16 Aug 2011

Krugman: I’m So Right About Rick Perry, Even Data Supporting Perry Prove It

Economics, Krugman 12 Comments

The funny thing about data-hound Paul Krugman is that I’ve often caught him presenting cold, hard facts that contradict what he is saying. Take the recent controversy over whether Rick Perry has presided (governed?) over an economic “miracle” in Texas.

Krugman here and here presents versions of the following two charts, thinking he has refuted the “myth” that Texas has done better than other states during the economic downturn:

and

The first chart shows the unemployment rate of Texas against Massachusetts since Rick Perry took over. Krugman says, “Funny how Deval Patrick isn’t running for President on the strength of the Massachusetts economic miracle.”

No Dr. Krugman, what would be funny is if Deval Patrick did say that–at least vis-a-vis Texas–because that would be a stupid thing to say. What would the chart have to look like to show that Texas did do better than Massachusetts since Perry took over? In the beginning, when Perry first showed up, Texas unemployment was more than a full percentage point higher than it was in Massachusetts. During the boom, Texas unemployment dropped faster than in Massachusetts, and then during the bust, it rose more slowly. The net result was that by 2010, Massachusetts unemployment was about .75 percentage points higher than in Texas (just eyeballing the chart). So that’s almost a 2-percentage point swing since Perry took over. You’re telling me if unemployment dropped two percentage points after a new stimulus package kicked in, Krugman would scoff at the bogus “miracle” of deficit spending?

(Note, the trend flipped again after 2010, where Texas lost some of its relative gains back to Massachusetts. But it’s not close to being back where it started.)

It’s the same story with the second graph. This one is less comprehensible from the FRED-generated legend, but it shows (Krugman’s words) “the ratio of nonfarm employment to total population. The red line is the nation as a whole, the blue line Texas.”

So why is this chart allegedly so damning to claims that Perry’s Texas has outperformed the nation? Krugman tells us: “[T]his graph should put paid to the notion that Texas somehow escaped the recession, or that there was something miraculous about its job creation. Once you take account of population growth, nothing special happened.”

Really? I look at that same chart and see that the gap in % of employed people has been cut in half under Perry. If anything, that accomplishment is especially impressive, once we learn that Texan population grows higher on average than in the rest of the country.

So what the heck is going on here? It’s simple: Krugman is setting up an absurd strawman. Now maybe fools calling into Sean Hannity said, “Rick Perry is our guy! The Lone Star State has escaped the recession unscathed!”

But in terms of an actual economist trying to evaluate whether a certain state has had better policies fostering job creation than other states, for what evidence would we look? Since there are no formal immigration barriers to speak of, you would expect workers to flee states with government constraints on job creation, and flock to states with the ability to create jobs more quickly. This would take pressure off the bad states (thus reducing their official unemployment number at any time) and put pressure on the good state (thus bumping up its number).

Therefore, you wouldn’t see the good states with constant unemployment throughout an awful recession. Rather, you would see the state get hit less severely, compared to the other states. Or, if you were trying to evaluate a change in policies, you would check to see if the state in question improved on its comparisons during the period in question.

In short, you would see charts just like the above.

Now don’t get me wrong: I am not saying the above charts prove that Bush III should get credit for his free-market wizardy. I have no idea what policies he implemented, and I don’t know whether the above charts show that Texan policies are more conducive to job growth. There are other hypotheses, and Matt Yglesias (HT MR) at least attempts to sort out the various explanations.

My point in this post is that Krugman is being completely absurd (at least in these two posts). He is pointing at data that is prima facie going against him, and acting like it demonstrates his view. At best, he should say, “This isn’t a strong enough result to rule out noise,” or the like. Yet he seems to think that a truly good state wouldn’t see rising unemployment during an awful worldwide recession.

Incidentally, Krugman should understand the mechanism, since he talked about displaced workers moving into different states when discussing optimal currency areas. Yet another Krugman Kontradiction. When worker mobility across states is useful for making the argument to print more fiat money, Krugman is all about it. When it apparently will justify “conservative” economic policies, Krugman forgets all about it.

