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Noah Smith

Noah Smith

Noah has been a finance professor at SUNY Stony Brook, an economics PhD student at the University of Michigan, an academic editor in Japan, and a physics major at Stanford. He is currently hard at work on solving all the problems of the world. So don't be surprised when all your problems suddenly vanish.

Articles by Noah Smith

Why Kevin Williamson is wrong about poverty and bad behavior

August 4, 2019

I recently wrote a post at Bloomberg Opinion arguing that "bad behavior" – drug use, violence, single parenthood, and idleness – is not the main cause of poverty in advanced nations. As evidence, I cited the country of Japan, which has extremely low rates of drug use, violence, single parenthood, and idleness, and yet which has a poverty rate almost as high as that of the U.S., and significantly higher than those of wealthy European countries. Since Japan has so little bad behavior and still has a pretty high poverty rate as advanced nations go, it must be the case that bad behavior, in aggregate, is not the major cause of poverty.Kevin Williamson of the National Review took issue with my post. In a strongly worded rebuttal, he calls my piece "a stale slab of conventional wisdom",

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The Middle Eastern Thirty Years War?

June 20, 2019

I know sweeping historical analogies are silly, but I’ve always been partial to the analogy between the Middle East’s recent decades of war and the Thirty Years War of early modern Europe. So let’s run with that and see where it takes us.The Thirty Years’ WarIn the early 1600s, most of Europe was involved in a gigantic war (which really lasted more than 30 years if you count other associated wars). A good history is C.V. Wedgwood’s creatively named classic, The Thirty Years War.Most people think of the war as a Protestant-vs-Catholic fight — an extension and climax of the Wars of Religion that had been going on in Europe since the Reformation a century earlier. And religion was a big fault line between the two sides, and a big motivator for both people and regimes to keep fighting.

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Examining an MMT model in detail

April 1, 2019

What is MMT, the heterodox economic theory that has captivated Alexandria Ocasio-Cortez, made its way into the Green New Deal discussion, and inspired dozens of thinkpieces and critiques? What does it say? How can we tell if it’s a good theory or a bad one?

These are incredibly important questions. Thanks to Ocasio-Cortez and the Green New Deal, MMT has very quickly gone from an obscure heterodox idea to one of the most potentially influential and important theories in all of economics. 

Formal Models vs. Guru-Based TheoriesThese days, most economic theories are collections of mathematical models. If you want to know what the theory says, you can parse out the models and see for yourself. You don’t have to go ask Mike Woodford what New Keynesian theory says. You don’t have to go

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Where should Americans live if they live abroad?

March 30, 2019

I’m a huge fan of living abroad, and I think many more Americans should do it. Living in a big, rich country with relatively few other countries nearby, Americans don’t tend to travel overseas much. And of course, a great many don’t have the economic opportunity to do so. I think there should be government programs that help young Americans travel and live abroad, and I think more charities, religious organizations, and other nonprofits should focus on helping people go overseas.In a recent Twitter thread, I explained how I think living abroad changes one’s perspective. In addition to the obvious benefits of cosmopolitanism – helping people realize that people around the world aren’t so different after all, etc. etc. – I think it conveys a healthy appreciation for how hard

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Guest post: Roy Bahat on Uber, Lyft, and the future of work

March 28, 2019

Roy Bahat is the head of Bloomberg Beta, a venture capital firm focused on the future of work. In this guest post, he explains what he thinks is wrong with the way the "ride sharing" companies treat their workers.____________________________________________________________________
AS GOES UBER, SO GOES THE NATION

HOW MIGHT IT LOOK TO NEGOTIATE A “TREATY OF SILICON VALLEY?”

Roy Bahat

Lyft could go public as soon as this week, with Uber tailgating. For either to succeed, they have to stop the rot at the core of their business: their drivers are suffering. Like a factory worker in a 1950 auto plant, Uber and Lyft drivers epitomize the struggles of many Americans today. To solve their drivers’ challenges, Uber and Lyft might need to strike a new bargain for all of American work, a new

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A proposal for an Alternative Green New Deal

March 1, 2019

Usually, Bloomberg Opinion understandably does not want me to repost my Bloomberg articles at this blog. But they made an exception for my Alternative Green New Deal plan. So here it is.***
The planet is in grave danger from climate change. No reasonable person can doubt this fact. Drastic and immediate action is needed to reduce global carbon emissions.

