A Secret Critic of James Galbraith
I have a Mises.org on deck, pointing out the absurdity of James Galbraith’s what-me-worry? attitude toward federal budget deficits. But I have an ally in the geeconosphere, who recently blogged:
OK, I don’t think that’s right. To spend, the government must persuade the private sector to release real resources. It can do this by collecting taxes, borrowing, or collecting seignorage by printing money. And there are limits to all three. Even a country with its own fiat currency can go bankrupt, if it tries hard enough.
Who said it?
DeLong on Deficits
By popular demand, today at Mises.org I critique a Brad DeLong blog post which had said, “We need bigger deficits now!” An excerpt:
This is part of the problem with Keynesian economics. It’s true, in certain circumstances it can spit out an answer that is reasonable — such as this case, where DeLong agrees that a government deficit would not be justified. But if the analysis itself is crude, then we shouldn’t be surprised that often the Keynesian framework spits out the wrong answer — which we’ll see in the next section.
Informal Post-Game Show
I still have a ton of work to catch up on, since I had to let everything else slide while running around for the Night of Clarity which was this past weekend. We are also getting everything put up on our websites (the PDF of the new book, the ability to purchase a hard copy, a sign-up for the forthcoming Lara-Murphy newsletter, footage from the event, etc.) but that will take a week or so.
In the meantime, let me say just a few words. By all accounts, the event was a smashing success. A lot of the attendees had never been to quite such an undertaking, including my mom who told me, “I didn’t realize economics speeches could be so interesting. We’ll come to the next one!”
Carlos and I handpicked the speakers not only for their scholarship, but also for their public speaking ability. They performed beautifully. We held each speaker to 35 minutes, which was perfect for a boom-boom-boom rhythm. Paul Cleveland opened with his charming Southern accent and set the mood by comparing the modern worship of government to the ancient pagan worship of Baal. Then, just in case some people were worried we would go religious on them, Richard Ebeling opened up with a joke involving a conservative, a libertarian, and a liberal Democrat buying Jesus drinks in a bar. (I won’t spoil it by giving the punchline. I guess you’ll just have to come to our event next time, won’t you?)
I went next. The straight man for the event, a local banker, had mentioned when he introduced Carlos that Carlos had just missed out on going to the Olympics for weightlifting. I confirmed this to the audience, mentioning that when Carlos and I were moving the books from the FedEx truck earlier that week, Carlos was uncharacteristically wearing a t-shirt and shorts, and I realized that even though he was a grandfather, he could “kick my butt.” Good times, good times.
Then Nelson Nash went, and he cracked up the crowd with his analysis of tax-qualified retirement plans. My dad kept saying for the whole weekend, “Lie! Lie!” in an imitation of Nash. Then it was on to Tom Woods. In my intro, I made some self-deprecating remarks about Tom’s educational pedigree (i.e. “why is a Harvard guy hanging out with us?”-type stuff) and then we played a truncated version of the zombie interview.
Tom knocked it out of the park. It was one of the best speeches I have seen him give. I am not kidding, when he wrapped it up I was ready to jump up and do something. (As it turns out, what I did was hit the bathroom before signing books. But Tom gave me a sense of purpose as I emptied my bladder.)
We will definitely be doing this again, though we all agreed that the middle of July might not be the best time of year to hold an event in Nashville. Oh, for those who are curious, yes the karaoke was awesome. If anyone has iPhone footage, please let me know.
The Father’s Commands Are for Your Own Good
For a while now, it often happens that when I give my 5-year-old a bath, he ends up getting shampoo in his eyes. He knows enough to close his eyes when I start putting the (“tear free”) shampoo in his hair, but lately he does this counterproductive thing where he pulls his legs up and puts his head down, so that each knee presses against an eye. This means that when I pour the water over his head, some of the shampoo stays on his eyelids, since his knees were pressed up against them when the water flowed over. Then he opens his eyes and gets mad and rubs them like crazy.
