I am carrying these YouTubes on my browser to post for a Potpourri, but I need to clean up the tabs and I want to feature them. So here ya go.
I think they are pretty self-explanatory.
This guy Matt Walsh is really growing on me. People keep linking him on Facebook; it’s gotten to the point where I may just have to update my Blogroll, something that happens as often as a Fort Knox audit.
==> Once again, Bryan Caplan beats me to the punch. Barry Ritholz et al. have things exactly backwards when it comes to the “welfare queen” corporations relying on food stamps etc. to underpay their workforce. Other things equal, a stronger “social safety net” makes workers pickier when it comes to their jobs. Put it this way: Would it make sense to eliminate welfare benefits and tell the recipients, “We’re trying to give you more bargaining power against Walmart”?
==> THIS IS FREAKY. Scott Sumner (in an older post to which he recently alluded) documents how Frederic Mishkin altered key sections of his textbook, mysteriously right around the time that retaining them would have embarrassed Ben Bernanke. Sumner of course thinks Mishkin is a great guy, but I’m not so sure. To me, the most ominous part about the “Inside Job” attack interview wasn’t that Mishkin got paid to write a study on Iceland, but that he apparently renamed the title of the paper on his CV after Iceland blew up. (Here’s the whole attack piece, but the Orwellian titling stuff starts around 1:05.) That would be like me altering my blog posts to, “My Deflation Bet With David R. Henderson.”
==> Matt Walsh says husbands don’t need to “earn” respect from their wives, just like wives don’t need to earn love from their husbands. Good stuff.
==> This Tom Woods interview with Michael Huemer (on justification for political authority) is really good.
==> Tatiana Moroz is so talented, she makes grown men cry.
==> Some people demanded that I comment on Jon Stewart’s attack on Judge Napolitano. What do you want me to say? He opens with a joke about killing vampires. Of course the writers at the Daily Show weren’t trying to increase sales of Napolitano’s books, but they did give long clips of his statement so people at least had the context. Yeah I didn’t find this piece as funny as, say, Stewart calling the trillion dollar coin a bad idea (full of swear words), but Krugman is right that the same amount of nuanced analysis went into that earlier episode. As Stewart himself said in response to Krugman, it’s a comedy show and they admittedly don’t get into all the subtleties of the argument; what seems an acceptable shortcut for the joke probably depends on whether you agree with the target or not. (If you want a true example of people lying about their opponents, how about Noah Smith retweeting some guy who called Walter Block a “pro-slavery prof”? Even if the NYT quote were in context, that would be wrong. I could say, “You know, bee stings aren’t that bad.” Wouldn’t make me a pro-sting economist.)
One of the Beltway tribe’s greatest strengths is also one of its greatest weaknesses: groupthink. As I noted before, a Beltway consensus actually counts for something in the world of international policymaking. That does not mean that this consensus emerges from any solid analysis, however. For example, a hidden cause of the enthusiasm for austerity in Washington that crested in 2010 was the consensus among foreign policy pundits that U.S. debt was spiraling out of control, rendering Washington vulnerable to foreign holders of U.S. Treasuries. This groupthink formed at the same time that the budget deficit as a percentage of output was shrinking at the fastest rate in American history. By the time the consensus had emerged, however, the change in the facts didn’t matter. Since the principal activity of Beltway folk is to talk to each other, the result is a feedback loop of confirmation bias that eventually leads to epistemic closure. [Bold added.]
OK, that sentence I put in bold? Drezner completely made it up. It’s not even close to being true. It’s so wrong I can’t even imagine what he was thinking, except that he decided to take something that was unusually large and christen it the biggest in American history (hence the tongue-in-cheek title of my blog post). It is particularly ironic that this bogus “fact” is included as part of a condemnation of the austerian groupthink, a condemnation that Krugman pasted into his own post for his readers to see.
Anyway, if you want a picture to see just how wrong it is, we can turn to FRED which has a nice series of the federal budget surplus or deficit as a share of the economy. Now one might quibble about whether Drezner/Krugman has “total government” or “federal government” in mind, but I think you’ll see that it doesn’t really matter:
Drezner/Krugman are claiming that the little uptick around 2010 is the fastest such move in all of U.S. history. Really? More so than after World War II? According to the White House’s historical budget tables, the total (on- and off-budget) federal deficit went from 21.5% of GDP in 1945 to 7.2% in 1946, a move of 14.3 percentage points in a single year. In contrast, from 2009 to 2010, the deficit fell from 10.1% of GDP to 9.0%, a move of 1.1 percentage points. I’m pretty sure 14.3 > 1.1.
