Theories on what is going on wiþ China's economy; philosophy!; 5-minute "Young Lady's Illustrated Primer"; very briefly noted; Williams, Steinsson, Blanchard, & Krugman on þe macroeconomic...
"A very smart piece from Jón Steinsson. I agree with him that first-year graduate macro should be recast as a primarily empirical course, with the aim of providing students (who are in the most part going to focus on other subfields) with the big-picture stuff relevant to what they are doing. "
If I may: Everyone doing Macro should be REQUIRED to do Economic History. Staple them together, for good. Economic History should be part of a required sequence of courses everywhere, especially at the graduate level. Inevitably, some Economic Thought will be thrown into the mix.
For people of my cohort that graduated in the 1990s, even back then DSGE seemed like a joke to those who were reasonably well read. Only the people who had descended from Math, Physics and sundry Engineering departments into Economics, students as well as professors -- especially professors! -- thought it was critical. But you could tell they did not know the economics even as they were able to calculate the solutions etc. I know of nobody sensible that went into it. But you know what? The engineers etc. who did that sort of thing were thought of as "sophisticated."
Are there any STEM disciplines that do not include some history as part of the course? Interestingly, it is science and engineering that mostly builds knowledge on a firm foundation. There tends not to be any serious argument over the accumulated knowledge. Economics, in contrast, still seems to have warring parties over models and policies - e.g. "Freshwater vs Saltwater" econ training. One might think econ history would at least be a solid grounding to establish before the various approaches were argued over. [Didn't I hear Noah Smith "joke" in a Hexapodia podcast that did he now have to believe in MMT?]
I'm a (former) STEM guy, Ph.D. and all. Most STEM pedagogy is ahistoric. Physics appears historic, but that's just a pedagogical trick, since Newtonian mechanics is easiest for a freshman to grasp. (Nobody ever talks about--say--"impetus.") Yes, an intro organic chemistry course will talk about Kekulé's dream of the structure of benzene. But that's not history--that's just attention-grabbing. Basic physical science education is as dogmatic and ahistoric as you're gonna get in a university, possibly apart from a hard-shell seminary. The necessary skepticism is inculcated in the lab, and that's not historic to anybody except the TA who is on their third time around chaperoning the sophomores.
So I took Biology at a UK university in the early 1970s. Aristotle (early beliefs on life), Linnaeus (taxonomy), Darwin/Russel/Lamarck (evolution), Mendel(inheritance), Fisher (mathematics of genes and allele selection), Schrödinger ("What is Life" - pre-double helix discovery), and of course Watson and Crick (double helix), were all touched on, if not in depth. In a geology course unit, Wegener's continental drift vs other theories that were disproved was discussed and why it succeeded. These may not have been what one could call historical study, but the basic grounding of how we reached the contemporary knowledge was given. Having taught some biology at a UC campus, I know that the bio textbooks do include the "history" through seminal experiments, even if the debates and homing in on the better theories were not covered.
Biology journal papers back in the 1970s and earlier would have citations that might even go back a century and even antiquity. With the explosion of knowledge since then, papers may have references that go back half a century or more, depending on the age of the field.
A course on evolution will include events that go back to the Earth's creation, and always include the Cambrian "explosion" where all the phyla of complex life appeared. While that is not written history, it seems little different to estimates of economic metrics that de Long uses for the ancients.
Where we disagree depends on how much history needs to be taught. STEM subjects can rely on replicated experiments and data analysis to provide the foundations of current knowledge, and to avoid presenting old ideas that have been falsified. No one believes that new life is created from dead matter, or that there is some mystical vital force inherent in living organisms, or that evolution happens via Kiplingesque "just so" stories, and one would be stupid to try to resurrect these ideas. Abiogenesis is now only worked on for the original evolution of life on Earth, an immaterial, metaphysical force in cells is perhaps only reflected in mind-brain dualism (a possible hangover from religious ideas of an afterlife), and Lamarckian ideas in e.g. epigenetics as a non-gene, environmental experience that is passed on to offspring.
"In my view, nearly all mistakes in macroeconomics come from (a) not recognizing that the exchange rate is an asset price, or (b) not recognizing that the price level is not an asset price. "
If I may add one more (and hoping that I am correct, but I'll brave it, regardless): (c) Among those who refer to the IS-LM framework, many still think that the intersection of the IS and LM curves is an equilibrium.
