Potpourri
==> My wise-guy post over New York City’s goal to reduce CO2 emissions.
==> My post on conservatives and carbon taxes. (More academic.)
==> Greek philosophers playing Texas Hold ‘Em. Super geeky.
==> Elon Musk says we’re close to killer robots.
==> Richard Ebeling talks about the Berlin Wall.
==> Good news! New peer-reviewed paper suggests climate models may have been overstating the equilibrium climate sensitivity because of poor modeling of soil feedbacks. I didn’t delve into the paper but others have told me if the results are correct, the effect is very large compared to the ostensible human contribution. All of the scientists should be either rejecting this study or breathing a huge sigh of relief that we don’t need massive government interventions in the energy sector after all.
Hmmm.. you’re mysteriously silent on the “Krugman Shows How Consumption Taxes Raise and Lower Price Inflation” thread. Could it be because the criticisms in the comments section are right?
I’m just curious… are you paid to troll comment threads?
If LK were to leave, he would interpret that as an admission of weakness in that he’s unwilling to continue his ideological battle. The ego can’t stand such a thing, so the siege/LOL mentality will continue until he gets himself banned and can return to his peers triumphantly proclaiming how he stood up to those irrational people who hold to the action axiom.
Once they get tired, people like this always work hard to get themselves banned.
anon:
LK has already accepted the anarcho-capitalist ideology as his own practised ideology. He behaves in accordance with ancapism. He does not tax anyone, he does not threaten people with violence in order to impose his own currency as a monopoly, he does not threaten me with violence if I use my property in nonviolent ways of which he disapproves. He does not engage in any “Keynesian stimulus”.
He engages in anarcho-capitalism.
The ideological battle is not between LK and us. It is between us and other people of whom LK wants to treat us in certain ways of which we do not consent. He is acting peacefully, but he is advocating for, calling for, hoping for, and demanding we feel a duty towards, and to obey, people with badges and guns whom we do not want to deal with in the way LK demands we deal with them. He wants us to obey.
He knows we won’t give it voluntarily, so he wants to portray our disobedience as a moral violation, as wrong, as something evil, something that requires correction. Ultimately, at root, it is not economics that he cares about. He is only using it as a weapon against us. The weapon he wields is of course a spitball shooter.
LK does not want us to peacefully use our own property in ways we see fit. He wants the local biggest mafia gang to have ultimate decision making ability, and he hopes that they tell us what to do in ways that LK approves. He needs such thoughts of power over us because he can’t handle himself physically lacking power over us. He knows he lacks the power to take our money at gunpoint. He knows he lacks the power to use force to consume more at our expense. So he finds meaning in his life through “powerful centralized institutions”. That is the crutch that he needs to fill the void he created in himself by evading self-reflection.
Holy crap, you have thought this one out!
Or, you know, Murphy has a finite tolerance for addressing fallacies and errors.
You’re not that interesting LK.
Speaking of fallacies Major.Freedom. You say that consumption shrinks an economy.
Economies are measured by their output. So consuming things does not lessen our output. You argue that consumption makes the economy grow less than it would if every dollar were invested. Growing less than it could is not the same thing as shrinking. You also noted that consumption is necessary for investments to have purpose and value. Investment in additional production would not occur if there was no consumption. If consumption is a necessary condition for growth, then it does not definitionally shrink the economy.
Period.
So not only do you not understand that “not grow” does not equal “shrink”, but you missed the fundamental point that consumption is necessary for investment and growth. This isn’t complicated stuff, you get the really basic stuff wrong.
I find it highly unlikely that you have a doctorate in economics at all, much less are teaching anyone. (Particularly at a reputable university)
Call me unsurprised that you consider yourself an Austrian.
KS,
In Austrian Theory, the desire to consume is the basis for output.
If all we do is consume, we will die for lack of planning.
But it would be a mistake to say that you can measure how well the economy is doing by looking at “output” if you aren’t also looking at the individuals for which the output is undertaken.
Measuring how much bread, concrete, or bank notes are being produced can tell us nothing about how well the economy is doing.
Only when the output of these things is for the purpose of satisfying particular individual preferences can it be said that “the economy” is growing; And since individual preferences are the whole point of “the economy”, only individuals can guage how well it is doing, and only for themselves as individuals.
