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International Day of Women and Girls in Science continues to raise awareness of the significant gender gap at all levels of science, technology, engineering, and mathematics (STEM). Read more from APHA's Dr Flavie Vial as she explains why gender matters in the animal health workforce in this interesting blog.

I have a new piece at The Dispatch on the antisemitism hearing in the House Committee on Education and the Workforce and the poor performance of the presidents of the University of Pennsylvania, Harvard University, and MIT. From the piece: The presidents' bad hand in the hearings did not stem from a lack of hate…

From today's opinion in Mata v. Avianca, Inc., by Judge Kevin Castel (S.D.N.Y.), which stems from an incident blogged about here last month (and see this follow-up): In researching and drafting court submissions, good lawyers appropriately obtain assistance from junior lawyers, law students, contract lawyers, legal encyclopedias and databases such as Westlaw and LexisNexis. Technological…

From today's decision by Judge Arun Subramanian (S.D.N.Y.) in Flynn v. CNN, Inc.: Plaintiffs Jack and Leslie Flynn have sued Defendant Cable News Network … under Rhode Island's false-light statute. The Flynns claim $75 million in damages. The entire dispute stems from a six-minute segment and, more specifically, the segment's use of a two-second clip…

From the Florida Court of Appeal decision Friday in Waite v. State, written by Judge Paige Kilbane, joined by Chief Judge James Edwards and Judge Scott Makar: This case stems from a lengthy dispute between Waite and the Citrus County Sheriff's Office ("CCSO"). Since 2018, Waite quarreled over property boundaries with city employees and CCSO…

The challenges facing social science research are numerous and wicked – being undervalued by funders, surmounting barriers between knowledge produced and its uptake, and ensuring they get the credit they deserve in public discourse. However, as Juergen Wastl and Kathryn Weber-Boer outline, solutions could lie in demonstrating their ability to catalyse STEM research, in effect … Continued

On average, Black Americans are biologically about nine years older than white Americans of the same chronological age. According to a new study by LDI Senior Fellow Courtney Boen, this aging disparity stems from inequitable social and economic lived experiences. These challenges include racialized poverty and lower wealth, discrimination, and a higher frequency of major […]

From Couture v. Noshirvan, decided Thursday by Judge Sheri Polster Chappell (M.D. Fla.): This case stems from a dozen TikTok videos…. [According to the Complaint,] Defendant Noshirvan is a TikTok creator. He makes money through TikTok gifts, tips, and subscription fees. His niche is cancel culture. Noshirvan finds a video of someone messing up. He…

This Policy Brief was originally published on Think20 India 2023. Abstract Central Bank Digital Currencies (CBDCs) are still a project in the making, but there are many doubts about the economic, political, and societal implications of this dramatic change in the representation of money. These uncertainties stem from the various policy goals, operational models, design […]
La entrada Improving G20+ Monetary Cooperation in the Era of CBDCs se publicó primero en Elcano Royal Institute.

Sara Diogo, Bruno Vilhena and Teresa Carvalho Scientific work has been gaining increased attention and importance in the public policy arena, conveyed by the fact that scientific knowledge is essential to promote economic and social development (Carvalho 2021). Much of this attention stems from the changes that the academic careers and more specifically working conditions […]
The post The Uberisation of Scientific Work appeared first on Europe of Knowledge.

Norbert Michel and Jai Kedia


A few weeks ago, American Compass released Rebuilding American Capitalism, A Handbook for Conservative Policymakers. This Forbes column (American Compass Points To Myths Not Facts) provided a very brief critique of the handbook's "Financialization" chapter, and Oren Cass, American Compass's Executive Director, released a response titled Yes, Financialization Is Real.
Today's Cato at Liberty post is the second in a series that expands on the original criticisms outlined in the Forbes column. (The first in the series is available here.) This post deals with American Compass's claim that the financial sector has siphoned off "top business talent" to the detriment of the rest of the economy.
The evidence does not support American Compass's claims. The post also points out the inconsistency between American Compass's complaints about (allegedly) stagnant American income and an influx of people working in higher‐​paying fields.
To recap, American Compass's handbook states the following:
American finance has metastasized, claiming a disproportionate share of the nation's top business talent and the economy's profits, even as actual investment has declined." [Emphasis added.]

