22 Apr 2014

Regime Change At Free Advice

DeLong 85 Comments

OK I had an epiphany yesterday. I realized that I was only checking the comments here at the blog out of my duty to approve pending ones, but that I had no desire to actually “hang out” in the comment section because I can’t stand its tone.

Well that’s dumb. So starting today:

1) Ken B. is banned for three months.

2) You are allowed to criticize me, libertarians, Austrian economics, other posters, etc. in the comments. But don’t be completely rude about it. Imagine you were at a dinner party at my house, and someone said something you thought was nuts. How would you voice your opinion?

I don’t want to do this stuff, but the strategy of “chime in occasionally and people will get the hint” obviously doesn’t work. On the bright side, I can now at least understand why Brad DeLong runs his blog the way he does. But don’t worry, I still think DeLong is wrong about Bastiat. (HT2 DK)

21 Apr 2014

Is Obama Chafing the Rich? It Depends on the Argument Krugman Is Making That Day

Krugman 156 Comments

For some time now, Krugman has been writing articles and blog posts explaining that the rich in this country are paranoid, that Obama is not some neo-Marxist trying to get them, etc. This isn’t the very best example of the genre, but it will serve the purpose: In September 2013 Krugman had a piece called, “Plutocrats Feeling Persecuted” in which he wrote (I’m relying on Mark Thoma’s summary):

Robert Benmosche, the chief executive of the American International Group, said something stupid the other day. And we should be glad, because his comments help highlight an important but rarely discussed cost of extreme income inequality — namely, the rise of a small but powerful group of what can only be called sociopaths.

For those who don’t recall, A.I.G. is a giant insurance company that played a crucial role in creating the global economic crisis… Five years ago, U.S. authorities, fearing that A.I.G.’s collapse might destabilize the whole financial system, stepped in with a huge bailout. … For a time, A.I.G. was essentially a ward of the federal government, which owned the bulk of its stock, yet it continued paying large executive bonuses. There was, understandably, much public furor.
So here’s what Mr. Benmosche did in an interview with The Wall Street Journal: He compared the uproar over bonuses to lynchings in the Deep South … and declared that the bonus backlash was “just as bad and just as wrong.” …

In 2010…, there was a comparable outburst from Stephen Schwarzman, the chairman of the Blackstone Group, one of the world’s largest private-equity firms…

This is important. Sometimes the wealthy talk as if they were characters in “Atlas Shrugged,” demanding nothing more from society than that the moochers leave them alone. But these men were speaking for, not against, redistribution — redistribution from the 99 percent to people like them. This isn’t libertarianism; it’s a demand for special treatment. It’s not Ayn Rand; it’s ancien régime. …

The thing is, by and large, the wealthy have gotten their wish. Wall Street was bailed out, while workers and homeowners weren’t. …

So why the anger? Why the whining? And bear in mind that claims that the wealthy are being persecuted aren’t just coming from a few loudmouths. They’ve been all over the op-ed pages and were, in fact, a central theme of the Romney campaign last year.

Well, I have a theory. When you have that much money, what is it you’re trying to buy by making even more? You already have the multiple big houses, the servants, the private jet. What you really want now is adulation; you want the world to bow before your success. And so the thought that people in the media, in Congress, and even in the White House are saying critical things about people like you drives you wild.

Beyond the specific example above, Krugman has a running theme of “Ma He’s Looking at Me Funny!” (here’s one) in which he mocks the rich businesspeople who claim there is some sort of concerted effort to hurt them under the Obama Administration. (The point of the insult is that these rich whiners are just like kids complaining about being mocked, as opposed to actually being injured.)

Uh oh, but today Krugman realizes that this puts him in a bit of a bind. If it were literally true that Obama isn’t chafing the super rich, then there would be no reason to vote for Democrats. Thus he clarifies:

it’s quite wrong to say that the parties’ behavior in office is the same. As Floyd Norris points out, Obama has in fact significantly raised taxes on very high incomes, largely through special surcharges included in the Affordable Care Act; and what the Act does with the extra revenue is expand Medicaid and provide subsidies on the exchanges, both means-tested programs whose beneficiaries tend to be mainly lower-income adults. The net effect will be significant losses for the super-elite — not crippling losses, to be sure, and hardly anything that will affect their elite status — and major gains to tens of millions of less fortunate Americans.