So naturally every time we take a bath since he’s been doing this, I tell him he will be fine if he just keeps his head upright and waits for me to pour the water over it. But of course he doesn’t trust me, and from his point of view it makes perfect sense: The burning never starts until after the water flows over his face, and everybody knows that to keep stuff out of your eyes, it’s safer to not only close your eyes but to press your knees up against them as added protection. So my instruction to not even use his knees–to leave his eyes more vulnerable–is nuts. And wouldn’t you know it, after I assure him his eyes won’t hurt at all (if he would just listen to me!!), his eyes end up hurting, proving that I don’t know what I’m talking about and he should continue to look out for himself.
I think the analogy between our heavenly Father is obvious enough that I don’t need to fill in the blanks.
Crashing
I haven’t been blogging because yesterday and today I was at the Hilton in downtown Nashville for this. I’ll give a postgame show next week; I have to crash right now.
In the meantime, does anyone know if Bill Gates gave to one-world type causes before Microsoft got hit with the antitrust suit? I.e., is it possible that Bill Gates doesn’t actually support the stuff the Bill Gates Foundation funds, but the deal was he could keep his company if he played ball like the other billionaires?
CFR vs. IER on Cap-and-Trade
Incidentally, I didn’t make a big announcement at the time, but I am no longer working for the Institute for Energy Research (IER). I am shifting my consulting business to focus on online teaching and projects with Carlos Lara.
IER put out a study written by Chamberlain Economics (CE) arguing that Kerry-Lieberman would act as a regressive tax on US households. The basic logic is that energy prices would go up (which hurts poor households proportionally more), while the free emission allowances given to utilities and other favored groups would end up in the pockets of rich shareholders, rather than getting passed along to consumers as the politicians claim.
The Council on Foreign Relations thinks this is nonsense:
The authors, to their credit, go beyond this sloppy analogy, and make a more careful argument about Kerry-Lieberman. They go through some basic microeconomics to argue (I’m simplifying a bit here) that since utilities’ costs will rise under cap-and-trade, and since regulators won’t be able to tell exactly how much of any cost increase is due to cap-and-trade, utilities will be able to play the regulators in a way that lets them capture some of the allowance value.
This would be fair if this exercise was about estimating costs. But it isn’t. It is about measuring value. The regulator knows the value of the free allowances: it is equal to the number of allowances given out for free multiplied by the value of the allowances at auction. If the LDCs cannot account for having spent that money on public purposes, the regulator will know. The CE authors try to make this complicated, but it’s actually pretty simple.
Nope, my gut tells me that when if the government imposes a massive new scheme to ration energy, and then hands out hundreds of billions of dollars worth of emission allowances, that poor people in the Bronx aren’t going to get the benefits.
Jewel Goes Undercover to the Karaoke Bar
When I anointed the “karaoke” Category on this blog, I thought it would only be for iPhone videos capturing me at conferences. But actually, MercedesRules sends this entertaining Funny or Die video where they had Jewel pretend she was part of a frozen foods convention and go to a karaoke bar and sing her own songs. The crowd is blown away.
Once Joe Salerno, Hans Hoppe, and I pulled a similar stunt. We put on tweed jackets and GMU name tags, and went into an AEA meeting. I got up there and started talking about how fractional reserve banking was inherently fraudulent. The crowd couldn’t believe it.
Call the Papers! Brad DeLong Disagrees With Krugman
This happens very rarely but DeLong disagrees with Krugman (HT2 Tyler Cowen).
I’d like to say that DeLong had said, “You know, on second thought, maybe Hoover wasn’t an Austrian,” but that’s not what happened.
(1) Krugman said even a helicopter drop of money can’t boost aggregate demand.
(2) DeLong says sure it can, and that’s why we should do it.
So you see, nothing to get excited about. It’s like watching the USSR fight Nazi Germany.
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