The original critique was that American Compass failed to provide supporting evidence for these claims, and that such supporting evidence doesn't exist. It also pointed out the number of people employed in the Finance and Insurance industry, as a share of total nonfarm employees, has barely budged from 4.5 percent since 1990.
To provide evidence that the nation is, in fact, losing its top business talent to the financial industry, Cass's response pointed to two paragraphs in a separate report that Cass wrote, Confronting Coin‐​Flip Capitalism. Our critique assumes that "coin‐​flip capitalism" is the same phenomenon as "financialization." The first of the two paragraphs is reproduced here:
Graduates of America's top business schools provide a useful proxy for the attraction of various industries and, from 2015 to 2019, nearly 30% of graduates from Harvard, Stanford, Wharton, Booth, Kellogg, Columbia, and Sloan went into finance. In 2020, the finance industry was the most popular and offered the most generous compensation packages for graduates of the MBA programs at both Harvard and Stanford. [See also, our Guide to Private Equity.]

This first paragraph does not provide evidence that finance has claimed a disproportionate share of the nation's top business talent. It merely refers to several years of placement data from some of America's top business schools, not a systematic study. The paragraph provides evidence that a large portion of top business school graduates choose to work in finance. That fact is hardly surprising, and it is not evidence that the proportion has changed or that businesses have been harmed.
The second paragraph is reproduced here:
Engineers have likewise flocked to Wall Street, as compensation at equivalent education levels surged in finance as compared to engineering after 1980. The probability of an engineer switching to a finance career increased more than four‐​fold from the 1980s to the 2010s; the share of "STEM" jobs in finance doubled over that period while the share in manufacturing fell by half. Lest one think these are the engineers who couldn't hack it in engineering, Nandini Gupta and Isaac Hacamo of Indiana University's Kelley School of Business find that "financial sector growth attracts exceptionally talented engineers from other sectors to finance."

Citing three research papers, American Compass bemoans the finding that "Engineers have likewise flocked to Wall Street." Our critique assumes that engineers should be included in the category of "top business talent."
First, even if business majors and engineers do choose finance versus other fields, that fact alone says nothing about why they make such choices, much less whether such choices cause harm to the nation's economy. Such choices could simply reflect that people tend to seek opportunities to earn higher compensation, and the outcome could be beneficial to the economy. And, in fact, between 1968 and 2022,[1] average annual real wage and salary growth was higher in finance than in several other sectors, including engineering. (See Figure 1.)









Figure 1: Real U.S. Annual Wage Growth Statistics by Sector, 1968 to 2022
Average annual real wage and salary growth is 1.73 percent in finance since 1968, but 1.26 percent in engineering and 1.36 percent in computer services. Thus, even though wages in finance are lower than in computer sciences or engineering (see Figure 2), their higher growth rate could help explain why many people would choose finance jobs relative to other fields.









