If you want an actual non-prax answer, Picketty's C21 is where to go. If you want to be spared 700 pages of pain, here is a toy model to explain it:

We can simplify this and say that social mobility depends on one's "rank" in an ordered list of all individuals in a given society. Of course, social rank doesn't just depend on wealth (there are other measures of influence) but wealth is a decent proxy to start.

How much income does one make in his own lifetime? That depends really on what you do to earn wealth. If you work for a wage, then you won't have much income variance, and you can expect to make anywhere between half and ~3.5x the US median income (~55k/household). If you make income from capital revenue or entrepreneurship (investing, startup) then your revenue is a function of your investment decision and your luck.

Sidebar: Luck is by far and away the bigger factor here, without question. If you need to conceive this, think about the biggest startup successes in the last few years and think where success in picture messaging or social networking apps' successes are created (the answer is luck, because of network effects). There is varying amounts of variance in investment or entrepreneurship decisions (of course a bond is going to be lower variance than a tech startup), but luck by far is the bigger factor nonetheless in any of these. Recommendations if you need additional convincing 1 2 3.

Now Picketty's whole point about r>g is that if capital revenue is greater than economic growth (which should roughly index wages as per gdp/pop) then there will be social immobility, because returns to capital will far outpace wages (and you have the conundrum of acquiring capital in the first place if you aren't born with some eg. by inheritance).

But even if r~g you would get significant immobility at the upper echelons, because getting to that place requires a significant amount of luck. You can see this in income distribution graphs which follow roughly exponential distributions. So if you let people inherit hundreds of millions or billions, then you have created an impenetrable, self sustaining, static class at the top of your income ranking for all intents and purposes, because getting to this class from below is only attainable by effectively winning the lottery regardless of your skill.

Having to win the lottery to move up is not what we would consider "social mobility". Note that I'm not making policy proposals here, just stating that if you let people inherit wealth you're going to create social immobility, and increasingly so as you move up the ordered list. Make of that what you will.

u/besttrousers this is long

Everyone else feel free to minimize it. I apologize for clogging the Fiat thread.

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u/besttrousers made me do this.

2018

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel
2018 was divided equally between William D. Nordhaus "for integrating climate
change into long-run macroeconomic analysis," Paul M. Romer "for
integrating technological innovations into long-run macroeconomic analysis,"
and Bob Lucas.

Lucas wrote On the mechanics of economic development, which provides a two-sector model in which human capital investment provides the necessary
linearity-in-capital required to generate endogenous growth. This paper is one
of the most-cited papers in economics, with 5,450 citations per Repec.

2017

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2017 was awarded to Richard H. Thaler "for his contributions to behavioural economics,"
and Bob Lucas.

Okay, I don't think Lucas has ever written down a paper that didn't include
rational expectations, so this was a tough one. However, Lucas has worked
on information frictions and macroeconomics with limited information. Recall
that his landmark 1972 and 1975 papers were built on a framework with
limited information. Lucas and Thaler provide a study in contrasts.
In Thaler's world, information is plentiful but people are imperfect at
processing it. In Lucas' world, information is scarce and people strive to
make the most of their scant knowledge about the world.
Let's give a shoutout to the original 1972 paper.

2015

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2015 was awarded to Angus Deaton "for his analysis of consumption, poverty, and welfare,"
and Bob Lucas.

This was a Prize for consumption and poverty. Lucas has a few papers that
touch on consumption, but I'm saving those for later. Instead, I'll link
to a 2018 (!) paper
he wrote on the Industrial Revolution. Not quite poverty, but it does
deal with long-run growth.

2013

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2013 was awarded jointly to Eugene F. Fama, Lars Peter Hansen and Robert J. Shiller "for their empirical analysis of asset prices," and Bob Lucas.

Finally an easy one. Lucas 1978 is the
starting point for consumption-based asset pricing in general equilibrium.
While most financial economists focus on market beta, the covariance
of a stock with the market, Lucas shows that the theoretically-appropriate
thing to look at is consumption beta, the covariance of a stock's return
with consumption growth. From this came the consumption-CAPM literature.

2011

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2011 was awarded jointly to Thomas J. Sargent and Christopher A. Sims "for their empirical research on cause and effect in the macroeconomy," and Bob Lucas.

