Tuesday, March 31, 2009

Blame the Economists, Not Economics - Dani Rodrik

Artikel yang ditulis oleh Dani Rodrik ini menarik untuk dibaca. Ia disiarkan dalam The Guatemala Times (http://www.guatemala-times.com/opinion/syndicated/roads-to-prosperity/887-blame-the-economists-not-economics.html)
Blame the Economists, Not Economics
Wednesday, 11 March 2009 10:50 Dani Rodrik

CAMBRIDGE - As the world economy tumbles off the edge of a precipice, critics of the economics profession are raising questions about its complicity in the current crisis. Rightly so: economists have plenty to answer for.

It was economists who legitimized and popularized the view that unfettered finance was a boon to society. They spoke with near unanimity when it came to the "dangers of government over-regulation." Their technical expertise - or what seemed like it at the time gave them a privileged position as opinion makers, as well as access to the corridors of power.
Very few among them (notable exceptions including Nouriel Roubini and Robert Shiller) raised alarm bells about the crisis to come. Perhaps worse still, the profession has failed to provide helpful guidance in steering the world economy out of its current mess. On Keynesian fiscal stimulus, economists' views range from "absolutely essential" to "ineffective and harmful."

On re-regulating finance, there are plenty of good ideas, but little convergence. From the near-consensus on the virtues of a finance-centric model of the world, the economics profession has moved to a near-total absence of consensus on what ought to be done.

So is economics in need of a major shake-up? Should we burn our existing textbooks and rewrite them from scratch?

Actually, no. Without recourse to the economist's toolkit, we cannot even begin to make sense of the current crisis.

Why, for example, did China's decision to accumulate foreign reserves result in a mortgage lender in Ohio taking excessive risks? If your answer does not use elements from behavioral economics, agency theory, information economics, and international economics, among others, it is likely to remain seriously incomplete.

The fault lies not with economics, but with economists. The problem is that economists (and those who listen to them) became over-confident in their preferred models of the moment: markets are efficient, financial innovation transfers risk to those best able to bear it, self-regulation works best, and government intervention is ineffective and harmful.

They forgot that there were many other models that led in radically different directions. Hubris creates blind spots. If anything needs fixing, it is the sociology of the profession. The textbooks at least those used in advanced courses - are fine.
Non-economists tend to think of economics as a discipline that idolizes markets and a narrow concept of (allocative) efficiency. If the only economics course you take is the typical introductory survey, or if you are a journalist asking an economist for a quick opinion on a policy issue, that is indeed what you will encounter. But take a few more economics courses, or spend some time in advanced seminar rooms, and you will get a different picture.
Labor economists focus not only on how trade unions can distort markets, but also how, under certain conditions, they can enhance productivity. Trade economists study the implications of globalization on inequality within and across countries. Finance theorists have written reams on the consequences of the failure of the "efficient markets" hypothesis. Open-economy macroeconomists examine the instabilities of international finance. Advanced training in economics requires learning about market failures in detail, and about the myriad ways in which governments can help markets work better.

Macroeconomics may be the only applied field within economics in which more training puts greater distance between the specialist and the real world, owing to its reliance on highly unrealistic models that sacrifice relevance to technical rigor. Sadly, in view of today's needs, macroeconomists have made little progress on policy since John Maynard Keynes explained how economies could get stuck in unemployment due to deficient aggregate demand. Some, like Brad DeLong and Paul Krugman, would say that the field has actually regressed.

Economics is really a toolkit with multiple models - each a different, stylized representation of some aspect of reality. One's skill as an economist depends on the ability to pick and choose the right model for the situation.

Economics' richness has not been reflected in public debate because economists have taken far too much license. Instead of presenting menus of options and listing the relevant trade-offs - which is what economics is about - economists have too often conveyed their own social and political preferences. Instead of being analysts, they have been ideologues, favoring one set of social arrangements over others.

