Potpourri
==> I’m being serious: Mark Spitznagel sent me this, and neither of us can tell if this is a complete fabrication about “Krugman’s response.” Thoughts? I’d call in the world’s leading forensic expert on the writing of Paul Krugman, but that would present a conflict of interest.
==> What kind of crazy upside down world are we living in, when The Economist magazine writes in (tepid) support of raising the minimum wage in order to reduce income inequality? Don Boudreaux and David R. Henderson react, and Ben Powell quotes from the ghost of Krugman Past to cast serious doubt upon the infamous Card/Kruger findings.
==> Richard Ebeling wants to End the Fed.
==> From the same issue that held Krugman’s infamous Internet prediction, David R. Henderson remembers the great Julian Simon.
==> This Nelson Mandela sign language thing just keeps getting weirder.
==> Somebody explain to me what the heck Nick Rowe is doing in this blog post. I don’t think he’s making the point I did about Bitcoin.
==> Alex Tabarrok has a really intriguing post on media underreporting of suicide.
Anyone who reads Krugman’s blog knows those are his words. He’s correct. It’s amusing that the Austrian school is suddenly looking out for the little people. That is an internet meme that is developed more or less since Ron Paul 2008 presidential campaign. Austrian school is strictly for the wealthy and upward distribution. That’s why the Koch Bros have popularized it. Strange to hear anyone argue that Wall Street loves inflation. Wall Street is full of inflation hawks who resent the Fed’s dual mandate.
joe,
I highly suggest you check out the (c. 2007) Politically Incorrect Guide to Capitalism and respond back with what you’ve found. I’ll even reimburse you for it, if you do so.
From the very first link:
Spitznagel > In the 20th century, the economists of the Austrian school built upon this fact as their central monetary tenet. Ludwig von Mises and his students showed that an increase in money supply is beneficial to those who get it first and is detrimental to those who get it last.
Rather closer to 1908 than 2008 — Mises was already lamenting the ridiculous privilege of the wealthy elite who make up the Primary Dealers in relation to the Fed.
Yeah, remember all those Misesians supporting the bank bailouts? Wait… that never happened.
“Anyone who reads Krugman’s blog knows those are his words. He’s correct.”
You actually believe the internet has turned out to be no more impactful than the fax machine?
“Austrian school is strictly for the wealthy and upward distribution.”
Yay Marxist class interest theory.
As Mises showed, you are not refuting a theory by unmasking the psychological motivations of the theorists. A rocket scientist could be doing his research because he wants to kill millions of people. Pointing to that motivation is not a refutation of his science.
“Wall Street is full of inflation hawks who resent the Fed’s dual mandate.”
The truth is the exact opposite. Wall Street is full of inflation doves, as Wall Street benefits relatively the most from easy monetary policy.
“What kind of crazy upside down world are we living in, when The Economist magazine writes in (tepid) support of raising the minimum wage in order to reduce income inequality?”
It looks like a “crazy upside down world ” only if you think that real world wages are actually set at market clearing levels or are flexible and converge to market clearing levels.
The reality is that wages are relatively inflexible and nearly always set by institutional and social factors. The demand for labour cannot be reduced to simple movements up and and down a labour demand curve.
The main driving factor behind employment growth is demand for output: hiring and firing happens when aggregate demand changes. The employment effects of small changes in wage rates like the minimum wage are grossly overrated. Whatever negative effects could easily be overcome and swamped by effects of expansionary fiscal policy.
LK > if you think that real world wages are actually set at market clearing levels or are flexible and converge to market clearing levels.
Aside from when union-lobbied legislation preclude flexibility and minimum wage legislation precludes market clearing levels, and similarly non-free working arrangements are prevalent, I sincerely believe real world wages tend to be set at market clearing levels and are flexible. If every firm is free to flex on wage, then wages are flexible, even if some firms choose not to.
… if every firm *and employee* is free to flex on wage …
“The reality is that wages are relatively inflexible and nearly always set by institutional and social factors. ”
…like minimum wage laws!
The Mandela interpreter article is entirely frustrating. At this juncture, is The Telegraph unable to conclude (somewhat objectively) whether his performance was or was not in accordance with the speech? This fact would have nothing to do with his prior performances.
> And if I was interpreting wrong all these years, why should it become an issue now? It’s one of the questions that I have never ever get the answer from it.
I’ll happily chalk this one up to the language barrier but COME ON PUH-LEASE. Maybe no one noticed before. Maybe no one cared enough to let him know earlier. Maybe he willfully ignored prior criticism.
Still, regardless of his prior performances, is it just The Telegraph or is no one willing to determine the quantity and quality of the discrepancies to confront him with?
Rowe > Assume that the demand to hold that asset grows at the same rate as GDP. If people are willing to hold that asset at a rate of return less than the growth rate of GDP, Mr Ponzi can run a sustainable Ponzi scheme
This sounds somewhat reasonable on its face, and I have to imagine Nick has thought it through. But I’m not sure all the bases are covered. I’ll try to muddle through it:
1. Demand vs. quantity demanded at a given price. I’m not sure how to rephrase more precisely and stay faithful to Nick’s argument.