Lucas pioneered macro modelling with his 1972 paper. But in a little-known
1973 paper,
he worked out some of the testable implications of his model and tested
them with international data. It's a bit too simple, and there are
econometric problems here, but he did recognize that a theory that cannot
be tested is a theory that is worthless.
Of course, we would be remiss to forget his
1976 Critique
in this discussion.
He co-edited a volume with
Sargent on how to test rational expectations macromodels.

2010

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2010 was awarded jointly to Peter A. Diamond, Dale T. Mortensen and Christopher A. Pissarides "for their analysis of markets with search frictions," and Bob Lucas.

Lucas actually worked out a search-theoretic theory of unemployment
in a 1974 paper.
His paper focuses on search on the part of workers, whereas the more
popular DMP model focuses on search on the part of firms.

2008

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008 was awarded to Paul Krugman "for his analysis of trade patterns and location of economic activity," and Bob Lucas.

The Kroog Man stands alone

Lucas has two papers in the modern trade theory literature, one from
2004
and one from
2005.
These papers are "Trade theory mark III" papers, where the old-school
Ricardian and Heckscher-Ohlin models were "Mark I" and Krugman was
"Mark II."

2006

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2006 was awarded to Edmund S. Phelps "for his analysis of intertemporal tradeoffs in macroeconomic policy," and Bob Lucas.

Easiest layup in the bunch. Lucas basically was joint in this Prize, they
just split it across 1995 and 2006. We can be leisurely here and link to
1972, but
more recent is his
2010
paper on menu costs and the Phillips curve.

2004

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2004 was awarded jointly to Finn E. Kydland and Edward C. Prescott "for their contributions to dynamic macroeconomics: the time consistency of economic policy and the driving forces behind business cycles," and Bob Lucas.

I'm just going to link to Lucas' 1975 paper.
In it, Lucas writes down the first modern equilibrium model of business cycles,
and he defines business cycles as fluctuations in output that don't
derive from changes in the production function, which is particularly relevant here.

I work with econ/stat people who are great at running and interpreting models and thinking about causality issues, but don't know much about programming. They've specialized, I get it, but in the future teams would benefit from everyone knowing some basics. It'll also make stats people more productive and help prevent errors. Also also, econ, other sciences, and the policy world really should embrace open source, open science, open access, etc.

But anyway, here's how to do it.

Below are a bunch of random resources. If you're looking for free courses, Software Carpentry has a bunch on the topics listed below and more. The terminal and Bash, Python, R, Matlab, Git, SQL, GNU Make, continuous integration, and data visualization. Data Carpentry has lessons for some of these topics, geared more toward social scientists. Apparently they're developing a course for doing econ with Bash(?). If you're into macro or computational stuff and want to learn Python, can't do wrong with QuantEcon.

I'll echo what the other guy said. If you have a Mac, cool. If not, consider dual booting with linux. It has a reputation for being difficult to use, but Ubuntu, Mint, and ElementaryOS are all very simple and work just like what you're used to in Proprietary World. It's possible to do the following with Windows, but requires a more setup work.

Learn to use the terminal (this is the point of using Mac or Linux, they come with a terminal and unix tools). Here's a decent book on the basics. Learn to navigate around your filesystem, run programs from the terminal, and use a bit of Bash. You can probably skip the chapters on actually programming with Bash. Bash as a programming language is cool, but not super necessary, and kinda quirky. It wouldn't be a waste of time though, since you can do certain things in Bash very quickly and easily. And you'll be a master haxxer.

Check out Data Science at the Command Line for a decent overview of stats programming in a linux environment. Goes over basic Python and R, and other tools to make life simple. There's also The Plain Person's Guide to Plain Text Social Science, geared toward people who do science but may not do programming atm. Covers more useful tools.

Learn Python or R or both. If Python, here. If R, here. If you're into ML, here for Python and possibly here for R but the code may be dated. Still, that book is The intro book for ML.

Learn Git. You should be in the habit of tracking changes you make to your code and the data/results it produces, especially if your data is being shared with anyone. If you use R, here's a great intro to Git and RStudio's fantastic Git integration.

Learn SQL. This one's harder to pick up on your own, at home, since you need a database set up to query. Look at the software/data carpentry courses.

Learn Docker. It makes your analyses/projects more shareable and--gasp--more reproducible (though I've gotten shit in the past for this, so let's compromise and say it helps but doesn't GUARANTEE reproducibility). This one is more optional than the others.