Furthermore, economists have been reluctant to share their intellectual doubts with the public, lest they "empower the barbarians." No economist can be entirely sure that his preferred model is correct. But when he and others advocate it to the exclusion of alternatives, they end up communicating a vastly exaggerated degree of confidence about what course of action is required.

Paradoxically, then, the current disarray within the profession is perhaps a better reflection of the profession's true value added than its previous misleading consensus. Economics can at best clarify the choices for policy makers; it cannot make those choices for them.

When economists disagree, the world gets exposed to legitimate differences of views on how the economy operates. It is when they agree too much that the public should beware.
Dani Rodrik, Professor of Political Economy at Harvard University's John F. Kennedy School of Government, is the first recipient of the Social Science Research Council's Albert O. Hirschman Prize. His latest book is One Economics, Many Recipes: Globalization, Institutions, and Economic Growth.

Friday, February 27, 2009

Recession looms as Q4 growth stops at 0.1pc

KUALA LUMPUR, Feb 27 — Malaysia is heading towards recession this year after economic growth stopped at 0.1 per cent in the last quarter, the slowest annual pace since 2001, due to weakening external demand.
The slump also slashed the 2008 GDP growth to 4.6 per cent, falling from 6.3 per cent in 2007 despite optimistic projections of at least 6 per cent.
Government officials and economists had earlier forecast for 0.5 to 1 per cent growth for the 2008’s fourth quarter but Bank Negara figures today revealed that the economy slowed faster than expected.
Finance Minister Datuk Seri Najib Abdul Razak said today the bleak figures will prompt the government to revise downwards its forecast of 3.5 per cent GDP growth for 2009.
“I do not think that we can anticipate an improvement in the GDP figures for the next quarter, but of course, it all depends on the situation in the United States and Europe,” said the deputy prime minister who is set to table a new stimulus package on March 10.
Most of Malaysia’s main trading partners entered recession since last year but Putrajaya had been optimistic of staving off the downturn although recent export and jobless figures painted a pessimistic outlook.
The Statistics Department said the manufacturing sector contracted 8.8 per cent for the first time after 26 consecutive positive quarters while construction shrank by 1.6 per cent from a 1.2 per cent growth.
But the services sector continued to expand to 5.6 per cent from 7.1 per cent in the previous quarter while agriculture slowed to 0.5 per cent from 3 per cent in the same period.
Authorities said services continued to boost the supply side while private and government consumption expanded growth on the demand side.
Bank Negara disclosed that inflation fell to 5.9 per cent in the fourth quarter from 8.4 per cent in the previous quarter due to adjustments in fuel prices.
“The downward trend in inflation is expected to continue in 2009,” Bank Negara said.

Inflation lower but food prices remain high

Inflation may have dropped to 3.9 per cent in January 2009 in line with the fall in consumer demand and the end of the commodity price bubble. But even though the agriculture commodity bubble has burst, food prices remain high with the consumer price index showing a 9.8 per cent rise in January for food. (The food and non-alcoholic beverages component contributes over 80 per cent of the 3.9 per cent rise in the CPI index.) Imagine, the index for rice, bread and other cereals has shot up by 18 per cent.
According to the Statistics Department, the 9.8 per cent increase in the food index is the result of “increases for Food At Home (+ 11.0 per cent); Food Away From Home (+ 8.6 per cent) and Coffee, Tea, Cocoa & Non-Alcoholic Beverages (+ 4.2 per cent). Among the subgroups of Food At Home which showed significant increases during this period were Rice, Bread & Other Cereals (+ 18.0 per cent); Fish & Seafood (+ 11.8 per cent); Meat (+ 10.4 per cent); Vegetables (+ 9.0 per cent) and Milk, Cheese & Eggs (+ 8.0 per cent)”.

Isn’t it time we take another look at our agriculture and fisheries policies to ensure sufficiency, sustainability and food security while eliminating profiteering among middlemen and large corporate retailers? It is not the small-scale farmers and fisherfolk who are reaping huge profits.

