Romer Slaughters Kittens

Well, I figured that we’d get to this point.

Since  I joined the World Bank last fall, we’ve had a few internal conversations that involved what the diplomats would call “a full and frank exchange of views.”

It is no surprise that the Bank has its own homegrown insurgents ready to wage their version of asymmetric warfare. One of those ways is via rumors. Apparently the word is out that when I asked people to write more clearly, I wasn’t nice. And that I slaughter kittens in my office.

On the writing, mea culpa. The good news is that people are taking writing more seriously. Today, we presented the Global Economic Prospects report that we’ll release in June to the Bank’s Board of Directors. Two of them commented that they liked the tighter focus this year. After the Board meeting, the team that wrote the report said that it has 35% fewer words than last year’s report. When I pressed, one of the team members laughed and said that yes, the frequency of the word “and” is about 1.5 percentage points above the threshold I’ve set of 2.6%. This is a bit of a running gag, but still, a reminder that we will all be paying attention. I guess the insurgents missed the joke.

Because it will all come out anyway, I created a mirror of the blog that I’ve been using inside the Bank firewall. It gives away the secret!!!!! explanation for the threshold frequency of 2.6%:

wb-ce.org

Oh, yes. “Romer shows up, breaks some china, and is asked to leave the kitchen.” Isn’t this one of those “dog bites man” stories?

After all, you can’t say that I didn’t warn everyone:

https://paulromer.net/progress-change/

Letter from an Aspiring Macroeconomist (with response)

Dear Professor Romer,

I am writing you about your recent working paper The Trouble with Macroeconomics that generated lots of reactions.

I have simple question. I am a graduate student in economics. I am going to begin a PhD program in economics next year. I always loved macro, and I will probably specialize myself in this field. My question is:
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Why It Makes Sense for an M.D. to Lead the World Bank

I lived with a surgeon for 25 years. From the decisions Ginny made, I learned that doctors are better than economists at balancing the costs and benefits of delay.

Economists teach that time is money, but we never specify the exchange rate. If delay costs $x per day per person, the total cost scales with the number of people. In my lifetime, the most important lesson economists have learned is that in countries of all sizes–small ones like Singapore, medium-sized ones like South Korea, large ones like China and India–better policy can lift people out of poverty more quickly than we dared hope. Because a billion people still live in extreme poverty, each day of delay in taking full advantage of this lesson imposes a cost that is staggering.

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Everybody wants progress; nobody wants change

Alain Bertaud once told me, ruefully, that he was part of a failed effort at the World Bank to end the implicit subsidy for car trips created by the Bank’s offer of free employee parking. This proposal generated complaints, but that does not mean that it was a bad idea. If Steve Jobs had followed a strategy of avoiding all complaints, my MacBook Pro would still have an optical disk drive. Examples like these suggest a general lesson about cooperation in large groups:

Everyone wants progress.
Nobody wants change.

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Abstraction vs. Radical Specificity

Someone asked “What if Germany ran Detroit?” This kind of what-if-pigs-could-fly question mixes abstraction and specificity in a way that I do not find helpful. What works for me is iterating back and forth between two extremes — abstraction and radical specificity — and avoiding the middle.

At one extreme, I ask abstract questions such as “Could there be gains from trade in government services like the gains from trade in private services?” Then I consider specific questions such as “Could the new authority that was formed to fix the street lights in Detroit sell its services to other cities?”

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Professionalism and the Academic Division of Labor

In my work, I have tried to avoid revealing anything about my personal political beliefs and even worked to obfuscate as necessary. When my father was visible in national politics as a Democrat, it was helpful to have a letterhead appointment at the Hoover Institution.

Although I stay away from the battles of national politics, in my role as an advocate for science as the greatest human institution, I am now drawn into the battles of academic politics. I seem to be the designated nag when Nobel Prize winners disappoint.

Ed Prescott has a new NBER paper (with a co-author I do not know) on monetary policy with negative nominal interest rates. Other economists have written on this topic. None of the work I know in this area is mentioned in Ed’s paper.

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