Sonan Memon

I Wrote a New Book!!! Optimization: A Bootcamp for Machine Learning, Inverse Problems, and Control Pre-Order Now (July 31) amazon.com/Optimization-B… Coming Soon: * Free PDF on website * YouTube Videos for entire book * Python code on GitHub

Must have been a rough tenure track.

Very much looking forward to the 𝐙𝐮𝐫𝐢𝐜𝐡 𝐐𝐮𝐚𝐧𝐭𝐢𝐭𝐚𝐭𝐢𝐯𝐞 𝐌𝐚𝐜𝐫𝐨 𝐖𝐨𝐫𝐤𝐬𝐡𝐨𝐩 next week! Excited to welcome an outstanding group of macroeconomists pushing the very frontier: Tom Sargent, @ben_moll, @a_auclert, @MarlonAzinovic, and many others! @Florian_Scheuer @comp_simon

A guide for students of economics: Ten statements that demonstrate that someone does not understand modern economics or what an equilibrium is, and that you can safely ignore everything else they say. 1. “Equilibrium means the economy is stable or at rest.” Many assume that an equilibrium is a peaceful state with no forces at play. Instead, an equilibrium is just an arrangement of actions and expectations over time that are mutually consistent. It can be locally unstable, explosive, or fragile. Nothing in the definition of equilibrium implies stability. 2. “Equilibrium implies optimality or social efficiency.” Equilibrium is often conflated with efficiency, but equilibrium merely reflects decentralized consistency, not welfare maximization. Market power, externalities, incomplete markets, nominal rigidities, and frictions routinely produce inefficient equilibria. I often teach a first-year macro graduate course, and not a single one of the equilibria I define is efficient. 3. “Equilibrium is a unique outcome.” Many often expect models to have one equilibrium. In reality, multiple equilibria arise naturally in dynamic, strategic, and incomplete-market environments. Models of coordination failures, self-fulfilling expectations, bubbles, overlapping generations, and liquidity traps all hinge on the existence of equilibrium multiplicity. 4. “Equilibrium requires perfect foresight or perfect information.” Equilibrium does not assume agents know the future. In fact, equilibria are often stochastic. The definition of equilibrium only requires that beliefs are consistent with the (perceived) stochastic laws of motion implied by the model. Bayesian learning, noisy signals, ambiguity, and subjective uncertainty all fit well within an equilibrium framework, provided beliefs converge to an internally consistent (but possibly incorrect) distribution. Bonus point: equilibria are compatible with agents having diverging beliefs that never converge to a single Dirac distribution. 5. “Real economies are rarely in equilibrium, so the concept is unrealistic.” Equilibrium is not meant to describe the daily state of the world. It is a conceptual device used to understand the outcome of our models under the assumptions we make. Also, see point 1 above. 6. “Equilibrium requires agents to be fully rational in a psychological sense.” Equilibrium only assumes internal consistency: agents optimize given preferences and constraints. It does not assume realism about human cognition. We can and do define equilibria in models with behavioral biases, bounded rationality, inattention, or rule-of-thumb behavior. We only need to ensure that the resulting actions and beliefs are mutually compatible. 7. “Equilibrium eliminates dynamics or learning.” Equilibrium is sometimes misinterpreted as a static state in which nothing evolves. In fact, many equilibria are sequences of probability distributions over states driven by shocks, policy rules, and endogenous responses. Learning dynamics (Bayesian updating, adaptive rules, experience-based expectations) can occur within equilibrium if the evolution of beliefs is self-consistent. 8. “Equilibrium renders expectations unimportant.” A common misconception is that equilibrium mechanically determines outcomes. In reality, expectations are often central: they determine investment, consumption, asset prices, and policy responses. Many equilibria differ only in their expectations. This is why communication, credibility, and forward guidance matter even in fully rational models. 9. “Equilibrium excludes policy intervention.” Some interpret equilibrium as a laissez-faire concept. In fact, equilibrium analysis is the foundation of modern policy evaluation. Fiscal, monetary, and regulatory interventions work through equilibrium responses (prices, wages, interest rates, quantities) and must satisfy equilibrium conditions to be credible. Equilibrium is a tool for policy design, not a barrier to it. 10. “Equilibriums…” Aequilibrium is a Latin neuter noun of the second declension, which forms a nominative plural in “a”. It is composed of aequus (equal; the same root as equality or equity) and libra (balance or scales or the name of several currencies over history). A final thought: “equilibrium” is a term of art. Its meaning in economics differs from its use in the natural sciences or in everyday language. Terms of art are ubiquitous across academic disciplines, and the first act of intellectual diligence when one starts studying a discipline is to learn what they mean.

