Phenomenal World

October 21st, 2019

Phenomenal World

Sunset Red and Gold-- The Gondolier

DESCRIBED FUTURES

Automation fears and realities

Of the many justifications for introducing a universal basic income, automation is among the most popular. Over the past years, a slew of reports and endless media coverage has raised the specter of mass "technological unemployment"—a possible future that has been taken up by basic income proponents across the political spectrum. It was even a point of argument in this week's Democratic presidential debate.

In the first of a two-part series, historian AARON BENANAV (whose work on the history of unemployment categories we shared in a previous letter) critiques and situates the automation debates within long-term global trends. Framed as a response to what Benanav terms the "automation theorists," who maintain a sense of inevitability about the robot takeover, the paper pursues alternate explanations: declining labor demand, global deindustrialization, and manufacturing overcapacity.

From the paper:

“Automation turns out to be a constant feature of the history of capitalism. By contrast, the discourse around automation, which extrapolates from instances of technological change to a broader social theory, is not constant; it periodically recurs in modern history.

The return of automation discourse is a symptom of our era, as it was in times past: it arises when the global economy’s failure to create enough jobs causes people to question its fundamental viability. The breakdown of this market mechanism today is more extreme than at any time in the past. This is because a greater share of the world’s population than ever before depends on selling its labour or the simple products of its labour to survive, in the context of weakening global economic growth.”

Link to the paper, and link to an ungated version on the author's website.

  • David Autor's 2016 paper "Paradox of Abundance" examines the problem of its title: "technological changes threatens social welfare not because it intensifies scarcity but because it augments abundance." Link.
  • A previous newsletter highlights a paper by legal scholar Brishen Rogers, which critiques automation fears in the US context by pointing to labor law and the "fissuring" of the workforce as more consequential for stagnating wages and declining job security. Link. Along the same lines, but in the European context, Zachary Parolin's recent work for the OECD measures the effects of collective bargaining agreements on wages in automatable occupations. Link.
  • Three post-debate accounts of the issue: Paul Krugman in the Times; Matt Yglesias in Vox; and Jordan Weisman in Slate, featuring the following quote from David Autor: "If we talk about the economic trauma of the 2000s, that’s not primarily due to automation. Nobody can tell you what great invention happened in 1999 that wiped out 20 percent of manufacturing jobs."
  • For another broad view of macro trends and low-demand problems, see JW Mason's "Macroeconomic Lessons from the Past Decade." Link.
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October 15th, 2019

Machine

WEAK OUTCOMES

On the returns to for-profit colleges

As student debt grows and the labor market stagnates, a growing body of research seeks to answer questions about the worthiness of college. What characterizes the schools and populations for whom college is worth it? What does worthiness mean—financial, intellectual, for individuals, for society as a whole? A key way to examine these questions is to find evidence on the financial returns to college. Douglas Webber examines the question along lines of ability, major, and debt, and explores the question for marginal students; JFI’s Sidhya Balakrishnan and Barry Cynamon looked at the way that returns vary based on the type of financing (loans, IDR, ISAs).

A new paper from STEPHANIE CELLINI and NICHOLAS TURNER uses administrative data to examine the returns to public college vs. for-profit college certificate programs. The key finding is that “for-profit certificate students experience lower earnings and employment post-college than their public sector counterparts,” but the richness of the data allows for many more surprising conclusions as well: one is that for-profit college may actually have worse returns than no college whatsoever; another is that for-profits may have worse effects for women than for men. From the paper:

“Across the board, our results show that despite the much higher costs of attending a for-profit institution, the average for-profit certificate student experiences lower earnings effects relative to public sector students. For-profit colleges outperform public institutions in only one of the top ten for-profit fields—cosmetology. Further, students in online and chain for-profit institutions appear to fare worse than students in more traditional campus-based and independent institutions. Our institution-level regressions reveal that the weak performance of the for-profit sector is not limited to a few poor performing institutions, rather the majority of schools appear to have negligible average earnings effects.”

The full paper is available in the Journal of Human Resources here.

