14
Aug
2015
Potpourri
==> Mark Spitznagel touts Rand Paul’s “Economic Freedom Zones.”
==> A great Tom Woods interview with FEE President Larry Reed on Upton Sinclair and other topics.
==> Another good Tom Woods episode featuring his response to those claiming Ron Paul was a leftist because he opposed aggressive U.S. foreign policy.
==> David Beckworth Strikes Back.
-Ah, but, this generational poverty trap isn’t exactly very strong:
http://econlog.econlib.org/archives/2015/06/charles_murray_5.html
While Beckworth has, indeed, provided evidence from a Concrete Steppe, methinks he’s reasoning from an interest rate change.
I still think the best test case for Austerity is the US after WWII. Provided you account for two things: the price indices during the war understate inflation and overstate it when price controls were lifted, and you look at how the parts of the economy that weren’t just government war production perform. NGDP fell, NG fell more, and RGDP-RG rose. That’s expansionary Austerity without monetary offset, or at least certainly without perfect monetary offset.
Again the NGDP growth rate from 1945 to 1946 (FRED series GDPA) was about -0.17%, the average of the previous 10 years of growth rates was ~12.34%. If I take GDPA and subtract GCEA (Government consumption and gross investment spending) and then I correct the GDP deflator like I did the CPI, the change in RGDP-RG is ~29.32%-That’s right: The private economy took off, in spite of contracting NGDP caused by decreasing government spending.
Good stuff, Andrew!
I think Bob has made a similar point in a lecture.
Hey maybe we can call that “Market Offset”.
If government spending declines, and total NGDP declines, but private spending booms, such that the private sector spending takes up a larger percentage of total spending, then this can boost overall productivity, as long as wage rates can fall unimpeded by government.
I have always rejected NGDPLT since day one, for many reasons, but one reason is that it treats government spending as equivalently ” stimulative” as private spending. That for some reason money spent by people who are for the most part power hungry assholes who benefit from aggression, that enables them to spend other people’s money, can somehow make us as wealth in real terms if money is spent by the owners, who are subjected to losses themselves.
How is that any different from Keynesianism that lumps all “spending” up into one homogeneous value, conceptually?
If we are going to study the wider ranges of dollar exchanges, the aggregates, then we should focus more on private spending as a ratio to total spending, rather than focusing on total spending that treats money spent on drones that kills families at weddings, as equally “stimulative” as money spent in producing medicine.
I don’t feel any remorse over a government bureaucrat losing their “job.”. If millions of ” public” workers lost their jobs, I would not feel the least bit upset. I would feel good that the ratio of private employees to government employees has risen. That means less mooching, less waste, and most importantly more justice.
“Market Offset”-Yes. This. I love it.
One small point: during WWII in particular, a number of people were employed in “war industries” without being considered government employees. So unproductive employment should also include those employed to make things for the government even if their employers are private entities.
NBER dates a recession to the end of WWII but I think that’s wrong. The unemployment rate was still very low and doubtless many people left jobs they only took to avoid the draft. I think it would be more accurate to consider that period a recovery or reallocation period, with the war itself being a sort of “high employment recession.”
Good points.
I fail to see why a free market in banking and money wouldn’t work. The banks would just respond to the micro-level incentives they face… just like every other business.
Levi-I agree. If nothing else, at least those who argue for laissez faire in money and banking have an explicated theory of how it would work, and why regulation and government monopoly produces perverse results. The other side lacks a theory of what laissez faire would look like (believing incorrectly they can simply point to US ante bellum experience (or even post bellum experience!)) and offers an unrealistic picture of government working perfectly.
This would be like if economists argued you have to have tariffs and trade barriers, without having any theory of free trade!
With regard to Ron Paul being seen as a leftist due to his foreign policy, here is the message that should have been hammered home in 2012, rather than saying things that made libertarians look naive about the terrorist motives of Arab nations, as if they have zero plans to harm Americans if given the chance:
Ron Paul versus Donald Trump on International Trade
http://www.economicpolicyjournal.com/2015/08/ron-paul-versus-donald-trump-on.html
(Robert Wenzel quoting Ron Paul from his new book.)
“Trade problems and imbalances of payments significantly
contribute to the resentments that frequently lead to war.”
I think that piece of knowledge from learning about Austrian Economics is what allowed me to see Ron Paul’s perspective on foreign policy.
And if you know that Obama is a Marxist who hates free markets and the American crony capitalism that he mistakes for free markets, and the unrelated issue of past American slavery that he somehow believes was the result of free markets, then you know that the Iran deal wasn’t about peace, but about further destroying free markets.
Yes, we should leave everyone alone, but we don’t have to act like there are no Islamic terrorist threats out there.
Right-wingers already want liberty, that’s the sad thing. We just don’t understand economics well enough to defend it.