By Jonathan B. Wight

John Tomer recently published what looks like an interesting approach to human capital, entitled Integrating Human Capital with Human Development: The Path to a More Productive and and Humane Economy (Dec 2015).

According to the description:

“For the most part, human capital theory emphasizes human cognitive development and the acquisition of knowledge and skills that enable enhanced productivity and earnings.  In light of recent research finds, particularly concerning neurodevelopment and early childhood development, it is becoming apparent that this standard version of human capital theory has a far too limited conception of human capabilities and how they are created…. [This book] shifts the focus of human capital theory to give full consideration to intangible, non-cognitive aspects of learning.”

At the Eastern Economic Association meetings held in D.C. last weekend, John Nye of George Mason presented on “Biology, Human Capital, and Achievement” that relates to Tomer’s theme. 

In Nye’s paper, he reported how prenatal hormonal levels of testosterone could be correlated with relative finger lengths (2^nd and 4^th fingers) in adults.  These, in turn, could be correlated with school GPA scores more than a decade later, after controlling for the usual other suspects.  

The biological story that explains some human success is still in its infancy, and may ultimately turn out to be swamped by environmental factors (parental upbringing and socialization, for example).  Yet it is an interesting and important foray, provided it does not lead to the dehumanization of the person as merely a collection of hormones, responding like a rat to a stimulus.

By Jonathan B. Wight

John Komlos, Professor emeritus at the University of Munich, wrote a lovely book entitled What Every Economics Student Needs to Know and Doesn't Get in the Usual Principles Text.

I very much like the whole tone and content, which is real worldly and accessible. Komlos starts with the central point that: “economics cannot be purged of ideology; our political, moral, and philosophical likes and dislikes– conscious and unconscious–are reflected in our assumptions and thus and how we structure our economic thinking and our understanding of the world around us. Much of that ideology is colored by our political philosophy.”  All of this should be standard fare for doing work and science, but is sadly neglected at all levels of instruction.

Economics, in order to become more scientific, needs to rely more on experience and facts to guide our analysis.   This implies that the discipline needs to return to its inductive roots. Komlos  does the appropriate genuflection at the altar of Adam Smith’s Theory of Moral Sentiments, to prepare us for a more humanitarian world. It is a “kinder and more just capitalism”—which is certainly in line with Smith’s thinking also in Wealth of Nations. 

 I haven’t yet finished the book, so I don’t know if all his policy recommendations would be ones I would support.  But he is asking the right questions and insisting on critical thinking, which means thinking outside the mainstream box.  Here are a few quotes:

“I am truly on enthusiastic supporter of markets that enable people to exercise their creativity and individuality of their own free will without interference from trendsetters and predatory lenders, but my support is contingent on empirical evidence.”

”There is a continuum of social economic systems, ranging from market fundamentalism to socialism. I advocate finding that constellation of institutional arrangements at the Golden mean between the two polar extremes that can provide most of us, as well as future generations, with a reasonably fulfilled life.”

That touches a lot of bases with me—trying to find the Golden mean between extremes (a virtue ethics concept) and the “reasonably fulfilled life”—which suggests pragmatism, humility, and a deeper meaning to life than “satisfying preferences.”

Komlos is chairing a session at the Eastern Economic Association this weekend:

Saturday, February 27, 4:00--‐5:20

Session Title: Searching for New Paradigms in Economics

Chair: John Komlos, University of Munich, [email protected]

“New Finance: Toward a Good Society” Hao Cheng, School of Economics and Management, Nanchang University, [email protected]

“Biology, Human Capital, and Achievement” John Nye, George Mason University, [email protected]

"Unemployment in a Just Economy" John Komlos, University of Munich, [email protected]

“What Every Economist Should Know about Ethics: Duty and Virtue in the Scientific Process” Jonathan B. Wight, University of Richmond, [email protected]

[John Komlos' blog on PBS is found here: http://www.pbs.org/newshour/author/john-komlos/]

By Jonathan B. Wight

Coming this spring, The Real Adam Smith: A Personal Exploration by Johan Norberg will appear on the small tv screens.

The first hour will be “Morality and Markets.”  The second hour will be “Ideas That Changed The World.”

The author of the series, Johan Norberg, is at the Cato Institution.  The series is promoted by the Free to Choose Network.

All of this sounds great, except the abstract’s emphasis on “free trade”—which I hope is not the tone of the piece, ignoring all the ways in which Smith insisted that regulations would be needed to reconcile individual incentives with the social good.

For a preview, and to register to see when it will appear in your area, go here:

http://therealadamsmithfilm.com/?gclid=COCBm5S9_8oCFYEkHwodWPYEQw

[Thanks to Jim Bacon for the link.]

By Jonathan B. Wight

Larry Summers goes after “big money” in this blog, by which he means large denomination currency—most specifically the 500 euro note.

What’s the beef? 

Such a large denomination note makes it easier for crooks and terrorists to engage in money laundering.  The larger the bill the less bulky the package to sneak through customs.