Figure 2: Annual Wages in the U.S. by Sector, 1968 to 2022, inflation adjusted with Personal Consumption Expenditures (PCE)​
None of these facts are indicative of an economic problem. If American Compass believes that people earning so much more in the computer field harms Americans, they should say so. Similarly, if American Compass believes that a 0.47 percentage point difference in average income growth between the financial and engineering sectors reveals businesses have been harmed, they should state their hypothesis clearly and make an empirical case.
Surely, though, an organization such as American Compass, one that constantly complains about stagnant income, would not begrudge Americans for choosing to work in a higher paying field. (Figure 1 and Figure 2 also demonstrate that Americans' income is not stagnant. Real wage and salary growth has been positive across almost all sectors and time periods, with cumulative growth of 71 percent even in the manufacturing sector. We'll return to this issue in a future post.)
Of course, even this compensation growth data tells us very little about why the different rates of growth occurred in the various sectors. However, one of the academic research papers Cass cites in his response does provide an explanation for this difference. Specifically, we're referring to the paper by Thomas Philippon and Ariell Reshef, titled "Wages and Human Capital in the U.S. Finance Industry: 1909–2006," which was published in the prestigious Quarterly Journal of Economics in 2012.
In that paper, the authors show that the labor market in finance was artificially suppressed between 1940 and 1980 due to an over‐​bearing regulatory environment. In other words, overall wages and employment in finance would have been much higher without the heavy regulation in that sector. Consequently, the uptick in wages and employment after 1980 are likely due to the finance labor market reverting back to its non‐​suppressed state (similar to pre‐​1940) after the regulatory environment changed (precisely what economics would predict). Here's a quote from page 1552:
We find a tight link between deregulation and the flow of human capital in and out of the finance industry. In the wake of Depression‐​era regulations, highly skilled labor leaves the finance industry and it flows back precisely when these regulations are removed in the 1980s and 1990s. This link holds for finance as a whole, as well as for sub‐​sectors within finance. Our interpretation is that tight regulation inhibits the creativity of skilled workers.

So, this paper does not support American Compass's position that anything bad has happened; instead, it argues that any employment increase seen in finance is essentially a reversion to a state where skilled workers' creativity is no longer inhibited.
Another of the three papers is a Kelley School of Business working paper from 2022 by Nandini Gupta and Isaac Hacamo. This paper is an even stranger choice for American Compass to cite as proof of some kind of harm caused by financialization (or coin‐​flip capitalism). It shows that the net effects of people working in finance boost entrepreneurship. Here is the relevant language (from two separate paragraphs on page 4 of the paper):
Our results show that the finance wage premium increases overall entrepreneurship. This may occur because engineer‐​financiers are more likely to become entrepreneurs. Or, because talented engineers in finance facilitate entrepreneurship by others. We find that engineers who take finance jobs are less likely to subsequently start firms. Therefore, we study a potential peer effects mechanism where engineer‐​financiers may help their classmates become entrepreneurs.
…
We find the following results: First, we show that top engineers exposed to a higher finance wage premium at graduation are more likely to take jobs in entrepreneurial finance (EF) jobs in venture capital, private equity, and investment banking. Second, we show that engineers who don't take finance jobs are more likely to become transformational entrepreneurs the more classmates from the same school‐​major‐​graduation year who are in venture capital, private equity, and investment banking firms. For example, an engineer with 5 classmates in entrepreneurial finance jobs is 9% more likely to become an entrepreneur and 18% more likely to create a transformational firm that issues patents, employs workers, and has a successful exit, relative to the mean.

At the very least, the paper's results are consistent with the literature on peer‐​effects "whereby engineers in investment banking type jobs help their classmates start transformational firms." Obviously, it's very odd to cite this paper as evidence that financialization is some kind of blight on capitalism. It implies the opposite: the overall labor market trend is good for the economy.
The third paper is a 2022 working paper by Giovanni Marin and Francesco Vona, and the evidence it provides does not show that finance is now claiming a disproportionate share of STEM talent. For instance, the authors show that the probability a STEM graduate starts working in finance rose between 1980 and 2019, from 4 percent to 6.8 percent. However, they also report a substantial increase for non‐​STEM graduates – it rose from 6.5 percent in 1980 to 8.2 percent in 2019. (See page 9.)
The authors of this third paper also report (see pages 3 and 4) that they "observe a pronounced task reorientation towards math in finance and business occupations, which is associated with a change in the types of education required in these occupations." (Emphasis added.) In other words, they observe a change in education requirements for multiple occupations, one that (especially in finance) is "more pronounced among experienced workers."[2] Additionally, the paper corroborates that the drift of STEM graduates to finance is simply a result of people finding the best match of talent and innovation:
These empirical patterns are associated with profound technological changes affecting the financial industry more than the rest of the economy. Finance is an information‐​intensive industry that benefited from improvements in information and communication technologies (ICT) more than other industries did. The STEM biasedness in the demand of college graduates is consistent with the complementarity between ICT technologies and STEM graduates.

