22 Jun 2010

Toy Story 3 Is Amazing

All Posts 6 Comments

We saw it on Sunday, and I was blown away. I don’t want to say anything else and spoil it. But if you have kids in the right age group, and you generally like the worldview of this blog, then I think this is a movie worth seeing in the theaters. One guy actually clapped at the end, which is a dying tradition.

21 Jun 2010

Dean Baker Looks at the Fed, and He Likes What He Sees

Economics, Federal Reserve, Financial Economics 10 Comments

It’s really funny how economists can look at the same basic facts and reach such different conclusions. For example, I only recently really understood what the deal was with the Fed remitting its excess earnings back to the Treasury. And when I had finally comprehended the scheme, I concluded: The Fed is a giant counterfeiter!

In contrast, Dean Baker–much older and more traveled in power-broker circles–apparently knew this for a while. And here’s what Baker has to say about it:

Actually, the debt being run up at present is helping future generations by keeping their parents employed, improving the infrastructure and providing them with a better education. There is little or no real burden associated with this debt since much of the debt being issued is held by the Fed. The interest on these bonds is therefore paid to the Fed, which in turn refunds the money to the government.

Last week, the NYT reported that the Fed paid more than $47 billion in interest to the government. So, where is the burden on our children?

At least when Brad DeLong talks about the magic of painless deficits, he always qualifies it by saying these arguments only apply in a liquidity trap. But in Baker’s post here, he doesn’t even throw in something like, “Of course, under normal circumstances if someone said the federal budget deficit were painless, because the Fed could just monetize it, then we would have to send that fool to Zimbabwe.”

But nope, here Baker just mocks people who actually think $1 trillion+ deficits might not be such a good idea.

21 Jun 2010

Reserve Your (Kid’s) Spot in My Principles of Economics Class!

Shameless Self-Promotion 4 Comments

Apparently five people have already registered for this class which teaches basic economic principles, even though we haven’t even put up the full syllabus yet, let alone started pushing it.

I am really going to push to get a lot of people in this one, limited only by what the tech guys tell me the system can handle. Having said that, I also think the demand could be big. I have just sent in the edits for the manuscript to my textbook for junior high school students, and in all seriousness, I can’t wait for kids to get their hands on it. My buddy teaches junior high history and he has already test marketed it with great success.

So my point is, if you know you and/or your kid(s) are going to enroll in this class, it’s better to do it sooner rather than later. There will be a technical limit to the class size, and it’s possible it could sell out quickly once we start blasting it on Mises.org.

21 Jun 2010

Slight Correction to DeLong on the Austrians

Economics, Financial Economics 3 Comments

Two things about this Brad DeLong post. First, I like the quote from a P.J. Grigg that DeLong disparages[actually I’m not sure if DeLong is for it or agin it] reproduces:

I distrust utterly those economists who have with great but deplorable ingenuity taught that it is not only possible but praiseworthy for a whole country to live beyond its [means] on its wits and who in Mr. Shaw’s description tech that it is possible to make a community rich by calling a penny two pence, in short who have sought to make economics a vade mecum for political spivs…

Then DeLong goes on to describe various economic schools of thought and their views on recessions / depressions. As you may have guessed, I don’t find his take on the Austrians flattering:

Austrianism, the doctrine that because of past irrational exuberance and over- or malinvestment, that there is nothing of social value a large chunk of the labor force can do other than sit on its hands unemployed and wait for circumstances to change and profitable employment opportunities to open up.

So just to clarify here: I don’t think that the unemployed worker has nothing of social value to do, and must sit on his/her hands and wait.

No, the socially valuable thing for the worker to do–who has been thankfully laid off from the wrong sector into which s/he was drawn during the misallocations of the boom–is to search for the right place to go. The worker has to find a new niche in the economy, and the “efficient” place for him/her to go, depends a lot on the worker’s own preferences. S/he doesn’t have to wait around for the right job to appear, but rather needs to go find it.

If we are dealing with a simple model where there’s one big firm (or millions of identical firms) who have the same production function F(K,L) then yeah, it’s pointless for people to be unemployed. But in the real world the economy is very complex and we can’t just survey the scene and say, “Ah, you sir need to report to 100 Downing Street at 8 am Monday morning, that’s where your labor will be the most useful. Carry on.”

Last point: I am NOT NOT NOT saying that the people who have been unemployed for the last two years should just suck it up and go find their perfect job. They are unemployed because of all the “help” the Fed and government have been providing since the crisis began. If the government/Fed had truly done nothing and “let everything collapse” back in 2008, then I believe unemployment would be lower now than it currently is.

DeLong of course would disagree with that claim quite strongly, but it is simply not true to say (or imply) that an Austrian thinks the current batch of unemployed people somehow deserve their lot, or are fulfilling an important social function by sitting on the sideline for two years.

21 Jun 2010

Football Trick Plays

Procrastination Break 3 Comments

I’m not even sure how I ended up watching these things. But if I can’t get my work done, no one else will either!