Once you have the basics down, you can do what interests you and learn best practices. Perhaps you want to know about Efficient R Programming (and general best practices). Or best practices in Python and more comprehensive coverage. Or how to make reports and papers with RMarkdown (want to make a paper that looks like it's published in AER? there's a template for that in Rmd).

I'm going to put a couple passages from Heilbroner's The Worldly Philosophers here to try and answer you.

>[Marx] sets the stage. We enter a world of perfect capitalism: no monopolies, no unions, no special advantages for anyone. It is a world in which every commodity sells at exactly its proper price. And that proper price is its value—a tricky word. For the value of a commodity, says Marx (essentially following Ricardo), is the amount of labor it has within itself. If it takes twice as much labor to make hats as shoes, then hats will sell for twice the price of shoes. The labor, of course, need not be direct manual labor; it may be overhead labor that is spread over many commodities, or it may be the labor that once went into making a machine and that the machine now slowly passes on to the products it shapes. But no matter what its form, everything is eventually reducible to labor, and all commodities, in this perfect system, will be priced according to the amount of labor, direct or indirect, that they contain.

...

>How, asks Marx, can profits exist in such a situation? If everything sells for its exact value, then who gets an unearned increment? No one dares to raise his price above the competitive one, and even if one seller managed to gouge a buyer, that buyer would only have less to spend elsewhere in the economy—one man’s profit would thus be another man’s loss. How can there be profit in the whole system if everything exchanges for its honest worth?

...

>He finds the answer to the dilemma in one commodity that is different from all others. The commodity is labor power. For the laborer, like the capitalist, sells his product for exactly what it is worth—for its value. And its value, like the value of everything else that is sold, is the amount of labor that goes into it—in this case, the amount of labor that it takes to “make” labor-power. In other words, a laborer’s salable energies are worth the amount of socially necessary labor it takes to keep that laborer going. Smith and Ricardo would have agreed entirely: the value of a workman is the money he needs in order to exist. It is his subsistence wage.

>So far, so good. But here comes the key to profit. The laborer who contracts to work can ask only for a wage that is his due. What that wage will be depends, as we have seen, on the amount of labor-time it takes to keep a man alive. If it takes six hours of society’s labor per day to maintain a workingman, then (if labor is priced at one dollar an hour), he is “worth” six dollars a day. No more.

>But the laborer who gets a job does not contract to work only six hours a day. That would be just long enough to support himself. On the contrary, he agrees to work a full eight-hour, or in Marx’s time, a ten- or eleven-hour day. Hence he will produce a full ten or eleven hours’ worth of value and he will get paid for only six. His wage will cover his subsistence which is his true “value,” but in return he will make available to the capitalist the value he produces in a full working day. And this is how profit enters the system.

>Marx called this layer of unpaid work “surplus value.” The words do not imply moral indignation. The worker is entitled only to the value of his labor-power. He gets it in full. But meanwhile the capitalist gets the full value of his workers’ whole working day, and this is longer than the hours for which he paid. Hence when the capitalist sells his products, he can afford to sell them at their true value and still realize a profit. For there is more labor time embodied in his products than the labor time for which he was forced to pay.

So the "exploitation" that Marx would be referring to is the "surplus value" that the capitalist gets for selling stuff.

Now, to answer your initial question. The difference between exploitation as Marx used it and what OP is talking about is that immigrant workers who are restricted in such a way can be (and have been, IIRC) taken advantage of in ways that are more similar to what we would colloquially define as exploitation rather than what Marx would say. For example, their passports could be taken from them, they could end up being paid less than minimum wage, working conditions could be less than what they should be, etc.

This ended up being longer than I intended, but at least I can have the comment on hand for when people start talking about Marx.

EDIT: Removed some stuff

For the efficiency issue? If you read spanish I have a great book, but if not I think these might be good too:

Roadmap

Rhetoric

Debunking I made a cardinal sin. Forgive me Smith for I have sinned. I hadn't actually read this book and thought it would be an accessible version of my argument. Apparently not.


A good shorter read might be found here, I haven't revised it but they are usually really good: Standford


-
But basically the point is this: The definition of efficiency as a pareto optimal is arbitrary, in the sense that it is efficient because that's how you defined efficiency. For example, if you have 10 people (5 with two dollars each, 5 with nothing) and 10 loaves of bread, and all wanted bread, the efficient allocation of those goods could be 2 loaves of bread per person. Now is 5 people going without food efficient? Sure, if you define efficiency as pareto optimal, but that just begs the question. In broader terms, markets are efficient because by fiat they allocate goods to where there is demand (demand=$$), so they are efficient because efficiency is conceptualized pre facto as that kind of allocation.