16 Aug 2011

Yet More Evidence About Media Bias Against Ron Paul

Conspiracy, Ron Paul 84 Comments

The latest “Stop being so paranoid, Bob” argument on the Ron Paul stuff is that he doesn’t have a chance of winning, and so that’s why the media is ignoring him. Sorry kids, that might explain a few of your data points, but not all of them. Jon Stewart’s team assembles the damning clips (HT2 Danny and EPJ):

(Note: As of right now, the above embed link isn’t working. But it’s down at Wenzel’s site too, so I think I pasted in the right code. They might be getting overwhelmed, or maybe they didn’t have permission to have such a long clip, or maybe the shapeshifting lizards paid them a fatal visit.)

15 Aug 2011

Politico Analyst Points Out Media Bias Against Ron Paul

Ron Paul 3 Comments

This is all over Facebook:

15 Aug 2011

Sovereign Debt Crisis Bask

All Posts 17 Comments

I’m gathering reading materials for my upcoming quickie course on the sovereign debt crisis. Topics include the housing bubble (from a global perspective–i.e. which countries were hit and by how much), the formation of the euro (and theory of optimal currency area), the fiscal situation in various countries, and the chronology of interventions. If you’ve come across any particularly good summary articles please post them in the comments and maybe I’ll include them on the syllabus.

15 Aug 2011

Did the Establishment Steal the Iowa Straw Poll from Ron Paul?

Conspiracy, Ron Paul 13 Comments

Robert Wenzel over at EPJ has two videos that make things look very suspicious. First, check out the standard way they announced the results of the Iowa straw poll back in 2007 (just watch it starting at 1:00 and end it at 1:30 once you see the obvious pattern):

OK, that’s standard stuff, right? You have a big event that is based on a final ranking, so–DUH–you announce the winners from last to first place, to build suspense. That’s how we do the finalists at Mises University for the oral exams, for crying out loud. Let me reiterate: DUH, of course that’s how any MC in his right mind would announce deeply anticipated results.

Now check out how they announced it this year:

Note that right after the guy walks off stage, you can hear people in the crowd going, “That’s it?! He’s not going to tell us the results?!” Also, when the guy walked over to get the package from the Secretary of State, he called them “the results” (plural). And of course the Fox people are discombulated; everyone is stunned that the results (plural) weren’t announced.

I have two theories:

(A) The Republican establishment stole it from Ron Paul, but they were triple checking the votes they gave to Bachmann from others to make sure they wouldn’t get caught. (They had to make sure the individual numbers added up to the grand total, they probably didn’t want to steal too many votes from the candidates getting just a few votes, since people might be able to reconstruct who voted for whom, etc.)

(B) The MC developed explosive diarrhea while on stage.

UPDATE: Oops, there I go being naive again. The votes we can see don’t add up to the total cast. So it would be really simple to give Bachmann the win, especially if it had been legitimately close. (Another, less sinister theory is that Ron Paul really did come in just shy of first, and the Iowa Republican Party didn’t want to advertise that fact. Since they couldn’t possibly go through everybody except the 2nd place guy, they just said the winner and walked off. But I still smell a rat.)

15 Aug 2011

Krugman and Space Aliens

Economics, Humor, Krugman 20 Comments

Lots of people sending me this. Eh, I mean he’s really just trying to come up with a fanciful illustration of his (crazy) position. Technically he’s not calling for an alien invasion, he’s (at worst) calling for a hoax of an alien invasion.

14 Aug 2011

Can God Violate the Laws of Physics?

Religious 27 Comments

In church today the pastor discussed the story of Jesus rebuking the storm and calming the sea. He brought up earlier miracles that Jesus had performed, such as turning water into wine and healing a congenitally blind man. Then he said something like, “So already Jesus has broken the laws of physics and biology.”

I disagree, on two fronts. First, strictly speaking this is nonsense, and misconstrues the character of physical law. If the H2O molecules didn’t obey “the laws of physics” when they were turned into wine, then those aren’t really the laws of physics are they? We don’t say that the behavior of clocks at high velocities violates the laws of physics. No, we say the Newtonian understanding of matter, space, and time was wrong.

Second, and more relevant to the theist reader, I think this typical view of God–where the religious person believes he is puffing up God’s strength by saying He can violate the “laws” of physics–is actually much less flattering to God than my own conception of His genius. It’s a bit weird to say that God setup a clockwork universe, running on autopilot, but then He has to come in every once in a while and break the rules because the physical machine He built was going down a path He didn’t like.

In contrast to that (typical) view, I prefer to view every event in the natural world as being equally willed by God. Everything is a miracle in that sense, and everything is natural–in accordance with the true laws of physics.