KS:
Consumption shrinks economies. It is a fallacy to believe otherwise.
You are not adding to the economy by consuming, i.e. destroying, what has been produced. If you want to add to the economy, then you do so by abstaining from consuming and investing in the production of goods. This is not to say that you can abstain 100%, as you must consume in order to live, but consuming nevertheless takes resources out of the economy.
The argument that consumption shrinks economies is not an argument that the sum total of all of your actions causes the economy to go from one overall size of wealth at one point in time, to a smaller overall size of wealth at a subsequent moment in time. For if you are a wage earner, and you save and invest a portion of your income, then your actions taken together result in a net growth to the economy. But your consumption still shrinks the economy because you are taking resources out of the economy in order to sustain yourself.
Now if you are leeching off the taxpayer, and you consume more than what you earn through productive activity, then your consumption shrinks the economy from one moment in time to the next, compared to what it otherwise would have been had you earned the money instead.
I do not care one single iota that you cannot handle my having a doctorate. The fact that you “doubt” it, given what you have written on this blog so far, is really only your self-doubt. You say you doubt me only because you doubt the value of your own schooling.
Consumption is not necessary for investment and growth. Investment and growth is necessary for consumption. You have the relation precisely backwards. If it weren’t for investment in goods, you could not consume those goods. The reason you believe the opposite is because of your philosophical principles you have unquestionably adopted. I mentioned it already to you that you lack the intellectual tools to be able to understand economics. And yet you keep repeating the same fallacy over and over again as if doing so will someday make it true.
To say that consumption is required for saving and investment to occur totally misses the fact of human life that consumption is not a choice. Consumption MUST occur if human life is to exist. Yet consuming does not cause investment. It is quite possible, and for many millennia human life predominantly consisted of, consumption right out of nature, i.e. animals and vegetation, with little if any investment at all.
The reason why the total consumption of primitive societies was so low is not because they just didn’t have a strong enough drive to consume. It is not because they weren’t spending pretty much their entire days searching for food. It is because their saving and investment was so low. They consumed so little because they saved and invested so little.
You, like LK, are committing what is called the fallacy of composition. You are taking what is true for an individual firm in capitalism, actually a consumer goods selling firm specifically, that the consumer goods seller’s livelihoods depend on consumers spending money on their products, and then you commit the fallacy by then claiming “that relation is therefore also true for the economy as a whole.”
At the level of the economy as a whole, where the concept of “consumption” comes up against the concept of “investment” in the most clear way, the relationship is the other way around. Consumers as such have no choice but to consume. Consumption cannot shrink to zero, or else all human life would end. But, investment can shrink to zero. It is possible for people to only spend money on consumption, and as long as that is the case, there will be no investment and no economic growth. Consumption does not cause investment. More consumption does not cause more investment. At the firm level it does, but that additional consumption comes at the cost of lower investment in total. You can easily grasp this if you imagine every individual on the planet reducing their investment to zero, and increasing their consumption concomitantly, where each individual hopes and expects that their additional consumption spending will “stimulate” more investment. If every individual did this, investment would not increase at all. What is true for this, is also true when the change is less than 100%. If you reduce your investment, you are reducing the amount of goods that are produced. No, your increase in consumption that takes place does not then replace or more than replace that lost investment. Your consumption adds NOTHING to production. The additional revenues that consumer goods companies receive because of what you did, comes at the cost of a reduction is sales revenues that capital goods companies received that they used to receive because of your investment.
The additional nominal investment the consumer goods companies make in response to your increased consumption, will purchase fewer capital goods because of your reduced investment. The prices of late stage capital goods rise, and the prices of earlier stage capital goods will fall. That makes the economy smaller than it otherwise would have been had you continued to abstain from consumption somewhat and invested instead.
Consuming more means investing less, because you can’t spend the same dollar on two different things at the same time. If you spend money on your own consumption, that is money you did not spend on hiring labor, or investing in capital goods that can add to the pie of consumer goods.
The reason you are able to consume the goods you consume at all is because someone, hopefully you, but it could be your parents, or the government, are producing goods, and either selling them for those consumer goods, or you are a self-sufficient consumer and what you produce you directly consume.