  • Scott Cunningham wrote a substantial tweet-thread summary, available here. “I’d include this paper when sorting through the human capital vs signaling debate. This is arguably pure credentialing… So why are the returns so bad if it’s also a credential? I’d be curious how proponents of the ‘education is only signaling’ hypothesis reacted to this study.” For more on that debate, see our previous JFI letter.
  • How can for-profit colleges be held accountable for poor returns to the educations that they provide? A 2016 report from Davids J Deming and Figlio explains the successes and failures of Obama’s Gainful Employment Act, and suggests the importance of financial “skin in the game” for all kinds of institutions. Link.
  • A new data explorer from the Urban Institute brings together an array of education data sets. Link.
  • Cellini and Turner’s piece examines certificate programs at for-profits. For more on certificate programs, see our March letter on the work of Di Xu and Madeline Trimble, and our May letter on the many non-Title-IV certificates, certifications, and credentials about which there is almost no data.
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October 7th, 2019

The Balloon

DIFFERENCE ENGINE

Labor and mechanized calculation

Breathless media coverage of machine learning tools and their applications often obscures the processes that allow them to function. Time and again, services billed or understood by users as automatic are revealed to rely on undervalued, deskilled human labor.

There is rich historical precedent for the presence of these "ghosts in the machine." In a 2017 lecture, Director Emirata of the Max Planck Institute for the History of Science LORRAINE DASTON examines the emergence of mechanical calculation, revealing a fascinating history of the interaction between new technologies and the methods of routinizing and dividing intellectual labor that emerges alongside them.

From the introduction:

"The intertwined histories of the division of labor and mechanical intelligence neither began nor ended with this famous three-act story from pins to computers via logarithms. Long before Prony thought of applying Adam Smith’s political economy to monumental calculation projects, astronomical observatories and nautical almanacs were confronted with mountains of computations that they accomplished by the ingenious organization of work and workers. What mechanization did change was the organization of Big Calculation: integrating humans and machines dictated different algorithms, different skills, different personnel, and above all different divisions of labor. These changes in turn shaped new forms of intelligence at the interface between humans and machines."

Link to the paper version of the lecture. (And stay tuned to the Phenomenal World for our upcoming interview with Daston.)

  • A 1994 paper by Daston entitled "Enlightenment Calculations" gives specific attention to the logarithmic tables of Gaspard de Prony, which sought to demonstrate the usefulness of the newly-invented metric system: "The tables marked an epoch in the history of calculation but also one in the history of intelligence and work." Link.
  • Matthew L. Jones, an historian at Columbia University, studies the history of calculation and computing. His 2016 book Reckoning with Matter: Calculating Machines, Innovation, and Thinking about Thinking from Pascal to Babbage traces the history of attempts to routinize, mechanize and apply the power of calculation. Link to the book, link to Lorraine Daston's review in Critical Inquiry.
  • Simon Schaffer's 1996 paper on the relationship between Charles Babbage's calculating engine and the contemporaneously emerging factory system. Link.
  • A syllabus prepared by Mary L. Gray and Siddharth Suri, authors of Ghost Work—a book about the "hidden" labor force behind many tech services—surveys the tech platform subcontracting labor market. Link.
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September 30th, 2019

Little Mephisto

VARIED NET

The politics of welfare in the 21st century

In his 1990 book, The Three Worlds of Welfare Capitalism (TWWC), sociologist Gosta Esping-Andersen identified three categories of European welfare regimes: liberal, conservative, and social democratic. In Esping-Andersen's account, these welfare regimes developed according to the sorts of coalitions formed by working people: social democratic regimes are based on associations between agricultural workers and industrial socialist organizations; conservative regimes emerged through an alliance between labor organizations and religious groups; liberal regimes are ones in which strong workers movements never managed to significantly structure bargaining institutions.

The dynamic and historical account of welfare state development which TWWC proposes continues to influence our understanding of how distributional conflicts can shape political institutions. However, Esping-Andersen's categories were based on full employment and high growth—a paradigm that no longer holds. In a lesser known but more recent book, the author attempts to adjust his model to postindustrial labor markets.

From the introduction:

"This book is an attempt to come to grips with the 'new political economy' that is emerging. One premise of my analyses is that 'postindustrial' transformation is institutionally path-dependent. This means that existing institutional arrangements heavily determine national trajectories. More concretely, the divergent kinds of welfare regimes that nations built over the post-war decades have a lasting and overpowering effect on which kind of adaptation strategies can and will be pursued. Hence, we see various kinds of postindustrial societies unfolding before our eyes.