So if I understand this, the elites in this country are “sociopaths” and “paranoid” even though Krugman admits that they have suffered “significant losses” under Obama’s policies, compared to what would have happened if someone else were in office.

21 Apr 2014

Term vs. Whole Life Insurance

Infinite Banking Concept 43 Comments

The latest installment in the videos for the Infinite Banking Institute:

21 Apr 2014


Humor, Potpourri, Shameless Self-Promotion, Tyler Cowen 20 Comments

==> Following Bryan Caplan’s lead, I talk about the long-term results of TARP.

==> Be careful, kids: My son was telling me matter-of-factly that this scientist Hooke was a bastard (not his actual term) etc. etc., and I interrupted to ask, “Did you get this from a Cosmos episode?” He said yes. Then–relying on this guy’s withering account–I warned my son that apparently there were a lot of problems with the history of science as rendered by this show. The most serious blunder, I told him, was that Tyson claimed authoritatively that Newton developed the new calculus in the Principia, when in fact historians of science have argued for decades about why Newton didn’t use it, instead relying on geometry.

My son was startled by this, chiefly because he had told things he learned in Cosmos to the kids in his school. (I was pleasantly amazed that that was his reason for being glum.) In an exercise to discover truth, my son and I wanted to independently see whether in fact Newton never used calculus in the Principia. We decided it was much more nuanced than the blogger made it seem. E.g. from a 2007 publication titled, “Did Newton use his calculus in the Principia?”:

A question that is often formulated by people interested in the history of mathematics is: Did Newton use his calculus in the Principia? This question comes very naturally to mind, since Newton discovered the calculus of fluxions before writing the Principia. It is just obvious to think that Newton had employed the calculus in order to mathematize his natural philosophy. However, very little trace of calculus techniques is to be found in the Principia, which are mostly written in ‘geometric style’. On the other hand, some propositions of the Principia are framed in a geometric language which appears to be very easily translatable into calculus concepts. Thus our question is very tricky.

As a matter of fact, the question of the presence of calculus in the Principia has been debated since the 169Os, when Fontenelle stated that almost the whole work is about the differential calculus. The question played an important role in the muddled context of the priority dispute with Leibniz. Since then the opinions of mathematicians and Newtonian scholars have been very contradictory and our question seems still to be waiting for a definite answer. In order to achieve an understanding of Newton’s use of calculus in his mugnum opus, we have to consider the exchange of information between a restricted group of adherents to the Newtonian school.

So, I will give Tyson (and his writers) the benefit of the doubt on this one. From further investigations, it seems that Newton used the idea of a limit of shrinking geometric shapes, which one could plausibly say is, or is not, calculus.

==> This economist debate about Hank Aaron is really interesting. I first agreed with Tyler Cowen that Nate Silver had left something important out of his analysis, when Silver wondered, “What if Hank Aaron had never hit a home run?” But then Scott Sumner convinced me that Cowen’s critique was churlish, and that Silver’s method was perfectly fine for this sort of thing.

Then, I couldn’t stop myself from reading the comments at Scott’s post, where people went nuts over Barry Bonds vs. Babe Ruth. This was my favorite from W. Peden (which I’m slightly editing to maximize the punchline): “On baseball: like most Brits, I know next to nothing about baseball, but I think most of the stats people are quoting are very misleading. I looked up a site called shadowbaseballstats.com and it pointed out that, due to changes in the sport, Barry Bonds had 100,000 home runs in [the original] terms.”

21 Apr 2014

Colbert Debates Bible Critic

Humor, Religious 21 Comments

20 Apr 2014

He Is Risen

Religious 171 Comments

1 Corinthians 15: 1-11:

Moreover, brethren, I declare to you the gospel which I preached to you, which also you received and in which you stand, 2 by which also you are saved, if you hold fast that word which I preached to you—unless you believed in vain.

