Consulting by RPM || Free Advice Blog

Revamped Blog

Incidentally, a few months ago I hired someone to revamp my blog. I never got around to mentioning him. So here’s Doug Stuart’s info:

Doug is a blogger who writes about life, the universe, and everything, and a part time designer who has worked in print, web, and video. His background is in communications and technology and has worked for graphic design studios and video production crews. His favorite number is 42. You can visit his website at www.liveloud.net.

Incidentally, I was a cheapska wise steward of resources, and just asked Doug to do a very bare job of transferring my blog from Blogger to WordPress. Oh my gosh, I cannot express enough what an improvement it is. If any of you are still using Blogger, you are doing the equivalent of switching the TV channel without a remote.

Did Henry Ford See Demand Collapse For His Product?

This Maoist (I assume this is legit, and not tongue-in-cheek?) takes a shot at the Mises Academy’s exploitation of economies of scale (HT2 Jeff Tucker):

Speaking of the Mises Academy, check out our Winter course selection–before we go out of business!

Krugman Challenge Update

It really is too bad that my 15 minutes occurs when I’m way behind in my work schedule. But to keep all of you up to speed:

* Zerohedge picked up the story over the weekend.

* Robert Wenzel just tipped me off that John Carney at CNBC ran this article. I now have my favorite news line ever: “Krugman did not immediately respond to an email requesting comment on the challenge.”

* The pledge total is now just shy of $29,000. If you haven’t contributed yet, I encourage you to do so. This is your Woodstock, but with bathrooms.

* A clarification to the press treatment: Strictly speaking, this isn’t a “$100,000 debate challenge” to Krugman. It’s whatever amount of money gets pledged. My idea is that the donations just keep piling in over the months, until he has no choice to debate me. That number may be $250,000; who knows.

* Last thing: Yes I looked up “wunderkind” to make sure it was a compliment. I thought maybe it meant I was both right- and left-handed.

How Is God Like Obi Wan Kenobi?

Notwithstanding my flippant title, this is a serious post. I am directing it at people who already believe in a personal God; if you think that stuff is all poppycock, then you’re not going to get much out of this.

Lately I have had some major events in my life. I am not at liberty to discuss them, but perhaps one day I will write an autobiography. Suffice it to say, I was really sure I understood God’s plan for my life, and then I was metaphorically smacked upside the head.

But as time passes, things fall into place and it all “makes sense.” It doesn’t mean I necessarily enjoy the rollercoaster right now, but I understand that the engineer who built it knew what He was doing–and I’m confident I’m not going to fall out of my seat, even when we go upside down.

I am mostly writing this post as an encouragement to some of you who may be facing similar doubts. I know that when I was particularly confused, a few “unrelated” remarks by some of my friends really had special significance for me at the time, even thought they couldn’t have known all of the background details.

In closing, let me just say that I’ve come to realize that sometimes God is like Obi Wan Kenobi, who told Luke that Darth Vader had killed his father. Well, Luke is understandably upset after he hears a contrary claim from the helmeted one. If you remember, Kenobi explains that he actually told Luke the truth “from a certain point of view.”

Now I have always been troubled by that. What the heck, Ben, you knew Luke wasn’t going to interpret it the way you meant–so you at the very least misled him, and at worst, you lied to his face!

But in retrospect, what else could Ben have told the young, rash lad? “Hey, guess what? You know the arch villain of the universe? That guy’s your dad. Now then, put the blindfold back on and let’s play some more with the laser sword.”

So joking aside, that is how I’ve come to terms with the surprises in my own life. I think I needed to have certain things withheld from me, until I was ready to handle them.

And there is no doubt that we are all here for a reason. You can either embrace it or fight it, but you can’t get off the rollercoaster. You might as well throw up your hands and yell with joy.

Krugman’s Rattled

That is my only explanation. Krugman is jet lagged from his trip, opens his inbox and finds 128 emails from people telling him to check out a website on which almost $24,000 (as of this writing) has been pledged.

Doubt me? Look at this:

A thought: it has occurred to me that we could use an economics equivalent of Keith Olbermann’s “Worst Person in the World” award. KO does not, of course, mean that the person he goes after on any given night really is the worst person in the world; he just uses the title to highlight some especially awful action or statement.

I’d encourage others to enter this game — and yes, I know that various paid trolls and others will award me the title five times a day if they can. But here’s what caught my eye: the WSJ’s Real Time Economics explaining (or rather, “explaining”) the risks from competitive devaluation:

[Wall Street Journal:] When one country devalues its currency, others tend to follow suit. As a result, nobody achieves trade gains. Instead, the devaluations put upward pressure on the prices of commodities such as oil. Higher commodity prices, in turn, can cut into global economic output. In one ominous sign, the price of oil is up 8.7% since August 27.

Urk.

