Inequality and hierarchy, or the two logics of capitalist exploitation

What makes capitalist exploitation special? Today is May first, and I’d like to present a simple distinction which is at the heart of many disagreements on the Marxist critique of capitalism: the distinction between the logic of hierarchy and the logic of inequality.

Let me start clarifying that the distinction is neither nitid, nor an “official” one, but just one that I find useful to wrap up my thoughts about currents of Marxism and arguments about inequality. When I go through my reading on analytical marxism, however, the distinction is very clear to me.

The logic of inequality is perhaps the most orthodox or well known. It focuses on the market and the ownership of resources. Capitalism solves the problem of incentives and transaction cost granting a sphere of individual decision-making, which ensures decentralization. However, this is done at a cost, since the protection of property rights and the private spheres set hard limits to rent extraction. Individuals decide how much they want to work, save or invest in their children, and do it in a decentralized fashion. However, they will only do so if they are allowed to appropriate the return of those decisions: unequal wages (for those having higher human capital endowments), returns from Capital, or (key in a dynamic setting) inherited advantage for their children. This incentive scheme is the working force of capitalist development, which ensures that entrepreneurs innovate and keep the division of labor alive (a good introduction to the analytical tools of this approach is in Roemer).

The preservation of this incentive scheme sets hard limits on how much you can redistribute, and how much equality you can achieve. In particular, it preserves the class structure that is specific to capitalist society (Wright), and the logic of reproduction: the one organized by inequality of resources. The capitalist state is the enforcer of this scheme, and democracy is always and everywhere an expression of this asymmetry (see Przeworski).

The logic of inequality would emphasize the importance of radical redistribution of resources, and point to the radical tension that is intrinsic to decentralized choice (and preservation of incentives). In a nutshell: once you want to comply with key capitalist structures of capital accumulation (human capital accumulation within families, wage labor), the degrees of freedom in the achievement of social progress are drastically restricted.

The logic of hierarchy is a different approach to the critique of capitalism. The emphasis is not on how injustice arises from asymmetric market transactions, but instead in the subjection that arises from social relations. The logic of hierarchy is more about power, and non-market transactions, such as those that exist within the firm. This extract from the Capital is a very neat expression of this idea:

[the market] is, in fact, a very Eden of the innate rights of man. There alone rule Freedom, Equality, Property, and Bentham. Freedom, because both buyer and seller of a commodity, say of labour-power, are constrained only by their own free will. They contract as free agents, and the agreement they come to is but the form in which they give legal expression to their common will. Equality, because each enters into relation with the other, as with a simple owner of commodities, and they exchange equivalent for equivalent. Property, because each disposes only of what is his own. And Bentham, because each looks only to himself. The only force that brings them together and puts them in relation with each other, is the selfishness, the gain and the private interests of each. Each looks to himself only, and no one troubles himself about the rest, and just because they do so, do they all, in accordance with the pre-established harmony of things, or under the auspices of an all-shrewd providence, work together to their mutual advantage, for the common weal and in the interest of all.

On leaving this sphere of simple circulation or of exchange of commodities, which furnishes the “Free-trader Vulgaris” with his views and ideas, and with the standard by which he judges a society based on capital and wages, we think we can perceive a change in the physiognomy of our dramatis personae. He, who before was the money-owner, now strides in front as capitalist; the possessor of labour-power follows as his labourer. The one with an air of importance, smirking, intent on business; the other, timid and holding back, like one who is bringing his own hide to market and has nothing to expect but — a hiding.

[Emphasis added]

The focus is here different. The problem with capitalist exploitation is the type of subordination that it embodies. Social institutions of a capitalist society are designed to generates attitudes and ideologies that mask the type of hierarchy, making them look as horizontal. But the task of managers (see Marglin ‘s classic) or schooling (see Bowles Gintis ) is to discipline workers, and alienate their self-determination and autonomy. The effect is not so much to give birth to the difference in resources, but in status, in the capacity to decide freely and individually. The central problem of capitalist exploitation is not economic inequality in itself, or pauperization, but instead the destruction of individual ownership (in terms of choice and freedom) and emancipation, the preservation of hierarchical social structures which are proper of archaic (Asian, antique, feudal) modes of production under a new face. These societies are not seen as granting freedom to their members; they are seen as organized around the superstitious belief in the social hierarchy; they do not grant equal dignity and recognition to their members. But -here goes the argument- neither does capitalism, even if the source of social stratification is uncovered by the bourgeois conception of freedom. Some varieties of hierarchy-based critiques are, in fact, relatively optimistic about pre-modern societies, which are often seen as more egalitarian, because less hierarchical.

The difference between inequality and hierarchy is subtle (and in Marx’s work they are complements), but they lead to differences sensitivities, and I believe it is analytically relevant. The logic of hierarchy is, for example, more “libertarian”, more optimistic about achieving freedom and liberation from alienation, while maintaining decentralized decision-making. Substantial improvements could be achieved within a capitalist society by improving the work environment, making relationships more horizontal (coops, for instance, or free software). It emphasizes culture, living arrangements, and finds some connection with the non-materialist left (Thoreau-vegan type) and its cultural turn. The logic of inequality is somehow more pessimistic. Once the logic of decentralized and impersonal arrangements is accepted, then all the rest follows. The preservation of incentives, the antagonism between social classes, the reproduction of capital over time and generations is almost inevitable, and the source of power asymmetries are “economic”, rather than “social” inequalities.

Perhaps because of character, or due to my materialist ricardian training, I have always been more sympathetic to the logic inequality- the only case in which I have different is when it comes to gender. I feel  it is definitely more scientific, more rigorous (in a vague positivist sense of the word), and descriptive of the process of history, since it is strongly autonomous from arguments about freedom or autonomy, whose definition is strongly problematic, and culturally grounded in my opinion. Perhaps because of my hostility to the cultural turn and the belief that traditional societies (religion, civil society, community, identities) can be vaguely decensored.

New times and some things I learned

I am sitting in my apartment which is now empty, while I write these lines.

I came to Durham, NC, three years ago. It is fair to say I have been very happy, and become a much more mature researcher and, tentatively, a better human being. There are, of course, disappointments that are intrinsic to growing up, discovering your preferences, and figuring out what is out there and what you can offer. That’s why they call it “research“.

I am now going back to my country of origin while finishing my dissertation part-time. I will have a job in the research department of a government institution. This is not what I expected to get as a final outcome when I came to the US, but after thinking carefully about it, it is the best choice at this decision node, and I strongly believe in sequential rationality.