"It has almost never been a debate about evidence, because the evidence for short-run sticky prices, set in an uncoordinated fashion—and against the view that central banks can drive prices without real effects—has always been overwhelming."
And it is the central banks job to understand just how and how much inflation drives real values and chose the instrument settings that facilitate constantly adjusting prices to maximize real income (and maybe any pure preference for some numerical inflation rate that does not work through real income). It would communicate its strategy to markets by solving its model for an average inflation rate consistent with expected levels of shocks (that require adjustments in relative prices) that maximizes income and announce it as an inflation target but note that unexpectedly large shock will require a temporarily higher rate of inflation. We might call this instrument setting exercise, "Flexible Average Inflation Targeting."
This does not mean that everyone has to agree with the central bank model. Some may think that shocks will be small (and specifically that demand shocks arising from fiscal policy SHULD be small). Others may disagree with the loss functions in the model from too high or too low inflation. Still others will disagree over the amount of nominal rigidity. They will think that the average target is too hih or too low and or that the amount of flexibility above the target is too much or too little. At least that is how an outside amateur interprets the debate.
I am not up on the debate, but does anyone disagree with what Blanchard says here? Surely Cochrane sees that his preferred inflation target, zero, depend on reasonably uniformly symmetrical flexible prices. He just thinks that it will take a few recessions to beat the inflexibilities out of the system, turning it into chemically pure econium.
Where will interest rates settle once we finish our recovery from the plague depression and get to "normal?"
Who knows and which policy decisions depend on the answer? Specifically, how does predicting the future real interest rate affect the Fed's FAIT target. It could affect the value of one of the policy variables the Fed might use to keep inflation on target, EFFR, but like 2008-2020 the Fed has other instruments if it chooses to use them.
I’m having a hard time being heard on these two points which I believe are valuable insights into messaging for Democrats in 2023-2024
---------------------------------------
Why so many think the Economy is bad
It’s the Prices Stupid !
Everyday I keep hearing pundits and political consultants bemoaning the fact that Biden is not getting the credit he deserves for his incredible and amazing good results with the economy. He really has overseen a remarkable recovery and everyone keeps scratching their heads, “I don’t know why so many think he has done poorly managing the economy - unemployment is down, new jobs are up, inflation is down. I just don’t understand it. Now they’ve added a new inquiry, “How long does it usually take for a President to get credit for a good economy?”
Open your f-ing eyes ! It’s the Prices Stupid !
Past inflation has driven up the prices of groceries and other items we purchase everyday. We went for years with very little inflation and the average person internalized a sort of “set price” for most items. When they go to the store now they see:
Food. 2020 & Precious Prices. 2023 Prices
Eggs. $1.40 - 1.50/doz. $2.50- $4.83
Milk. $3.20 - $3.50. $4.00 / gal
Bread. $1.30 — $1.50 / lb. $1.90 / lb
Bacon. $5.30 — $5.80 / lb. $6.20- $6.80 / lb
Etc.
This is a whopping increase in percentage and in actual dollar price increase -- and it hits the average consumer in the face every day. Every time he or she goes shopping for anything. The cost is way above the range they had been used to for years and years.
We sound like idiots and/or liars when we try to tell them inflation is no longer a problem. Or that we think they are idiots – it’s insulting. It doesn’t match what they see at the store with their own eyes every day. They know what they used to pay and how much they have to pay now. It’s a lot more.
The Republicans are very successful at blaming this on the Dems with their tired old tropes about massive Democratic spending. "Of course prices are up: it’s the result of too many dollars chasing too few goods — and the Dems caused this with their massive deficit spending."
I believe many Dem strategists and pundits must rarely go shopping and/or when they go they just buy what they want and don’t pay much attention to the price; sometimes never even checking the total bill at checkout. It just isn’t important to them -- they have plenty of money and this is just an incidental expense. I think this must be how most of our analysts and political consultants still operate, or worse - they don’t know how to observe from another’s point of view.
But if they start paying attention and trying to put themselves in the position of the average family that lives paycheck to paycheck, they would be shocked at the price of everyday goods from the perspective of someone that has to make his or her dollars stretch. AND THAT IS THE EXPERIENCE OF MOST OF OUR COUNTRY — PRICES ARE HIGH AND MY DOLLAR DOESN’T GO AS FAR. — I AM WORSE OFF AND I SEE IT EVERY DAY.
