Update on "Some Personal Reflections"

Some have pointed out to me that some of the points I make are similar to Richard Reeves’ The Dream Hoarders, so I encourage everyone to consider buying it.

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Some Personal Reflections

Or, subverting the Rational Gaze

Never have I ever written about personal stuff. Sure, I’ve dropped the occasional thread about the political viewpoints I have observed developing in my generation and the occasional tweet hinting about my personal life, but I’ve never really put pen to paper on (or typed out) my thoughts on myself and my life. I think part of the reason for this is that, like many of my gender, through social conditioning and biology I approach emotion in an almost clinical way. Writing out what I am feeling is sometimes all I can achieve, and I haven’t cried in six years.1

Connecting things to basic economic principles is perhaps what I do best (behind using the dynamics of nominal income to forecast key trends in the business cycle), so in this piece I will attempt to marry my personal feelings and observations with my knowledge of socioeconomic trends and the behaviour of humans to drive at the heart of the way my generation behaves.

I’m probably gonna skip my usual sectional formatting for this. I want this piece to be explicitly readable, more flow than formal thought. I’m not sure that’s something people are interested in getting from me, but I figure I should express myself sometime or another.

The particular impetus for me writing this now, at this particular moment in time, is that I’ve come to the arduous conclusion that I am an extrovert. While it may seem ridiculous, pathetic even, that I’m making such a deal out of this elementary realization, you must realize that I lived the entirety of my life so far like an introvert. I constantly wondered why I was depressed and tired all the time; now I know the answer.

I honestly shouldn’t be surprised! I’m confident that the vast majority of humans are naturally extroverted in personality. I must note “naturally”, as according to the best academic work I could find (this is still my blog, I will be citing properly!) the split is roughly equal.2 I say “natural” because we are social creatures; it’s of great necessity that we feel most comfortable and refreshed spending time amongst our fellow men than alone. Typically, introverts are specifically molded by societal, not natural, conditions. I recall Pascal’s remark:

All of humanity's problems stem from man's inability to sit quietly in a room alone.

Pascal’s ideal of human behaviour contrasts to his view of natural human behaviour, that of the restless extrovert. It’s a part of our innate curiosity, the reason why apes and children behave so similarly.

My introversion was only partially driven by my personal choices. Part of it was also driven by the way suburban America chooses to organize itself.

The suburban focus on road transport means that until you’re at least sixteen and have access to a car, you have little means of independently reaching your friends and social amenities which are not in your immediate area. A lack of walk- or bike-ability means that even immediate areas can be inaccessible, and the fears and restrictions of overprotective parents limit the early development of independence in children.

There’s also less acceptable activities for children in general. When all you can do is corporate, clinical, and organized by your parents, no wonder you’d want to stay inside all day, on the internet!

We find another familiar villain in zoning. There’s a replete lack of commerce-based social spaces in individual suburbs due to sole residential zoning restrictions. I recall my grandfather, who grew up in Brooklyn in the 1940s, describing the candy stores and family shops he would spend his time in. It is easiest to be social in a neutral space as a paying customer, something today’s children lack.

That’s mostly what I did. Sure, I spent most of my time studying and blogging and researching, things I’d consider productive, but I missed out on some important social development along the way. Some of this had to do with the competitive academic environment I perceived. Now, this is still something I’m working through at the moment, so I won’t say too much, but I believe that college is too competitive in the United States. Achieving a work-life balance is an achievement, and we should be doing something to foster it.

I don’t think the average teenager wants to be Very Online. It’s because of the way we’ve organized society that teenagers are such. Even rural and urban areas lack respite, due to isolation in the former and crime in the latter.

I’m not all doom and gloom, because something I noticed about my generation has made me quite hopeful (and is an upside to our aforementioned Very Online-ness). I believe there has been an emergence of what I’ll call intragenerational solidarity amongst my peers, due to the pandemic and our national cultural melding via social media.3 Ever since the pandemic began, I’ve found kids my age to just be that one bit nicer, more trustworthy, more reverent, and more appreciative. I used to be pretty pessimistic about my peers, but now I’ve gotten almost enthralled by our new group dynamics. It’s like a V-Day march (diluted heavily, of course, but still), just without the non-consent.