Why do dollar commodity prices tend to rise when the dollar falls? Because other countries buy commodities too, so that a constant dollar price would mean a fall in terms of other currencies. To a first approximation, in fact, you’d expect commodity prices to remain constant, other things equal, in terms of a GDP-weighted basket of currencies around the world.

So yes, a fall in the dollar tends to raise the price of oil in dollars — but it also tends to reduce the price of oil in euros. A fall in the euro tends to raise the price of oil in euros, but raise reduce it in dollars. [whoops!] So what would devaluations that raise commodity prices in terms of all currencies look like? I have no idea.

There is, I think, a tendency to think of devaluations as reductions in the value of currencies relative to something external and eternal — and hence as making us all poorer. But the reality is that my depreciation is your appreciation, and vice versa; we can’t all devalue at the same time.

A lot going on in the above. First, notice that Krugman thinks it would take “paid trolls” to nominate him as the Worst Economist in the World. At first I was going to make a joke, but I think we should be serious. Do you see how bad Krugman’s worldview is? Forget Keynesian economics for the moment. Does Krugman actually think that the level of anger directed against him, is the result of right-wing funding?

You might be tempted to say, “Oh c’mon, he’s just joking around.” Right, he was joking around; but not on that part. He was trying to preempt wise guys in the comments by acknowledging that he himself would win this award, but the “paid troll” doesn’t read like sarcasm to me.

But on to more important things: What the heck is Krugman talking about? Does he really not understand the WSJ’s point? A humble guy in the comments spelled it out:

> [Krugman:] So what would devaluations that raise commodity prices in terms of
> all currencies look like? I have no idea.

[Guy in comments:] Use oil as an example. Suppose all currencies devalue relative to oil by 10%. That means the cost of oil in all currencies increase by 10%. Imagine that the amount of money of everyone on this planet was increased by 10% suddently. Obviously the cost of everything including oil will increase by about 10% after some time.

> [Krugman:] But the reality is that my depreciation is your appreciation, and vice versa;
> we can’t all devalue at the same time.

[Guy:] Of course, it won’t happen at the same time. US dollars will devalue first by increasing the money supply, followed immediately by Yuan, Won, … Most countries will need to follow the action by US after some time. Japan has done that not long ago and I am not surprised that Japan will do that again if US dollars continue to devalue.

I don’t believe what I am doing. I am answering a simple economics question raised by a Nobel Laureate in economics.

Welcome to my world, friend.

One last thing: Please don’t say, “Krugman is just making the point that currencies can’t simultaneously depreciate against each other.” Look at what Krugman wrote: “So what would devaluations that raise commodity prices in terms of all currencies look like? I have no idea.”

So if Krugman just means that two currencies can’t fall against each other, then the stuff about commodity prices is very confusing. He should have just said, “You can’t have two devaluations, period.” By him throwing on the discussion of oil in euros and dollars, and then writing the above two sentences, is like saying, “Jim said he was going to mow my lawn with a square circle. But I have no idea how a square circle is going to cut through grass.”

Mish Archives?

Quick, silly question: Does anybody know how I can scroll an archive of Mish’s blog posts? I spent a good 5 minutes looking all over his blog, and I don’t see such an option.

For example, suppose I want to see what he was saying about oil prices back in early 2009. Right now I’m reduced to an Advanced Google search, and that’s not very helpful.

Lessons for the Young Economist

The hardcover is here! Order yours today. Here are two plugs from my current students:

I was reading ahead in the text to some of the stuff that isn’t on the syllabus, and the chapter on the stock market (I think 14) is fantastic.  I sat it on a graduate level investments class for a semester, and I don’t think the professor (though he was good) explained the difference between stocks and bonds (and especially pros and cons) as eloquently and succinctly as you did in 8 pages or whatever.

The positives of stock speculation was especially helpful.

Well done.

And:

…I’m currently taking your Econ 101 Course at the Mises Academy.  I just wanted to extend my compliments towards you for your textbook — it is very well written, easy to understand, organized, and in short…  just plain fantastic.  I’m really enjoying reading it to fill in my economic knowledge gaps, and I truly hope that your book becomes available in elementary schools and high-schools everywhere (depending upon the reading level of the students).  I truly wish that I’d encountered this book during my formative years… your clear exposition certainly would have helped me in the International Baccalaureate Program I participated in during highschool!  Economics is almost always left out of history classes, like money simply doesn’t matter… when indeed the principles you outline are a driving force behind every social movement throughout history.  I can easily see your textbook being worked into both math and history classes.

In particular, I admire your clear and easy to understand prose.  Economics is a subject that has largely been made esoteric and difficult for people to understand, and quite frankly this is the best primer I’ve read on the topic.

Now, I feel I should give two disclaimers. The first note was from my brother, and the second note was from a guy who was buttering me up, in order to complain about something in the class.

But the textbook is solid.