Contemporary debate has been far too focused on the state. The real crisis lies in the interaction between the composite parts that, in unison, form contemporary welfare 'regimes': labour markets, the family, and, as a third partner, the welfare state. What most commentators see as a welfare state crisis, may in reality be a crisis of the broader institutional framework that has come to regulate our political economies. Our common tendency to regard postindustrial society as a largely convergent global process impairs our analytical faculties and our ability to understand the radical shifts in government and power which have taken place in recent decades."

Link to the publisher's page.

  • Esping-Anderson's analysis rests heavily on the Polanyian notions of decommodification and double movement. In a recent book chapter, sociologist Michael Burawoy elaborates on the persisting relevance of these concepts for understanding social movements in market societies. Link.
  • Philip Manow uses the historical framework developed in TWWC to explain the success of communist parties in Southern Europe: "Conflicts between the nation-state and the Catholic church in the mono-denominational countries of Europe’s south rendered a coalition between pious farmers and the anticlerical worker’s movement unthinkable, leading to the further radicalization of the left." Link.
  • "How can the social categories which are commonly called 'middle' class be situated within a conceptual framework built around a polarized concept of class? What does it mean to be in the 'middle' of a 'relation'?" In his 2000 textbook, Class Counts, the late Erik Olin Wright develops a theoretically rich account of class relations and their relevance for understanding historical change. Link.
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September 23rd, 2019

The One

FICTIONAL BARGAIN

The meaning and impact of the Coase Theorem

Recent years have seen a surge in scholarship that critically evaluates the origins and impact of the law and economics movement. Out of the many theoretical bedrocks of the movement, the Coase Theorem is one of the most significant. Stemming from Ronald Coase's 1960 paper "The Problem of Social Cost," the theorem itself was coined by George Stigler in his 1966 book The Theory of Price. (Click here for a very simple primer on the theorem as it is generally taught.)

A 1999 paper by STEVEN MEDEMA—an economist and historian who has written extensively on Coase and his legacy—looks at the role that the Coase theorem has played in the law and economics movement:

In spite of the often heavily ideological overtones of the Coase theorem debate, the theorem is simply a positive proposition, stating that under certain conditions a particular result will follow. Yet, the Coase theorem has been assailed from the left (as conservative dogma) and from the right (as liberal dogma); its moral, philosophical, and political underpinnings have been called into question; its logic, applicability, and empirical content have been both trashed and defended; it has been hailed as offering a new way to conceptualize law and legal culture and attacked as anathema to the traditional common law process. The present essay will attempt to explain how and why the Coase theorem quickly evolved from a debunking fiction to the basis of one of the most successful branches of applied economics in the last part of this century.

Link to the paper.

  • Ronald Coase's seminal paper "The Problem of Social Cost." Link. And an interview with Coase from 1997, in which he says: "I think the success of the Coase Theorem—because it’s discussed all over the place—is an interesting illustration of what’s wrong with economics. If you read 'The Problem of Social Cost,' it occupies perhaps four pages. It’s useful because you can show the type of contracts that would have to be made in order to have an efficient economic system. But then you have to introduce the obstacles to doing it. Then you see how the system actually works." Link.
  • A 1998 paper by Deirdre McCloskey examines the legacy of the theorem: "Something like a dozen people in the world understand that the 'Coase' theorem is not the Coase theorem. One of this select group is Ronald Coase himself, so I suspect we blessed few are right." Link.
  • A post by Steven Medema on VoxEU treats Coase's legacy and the distance between his own views and the school of thought which adopted the theorem bearing his name. Link. Another paper by Medema examines the Coase Theorem on its sixtieth anniversary. Link.
  • Robin Hahnel and Kristen Sheeran provide an "internal critique" of the theorem, arguing that even under optimal conditions—low transaction costs and well-defined property rights—it generates perverse incentives. Link.
  • A 2017 paper by Dina Waked—"Sense and Nonsense of the Economic Analysis of Tort Law"—situates the law and economics school (and its invocation of Coase) alongside earlier and more recent alternatives, including the early institutionalists. Link.
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September 16th, 2019

Live Airborne System

DIVIDED INTEGRATION

Immanuel Wallerstein's contributions to research in the social sciences

Two weeks ago today marked the passing of the great Immanual Wallerstein. His work has had resounding influence across fields: from literature, to legal theory, education, development studies, and international relations. Among his foremost contributions is the four volume Modern World System series, which recount the transformation of feudalism into global capitalism through progressive incorporation of new regions into the European capitalist core. Complementing this history was world-systems theory, an analytical approach which challenged the tendency of social science research to identify simplified and direct causal relationships.