A lesser, but still-important, component of this transformation is the increasing number of brave souls in my generation who are willing to speak out about abuse they’ve suffered. There’s a lot of abused children in America, about 650,000 going off of declared cases. If you’re my age, you’ve certainly met someone who has suffered childhood abuse and trauma.

The “true” number is certainly higher. I don’t want to give off the impression that everyone in my generation is an angel. Nothing could be further from the truth. There’s an incredible amount of child-to-child (usually teen-to-teen) abuse in America, none of which is counted, plus an inordinate amount of “soft” childhood trauma. A difference between now and before, however, is that my peers are more likely to seek help and healing and solidarity, especially from each other. Stigmas are slowly being broken down.

I have begun to think people are inherently good. I’ve always been a liberal, but I used to call myself a pessimistic one, unsure of whether or not Locke was truly more enlightened than Hobbes. Now, I’m confident that we all have the innate capacity to maintain a just society governed by natural law.

I learned recently that both capitalistic and communitarian societies show higher levels of cooperation and lower levels of social malaise.4 This is in-line with the liberal ethos, which is predicated on the idea that consensual and free exchange leads to optimum social outcomes. I do think we miss out on this in our political discussions. I’m no conspiracy theorist, but there’s a vague authoritarian streak rising in public discourse (well, not so vague in the case of the American Right), and I think that is because people have lost track of natural law as their primary mode of understanding both government and society. This isn’t to say we shouldn’t expand the state, but I do feel that most people tend to justify their preferred policies based on a dislike of the actions of certain people rather than weighing ethical costs and benefits. This is how we get NIMBYism, immigration restrictionism, and almost all other modern political diseases.

It is important from the perspective of teaching economics to reinforce the ideals of liberalism as intertwined with the commercial space. I recently took part in a program for young people interested in economics, and while I found most of the lessons employed to be of the typical “conservative economics” ledger, I was intrigued by the aforementioned discussion of how economic systems influence the social incentives of people.5

The “leadership” aspects of the program, which I unexpectedly enjoyed the most, reinforced this realization in me. The participants and I were forced into challenges we could only beat via cooperation, and we overcame them all with intense vigour pent-up over the last fifteen months of our lives. What I ended up enjoying the most was this event known as the Power Walk, which entailed a sort of collective admittance to proposed personal statements, almost certainly related to things people regretted about themselves or had to deal with in their lives. It was a therapy session, in a mild way, and I enjoyed it immensely. It was perhaps the first time in my life I had ever really come to fore with my feelings in a healthy manner. As I pointed out earlier, crying isn’t my style. In fact, I shed my first, lonesome tear in six years there.

I’ll share a few more anecdotes from the event and then move into my closing statements. I remember talking to a girl at the event about college applications. When I told her my dream school, she mentioned how she could never apply there, as it was too much of a depressing environment, and mentioned her choice, which I wholeheartedly endorse as the happiest school in the United States based on familial experience (it should be completely obvious why I’m declining to mention names here). It did get me thinking about the way we approach designing spaces and experiences around mood. I’m not a traditionalist, but there is something to the way the ancients did it. Our work-life balances are out of whack, and we fail to provide appropriate social clearance and environmental designs to facilitate contentedness in ourselves. Sure, hunger for achievement is necessary and good, but so is Eudamonia. I’d posit that in fact the most accomplished people are those who are contented. If our academic institutions continue to fail to achieve this, we will surely languish.

This next anecdote is of a more shocking and tragic nature, so I encourage those unable to bear such to skip reading this next paragraph. I encountered a girl at the program whose father had taken his own life the week prior. She seemed remarkably resilient. I am a practicing Stoic,6 so I’m cognizant of and confident in the ability of people to handle intense trauma in such a manner. Still, it was utterly impressive to see the true, unfettered fortitude that we as humans are capable of in action. I gave her my treasured necklace that held a denarius from the reign of Marcus Aurelius, one as it had served as my memento of fortitude for many years but two as an induction, in my mind, into the ranks of those with astounding emotional prowess.