Now the really interesting thing–and here is why God is so brilliant–is that God figured out a way to tell His grand story (full of love, hate, honor, sin, faith, betrayal, redemption, heroes and villains, etc.), using (to a first approximation) little bundles of something we’ll call “energy” that obeys a very parsimonious set of rules. It would be like Shakespeare writing all his plays not in the original English, but in a series of 0s and 1s upon which you could do very mechanical operations involving the prime numbers, and BAM out pops Romeo and Juliet. Would that make Shakespeare more or less clever, in your estimation?

So don’t misunderstand me. I am not saying that I think the true laws of physics (and biology, etc.) are necessarily completely foreign to our current understanding. What I’m saying is that it is sheer sloppiness to say, “A guy turning water into wine is violating the laws of physics.” It most certainly is not. Two hundred years from now, we might have Star Trek (TNG) type replicators, so a guy can say, “Make me a glass of water,” then his lady friend walks in and he says, “Scratch that, turn it into a glass of wine.” Don’t tell me that this would violate the laws of physics; you don’t know that.

Now of course, the obvious reply will be, “Oh my gosh Bob, fine, let’s stipulate Jesus didn’t have a little device from the future that was sent back in time by an android with huge biceps and an Austrian accent. Now do you agree it would be violating the laws of physics for a regular man to somehow turn water into wine?”

No, I still don’t agree. We have only the most miniscule ability to take our knowledge of the microscopic “laws of physics” and turn them into statements about the macro world. Consider this:

No fooling, I can use my mind to control matter. There can be a physical object (weighing more than a pound) resting on my kitchen table. I can control it with my mind, making it go up in the air and putting it back down. I can do it in any pattern you want. E.g. you can say, “Make it go up and down, rapping on the table to count out the first 7 prime numbers” or whatever you want. This way we can be sure it’s not a coincidence (like me saying every morning I’m going to use my mind to make the sun rise in the east). Really, I’m not kidding, I can do this experiment right before your eyes. The one catch is, the physical object I’ll be controlling is my right hand.

Of course, our apparent ability to control a small subset of nature directly with our “mind powers” is so commonplace that nobody even notices it. You think I’m just being goofy with that observation.

I don’t think so. It is absolutely astonishing that we seem to be intangible essences who yet can derive information from our bodies and somehow seem capable of influencing the course of events.

Mind you, I actually don’t think anything in the human nervous system violates the laws of physics or biology, even as we currently understand them. What I think is that we have only the dimmest understanding of the complexity and emergent phenomena that those simple laws are capable of generating.

So in conclusion, I would ask theists to reconsider their view of God’s relationship to physical law, and I would ask atheists to stop speaking such nonsense as, “The stories of the Bible violate the laws of physics.”

12 Aug 2011

Potpourri

Potpourri, Ron Paul, Shameless Self-Promotion 27 Comments

* If you want socialized medicine, here’s the plan: First you pass a “weak” law that allows private insurance but imposes all sorts of rules on whom they need to enroll. Then, in order to keep them from going out of business, you require that every American buy health insurance. After that legislation is passed, have a court declare that the individual mandate is unconstitutional, but leave everything else in place.

* Jonathan Catalan has a good piece on 1937 that Tucker recently dug up from the vault. (Or at least, I assume Catalan wrote the article. It’s possible he paid someone to ghost write it.) On this point, I have an observation: Even on their own terms, the Keynesians who say the budget austerity of 1937 caused the US to fall back into Depression are admitting that their “medicine” doesn’t work even after four years of application. That is way longer than the typical free market recovery. This is what I mean about “believing is seeing.” What else would the data look like, to show that the New Deal actually prolonged the Depression?

* I don’t know if I’ve already discussed this, but I continue to be amazed at the casual way in which economists talk about the ECB buying half the Spanish and Italian debt. At what point are we going to say, “Yeah, that counts as monetizing the debt”?

* A relatively new podcast series featuring two young ladies from Auburn. The Australian guys they interview first are the ones who made that “bootleg” Mises U video, and then I give an unusual interview.

* There aren’t too many politicians who can discuss monetary policy and history like this.

* Noahpinion (that’s clever in and of itself) and I exchanged a few wise-acre emails after I mentioned him recently. Alas, he is an interventionist. He pointed me to this interesting post he did to try to show that Krugman was right and the free-marketeers were wrong.

* Tom Woods turns the tables on Lew Rockwell!

* I recycle Steve Landsburg’s game theoretic argument to question the efficacy of the SPR release.