Wallerstein argued that purely economic, historical, or political analyses of society exclude more factors than they incorporate, casting doubt on both their internal and external validity. From the introduction to World Systems Analysis:

The phenomena dealt with in these separate boxes are so closely intermeshed that each presumes the other, each affects the other, each is incomprehensible without taking into account the other boxes. The separate boxes of analysis are an obstacle, not an aid, to understanding the world. Structurally, the social reality within which we live has not been the multiple national states of which we are citizens but something larger, which we call a world-system. This world-system has had many institutions—states and the interstate system, productive firms, households, classes, identity groups of all sorts—which form a matrix which permits the system to operate but at the same time stimulates both the conflicts and the contradictions which permeate it.

The world-system is a social creation, with a history, whose origins need to be explained, whose ongoing mechanisms need to be delineated, and whose inevitable terminal crisis needs to be discerned. For this reason, it is important to look anew not only at how the world in which we live works but also at how we have come to think about this world.

Link to the book's first pages.

  • "My intellectual development led me to historicize social movements, not only to better understand how they came to do the things they did, but also in order to better formulate the political options that were truly available in the present." On his website, Wallerstein reflects on the questions and contradictions that informed his life's work. Link.
  • "The Modern World-System is a theoretically ambitious work that deserves to be critically analyzed as such." Theda Skocpol's sympathetic scrutiny of the weaknesses in Wallerstein's major work, from the 1977 Review of American Sociology. Link.
  • Wallerstein's account of feudal breakdown, which stressed external factors like increased trade, countered that of historians like Robert Brenner, who focused instead on internal factors like peasant revolts. Robert A. Denemark and Kenneth P. Thomas give an overview of the debate. Link.
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September 9th, 2019

Original & Forgery

MULTIPLY EFFECT

The difficulties of causal reasoning and race

While the thorny ethical questions dogging the development and implementation of algorithmic decision systems touch on all manner of social phenomena, arguably the most widely discussed is that of racial discrimination. The watershed moment for the algorithmic ethics conversation was ProPublica's 2016 article on the COMPAS risk-scoring algorithm, and a huge number of ensuing papers in computer science, law, and related disciplines attempt to grapple with the question of algorithmic fairness by thinking through the role of race and discrimination in decision systems.

In a paper from earlier this year, ISSA KOHLER-HAUSMAN of Yale Law School examines the way that race and racial discrimination are conceived of in law and the social sciences. Challenging the premises of an array of research across disciplines, Kolher-Hausmann argues for both a reassessment of the basis of reasoning about discrimination, and a new approach grounded in a social constructivist view of race.

From the paper:

"This Article argues that animating the most common approaches to detecting discrimination in both law and social science is a model of discrimination that is, well, wrong. I term this model the 'counterfactual causal model' of race discrimination. Discrimination, on this account, is detected by measuring the 'treatment effect of race,' where treatment is conceptualized as manipulating the raced status of otherwise identical units (e.g., a person, a neighborhood, a school). Discrimination is present when an adverse outcome occurs in the world in which a unit is 'treated' by being raced—for example, black—and not in the world in which the otherwise identical unit is 'treated' by being, for example, raced white. The counterfactual model has the allure of precision and the security of seemingly obvious divisions or natural facts.

Currently, many courts, experts, and commentators approach detecting discrimination as an exercise measuring the counterfactual causal effect of race-qua-treatment, looking for complex methods to strip away confounding variables to get at a solid state of race and race alone. But what we are arguing about when we argue about whether or not statistical evidence provides proof of discrimination is precisely what we mean by the concept DISCRIMINATION."

Link to the article. And stay tuned for a forthcoming post on the Phenomenal World by JFI fellow Lily Hu that grapples with these themes.