Potpourri

* Jim Manzi has a great little post on controlled experiments and economics. But then he ends with, “But there is an unconsidered alternative that permits us to constantly recognize our ignorance, yet not be paralyzed: The Open Society. This is the whole point (in my view) of the institutions of representative democracy, limited, law-bound government, and free markets.” I totally understand why he says that; I myself would have thought free markets and representative democracy go hand in hand, before I read Rothbard. But once you go down that path, you realize that Manzi’s statement is a bit like saying, “Because of our ignorance, it’s necessary for the police to promise that they have really good reasons before locking someone up. This is the only way to safeguard our liberty.” Or if that’s too much for you, try this: “Because the public often makes mistakes, we require a 75% supermajority before allowing them to impose price controls; this is the only way to preserve a free market.”

* Tom Woods sics the zombie video on somebody.

* Robert Wenzel bumps into G. Gordon Liddy. I don’t think it’s out of place for me to say that when I was on Liddy’s show (in studio) to promote my PIG to the Great Depression, during the commercial break somehow Liddy worked into the conversation that he could start with his gun in his holster and shoot to kill in x seconds later, where x was much smaller than you would have guessed. And the weird thing was, the conversation flowed naturally.

* Paula Peck (I think, sorry if I got mixed up with my emails) sends this video. I’m not sure how I feel about this. On the one hand, I think it’s very plausible, but on the other, I am creeped out by the underlying message which seems to be, “Save the country to spite the Chinese.”

* I can’t imagine why, but someone thought I would enjoy a website called KrugmanIsWrong.com. In any event, move your cursor over Krugman’s picture. (Speaking of which, the pledge total has now exceed $18,000. Next week we begin Phase II of the campaign.)

* I really didn’t like the way Glenn Greenwald handled the firing of Juan Williams. (In contrast, my own take is very similar to Lew Rockwell’s.) GG is basically saying, “Two wrongs are better than one. And oh yeah, I suppose they don’t add up to a right, but still.”

This is a very disturbing trend, where people are getting booted for saying something that wouldn’t even make (say) 30% of the country bat an eye. I’m not even talking politics here; I’m saying it’s not healthy if everyone is walking around, thinking, “OK if I didn’t have a mic on me, I would say this, but I have to put my TV face on now, lest I get fired.”

I know full well half of you are going to disagree with me in the comments; go ahead. I promise I won’t ban you from the blog for telling me how you feel about this situation. But one thing: I understand this isn’t a “free speech” issue (although it’s complicated with NPR getting government money). I also understand that sometimes corporations do things to avoid losing advertising revenues etc. But look, I am allowed to say, “I think it’s a sign of a rotting society that there are 90%-naked women on every checkout line in the grocery store.” (Calm down, I am referring to the magazines; I know some of you wanted to know where I do my shopping.) Yes that should be legal, and yes the magazines are doing that because it sells. And I’m saying, that is a bad sign. It would not have been profitable to do that in 1960, even if it were legal.

Back to Glenn Greenwald: The most hilarious thing in his post, is that he himself uses the exact same tactics he is criticizing, almost to the paragraph. For example, he is mad that Juan Williams is lumping all Muslims in with terrorists. OK I agree that’s bad. But then Glenn, when responding in an update to people who oppose the firing, writes:

For those objecting to Williams’ firing as some sort of oppressive act of PC censorship:  in addition to wanting to know whether you also objected to CNN’s firing of Nasr and Sanchez, and to Thomas’ forced “retirement,” I’d also like to know what you did to protest CNN’s firing of executive Eason Jordan in 2004 for observing — correctly — that the U.S. military had repeatedly attacked war journalists; and CNN’s 2003 firing of Peter Arnett for criticizing the Iraq War; and MSNBC’s demotion and firing of Ashleigh Banfield after criticizing media coverage of American wars, or the same network’s firing of Phil Donahue for being too anti-war; or, for that matter, the University of Colorado’s dismissal of Ward Churchill for arguing that the World Trade Center was a legitimate target to retaliate against American foreign policy.  If you only object to speech-based firings when you agree with the ideas being expressed, then you don’t actually believe in the principles you claim to support.

Wow, if I didn’t know any better, I’d say Glenn was lumping guys like me in with Sean Hannity. That’s not fair, Glenn! Stop making completely false accusations about whole groups of people, based on the actions of a loudmouth subset.

And then Glenn doesn’t think that Williams should get off scot-free because he tried to backpedal out of the main point of his remarks: “It’s true that Williams went on to say that not all Muslims are extremists and that Terrorism shouldn’t be attributed to Muslims generally…” and then Glenn gives some other examples of clearly bigoted statements, then says, “[A]fter-the-fact caveats don’t mitigate the original statements.”

Right, which is why I don’t release Glenn from my criticism, simply because he says–in one sentence in the middle of his original post–“I’m not someone who believes that journalists should lose their jobs over controversial remarks, especially isolated, one-time comments..”

Well OK, Glenn, but then Juan Williams isn’t someone who thinks all Muslims are terrorists, either. After all, he explicitly said that.