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July 2018

"The Great American Melt-Up"

James Pethokoukis:

Economic facts, properly understood, simply do not support the argument that the broad American middle class has been stuck in neutral for nearly two generations. . . .

But set the data aside for a moment. The idea that most Americans are worse off than they were in the 1970s seems intuitively nonsensical to those of us who were living back then. As former Obama economic adviser Jason Furman once put it: “ignore the statistics for a second and use your common sense. Remember when even upper-middle-class families worried about staying on a long distance call for too long? When flying was an expensive luxury? When only a minority of the population had central air conditioning, dishwashers, and color televisions?”

"Chevron Deference v. The United States Constitution"

I vote in favor of the Supremes overturning "Chevron deference".

Berninger v. FCC offers the first best opportunity for a Supreme Court that includes Justice Gorsuch to weigh-in on the powers the Administrative State to self-legislate.  The grant of Chevron deference to the Open Internet Order (and by presumption to the RIF Order) sets a new high water mark for the 30-year old precedent.  The express wording of Commission authority in the Telecommunication Act of 1996 precludes regulation of the Internet.  The fact the Commission claims authority to regulate the Internet exists in a 1934 Depression-era law predating both computers and networking illustrates the problematic ambiguity of "ambiguity" as the legal threshold of Chevron deference.  

"How Conservatives Won the Law"

I've never read anything by him, but Stephen Teles sounds really smart for a self-described Liberal.

“Liberals got power because they got control of professional venues.” As a result, they fell back on appeals to authority, or what Mr. Teles calls “hiding the ball.” Rather than arguing against conservative ideas on the merits, they claimed their opponents were “violating expert knowledge.” He cites the popular assertion by corporations and universities—and the Supreme Court, in decisions involving racial preferences in admissions—that diversity is merely a matter of “good professional practice” rather than social justice.

"The Sound of Silence. A Review Essay of Nancy Maclean's Democracy in Chains: The Deep History of the Radical Right's Stealth Plan for America"

This is a devastating review of Nancy MacLean's much-discussed "expose" of James Buchanan, the Kochs, and their corruption of modern American politics. As I write it is forthcoming in the Journal of Economic Literature. The JEL is one of the top journals in economics and it is a journal of the American Economic Association, the leading professional organization for American economists. One would hope that such a review in such an authoritative source would stop, or at least inhibit, Lefties from gleefully citing it. 

Based on experience I very much doubt it will. But we'll see.

Here's an excerpt from the review:

This essay aims to carefully evaluate MacLean’s account. We will develop three main claims. One, as we argue in section 2, MacLean fails to demonstrate convincingly how Buchanan was the central character and mastermind of the grand scheme to revamp  democracy and government intervention. Second, MacLean’s account is marred by many misunderstandings about public choice theory. Thus, in section 3, we argue that her historical analysis and theoretical criticisms about public choice generally miss the mark, in particular because MacLean fails to understand the specifics of constitutional political economy, as well as its relationship to the economic analysis of politics. Third, in the midst of abundant archival material, her historical (and biographical) narrative is at best sketchy, and shows significant flawed arguments, misplaced citations, and dubious conjectures. Sections 4, 5, and 6 address different points of MacLean’s narrative in detail, from her analysis of the origins of Buchanan’s thought to her depiction of his involvement with the administration of the Chilean dictator Augusto Pinochet. Indeed, MacLean tends to over-interpret certain aspects in Buchanan’s life or thought and to overlook others that are nonetheless important. This is the case with ethics, which Buchanan always included when analyzing of how markets work, as we show in section 7.

Other than that, how was the book, Mrs. Lincoln?

(This review is just one of many critical reviews. For example, Mike Munger's review is instructive and also fun to read.)

"Statistical and Machine Learning forecasting methods: Concerns and ways forward"

From the abstract:

After comparing the post-sample accuracy of popular ML [machine learning] methods with that of eight traditional statistical ones, we found that the former are dominated across both accuracy measures used and for all forecasting horizons examined. Moreover, we observed that their computational requirements are considerably greater than those of statistical methods.

From the body:

A major innovation that has distinguished forecasting from other fields has been the good number of empirical studies aimed at both the academic community as well as the practitioners interested in utilizing the most accurate methods for their various applications and reducing cost or maximizing benefits by doing so. These studies contributed to establishing two major changes in the attitudes towards forecasting: First, it was established that methods or models, that best fitted available data, did not necessarily result in more accurate post sample predictions (a common belief until then). Second, the post-sample predictions of simple statistical methods were found to be at least as accurate as the sophisticated ones. This finding was furiously objected to by theoretical statisticians [76], who claimed that a simple method being a special case of e.g. ARIMA models, could not be more accurate than the ARIMA one, refusing to accept the empirical evidence proving the opposite.

A co-author of the paper is Spyros Makridakis, currently with nearly 17K Google Scholar citations.