Here are a number of things that I have learned and which I did not know before:

1. Academia is a bubble. It is not like I was not aware of it, but academia is not the real world. It is easy to be trapped into it. It is full of wonderful people, but if you are not careful you can be underexposed to the world you are trying to study, or be absorbed by the idiosyncratic obsessions and personality disorders of your community. And you also risk starting thinking that your community makes you better. I am fine with belonging to religions -secular or otherwise- as long as one is aware of what he is doing: joining a cult.
2. Previous background matters. For better and for worse. It matters because previous skills are key. I was lucky to have some technical background, and that helped me to build on it and reflect it into my research. But it also has generated problems of becoming part of an epistemic community with certain standards. I tend to think that research is about answering relatively standardized questions in an increasingly technically sophisticated way, and less about finding “puzzles”, or sexy framings.
3. Writing code and writing introductions: the two central skills in academia are writing/marketing and technical skills. Many people underestimate the importance of one or the other. Start writing early, and talk about it. Try to implement as many statistical techniques as you can, and get good at coding.
4. Explain to strangers what your research is about. My main mistake was to start working on a complex story that was coherent in my mind, given my background.  When I told people about my research, they often misunderstood it. I attribute it to their lack of background and exposure to what I was doing. But while this is true -people always lack exposure and will misinterpret your explanations- it is also mistaken. If your research cannot be explained to someone without background, you have a real marketing problem.
5. Learn to filter both encouragement and criticism. Unfair criticism should not take you down. But for me, the worse advice is one of naive encouragement. When you present your research to people, they often will give a sense of false security- especially in the US. This is because they don’t want to confront your negative feelings, or because they think you need emotional comfort. But this is just keeping your bubble alive.
6. Previous background matters also in terms of life experience. Being older than the average, and because I had some working experience. I met plenty of intellectually brilliant people who had serious issues with basic life and human skills: dealing with failure, and dealing with people.
7. Failure is key in research. If you have never experienced it, you probably have been overqualified for what you were doing, never seriously challenged. And research is only stochastically related to effort, and often in an unfair way: some people may just dislike you, or the topic you are doing. Your topic is not interesting is the worst criticism you can get, because interestingness is in the eye of the beholder.
8. Research is a social activity. It is social in two ways. Firstly, by interacting with other scholars. But also, in terms of keeping a life related to the real world, not forgetting that there is stuff out there. While you go through the research process, it is easy to forget what it is like interacting with other people: approaching professors, cheap chat in seminars and conferences, dealing with reject or disdain. The same is true in social life: I have met too many people who have essentially no clue of what it is like to approach a person of the opposite sex, and have a certain control over the type of relationship you want to establish- professional, personal, intimate… This has dramatic consequences for gender (and race) balance, by the way.
9. Work-life balance matters. It is key to be productive. I used to ignore this, because I am ok working hours and hours. A friend of mine told me, when choosing my department “You should think it is a place where you will live 5 years of your life”, and I thought it did not matter because I did not have much time for visiting the city anywhere. It so happens that I really miss living in an actual city with urban density, one which is walkable and allows for taking pauses of 20 minutes in a coffee shop downstairs. I also learned that it is important to have hobbies – I found one in fountain pens- that are compatible with your work routine, and still allow you to get some steam out, be somehow creative.
10. Work-life balance is not just about taking time off. You will take time off anyway. It is mostly about not procrastinating: that is, ensuring that your time off is not spent watching Netflix, twitter, facebook, or youtube unless you seriously think that is a good use of your time (maybe, but then think twice). But beware of people who think you should take entire days off, doing jobs, going out, or something like that. Academia, at least the one I know, is highly incompatible with having a “normal life”, similar to that of 9 to 5 job with weekends. You sign up for that. Work-life balance is about finding things that complement your research activity, in particular addressing all the above problems: bubble environment, social isolation, monotonicity of job, lack of schedules.
11. Dating apps can help. The two times I have joined dating apps was when I was going through peaks of work. It might seem paradoxical, but it is not. A date is an environment in which you are trying to make a good impression on a stranger that probably does not value your research skills alone and will judge on a totally superficial and unfair basis. In terms of training your social skills, of meeting people slightly beyond your social bubble, of reminding yourself how to dress properly and to keep in good shape, learning to deal with rejection and unfair treatment, and of course of having fun, first dates are a very good complement to research. And dating apps allow control on the amount of time you spend on it- unlike other hobbies.
12. Conversations about research are not always intellectual in nature. Most conversations among researchers, in their daily life, are not about substance or real topics. Academia does not typically equip you for that, in most branches. When intellectual, academia is most of the time about papers and research fads. And to an incredibly annoying extent about “academic bureaucracy and politics”: the common denominator of a group of three or more researchers is typically requirements, fellowships, data availability, and an incredibly high level of bureaucratic topics.
13. Academic elitism is stupid. Look at point 1. Academia allows to meet fascinating people, some of them really smart. People are multidimensional, and the skill of writing papers that are publishable correlates very imperfectly with many other things- a sense of humor, good aesthetical taste, not having a serious personality disorder, common sense- that are important for good judgment and a healthy social environment.
14. Politics, beliefs, ideology matter in academia. But they do not matter in the type of research that people produce, as it is often thought. It matters in terms of how the environment shapes extra or para academic discussions. Because many academic environments have a strong lack of diversity-gender, racial, political, national-  the sensation that people as incapable of questioning their own ideas is too often around. This is also the case among muggles, but in those cases, you are a bit confronted with otherness.
15. PhD research is an incredible living and learning experience not only academic but also with respect to the above points. The most important part is, of course, the quest for truth (or at least publishable truth), but the quest for maturity does not hurt either.

I will keep posting here from time to time. You can follow me on Instagram, as lmgeeko .

Being a Marxist today

With the possible exception of Jesuschrist, Karl Marx is among the most influential thinkers of all times. What does it mean to be a Marxist? I often quote a paragraph that is in Jon Elster’s “Introduction to Karl Marx”:

“If, by a Marxist, you mean someone who holds all the beliefs that Marx himself thought were his most important ideas, including scientific socialism, the labor theory of value, the theory of the falling rate of profit, the unity of theory and practice in revolutionary struggle, and the utopian vision of a transparent communist society unconstrained by scarcity, then I am certainly not a Marxist. But if, by a Marxist, you mean someone who can trace the ancestry of his most important beliefs back to Marx, the I am indeed a Marxist. “”

I have similar feelings. For most of my trajectory as a social scientist I have been on the neoclassical economist, orthodox, hard believer in quantitative research organized by standard microeconomic principles. This is not, in my view, in contradiction with a set of core ideas that I use in my daily thought process to make sense about the world. I will name three which I think are particularly useful. I do not claim that these are essentially “Marxist”, or faithful to Marx’s version of them, but in my personal case they have a strong Marxist root. How can I reconcile this with my commitment to social science orthodoxy?