But that doesn’t mean that any sort of drastic action is a good one. The Green New Deal, proposed by Representative Alexandria Ocasio-Cortez, has two big flaws. First, the plan overreaches in its desire to deliver a raft of expensive new entitlements — guaranteed jobs, benefits, health care, housing, education, income and more. If the large deficits required to pay for all of these things ended up harming the economy, it would

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Book Review: The Revolt of the Public, by Martin Gurri

February 22, 2019

If you do not read "The Revolt of the Public and the Crisis of Authority in the New Millennium," by Martin Gurri, you will not be sufficiently prepared for the world to come.

Well, you probably won’t be anyway. No one will! But this book brings together a startling number of important threads of contemporary politics, geopolitics, public affairs, and media, and weaves them into a coherent, comprehensible, and very plausible narrative. And it does so far better than any other book, blog post, or Twitter thread that I have seen attempt to deal with these issues (including my own modest foray). So buy this book and read it.

Why This Book Is Great

The basic thesis of the book is that social media has empowered the public, and that the public is using its newfound power to attack

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Book Review: “The Souls of Yellow Folk,” by Wesley Yang

January 31, 2019

"He was ugly on the outside, and once you got past that you found the true ugliness on the inside."
– Wesley Yang, "The Face of Seung-Hui Cho"Wesley Yang is not here to make you feel comfortable. He’s here to find your most vulnerable places, and then, methodically, to poke you in those places. To pierce the veil of optimism that you use to get through your days. To make you think thoughts like: What if nobody really loves me? What if nobody really loves anybody? What if your failures are all your fault? What if they’re not your fault at all, and society is out to get you?Wesley Yang is here to make you sit with discomfort.The Souls of Yellow Folk, a collection of Yang’s essays, is a very Generation X work, in an age when Generation X is being rapidly eclipsed and forgotten. The voice

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Book Review: “Stubborn Attachments”, by Tyler Cowen

January 26, 2019

Tyler was good enough to give me a review copy of his new book, "Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals", so here is my review!

This is a philosophy book. It tries to answer the question of what a society’s priorities should be. That’s interesting, because Tyler is usually a very circumspect guy who doesn’t like to come out and make strong value statements. So it’s cool that he’s finally telling the world, in no uncertain terms, what he thinks society should be all about!

There are two things about the way Tyler approaches philosophy that I really like. First, he’s very informal, and doesn’t bother to painstakingly define terms or refer to things other philosophers have said. That would probably annoy some people in the

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Yuppie Fishtanks: YIMBYism explained without “supply and demand”

July 27, 2018

YIMBYism is the idea that cities need to build more housing in order to relieve upward pressure on rents. In Northern California, where I live, YIMBYs tend to get into fights with progressives about market-rate housing. YIMBYs don’t want to build only market-rate housing, but they think market-rate housing has to be an important component.NorCal progressives, in contrast, tend to think that market-rate housing is bad – either they think it lures more high-earners into a city and pushes up rents (induced demand), or they object to private housing developers making profits, or market-rate housing just sounds like cities catering to the needs of richer residents instead of poorer ones. Instead, the progressives tend to support what they call "affordable housing" – either public housing,

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Noah Smith’s Japan Travel Guide

July 2, 2018

Now is a GREAT time to travel to Japan. The country has really opened up, thanks to Abenomics, a weak yen, and the impending 2020 Tokyo Olympics. New technology has also made it a lot easier to get around the country, and to find cool stuff. Japan is in the middle of a huge tourism boom, and who knows how long it’ll last, so you might as well be part of it. Go see the world, take a trip to Japan!

Anyway, for a long time, people have been asking me for tips about what to do when they go to Japan. So instead of re-writing a list of recommendations every time, I thought I’d write a blog post. So here it is: Noah Smith’s Abbreviated Illustrated Guide to Travel in Japan.