-

edit: In case anyone who reads Spanish reads this, the book is Neoliberalismo by Fernando Escalante Gonzalbo, a sociologist at El Colegio de Mexico (one of best universities in Latin America and the world). Great, short read.

Full disclosure: I work in the economics of competition and privacy law and I found the piece really wanting. Here are my reactions.

Hughes says,

>We are a nation with a tradition of reining in monopolies, no matter how well intentioned the leaders of these companies may be.

That traditional is uneven. American Tobacco was broken up and the result was hardly what everyone expected. As historian Allan M. Brandt details in The Cigarette Century,

>It was one thing to identify monopolistic practices and activities in restraint of trade, and quite another to figure out how to return the tobacco industry to some form of regulated competition. Even those who applauded the breakup of American Tobacco soon found themselves critics of the negotiated decree restructuring the industry. This would not be the last time that the tobacco industry would successfully turn a regulatory intervention to its own advantage.

AT&T skirted its 1913 breakup suit by becoming the de facto monopoly through the Kingsbury Commitment. When the DoJ did finally break up the telephone company in 1982, it was hardly an unmitigated success. Here is a paper from Hausman et al (yes, of the Hausman test) on the lackluster results. What about Standard Oil? Again, the results were meh.

He also says,

> The Sherman Antitrust Act of 1890 outlawed monopolies.

But not really. Sherman's Section 1 outlaws "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations," while Section 2 outlaws the act of monopolization. As anyone who works in the space knows, Section 1 is a bit of a logical mess and so Section 2 is used, and it is about monopolization, the act of monopolizing, not just "monopolies."

Still, the Sherman Act isn't the important one here, especially since Hughes wants the FTC to bring the case and unwrap the mergers. Instead, you would need Clayton+Sherman. I could go into the nuance of law here, but regardless, citing Sherman while talking about the FTC is odd since Clayton enabled the FTC, not Sherman.

Hughes also says,

>Two of the last major antitrust suits, against AT&T and IBM in the 1980s, were grounded in the argument that they had used their size to stifle innovation and crush competition.

The IBM case was dismissed by the DoJ because they admitted it was a suit without merit. This case is interesting because at core it was about mainframe prices. Here is what the DoJ later said about the case:

>The 1969 action alleged that IBM had undertaken exclusionary and predatory conduct with the aim and effect of eliminating competition so that IBM could maintain its monopoly position in general purpose digital computers. (See Plaintiff's Statement of Triable Issues (dated September 23, 1974) at 8; U.S. 1969 tab 1.) Specifically, the Government contended that from 1961 to 1969 IBM engaged in anticompetitive practices "for the purpose or with the effect of restraining or attempting to restrain actual or potential competitors from entering" the relevant markets. (Id. at 8.) 1 Such practices allegedly included anticompetitive price discrimination such as giving away software services for "the purpose or with the effect of enabling IBM to maintain or increase its market share . . . . " (Id. at 9.) The Government also alleged that IBM's bundling of software with "related computer hardware equipment" for a single price was anticompetitive. (Id. at 10.)


>The Government further averred that IBM predatorily priced and preannounced specific hardware that the Government termed "fighting machines." (Id. at 12-14.) IBM allegedly introduced certain products "knowing [the products] had unusually low profit expectations." (Id. ¶ 1 at 12 .) Allegedly, IBM "developed and announced" the specified hardware products "primarily for the purpose or with the effect of discouraging actual and potential customers from acquiring . . . [competing products] . . . in markets . . . where IBM's monopoly position had eroded or threatened to erode." (Id. ¶ 3 at 12.) Also, in an effort to deter entry and injure competition, IBM allegedly "announced future production and marketing [of certain products] when it believed or had reason to believe that it was unlikely to be able to produce and market such products within the announced time frame . . . ." (Id. ¶ 5 at 13.) Additionally, the Government alleged that IBM was engaged in various below cost and discriminatory discount conduct in marketing its products to educational and scientific institutions (Id. at 14-16) in order to injure peripheral manufacturers and leasing companies. (Id. at 16-19.)