Abstract concepts like the "rate of inflation” coming down have no impact on the day-to-day prices the average consumer confronts again and again. Inflation moving from 6%--9% down to 3% doesn’t change the prices at the store. In fact, the prices at the store mostly stay the same and/or they continue to rise, just not as fast.
We Dems have to confront and recognize this experience. We have to acknowledge it. And then start a full-on blitz of all media that inflation was a GLOBAL phenomenon brought on by the pandemic, Ukraine, supply chain disruption etc. it is easy to demonstrate this by using a chart showing the inflation rates of the industrialized countries around the globe. It’s a simple and direct illustration to understand.
The accompanying message is: “Inflation was everywhere and It was not the result of Democratic spending. -- Yes Biden and Dems (along with Republicans who joined in passing the legislation) spent money that was needed to bring us out of the pandemic induced Great Recession”. Did this have some impact on inflation? Probably some, but that was a necessary cost to bring us out of the tailspin of losing 800,000 jobs a month.
In fact, Biden and the Dems have worked to bring inflation down in the US tremendously compared to other countries [show chart again]. Yes, prices are up, across the globe. But Bidonomics has worked to bring us out of the recession and set us on a road to future growth and stability. This is a remarkable accomplishment -- remember Trump turned over to Biden an economy that was hemorrhaging hundreds of thousand jobs a month, our economy was so bad it was coined “The Great Recession.” Biden has helped lead our economy back to health and mostly tamed the inflation genie. Yep we now have to adjust to the higher price levels, but for most of us, our wages are up too. (Note to reader: I don’t really know if this is true – I hope so).
We need to put the political and communication experts on delivering this message — I watch show after show where all the pundits throw their hands in the air and say they don’t understand why Biden’s good economic results aren’t being recognized. They don’t understand because they don’t see what the average American living paycheck to paycheck sees every day. — prices are way up ! That the RATE of inflation is down doesn’t change this everyday reality.
Dominion Systems showed us how. Make him show his fear of being sued again.
Every time Trump is available he should be hit with something like the following:
“You continue to say the 2020 Election was stolen. Approximately 60 independent Courts looked at the evidence presented and rejected that claim every time, yet you still persist in this lie.
If you are not merely a dishonest Con Man, tell us exactly who rigged the election and how. Give us a name. Tell us when and where. Unless you give us that simple information it is clear that you are nothing more than dishonest con man abusing the trust of your followers. . So who did it ? When and Where? Are you too afraid to give us a name? Or is it that you really are just a con man who has been abusing the trust of your followers for years? Which is it? Are you a con man or will you give us a name and when and where? Or have you just been abusing for years the confidence your followers have placed in you ?”
Something like this. And don’t let up until he gives a straight answer — that he can’t give a name or a when and how. Everyone has to do this. Hit him with this over and over. Stick with the line of questioning to its conclusion. Over and over.
Give him a choice: give us the goods or admit you’ve been abusing the confidence of your followers for years – you’re just a con man.
There are now 875,000,000+ reasons why he won’t name a name, and we have push hard on this leverage point again and again.
Don’t argue facts with his followers use this question to show they’ve been conned.
Ron
PS — this will work for all the other election deniers as well.
Conclusion: Presidents should never seek and never expect for any macroeconomic good that happens, but they can expect blame for anything bad. So from day one, they should start blaming the Fed for everything. :) It also happens to be the approximate truth.
I agree that more empirical in macro theory coursework is a good idea. I have mixed feelings about not having a full year of the "right" kind of macro in the first year, though, and I like the comments that push for more history of thought as well as econ history. Of course, other tools probably better serve students on an individual basis.
One of my favorite graduate courses (this was way back) was a macro theory course taught by Mark Gertler at Wisconsin, which had plenty of technical material but was also a survey of the history of macro thought. This was supplemented by coursework from Aiyagari, Kiyotaki, and Rogoff. Even though macro was not my major field, I found this to be incredibly useful.
Maybe that is ancient history and not of much use now!
Smith: The answer is, according to Smith, the CPC channeled investment into real estate that had a very low rate of return. Over here, the government deciding which sectors to invest in without doing cost benefit analysis is called "industrial policy."