This list is HEAVILY weighted toward the "urban Japan experience", rather than touristy/historical stuff like

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Book Review – “The Space Between Us”

July 1, 2018

"Hey, there ain’t no space between us!"
– a flight attendant who saw me reading this book

This is a very important book about a very important topic (segregation and race relations). It is also a book that strongly agrees with my priors about how the world works. And not just my priors, but with my desires – I want segregation to be a bad thing. So because I’m so biased in favor of this book’s thesis, I’m going to try to be especially hard on it in this review. Just realize that that’s what I’m doing here. You should absolutely read this book. The research it explains is eye-opening, well-executed, and very important for our national future. And the theory that Enos weaves to explain his observations probably captures important features of reality, and deserves to be a central

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DeLong vs. Krugman on globalization

April 1, 2018

I’m going to do the inadvisable, and argue with Brad DeLong. Hopefully this will turn out OK, since it’s in response to Brad doing the inadvisable and arguing with Paul Krugman (thus breaking at least two of his own rules).The topic is globalization. Krugman has a new essay in which he lays out what seems to be a rapidly crystallizing conventional wisdom on the recent history of globalization. Some excerpts:
[D]uring the 1990s a number of economists, myself included…tried to assess the role of Stolper-Samuelson-type effects in rising inequality…[these analyses] generally suggested that the effect [of factor price equalization from globalization] was relatively modest, and not the central factor in the widening income gap… 

[T]he basic fact in the mid 1990s was that imports of

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Sheepskin effects – signals without signaling

December 18, 2017

Bryan Caplan is one of the most enthusiastic proponents of the signaling theory of education, and this theory plays an important role in his new book, "The Case Against Education". But I’ve always had a number of problems with this theory, and also with its application to the education policy issues. Recently, I wrote a Bloomberg View post in response to an essay Bryan wrote in The Atlantic that was adapted from his book. Now, Bryan has responded to my post. He makes many interesting points, but here I’d just like to deal with one issue – the issue of sheepskin effects, and which model they support. 

Sheepskin effects

Sheepskin effects are central to my debate with Bryan. In brief, the sheepskin effect is the fact that most of the college wage premium vanishes if you drop out

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The “cackling cartoon villain” defense of DSGE

November 15, 2017

I’ve sworn off macro-bashing. I said what I had to say. And I’m seeing lots of young macro people doing good stuff. And the task of macro-method-criticizing has been taken over by people who are better at it than I am, and who have much better credentials. My macro-bashing days are done.But sometimes I just have to offer macro folks some marketing advice.The new defense of DSGE by Christiano, Eichenbaum, and Trabandt is pretty cringe-inducing. Check this out:
People who don’t like dynamic stochastic general equilibrium (DSGE) models are dilettantes. By this we mean they aren’t serious about policy analysis. Why do we say this? Macroeconomic policy questions involve trade-offs between competing forces in the economy. The problem is how to assess the strength of those forces for the

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Defending Thaler from the guerrilla resistance

October 10, 2017

So, Richard Thaler won the Nobel Prize, which is pretty awesome. If you’ve read Thaler’s memoir, you’ll know that it was a long, hard, contentious fight for him to get his ideas accepted by the mainstream. And even though Thaler is now a Nobelist and has been the AEA president – i.e., he has completely convinced the commanding heights of the econ establishment that behavioral econ is a crucial addition to the canon – resistance still pops up with surprising frequency in certain corners of the econ world. It’s a sort of ongoing guerrilla resistance.An example is this blog post by Kevin Bryan of A Fine Theorem. Kevin is one of the best research-explainers in the econ blogosphere, and his Nobel explainer posts have always been uniformly excellent. This time, however, instead of

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Handwaving on health care

September 28, 2017

There’s a particular style of argument that some conservative economists use to dismiss calls for government intervention in markets:

Step 1: Either assert or assume that free markets work best in general.Step 2: List the reasons why this particular market might be unusual.Step 3: Dismiss each reason with a combination of skeptical harumphing, handwaving, anecdotes, and/or informal evidence.Step 4: Conclude that this market should be free from government intervention.In a recent rebuttal to a Greg Mankiw column on health care policy, John Cochrane displays this argumentation style in near-perfect form. It is a master class in harrumphing conservative prior-stating, delivered in the ancient traditional style. Young grasshoppers, take note.Mankiw’s article was basically a rundown of

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Speech on campus: A reply to Brad DeLong

