Potpourri
==> The observant von Pepe sends this CFR critique of Krugman.
==> If I do say so myself, I think I had a nice example in this post to illustrate a problem with the EPA’s cost/benefit procedures. (It involves changing the oil on 18-wheelers, for those who saw my inquiry on Facebook.)
==> Amanda Billyrock thinks I outrank Tom Woods.
==> The policeman is your…oh never mind.
==> Mark Spitznagel in IBD talking about the Herbert Hoover myth.
==> Noah Smith has a good post trying to show that there’s nothing veird about Fama and Shiller winning the “Nobel.” (Also, just in case anyone is foolish enough to get his or her views solely from Free Advice, let me be clear that three people won: Lars Hansen was the other guy.)
==> For more reactions to the award, Mark Thoma has a great compilation.
Hey Bob, did you know that out of all the sites on the internet, this site is ranked 3,191st in Ireland? I wonder why…
Chaos Theory was the book that most helped in getting me to abandon minarchism, so you’d be high on my list, too. But Tom Woods was most influential in converting my dad from lifelong diehard liberal into an anarchist, so it’d be tough for me to pick one of you over the other.
It’s amazing that the police are so utterly corrupt and fearless of retribution that they don’t even charge that scumbag with any crime.
This is the sort of thing the DoJ is supposed to be prosecuting, wonder where they are at here?
What do those CFRs know about the Baltics? Sounds like a bunch of RUBBISH to me.
The belief that austerity in the Baltic states has been “successful,” and that it is a sustainable path to growth is one of the most truly absurd things I have heard of late.
http://socialdemocracy21stcentury.blogspot.com/2011/06/miracle-of-baltic-austerity-case-of.html
“Let’s focus on Latvia here, which has implemented austerity”
Roddis, why do you insist on giving me such laughs? I don’t know if I can take it.
Apparently, this is now austerity:
2006: 4.08 billion lats
2007: 5.25 billion lats
2008: 6.94 billion lats
2009: 5.76 billion lats
2010: 5.54 billion lats
If that’s austerity, what the hell would we call it if they cut from the 2006 or 2007 level?!
2006 and 2007 are irrelevant. The economy was booming in those years. Government tax revenues were rising: the rising expenditure was nearly matched by rising tax revenue.
The data that matters is:
2007: 5.25 billion lats
2008: 6.94 billion lats
2009: 5.76 billion lats
2010: 5.54 billion lats
Government spending was cut by 17% in 2009 and taxes were increased, at a time when the private sector economy was collapsing. That is called contractionary fiscal policy (i.e., austerity).
Government spending was cut again in 2010 and slightly again 2011 and taxes were increased again in 2011. That is called contractionary fiscal policy.
The result was that Latvia experienced the worst depression of any nation over 2008-2010: GDP contracted by 24%.
Taxes:
http://www.worldwide-tax.com/latvia/lat_econonews.asp
Government expenditure:
http://www.quandl.com/IMF-International-Monetary-Fund/GGX_941-Latvia-General-government-total-expenditure-National-currency-Billions
I’m on record as being against tax increases.
From 1.1.2009 the new standard V.A.T rate in Latvia is 21%, compared to 18% in 2008. The reduced V.A.T rate for 2009 is 10%, instead of the 5% rate in 2008. The increase in the V.A.T rates follows EU pressure to increase taxes, a precondition for granting a loan to Latvia……In 2009 the new personal income tax rate is reduced to 23%, replacing the previous 25% rate. There are also additional tax credits to disabled people.
http://www.worldwide-tax.com/latvia/lat_econonews.asp
What isn’t Austerity then?
Isn’t it obvious that it is all cherry picking on your part? You choose the HIGHEST spending point as being the point of reference and ignore the gigantic spending increases until then and ignore the sustained increase in spending.
Apparently it is austerity if we first double spending and then “cut” it by 10 percent. Again, by your flawed logic ANYTHING can be described as “austerity”. Would it still be austere if the budget only increased to the current level?
e.g.
2006: 4.08 billion lats
07: 4.3 B
08: 4.7 B
09: 5.1 B
2010: 5.54 billion lats
See that? same start and end point, yet you’d have a hard time calling this austerity. G-D it’s easy to explode Keynesian lies.
“The result was that Latvia experienced the worst depression of any nation over 2008-2010: GDP contracted by 24%. ”
Correlation doesn’t imply causation LK. Keynesian self-contradiction 101. The economy’s poison can’t also be its cure. However, in your narrow world, whatever increases GDP is the right thing to do.
“GDP contracted by 24%. ”
GDP doesn’t mean what you think it means. and contracting GDP isn’t necessarily “bad” anyways..
This is why we are the school of hangover economics. It is a criticism, but I like the analogy. Yes, consuming alcohol to cure a hangover makes you feel better, but what caused the hangover in the first place?!?!? The right thing to do isn’t obvious to simpletons like you. I abhor the thought of having a Keynesian-minded doctor.
A country employing an Austrian approved response to decades of Keynesian governments would have a sharp and short depression. The best the Keynesians can point to is their “fixing” of the great depression….. which took how long? exactly. Wasting resources gets us into the mess, and wasting resources will not get us out.
http://www.financialsense.com/contributors/michael-shedlock/intellectual-dishonesty-and-insanity-on
The countries employing “austerity” are still FAR more Keynesian than Austrian. An Austrian response would actually cut spending, cut taxes and eliminate the welfare state.
Mark Thoma left my piece out of his compilation. It’s here:
http://online.wsj.com/news/articles/SB10001424052702303376904579135634030221864
The amount that John Cochrane has written on the Nobel is overwhelming (for a non-economist like me), but highly recommended. He covers each of the winners independently.
http://johnhcochrane.blogspot.com/