"A very smart piece from Jón Steinsson. I agree with him that first-year graduate macro should be recast as a primarily empirical course, with the aim of providing students (who are in the most part going to focus on other subfields) with the big-picture stuff relevant to what they are doing. "
If I may: Everyone doing Macro should be REQUIRED to do Economic History. Staple them together, for good. Economic History should be part of a required sequence of courses everywhere, especially at the graduate level. Inevitably, some Economic Thought will be thrown into the mix.
For people of my cohort that graduated in the 1990s, even back then DSGE seemed like a joke to those who were reasonably well read. Only the people who had descended from Math, Physics and sundry Engineering departments into Economics, students as well as professors -- especially professors! -- thought it was critical. But you could tell they did not know the economics even as they were able to calculate the solutions etc. I know of nobody sensible that went into it. But you know what? The engineers etc. who did that sort of thing were thought of as "sophisticated."
Are there any STEM disciplines that do not include some history as part of the course? Interestingly, it is science and engineering that mostly builds knowledge on a firm foundation. There tends not to be any serious argument over the accumulated knowledge. Economics, in contrast, still seems to have warring parties over models and policies - e.g. "Freshwater vs Saltwater" econ training. One might think econ history would at least be a solid grounding to establish before the various approaches were argued over. [Didn't I hear Noah Smith "joke" in a Hexapodia podcast that did he now have to believe in MMT?]
I'm a (former) STEM guy, Ph.D. and all. Most STEM pedagogy is ahistoric. Physics appears historic, but that's just a pedagogical trick, since Newtonian mechanics is easiest for a freshman to grasp. (Nobody ever talks about--say--"impetus.") Yes, an intro organic chemistry course will talk about Kekulé's dream of the structure of benzene. But that's not history--that's just attention-grabbing. Basic physical science education is as dogmatic and ahistoric as you're gonna get in a university, possibly apart from a hard-shell seminary. The necessary skepticism is inculcated in the lab, and that's not historic to anybody except the TA who is on their third time around chaperoning the sophomores.
So I took Biology at a UK university in the early 1970s. Aristotle (early beliefs on life), Linnaeus (taxonomy), Darwin/Russel/Lamarck (evolution), Mendel(inheritance), Fisher (mathematics of genes and allele selection), Schrödinger ("What is Life" - pre-double helix discovery), and of course Watson and Crick (double helix), were all touched on, if not in depth. In a geology course unit, Wegener's continental drift vs other theories that were disproved was discussed and why it succeeded. These may not have been what one could call historical study, but the basic grounding of how we reached the contemporary knowledge was given. Having taught some biology at a UC campus, I know that the bio textbooks do include the "history" through seminal experiments, even if the debates and homing in on the better theories were not covered.
Biology journal papers back in the 1970s and earlier would have citations that might even go back a century and even antiquity. With the explosion of knowledge since then, papers may have references that go back half a century or more, depending on the age of the field.
A course on evolution will include events that go back to the Earth's creation, and always include the Cambrian "explosion" where all the phyla of complex life appeared. While that is not written history, it seems little different to estimates of economic metrics that de Long uses for the ancients.
Where we disagree depends on how much history needs to be taught. STEM subjects can rely on replicated experiments and data analysis to provide the foundations of current knowledge, and to avoid presenting old ideas that have been falsified. No one believes that new life is created from dead matter, or that there is some mystical vital force inherent in living organisms, or that evolution happens via Kiplingesque "just so" stories, and one would be stupid to try to resurrect these ideas. Abiogenesis is now only worked on for the original evolution of life on Earth, an immaterial, metaphysical force in cells is perhaps only reflected in mind-brain dualism (a possible hangover from religious ideas of an afterlife), and Lamarckian ideas in e.g. epigenetics as a non-gene, environmental experience that is passed on to offspring.
"In my view, nearly all mistakes in macroeconomics come from (a) not recognizing that the exchange rate is an asset price, or (b) not recognizing that the price level is not an asset price. "
If I may add one more (and hoping that I am correct, but I'll brave it, regardless): (c) Among those who refer to the IS-LM framework, many still think that the intersection of the IS and LM curves is an equilibrium.
Too gnomic for this little black duck :) [a) and b), too not just c)]
"It has almost never been a debate about evidence, because the evidence for short-run sticky prices, set in an uncoordinated fashion—and against the view that central banks can drive prices without real effects—has always been overwhelming."