September 23, 2017

On Twitter, I wrote that I disagreed with Brad’s ideas about speech on college campuses. Brad then requested that I write my ideas up in the form of a DeLong Smackdown. So here we go.Brad’s post was written in a particular context – the recent battles over right-wing speakers at Berkeley. More generally, the alt-right has been trying to provoke conflict at Berkeley, seeing an opportunity to gain nationwide sympathy. The murder of Heather Heyer by Nazis, and general white supremacist street violence, has turned the national mood against the alt-right. The alt-righters see (correctly) that the only way to recover rough parity is the "both sides" defense – in other words, to get people so worried about left-wing street violence that they equivocate between left and right. To this end,

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What we didn’t get

September 22, 2017

I recently wrote a fairly well-received Twitter thread about how the cyberpunk sci-fi of the 1980s and early 1990s accurately predicted a lot about our current world. Our modern society is totally wired and connected, but also totally unequal – "the future is here, it’s just not evenly distributed", as Gibson was fond of saying. Hackers, cyberwarfare, and online psyops are a regular part of our political and economic life. Billionaires build spaceships and collaborate with the government to spy on the populace, while working-class people live out of shipping crates and drink poison water. Hobbyists are into body modifications and genetic engineering, while labs are researching artificial body parts and brain-computer interfaces. The jetpack is real, but there’s only one of it, and

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The margin of stupid

September 21, 2017

Every so often, I see a news story or tweet hyping the fact that a modest but non-negligible percent of Americans said some crazy or horrible thing in a survey. Here are two examples:

1. "A chilling study shows how hostile college students are toward free speech"

The most chilling findings, however, involved how students think repugnant speech should be dealt with…It gets even worse. Respondents were also asked if it would be acceptable for a student group to use violence to prevent that same controversial speaker from talking. Here, 19 percent said yes. 

2. "Millennials are just about as racist as their parents"

Racial slurs that have cropped up chants, e-mails and white boards on America’s college campuses have some people worried about whether the nation’s diverse

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a16z podcast on trade

September 10, 2017

I recently had the pleasure of appearing on the a16z podcast (a16z stands for Andreessen Horowitz, the venture capital firm). The topic was free trade, and the other guest was Russ Roberts of EconTalk.Russ is known for making the orthodox case for free trade, and I’ve expressed some skepticism and reservations, so it seemed to me that my role in this podcast was to be the trade skeptic. So I thought of three reasons why pure, simple free trade might not be the optimal approach.Reason 1: Cheap labor as a substitute for automationGetting companies and inventors to innovate is really, really hard. Basically, no one ever captures the full monetary benefit of their innovations, so society relies on a series of kludges and awkward second-best solutions to incentivize innovative activity.One

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Realism in macroeconomic modeling

September 8, 2017

Via Tyler Cowen, I see that Ljungqvist and Sargent have a new paper synthesizing much of the work that’s been done in labor search-and-matching theory over the past decade or so.This is pretty cool (and not just because these guys are still doing important research at an advanced age). Basically, Ljungqvist and Sargent are trying to solve the Shimer Puzzle – the fact that in classic labor search models of the business cycle, productivity shocks aren’t big enough to generate the kind of employment fluctuations we see in actual business cycles. A number of theorists have proposed resolutions to this puzzle – i.e., ways to get realistic-sized productivity shocks to generate realistic-sized unemployment cycles. Ljungqvist and Sargent look at these and realize that they’re basically all

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An American Whitopia would be a dystopia

September 7, 2017

In a recent essay about the racial politics of the Trump movement, Ta-Nehisi Coates concluded with a warning:

It has long been an axiom among certain black writers and thinkers that while whiteness endangers the bodies of black people in the immediate sense, the larger threat is to white people themselves, the shared country, and even the whole world. There is an impulse to blanch at this sort of grandiosity. When W. E. B. Du Bois claims that slavery was “singularly disastrous for modern civilization” or James Baldwin claims that whites “have brought humanity to the edge of oblivion: because they think they are white,” the instinct is to cry exaggeration. But there really is no other way to read the presidency of Donald Trump.