  • For an example of the logic Kohler-Hausmann is writing against, see Edmund S. Phelps' 1972 paper "The Statistical Theory of Racism and Sexism." Link.
  • A recent paper deals with the issue of causal reasoning in an epidemiological study: "If causation must be defined by intervention, and interventions on race and the whole of SeS are vague or impractical, how is one to frame discussions of causation as they relate to this and other vital issues?" Link.
  • From Kohler-Hausmann's footnotes, two excellent works informing her approach: first, the canonical book Racecraft by Karen Fields and Barbara Fields; second, a 2000 article by Tukufu Zuberi, "Decracializing Social Statistics: Problems in the Quantification of Race." Link to the first, link to the second.
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September 3rd, 2019

Eye Machine

IMPLICIT FAVOR

The failures of research on fin-tech and poverty alleviation

Last week, we considered how social and political standards can pressure climate scientists to under-report their findings, introducing an underestimation bias into published climate research. In a recent thread, Nicholas Loubere examines the development buzz around mobile money, showing how similar factors can serve to exaggerate the findings of academic studies.

In a new article quoted in the thread, MILFORD BATEMAN, MAREN DUVENDACK, and NICHOLAS LOUBERE contest a much cited study on the poverty alleviating effects of mobile money platforms like M-Pesa. The criticism rests largely on grounds of omission: the study, they argue, ignores the closure of nearly half of microenterprises opened with M-Pesa, the jobs and incomes lost with the introduction of new businesses into fragile markets, the burgeoning debt accrued through digital loans, the overwhelmingly foreign ownership of M-Pesa and its profits, and the wealthy networks composing its primary users. Methodologically, it had no control group, used a small sample size, and overlooked the potential for reverse causality.

Why was a potentially flawed study so well regarded? According to Bateman, Duvendack, and Loubre, it's in part because its results told researchers and policymakers what they wanted to hear. From the article:

"The rapid popularization of fin-tech as a developmental solution is premised on the continued prominence of microcredit and the broader concept of financial inclusion. The microcredit movement was established and validated in the 1980s on overblown and ultimately false claims that providing small loans to groups of poor women was a panacea for global poverty reduction—claims that were especially associated with Dr Muhammad Yunus. Empirical justification came from an impact evaluation undertaken in Bangladesh by then World Bank economists Mark Pitt and Shahidur Khandker, which claimed that microcredit programs had significant beneficial results for impoverished female clients. For many years, Muhammad Yunus used Pitt and Khandker’s findings to successfully ‘sell’ the microcredit model to the international development community, generating a consensus that the microcredit model was the most effective way to efficiently provide enormous benefits to the global poor."

Link to the article, and link to a blogpost in which the authors outline their key findings.

  • "Kenya’s new experience of debt reveals a novel, digitized form of slow violence that operates not so much through negotiated social relations, nor the threat of state enforcement, as through the accumulation of data, the commodification of reputation, and the instrumentalization of social ties." Kevin P. Donovan and Emma Park report on the consequences of mobile debt for poor borrowers. Link.
  • In an article from 2017, Loubere "examines examples of exploitation, fraud, instability, and extraction related to expanded digital financial coverage in contemporary China." Link. At Bloomberg, David Malingha compares credit markets in Asia with those of sub-Saharan Africa. Link.
  • "This article claims that to bring finance back to serve the real economy, it is fundamental to (a) de-financialize companies in the real economy, and (b) think clearly about how to structure finance so that it can provide the long-term committed patient capital required by innovation." Mariana Mazzucato on governments' role in ensuring that finance serves public ends. Link.
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August 26th, 2019

Summer in Brabant

INTEMPERATE OBJECTIVITY

On the pressures of policy-relevant climate science

Without any “evidence of fraud, malfeasance or deliberate deception or manipulation,” or any promotion of inaccurate views, how can bias enter a scientific assessment? In their new book, Discerning Experts, Michael Oppenheimer, Naomi Oreskes, Dale Jamieson, et al explore the pattern of underestimation of the true consequences of climate change.

Climate change's impacts are uncertain; predictions about climate change are difficult to make. Taking an ethnographic approach, Discerning Experts shows how those difficulties, coupled with the nature of the public discourse, and the pressures that come when research is going to be discussed and used in policy, have tilted climate assessment optimistic and cautious.