I present no references, and many arguments should be nuance, but I am trying to keep this post readable.

The materialist interpretation of history. History is driven by changes in the modes of productions, that is, in the capacity of human society to generate resources that are driven to their consumption and reproduction. In other words: it is all about technology. This is core to textbook models of economic growth, in technology and factor accumulation typically play a central role.

Many changes that are often understood as guided by human agency, or ideas, usually reflect large changes in technology and demography. My personal favorite, because it contrasts with standard views of the phenomenon, is the economic rise of women. Female equality is, perhaps, the key historical event of the last century.

Contemporary research in gender economics (from Barbara Bergmann to Claudia Goldin) have found that the liberation of women from the domain of domesticity is driven by a set of changes in technology. The technology of producing market goods and services, to the extent to which a society in which the service sector concentrates a large part of employment can hardly keep women in the world of domesticity. The rise of electrification and domestic appliances reduced the amount of time necessary to keep a home running drastically, and made the traditional specialization of women in home labor obsolete. The emergence of contraceptives, and the pill, drastically changed sexual norms and gave women control over their life cycle, allowing them to engage in longer careers. Eventually, these changes led to a change in the bargaining power of women, to demographic changes, which in turn were translated into changing values about the role of family and lifestyles.

This view is not one that Marx himself held, but the role of the unexpected effects of changes in technology is a classically Marxist one. The story is to be sure more complex, of course, but the reasons that made these changes possible in the postindustrial world, and not elsewhere are not casual. They are rooted in their historical nature, where “historical” is meant to reflect “material conditions”.

The economic critique of politics and class struggle. As a political economist, this is my bread and butter: most political conflicts are, in fact, expression of distributive conflicts. Political institutions are forms of splitting the pie. Political ideologies express interests, especially class interests.

One dimension is just an expression of the materialist interpretation of history. The nature of politics, democracy, equality or dictatorship are historical products, that reflect material conditions. It is hard to make sense of civil society without thinking about special interest; equality is known to be a pre-requisite for the stability of democracy.

More interestingly is the critical perspective. Many political phenomena and many justifications of pluralism are often seen as reflecting contrasting views of what is good or fair. Routinely, political scientists discuss “identities” or “ideologies” as being important factors. Consider the case of ethnic conflict: national or ethnic identities are often seen as being constitutive of politics. As a Marxist political economist, I have always understood that nationalism (and non-class cleavages) is a bourgeois construct, whose function is to limit the extent of class-conflict. Similarly, ideas about fairness or discussion about policy more often than not reflect equilibria and position in the class structure.

This suspicion against institutions and ideas as being the reflection of class conflict or class aspirations, with roots in the state of modes of production and historical trajectories- is an originally Marxist idea- one that political scientist do not think often enough about.

The critique of bourgeois society. The message of the enlightenment, of XIX century bourgeois revolutionaries, was one of emancipation. Democracy and personal choice were taken to the front page, and men and women were declared to be the masters of their lives. These are the political ideas which, in principle, are supposed to be at the center of out societies and constitutional texts. Tradition and gods were declared obsolete as the source of moral authority by progressives.

Yet, we Marxists have always suspected that this presumed emancipation which was intended to be brought to all segments of society was not at all. While market economies probably are a second best, societies based on private property and the idea of meritocracy embody substantial forms of servitude and alienation. Family links and other forms of archaic social reproduction perdure all along economic life. Individuals are indoctrinated to have quiet lives, acquire consumer durables and coopt family members and friends to their position of power. Superstition, religion, Stata users, ethnic and national identities and other forms of human alienation are far from abolished. Social hierarchies are far from abolished but only covered under a false sense of order. Exploitation is naturalized and legitimized by the idea that exchanges are mutually consensual.

More importantly: these are not bugs of bourgeois society. They are pillars of its functioning. Market exploitation is necessary to preserve creative incentives; hierarchy is a central feature of all capitalist organizations (bureaucracies and firms), and critical sources of inequality, such as the choice to form families with the partner of your choice and the right of parents to transmit their advantage to their children through education and inheritance still considered a central right of the liberal order.

That said, I personally believe that bourgeois society generates a reasonably free, and moderately fair environment, especially compared to most known alternatives. I have no nostalgia for the USSR and no mercy to the Thoreau vegan left who think Putnam is a legitimate source of inspiration. It might be argued that radical attempts to question the principles of capitalist society may lead to much worse outcomes, or be incompatible with liberalism or democracy. I agree. However, accepting the market, the family, hierarchy, and the logic of “meritocracy” as working social principles in the absence of an alternative is very different to celebrating them as embodying some type of virtue, full accomplishment of “free choice”, or presenting them as being the expression of some natural order.

Many of these ideas can and should be nuanced. I will leave nuance for the book that sits in one of the shelves of the library of Babel.

On the liberating character of complexity and abstraction

Mathematics is the art of giving similar names to things that are different
Henri Poincaré

I am currently covering my yearly quota of unuseful knowledge reading an introduction to metaethics. By this I mean, it is a knowledge that I do not pretend I will be able to use in my research or anything related to my profession at any point of my career. I just read it for fun and take a break from statistics, inequality, and extremism, which are the topics I read about these days.

Metaethics is a subject I have always being interested in exploring, especially after my girlfriend chose to think that being a Kantian groupie with existential accents was an intellectually acceptable stance.

It is a very obscure area of knowledge. Unlike other topics -say, political philosophy- I do not have too many preconceived ideas. Each time I approach a book, I have all kinds of commitments to different theories and views that I am naturally reluctant to give up altogether. When I read about statistics, I am now a committed Bayesian and that affects what I am ready to learn and understand every new piece.

While I have some intuitions about metaethics (thus my original interest), my views about it are very diffuse. Since I read Binmore’s Game theory and the social contract, I became particularly suspicious about moral claims made as if these were metaphysical absolutes that are usually formulated in the Kantian tradition. Another piece that drove my interest was this piece by Joel Marks Marks which challenged me to start thinking about morals in terms of tastes, and desires. The way I think about morals is as feelings, tastes which, as Marks suggest, are ‘window dressed’ as moral talk, but are actually ‘desires’ and motivations, not ‘beliefs’ about the world. These feelings are not, in my view, coming from heaven, and do not exclude all kinds of reasoning, or fully undisciplined. I think these can be transmitted using empathy, just as people become convinced that a work of art is beautiful if their tastes are educated to do so. To the extent that moral constructs works as abstract theories, logic and reasoning can be used to point out conflicting views. And, I find generically suspicious to speak of morals as if these were facts to be found out there. What lies below, in my view, are subjective (yet, potentially convergent) views about the world.