The IBM suit was about specifically about contractual bundling and predatory prices. That isn't the kind of case that would be brought against Facebook, according to Hughes, so he framing is confusing. But it is understandable because it is fairly clear he doesn't know that much about antitrust, especially since he makes this statement:

>The cost of breaking up Facebook would be next to zero for the government, and lots of people stand to gain economically.

To bring a case of that magnitude, you would have to boost the appropriations to the FTC and the DoJ.

And finally Hughes tries and fails to RI Jean Tirole:

> Some economists are skeptical that breaking up Facebook would spur that much competition, because Facebook, they say, is a “natural” monopoly. Natural monopolies have emerged in areas like water systems and the electrical grid, where the price of entering the business is very high — because you have to lay pipes or electrical lines — but it gets cheaper and cheaper to add each additional customer. In other words, the monopoly arises naturally from the circumstances of the business, rather than a company’s illegal maneuvering. In addition, defenders of natural monopolies often make the case that they benefit consumers because they are able to provide services more cheaply than anyone else.

Here is the Tirole paper:

>From both positive and normative viewpoints, two-sided markets differ from the textbook treatment of multiproduct oligopoly or monopoly. The interaction between the two sides gives rise to strong complementarities, but the corresponding externalities are not internalized by end users, unlike in the multiproduct literature (the same consumer buys the razor and the razor blade). In this sense, our theory is a cross between network economics, which emphasizes such externalities, and the literature on (monopoly or competitive) multiproduct pricing, which stresses cross-elasticities. For example, socially optimal “Ramsey” prices are not driven solely by superelasticity formulae but also reflect each side’s contribution to the other side’s surplus.

And here is more Rochet & Tirole. There is more to the Hughes piece, but a lot of it is very suspect in my mind.

EDIT: After a bit of searching, I am fairly confident the op-ed links to the wrong Quartz conversation with Jean Tirole. Here is where he talks about breaking up big tech:

>There is nothing wrong per se about breaking them up. But breaking up firms only for the sake of reducing their power may fail to accomplish our goals. For example, breaking up Facebook into five Facebooks would do little to address privacy concerns.

>In the past, we have broken up Standard Oil, AT&T, railroad, and electricity systems. Regarding internet platforms, we need to give it more thought. First, it takes time to implement divestitures. Railroads and electricity, and to a large extent telecoms in 1984, were simple and stable technologies. By contrast, the current platforms are rapidly evolving. We must make sure that the intervention is not obsolete by the time it is implemented.

>Second, we need to apply economic reasoning. To break up a firm, we must identify the essential facility—characterized by natural monopoly features—that separates it from potentially competitive segments, and make sure that the essential facility does not succeed in monopolizing back these potentially competitive segments. This can happen either through a line-of-business restriction or the monitoring of fair access to the essential facility. An electricity company can be broken up in relatively clear segments, like generation, transmission, and distribution, with the transmission grid clearly being the essential facility. Similarly, the railroad tracks and stations are obviously facilities that cannot easily be duplicated by rivals.

On a high level? Banks take reserves and loan them out, but are required to keep some amount on hand given reserve requirements. They can hold more reserves if they want, and this is called excess reserves.

A one-time increase in reserves held by banks given to them by the Fed (this is called high powered money) causes an overall increase in the money supply higher than one-for-one (so 1 dollar turns into more than 1 dollar) thanks to a "money multiplier".

In the 60s, it was theorized that the money multiplier was 1/1-rr (where rr is the required reserve ratio). It's a bit more complicated than that now, but the idea stays the same: an injection of high powered money can increase the amount of money in the system more than just the initial amount of money. From Hubbard and O'Brien's book that I reference below there's an alternative and more realistic model of the money multiplier (warning: power point download).

---

However, the Fed doesn't target the money supply, it targets inflation. To change inflation it just adjusts interest rates by swapping bonds for reserves in the Fed Funds market. This increases the money supply. Through this increase in the money supply, the Fed suppresses real interest rates and increases the quantity demand of loans, which increases real output. So, through an interest rate channel, chg(M)->chg(output).

This has an impact on real variables, despite what 9/11 truthers MMTers would have you believe. See my R1 of MMT here, along with exceptional comments by /u/Integralds.

---

For a really good in depth look at banks, money and financial markets I suggest going through Hubbard and O'Brien's Money, Banking and the Financial System. I have heard Mishkin's book is good too, but I have not used it.

