08 Apr 2012

He Is Risen Indeed

Religious 108 Comments

From Matthew 28:

28 Now after the Sabbath, as the first day of the week began to dawn, Mary Magdalene and the other Mary came to see the tomb. 2 And behold, there was a great earthquake; for an angel of the Lord descended from heaven, and came and rolled back the stone from the door, and sat on it. 3 His countenance was like lightning, and his clothing as white as snow. 4 And the guards shook for fear of him, and became like dead men.

5 But the angel answered and said to the women, “Do not be afraid, for I know that you seek Jesus who was crucified. 6 He is not here; for He is risen, as He said. Come, see the place where the Lord lay. 7 And go quickly and tell His disciples that He is risen from the dead, and indeed He is going before you into Galilee; there you will see Him. Behold, I have told you.”

8 So they went out quickly from the tomb with fear and great joy, and ran to bring His disciples word.

9 And as they went to tell His disciples, behold, Jesus met them, saying, “Rejoice!” So they came and held Him by the feet and worshiped Him. 10 Then Jesus said to them, “Do not be afraid. Go and tell My brethren to go to Galilee, and there they will see Me.”

11 Now while they were going, behold, some of the guard came into the city and reported to the chief priests all the things that had happened. 12 When they had assembled with the elders and consulted together, they gave a large sum of money to the soldiers, 13 saying, “Tell them, ‘His disciples came at night and stole Him away while we slept.’ 14 And if this comes to the governor’s ears, we will appease him and make you secure.” 15 So they took the money and did as they were instructed; and this saying is commonly reported among the Jews until this day.

16 Then the eleven disciples went away into Galilee, to the mountain which Jesus had appointed for them. 17 When they saw Him, they worshiped Him; but some doubted.

18 And Jesus came and spoke to them, saying, “All authority has been given to Me in heaven and on earth. 19 Go therefore and make disciples of all the nations, baptizing them in the name of the Father and of the Son and of the Holy Spirit, 20 teaching them to observe all things that I have commanded you; and lo, I am with you always, even to the end of the age.” Amen.

Obviously on the face of it this sounds like a myth. Yet there are at least two things that make it odd, if it were pure invention after the fact by Christians trying to spread their doctrine. First, the story has Jesus appear to women, rather than (say) Peter. That is an odd twist that, in and of itself, would not have made the story more appealing to the culture of the time.

Second, Matthew goes out of his way to mention that some doubted (I put that part in bold). I can’t think of any tall tales or myths that do that, unless they are setting up someone getting the smack down. (For example, recall the suitors who mock Odysseus when he’s disguised as a beggar.)

I realize neither of those points are smoking guns, but I’m just pointing out that they’re odd features of a story that some claim was invented or at least heavily edited in order to make it palatable to the masses. I claim that from a literary standpoint there are several features of the gospels that make them sound like the writer was actually trying to faithfully record an eyewitness account.

He is risen!

07 Apr 2012

Krugman Throws 99% Under the Bus on Inflation?

Economics, Federal Reserve, Inflation, Krugman 20 Comments

Uh oh, I know some of you don’t like it when I say this, but I think we have another Krugman Kontradiction on our hands… In his recent op ed calling for a moderate increase in inflation, Krugman writes:

[W]ould a rise in inflation to 3 percent or even 4 percent be a terrible thing? On the contrary, it would almost surely help the economy.

How so? For one thing, large parts of the private sector continue to be crippled by the overhang of debt accumulated during the bubble years; this debt burden is arguably the main thing holding private spending back and perpetuating the slump. Modest inflation would, however, reduce that overhang — by eroding the real value of that debt — and help promote the private-sector recovery we need.

OK, so let’s consider the perspective of the struggling middle- or lower-income household; the salt of the earth people for whom Krugman goes into battle every day against the buzzsaw of corporate blood money.

So you’ve got this household, where maybe the major breadwinner can’t find a good job to replace the one that was lost in 2009, and they’ve got credit card and medical bills piling up. Now gas is over $4 a gallon and they’re really feeling it. At this point, Krugman is saying that if prices on everything else they buy (not just groceries and energy) start rising at twice their current pace, the household is going to benefit?