Wednesday, February 25, 2009

A journey down the road to the Ivory Tower

Freshman to Faculty - A journey down the road to the Ivory Tower investigates the allure of academia
Published On Wednesday, February 25, 2009 1:48 AM
By CHELSEA L. SHOVER Crimson Staff Writer


Sharply attired in a slim-fitting black suit and stylish thick-rimmed glasses, Matthew B. Kaiser folds his elbows neatly on his desk. For a professor who leads a class on crime and horror, his Barker Center office is strikingly cheery. The plush red rug matches the pillows arranged on the sumptuous couch and the lamp that sits atop one of the full bookshelves lining the walls.
But Kaiser’s deliberate enunciation, enthralling as it is haunting, is tinged with the darkness of his academic specialty—and his own past.
Kaiser did not think he would finish his last year of high school. At age 17 he left his home to live with three 22-year-old musicians in their attic. “I had a fairly chaotic and sometimes scary life,” he says. He did ultimately graduate and even ended up applying to the University of Oregon—in no small part because the application was only one side of a sheet of paper. For the next two years Kaiser says he drifted through college as an undeclared major, more interested in Oregon’s gay rights battles than in going to class.
Eventually, exhausted from the chaos of the political involvement and worn out from the ugly language hurled at him, he turned to Victorian literature. “I wanted to seek refuge in beautiful language,” Kaiser says. “There were so many shadowy silent spaces that needed to be filled with language.” Kaiser’s passion for Victorian literature turned him from a wandering, undeclared college student into an expert in the field and an assistant professor at Harvard. He now teaches the popular course, English 156: “Crime and Horror in Victorian Literature and Culture” to more than 450 students.
Kaiser says he attended graduate school and pursued a career in academia because it allowed him to dedicate his life to his intellectual passion. For students like Kaiser, this route often naturally leads to a career as a professor because along the way they discover a need to share their passion with the rest of the world. For others, becoming a professor has always been the ultimate goal. Whether it’s happenstance or raw ambition, the ivory tower holds some kind of allure for many who step inside its doors.
“If you really love a field, you see it everywhere,” Brian M. Weller ’09 explains. The bespectacled senior’s face lights up as he jokes about his obsession with economics. He constantly apologizes for what he sees as his overly “nerdy” interest in the subject.
As a freshman, he says he often annoyed his friends by taking an economic view of ordinary situations. “I’d have a marginal cost, marginal benefit type of analysis,” he says. But Weller was an economics whiz kid even before he was accepted by Harvard. When his high school Advanced Placement economics teacher was out much of the year due to illness, Weller sometimes taught the class in place of the substitute. His mother, Leslie A. Weller, recalls the nightly phone calls from other students asking her son for help. “Teachers would refer kids to Brian,” she says. “They said, ‘Call Brian, he’ll help you.’”
Weller finished his AP economics exams so early that he had enough time left over to pen some poetry. Along with responses about supply and demand and opportunity cost, his AP graders discovered a haiku and a sonnet in his response book. Weller recalled the experience fondly: “I think I wrote the longer one for macro because it was easier.”
Unlike Weller, Kaiser’s took a more windy road to discovering his hidden passion. Kaiser did not discover his true academic interest until he became an English major. After that, there was no turning back. “Once that love affair with Victorian literature began, my path into academia was pretty clear,” he said. When he entered his English Ph.D. program, his professorial pursuit was already in motion. “It doesn’t make a lot of sense, in literary studies at least, to work for a Ph.D. unless you are going to be a professor,” Kaiser said.
For Kaiser, it was authors like Walter Pater and Oscar Wilde, people who he says existed outside society’s power structure, who drew him to academia. For Maria Tatar, professor of TKTK, it was Kafka and Thomas Mann who initially drew her in. She chose graduate school because she viewed it as the next logical step to nurture her love of reading. Tatar began to investigate the Grimm Fairy Tales and stumbled upon a virtually unmined trove of literary wealth in these two volumes of tales told to generations of children the world over. “For me it was almost a way of knitting together my role as a parent and as a professor,” Tatar said.
By also looking at the effects of these violent stories on children, she helped lay the groundwork for the field that would become Childhood Studies, which examines literature written for children and how it affects them. She now leads the popular Lit and Arts A 17: Childhood: Its History, Philosophy, and Literature. “Teaching really is a way to give back,” she said, “you don’t have to be a lawyer or a doctor in order to do that.”