If you know anything about the subject, you probably will notice how rough the above views are, and to what extent there are potential tensions. The experience of reading about it is wonderful since it forces me to take a stance on issues I used to believe were compatible. For example, until now I thought that error theory, relativism, and emotivism were to a large extent the same approach thing, although error theory is a form of cognitivism and emotivism pretty much the opposite.

The learning experience is so rewarding because, while talking about morals and ethics, the discussion evolves on a completely different level. Cleavages in metaethics hardly map cleavages in applied ethics, but are extremely relevant to practical matters in that field. I realize that, to a large extent, many of the disagreements I have with my girlfriend on her political liberalism are driven by differences in metaethical sensitivities.

In math parlance, learning about a new field opens to your eyes new partitions of the sample space. It reorganizes discussions problems along completely new lines. It reshapes the structures and ideas you use to think about problems. I have had this experience each time I have started learning about a new subject, especially abstract topics. The more abstract, typically the more subtle the division, the more unconventional. Learning changes your view about the world, not only across pre-established dimensions, but by opening new ones and challenging ideas. The complexity created by the systematic re-organization and scrutiny of ideas is one of the more rewarding and liberating processes I can think of. It is liberating from simplicity and tribalism.

One of the reasons why I became fed up of writing politics is due to the tendency of ideological reductionism -the tendency to map all ideas on the left-right spectrum. I have always regarded my views about the desirability of redistribution or gender equality as neatly separated and logically independent from my views about elasticities and fiscal multipliers. I tend to think my moral intuitions about the former will remain, to a large extent, unchanged, but I would like my views about the latter to be highly open to new ideas and research. Of course, I understand an inevitable consequence of the collective action nature of the political process, this is perhaps the source of my disappointment.

Melancholy, books, scholarship and science

I am these days spending the winter break at my hometown, in Spain. This has left me some time to inspect my books. It’s that there are several of them I had even forgotten that I possessed. It is impossible to avoid feeling some nostalgia looking at them.

There is this strange feeling of discovering a selection of reading made by a past self. Many of them are attached to past interests, that is, latent passions that I have abandoned due to lack of time, lack of usefulness. I remember, for example, a time when I wanted to learn about China, ancient Rome or differential topology.Next to me is for example Paul Veyne’s Le pain et le cirque an 800 pages book on the sociology of charity in ancient Rome, or John W. Milnor Topology from a differentiable viewpoint.

It is also enjoyable to discover this selection, just as if I was gossiping someone else’s library in search of some good book. I find myself thinking ‘Oh, these are really great choices, I really I should find time to read these’, forgetting that, of course I find them great since they were chosen by me!

I used to cultivate the (flawed) idea that having a minimal understanding of these esoteric topics was an absolute requirement for any cultivated person, let alone for a researcher. Even now I found myself toying with the idea that, perhaps, if I think about working on preferences for redistribution ‘perhaps it could be useful to read Veyne’s book. Perhaps I could use its insights to think about charity and the political economy of redistribution in America!’.   Get behind me, Satan!

One of the reasons why I went into academia is because I loved to read and to learn. There was also this stuff about changing the world. But the reason why I can stand so much time working without becoming insane is because I like to read, to know, to understand. Recently, I learned that my fetish professor when I was an undergrad, Pedro de Vega, had died. He was the first professor I had. He taught us constitutional law, and introduced us to the history of political ideas. I remember being massively impressed by the breadth of his knowledge, although I am sure I would find it much more limited now. He belonged to that generation in which university professors were scholars, intellectual, meaning, individuals who were expected to feel comfortable in many fields and being smart.

The world of research has made massive progress getting beyond that paradigm. Currently, you are not valued for being smart or wise but by being good at writing papers- and make no mistake, the two do not alway coincide. Depth is valued over breath of knowledge. Researchers are much less intellectuals or scholars, and much more workers with a broad division of labor. Works are succinct and concise, instead of encyclopedic. This is encapsulated in a piece of advice a professor of mine always repeats ‘One idea/topic per paper/book/career’. I really think this is great progress.  I have met many people who were brilliant in their field, who contributed and produced valuable research and deserved thus being at the top, but -I am pretty sure of this- could not tell what the field of metaphysics is vaguely about. This is efficient, it is productive, it provides the right incentives. It is the scientific mode of production, after science stopped being ‘natural phylosophy’.

For people with my taste, of course, this incentive structure has made life much less pleasant. I still try to read at least one philosophy book and one novel every year and listen to as much history (in audioboooks) as I can on my way to the department.

 

Ten books and ten papers for political economists

As the readers of this blog know, I have a bit of an emotional relationship with the stuff I read, and with my books in particular. With a friend, we were discussing the possibility of organizing a list of good reads that have been particularly influential in the way we think about the world and research in general. In one way, I couldn’t be more enthusiastic, as if there is something I love is talking/bragging about books, papers, and music. On the other hand, selecting a list involves excluding so many readings I would like to include that I can only feel it is extremely unfair.

To facilitate this task, I have followed some rules: a) I only selected readings in English b) I tried them to reflect a mixture of my interests, my background, and my current orientation. I have tried to avoid including readings that do not reflect my profile as a political economist, even if they have been influential in the way I think (for example, wonkish books on the philosophy of language or ethics :/) c) I have included only ten works in each category and not one more d) The selection tries to include an interdisciplinary dimension. e) I have included books that I think political economists would benefit from reading, independently of whether they work on my field or not.

