Jon Stewart Yells, “Ron Paul 2012!”
For a minute I thought they had doctored this Romney clip. He actually said that?!
Morgan Freeman Makes Mike Wallace Squirm
This was very well-said for a black guy*:
* Oh come on, that was funny.
Illustrating the Problems With GDP Accounting
In the comments I chimed in, giving an example to demonstrate the dangers of the standard discussion of GDP accounting. (Note that I’m not sure if anyone in the comments was saying something wrong; it was just a springboard for me to pontificate.) Let me embellish the example here:
Suppose Country A is composed of vegetarians whose sole occupation is to raise pigs. Each year they export all $1 trillion of them to their carnivorous neighbors in Country B. The meat-lovers, in contrast, do nothing but grow apples ($1 trillion per year) to sell to their vegetarian neighbors in Country A.
Further suppose that in each country, there is no investment (neither gross nor net). Each year, consumers in each country spend $1 trillion on food. There is no government.
So GDP = C + I + G + Nx = $1 trillion + $0 + $0 + ($1 trillion – $1 trillion) = $1 trillion.
That’s a tautology and obviously true. But when commenting on it, pundits might say something like, “Our country is driven 100% by consumption. Foreign trade contributes $0 to GDP, and thus has nothing to do with job creation.” Based on this misleading description, people might erroneously conclude that erecting a trade wall would do little to affect the economy.
A Wise Consistency
My friend and co-author Carlos Lara kept telling me about this really intense Bible study at his church, in which they work through the Westminster Confession of Faith. To give you a flavor of how hardcore this stuff is, consider what we studied today, from Chapter XI:
4. God did, from all eternity, decree to justify all the elect, and Christ did, in the fulness of time, die for their sins, and rise for their justification: nevertheless, they are not justified, until the Holy Spirit doth, in due time, actually apply Christ unto them.
I am pretty sure we spent the entire class (about 45 minutes) on just this sentence.
What I’ve been doing is going to Carlos’ (Presbyterian) church for this class, then I go to my church (which is a Fellowship Bible church where Dave Ramsey happens to go, I just found out…) and we sing really awesome songs and hear a sermon that is much more “let’s get out there and live like Jesus!” than the Presbyterian study sessions. It’s makes for a really interesting Sunday, sort of like going to the Rothbard Graduate Seminar in Auburn and then PorcFest.
Anyway, the thing that is really striking me as we go through the Westminster Confession is that you can’t push some of the “tough” doctrines of predestination, Original Sin, etc. only halfway. If you pull back from their implications, then you actually end up with something monstrous.
The most recent example I can give, concerns whether infants might die and not be elect. The pastor leading the study group said that yes, of course they can; there is nothing in Scripture that would lead us to believe otherwise. Then he mentioned how other sects had some type of “age of accountability” doctrine (see somehow who apparently endorses this doctrine, writing about it here). The idea is that if, say, a 3-month old dies, then obviously he must go to heaven, because after all he never got a chance to accept Jesus as his personal Lord and Savior.
So to be clear, the Presbyterian pastor leading our study group, completely rejected this concept and said humans had just made it up, because the alternative sounds like it’s not fair. But, he pointed out, the very idea of election isn’t “fair” either. After all, the group had been studying–in painstaking detail for months–that humans are sinners who don’t do anything to earn their salvation. On this most hardcore of interpretations, it’s not even that you are saved by your faith in Christ, per se. Rather, God decided from before time began that He was going to save you, and then when He effectively called you (working through the instrument of someone on earth sharing the gospel with you, perhaps), then the Holy Spirit began regenerating you from your spiritual state of death, and as a result of your re-birth, you exhibit faith in Jesus and repentance for your sins. (I hope I’m accurately recapitulating what he was teaching; this is all new stuff to me.)
So, if this is how one views the process of salvation, then in a sense it’s just as “unfair” that some other adult doesn’t believe in Jesus (and hence goes to hell), as it would be for an infant. It’s not that you distinguished yourself from the hell-bound sinner because you freely chose God while he didn’t. No, God chose you, and God rejected that guy.
Now admittedly, things do seem even more unfair in the case of the infant. With the sinning adults, at least you could limit the “unfairness” to the grace God gives to the one guy. In other words, the sinning adult does deserve to go to hell, but for some reason God decides to effectively call a subset of these sinners (who deserve damnation) and redirects them to heaven. But does that really work for a little baby…?