RESEARCH
For Professor Lisa Randall ’83, Harvard’s first female tenured theoretical physicist, an intense interest in research led her to enter academia. The author of Warped Passages: Unraveling the Mysteries of the Universe’s Hidden Dimensions was named one of Time Magazine’s 100 Most Influential People of 2007.
Although she is now a frontrunner in research on particle physics and cosmology, Randall initially viewed academia as only one potential career option. She realized it would probably be harder to return to research after an alternate career than to transition from a stint in research to another field. But when she was applying for professorial positions, she found she did actually want to teach along with conducting research. “I realized that I really did care,” she said.
Like Randall, a devotion to research pulls Harvard senior, Allen Cheng ’09 to academia. He currently works in a lab to screen for enzyme-inhibiting compounds. “You’re discovering something new,” Cheng said of his desire to contribute to the scientific body of knowledge, “You’re not simply living in the status quo.”
But Cheng’s interest in becoming a professor is not solely based on research. After working as an Organic Chemistry teaching fellow for the past two years, Cheng knows he would also enjoy instructing others. “It’s really a personal matter of finding something very interesting,” he said.
Lisa J. Miracchi ’09 also has dreams of becoming a professor. Like Cheng, this desire stems from a deep interest in her area of study—philosophy. She says she used to want to be an architect or perhaps a starving artist. However, in order to fulfill her goal of studying abroad in Italy, Miracchi first had to double up on her philosophy concentration requirements. It was this with this course load that she began to suspect she might want to be a philosophy professor. Even as she was studying gorgeous Florentine architecture, she found herself thinking about metaphysics and epistemology. It was then she knew she was ready to devote her life to the specialty Miracchi describes as “the study of what there is and how we know what there is.”
BREAK
Like Cheng and Miracchi, a specific passion for their area of expertise pushed Kaiser, Tatar, and Randall all into their professorial positions. However, some current students have much more direct visions of becoming professors. They have long dreamed of the days when they will prepare lectures rather than problem sets.
For example, even before Weller was wowing his AP graders, he was already fascinated with economics. At age 17, he attended the Pennsylvania Governor’s School for International Studies, a summer program for high school students. Until that point he had primarily studied math and science. However, instead of spending his summer at the Pennsylvania Governor’s School for the Sciences, he decided to explore his burgeoning interest in economics. That summer’s survey course convinced him to continue exploring the field.
However, becoming a professor was not Weller’s only option for pursuing his interest in economics. He knew that there is often much more money to be made outside the hallowed halls of academia. But after a summer working in the private sector for Citadel Investment Group, Weller knew that inside those hallowed halls was exactly where he wanted to be.
Before working at this hedge fund, Weller had served as a research assistant to Aleh Tsyvinski, the now-co-director of Yale’s Macroeconomics Program. During his time at Citadel, Weller saw the difference between researching for industry and researching in a university setting.
“At the end of the day your knowledge and your efforts are restricted to making money,” he said about his summer experience. He resented being forced to limit himself to activities that were likely to produce profits.
Since confirming his original sense that he was bound for a career in academia, Weller has worked hard to structure his time in college to make his graduate school application as competitive as possible.
“My focus has been extremely tight,” he said. “It’s been, ‘I need to do this for grad school. I need to take these classes. I need to excel in one specific area of economics, write a great thesis, really drill down into something.’”
Years before Weller attended that fateful summer program, psychology professor Steven Pinker was trying to figure out where his interests would lead him.
As Pinker sat in his office, framed by large windows offering an expansive view of Boston, he recalled his path to William James Hall.
When he first discovered that think tanks are organizations that pay people for their ideas, Pinker was set on working for one. “I really want to think, and solve problems, and debate, and learn,” the college student told his mother.
She had a different idea in mind.
“You belong in a university,” she replied.
“At the time I wasn’t completely aware of the fact that university professors both taught and did research,” Pinker said.
Armed with this new information, Pinker knew his mother was right. “As soon as I realized that that’s what university professors did, I knew that was what I wanted to do, that you could actually be paid for thinking,” Pinker said.