And it is the central banks job to understand just how and how much inflation drives real values and chose the instrument settings that facilitate constantly adjusting prices to maximize real income (and maybe any pure preference for some numerical inflation rate that does not work through real income). It would communicate its strategy to markets by solving its model for an average inflation rate consistent with expected levels of shocks (that require adjustments in relative prices) that maximizes income and announce it as an inflation target but note that unexpectedly large shock will require a temporarily higher rate of inflation. We might call this instrument setting exercise, "Flexible Average Inflation Targeting."
This does not mean that everyone has to agree with the central bank model. Some may think that shocks will be small (and specifically that demand shocks arising from fiscal policy SHULD be small). Others may disagree with the loss functions in the model from too high or too low inflation. Still others will disagree over the amount of nominal rigidity. They will think that the average target is too hih or too low and or that the amount of flexibility above the target is too much or too little. At least that is how an outside amateur interprets the debate.
I am not up on the debate, but does anyone disagree with what Blanchard says here? Surely Cochrane sees that his preferred inflation target, zero, depend on reasonably uniformly symmetrical flexible prices. He just thinks that it will take a few recessions to beat the inflexibilities out of the system, turning it into chemically pure econium.
Where will interest rates settle once we finish our recovery from the plague depression and get to "normal?"
Who knows and which policy decisions depend on the answer? Specifically, how does predicting the future real interest rate affect the Fed's FAIT target. It could affect the value of one of the policy variables the Fed might use to keep inflation on target, EFFR, but like 2008-2020 the Fed has other instruments if it chooses to use them.
John Finnemore has the best take on Sisyphus: https://www.youtube.com/watch?v=CdCUy1oFlso
Maybe off topic but I hope worth reading:
It’s The Prices Stupid !
The reason folks think the economy is bad
+
How to hit Trump
I’m having a hard time being heard on these two points which I believe are valuable insights into messaging for Democrats in 2023-2024
---------------------------------------
Why so many think the Economy is bad
It’s the Prices Stupid !
Everyday I keep hearing pundits and political consultants bemoaning the fact that Biden is not getting the credit he deserves for his incredible and amazing good results with the economy. He really has overseen a remarkable recovery and everyone keeps scratching their heads, “I don’t know why so many think he has done poorly managing the economy - unemployment is down, new jobs are up, inflation is down. I just don’t understand it. Now they’ve added a new inquiry, “How long does it usually take for a President to get credit for a good economy?”
Open your f-ing eyes ! It’s the Prices Stupid !
Past inflation has driven up the prices of groceries and other items we purchase everyday. We went for years with very little inflation and the average person internalized a sort of “set price” for most items. When they go to the store now they see:
Food. 2020 & Precious Prices. 2023 Prices
Eggs. $1.40 - 1.50/doz. $2.50- $4.83
Milk. $3.20 - $3.50. $4.00 / gal
Bread. $1.30 — $1.50 / lb. $1.90 / lb
Bacon. $5.30 — $5.80 / lb. $6.20- $6.80 / lb
Etc.
This is a whopping increase in percentage and in actual dollar price increase -- and it hits the average consumer in the face every day. Every time he or she goes shopping for anything. The cost is way above the range they had been used to for years and years.
We sound like idiots and/or liars when we try to tell them inflation is no longer a problem. Or that we think they are idiots – it’s insulting. It doesn’t match what they see at the store with their own eyes every day. They know what they used to pay and how much they have to pay now. It’s a lot more.
The Republicans are very successful at blaming this on the Dems with their tired old tropes about massive Democratic spending. "Of course prices are up: it’s the result of too many dollars chasing too few goods — and the Dems caused this with their massive deficit spending."
I believe many Dem strategists and pundits must rarely go shopping and/or when they go they just buy what they want and don’t pay much attention to the price; sometimes never even checking the total bill at checkout. It just isn’t important to them -- they have plenty of money and this is just an incidental expense. I think this must be how most of our analysts and political consultants still operate, or worse - they don’t know how to observe from another’s point of view.
But if they start paying attention and trying to put themselves in the position of the average family that lives paycheck to paycheck, they would be shocked at the price of everyday goods from the perspective of someone that has to make his or her dollars stretch. AND THAT IS THE EXPERIENCE OF MOST OF OUR COUNTRY — PRICES ARE HIGH AND MY DOLLAR DOESN’T GO AS FAR. — I AM WORSE OFF AND I SEE IT EVERY DAY.