The final anecdote is of my experiences giving informal lectures to some of the participants who were more interested in economics. I believe we called ourselves the Uncool Kids Club. What struck me about the questions they asked was how much they implicitly understood Friedman’s Methodology of Positive Economics. They understood the bounds of positive analysis and clearly divided such from their attempts to develop a normative framework. A lot of the discussion I took part in at the program revolved around whether or not we all shared on normative framework. Whatever you may believe, it is good to see the next generation of economists investigate their normative frameworks more. We have been sorely lacking there.7

I’m a believer in the benefits and continued success of capitalism through and through, but recently I have begun to see its downsides. We as a society look too much through the competitive lense in our social lives, too much through the locus of wealth and wage. I’m confident that this isn’t inherent to capitalism, but I know it doesn’t do much to alleviate it (other than transforming it into a productive economic force). Many on my side of the political spectrum say we aren’t appreciative enough of the growth we’ve been given. I think we aren’t nearly ambitious enough in our view of what society can be: more prosperous, equal and happy.

Andrew Yang spoke about it. Noah Smith elucidated about it. Now I have come to expunge my view on America’s scarcity mindset. All of the problems we face are because of it. Indeed, that flaw in capitalism I just mentioned is sourced from it. We are unable to appreciate as a society the possibilities of what we can achieve. Much of our economic discourse revolves around the “scarce means” and not the “alternative uses”. I hope this nascent transformation in social paradigms begins to erode it, because we will die if it doesn’t. Our myopic appreciation of our own potential leads us to inequality, poverty, and scarcity in the first place. As we emerge from hysterisis, I hope the young economists of my generation begin to move towards a view of the economy that is less gloomy than our predecessors (and, while this comment will elucidate groans from my more loyal readers, can we get just a bit more willingness for demand support?).8

I guess I’ll end with this. I’ve always been a Stoic. I always will be a Stoic. But recently I’ve begun to appreciate the Epicurean view of things, and not just that communal or dormitory living should be given another chance. I’ve become Epicurean in the sense that I understand now that happiness is a key component of Eudamonia, and that such happiness really does come from how intense our relationships are, agnostic of all. Maybe I’ll even start to let up a little. Knightian Uncertainty, of course.

Per Gladium Causa,

Joshua Z. Miller

P.S. The cover image is Marcus Aurelius distributing bread.


We will get to this later.


Briggs-Myers, Isabel, Mary H. McCaulley, Naomi L. Quenk, & Allen L. Hammer. 1998. The MBTI® Manual: A Guide to the Development and Use of the Myers-Briggs Type Indicator. Consulting Psychologists Press. 3rd.


Hats off to the Marvel Cinematic Universe as well.


Both the event where I learned this and this theme come up later.


This is not to imply that capitalism only breeds angels. I dismiss this later.


This gets brought up again, later.


It may be a bit dramatic, but I somewhat blame the failed response to the Great Recession on a poor normative framework as well as flawed positive analysis. The last forty years, in fact!


This is still my blog, I will be talking about aggregate demand even if it’s forced.

Some Thoughts On Sticky Wages

Or, don't fix it if it ain't broke

Basil Halperin wrote a great piece a couple weeks ago on why we should use sticky wages. I have couple thoughts on the “reasoning” behind sticky wages, and their implications.

Are Sticky Wages a Good Approximation?

The central question I now have about sticky wages is whether or not they are a good approximation of the general behavior of wages in a recession. Are wages consistently variable as implied by the idea of sticky wages? No. So what do sticky wages represent?

One explanation, mentioned by Halperin, is that new hire wages can be sticky. This makes more sense, as those wages are completely variable. This could also apply to workers seeking promotions or renewals of contracts. In fact, the “wage rigidity is contract rigidity” view is the one I personally prefer. Essentially, wages aren’t sticky “because you were “too stupid and too stubborn” to lower your wage demand”,1 they’re sticky because you can’t adjust a rigid contract.