Now I imagine the clarification would be: “Bob, Krugman is saying that a general depreciation of the dollar would help them. So no, it’s not that rising prices per se helps the household, but that with a general rise in prices, they can expect their wages to rise too. And so the $20,000 they owe the credit card companies isn’t as big a deal, if every price and wage in the economy goes up by 4%. It’s even more obvious if they have a fixed-rate mortgage, that a general rise in all dollar-prices, including wages and salaries, will help them. Thus, as more and more households find themselves getting breathing room from the real burden of their debt service falling, they begin spending more and that leads to a virtuous cycle of more aggregate demand, rising wages, and more spending.”

But wait a second: There is at least one economist I know who has been arguing quite forcefully for a few years now, that wages can’t rise quickly if we still have high unemployment. So I think on Krugman’s own terms, his solution of an increase in the rate of (price) inflation would mean, in practice, that the struggling households with the least bargaining power at their jobs would get absolutely crushed for a year or two by higher bills, and that their wages would only catch up once the economy was already fixed.

So it seems that the inflation approach sacrifices struggling households in order to give the 1% (who are fine and just sitting on hordes of cash balances) a reason to increase their investment and consumption spending. I’d call it Trickle Down if the name weren’t already taken.

06 Apr 2012

On the “Big Oil Tax Loopholes”

Climate Change, Economics, Oil, Shameless Self-Promotion 24 Comments

I have a commentary at the Institute for Energy Research (IER) on the Administration’s recent efforts to stick it to the big oil companies. An excerpt:

The rhetoric concerning the domestic manufacturing deduction is particularly silly. Back in 2004 Congress changed the tax code to encourage companies to keep their production activities within the United States. This was not a feature unique to fossil fuel companies…

In the interest of tax simplification, it might make sense to eliminate the Section 199 domestic manufacturing deduction altogether, ideally coupled with a reduction in marginal tax rates across the board. But what does not make sense—and what would only make the tax code even more convoluted—would be to leave the Section 199 domestic manufacturing deduction in place for every other qualifying industry, but to amend it so that oil and gas activities no longer qualify. In other words, the Administration is carving out an exception to an existing loophole so that oil companies pay more taxes than other manufacturers. This is what the Administration is proposing, and describing as “closing loopholes for Big Oil.”

06 Apr 2012

Come to Porcfest 2012!

Free Travel Advice, Shameless Self-Promotion 13 Comments

Check out this promotional poster for the Comedy Roast that will occur on Friday, June 22 at this year’s Porcfest event:

Here is my write-up of Porcfest 2011. If you can get there, you should. All the details for this year’s Porcfest are here.

UPDATE: Duh, here is my performance as a Roaster at last year’s event. So to be clear, this time around, I’m the MC and we are roasting the guy who was the MC last year. (Yes, it will probably come up that he drank too much. I’m sure we will address that issue.)

05 Apr 2012

More Krugman Mayhem Regarding the Hoover Record

Economics, Krugman 23 Comments

I tell you, Dr. Paul Krugman is an absolute master of writing things that are incredibly misleading, but are technically not lies. The following actually took my breath away:

Just to be clear, you can, if you choose, make moral arguments to the effect that it’s wrong to seize the rightful earnings of the wealthy for other purposes; I would disagree, and argue that the real immorality is letting so many of our fellow citizens suffer. But that’s all a different kind of discourse. What the right is claiming is that there’s a straight economic, not moral, argument for low taxes on the rich, that going back to Herbert-Hoover-level taxes at the top makes everyone richer. [Bold added.]

That is truly impressive. Sure, Krugman doesn’t actually say it, but you certainly get the implication that Herbert Hoover was a right-wing laissez-faire guy, who tried slashing tax rates to jumpstart growth and then–oops–it plunged us into the Great Depression. Hey folks, we tried the free market, first under Hoover and then again under George W. Bush, and look what it got us!