3 For I delivered to you first of all that which I also received: that Christ died for our sins according to the Scriptures, 4 and that He was buried, and that He rose again the third day according to the Scriptures, 5 and that He was seen by Cephas, then by the twelve. 6 After that He was seen by over five hundred brethren at once, of whom the greater part remain to the present, but some have fallen asleep. 7 After that He was seen by James, then by all the apostles. 8 Then last of all He was seen by me also, as by one born out of due time.

9 For I am the least of the apostles, who am not worthy to be called an apostle, because I persecuted the church of God. 10 But by the grace of God I am what I am, and His grace toward me was not in vain; but I labored more abundantly than they all, yet not I, but the grace of God which was with me. 11 Therefore, whether it was I or they, so we preach and so you believed.

19 Apr 2014

Maybe Sargent Should Have Used 1,000 Words?

Economics, Noah Smith 17 Comments

We don’t see eye to eye on many issues of economic policy, but Noah Smith is quite possibly even a bigger smart*ss than me, so I try to follow his blog out of solidarity. I have to agree with Noah that the gushing over Thomas Sargent’s 2007 graduation address to Berkeley students has been completely overblown. (I saw people on Facebook referring to it as the greatest economic lecture ever, etc.) Also, in case you’re curious, I have no idea why people starting talking about it now, when the event occurred 7 years ago. Perhaps something to do with asymmetric information.

Anyway, Noah is mad because it smacks of policy advocacy. It’s not the neutral discussion of objective economic law, the way Noah’s heroes Paul Krugman and Brad DeLong dispense.

But I’m more concerned that at least two of Sargent’s 12 principles don’t even make sense. First and most serious: “6. In an equilibrium of a game or an economy, people are satisfied with their choices. That is why it is difficult for well meaning outsiders to change things for better or worse.”

Huh? One out of twelve main points that the science of economics can teach young people, is that it’s difficult for government policy to make things worse? (If you read the whole thing, I think it’s pretty clear that Sargent is including the possibility of well meaning outsiders working through the government to try to change things for the better.) And doesn’t this superficially at least conflict with Sargent’s 5th principle, that there are tradeoffs between equality and efficiency? Or is he saying in #5 that there are tradeoffs, but in #6 that we can never really move along that dimension much from our starting point?

7. In the future, you too will respond to incentives. That is why there are some promises that you’d like to make but can’t. No one will believe those promises because they know that later it will not be in your interest to deliver. The lesson here is this: before you make a promise, think about whether you will want to keep it if and when your circumstances change. This is how you earn a reputation.

This is the kind of thing where it sounds like he’s saying something deep, but if you actually read the above three times in a row, you see it doesn’t really make sense. If I can break it down, it’s something like:

a) Sometimes it would benefit you today, if you could promise to do something in the future that is against your interest. But when it comes time for to follow through on that promise, you won’t, because you will be responding to the incentives at that time. However, recognizing this, people won’t believe you today if you try to make such a non-credible commitment, meaning that in practice you will not be able to benefit today from issuing such a promise.

b) Try to gain a reputation as someone who will not respond to the incentives you will face in the future. Then people will believe you when you promise to do something that is not in your interest.

Look, I know what Sargent is trying to say in the above, or at least I think I know what he’s trying to say. But my point is, what he actually said makes no sense to me.

So in summary, I agree with Noah that this is hardly a “summary of economics.” Not only is it an odd collection of principles (the last one seems to come out of left field), but at least one is flat-out wrong and would (if it were true) justify getting rid of 99% of the world’s economists, and another one is very poorly worded.

Yet having said all of that, I’m sure the kids loved it, because the whole thing was 297 words.

19 Apr 2014

More of Krugman’s Conscience

Krugman 23 Comments

OK, I realize I might not be the fairest judge on this, but I’m pretty sure it is an accurate statement to say that Paul Krugman recently called cancer patients whiners. Go ahead and see if I’m right by reading my latest Mises Canada post.