He is now a highly respected professor who Time Magazine named one of the Most Influential People of 2004. He is also the author of best-selling popular psychology books including How the Mind Works and The Stuff of Thought.
THE FAMILY FACTOR
Family influence has also contributed to current Harvard students’ dreams of becoming professors. Daniel J. Thorn ’11 arrived on campus just over a year and a half ago, and he has every intention of sticking around. With several professors in his family, Thorn was exposed to academia from a young age. In speaking with members of the History of Science faculty, Thorn says he has found the life of inquiry he wants in a community of the intellectually engaged.
“You kind of get the impulse not to leave,” Thorn said, nodding to the economy that might dissuade his peers from entering the traditional job market in two years. Thorn says he has already been mistaken for a graduate student but “it’s more of a factor of looking old for my age rather than being innately professorial.” In fact, he said the biggest indicator of his scholarly goals is how he avoids studying: “When I procrastinate, I read the internet comic Ph.D. about doctoral candidates.”
A desire for intellectual freedom explains how economics professor N. Gregory Mankiw wound up in academia. He teaches Social Analysis 10: Principles of Economics, back in the classroom after chairing former-President Bush’s Council of Economic Advisors from 2003-2005. His Principles of Economics textbooks are used in high schools and colleges around the world. “They pay us to do what we want to do,” Mankiw said. “You can think about the problems that interest you. You have a tremendous amount of freedom to come and go as you please,” he added.
Of his own Princeton class of 1980, Mankiw said the beckon of the ivory tower reached a certain kind of student. “Those of us who became professors were slightly ‘nerdier’ on average than those who went for professional degrees.” Mankiw actually started out in the latter camp, initially attending law school while earning his economics PhD. But he dropped the J.D. half of his joint-degree program after a year and a half. “I eventually decided my comparative advantage lay in economics,” he says.
A DIFFERENT ROAD ALTOGETHER
And of course, in between the tenured professors at the end of the road and the undergraduates about to step off down the path their academic destination, there are those midway through the journey to academia.
When sociology graduate student Van C. Tran was deciding what he might like to do with his life, he looked around for a role model and a career goal. He found both in his thesis adviser, a sociology professor named Philip Kasinitz. “I thought [being a professor] was the best job in the world I could possibly have,” Tran said.
Tran has been at Harvard for several years, but ten years ago, when he arrived in the U.S. from Vietnam, earning a Ph.D. was nowhere on his radar. At the time, he spoke no English. He had lived seven of his 19 years in Thailand’s refugee camps. After his family landed in New York City, he found a job in a hardware store.
Tran says his life changed one fateful snowy day. Everyday he passed the local community college and on one afternoon he finally decided to check it out. He asked about his educational options and the receptionist handed him an application. After completing his Associate’s Degree, Tran went on to Hunter College to earn a Bachelor’s Degree in sociology. As he wrote his thesis on the experience of Tibetan refugees in New York, Tran worked one-on-one with Kasinitz.
Tran saw in his mentor’s lifestyle the only kind of life he wanted for himself. In the summer of his junior year, he brought up this goal in a weekly meeting with Kasinitz. He told his mentor that he wanted to apply to graduate schools–but only in New York so he could stay close to his family. “I said it very gingerly because I wasn’t sure how he would react,” he says.
However, his mentor responded encouragingly. “I was practically by the door, when he looked at me and said, ‘But you should also apply to Harvard and Princeton,’” Tran remembers. Thinking the professor was addressing someone else, Tran looked over his shoulder. “Are you talking to me?”
Kasinitz laughed.
Now, as a resident tutor in Lowell House, it is Tran’s turn to advise his own students on graduate school.
Whether life’s coincidences landed them in the lecturer’s seat, or that spot behind the podium was the goal all along, professors find different routes to the ivory tower. With his own wayward path to success as a frame of reference, Kaiser holds a respect for students at the center of his identity. “When I teach I address students as if they’re adults instead of my children,” he says. “I don’t look at students as lacking, in desperate need of being corrected, bundles of chaos that need to be brought into the light.”
While some students dream of getting to a tenured destination, others find immersion in academia is the only way to feed the fire of their intellectual passion. There are many roads to academic greatness. Who knows where the next Kaiser will come from? He may be living in an attic right now.