Here’s what actually happened with the top marginal income tax rate. And note, I’m grabbing the chart from a left-leaning site that is trying to make fun of the right’s horror at Obama’s plan:

So the “Herbert-Hoover-level taxes at the top” were that way because of the massive Harding-Coolidge tax cuts (spearheaded by Treasury Secretary Andrew Mellon). (There was also a dinky Hoover tax cut after the stock market crash.) Yet it would have taken away from Krugman’s rhetorical punch to say, “Republicans want to give us the same tax rates that prevailed during the Roaring 20s, as if that will shower prosperity on us!”

If you really want to see what Herbert Hoover did with tax rates, and the effect it had on the economy, you can see that he jacked the top rate from 25 percent to 63 percent in a single year in 1932. (In fact tax rates went up across the board, as this history shows.) And then we had the absolute worst economic performance in U.S. history.

Correlation isn’t causation, but if anything the tax evidence from the 1920s and 1930s paints the exact opposite picture Krugman is trying to tell here. And remember, this is the guy who routinely complains that people who disagree with him are a bunch of idiots and/or liars.

04 Apr 2012

Paul Ryan, Draconian Budget Slasher?

Economics, Tea Party 16 Comments

I just did a podcast with James Delingpole (yes, the climate change guy) and he had mentioned that we might discuss Paul Ryan’s budget. Turns out we didn’t talk about Ryan specifically, but here was the point I was going to make:

Go to the actual budget proposal [.pdf] (so no fear that we’re relying on Krugman’s interpretation) and look at page 84. It says:

This budget tackles this crisis head-on by cutting debt as a share of the economy by roughly 15 percent over the next decade. The CBO estimates that this budget will produce annual surpluses by 2040 and begin paying down the national debt after that. [Bold added.]

Everyone understand what that is saying? Even under the Ryan budget’s own rosy scenarios (which don’t assume a massive interest rate spike or another economic collapse, for starters), the federal government will run a deficit every single year from 2013 through 2040. It will take them 27 years just to produce the first balanced budget.

If someone can figure out how many trillions will be added to the absolute level of the federal (cash) debt, let me know. I did it back in 2010 for Ryan’s “draconian” budget, but I don’t have the time to sift through this latest version to see if the number changed.

And remember kids: This is the wish-list. This won’t survive the actual political process over the coming decades. They are saying if they got what they wanted, then we would only have the federal government spend more than it takes in, for another 27 years. After that, it’s fiscal responsibility time, baby! When times are tough, the government needs to tighten its belt just like a household.

03 Apr 2012

Paul Krugman Hits the Bar Before Answering Steve Keen

All Posts, Economics, Federal Reserve, Krugman, MMT 25 Comments

I am super busy with “day job” stuff so I can only do a hit-and-run: In the big blogosphere battle between Krugman and Steve Keen, the latter threw out some sweeping insults of New Keynesian economics. One of the things Keen said was:

Firstly, there are similar underlying principles to the DSGE models that now dominate Neoclassical macroeconomics, and as with Ptolemaic Astronomy, these underlying principles clearly fail to describe the real world. They are:

-All markets are barter systems which are in equilibrium at all times in the absence of exogenous shocks—even during recessions—and after a shock they will rapidly return to equilibrium via instantaneous adjustments to relative prices;

To which Krugman responded: What on earth? Point 1 is all wrong — NK [New Keynesian] models are all about sticky prices, so what’s that about “instantaneous adjustments”?

Longtime, wonkish readers should have laughed out loud at that.

Last point: When Krugman and MMT’ers (I don’t know if Keen is officially an MMTer, but his critique is) start going head-to-head, I think it’s best to let them blow each other up. However, if you forced me to choose a side, I’d say that Krugman has been mostly right. However, I think he made one major slip-up. Early on, he said that even if banks had no reserve requirements, they would still be limited in their ability to engage in credit expansion, because of the public’s desire to hold actual currency. But I think this is a little confusing, and I’m not sure Krugman realizes just how limited his statement was. Because a bank’s customers might want to hold currency and thus draw down their accounts, that forces banks to hold some reserves, even if the law doesn’t require it formally. But if there were no reason for banks to ever hold reserves, then the strong MMT claims would be right, and commercial banks could create an infinite amount of new money, regardless of Fed policy.

