Policy uncertainty and jobs

"Policy uncertainty" has dramatically increased since the September 2008 crash. (via)

That article (written by 3 economists at Stanford and University of Chicago) notes that it's hard to disentangle uncertainty about policy (tax rates, health-care law, regulations) from uncertainty about the economy as a whole. But the authors tried to isolate policy uncertainty as a distinct factor inhibiting businesses from hiring people.

They "estimate that restoring 2006 levels of policy uncertainty would yield an additional 2.5 million jobs over 18 months."

UPDATE: My mom, Ann Althouse, remarks: "And yet the government is always scrambling to help us out with new policies." She quotes President Obama from today:

“If Congress does nothing, then it’s not a matter of me running against them. I think the American people will run them out of town. I would love nothing more than to see Congress act so aggressively that I can’t campaign against them as a do-nothing Congress.”

She urges us to "[r]econsider the amazing value of nothing."

Scientists keep getting things wrong. Should we stop believing in science?

"Plenty of today’s scientific theories will one day be discredited. So should we be sceptical of science itself?" That's the teaser for a short, worth-reading article (via Arts & Letters Daily). Here's an excerpt:

Physicists, in particular, have long believed themselves to be on the verge of explaining almost everything. In 1894 Albert Michelson, the first American to get a Nobel prize in science, said that all the main laws and facts of physics had already been discovered. In 1928 Max Born, another Nobel prize-winner, said that physics would be completed in about six months’ time. In 1988, in his bestselling “A Brief History of Time”, the cosmologist Stephen Hawking wrote that “we may now be near the end of the search for the ultimate laws of nature.” Now, in the newly published “The Grand Design”, Hawking paints a picture of the universe that is “different…from the picture we might have painted just a decade or two ago”. In the long run, physicists are, no doubt, getting closer and closer to the truth. But you can never be sure when the long run has arrived. And in the short run—to adapt Keynes’s proverb—we are often all wrong.

Most laymen probably assume that the 350-year-old institution of “peer review”, which acts as a gatekeeper to publication in scientific journals, involves some attempt to check the articles that see the light of day. In fact they are rarely checked for accuracy, and, as a study for the Fraser Institute, a Canadian think-tank, reported last year, “the data and computational methods are so seldom disclosed that post-publication verification is equally rare.” Journals will usually consider only articles that present positive and striking results, and scientists need constantly to publish in order to keep their careers alive. . . . Historians of science call this bias the “file-drawer problem”: if a set of experiments produces a result contrary to what the team needs to find, it ends up filed away, and the world never finds out about it.

Despite all this and more, the author concludes the article by saying we should be generally credulous of science. Isn't this an outrageous paradox?

He thinks there's no other choice, since not to believe in science would be not to believe in anything, which would be paralyzing. "[S]cience is the only game in town."

Well, not really. If you're a professional scientist, it's certainly not that simple. You don't have a binary choice between "believing" or "not believing" in "science." You should be aware of enough of the complexities of your field that you can be more or less skeptical of different claims, using some kind of epistemic sliding scale.

And if you're a layperson, you usually don't have to believe in scientific theories at all in order to lead a productive life (as long as you're familiar with enough of the basics not to be embarrassed if they come up in conversation). But what if you're facing a specific problem and your best hope of a solution depends on science, such as taking medication? Well, you still don't need to be completely credulous about science in general or even the scientific claims behind that medication. You can take a gamble that the scientists are more likely than not to be right. This just means you think the odds that the medication is effective are greater than the odds of any other method you know of (including doing nothing); it doesn't mean you believe the odds that it's effective are 100%. You can use a working assumption that scientists are getting things right, based on your hunch that this usually turns out to be true -- but you can, at the same time, be skeptical of your own hunch. This needn't lead to paralysis. On the contrary, this semi-skeptical attitude can make it easier to move on once we discover, as we're sure to from time to time, that we were believing in bad science.

How to deal with our lack of understanding of financial reform

The New Republic's Jonathan Chait makes a confession that's rare for a pundit: he doesn't know what he's talking about. Specifically, his "commentary on financial regulatory reform has been somewhat hamstrung by my skeletal understanding of the substance of the issue." He also thinks this ignorance isn't just his own quirky failing but extends to liberals and policy wonks in general:

Other policy commentators have learned more about this issue than I have, but even their opinions are heavily sprinkled with self-doubt. This points to the fact that liberals and the wonk community have a lot less confidence that financial regulatory reform will work than we did that, say, health care reform would work.

So how should they respond to this state of affairs? Chait says:

We could wait a few years until the debate has matured, but the truth is that only is the shadow of an economic crisis and a backlash over the bailouts does the political space exist to impose a reform that actually takes a bite out of Wall Street.

Apparently, the issue has addled his brain so much that he has trouble writing in grammatical sentences.

He continues:

So at this point, the best bet is to pass the toughest, most anti-Wall Street reform possible while the window of opportunity remains open. Then, if it proves too tough, or if somebody comes up with a better way to regulate the system, you can bargain away the too-tough parts of the law for something better.

You rarely see someone argue: we're unusually lacking in confidence about whether our ideas will work; therefore, let's try to exert as much power as possible, as quickly as possible! But just because this is a counterintuitive line of reasoning -- and one that most commentators wouldn't be willing to make explicit -- doesn't mean it's a bad idea.

The skeptic's creed

Metafilter commenter "BrotherCaine" says:

My wife is always saying, "Have the courage of your lack of convictions!" in response to my closeted atheism.

Of course, that would work better with agnosticism.

Punk epistemology: "All I know is that I don't know nothing"

Facebook friend status update, referring to the old punk band Operation Ivy:

_______ is on an Op Ivy bender.

That makes me want to listen to some "Knowledge" -- an Operation Ivy song covered here by Green Day (whose first live show ever using the name Green Day was also Operation Ivy's last show, according to Wikipedia):




Cf. Socrates in Plato's Apology:

For this fear of death is indeed the pretence of wisdom, and not real wisdom, being the appearance of knowing the unknown; since no one knows whether death, which they in their fear apprehend to be the greatest evil, may not be the greatest good. Is there not here conceit of knowledge, which is a disgraceful sort of ignorance?

And this is the point in which, as I think, I am superior to men in general, and in which I might perhaps fancy myself wiser than other men -- that whereas I know but little of the world below, I do not suppose that I know.

Back to the modern day ... don't forget about Operation Ivy's bassist, Matt Freeman, who went on to be the bassist for Rancid. The greatest punk bassist in the world (parental advisory: explicit lyrics):