Books

• German Social Democracy, 1905–1917: The Development of the Great Schism, by Schorske: The title is not very seductive. It would look that, unless you are highly interested in the story of socialism, there is no point of reading it. I disagree. One of the books that did not make the cut and that has highly influenced me suggests that good history works are like case studies that feed your intuition that you may then build into theory. The history of the Great Schism (between reformism and communism) in the SPD is full of interesting lessons that show up in all types of social contexts. How do social movement behave? What role does their ideology shape in organizing that behavior? How Do they confront strategic decisions?  How does a party reconcile its internal and external contradiction? Bonus point: if you read Roemer’s seminal book on party competition, one of his models is based on this book
• Search of Modern China, Jonathan Spence: I read this book some years ago, and it remains one of my favorite history books. I have included it partly for the same reasons as Schorske’s: it is a great history about the road to modernization of a country. But also, I think that political economist should read, at least a little bit, about societies that are substantially different from theirs to avoid the sin of being to provincial in their way of thinking.
• Codes of the street by Elijah Anderson: this book is an ethnographic study of the Philadelphia’s ghetto. As someone coming from the other side of the methodological continuum, I found this book wonderfully written, and informative. Given that I work mainly on inequality, having some sense of what people think and feel like behind the numbers seemed important to me.
• Democracy and the Market: Przewroski is probably one of my favorite social scientists and I wanted to include at least one of his works in the list. I read D&M  8 years ago, with enormous excitement. It was the first Przewoski book I read, I remember it had all kind of insights and ideas that fed my understanding of how democracies interact with the market.
• Power, a radical view, by Stephen Lukes: Being a political economist, it is unavoidable to talk about power. A friend recommended it to me long ago. He suggested that a) It was a good exposition of the idea of subgame perfection and b) It put substantial order in the debate separating the three dimensions of power. His words have stayed in my mind each time I think about the relationship between theory and empirics. Most of what you do in political science is about off-the-path stuff, that is, subgame perfection. Interestingly, Lukes does this coming from the ‘radical’, political theory tradition.
• Making sense of Marx, by John Elster. Karl Marx is, with the possible exception of Jesus Christ, Isaac Newton and Charles Darwin, the most influential and insightful thinker in history of Western civilization. Yet, nowadays, its ideas are only studied by obscure political theorists who, together with its critics, claim that most of Marx ideas are at odds with modern social science. A group of brilliant people spent some time examining this claim and trying to reconcile and translate many of Marx’s ideas with modern social science.   This, and its baby version were the books with which I became familiar with the work of the September Group.
• Economic theory and cognitive science, by Don Ross: when I started studying economics, I was feeling uneasy about the contradiction between the ‘behavioral’ economics approach, and my feeling that mathematical models of rationality were compelling
• Identification for prediction and decision, by Charles Manski: Everything today is about causal identification. When thinking about causal inference, the names that come to mind are people like Donald Rubin, Guido Imbens, or Josh Angrist. Even in econometrics, Manski is mostly known for his work in discrete choice. However, I find Manski’s work on identification the closest one to my taste. I understand why his ideas are less attractive for researchers. The Mostly Harmless  gospel is optimistic: it shows in an accessible fashion the thousands of things that can be achieved with all sorts of research designs. Instead, Manski emphasized that every single piece of identification implies more or less strong assumptions are not testable, and often you can at most achieve set identification. I find Manski’s pessimism compelling, and a necessary cure.
• Statistical rethinking, Richard McElreath: One of the greatest achievements for me of the last year and a half has been the incorporation of the bayesian set of tools into my work routine. I owe much of that to this book. I want to write a review some day. It deals with things at a very practical (i.e. not mathematical) level, but introduces pretty advanced ideas about inference, information theory, computation (with plenty of examples), and hierarchical models. It is probably the best book on statistics I have ever read and with no doubt the one with which I have learned the most.
• Advanced R, Hadley Wickham: I wanted to include at least one book on programming, as I spend most of my time now doing this. I also think programming is a basic skill for any researcher. Social scientists owe a lot to Hadley, and any of his other books could be in this list (his ggplot2 book is wonderful too). But I preferred this one, because the book is actually about computing and the R language. The book is wonderfully written and, unlike other programming books, it can actually be read (not just consulted as a cookbook). You will learn a lot from reading, at least several of the chapter.

Papers:

• General Conditions for Global Intransitivities in Formal Voting Models, McKelvey: I have included McKelvey’s paper as a representative of the social choice / Rochester school literature. This strand of ideas -about cycling, instability, manipulability and the normative side in the form of social choice- is, in my view, at the very basis of the rational study of institutions. When I say at the basis, I mean it at the foundational, motivational sense: without the results from voting and social theory, the design of political institutions makes little sense.
• Tirole  ‘The internal organization of government’: everyone should read some Tirole, at some point of her life. This piece if particularly relevant for political scientists, as it is about how governments and bureaucracies work. It provides the idea from first principles. I think the title is self-explanatory.
• Claudia Goldin’s two review pieces about the economic history of American women (I and II) I wanted to include an ‘easier’ read and some economic history. Claudia Goldin is one of my intellectual heros. More importantly, if I had to name just one thing that dramatically changed in the XXth century in western societies, probably I would mention: the status of women. Besides being important on its own, its the engine of family structure (intrinsically linked to inequality), and represents a historical break with everything known before. Claudia Goldin shows how the main force behind that was technology. It is a great companion to Elster’s chapter on marxist theory of history.
• Heckman’s the Scientific model of Causality: This paper is a comprehensive review of the theory of causal identification performed by one of the best econometricians of the last century. Heckmans represents the structural approach to econometrics, that suggests that theory and inference should be closely linked. My main problem with the Causal Inference approach that dominates is precisely that: there is little understanding of what the parameters, the ATE, actually mean. There is, moreover, little feeling of a need to go beyond the estimation of ‘causal effects’. My favorite quote from that paper goes something like that ‘Causality is in the model. Ambiguity in the description of the model leads to ambiguity in the conclusions’
• Manski’s ‘Reflection problem’ paper: maybe this is cheating, since this paper is explained in the book I mentioned above. It is Manski’s most quoted paper, and a brilliant piece of work, showing how social interactions face enormous identification problems.
• Practical Bayesian model evaluation using leave-one-out cross-validation and WAIC: I read this paper after reading the Rethinking book mentioned above. It introduces a systematic way of thinking about model selection implementing its most sensitive modality: out of sample prediction. It is easy, and there is an R package that implements it.
• Elections as a conflict processing mechanism, by Przeworski, Rivero, Xi: I wanted to include at least one piece by Przeworski on democracy, and this one is probably the most recent one. Even if, as a political economist working on ‘pacified’ (stable democratic) societies I should not be particularly interested in the topic, I find Przeworski’s ideas about democracy foundational to the way I think. Just as it is important to know how other societies work, it is important to understand that the institutional equilibrium under which the current set of policies work is one of the many potential ones, and thus it is constrained by its sustainability conditions.
• Social Assets, Mailath Postlewaite: a beautiful theoretical paper. It shows how traits (education, blue blood) may acquire and sustain value in equilibrium because of their ‘exchange’ value in the marriage market. I have put it here, not only because Georges and Andy are among the most brilliant minds I have seen in action, but the paper shows the versatility of formal modeling to represent situations that used to be only seen as the domain of sociologists.
• Self-confirming equilibrium, Levine and Fudenberg: beliefs are hard to model. This paper is beautiful and, shows that there is hope in formal theory accommodating many ideas from social theories (ideologies, cognitive traps, etc). This paper was presented by Lupia and Zarinova in this PA
• Whither political economy? by Antonio Merlo: I was not sure of whether this could be included in the ‘papers’ section, given that it is basically a manuscript of course notes, but this is my blog and my rules, so let it be. It covers a wide array of formal models of political economy in a very intuitive way. I particularly like the exposition of the theory of coalitions and careers (to which Merlo has been an original contributor).