In a summary of their book, Oreskes et al explain three reasons for the tilt:

“The combination of … three factors—the push for univocality, the belief that conservatism is socially and politically protective, and the reluctance to make estimates at all when the available data are contradictory—can lead to ‘least common denominator' results—minimalist conclusions that are weak or incomplete.”

These tendencies, according to the authors, pertain to the applied research context. The academic context is different: “The reward structure of academic life leans toward criticism and dissent; the demands of assessment push toward agreement.” Link to a summary essay in Scientific American. Link to the book.

  • In an interview, Michael Oppenheimer elaborates on other elements that skew the assessments: the selection of authors, the presentation of the resulting information, and others. Link.
  • In a review of the book, Gary Yohe reflects on his own experience working on major climate assessments, such the IPCC’s. Link.
  • A David Roberts post from 2018 finds another case of overly cautious climate science: models of the economic effects of climate change may be much more moderate than models of the physical effects. To remedy this, “We need models that negatively weigh uncertainty, properly account for tipping points, incorporate more robust and current technology cost data, better differentiate sectors outside electricity, rigorously price energy efficiency, and include the social and health benefits of decarbonization.” Link.
  • Tangentially related: carbon tax or green investment? It’s worth considering not just all possible policy options but also their optimal interactions. A paper by Julie Rozenberg, Adrien Vogt-Schilb, and Stephane Hallegatte concludes, “Optimal carbon price minimizes the discounted social cost of the transition to clean capital, but imposes immediate private costs that disproportionately affect the current owners of polluting capital, in particular in the form of stranded assets.” Link to a summary which contains a link to the unpaywalled paper.
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August 19th, 2019

Tennis Court

DETERMINED MOVEMENT

Energy production and political institutions

The role of labor (with some notable exceptions) has been relatively marginal in debates over how to decarbonize the economy. But given the growing number of clean energy jobs (and some recent labor news), it is reasonable to predict that any large-scale shifts in the nature of energy production will be accompanied by large-scale shifts in the nature of energy work and the labor relations that define it.

In his 2011 book Carbon Democracy, Columbia University professor TIMOTHY MITCHELL explores the political history of energy production. The wide-ranging study spans history from the industrial revolution to the Arab Spring, and charts the relationship between carbon-based energy production and various forms of governance. Among the arguments at the core of the book is Mitchell's identification of the emergence of democratic labor institutions within the structure and position of coal mines during industrialization—a position that was weakened in the transition to oil.

From the book:

"Between 1881 and 1905, coal miners in the United States went on strike at a rate of about three times the average for workers in all major industries, and at double the rate of the next-highest industry. The rise of mass democracy is often attributed to the emergence of new forms of political consciousness, and the autonomy enjoyed by coal miners lends itself to this kind of explanation. There is no need, however, to detour into questions of a shared culture or collective consciousness to understand the new forms of agency that miners helped assemble. Strikes became effective, not because of mining's isolation, but because of the flows of carbon that connected chambers beneath the ground to every factory, office, home, or means of transportation that depended on steam or electric power.

Changes in the way forms of fossil energy were extracted, transported and used made energy networks less vulnerable to the political claims of those whose labor kept them running. Unlike the movement of coal, the flow of oil could not readily enable large numbers of people to exercise novel forms of political power."

Link to the book preview, link to a 2009 article that preceded its publication.

  • For more on labor dynamics in industrial Britain, see Robert Steinfeld's 2010 book Coercion, Contract, and Free Labor in the Nineteenth Century, and Suresh Naidu and Noah Yuchtman's 2012 paper on coercive contract enforcement in coal and other industries. Link to the first, link to the second.
  • A 2012 review of Mitchell's book by Matt Stoller: "Globally, the switch from coal to oil was a fight about labor. You can’t understand modern democratic or third world political structures without understanding energy, and particularly, coal and oil." Link.
  • A book on the role of Mexico's oil fields in labor disputes during the Mexican revolution, by Myrna I. Santiago. Link.
  • A Next System report by Johanna Bozuwa imagines a network of democratically-run energy projects as the core of a "just transition." Link.
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