Yes, at first glance, the notion that Trumpian white

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The Market Power Story

August 24, 2017

So, there’s this story going around the econosphere, which says that the economy is being throttled by market power. I’ve sort of bought into this story. It certainly seems to be getting a lot of attention from top economists. Autor, Dorn, Katz, Patterson and van Reenen have blamed industrial concentration for the fall in labor’s share of income. Now there’s a new paper out by De Loecker and Eeckhout blaming monopoly power for much more than that – lower wages, lower labor force participation, slower migration, and slow GDP growth. The paper is getting plenty of attention.That’s a big set of allegations. Everyone knows that the U.S. economy has been looking anemic since the turn of the century, and now a growing chorus of papers by well-respected people is claiming that we’ve found

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“Theory vs. Data” in statistics too

August 17, 2017

Via Brad DeLong — still my favorite blogger after all these years — I stumbled on this very interesting essay from 2001, by statistician Leo Breiman. Breiman basically says that statisticians should do less modeling and more machine learning. The essay has several responses from statisticians of a more orthodox persuasion, including the great David Cox (whom every economist should know). Obviously, the world has changed a lot since 2001 — where random forests were the hot machine learning technique back then, it’s now deep learning — but it seems unlikely that this overall debate has been resolved. And the parallels to the methodology debates in economics are interesting.In empirical economics, the big debate is between two different types of model-makers. Structural modelers want

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Why did Europe lose the Crusades?

July 3, 2017

A little while ago, I started to wonder about a historical question: Why did Europe lose the Crusades? The conventional wisdom, at least as I’ve always understood it, is that Europe was simply weaker and less advanced than the Islamic Middle Eastern powers defending the Holy Land. Movies about the Crusades tend to feature the Islamic armies deploying fearsome weapons – titanic trebuchets, or even gunpowder. This is consistent with the broad historical narrative of a civilizational "reversal of fortunes" – the notion that Islamic civilization was much more highly advanced than Europe in the Middle Ages. Also, there’s the obvious fact that the Middle East is pretty far from France, Germany, and England, leading to the obvious suspicion that the Middle East was just too far away for

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Noah Smackdown, illegal immigration edition

June 22, 2017

In February, I wrote a Bloomberg View post called "The Myth of the Immigration Crisis" that got a fair bit of attention. In it, I wrote:

Illegal immigration to the U.S. ended a decade ago and, according to the Pew Research Center, has been zero or negative since its peak in 2007: 

About a million undocumented immigrants left the country in the Great Recession. But even after the end of the recession, illegal immigration didn’t resume.

Now, my Twitter buddy Lyman Stone of the USDA has written a post alleging that my post is "bad" and "false". Well, my mom always told me "Son, don’t **** with the USDA," and that advice has served me well for many years. However, given the importance of this issue, I may have to ignore my mother’s wise words, and rebut Lyman’s post. Which

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Is economics a science?

June 11, 2017

While I was in Norway to give a talk about macroeconomics, an interdisciplinary group at the University of Oslo also invited me to give a talk about whether economics is a science or not. That’s an impossible question, of course, since there’s no official definition of what "a science" is. But I did have some thoughts on the matter. Here are the slides from the talk:
   [embedded content]These slides don’t speak for themselves quite as much as the macro slides did, and the topic is much broader and more vague, so I’ll turn it into a full post. This post mostly just explains the slides.What the heck is a "science"?No one knows. Because no one has ever really been able to make one dominant definition of science stick. Some people define it as a method (e.g. Popper), some as a

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Summing up my thoughts on macroeconomics

June 10, 2017

I’d like to close the chapter of my life that involves complaining about macroeconomics. I’ve been out of that world long enough that it’s becoming a distant memory. And much more qualified critics are on the job. Furthermore, macroeconomists I talk to – especially young macroeconomists – mostly seem to have heard and internalized all of the critiques. That doesn’t mean I want to stop following developments in the macro field, but that my days as a certified "macro-basher" have come to an end.So when the Norwegian Finance Ministry, Norges Bank and Statistics Norway asked me to give a talk about "What Has Happened in Macroeconomics (and what still needs to be done)", I viewed it as an opportunity to sum up. Here are the slides from that talk.[embedded content]

Enjoy.

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The Shouting Class

June 3, 2017

In response to the tragic Portland stabbing, I wrote a Twitter thread praising the two men who died defending Muslim women on a train. I pointed out that one of the heroes was a Republican army vet, while the other was a liberal hippie type. I lamented that our current national political discourse so often sets decent guys like this against each other, and wished that liberals and conservatives could put aside their mutual suspicions and unite at the political level to defend the country against white supremacism, fascism, and the general madness brought on by the age of Trump. This thread was very well-received, getting about 2000 retweets, 3300 likes, and numerous mostly favorable quote-tweets.Nevertheless, there were some who were dissatisfied with the thread. A few dozen people on

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