If you like value investing (the idea that the market undervalues some companies and you can identify factors that indicate that) this book is a good place to start. A great book on valuation my professor suggested to me is this. It's a little more technical and slightly dated but does a great job of explaining the reasons a stock trades at a certain price. I have a more extensive reading list that I'm happy to share but that should give you a great start. Hope that helps!

For fun, here's my standard copy pasta when this shows up:

***

There is no student loan bubble:

1. A bubble is a term with a specific meaning - "Bubbles refer to asset prices that exceed an asset's fundamental value because current owners believe they can resell the asset at an even higher price. ". There is no mechanism for which this can work in the education market.
   
2. The last 30 years have been characterized by a huge increase in the college wage premium. In 1979, a college educated worker made 35% more than an HS graduate on average, by 1999, they would be making 80% more. The Race Between Education and Technology is a great overview of this. A college education is still a really good investment. This isn't because of selection effects - see The Causau Effect of Education on Earnings.
   
3. Virtually no one pays market price for a college education. The financial aid process allows universities to practice almost-perfect price discrimination. They can effectively charge a different price for every student, so that the market just follows the demand curve up until their maximum tuition level.
   
4. The is definitely is a sheepskin effect - http://en.wikipedia.org/wiki/Signalling_(economics)#A_basic_job-market_signalling_model - for college diplomas. But this is extremely well understood (Spence shared the economics Nobel with Akerlof for signalling theory). I think that separating bright, talented and hard working 18 year olds from bright, talented and lazy 18 year olds is a non-trivial process.
   
5. Tons of articles imply that you don't need higher education, because you can take classes online. If this was the case, why did the university lecture have survived the invention of the printing press? Books reduced the cost to the diffusion of knowledge far more than the internet did, without ending the university system. This implies that there is something else going on to me.

>The Great War (week-by-week history of WWI)

This is an awesome project that I have also been following. I love Indy Neidell.

It inspired me to go out and read this book which turned out to be one of the best books I have read this year.

Highly recommended if you are interested in the intricacies and the historical context of the July 1914 crisis. It really goes through the detailed histories and motivations of the full cast of characters from Serbian politicians, the Black hand to French diplomats, etc.

For example, Maurice Paléologue, French ambassador to Russia:

>Paléologue had a horror of the kind of detailed dispatches that were the bread and butter of workaday diplomacy, preferring to shape his impressions into lively scenes invigorated by dialogues in which catchy phrases replaced the long and often ambiguous verbal circumlocutions that were the day-to-day traffic of diplomats working in Russia...In order to achieve this he composed the account of his meeting before he had even left the embassy to see the Russian sovereign.

>De Robien and his colleagues got busy encoding the detailed narrative of a conversation that had never taken place. Amid all the faux-reportage, the count remembered one highly characteristic Paléologian phrase: ‘At this point, the interview reached a crucial turning point and the Emperor offered me a cigarette.’

It really is a fantastic book full of the type of details of diplomatic/political machinations that I was simply unaware of except in broad strokes (like how diplomats often planted stories in the press and how that turned into a complex game of signalling, etc.) Some of the character profiles, like that of the German Kaiser, are also hilarious. I had no idea how insufferable he was and how embarrassing his government found him.

Edit: Since fans of the Great War will have something of a fetish for Conrad von Hötzendorf, I must say that the book covers him and the politics around him in great detail.

Good to see someone following the Great War on YouTube. All of you should go watch it.

R1:

Today I bring you this WaPo Op-Ed on how the Carrier deal will return business norms back to ones that favor labor and community because firms will fear Trump’s wrath. Here the author offers a distorted view of America’s past, a dysfunctional view of how contracts and norms interact, and a wayward portrayal of economists as unable to fathom agents and systems which do not follow strict mathematical functional forms.

>There was a time in America when there was an unwritten pact in the business world — workers were loyal to their companies and successful companies returned that loyalty by sharing some of their profits with their workers in the form of higher wages, job security and support for the local community.

The author wistfully describes a past that did not exist when businesses and workers in long term marriages because it was what was right and good for the community.

At its heart this period existed because unionization (or more accurately worker bargaining power) made it possible. Certainly on the point of loyalty, unionization decline is the largest contributor to declining tenure (see Bidwell. As unionization fell, this loyalty also disappeared.
However, unionization's decline can largely be explained by the rule of law (right-to-work laws, unionization process etc.) though governing and business norms played a role (to be discussed).