At this point, the guy discussed what happened with Adam, and how every human since him has a “sin nature.” I’m not going to dwell on this, because I know it will just set off the atheist libertarians.
The point I want to make in this post, however, came a bit later. Now I should stress that this Presbyterian pastor is not only extremely intelligent and knowledgeable, but also a “real guy” who understands perfectly well why a lot of people would have trouble with the idea of infants not “being saved.” Yet if we push that view, inventing doctrines such as the “age of accountability,” you run into trouble, as he pointed out.
The pastor said look, if you are going to say that an infant in the Bible belt gets a pass, because he was never old enough to understand the Scripture being shared by his neighbors, then you also have to give a pass to the people who have never heard of Jesus. After all, how could they possibly be sent to hell for failing to accept Jesus, if they don’t even know who He is?
And now the coup de grace: If it’s true that people can’t go to hell if they never really had a chance to accept Jesus, then the obvious thing for all Christians to do is to stop sharing the gospel, cancel all mission trips, and indeed burn all the Bibles as fast as they can. In just one generation, if we all work together, we can ensure that nobody ever goes to hell–we just have to wipe out all evidence of Jesus.
In conclusion, I realize the atheist readers are going to be amused or horrified at how much mental energy Bible-believing Christians spend, trying to reconcile what seem to the atheists as blatantly contradictory doctrines.
However, I would suggest to the actual believers, that you push your doctrines to their logical conclusions. If you think the Bible clearly says something, but you dismiss it because “that can’t possibly be right,” I would encourage you to suspend your disbelief. I bet that the passage in question is leading to “problems” only because you are also “helping” some other beliefs with your own earthly interpretation. The Bible definitely teaches us to transform our minds and stop thinking as mere men and women. If we pull back from this Godly perspective because a certain part doesn’t seem to fit, and substitute something more “reasonable,” then the whole thing will come crashing down.
Let’s Name the New Planet Krugmanus
Krugman routinely mocks those who rely on austerity for European countries, which (he claims) involves growth through exports. To take a recent example from December 9:
European stocks are up today, and I have no idea why. I’m with Felix Salmon — this looks like a disastrous meeting. More austerity, more posing of the crisis, wrongly, as being all about fiscal deficits; no mechanism for ECB funding. Somehow southern Europe is supposed to deflate its way to prosperity, while everyone runs a trade surplus, presumably against that potentially habitable planet we’ve discovered 600 light-years away.
Everyone gets the joke, right? If one country reduces its unemployment rate by boosting exports, then some other country must have a higher unemployment rate because of its increased imports. This is one tactic Krugman used to discredit all of the examples we have of fiscal austerity leading to a quick economic recovery; any time such an example involved a boost in exports, Krugman dismissed it as inapplicable to our current slump. Only if a policy will work simultaneously for every country in the world that is currently in a recession, is it valid in Krugman’s book. Otherwise, he will mock you as relying on a planet 600 light-years away with which all of Earth can run a trade surplus.
But here’s the odd thing. Try reading Krugman’s blog post from today, December 10, which I’m reproducing in its entirety. It sure sounds like Krugman is endorsing currency devaluation as a solution. If I didn’t know any better, that would sound like it’s not something the whole world can implement simultaneously. So here it is:
Let me return for a minute to Kevin O’Rourke’s recent piece on the European summit. Aside from pointing out just how bad an idea the new super-stability pact is, O’Rourke makes an important observation about what the European experience teaches us about macroeconomics:
[Here Krugman is quoting O’Rourke:] One lesson that the world has learned since the financial crisis of 2008 is that a contractionary fiscal policy means what it says: contraction. Since 2010, a Europe-wide experiment has conclusively falsified the idea that fiscal contractions are expansionary. August 2011 saw the largest monthly decrease in eurozone industrial production since September 2009, German exports fell sharply in October, and now-casting.com is predicting declines in eurozone GDP for late 2011 and early 2012.