Abstract concepts like the "rate of inflation” coming down have no impact on the day-to-day prices the average consumer confronts again and again. Inflation moving from 6%--9% down to 3% doesn’t change the prices at the store. In fact, the prices at the store mostly stay the same and/or they continue to rise, just not as fast.
We Dems have to confront and recognize this experience. We have to acknowledge it. And then start a full-on blitz of all media that inflation was a GLOBAL phenomenon brought on by the pandemic, Ukraine, supply chain disruption etc. it is easy to demonstrate this by using a chart showing the inflation rates of the industrialized countries around the globe. It’s a simple and direct illustration to understand.
The accompanying message is: “Inflation was everywhere and It was not the result of Democratic spending. -- Yes Biden and Dems (along with Republicans who joined in passing the legislation) spent money that was needed to bring us out of the pandemic induced Great Recession”. Did this have some impact on inflation? Probably some, but that was a necessary cost to bring us out of the tailspin of losing 800,000 jobs a month.
In fact, Biden and the Dems have worked to bring inflation down in the US tremendously compared to other countries [show chart again]. Yes, prices are up, across the globe. But Bidonomics has worked to bring us out of the recession and set us on a road to future growth and stability. This is a remarkable accomplishment -- remember Trump turned over to Biden an economy that was hemorrhaging hundreds of thousand jobs a month, our economy was so bad it was coined “The Great Recession.” Biden has helped lead our economy back to health and mostly tamed the inflation genie. Yep we now have to adjust to the higher price levels, but for most of us, our wages are up too. (Note to reader: I don’t really know if this is true – I hope so).
We need to put the political and communication experts on delivering this message — I watch show after show where all the pundits throw their hands in the air and say they don’t understand why Biden’s good economic results aren’t being recognized. They don’t understand because they don’t see what the average American living paycheck to paycheck sees every day. — prices are way up ! That the RATE of inflation is down doesn’t change this everyday reality.
It's the Prices, Stupid !
________________________________________________________________
Bonus:
How to shut Trump down
Dominion Systems showed us how. Make him show his fear of being sued again.
Every time Trump is available he should be hit with something like the following:
“You continue to say the 2020 Election was stolen. Approximately 60 independent Courts looked at the evidence presented and rejected that claim every time, yet you still persist in this lie.
If you are not merely a dishonest Con Man, tell us exactly who rigged the election and how. Give us a name. Tell us when and where. Unless you give us that simple information it is clear that you are nothing more than dishonest con man abusing the trust of your followers. . So who did it ? When and Where? Are you too afraid to give us a name? Or is it that you really are just a con man who has been abusing the trust of your followers for years? Which is it? Are you a con man or will you give us a name and when and where? Or have you just been abusing for years the confidence your followers have placed in you ?”
Something like this. And don’t let up until he gives a straight answer — that he can’t give a name or a when and how. Everyone has to do this. Hit him with this over and over. Stick with the line of questioning to its conclusion. Over and over.
Give him a choice: give us the goods or admit you’ve been abusing the confidence of your followers for years – you’re just a con man.
There are now 875,000,000+ reasons why he won’t name a name, and we have push hard on this leverage point again and again.
Don’t argue facts with his followers use this question to show they’ve been conned.
Ron
PS — this will work for all the other election deniers as well.
Ron Feinman, Esq.
Lynchburg Virginia
rfeinman@oneworld.ws
Conclusion: Presidents should never seek and never expect for any macroeconomic good that happens, but they can expect blame for anything bad. So from day one, they should start blaming the Fed for everything. :) It also happens to be the approximate truth.
I agree that more empirical in macro theory coursework is a good idea. I have mixed feelings about not having a full year of the "right" kind of macro in the first year, though, and I like the comments that push for more history of thought as well as econ history. Of course, other tools probably better serve students on an individual basis.
One of my favorite graduate courses (this was way back) was a macro theory course taught by Mark Gertler at Wisconsin, which had plenty of technical material but was also a survey of the history of macro thought. This was supplemented by coursework from Aiyagari, Kiyotaki, and Rogoff. Even though macro was not my major field, I found this to be incredibly useful.
Maybe that is ancient history and not of much use now!
Smith: The answer is, according to Smith, the CPC channeled investment into real estate that had a very low rate of return. Over here, the government deciding which sectors to invest in without doing cost benefit analysis is called "industrial policy."
BRIEFLY noted! But thanks for it all, even when you show me how little I know about economics.