20 Jun 2010

He’s a Crafty Devil

Conspiracy, Religious 4 Comments

My favorite line from The Usual Suspects is when Verbal explains about Keyser Soze, aka “the Devil”:

He is supposed to be Turkish. Some say his father was German. Nobody believed he was real. Nobody ever saw him or knew anybody that ever worked directly for him, but to hear Kobayashi tell it, anybody could have worked for Soze. You never knew. That was his power. The greatest trick the Devil ever pulled was convincing the world he didn’t exist.

So for years I thought this was a very profound statement about the real Devil. But as with most things that one learns from 20th century pop culture, this actually is quite old, as this website explains:

This [line from The Usual Suspects] was first said by the famous French poet Baudelaire in an unusual short story about meeting the Devil and having a grand old time.

He did not complain in any way about the bad reputation he enjoyed all over the world, assured me that he himself was the person the most interested in the destruction of superstition, and admitted to me that he had only been afraid for his own power one time, and that was the day when he had heard a preacher, more subtle than his colleagues, shout out from the pulpit:

“My dear brothers, never forget, when you hear the progress of enlightenment vaunted, that the devil’s best trick is to persuade you that he doesn’t exist!”

In the last few years, I have come around to at least some of the conspiracy views that think there is an elite group “running the show” behind the scenes–and that (for example) it’s really absurd for us to get all worked up “about that tyrant Obama!” I’m not saying I agree with every last theory coming down the pike that has this flavor, I’m just saying it’s not nearly as wacko as I would have thought ten years ago.

Now let’s suppose for the moment that it’s true, and there are a group of elites who control banks, major media, and key governmental positions all over the world. The most obvious way to protect themselves is to do everything they can to keep their very existence a secret. They would be perfectly happy to choose which candidates the parties run against each other, and they would laugh themselves silly when x million Americans got so riled up about the other y million who were voting for the monster Republican/Democrat instead of the obvious angel Democrat/Republican.

These shrewd players behind the scenes, many of whom were from families that for generations had been pushing the entire society in the direction of more centralized power–controlled by them and their allies–would of course run from the spotlight. They would look with contempt on the insecure politicians who needed the rush of adoring masses. In fact, if at all possible, these shrewd puppetmasters would want their underlings to fool themselves into thinking they were calling the shots. Remember that great Goethe line: “None are so hopelessly enslaved as those who falsely believe themselves to be free.”

OK I think many of you are at least with me so far. Maybe you don’t agree that this is how the world really is, but I’m hoping you see the plausibility in what I’m saying.

Now just take it one more step. Suppose there were a malevolent being who had been around for thousands of years. His goal is worldwide domination. He has steadily been steering human affairs to that end. Wars and other events come and go, apparently at random, but gee whiz it seems like the mechanisms of centralized authority and coercion just keep getting more and more powerful, as if they have a life of their own. I mean, heh heh, if I didn’t know any better, I’d say that some very powerful force were transforming the entire global society so that it would be institutionally possible for one person to literally seize control of the entire planet. Go figure, what a weird coincidence.

Now if this were the case, what would be an incredibly crafty thing for this supreme deceiver to do? He would try to convince his lieutenants–the humans at the top of the various secret societies around the world–that they were at the top of the pyramid. He would be manipulating them exactly as they were doing to the politicians, central bankers, Nobel committee members, editors of Time magazine, and let’s not forget all the impressionable but incredibly influential movie and rock stars.

These reflections by themselves don’t prove anything, of course. But I am just pointing out that if your immediate answer is–“But Bob, reason and science have proven that the Devil doesn’t exist”–that that’s exactly what the Devil would want you to think.

19 Jun 2010

Consumer Sovereignty

All Posts 10 Comments

OK kids, I have a bunch of Mises.org potential articles in that nether region between my cerebrum and the Institute’s server. I will eventually do all of these topics, but I’m not sure which order. Any preferences?

* The claim that our financial system requires the creation of ever more money so that people can pay the principal plus interest on their prior loans.

* Whether a discovery of gold can cause a boom-bust cycle if the gold miners dump most of it on the credit market.

* Antal Fekete’s critique of the Austrian School’s conventional take on gold.

* How Krugman’s response to the ECB’s list of cases of successful austerity programs paints him into a corner so small that we have to worry about quantum effects. (Yes, I am just that much of a geek. I would write a Mises.org on the Star Trek:TNG episode where Commander LaForge accidentally creates Dr. Moriarity in the Holodeck, if I thought Jeff Tucker were asleep at the wheel.)

* What should we look forward to? Deflation? Inflation? Libations?

* Surely this is wrong. But does anyone want me to roll up my sleeves and figure out exactly why it’s wrong?

* Should I revisit the Social Security issue, if for no other reason than to blow up a Keynesian who isn’t Krugman or DeLong?

19 Jun 2010

Uh Oh, Can I Retract My Letter to Obama?

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Just yesterday I dropped a letter in the mailbox, asking President Obama if he had any advice for how I could spread the ideas of anarcho-capitalism. Should I not have done that?