The Millennium Development Goals (MDGs)

At the Millennium Summit in September 2000 the largest gathering of world leaders in history adopted the UN Millennium Declaration, committing their nations to a new global partnership to reduce extreme poverty and setting out a series of time-bound targets, with a deadline of 2015, that have become known as the Millennium Development Goals.

The Millennium Development Goals (MDGs) are the world's time-bound and quantified targets for addressing extreme poverty in its many dimensions-income poverty, hunger, disease, lack of adequate shelter, and exclusion-while promoting gender equality, education, and environmental sustainability. They are also basic human rights-the rights of each person on the planet to health, education, shelter, and security.

The End of Poverty - J. Sachs

The End of Poverty: Economic Possibilities for Our Time

"Extreme poverty can be ended, not in the time of our grandchildren, but our time." Thus forecasts Jeffrey D. Sachs, whose twenty-five years of experience observing the world from many vantage points has helped him shed light on the most vital issues facing our planet: the causes of poverty, the role of rich-country policies, and the very real possibilities for a poverty-free future. Deemed "the most important economist in the world" by The New York Times Magazine and "the world's best-known economist" by Time magazine, Sachs brings his considerable expertise to bear in the landmark The End of Poverty: Economic Possibilities for Our Time, his highly anticipated blueprint for world-wide economic success — a goal, he argues, we can reach in a mere twenty years.


Marrying vivid eyewitness storytelling with concrete analysis, Sachs provides a conceptual map of the world economy and the different categories into which countries fall, explaining why wealth and poverty have diverged and evolved as they have and why the poorest nations have been so markedly unable to escape the cruel vortex of poverty. The End of Poverty does not deliver its worldviews from on high: Sachs plunges into the messy realities of economies, leading his readers through his work in Bolivia, Poland, Russia, India, China, and Africa, and concludes with an integrated set of solutions to the tangled economic, political, environmental, and social issues that most frequently hold societies back.

Tuesday, February 24, 2009

Nod for 45 new private hospitals

THE government has approved licences for a total of 45 new private hospitals and this will grow the number of beds at private hospitals by a third to 15,178.
As at end of 2008, Malaysia had a total of 209 registered hospitals with a total of 11,689 beds. "Since the implementation of the Private Healthcare Facilities and Services Act 1998 and its regulations in 2006, we have received 55 applications for the establishment of new private hospitals, of which 45 have been approved," the Minister of Health Datuk Seri Liow Tiong Lai said.
The 45 hospitals have a total of 3,489 beds."...the number of private hospitals operating in the country has increased almost two fold from 135 at the end of December 2001 to 209 by the end of December 2008," he added.Liow was speaking to reporters yesterday following the launch of "Rebirth of Pantai" for Pantai Holdings Bhd.
On whether the healthcare sector can expect anything from the second stimulus package, Liow said there will be some goodies in store to boost medical tourism and training for nurses. "We should prepare for medical tourism and take it to the next level ... we should promote this sector further," he said, adding that medical tourism has been identified as a key sector to generate economic growth.A second stimulus package to boost the economy will be announced on March 10 2009, adding to the RM7 billion stimulus package announced last November. - By Vasantha Ganesan.