So I think Krugman is technically right, even on this point, but to me it sounded akin to him arguing, “I don’t care how fast the car is going when it slams into the brick wall, the occupants won’t be hurt so long as we cap the kinetic energy of the vehicle at a very low level.”

03 Apr 2012

A Note on ECON MOMENTS and Ron Paul vs. Non-Neutrality of Money

Economics, Federal Reserve, Ron Paul 76 Comments

[UPDATE below.]

Just to give you a quick update, over the weekend I bit the bullet and bought a new camera that takes a mic. However, my parents are coming into town this week for Easter, and then I’m traveling like CRAZY for two weeks. (As Dennis Miller would say, I’m going to make Kerouac look like an agoraphobe.) So don’t think I’m pouting and holding off on the videos because some meanies complained about the sound (though they were indeed meanies and I am indeed pouting).

In the meantime, here’s something that has been bothering me about this fancy-pants economist critique of Ron Paul. (I’ve seen at least three economists make this argument.) It goes like this (paraphrasing):

[RPM’s PARAPHRASING OF ACTUAL ECONOMIST CRITICS OF RON PAUL:]

Ron Paul is either a liar or a fool. The fact that the USD has lost 95% or whatever of its purchasing power since 1913, is completely irrelevant. To a first approximation, if the prices of goods have risen 20x (or whatever), then wages have risen 20x too, because of the printing press. Now in reality, wages have actually risen faster than most prices, and that is because productivity has risen over the decades. But if money is non-neutral at least in the long-run–and even Austrians claim they agree with this proposition–then the printing press doesn’t affect the real marginal productivity of labor. So nobody is really made poorer by the Fed, or at least, the factoid about the dollar losing 95% of its purchasing power since 1913 is a complete non sequitur. What would be scarier–if Ron Paul realizes this and cites the stat anyway, or if he is considered an expert on monetary policy and doesn’t know these elementary things?!

OK like I said upfront, I am super busy so I’m not going to be as cool as Krugman and literally do a formal model on this. But go ahead and write up a general equilibrium model with all the i’s dotted and the t’s crossed, where one agent has a printing press. Characterize an equilibrium where the agent with the printing press has the money stock grow at (say) 5% per year, and the agent uses this newly-produced money to buy a constant stream of consumption goods. Make the workers and the owners of capital have cash-in-advance constraints so that in equilibrium, they want to hold money.

OK so when you get that all pinned down, it is clearly the case that every year, the agent with the printing press siphons real consumption away that the workers and capitalists physically produce. If you set the rate of inflation to 0%, then clearly the printing press owner would consume 0% from that point onward, leaving the full product to the workers and capitalists. But at a positive rate of monetary inflation, there is a systematic flow of real goods out of the bellies of the other people and into the belly of the guy with the printing press.

So already we see that the “wages adjust in the long-run” isn’t quite right. It’s leaving out the crucial issue that the Ron Paul people are complaining about. (And this can happen with rational expectations, even with perfect certainty, in the model.)

Now here’s the point I’m not as sure about: I think I could come up with a pretty standard model, with “normal” utility functions blah blah blah, where we have a class of equilibria such that the proportion of total output transferred to the money-producer rises with the rate of price inflation, at least within a certain range. So in that class of equilibria, if somebody asked at time 87, “Hey, how much have we gotten ripped off in this timeline?” it would be an adequate answer to say, “Well, the price of a unit of food quoted in the money has risen by X%.”

UPDATE: I realized my last paragraph was very confusing. I don’t mean that I could come up with a model where an X% rise in the CPI corresponds to X% of GDP going to the money-producer. Rather, I meant that I think I can come up with a family of equilibria where there is a direct relationship between the total depreciation of the currency from time T=0, and the proportion of total GDP over the timespan that was diverted into the belly of the money-producer. So in that sense, if the dollar had lost 95% of its value since 1913, that would mean “the people” got ripped off a lot more over the years than if the dollar had only lost 2% of its value. Thus, the “naive” layperson applause for Ron Paul’s statements is a lot more defensible than the economist who cites “money neutrality” would have us believe.