2. Assume GDP grows at 3% a year. What is the inflation rate? Is it as likely to be 1% as 3% as 5%?
3. So, people want a (fake) asset that delivers a (real) return that is roughly 0. Fine, we’re assuming.
The problem with Ponzi schemes is that demand is not limitless, even though fiat-denominated GDP is. Anyhow, I’d love to get beyond the premise, but it’s hard to.
More minimum wage vs unemployment stuff:
http://catallaxyfiles.com/2013/12/12/david-leyonhjelm-let-the-people-work/
Here is some more potpourri.
Apparently the ” do what I say otherwise I will shoot you” Keynesian mentality knows no limits.
Denver Post reporters Zahira Torres and Yesenia Robles are investigating today’s school shooter, Karl Pierson. Pierson mocked Republicans on his Facebook page:
“you republicans are so cute” and posting an image that reads: “The Republican Party: Health Care: Let ’em Die, Climate Change: Let ’em Die, Gun Violence: Let ’em Die, Women’s Rights: Let ’em Die, More War: Let ’em Die. Is this really the side you want to be on?”
In another post, he describes himself as “Keynesian.”
http://beforeitsnews.com/opinion-conservative/2013/12/colorado-school-shooter-mocked-republicans-called-himself-a-keynesian-2772056.html
I see you have opted to buy a gun. Good for you sir, but first I have to ask you a few simple questions about Aggregate Demand. This won’t take long, we are just screening for Keynesians.
I have a simple way to raise aggregate demand. Ask me how — it’s foolproof.
Anyone could do it by printing dollars in their basement, convince the state to enforce it as legal tender, and then spend to their heart’s content.
Funny story: I actually got a fan of market monetarism to reluctantly accept my throught experiment of me doing just that, as socially beneficial given that the central bank is not printing enough dollars.
The shooter also said:
“I was wondering to all the neoclassicals and neoliberals, why isn’t the market correcting itself?” he wrote. “If the invisible hand is so strong, shouldn’t it be able to overpower regulations?”
This is exactly the same blame the victim stuff I hear from many other anti-capitalists. Some of whom visit this blog.
It rests on an obvious fallacy. For suppose that individuals who used the free market process were indeed able to fully reverse any and all government interevention. That would make government intervention completely benign. And yet for more than 100 years at least, the government has been intervening. Obviously it must be changing society away from a pure free market process path in SOME respects, or else the generations of politicians wouldn’t keep doing it.
To then blame the free market as incapable of completely offsetting and reversing any and all government intervention, as a means to continually attack it via continued state intervention, is pretty much the worst case of cricular logic I’ve ever encountered. And that includes LK and Ken B, so you know it’s pretty bad.
It’s almost as if these sociopaths get a kick out of taunting people because they can’t properly calculate in a world of monetary state intervention. “Oh ya? Your precious free market is so good huh? Then how come it can’t stop me from stepping on your throat with my jackboots?”
“Carl Schmidt and Brendon Mendelson, both seniors at Arapahoe High, knew Pierson. They said he had political views that were “outside the mainstream,” but they did not elaborate.”
Sounds like he fits right into the mainstream.
“Obviously it must be changing society away from a pure free market process path in SOME respects”
Do you believe there is a pure free market in the absence of Government. Do you accept no other market failures? Have I mis-understood what you mean by “pure free market”?
Bob: what point did you make about bitcoin?
I think he’s referring to the previous post that argues that bitcoin is no more of a bubble than existing full-fledged currencies.
Thanks Silas! I’m making a similar, related point.
The total value of an asset is the present value of the stream of returns on that asset. But what interest rate do we use when we calculate that present value? The more liquid is the asset, the lower the rate of interest at which people will hold it. That rate of interest could be negative.
What is the interest rate on holding cash? Zero right?
I don’t think there has to be a money based “return” on a commodity that has instantaneous purchasing power.
Interest rates arise through delaying consumption. If holding Bitcoins is the holding of instantaneous (consumption) purchasing power, then the interest rate would be zero. The present value of principal plus future income streams of zero income each, is equal to the principal.
[…] Speaking of the economics of minimum-wage legislation, Ben Powell (a GMU Econ PhD) reminds us that Dr. Krugman was a more careful economist than is Mr. Krugman. (HT Bob Murphy) […]
Seems related http://booksbikesboomsticks.blogspot.com/2013/12/why-we-fight.html
Britain’s NHS http://www.dailymail.co.uk/news/article-2522878/National-Health-SHAMBLES-Three-damning-reports-mothers-abandoned-labour-hospital-blunders-day-patients-lost-faith-GPs.html
This relates to the Tabarrok post on media under-reporting of suicides. Media reports are not a reliable source of information. “News” is only news because it is unusual. Unfortunately, it is becoming more and more the case that it is only news if is accompanied by video images.