A crítica de Lucas Marley

Só mesmo o café

Permite entender

A maldita algebrera

De onde brotou esse c.

Equação compreendida,

Simplificação embutida,

E o reggae de Lucas

Racionalizando as expectativas da vida.

Eu, o café, o livro, a música e a gata,

Internalizando a crítica ao sabor do vento:

Você pode enganar algumas pessoas algumas vezes,

Mas não todas todo o tempo.

Houvesse três pequenos pássaros

À janela da minha alma,

Fosse o sol mais quente e eu mais frio,

A matéria estaria na palma.

Seria a vida mais calma?

Exercício contrafactual de pouca valia.

Penso no velho barbudo.

Se vivesse, hoje, de que lado estaria?

Pudesse escrever por mais tempo,

Faria um poema melhor,

Mas esse mestrado mecanizado

Implica saber tudo de cor.

A day with Amitava Krishna Dutt

Actually, last week we had two days of Dutt, the best academic experience I’ve ever had.

Talking to Dutt was a confirmation of an old dream: to go abroad for my Ph.D.

Not that we don’t have excellent professors in Brazil, we do! Gilberto de Assis Libânio, Dutt’s host during his journey through UFMG, is a brilliant professor as well, and I’m quite glad to study Macroeconomics with him. However, he also took his Ph. D. abroad, at Notre Dame, which partially explains his broad vision of economics.

Back to Dutt, the most remarkable feature of his personality is that he is definitely not radical. In economics we are very much used to extreme reasoning, there are several schools of thought fighting over semantics. Had we learned “The tower of Babel” moral, much of the disasters we see in our society could have been avoided. Rather than working together, however, economists preferred fighting for hegemony within the profession. Take mathematical models, for instance. Instead of debating which models work under specific contexts, we engaged in a hopeless competition, as if some particular model could answer everything everywhere. I wish I could say economics is playing a zero sum game, but I think it’s a negative one.

Dutt’s open minded vision of our science reminded me the most important lesson my father has taught me, Aristotle’s Golden Mean. My dad behaves like a Greek philosopher in many ways, even though his Ph. D. was in a different field within philosophy. If economists took Aristotle seriously, the current debate about pluralism in economics would be redundant. Unfortunately, nevertheless, we focus so much in mathematics we can barely dialogue with other fields of science. The trade-off of being a brilliant mathematician is the lack of a critical view. An obsessed mathematician might not even notice the homeless family living nearby his house due to the fact that every time he walks by them he is trying to solve one of the millennium prize problems.

I have no problem with mathematics; it has always been my favorite subject, actually. However, thanks to my father and the great professors I had during my undergrad at UFMG such as Hugo da Gama Cerqueira , João Antônio de Paula, Eduardo da Motta Albuquerque and Marcelo Magalhães Godoy, it has become clear that sticking to a particular interpretation of the world isn’t going to change our dismal science, not to say our society, which should be our goal.

Some students choose economics to earn a fat check working at the stock market or the like. But I still believe (you can call me naive) that most students engage in economics in order to grasp a better understanding of our society, and, in the limit, change the world (or at least to help the homeless family living nearby you).

Dutt’s lesson, put it short, is that optimization might be helpful to understand specific issues and we shouldn’t doom mainstream economics. The blind belief of standard economics as a method that can solve any problem, on the other hand, is jeopardizing to the future of economics, and, more importantly, of our society. 

Me plus you over two

You say I’m not consistent,

I don’t converge in time,

I am a random walk.

You’re not. I wonder why.

You distribute your time

in such a normal fashion,

while I get stuck with mine,

most likely in recession.

The product of us two

is simply our summation.

No stupid logarithm law,

just love / formalization.

What I do is conditional on you,

for we’re not independent,

but it’s not a matter of who guides who

we’re not each other’s pendant.

If I were a function of you

how different would it be

then, take the reciprocate,

if you were a function of me?

Fixed Quota System x Tradable Procreation Permit

Comparing the fixed quota system with a tradable procreation permit, I would argue that the latter is more questionable than the former. Even though a tradable procreation permit would be efficient whereas a fixed quota system would not, its impact in terms of eroding people’s perception of how fair their community is offsets efficiency gains. People’s expectations about one another affect their behavior towards the group, a position underpinned by a large body of recent academic evidence that rejects the idea of the utility maximizer representative agent. It is rather the case that emotion and moral codes play a major role in human decisions. In this vein, one’s attitude toward his or her group, including whether  one cooperates or not and to what degree, depends fundamentally on the person's expectations about the rest of the group. Hence, the fairness of public policy fosters cooperation among agents. The design of public policy and institutions must account for this behavioral effect, taking the discussion beyond efficiency concerns.