The contracts view does also apply to sticky prices, as companies facing contracts may have cashflow shortfalls if NGDP drops. In that case, real wages would rise, causing unemployment and industrial malaise.

Because of the Implication

The main implication of all the causal scenarios I discussed is simple: target nominal income. The source of distortion is an NGDP shock.

It also implies that equilibrium wages are a function of NGDP. Essentially, that it’s cash balance, not productivity, that manages real wages. This means that growth slowdowns must be met by loose money. That lesson implies that policy since Volcker has erred tight, and that 1970s policy erred loose.


From the Halperin piece

It's Time For the Phillips Curve to End

or, embrace Monetarism


I just finished Skanda Amarnath’s and Alex William’s piece on the Phillips Curve and maximum unemployment.1 There is a lot to like in the piece, especially the dismissal of the Phillips Curve, also known as the worst idea to come out of American Keynesianism other than hydraulic modelling.

Some Critiques

Before I get into the meat of this post, I want to discuss what I didn’t like about the article.

My main issue with the article really is only about their assertion2 that the failure of the labour utilization rate to rise leads to recessions or anti-recessionary actions. It is a mere causation due to capacity labour utilization being endogenous to the strength of nominal output growth, both on the real output and stabilization policy side.

I also take issue with their stance on interest rates. Interest rates must be looked at through a Wicksellian3 lens—period. Understanding both how the spread between the natural and policy rate and Fisher Effect play into rates is crucial.4

I also find their discussion of the Great Inflation to be more or less false. The price level increases in the 1970s were the result of expansionary policy. It is impossible for capacity constraints to affect input-output linkages in the way they did, whereas the hot potato effect and the Fed’s overshoot5 can certainly explain the crisis (and consistently with theory too).

The Two Drivers of the Labour Market

Their piece is really about the relationship between the labour market and inflation. To summarize, inflation is born of excess demand over supply constraints, while limits to labour market tightening are born of capacity constraints and a lack of policy accommodation.

In my mind, we can divide up the driving forces of labour markets into two types: real and nominal.

Real driving forces in labour markets are ultimately about the need and ability for sectors to take on workers and the desires and constraints worker have imposed while bargaining. Things like a microchip shortage limit the ability of certain sectors to hire, while things like unions and occupational licensing restrict labour supply. It is important to note the relation between labour supply and demand and real wage acceleration. Ceteris paribus, restrictions to labour supply increase real wage acceleration. However, on a grander scale, they decrease real wage acceleration because firms are less survivable. That’s why paying attention to occupational licensing, trade unions restricting the entry of potential workers,6 and capacity constraints that hurt firms’ bottom lines all serve to drive down labour market tightness.

Nominal forces are merely stabilization policy. Both monetary policy driving up income expectations and easing credit conditions and fiscal policy adding new capacity and spending to the economy count here. Labour markets will tighten when the economy approaches equilibrium, as that is when competition is most perfect. Firms with more spending capacity can also allow wages to rise more, and workers with more potential fallbacks drive a harder bargain. The inverse (when policy is contractionary) is true as well.

The Two Types of Inflation

Let us now evaluate the opposite side of the Phillips Curve: inflation. Inflation can be one of two types: transitory and permanent.

Transitory inflation happens when there is a disequilibrium in the economy that manifests as a price increase. It is typically, but not always, a cost-push phenomenon. When the disequilibrium is resolved, the inflation ends.

On the other hand, permanent inflation is embedded into the equilibrium structure. This can only be a demand-pull phenomenon. It is sourced entirely from an overwrought gain in nominal income relative to capacity, or the nominal income gap. It can only be resolved by tightening policy or re-spurring real growth.

Demographic changes matter for inflation insofar as they govern the dynamics of real output capacity.7 Paying attention to the ability for demand to come or offset from the rest of the world is also important (never mind the additional effects on interest rates).

Declining Capital Stock and Frictions

My favorite assertion in the Employ America piece was that targeting conditions from the pre-recession is appropriate:

Demand-side policies should be actively addressing the fallout of painful recessions that inflict obvious cyclical dislocation. It is well within reason to aim for a labor market that proved feasible just 14 months ago.