Finally, Marin and Vona report (see graph B on page 10) the share of hours worked by college graduates in the finance industry for both STEM and non‐​STEM graduates between 1980 and 2020. Both STEM and non‐​STEM groups display an increasing trend, and the share for non‐​STEM graduates remains roughly two percentage points higher than for STEM graduates for the full period. Though not quite as damning as the previous two papers, this one, too, fails to support the idea that finance has started claiming a disproportionate share of talent.
So, on balance, none of this evidence – especially not the papers cited by American Compass – supports the idea that finance is responsible for robbing the nation's businesses of talent. Nor, as American Compass argues in Confronting Coin‐​Flip Capitalism, does any of this evidence support that finance is robbing talent "from the real economy" and "further discouraging productive investment."
On page 102 of his book, Cass supports the "tracking of less academically talented students toward vocational training," so he may have some optimal employment arrangement in mind for the financial sector. Perhaps someone else at American Compass has some idea what the optimal quantity of workers should be in the financial sector, but the "Financialization" chapter does not mention it.
In the next post, we will discuss claims involving financialization's alleged effect on profits.


[1] Figure 1 and Figure 2 report annual average growth rates and actual amounts, respectively, for real annual pre‐​tax wage and salary income, by sector, from 1968 to 2022, using the IPUMS-CPS, University of Minnesota, www​.ipums​.org.


[2] Figure VI (on p. 1571) from Philippon and Reshef (2012) also confirms this finding. Finance jobs dramatically increased in complexity while tasks in the rest of the labor market became substantially less complex.

Back in July, I mentioned our new introduction to population ethics.  Since then, I've also added a chapter on Theories of Well-being, and -- brand new as of today -- Arguments for Utilitarianism.I'm inclined to think the best case for utilitarianism stems from simply reflecting on what fundamentally matters (and one who doesn't find the utilitarian answer here intuitively compelling is unlikely to be much moved by any other argument in support of the view).  But I'm also pretty moved by the charge against non-consequentialist views that they are steeped in status quo bias, so I was pleased to be able to make that case here.  (I don't recall seeing the point discussed so much elsewhere -- it strikes me as unduly neglected.)The other big news today is that we're kicking off a new series of Guest Essays with an excellent article by Jeff Sebo on 'Utilitarianism and Nonhuman Animals':This essay advances three broad claims about utilitarianism and nonhuman animals. First, utilitarianism plausibly implies that all vertebrates and many invertebrates morally matter, but that some of these animals might matter more than others. Second, utilitarianism plausibly implies that we should attempt to both promote animal welfare and respect animal rights in practice. Third, utilitarianism plausibly implies that we should prioritize farmed and wild animals at present, and that we should work to support them in a variety of ways.Enjoy!  (And maybe consider adding the relevant articles to your syllabi if you teach on any of these topics...)

Manuel Orozco directed a survey in Nicaragua for the Inter-American Dialogue. The results show deep distrust that has developed over years of corrupt government, from Daniel Ortega of course but also the right. Nicaraguans want free elections and they also want good choices, and they don't see either happening.It would be logical to assume that Nicaraguans would lay the blame for the crisis--political, economic, public health, etc.--on Daniel Ortega. But that's only partially true. This graph caught my attention the most:Several of these questions get at the repression and ineptness off the government, but a lot of people see this as just another example of Sandinista/right political conflict, which has dominated the country for over 40 years. Further, check out the sizable chunk of people who believe the crisis stems from the U.S. and the right.Who do Nicaraguans want to vote for? They don't seem to see good options. They don't identify with the political parties and a majority doesn't even identify as "pro-government" or "pro-opposition." If the election were held today, a large majority either doesn't know or would not choose from any candidate (which they could write in). They think there will be fraud and see international observers as important.What can we take away from this?--Lack of popular interest in the opposition and an alternate leader works very much to Ortega's favor.--International observers are critical for the legitimacy of any election. The next presidential election is now scheduled for November 2021.--Ortega's inept response to Covid-19 is truly devastating. No one believes him when he says it's barely affecting the country.--There is support for sanctions, but they should stay very focused on the Ortega clique.--as with Venezuela, the situation keeps getting worse with no real solution in sight. Subscribe in a reader