@Beautifulday98X Sexually frustrated society since everything is banned yet everyone is interested in all that is banned: alcohol, bars, prostitution etc. If we didn't have gender apartheid, people will get used to interacting with women.

Pakistan is the most sexually perverted nation on earth. No other nation hears a scientist talking about sexually transmitted diseases, and thinks its dirty, filthy. No other nation watches a female figure skater, diver, swimmer and thinks sex, except millions of Pakistani men. No other nation has to have so many protective norms for women, to simply make life bearable for them. Why is the nation so utterly and completely sexually perverted.

@Beautifulday98X Secularize the constitution, society and education for a start. Of course that will not happen.

Education and Religion have failed to deliver human development to Muslim societies. So what is the solution.

“The practice of socialism is everywhere totalitarian.” — Friedrich Hayek

@JesusFerna7026 @AtifRMian @dwarkesh_sp There is a thin line between evolution and social darwinism which one should be mindful of. Nevertheless, of course we were shaped by our evolutionary history.

Last night I listened to David Reich’s interview with @dwarkesh_sp on his new Nature paper, “Ancient DNA reveals pervasive directional selection across West Eurasia.” dwarkesh.com/p/david-reich-2 Reich and his team present a method for detecting directional selection in ancient DNA time series, testing for consistent trends in allele frequency over time. They find that hundreds of alleles have been under strong directional selection, including alleles correlated with measures of cognitive performance. I have followed David Reich’s work for over a decade now and cite him in my economic history courses all the time. Nothing has changed my view of ancient history as much as his research, and the research his methods have triggered. His findings also bear directly on another line of work, “Natural Selection and the Origin of Economic Growth” by @GalorOded and @Omer_Moav at the Quarterly Journal of Economics, which proposes a similar mechanism. Reich’s results give a serious empirical boost to Galor and Moav's research agenda. Reich returns several times in the interview to behavior related to what economists call the discount rate (without using such a term). The evidence suggests that humans began discounting the future less with the advent of agriculture, because directional selection favored patience. I’ve long thought modern schooling serves this same function, training people to defer immediate rewards for long-term gains, and that such training is the most valuable trait one can have in daily life. Contrary to the Foucaults and Freires of the world, that schools are boring is a feature, not a bug. I don’t expect anyone at the schools of education to get this.

🎙️ First Calvo Lecture We are pleased to launch the Calvo Lecture Series with @IvanWerning (MIT), introduced by @SFGaliani: “On Inflation: A Look From Above, Backwards and Forwards” 📅 May 22 ⏰ 12:00 PM (EDT) 💻 Live on Zoom (no registration) 🔗umd.zoom.us/j/7244863058?o…

Since I have posted so much on Marx vs. Weber, modernity, and development over the last few weeks, I have posted an updated slide deck of my lectures on Karl Marx and the Marxian Tradition (together with @ferarteaga) here: sas.upenn.edu/~jesusfv/ET_3_… This is a long deck: 437 slides in the last compilation! (It also takes a few seconds to upload.) If I were to teach it carefully, with plenty of class discussion, I would require a whole semester. Even then, some topics (e.g., the Frankfurt School) receive only a cursory treatment because I focus more on economics and political economy, broadly construed. I hope to extend the discussion of those someday. However, I cover topics rarely seen in these courses, such as Hans-Georg Backhaus and the Neue Marx-Lektüre, because most of the work is not translated into English and must be read in the original German. I don’t have an equivalent slide deck on Max Weber, as I haven’t lectured on him. Hopefully, one day I will. Comments and feedback are very welcome.

@omar_quraishi It is funny that the superiority of Punjab's education system while true is judged based on passing jackshit CSS, an outdated colonial system of examination, serving no useful purpose in society.

So 78% of successful CSS candidates are from Punjab Punjab makes up 53% of Pakistan’s population And there are people here whining that candidates from Punjab suffered because of the quota system Wow

David Reich on how much ancient DNA evidence has overturned so much consensus thinking how ancient cultures spread. "It wasn't peaceful, it wasn't friendly, it wasn't nice. Some of our archaeologist co-authors were just really distressed."

Thomas Sowell: “Most academic intellectuals have no serious experience outside the academy.” “They have every incentive to believe that they’re brighter and know more than other people, because they’ve been told that all their lives.”

@DKThomp Menckin said it best: "For every complex problem there is an answer that is clear, simple, and wrong." Like so much of leftist thought.

