Headline/Content Mismatch?
Someone on Facebook linked to this article with the headline, “Argentina bans inflation from official jargon.” But if you click on it, you notice two things:
(1) It is horribly written. Presumably it is a translation?
(2) After a second reading, I still don’t see anything in the article that directly supports the headline. There are references to synonyms for “inflation,” but it doesn’t actually say that the government bans use of the term. Can anyone else find it?
Murphy Twin Spin
I don’t think I officially announced this, but I’ve been traveling a lot (and will do so next week also) and have a bunch of “real work” that piled up. So, blogging has been sparse as you’ve no doubt noticed.
Anyway here is a piece I had on MarketWatch a while ago criticizing the Financial Crisis Inquiry Commission’s findings. What’s neat is that I gave a standard summary of Hayek, and the crowd went wild. (You have to look at the first batch of comments for the lovers. The haters came later.)
Then just yesterday, I gave a shout out to the freedom fighters ’round the world. And then I got my head bitten off by the people who hang out at the Mises blog.
I have several lectures that are “Bob as you’ve never seen him!”-type material. (I am shirted though, no funny stuff.) But it’s taking a while to get the videos edited etc. for posting. And yes, that includes the pseudo-debate I had with an economist from the Atlanta Fed a few weeks ago. So I’ll post those when they’re ready…
What’s Wrong With Government Debt?
In today’s Mises.org article I elaborate on the Keith Hennessey chart showing projected fiscal trends through 2060. I walk through a numerical example showing the connection between government deficits and debt, as a % of GDP. (It’s a bit counterintuitive–you can set any level of perpetual deficits that you want, and there is an associated debt-to-GDP ratio that would be stable at that constant deficit.)
Here’s an excerpt of the Austrian product differentiation:
Contrary to Keynesians, the problem with government budget deficits is not merely that they (typically) lead to higher interest rates and thus reduce private-sector investment and consumption spending. Because, in this context, the Keynesians only look at economic factors insofar as they work through “aggregate demand,” they understandably think that large deficits can’t possibly hurt anything when interest rates are practically zero.
However, Austrian economists have a much richer model of the capital structure of the economy. In this view, economic health isn’t simply a matter of propping up total spending high enough to keep everybody employed. On the contrary, resources need to be deployed in particular combinations in particular sectors of the economy, so that semifinished goods can be transformed step-by-step as they move through the hands of various workers at different businesses and finally onto retail shelves.
Mike Huckabee: Without Government Welfare, Churches Would Let Babies Starve to Death
OK I’m reading into it but here’s what he said on Michael Medved’s show, concerning Natalie Portman (HT2 somebody on Facebook):
You know Michael, one of the things that’s troubling is that people see a Natalie Portman or some other Hollywood starlet who boasts of, ‘Hey look, you know, we’re having children, we’re not married, but we’re having these children, and they’re doing just fine.’ But there aren’t really a lot of single moms out there who are making millions of dollars every year for being in a movie. And I think it gives a distorted image that yes, not everybody hires nannies, and caretakers, and nurses. Most single moms are very poor, uneducated, can’t get a job, and if it weren’t for government assistance, their kids would be starving to death and never have health care. And that’s the story that we’re not seeing, and it’s unfortunate that we glorify and glamorize the idea of out of children wedlock.
BTW I generally agree that our culture glamorizes unwed parenting, but I liked Dan Quayle’s approach a lot better than Huckabee’s.
Econometrics Bask
This is a geek question: I am working with a data set where we are trying to determine if more occurrences of something leads to a higher probability that another condition will occur. This calls for a logit model and that’s what we’re doing. These aren’t the numbers but they’re close:
Occurrences for a person *** % of people with condition
==================================
1 *** 68%
2 *** 71%
3 *** 74%
4 *** 77%
5 *** 81%
…
10 *** 85%
11 *** 85%
12 *** 85%
So in other words, if you look at all the people in the sample who only had occurrence of the independent variable, then 68% of them had the condition, and 32% didn’t have it. If you look at all the people who had two occurrences, then 71% had the condition and 29% didn’t. Etc.
So it looks like there is definitely an effect as we go from 1 through 8 or 9 of the occurrences, but then it plateaus and further occurrences don’t increase the % in the population who have the condition.
Any thoughts on this? Is there any justification for just running a logit with the data from 1 to 8 (or whatever) occurrences, coming up with the constant and the other coefficient, and then just not extrapolating beyond occurrences?
Or do you always have to include the whole data set, even though it seems throwing in the rest of the data points will swamp the effect and make it seem as if the marginal impact of occurrences is lower than it really is upfront?
Finally, is it better just to show the actual averages (as I’ve done hypothetically above) and use that to estimate the marginal impact of occurrences, from 1 to 8, etc.?