Historically, though, commentators and policymakers alike have often responded to long, slow recoveries by revising their estimates of “maximum employment” downwards. In this narrative — rather than demonstrating a failure to manage the business cycle — persistent unemployment following a recession instead indicates some “structural” mismatch preventing the economy from returning to pre-recessionary strength. If job loss can be reframed as “structural” rather than “cyclical,” it becomes the responsibility of workers to “find new skills” and “learn to code,” rather than the responsibility of policymakers to support workers through an economic downturn. Consider Charles Plosser’s claim in 2008 that unemployment would remain elevated simply because, “you can’t change a carpenter into a nurse.” This is not much different from the obsession with “skill-biased technological change” that gripped macroeconomists as the recovery dragged on past the two year mark. Unfortunately, this “structural” narrative can easily lead to premature policy tightening that stifles a nascent recovery.

I’ve felt this way for a while now. I see no reason why the potential of physical capital, human capital, and factor productivity should necessarily decline after a recession. In fact, it’s vague if they decline in general. The only things that always decline are the financial sector and pure labour hours. However, those can recover quickly. In fact, I partially credit the shadow banking sector with driving the faster US recovery from the Great Recession compared to Europe which lacks such a sector.

It is further necessary to note the way frictions adjust the labour recovery rate. Mostly in the hiring process, vagaries can obscure the true rate of recovery in the labour market.

End the Phillips Curve

Milton Friedman recognized it. Emi Nakamura recognizes it. It’s time for the Phillips Curve (as Keynesians know it) to be kissed goodbye. Unemployment does not drive inflation.

Instead, there is a delicious web of factors influencing the relationships of what can be called the Monetarist non-Phillips not-really-Curve. One, inflation can ease labour market conditions, meaning a lower unemployment rate. That’s a standard relationship. However, it is more accurate to say that nominal output growth drives both. Depending on the shape of real factors, the curve ceases to be, as inflation is held down while employment is pushed up.

Those real factors are twofold: standard union and capacity constraints, and the shape of markets as influenced by demand policy. You can perhaps denote the natural rate of unemployment as the rate on which policy will be ineffective unless said policy changes the long run factors (such as via communication), or the point at which the curve must shift. In effect, don’t look at the curve. Look at what NGDP is doing and how EPOP/NPOP and inflation expectations respond.


Amarnath, Skanda, and Alex Williams. Beyond The Phillips Curve: A Dynamic Approach To Communicating Assessments of “Maximum Employment”. Employ America Medium Article, June 17th, 2021. https://employamerica.medium.com/beyond-the-phillips-curve-a-dynamic-approach-to-communicating-assessments-of-maximum-employment-c3eff48b2fcf.


I will note that it is ambiguous whether they believe in a correlation or causation here.


Sumner, Scott. A Critique of Interest Rate–Oriented Monetary Economics. Working Paper, Mercatus Center at George Mason University, November 23rd, 2020. https://www.mercatus.org/system/files/sumner-critique-interest-rate-mercatus-working-paper-v1.pdf.


I shall write about this another day.


I have a forthcoming paper on this subject.


I have the American Medical Association in mind here.


I mention this later.

Friedman Was More Keynesian than You Think

Or, everyone analyzes things the same nowadays

I want to direct everyone’s attentions to these Friedman papers.1 They demonstrate how Keynesian Friedman was.

What differentiated Friedman from Keynes was a matter of empirics. Friedman observed that the nominal income path of the economy was a function of monetary policy, that it was money supply, not liquidity preference, that caused recessions, and that the quantity theory was true. Friedman also trusted bureaucrats less after years of failure. All these conclusions, however, were within a Keynesian framework.


Friedman, Milton. "Comments on the Critics." Journal of Political Economy 80, no. 5 (1972): 906-50. Accessed June 2, 2021. http://www.jstor.org/stable/1830418.

Friedman, Milton. "A Monetary Theory of Nominal Income." Journal of Political Economy 79, no. 2 (1971): 323-37. Accessed June 2, 2021. http://www.jstor.org/stable/1832113.

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