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Four Ways in Which the World Has Surprised Me Over the Past Decade with Its Economics

Over at Equitable Growth A good day yesterday at the University of California center in Sacramento, which is in the basement on K St. a couple of blocks away from the California state capital. 20 students, and then 100 for the lecture. (And I do not yet have the URL for the videotape.) READ MOAR

I started out saying: I find my peers, as they age, become increasingly unwilling to mark their beliefs to market. They increasingly turn their smarts and their cleverness to rationalizing why they can still believe what they believed in their 20s. This is not wise. This is, in fact, very dumb. And this is boring.

I said: I do not want to be boring here today. You do not want me to be boring here today. So let me go against this type of the aging middle-aged professor. Let me, instead, spend my time this lunchtime detailing four points in economics at which the world has surprised me over the past decade, and in which as a result reality has led me to shift my beliefs.

In brief:

  • The world has turned out to be more Keynesian than I would have imagined a decade ago.
  • Low-tax low-service U.S. state level political economy has proved to be ineffective as an economic development model. I was always pretty sure that it was a lousy bet from the standpoint of societal welfare. But a decade ago I thought it at least boosted state-level GDP. Now I do not.
  • The success of the implementation of Obamacare has raised my estimation of the administrative competence of the government.
  • And the aggregate economic costs to America of local NIMBYism now appear to me to be much larger than I would have thought reasonable decade ago: we are no longer a country in which people can afford to move to places where they will be more productive and more highly paid because high-productivity places refuse to upgrade their residential density.

All this, I said, has powerful political consequences. And the politics of the last decade has also been very surprising to me. But I did not have time to get into that in any depth...