It Is Done

At 10:00 this morning I handed in my final paper for my Money & Banking class, and with that was finished with my Economics degree.

After class I walked around campus, visiting the places that have been important for one reason or another during my time back at UT over the last 11 [sic] years. GEO 100, where I took my first econ class: ECO 301K Introduction to Microeconomics. BUR 106 where 450 other people and I took ECO 329 Economic Statistics. The 6th floor of PCL, the Presidential Lounge in the Union, and the Architecture Library where I spent so many hours studying. It was a nice trip down memory lane.

And now I'm finished. Lots of people have asked me what I plan on doing with my new Economics degree. My best answer, which always disappoints everyone, is, "Know (undergraduate-level) economics." But that's what I set out to do.

I wanted to understand basic economic theory and how it applies to everyday life. And having studied it, I know how a pretty good handle on a bunch of economic concepts—budget constraints and indifference curves, production possibility frontiers, diminishing marginal value and returns, consumer and producer surplus—that kind of stuff. And I understand how those things help explain the behavior of consumers and producers, health care (and health insurance) providers, financial intermediaries, workers, and employers. And I see how little attention is paid by economists to tastes and preferences, those very things that so much of our economy is actually based on.

I have an informed skepticism about neoclassical economics. I have an educated appreciation for behavioral economics. And I know for a fact that macroeconomics is, as one of my micro theory TA's put it, largely bullshit. Laffer Curve indeed.

The most important thing I've learned is how to think like an economist, which boils down to looking for tradeoffs. (But if you can ever find a Pareto improvement, make it.)

Along the way, I got to be a student again. It was sometimes humbling, sometimes awkward, but almost always interesting. My own kids will be going to college in a few years and I have an updated understanding of what they'll be facing.

I might write an epilog post or two on this blog, but for the most part this is it. Thanks for reading. Hook 'em horns!

Technology as a Substitute for (All Kinds of) Labor

Most economists don't expect automation to cause mass unemployment. Their argument is that, just as it has done for the last few hundred years, technology will replace some jobs but will create even more.

I find that conclusion counterintuitive and unsatisfying for lots of reasons, many of which I hope to share on this blog in the future. But in the mean time, here are two interesting items recently in the news.

First, Google's AI company DeepMind, after conquering the games of Go, Chess, Shogi, and StarCraft II, and in fact basically declaring victory in all two-player perfect information games, recently won a protein folding competition. If you still think that technology will only replace people in low-skilled jobs, think again.

This talk by DeepMind cofounder and CEO Demis Hassabis is fascinating. (Skip to 51:27 for the discussion about AlphaFold.)

Second, economists Daron Acemoglu and Pascual Restrepo just published a short paper titled The Wrong Kind of AI? Artificial Intelligence and the Future of Labor Demand that seeks to answer the question, "If automation tends to reduce the labor share and has mixed effects on labor demand, why did the labor share remain roughly constant and productivity growth go hand-in-hand with commensurate wage growth over the last two centuries?"

I think it's important to recognize that very recent developments like those being pioneered by DeepMind are radically changing the types of work that can be automated. When machines can learn, they are not constrained by the imaginations or aptitudes of programmers, and can quickly surpass human ability in domains we previously considered reserved for us.

It's going to be a wild ride.

Premature Nostalgia

I haven't even finished my time at UT and I'm already starting to miss it.

I've come to understand that it's an incredible luxury to have someone who is not only an expert in his or her field but also a professional teacher teach you something you want to learn. Where else would I have the opportunity to learn about labor economics from the member of President Obama's Council of Economic Advisors responsible for delivering to him and interpreting for him the monthly jobs numbers? That's just crazy. And yet, I had that opportunity at UT last semester. (Thanks, Professor Black!)

During my economics studies, I've had some great teachers. Not just Sandy Black but also Valerie Bencivenga, Wayne Hickenbottom, Helen Schneider, Steve Trejo, Brian Trinque, and Elon Lang, among others. I'm grateful to them for teaching me all about micro, macro, statistics, econometrics, health, money and banking, labor, and drama (!). I've learned literally more than I ever wanted to know, but I'm glad I did.

I've met some really impressive students who are bound to go on to get success (hi, Akash!). I've also met some who aren't even trying, and are failing. They make me shake my head and wonder why they're even here. I recognize my 20-year-old self in them. Maybe they're bound for success too, but it will be a long, hard road.

Along the way I've developed some strong opinions about economics, which I admittedly hold with the confidence of the novice. More econometrics, less calculus. Don't be so quick to dismiss "tastes and preferences". People are not rational, no matter how elegant your graph is. Economic analysis is a reasonable place to start but is rarely if ever the final word.

But beyond just the education I've received, I appreciate the experience. Sure, it's sometimes been a little awkward to be the 40-something guy in class. But it's been a treat. Universities are environments like no other. Everyone is there to teach or to learn, or to help facilitate that. At least in theory.

The administration is mind-bogglingly complex but works very smoothly. It's a really impressive operation. And the wifi is excellent.

I'm going to miss being a UT student.

The 49-Year-Old Graduate?

Classes for Spring 2019, which will be the final semester of my economics studies, start next week. By the end of the semester I'll be 49 years old, eleven years older than when I started this "back to school" project.

Back then my kids were three years old, now they're fourteen. Back then I was running a little two-man software company, since then I've founded, grown, and sold a much bigger company, and now I'm retired.

It's been a long time and a lot has changed. But I'm excited to be going back to school one more time.