Monday, June 24, 2019

A Workers' History of the United States 1948-2020

#1 New Release in Macroeconomics
After seven years of economic research and developing forecasting models that have outperformed the experts, author, blogger, and physicist Dr. Jason Smith offers his controversial insights about the major driving factors behind the economy derived from the data and it's not economics — it's social changes. These social changes are behind the questions of who gets to work, how those workers organize, and how workers identify politically — and it is through labor markets that these social changes manifest in economic effects. What would otherwise be a disjoint and nonsensical postwar economic history of the United States is made into a cohesive workers' history driven by women entering the workforce and the backlash to the Civil Rights movement — plainly: sexism and racism. This new understanding of historical economic data offers lessons for understanding the political economy of today and insights for policies that might actually work.
Dr. Smith is a physicist who began with quarks and nuclei before moving into research and development in signal processing and machine learning in the aerospace industry. During a government fellowship from 2011 to 2012 — and in the aftermath of the global financial crisis — he learned about the potential use of prediction markets in the intelligence community and began to assess their validity using information theoretic approaches. From this spark, Dr. Smith developed the more general information equilibrium approach to economics which has shown to have broader applications to neuroscience and online search trends. He wrote A Random Physicist Takes on Economics in 2017 documenting this intellectual journey and the change in perspective towards economic theory and macroeconomics that comes with this framework. This change in perspective to economic theory came with new interpretations of economic data over time that finally came together in this book.
The book I've been working on for the past year and a half is now available on Amazon as a Kindle e-book or a paperback (link here until they get them together on the same page)**. Get your copy today! Or pick up a copy of A Random Physicist Takes on Economics if you haven't yet ...

And once you've had a chance to read it, stick around and leave your first impressions, comments, criticisms in the open thread below ...

**Paperback should be available soon. Update: Now Available. As of 6:50am PDT 24 June 2019, KDP still says "publishing". Also, as of 2pm PDT the Kindle edition still says it's the #1 New Release in Macroeconomics on Amazon, so I replaced the cover graphic (show below).


  1. Good read so far. Read the first chapter just before bed last night. Very thought-provoking. I'm thinking of implications, both for conventional theory and for replacing it.

    1. Thanks, Anti!

      The book is structured so as to make bolder and bolder (and more controversial) claims as you continue. The first chapter is the pretty straightforward bit to ease into the idea of social forces, so get ready for fun!

    2. I just finished the book, and it is a very interesting read. Even if one doesn't completely buy the outlines of a possible new model, the commentary on social change in recent decades in the US is deep, often well-researched, and illuminating. It is excellent.

      I do see one obvious problem with the idea that money doesn't really matter, especially as it relates to the 0s inflation in the US. What has always struck me much more than the rise of inflation over the period is the macro instability. NGDP was all over the place. It is tempting to look at the effective Fed funds rate and conclude the Fed caused the instability by applying incorrect macro models and forecasts when adjusting monetary policy.

      Do you have an explanation for the macro instability of the period '68-'82?

      My initial thought is that monetary policy matters, but is more complicated than various monetarists and Keynsian schools would have one believe. Perhaps there's, at very least, an interaction effect between changes in labor demographics, for example, and the effects of monetary policy actions.

    3. Thank you so much!

      I have yet to examine a lot of other countries in detail yet, but in the few that I have seen high rates of labor force expansion not only raises inflation, but also creates a fluctuating economy. I wrote a post about it on the other blog:

      My thinking behind it is that high rates of labor force expansion (high compared to population growth) are more susceptible to the business cycle. Unlike adding people at the population growth rate, adding people at an accelerated rate because of something else happening — women entering the workforce — is more easily affected by macro conditions. Population grows and people have to find jobs, but women don't have to go against existing social norms and enter the workforce in a downturn, but are more likely to do so during an upturn (i.e. breaking social norms gets easier if it pays better than if it doesn't).

      This would cause the business cycle to pro-cyclically amplify and modulate the rate of women entering the workforce, which gives rise to bigger cyclical fluctuations and also the Phillips curve.

      As a side note: I think a similar mechanism played out during industrialization, when people were being drawn from rural agriculture into urban industry. And also a similar mechanism plays out when soldiers return from war (post-war inflation and recession cycles).

    4. Plus, if you did like it, then it'd be great if you could leave an Amazon review! It helps make the book more visible in searches ...

    5. I'm going to do that. Sorry, but have been very busy. I did link to it in the comments of Scott Sumner's blog. I'm Mike Sandifer, so we've exchanged some messages on Twitter too.

    6. No worries — and great to put a face with a name. It's funny that I had no idea you were the same person!

      I can imagine that it probably wasn't taken all that well on Sumner's blog, what with the suggestion that monetary policy is largely irrelevant ... ha!


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