Why I Claim That Caplan Said “Parents Don’t Matter”
I just want to make a quick point to defend my honor. Whenever I say, “Bryan says ‘parents don’t matter,’ but I think he’s wrong because of XYZ…” I get people saying I’m misrepresenting his position. Don’t get me wrong–I concede that in a formal debate, or if pressed for clarification on his blog, Bryan would give the very nuanced, “Sure the research doesn’t show genetics causes 100% of your kids’ outcomes, and of course if a parent serves molybdenum for lunch that might affect you, but what I’m saying is the more modest claim of…”
However, Caplan has certainly–perhaps in moments of weakness–given the impression that he basically thinks “parents don’t matter.” I did about 10 minutes of looking and found two examples of what led me to this view. So just for the purposes of documenting it, here they are:
==> In April 2009 Bryan had a post titled, “Do Parents Affect How Long You Live?” Here is an excerpt:
Parents – especially moms – spend a lot of time nagging their kids to eat right, get some fresh air and exercise, not smoke, etc. If nagging changed behavior, and there is some validity to popular perceptions about “what’s healthy,” then parenting should affect life expectancy. Does it?
According to the literature I’ve tracked down, the answer is no. When you analyze life expectancy and mortality using twin studies, you get the standard behavioral genetic answer: genes aren’t everything, but parents still don’t matter. A couple of relevant studies…
At least in my experience, most parents claim that their nagging has long-run health benefits. “It may seem OK to eat ding dongs and play videogames all day when you’re ten, but you’re building bad health habits that will haunt you later in life.” Once again, though, it looks like parents overestimate their influence. If the short-run benefits of health nagging aren’t enough to justify it, it turns out that you might as well just hold your tongue.
Now it’s true, if you go look at the stuff I replaced with an ellipsis, then it seems the literature might not support what Caplan is saying here. But c’mon, give me a break: Caplan is here quite clearly telling us that parents don’t affect how long you live, and he literally says “parents…don’t matter.”
Now maybe you will say, “OK sure, but that’s just for longevity. Caplan never said anything comparable for other aspects of kids’ outcomes.” Oh? Because of a reader comment on the above post, Caplan followed up and said this:
One of the big lessons of twin and adoption studies is that the short-run effects of parenting are much bigger than the long-run effects. So when a parent nags a kid and sees immediate improvement, his first-hand observation confirms that nagging works. It’s very tempting to infer that the difference between an average kid and a great kid is several thousand hours of nagging.
What twin and adoption studies have taught us, though, is that nagging isn’t cumulative. It’s not like trying to hold back the ocean by building a sea wall brick by brick until it’s high enough to get the job done. It’s more like building a sea wall out of sand – you have to keep building just to stay in place. And once your kids grow up and start making their own decisions, the tide comes in whether you like it or not. Or as I’ve put it before:
Instead of thinking of kids as lumps of clay that parents “mold,” we should think of kids as plastic that flexes in response to pressure – and springs back to its original shape once the pressure goes away.
To repeat myself, though, the glass is half-full. You have little effect on your kid’s long-run prospects, but most kids’ long-run prospects are still bright. If you’re the kind of parent who reads econ blogs, your kids’ prospects are probably very bright indeed, because they’re going to painlessly inherit your brains, charm, good looks, and modesty.
So if you can’t understand why I take Caplan to be picturing kids as impervious (in the long run) to their parents, the reason is because…that’s how Caplan told us to think about it.
Challenge to Einstein: I Love It
I love this kind of stuff. Last week (or maybe even the week before) LRC ran this article by Tom Bethell, explaining one scientist’s campaign to upend not quantum mechanics, but relativity theory.
Bethell is not an idiot, I can say that with confidence. His Politically Incorrect Guide to Science did what the series is designed for: make provocative claims that sound crazy at first, but then when you read the discussion you think, “Oh OK, I could see how someone would think that. It might even be true.” (For example, claiming that cancer research is barking up a wrong tree. Bethell didn’t discuss Einstein in his PIG book, as far as I can recall.)
Has anyone looked into this relativity stuff more deeply? All I can say from reading Bethell’s article is that it’s not obviously wrong. I mean, they acknowledge that particles decay more slowly at high velocities etc., so they’re not merely saying, “C’mon, how can Euclid be wrong?! That blows my mind so it must be Ivory Tower nonsense.”
Fed Guy Backs Off “Pinhead” Comment About Ron Paul
[UPDATE below.]
Based on a reader tip (which I read on my Blackberry waiting for the beginning of the “Success Assembly” at my son’s school) I had intended to write a critique of the Fed guy who called Ron Paul a “pinhead,” but before I could Bob Wenzel had already hit the major points.
So maybe I will be the first Austrian economist (leaching from Daniel Kuehn’s blog) to report that the Fed guy has retracted his pinhead comment?
Last point: Everyone is just assuming this guy was saying Ron Paul was not sharp. But if you think about it, a pinhead is very sharp up top, and certainly isn’t someone to trifle with.
UPDATE: Here is the comment I left at his site, showing the one major point I don’t think others have made regarding the original pinhead piece:
Dr. Andolfatto, I was going to write a (calm) critique of your post, but others made most of the important points. One thing that struck me was an apparent contradiction in your position: On the one hand, you were saying money neutrality proves that nobody in the public is getting taken to the cleaners by inflation.
But then later in the article you admitted that the Fed/Treasury derive an income (admittedly not large compared to tax revenues) from seignorage. So how can that be?
In your tamer post, it would be great if you could clarify. Thanks.
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