 

What I have learned about the replication crisis in American politics

The current semester is ending, and with it, a chapter that I started about six months ago. As someone interest in the political economy of industrialized countries, I thought I could do little of interest if I did not have a minimal understanding America, which is also the country I live in.

In the last year I have seen or done several replication exercises.  When you are asked to do one of these for class, you usually choose one for which the data is available, and preferably the code too. In American politics, this is often the case: the data are pretty standardized and available. They are also pretty detailed. A good argument to study America is, in fact, that there are plenty of data available. And yet, systematically, results fail to replicate. Codes do not run. Arguments do not resist a second look.

This paints a grim picture of quantitative American politics.  Kids are taken through all those math and stats classes to end up not discovering much. But it gets worse. If this happens for the case of American politics, in which the community that is monitoring your work is large and the data are large in size, standardized and of the best possible quality,… what can we possibly expect from less quantitatively disciplined branches? Think of the case in which people conduct their own survey or experiments in exotic countries. Think of historians and anthropologists that have to rely on observation and ‘judgment’. Or just think of the case of hypotheses that are only vaguely defined and difficult to identify.

I had this thought reading again through this psychological analysis of how the Trump victory implies the victory of white male sexism and racism. I can perfectly see, of course, that there is some visible aesthetical and substantive distance between Trump and Chimamanda Ngozi Adichie. But what people seem to imply is that this symbolic dimension, which is apparent, is likely to have a  causal relationship with what is going on in people’s minds. This is something that as a social scientist, I feel, I should expect to be backed by something else than just impressions.

In my view, the main lesson about the replication crisis in quantitative science is not that quantitative work is hopeless, it is that conclusions, especially those in public debate and non-quantitative literature, are to be doubted proportionally on their strength.

Living in Trump America

Post- Trump victory America is indeed becoming a somewhat weird place. There is, of course, alt-right people coming out, and weird people in the government. But there is something else.

I have been a long time defender of the idea of political correctness in public debate. PC is a deprecated concept, but as most social institutions, it fulfills a function. It regulates relationships. It establishes minimal rules of respects. It works as a fire alarm when you are touching a delicate subject. I am mostly happy, for example, with discussions about the role of genes in social success been considered as a out of the public debate. I have myself struggled for a long time to understand what heritability actually means -in terms of causality or its (ir)relevance for public policy- and I don’t think much can come from people misunderstanding the topic. Pretty much the same goes for gender. I am mostly OK with the blank slate idea being the official truth given what I think is the alternative. As James Tobin allegedly once told to Robert Nozick ‘There is nothing more dangerous than a philosopher that has read a bit of economics’.

The day after the election I was in a graduate seminar on American politics. Most people were devastated. Some were crying. We spent a large portion of the class doing therapy about the election results from a purely political point of view. I don’t think I really need to reiterate that no one, again, no one, except perhaps the color person in the class, has more reasons to be concerned about the result in the election than me, foreign-born socialist. Yet, I was struck by the fact that it was taking for granted that everyone in the room was strongly anti-Trump. In my mind, this is somehow a break of a basic social rule of respect. You don’t assume that other people think like you. And if you engage them, you do it respectfully.

The post-election in my environment has been a reflection of that same situation. People have demonstrated on campus. I have got emails from the university asking us to be strong. In general, there is a huge, brutal, violation of neutrality in the public space and a denial of legitimacy to what seems to me be the result of a democratic process.

Why does this happen? My conjecture is that we live in a bubble. Since I started to become interested in Americans politics, I have made the effort of asking people if they knew of someone who planned to vote for Trump. No one did. At two degrees of separation from me, there is no one willing to acknowledge that they are part of the almost 50% of Americans who elected that guy. No one knew Trump voters and, for that reasons, we underestimated what could be understood from surveys.

In social science there is that strange fine line between understanding and justifying, and I think I cross it too often. Some day I may become a moral void. But I somehow feel very uncomfortable with the standard view on why Trump won (‘racism’ ‘liberal elite contempt’ ‘politics of resentment’, ‘losers from globalization’). I feel all these narratives are morally tainted. They are not informative.

And here goes the thing: it’s hard to dispute them. People have strong feelings about Trump. Democracy, and especially academia even more, is supposed to be about having a certain degree of openness to understand the other.

Some unconventional reflections about democracy and the Trump phenomenon

As a person with a latin name, I really fear the possibility that next week Trump will win. This is not trivial. At least in the medium term, my future is tied to America and any substantive change in how USA treats non-national would affect me, personally. I say this to just state that, besides thinking that Trump represents the very opposite of everything my limousine liberal soul believes in, I have a very credible stake about this.

And yet, there are certain things that I can but  uncomfortably acknowledge about what the Trump phenomenon says about American Democracy- perhaps about democracy in general. In particular, there two important claims about democracy that I believe are challenged: its openness and contestability, and its neutrality.

Consider contestability. Trump is an outsider. He is a person that, for a long time, did not think about running into politics, but had a public or semipublic profile. As a result, he has a record. He has written, said and done things that he never anticipated would have any effect on his future. In part, of course, these things reflect the horrible individual he is. But in part, it reflects the fact that no one, except someone that has been looking forward to go into politics for a long time,  could resist the type of oppo-research that Trump has suffered. The result is probably an ugly conclusion: there is a strong insider bias in running for office.

Neutrality is pretty much the same thing. I am personally amazed by the degree of opposition that everyone but Trump supporters has shown to Donald Trump. Sure, Donald Trump has worked very  hard to piss everyone off. But again, making abstraction of his horrible views about everything, it illustrates the fact that you of the limitations of running for office: even if you are able to gather the votes, you are going to face a substantial amount of opposition if you propose things that are unpalatable for the wrong people.

Again, I would not like to feel that I am regretting any of this. I am not, if only for very selfish reasons. But think of a thought experiment. Assume a not too crazy scenario in which Sanders had been the democratic nominee, while someone reasonably moderate (cannot think of anyone now) had been the Republican one.  How would the media, interest groups and even the two main parties have treated him? I would like to answer that it would have been a fair way, but I am not sure.