Hayek explains why social justice is a meaningless term: “Justice is an attribute of individual action. I can be just or unjust towards my fellow men.” “But the conception of a social justice—to expect a just result from an impersonal process which nobody can control—is meaningless and completely impossible.”

@Shehzad89 Such a waste of talent. Very eloquent speaker and capable but infested by a well-known opiate.

Disappointed reading some of the comments about Javed Ahmad Ghamidi. You can disagree with him but you cannot deny the decades of scholarly work he has put in. If you are to learn one thing from him, it should be the ability to disagree with respect. Ikhtalaf with Ehtaram

Many readers yesterday asked for more concrete examples of what I have in mind regarding the distinctions between features inherent to modernity and those inherent to “capitalism.” Imagine we have a functioning socialist commonwealth. For simplicity, I will call it the SC. Imagine also that this SC aims to provide state-of-the-art medical care to its citizens. This is not about superfluous consumption. It is about the desire to provide good preventive care, adequate treatment, palliative care, and so on. Soon, you realize that you need the scientific-technological complex that develops advanced mRNA vaccines and, even more importantly, the industrial capacity to produce tens of millions of doses at short notice when a new virus arrives or an old one mutates. These are sophisticated processes that involve coordinating millions of individuals with diverse knowledge, skills, and personalities. But it does not stop there. You will need to produce thousands of MRIs, scanners, FLASH radiotherapy machines, and all the bewildering array of equipment you find in a top hospital. And I insist: wanting to be treated with the latest oncological equipment if you get cancer is not frivolity. It is a deep human desire that a good society (any society, really) should attempt to provide. How are you going to accomplish all this? An SC does not want to use private property, so it relies on some form of public property. But public ownership is not the main issue. The real issue is that the SC would need to organize large bureaucratic organizations. Without them, it cannot develop and deploy vaccines, MRIs, scanners, and the rest. The need to scale is the key mechanism at play, not who owns the property. And, because of their scale, these large bureaucratic organizations will suffer the type of problems that critics of “capitalism” attribute to “capitalism.” The organization will be impersonal and alienating, and inefficient due to career concerns, asymmetric information, conformity effects, and internal politics. Moreover, because resource constraints hold in every human endeavor, some claims for medical treatment will be denied. The SC will not have enough resources to satisfy every medical demand (and medical demands are, for all practical purposes, unlimited), every demand for education, every demand for the environment, and every demand for this or that worthwhile cause. Sorry, yes, scarcity will always be with us, with or without AI. Patients whose requests for medical treatment are denied will be particularly annoyed because the SC is built on the idea that such events cannot happen. At least in a “capitalist” society there is someone to blame (the “capitalist”). Those who deny the need for large bureaucratic organizations are living in a fantasy world. I am pretty sure the day they are told they have prostate cancer, they will run to their closest large bureaucratic organization for treatment. Those who deny the problems of large bureaucratic organizations, and how deeply irresoluble those problems are, have not seen how not-for-profits work. I have never seen more acrimonious fights than within not-for-profit organizations, where some shared sense of the common good unites members. The fights are fierce precisely because profits play no role. I have been reading about these issues for nearly 40 years, and I have seen plenty of proposals to address the problems of large bureaucratic organizations. A favorite among many is “participation” or “more democracy” within the organization. No, sorry, more “participation” or “more democracy” only makes things worse. Yugoslavia taught us that you cannot run a large bureaucratic organization based on democratic participation (well, you only need to know some basic economics; Arrow’s impossibility theorem, anyone?). Large bureaucratic organizations are essential to modern life, and they are full of problems, with or without “capitalism.” This is what Weber understood and what Marx, who had an incredibly naïve view of the future, never grasped. Weber saw that bureaucracy is not a feature of “capitalism” but the institutional form modern society uses to coordinate large-scale tasks under rational, impersonal rules. Hospitals, ministries, armies, universities, and, yes, corporations all converge on the same form because it works at scale. The iron cage is not capitalist. It is modernity.

@FactCheckAsia But know we are part of Central Asia as per WB.

Maturity is when you realize that Sanskrit is a language of the Pakistan region.

🚨 BREAKING: Pakistan is NO longer in South Asia for the World Bank! 🇵🇰 We’ve officially been moved to the Middle East & North Africa region. This isn’t just a bureaucratic change it’s a powerful geopolitical reset.

@Laghari_UX Yes with economics we have a lot of graphs and that works since at least at this point chatgpt is not good with spitting out graphs.

@sonan_memon Give more hand on scenario or activity based assignments, they work better even if students use AI tools.