Incidentally, you can’t even say, “Oh c’mon Murphy, everybody throws World War II stuff out of these types of discussions.” According to the same White House table, the budget deficit was 5.0% of GDP in 1986, but only 3.2% in 1987, a move of 1.8 percentage points. Thus the drop in the federal deficit from 1986 to 1987 was bigger (as a share of the economy) in both absolute terms and relative to the original deficit, compared to the period that Drezner classifies as the fastest in American history.
Besides the irony of Drezner just making up bogus facts in the midst of wagging his finger at the “austerians” for their groupthink (and Krugman high-fiving him), is the more substantive point that there is nothing “unprecedented” about the recent move away from the deep deficits following the 2008/09 crash. Historically there have been far larger moves. The biggest one, due to the demobilization following World War II, was characterized by a technical (and short) recession as classified by the NBER, but was associated with a massive period of private sector growth. (Here’s David R. Henderson’s discussion of the post-WW2 miracle.) So not only do our Keynesian friends have their statistics wrong, their entire message is unfounded: Cutting government spending yields prosperity, not depression.
I encourage you to watch this whole thing. Near the end they explain that the police’s own Internal Affairs investigation had concluded the cops did nothing wrong. Thank goodness the second dash cam video came to light. (Also note that the police didn’t originally turn this over. I don’t understand exactly what changed, but prosecutors are saying they didn’t have this video originally.)
Peter Thiel recently gave a qualified endorsement to raising the minimum wage, arguing that in the presence of generous welfare benefits it was a second-best solution (not his terminology). The argument made no sense to me, and I was going to write it up but Bryan Caplan beat me to the punch.
My question: Is Bryan overlooking something? This isn’t just about Thiel. There are some people making a “conservative” case for raising the minimum wage, and in that Daily Show hit piece on Schiff, they repeated a claim I’ve been hearing that employers of minimum wage workers benefit from the existence of the welfare state.
I think all of this is, if anything, totally backwards. So: Is Bryan overlooking something in his critique of Thiel?
I can’t remember mentioning this here at Free Advice so…
In a recent IER post I walk through the results when a programmer at the Heritage Foundation’s ran Richard Tol’s FUND model to calculate the “social cost of carbon” (SCC) using a 7% discount rate.
A 7% discount rate is one of the required parameters for federal cost/benefit analyses, which the Obama Administration’s Working Group on the SCC failed to include in its report. When I testified to the Senate on this last summer, I speculated that at a 7% rate, the SCC would be close to zero or even negative. Well, the FUND model was one of the three computer models in the literature chosen by the Working Group, and look at this:
So to reiterate: The Office of Management and Budget (OMB) had a long-standing rule that whenever federal agencies conduct cost/benefit analyses, they present their results at both 3% and 7% discount rates. In a later issue, OMB acknowledged that in certain cases (for example involving intergenerational impacts of a policy) a much lower discount rate might be appropriate and so could be included too, but in addition to the 3% and 7% rates.
Yet, despite this clear guidance, the Working Group simply did not run their models at the 7 percent rate. It led to the absurdity of federal agencies having to report their “7%” analyses while plugging in the wrong value of the SCC, and then explaining in a footnote why they had to do it like that.
From the table above, can anyone come up with a hypothesis as to why the Obama Administration Working Group on the Social Cost of Carbon didn’t compute the figures at a 7% discount rate?
(To be clear, the overall estimate of the SCC might not be negative, because they averaged the results of the FUND, DICE, and PAGE models. Just the FUND model would yield negative numbers, I believe. But even so, the averaged result would be pretty close to $0 for the next couple of decades, at 7%, keeping everything else the way they ran the models “officially.”)
Nick Rowe has another zany post. Nick is not personally taking a stand on the minimum wage debate. However, he argues that for those economists who do think employment effects will be minimal (or even positive) from hiking the minimum wage, the theoretical argument they usually give to explain the result would also mean that if the central bank raised interest rates, then this too would promote employment.
So, if I were to extend Nick’s analysis, this means that we shouldn’t see the same economists (a) supporting low interest rate policies and (b) supporting a hike in the minimum wage. And yet, that doesn’t seem to be what’s happening. It’s almost as if people pick and choose their economic assumptions (monopsony in low-skill labor markets, in this case) depending on their impact on preferred policy moves…