Those put-off by the putative counterexamples to Act Consequentialism may consider Rule Consequentialism a more appealing alternative. Michael Huemer goes so far as to suggest that it is "not a crazy view." In this post, I'll explain why I think Rule Consequentialism is not well-supported -- and, at least as standardly formulated, may even be crazy.There are three main motivations for Rule Consequentialism (RC).  One -- most common amongst non-specialists -- stems from the sense that it would be better (in practice) for people to be guided by generally-reliable rules than to attempt to explicitly calculate expected utilities on a case-by-case basis.  But of course this is no reason to prefer RC as a criterion of right; this consideration instead pulls one towards multi-level act utilitarianism (on which the right decision procedure is something other than constant calculation).A better argument for RC (and the one that seems to motivate Huemer) is that it better systematizes our moral intuitions about cases.  But I think this is bad moral methodology -- matching superficial intuitions about cases is much less important than conforming to our deeper understanding of what really matters.  And RC is notoriously difficult to reconcile with the idea that promoting well-being (rather than blindly following rules) is what matters.Perhaps the most principled argument for RC stems from the contractualist ideal of acting on principles that are systematically justifiable to others.  Parfit's project in On What Matters was to argue that such contractualist foundations should lead one to Rule Consequentialism.  But as I argue in chapter 5 of Parfit's Ethics, it's obscure why we should want the rules we act upon, rather than simply our acts themselves, to be justifiable to others:[T]he
mere fact that the best uniform (or universal) principles recommend an act does not mean that this specific act is any good—the
principles' benefits may stem from other cases. This prompts a
couple of deep challenges to Parfit's rule-based approach: (i) When
an optimal act is ruled out by optimal principles, why prioritize
the principles—why should acting optimally ever be considered
"unjustifiable"? (ii) Different people might do better to be guided
by different principles—so, even on a rule- or principle-based
approach, why require uniformity?So I'm dubious of the putative reasons to favour RC in the first place.  Moreover, it seems to me that RC is subject to powerful objections.(1) It's subject to all the standard objections to views that aren't fundamentally consequentialist: (i) it gives bad (rule-fetishizing) answers to the question of what fundamentally matters; (ii) it implies that benevolent spectators should often hope that (fully-informed) agents act wrongly;  (iii) it's subject to the paradoxes of deontology, both old and new.(2) More distinctively, RC (at least as standardly formulated) has absurd implications in any scenario where the optimific rules were good to accept but not good to act upon.For example, an evil demon could threaten to torture us all unless we come to accept & approve of torturing puppies. (Crucially, the actual act of torturing puppies does not achieve any good whatsoever in this scenario; the belief is enough.) Obviously, one should not torture puppies in this case -- there isn't even the slightest reason to do so.This is very different from putative counterexamples to act consequentialism, where one might feel that the act "seems wrong", but you can at least see how there are weighty reasons counting in its favour (e.g. saving more lives!).  In this case, what we're able to show is that the Rule Consequentialist's assumed link between reasons for accepting a moral code and reasons for acting upon it is fallacious. There's just no essential connection there.  But that's the basis for the whole theory.Could RC be saved by reformulating it in terms of rules that are good just in virtue of the value of the acts that they lead to?  I don't recall seeing anyone else formulate the view this way, but it does seem an essential move in order to address this (otherwise decisive) objection.  The resulting view starts to look increasingly ad hoc, however -- once you've gone this far, why not simply accept the multi-level act utilitarian view that the rules are mere rules of thumb, rather than in-principle determinants of rightness or normative reasons for actions?(3) As Podgorski argues, RC is subject to the "distant world" objection, as it "determines what we ought to do by evaluating worlds that differ from ours in more than what is up to us."  It seems that this will inevitably lead to clearly bad recommendations in special cases (such as Podgorski's "duds").(Caleb Perl claims to "solve" this by jettisoning counterfactual evaluation in favour of the "consilience" principle that "the moral value of
a rule R is everything actual that's agent-neutrally
good or bad to the extent it's caused by actions that
R classifies as morally right."  But such a blinkered form of evaluation will surely be subject to even more egregious counterexamples.  E.g. suppose that R permits both good and extremely bad acts, but we're in a world where people have only performed the good acts.  We shouldn't conclude from this that R is a good rule, or that its non-actual (extremely bad!) instances are permissible.)(4) RC is a structural mess. As I explain in my (2012) 'Fittingness' paper:Rule consequentialists first identify the rules that are best in terms of
impartial welfare (or what's antecedently desirable), and then specify that
we have decisive reasons to act in accordance with these rules. Finally, they
might add, we have overriding reasons to desire that we so act. This way,
a prohibited act may be 'best' according to the antecedent (agent-neutral
welfarist) reasons for desire, and yet be bad (undesirable) all things considered. This avoids the incoherence [of preferring to act wrongly]. But it also brings
out how convoluted the view really is. It is recognizably consequentialist in
the sense that it takes (some) reasons for desire as fundamental, and subsequently derives an account of reasons for action. But then it goes back and
"fills in" further reasons for desire — trumping the original axiology — to
make sure that they fit the account of right action. In this sense it exhibits
a deontological streak: reasons for action are at least partly prior to reasons
for desire. In other words, the initial axiology includes only some values
(the 'non-moral', agent-neutral welfarist ones), and what's right serves to
determine the remaining ('post-moral', all things considered) good.I don't have a further argument against accepting a moral theory with this structure.  It's not strictly incoherent or anything. I just think it's unappealing once brought to light, especially when the view lacks significant compensating advantages.  (I think this also brings out why we might reasonably regard RC as not really consequentialist, despite its name.)