In the same vein, I can’t avoid being disturbed by the timely involvement of the FBI by dropping information about HRC. It is just fantastic the degree of involvement in the campaign of non-political forces.

As a counterexample, in Spain, a group of former communists with a large record (a record that can be found on youtube) of supporting dictatorships or protodictatorships and saying this that were highly unpalatable for the general public, founded a party and took over a substantial part of the left-wing electorate. Some of the media found some not very cool things online, such as weird tax records and the like -in fact, things that could be found about any outsider. But nothing of the sort of what has been organized against Trump (with a clear sequencing, a strategic dropping of revelations etc) has taken place.

As I was writing this post, I should say I am not sure about which scenario I prefer. But the point rest: many of the points we believe about contestability and neutrality of the democratic system are, I think, proved to be more limited than what it could look like on the surface.

The tyrany of immediacy (homestuff)

Today has been my second day in a row of working ”offline”. I am going through a bottleneck of work and I really, really need to focus. I read somewhere that Hadley Wickham did something along these lines (allocating certain times of the day to doing certain this -he has an app that delivers his email twice a day, he does not check social network when he wakess up, etc.  I thought that this could be a good opportunity to start this type of routine. I have thus tried to establish some simple rules to implement an efficient work routine:

1. Start working at 8 am.
2. Stop working at 11pm, no matter what.
3. Checking my email and my phone at most twice in the day, and not answering anything until the end of the day unless it is urgent.
4. Work with the ”Self-control’ app (which disables many websites, such a twitter, facebook or the several blogs I read) on until I stop working.
5. Make breaks every 2 hours at most and walk around my house or stretch a bit.
6. Whenever I have to ‘look for something’ in the internet (‘let’s see what data I can find for this project’), allocate some reasonable amount of time in advance and then stop no matter what.
7. Whenever I am working and something comes to my mind, write it down in a piece of paper and keep doing what I was working in.
8. Keep my computer off whenever it is not necessary (when reading, for example).

The result has so far been great. Not only have I been much more productive, I also feel much less stressed, in spite of the huge amount of work I still have left. It’s just common sense: more work means more stress, more productivity means being able to achieve given the the same time-budget, so less stress.

It’s hard to believe this can work, but if you think about it as a challenge, just as people say ‘I have quitted smoking’ or ‘I have been sober for X days’, then it works pretty well.

But what I wanted to talk today is about the standard idea that one is expected to be on call 24/7. Of course, it’s written nowhere, but over my whole day, there is a large number of reasons why I can get distracted: a lot of mentions on facebook, twitter, emails that arrive, slack messages, etc. Given that I work with my laptop most of the time, there is a . If I answer them all, then I probably well get even more answers, and so on. This is extremely disrupting, not just in terms of time, but also mentally. I also think that if you answer instantaneously, you feed the expectation that you will answer fast.

It’s not the first time I have the thought that this IT revolution has had mixed benefits. Yes, it is easy to coauthor papers with people located remotely and be in a distance relationship, but at the same time, it obstructs with your life. I sometimes miss the time in which people met at a precise place and fixed time one or two days in advance, instead of assuming that one must reconfirm that same morning and call to tell where one is waiting. Or, I miss when people asked for appointments one week in advance instead of bugging you through facebook- I had this conversation with my girlfriend yesterday: I really do not consider facebook a proper way of contacting someone professionally. I do many of these things myself, but very few of these things are urgent.

Just as I issued the commitment sometime ago to ”write more often” (of which this post is a by-product), I commit here to emancipate myself from the tyranny of immediacy . 

 

 

 

What if the rich could not escape democracy

My reflex as a political economist, I look at democracy mainly as a device of solving public goods and distributional concerns. I read for class a small book by Gabriel Zucman. The Hidden Wealth of Nations tells the story of tax heaven. It gathers data, and suggests realistic measures,  although one can feel that the author would eventually like to invade Luxembourg and Switzerland. It is very well written and I strongly recommend it.

The ability to tax is at the heart of democracy. Without it, there is little democracy purpose left. We would have no real state capacity, or no state for that matter, and thus not much to decide about. As such, my natural inclination reading Zucman’s evidence was to think that better tax capacity is necessary for democracy. If the rich can opt out from democracy, democratic decisions are constrained to those that do not to harm the rich. And in very unequal societies, it makes democracy pointless.

If you are familiar with the literature on democratization (Acemoglu&Robinson, Boix, partly Przeworski), this may ring some bells. In this research, one key problem to solve is how the poor can reach a compromise not to ‘abuse’ their power under democracy. If we operate under the tyranny of the majority, democracy will result in bad policy and social conflict. Historically, this is at the heart of the ‘class compromise’ idea of socialdemocracy. In Boix’s account, capital mobility plays a key role: if the rich can take their asset and leave, then the expropriation power is limited. As a result, a low tax-stay at home equilibrium is flexible, as well as a high tax-capital flight, depending on parameter values. Dictatorship occurs when the rich have their wealth in the form of assets that can easily be taxed -like land.

The provocative conclusion seemed hard to escape: perhaps tax havens are good for democracy. I like to think about this as an exit-voice-arms idea. Under the democratization literature, the dilemma is about exit vs arms. This idea is similar to that ‘make the world safe for (former) dictators‘ and the problem posed by universal transitional justice.

What is left unexplored and I find more interesting is the voice dimension. If the rich could not escape domestic taxation, then perhaps they would become more involved in domestic politics. They may lobby, for looser regulation of money and politics that will allow having a stronger voice.They may contribute more strongly to political campaigns. They may run for office. Perhaps this involvement would not go further from fighting against taxation. In that case, going after tax havens would do no harm, since this wealth is currently not taxed. However, getting the rich involved in domestic politics may have other negative consequences. They may be potential allies for other segments of society (the upper middle class), shifting the balance of influence. Or, if participation in politics has a fixed cost -setting up a lobby industry,  building a political network- the participation in tax politics may extend to other areas.

All the above is highly speculative. My professor asked me ‘So, you think that if we attack tax haven, then democracy will suffer’. I was reluctant to push my argument to say yes. But if we believe, like many in the literature, that asset mobility affects democratization in a quantitatively relevant manner,  one can not ignore that tax havens are just a form of asset mobility so it must have some effect. And the same is true for more generic dimensions of participation. What seems totally unlikely to me is that the rich will just watch and see while they are taxed.

Audible in NC

I started Amazon Audible a while ago. My experience so far has been pretty positive. For for certain books, it works really well. These are mainly non-fiction but non-technical books, for which I can just pay attention intermittently. As as a result, I have restarted to ‘read’ History. I listened to the Oxford history of the United States (II, III)this summer, and Lindert Williamson’s great book on the economic history of the US.