With bargaining power largely reduce, workers had additional difficulty (for better or worse) attempting to hold their jobs in the face of international pressures and especially technological change as countless economist (Autor just to name check one) have documented.

>modern day economists tend to ignore such shifts in social norms because they can’t quantify them in the same way they can quantify trade flows or technological innovation or changes in educational attainment. They assume that social norms change in response to economic fundamentals rather than the other way around.

This is the sort of things that can ruin my work day as a nominally institutionalist style economist. To begin, several Nobel prize winning economists have done significant work studying norms formation and effects such as North, Ostrom, Akerlof, Akerlof again!.

Beyond this, others have built off these works (Ostrom was focusing on the importance of norms, but not specifically addressing the problem) to try to model norm development in game theory example.

In fact, in Samuel Bowles’ Microeconomics, discusses in detail the way contracts influence the norms and institutions of exchange (Chapter 8, p. 265). The long and short of Bowles’ discussion is that norms are well understood, evolutionary, and in the absence of complete contracting have significant influence on the results of exchange.

Norms matter greatly to economists in the event that contracting is incomplete. One would hope, it seems in vain, that contracting between the federal government and American firms is more complete than most contractual situations.

>the new norm is not longer acceptable, and [Trump] intends to do whatever he can to shame and punish companies that abandon their workers.
>He may even have to make an example of a runaway company by sending in the tax auditors or the OSHA inspectors or cancelling a big government contract.

Many economists see the potential change of market norms that will result from government contracts suddenly being less than 100% enforceable as a problem. Coming back to Bowles, he notes that said norms “are sustained by the structure of the market and other social interactions in which traders routinely engage.” If having government contracts and enforcement become less predictable is to be the new norm of enforcement, surely the market response will be to ask government from some premia in contracting to account for uncertainty. New firms may avoid starting their business under the supervision of this government altogether.

Tyler Cowen points out that the new norms that would arise likely involve more complex contractual agreements to skirt restrictions, degradation of U.S. tech advancement, a ramping of favoritism to levels not seen since the Harding administration, potential de facto capital controls, or at best a politicization of the economy with no real rule of law effects.

>Teddy and Franklin Roosevelt understood that. So did Ronald Reagan when he fired thousands of striking air traffic controllers and set back the union movement for several decades.

Perhaps most crucially, the author here references a variety of Presidents who enforced their support (or lack therefore) for labor, but did so through the rule of law via various anti-trust acts, the championing and enactment of a large set of labor relations legislation, and the decision to enforce laws enshrined in code 15 years prior that had been previously ignored. As opposed to potentially undermining the rule of law as Trump does by leveraging government contracts and regulation.

A bonus on this point is that—though Reagan’s actions may have signaled willingness from government to support changing business norms by supporting them through rule of law—unionization’s decline had already begun years prior to the changes in business norms Reagan’s ruling supposedly incited.

The study of economics is not one that lacks an understanding of how norms influence market interactions. Though I am not as well versed in studies accounting for changes in norms mathematically, I’d wager someone here could produce good examples of studies that do just this through the use of good instrumental variables.

The Carrier deal will likely change norms in business actions, but those are likely to be related to businesses’ certainty in contracting with government during the Trump presidency. Just as is seen in Trump’s cabinet, the only people left to provide work will be those certain they can take advantage of information asymmetry to get a better deal from U.S. governments. Any mass effort to enforce job retention on a scale much more massive than the Carrier deal will be enacted via law and will be just as harmful to business culture as Cowen and other economist predict, but it will be the changes to contractual enforcement that drive these results and not revolution in norms spurred on by backroom dealing.

They might go lighter on your school if it's a top tier (e.g., Ivy League-level) AND has a reputation for low grades. Otherwise, I wouldn't count on it, as unfair as that may seem, candidates with 4.0 GPAs in math/physics/engineering are a dime-a-dozen at top PhD programs.

Definitely re-do linear algebra. Are you at your limit with math classes? I would highly recommend some real analysis and probability theory. I see you've already taken a stats course, so that's good. Was it stats in the engineering department? I know a lot of departments have their own statistical methods courses. Those are fine, but if you didn't take the math/stats department one, I would.

GRE is fine. I'm assuming you're a native English speaker. In that case, the rule of thumb is "just don't embarass yourself" on the reading/writing sections and get a 165+ (out of 170) on math. The math is, in principle, easy, but as you probably know, they try to trip you up on stupid shit. I took the GRE three times before I was happy with my score. I highly recommend the "Nova GRE Math Bible" for studying.