Steering the UK economy out of the inflationary storm would always require unusual finesse, but the task would be easier if the Bank of England governor had an unemployment number he could trust.The problem, highlighted by Andrew Bailey in a recent hearing, stems from deeply flawed labour market data from the Office for National Statistics, led by national statistician Sir Ian Diamond.It's possible to work merely with management consultancy platitudes - you can only manage what you can measure for example. Which is, in fact, the complaint being made here. The desire is to manage inflation, for that it's necessary to have the employment numbers and therefore we desire to have those so that we can manage.We can and should go back a step into theory. Which is that economies are big and complex and therefore we're simply never going to have those numbers to the level of detail required for that pinpoint management. This is the rock upon which all clever macroeconomic schemes founder. Not only don't we know, we can't know. For example, we really don't know how many people there are in the country. Observations of, say, sewage volumes (with, admittedly, some heroic assumptions about diet and so on) are rather at odds with any counts of National Insurance numbers or Census counts. Certainly, anyone who tries to insist we know to within better than 5% either way is on very dodgy ground indeed. OK, maybe 3%.It's not just this number either. It's all the numbers we collect have those error bars. Which means that attempting to fine tweak to within those error bars is going to be a nonsense. Yes, obviously, a 10% fall - or a 5% increase - in recorded GDP is something to take note of, even panic about. Inflation of such sizes and so on. But in that pointillist detail required by the more ambitious macroeconomic management schemes we're really just out of luck on that information front. Sad, but there it is. Which does mean that economic management needs to rely upon the things that can be done. Set up the basic systems properly and leave be. Make sure that incentives are good, the rule of law is tolerably enforced, we've not a bureaucracy descending upon economic activity like piranhas upon a corpse, taxes are easy and so on. The outcome becomes something not managed, for that's impossible, but emergent from the correct set up of the system in the first place.