Specifically as regards the options at hand, a fixed quota system is problematic in a highly unequal world. Imposing a significant fine on the poor for an extra child limits their freedom regarding family decisions, whereas for the rich the cost of having more than one child dissipates in their mammoth budget. A fixed quota system, however, can be socially acceptable by letting the fine on extra child be proportional to income. On the other hand, when there is a market for the right to have a child, such as a tradable procreation permit, the nature of having children changes drastically. When kids are goods, having a child implies an opportunity cost absent under a fixed quota system. Kids would most likely become luxury goods under such conditions; rich families would be notable for having five kids. For the average guy, having a child would imply not earning a lot of money, as the right to have kids would presumably be quite expensive. A young couple would thus be faced with the awkward decision of having a kid or selling the right to do so and travelling around the world, buying a car or an apartment and so forth. Who knows what the price of life would be? For poor people, having a child would be a burden; selling their fundamental right to have a family would be a matter of making ends meet. A market for children introduces an opportunity cost, its corollary is to create a fallacious equivalence between money and life, as if they were interchangeable.

Most economists would argue it’s a paradox that one system can be more efficient yet less preferable than other. Mainstream economics isolates moral concerns from its analyses claiming everything can be understood as goods. Economic models and its restrictive hypothesis, however useful, must operate within its boundaries. Most relevant economic questions lie beyond orthodox framework, and, in such cases, dialoguing with other fields of science is paramount.

PS: I'd like to thank the old salt Pedro Mendes Loureiro for very helpful comments on a draft of this post, thank ye matey! 

Robot Economicus

Adam Smith economics can’t be seen as value-neutral driven. Modern Economists misread the father of economics by either not reading The Theory of Moral Sentiments or by considering it independent from his other book, slightly more famous. Oddly enough, the so-called father of economics gave birth to a child that didn’t share the Scottish Enlightenment’s DNA, for Smith’s reasoning was embedded on Scottish Tradition under which moral concerns played a major role.

Born out of Smith’s wedlock with the Illuminati, not exactly nine months after the author’s major academic intercourse in 1776, the Homo Economicus, put it short, is a misinterpretation of Smith’s self-interest concept.

Little by little the politique was taken away from the économique and economics became mathematics. In order for economics to be a science such as physics men were reduced to atoms. Quoting Murray Gell-Mann, “Think how hard physics would be if particles could think”, now, think how hard economics would be if men had feelings...
Modern economics, under the streetlight effect, asks not this question. A drunken mainstream economist is looking for his car keys under a lamppost, a younger economist asks whether he has lost his keys there, the prominent economist replies: “No, I lost the keys somewhere across the street, but the light here is better”. The youngster follows his master with all his heart, ironically, for heart matters belong not to the modus operandi of his science. He gets thrilled when his paper proving that emotions play no role in economics wins the Clark Medal. In the following years he gets completely obsessed with the possibility of winning the Nobel. Unfortunately this fairy tale doesn’t have a happy ending; during his lifetime another economist was actually able to prove that humans are robots, hence winning the Nobel prize for his major contributions in fostering the scientific inherent aspects of life.

Passionate economists argue that Robot Economicus inhabits our world, they twist-and-shout and scream-and-cry to defend their deep beliefs. Just don’t blame Adam Smith for our blindness, the man he portrayed wasn’t ruled by algorithms:

“Though every man may, according to the proverb, be the whole world to himself (...) Though his own happiness may be of more importance to him than that of all the world besides (...) In the race for wealth, and honours, and preferments, he may run as hard as he can, and strain every nerve and every muscle, in order to outstrip all his competitors. But if he should justle, or throw down any of them, the indulgence of the spectators is entirely at an end. It is a violation of fair play, which they cannot admit (…) They readily, therefore, sympathize with the natural resentment of the injured, and the offender becomes the object of their hatred and indignation”.

Mea Culpa

Tanta coisa por ser dita e que não foi.
Tudo foi choro para dentro.
E agora, Maria?
Agora choro no papel.

Queria não te ter escrito tantos poemas,
E ter te falado mais.
Queria ter te escutado mais,
E não te ter visto ouvir tantas de minhas canções.
Queria não te ter contando sobre a vida de tantos economistas,
E ter te revelado o estado de minhas finanças pessoais.

Queria ter viajado mais com você
E menos em você.

Ainda quero.