At the Richmond Fed’s money museum there is a $100,000 note on display.  Currently, for the very reason Summers worries about, the largest U.S. note is $100.   

Summers’ argument is prudential: we should not allow the market to use the denomination it desires, because it encourages unethical behaviors.  In fact, Summers says in the best of all worlds we would withdraw $100 notes from circulation. 

$10,000 in $1 bills looks like—or equivalently—what $1,000,000 in $100 bills would look like--would be a medium size paper bag.  It’s relatively easy to smuggle something smaller than this paper bag and in terms of euros, the bag would be about less than one-fifth as full.

Adam Smith, who also worried about unethical behaviors, argued that government should make bills larger—no smaller than 5 pounds—essentially preventing poor people from gambling in private bank notes.

As of a few moments ago, the European Central Bank has voted to scrap the 500 euro note, but a 1,000 euro note still exists.  Go figure.  Both the $100 note and the 500 euro note are used for illegal activities, and earn governments lots of seignorage.  So it’s like asking a junkie to give up cocaine for the betterment of his health. 

By Jonathan B. Wight

I spent last weekend visiting the White House and the American Art Museum and National Portrait Gallery at 8^th and F Streets in Washington, DC.  Art was the focus of our eyes everywhere.

My wife, who grew up in Europe, notes that the premier residence of our leader—beautiful and historic though it may be—pales in comparison with Buckingham Palace and Versailles.  We are all probably glad that it does--except for Donald Trump, who hints he will continue living the high life in New York City after he wins, or, if he comes to DC will have to glitz up the residence by building a giant ballroom, so “top people” will then be willing to visit.

I never knew that so many top-people refused to come because the White House wasn’t grand enough!  Thank goodness Trump can fix that with his own money, he says.

Our time at the National Portrait Gallery and American Art Museum was utterly absorbing.  There is SO MUCH of interest, making this a top destination for anyone in the city.

My own favorite was an exhibit of photographs by Irving Penn, who shot portraits with clarity and simplicity for Vogue and other magazines from the 1940s on. 

The artist reveals to us emotions that help engage our critical thinking skills. While it sounds pompous to say—and there are plenty of blowhard narrow-minded artists—I do buy into the maxim that “The artist’s essential function is to retain integrity at any cost in an essentially corrupt world.” --Robert Motherwell

The role of the arts in moral imagination and the teaching about ethics is something I learned about in writing a paper found here.  For more photos and text, follow the jump.

By Jonathan B. Wight

Christianity is the world’s largest religion, with about 2 billion followers. Hence, its goings and comings should be of interest to all.

The Anglican Communion is a sliver of that pie, about 85 million people, left-over from the Church of England and its colonial churches around the world.

One would hope that, in the best of times, King Henry VIII’s church could be a beacon of light to oppressed parts of the earth. The very reason that wealth is supposedly a good thing is that it allows for the widening scope of the moral imagination.  Trade and travel are supposed to broaden one’s vision, and in broadening remove the boundaries of burden.

Here it is working in reverse.  The constrained moral imaginations of Anglicans from poor parts of Africa and Asia are imposing their wills on those in wealthier parts of the world, particularly the United States.

The U.S. Episcopal church openly elected both women and gay bishops and its ministers perform wedding ceremonies for gays. This provoked a schism within the Episcopals, which fortunately seems to have died down.

But globally other members of the Anglican Communion are incensed.  Last month they suspended the U.S. branch from voting for three years.

Bishop John Shelby Spong provides a fascinating insider’s look at the demise of Anglican Communion in this post. He nails the conclusion that this is essentially about politics more than religion.  By tradition the head of the Anglican Communion is the Archbishop of Canterbury, who is appointed by … the Prime Minister, in consultation with the Queen!  Here’s the conclusion:

“Is there any responsible, scientific authority in the world today that says that sexual orientation is a chosen lifestyle that should be condemned? I know of none! Are modern Christians to ignore new definitions and to continue to endorse as virtuous behavior patterns out of a dated Bible? Are we not aware that we have quoted that Bible in history to discriminate against left-handed people, to oppress women and to enslave and segregate people of color? Would we have expelled Desmond Tutu for leading the fight against a legal Apartheid? When Galileo discovered that the earth was not the center of the universe around which the sun rotated, would Archbishop Welby be ready to punish the churches that tried to embrace this new truth? Where will the purge stop? It is too late to save this situation! I do not want to be identified with Christians who make homosexuality a crime, who deny evolution, who continue to define God as a supernatural being who lives above the sky.

“For me, the time has come for the Anglican Communion to go the way of the rest of the British Empire. Ignorance in high places is sufficient reason to ignore high places. From now on, let the Archbishops of Canterbury continue to preside over the funerals of royalty and the marriages of princesses. They serve well in ceremonial roles of irrelevance. I do not want them daring to speak for any part of the Christian Church on any issue of substance.”

The good news is that the Anglican Communion has no power, other than to jaw-bone.