I have been consistently unable to purchase certain books. For example, The Curse of Cash, or Eric Foner’s Reconstruction show up as not available in my area. This sounded weird to me, since I am a registered Amazon for the United States, but I talked this morning to their customer service and this seems to be the case indeed. I was told that certain books seem to have restrictions within the United States.

I couldn’t help but speculate* about the reasons why people in North Carolina are prevented from buying these books. Perhaps it is some form of boycott for the toilet bill.

*Note: I tend to think that the person on customer service just told me this because she did not know how to fix it.

My experience being a terrible writer in academia

I have recently become aware of a very unpleasant fact: I am a terrible writer. At least, I’m a terrible academic writer. This awareness has built in progressively, but it reached a peak last weekend, when I had to write the final draft of an essay for class.

I have been aware of this weakness for a while. I just find it difficult to be succinct and synthetic (I guess this is obvious from my style writing in this blog), avoid grammar mistakes, and keep my sentences readable. I even face this ‘far too long sentence‘ bias when writing mails. For me, it is just much more natural to write in French or Spanish.

I also think that most successful research is, at least by 30% percent, about framing, about making it attractive and selling it properly. I recently attended a talk in a workshop. The speaker did not do anything terrific. Most of the contribution was just the data collection and a small conjoint experiment. But I came out of the talk feeling that it was, by far, one of the best talks I have seen in the last year and a half. Why? The framing, the talk, speaking skills were great -it did not hurt that the topic was of substantial interest to me, of course.

Becoming aware of these two facts simultaneously -the importance of writing well and what a terrible writer I am- is of course a very depressing prospect. My girlfriend said she thought, from reading my blog, that I am not that bad a writer (I think she is sincere on this one, she has a rather tough-love style to communicate these things in general). But that was hardly a reason to feel better, since a) she also a non-native speaker, and finds my Spanish transplanted structures much more natural and b) the tone and structure of a blog is very different than that of an academic paper. One of the areas I have problems with is in trying to control how formal I am being, how many words I use to communicate a single idea, etc. Here, you see, I have been writing now for 20 minutes without really saying anything.

I guess I should practice. That is what people suggest, you should practice. But in grad school, at least if you do the kind of work I do, there are less opportunities for writing than you may think. My workflow is only about writing in the very end- which arguably is also a problem which I should correct. Consider this back of the enveloppe calculation. Say that I take three classes per semester, and that I have, at most, two writing assignments per class. For each paper, until now, I started writing the results at most five days before the deadline (yeah, working under stress and so on). That means that in two years, I will gone through, at the very best, 24 writing pieces, with an average of 3 days writing per piece, which makes an overly optimistic upper bound of 74 days, that is, two months and a half out of 24, in the period of my academic life in which I am most likely to be writing most. I believe, however, that given that many of my classes have been methods/statistics classes, and that 2 essays per class is a much too optimistic prospect, the real time is likely to be about  half of this. Given that, as I was saying, I believe that at the very least your presentation skills (not just writing, but story-telling, thinking hard about your idea) are about 30% of what makes your research quotable, this seems really small to catch up for a non-native speaker.

I would like to take advantage of any writing opportunity to try to do it well. This means editing my writing as much as possible. Trying to pay attention to how I write, whether it is easy to read, etc. And, above all, trying to be more synthetic. I used this essay last weekend to start doing this. The result was horrible. I finished my first draft on Friday, and edited it every day until the deadline on Wednesday. Every single day I felt I had to do minor to medium editing. When I was analyzing my writing and trying to pay attention to what I do right and wrong, it was particularly painful to discover that I was incurring is the very same vices and biases that I usually criticize. It took an awfully large amount of time to do it. Eventually, I missed a deadline for another class that was completely crowded out of my span of attention.

I have a similar problem with reading fast. This is particularly obvious to me when I try to read books in French or Spanish and my reading speed doubles or triples. And this, in spite of the fact that I almost don’t read anything not written in English these days.

Moreover, there seems to be little hope for improvement and catch up. I have got in a stage where I am completely blind to my mistakes and left of my own. People are polite and do not correct you, so I am not aware of my mistakes. And when they do, it takes the form of a general comment about my writing/language skills, which does not help to improve any particular point.

I am determined to start using this blog to practice my writing, and do it more often, and this post is a form of commitment. I am reading a lot these days, so I may just issue some comment on pieces I read or perhaps report some data results. Hopefully something will come out.

Empirical and formal models are just models

One of the most stupid divides in the social sciences is that between those who put emphasis on empirical issues and those who put emphasis on theory. I know, I know that this is a discussion that has largely been overcome, that’ big data’, causal identification and formal modeling are to be seen as complementary, and so on.

However, it is a division that can be found in seminars, classrooms and, to some extent, fields: some people are more inclined toward elegant formal models and theories, while others emphasize data and empirical work. I tend to believe this is due to decisions to acquire one set of skills over another. After all, you may decide to take your classes in the computer science, the stats or the econ department and, to the extent to which your time is limited and you may like one over another, your appreciation of one over another is likely to depend on your skill endowment.

As I said, I believe this is a false dilemma, of course. But the most stupid instance of it is that of critics of the ‘unrealistic’ assumptions of formal models alone. I learned to live in peace with the lack of realism of assumptions long ago, when I understood that I had learned most from models that were ‘toy models‘: extreme simplifications of reality, yet, simplifications that can teach you something to the extent to which that something is not directly dependent on the lack of realism.

I’ve always found incredibly hard to understand how harsh people tend to be on the assumptions of, say, rationality, while they seem to be perfectly ok with most standard linear models. I saw the light about this the day I understood that everything that can be said about formal models can be said about empirical  models. Both are simplifications. Both are about making things tractable. If anything, regression models, to the extent to which they assume exogeneity, linearity, and so on, are even harder to believe!

What is a formal model after all, if not a tractable way of keeping track of how parameters (typically, behavioral parameters) related to each other?  As such, I liked Thomas Sargent definition of a model as a restriction on the data generating model. A model tells you how variables are related. Is the relation linear? Is one variable affected by another but not the other way around? A totally unrestricted model would if anything, be gigantic correlation matrix that would be extremely limited.

No one disputes this, of course. People regularly use the Stata command to run regressions with their right hand while they use their left hand to manifest outrage against the lack of realism of behaviorally grounded models to look at how one variable affects another. For some reason, they are often happy to use higher order polynomials as a functional form, but extremely averse to give any behavioral meaning to their parameters.