A second, related lesson is that it is difficult to cut nominal wages, and that they are certainly not flexible enough to eliminate unemployment. That is true even in a country as flexible, small, and open as Ireland, where unemployment increased last month to 14.5%, emigration notwithstanding, and where tax revenues in November ran 1.6% below target as a result. If the nineteenth-century “internal devaluation” strategy to promote growth by cutting domestic wages and prices is proving so difficult in Ireland, how does the EU expect it to work across the entire eurozone periphery?
The world nowadays looks very much like the theoretical world that economists have traditionally used to examine the costs and benefits of monetary unions. The eurozone members’ loss of ability to devalue their exchange rates is a major cost. Governments’ efforts to promote wage cuts, or to engineer them by driving their countries into recession, cannot substitute for exchange-rate devaluation. Placing the entire burden of adjustment on deficit countries is a recipe for disaster.
[Back to quoting Krugman:] Basically, European experience is very consistent with a Keynesian view of the world, and radically inconsistent with various anti-Keynesian notions of expansionary austerity and flexible prices.
The point about nominal wages is especially telling. Ireland has clearly — clearly — faced a massive demand shock; maybe Casey Mulligan will find some way to insist that 14.5 percent of the Irish work force has voluntarily decided to refuse employment, but it’s just not true. And Ireland is supposed to have flexible markets — remember, before the crisis it was hailed as an example of successful structural reform. Yet here’s what has happened to hourly wages in manufacturing in the face of catastrophic unemployment:
[Chart.]
It is really, really hard to cut nominal wages, which is why reliance on “internal devaluation” is a recipe for stagnation and disaster.
The crisis really has settled some major issues in economics. Unfortunately, too many people — including many economists — won’t accept the answers.
So to repeat, I defy anyone reading the above quotation, to deny that Krugman is agreeing with O’Rourke that currency devaluation is the key to ending the Euro crisis. Indeed, that’s exactly what Krugman claims is bad about the ECB–it prevents the troubled countries from devaluing their currencies.
But, in light of Krugman’s first post (quoted above)…devaluing against whom? The inhabitants of Krugmanus, living 600 light-years away?
Austrian Business Cycle Theory: Malinvestment, Not Overinvestment
Apropos of the recent flurry–the Austrians are apparently the Charlie Sheen of the blogosphere right now–here is an interesting quotation from Mises:
The erroneous belief that the essential feature of the boom is overinvestment and not malinvestment is due to the habit of judging conditions merely according to what is perceptible and tangible. The observer notices only the malinvestments which are visible and fails to recognize that these establishments are malinvestments only because of the fact that other plants — those required for the production of the complementary factors of production and those required for the production of consumers’ goods more urgently demanded by the public — are lacking.
…
The whole entrepreneurial class is, as it were, in the position of a master builder whose task it is to erect a building out of a limited supply of building materials. If this man overestimates the quantity of the available supply, he drafts a plan for the execution of which the means at his disposal are not sufficient. He oversizes the groundwork and the foundations and only discovers later in the progress of the construction that he lacks the material needed for the completion of the structure. It is obvious that our master builder’s fault was not overinvestment, but an inappropriate employment of the means at his disposal.
Potpourri
* I was hired to evaluate the budget numbers in this novel. I thought they were too optimistic, which the author was glad to hear.
* Carlos Lara and I did a radio show in Vegas, baby. Topic: Our book.
* This year I have two separate nominations up (here and here) for “Funniest Geek Econ Blog Comment of 2011.” I don’t expect to win it; the judges have a grudge against the South. It’ll go to a blogger from New York or LA, I bet.
* On the whole David Warsh Hayek thing, Bob Wenzel has a very interesting take. He dug up previous things Warsh has written that might surprise you, given his newfound opinion of Hayek’s importance. (If anyone cares, my own views on the subject are closest to Mario Rizzo’s. This whole thing to me, is like arguing that the “Jedi vs. Sith lord” thing is a big myth. Sure, the Jedi once used to have some influence, having an official council and dozens of members. But they embarrassed themselves in Episode III, in which their leader Yoda fled into exile and from that point on they were virtually extinguished. I mean, does the modern Death Star have anything to do with the schematics that Mace Windu came up with? I doubt it. If you want to say Jabba the Hut–who lies outside the sphere of influence of the Emperor–was somehow influenced by the Jedi, OK I’ll listen to that argument, but that’s really the only leg you have to stand on.)
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