That's ok if you're the first candidate for a top PhD program. See if you can get them to mention that in a positive way: "So and so is the first person I have taught whom I truly thought was prepared for a program like Stanford/Chicago/etc." It seems a bit crazy, but letters that are explicit seem to work better (this is from my chats with faculty at my school, so admittedly anectodal. If you don't feel comfortable asking your profs for such aggressive language, don't sweat it).

If you want to just be prepared for first year micro sequence and get a head start: Mas-Colell, Winston, and Green (Microeconomic Theory).

If you want to prepare yourself to do research in the field: Kreps (2011)

Books:
https://www.amazon.com/Microeconomic-Theory-Andreu-Mas-colell/dp/0195685717/ref=sr_1_2?s=books&ie=UTF8&qid=1519393367&sr=1-2&keywords=mas-colell

https://www.amazon.com/Microeconomic-Foundations-Choice-Competitive-Markets/dp/0691155836/ref=sr_1_1?s=books&ie=UTF8&qid=1519393376&sr=1-1&keywords=kreps+microeconomics

Regarding your 2: there are five different scandals linked on that linked page alone, just from the time Bill was President. There have also been many scandals she's faced since that time. You don't consider that a problem, seriously? They say that whenever you see one cockroach you should conclude that there are several nearby. So what then should we conclude when we see several cockroaches, if not that there's an infestation?

I can see three main possibilities: either she is an innocent person and keeps getting accused of illegal actions due to the worst luck in the universe, or there's a far reaching conspiracy focusing on manufacturing false claims against her specifically (much more often than against any other potential target), or she is guilty but calls in favors and destroys relevant evidence in order to get away with things she shouldn't be able to get away with.

Which seems the most probable to you: a corrupt politician getting away with it, a powerful conspiracy against a politician existing but somehow failing over and over and over again to get rid of her, or someone innocent of all wrongdoing repeatedly facing scandals for absolutely no reason?

If you don't think it's a big deal when politicians break laws in order to make themselves and their friends money, I'm astonished. Corruption is the ultimate form of rent seeking, and the proximate cause of highly extractive institutions. Additionally, when someone who's corrupt is in power, they'll tend to bring other rent seekers in their wake. They are likely to sympathize with their friends promoting special interest groups, rather than to dispassionately evaluate the costs and benefits of policies for the average citizen. I think the laws that we do have are permissive enough as it is. I'd much prefer a candidate who seeks to strengthen and broaden these laws in order to give government policymakers good incentives, over a candidate who prefers to weaken them, circumvent them, or break them.

The cattle controversy is the one I'm most familiar with. She got a hundred fold return shorting the cattle futures market during a time when the cattle futures market was rising. Expert economists, using a model "stated to give the hypothetical investor the benefit of the doubt... concluded that the odds of such a return happening were at best 1 in 31 trillion." Whatever the justice system might or might not require, I don't need any more evidence than that. An exact description of how she did it seems unnecessary, in my view, when such an implausible outcome occurring without corruption is essentially impossible. I am very much inclined to think that if she were a normal person, rather than a rich white ex first lady who has lots of friends and knows lots of secrets, one of these scandals would have landed her in jail by now. Politicians are corrupt all the time, and get away with it all the time, and she shows every possible sign of being typical in that regard.

I am not saying that because she is corrupt, she's automatically worse than any other possible candidate running for the presidency. I'd prefer Clinton to Trump, certainly, and am essentially indifferent between her and Sanders. However, I do think that it's shameful to our legal system that someone like that is allowed to walk free, and shameful to democracy in general that she's the best candidate our electoral system has managed to produce for us this year. It has become mainstream for people to mock and insult the Republicans for having Trump leading the polls, and the Republicans deserve it, but if the world made sense the Democrats would be receiving similar insults too, and just as frequently, but they are not.

It's not just Hillary I think is corrupt, though, lest you think this is all coming from a place of partisan bias. Karl Rove belongs in jail too. As do many other "respectable" people who've helped guide our country, in both the major political parties, whose names are too numerous and controversial for me to list here.

Elements of Statistical Learning covers KDE pretty well. (It does have a pretty heavy linear algebra prereq. If it is getting too hairy, you may want to look at a numerical linear algebra book, like Trefethen and Bau)

Also Computational Statistics covers it well from what I remember. These are both really good books.

But both are really great books.