I suggested to you that you should read more economics before coming back here to argue, but you don’t seem to be able to take constructive criticism. Hmmm…do you think that is a major reason why you are making assertions that I am easily exposing as flawed and incorrect? You have an attitude problem. Your problem is that you can’t handle being corrected. You will always stay ignorant that way you know.
“You can easily grasp this if you imagine every individual on the planet reducing their investment to zero, and increasing their consumption concomitantly,”
If we are imagining extremes, why not instead imagine that every individual on the planet reducing their consumption to only what was required for continuing life and increasing their saving concomitantly The economy would shrink surely?
KS:
Just look at what you said again:
“Investment in additional production would not occur if there was no consumption.”
You say that as if it is possible for there to be a world of human life without consumption. No consumption? Humans would go extinct. What you are really saying is that without human life, there can be no investment.
Even if consumption remained constant in terms of spending, additional investment can be made on the basis of a gradual fall in capital goods as the productivity of labor and capital accumulation rises. Constant real productivity growth does not need constant additions to consumer spending.
As more and more capital goods are produced, that allows for more capital production totally apart from any rise in nominal demand for consumer goods. With bigger and better machinery, more goods can physically be produced without there having to be any increase in nominal costs. That allows for lower prices given a nominal demand for the outputs.
As long as the expenditures on capital goods and labor are high enough relative to consumer spending, and this following fact is guaranteed to go over your head, then economic growth can continue without limit. The same expenditures on consumer goods and the same expenditures on capital goods and labor, can take place besides technological progress, innovation, and capital accumulation that go to increase total output with falling unit prices.
You have no understanding of how economies actually grow. You have blindly adopted mantras and crude Keynesian multipliers and circular flow diagrams, and you believe that makes you adequately equipped. Lulz.
Major Freedom, If consumption dropped by 20%, how much bigger would our economy be?
Usually when I play Texas Hold Em, it turns into Texas Hold Em Up. One or the other person ends up robbing the others, one ends up dead, and one escapes to call the police. We started with 20 members and are down to about 10 now, and we have to keep switching restaurant basements once the owners figure out what’s happening.
There are probably many more such processes lead models to overestimate sensitivity. I dount whethrr this is te most important, but by now the overestimation is clear to those both “in the know” and not ideologically committed to not seeing it.
What was it Schumpeter said about unwillingly perceived hard facts again?
“We show that because mineral surfaces interact with substrates, enzymes and microbes, both Q10 and microbial carbon use efficiency are hysteretic (so that neither can be represented by a single static function) and the conventional labile and recalcitrant substrate characterization with static temperature sensitivity is flawed.”
Can’t be represented by a single static function, you say? So it’s more difficult to model complex phenomena than experts might have imagined, despite their confident assertions and pretense of knowledge to the contrary? I’ve heard that one somewhere before, but I can’t quite recall where.
But seriously folks. If the admitted decades-long failure of their actual models failed to stem the (C)ACG movement, I’m unsure why an explanation of the cause of their modeling failure would be the straw that breaks the camel’s back. This has long since become a cultural movement to separate the believers from the infidels, and evidence is less meaningful than apologetics in circumstances like these.
As for the climate studies there are at least 12 or 13 new studies published since 2010 which show that climate sensitivity is lower than 2 C. It seems that “scientific consensus” is now that there is no reason to worry at all. The only problem is that the “climate change action” does not have anything to do with science. It never did.
http://www.reportingclimatescience.com/news-stories/article/cato-institute-lists-14-low-climate-sensitivity-papers.html
OK, Bob Murphy, are you comfortable with M_F calling me a fascist?:
You are more fascist than communist because you want socialism predominantly in the form of government control (i.e. “regulation”) but not outright ownership, of the means of production.
http://consultingbyrpm.com/blog/2014/11/tom-woods-and-i-talk-japan-plus-a-surprise-announcement.html#comment-1319670
Serious question.
LK, in a perfect world, you and MF wouldn’t have the same argument every third post. I am not going to wade into the huge back-and-forth but in the quotation you provided it looks like he is trying to apply a dictionary definition in a way that most people would not endorse. He’s not saying, “Shut up you fascist!”
He didn’t call you a fascist, he said you were more fascist than you are communist, which is true insofar as you honor your namesake.
It’s also true of the rest of us as well (I don’t know that RPM has attracted too many LTOV-spouting New Soviet Men by his writings, though you never know) and might even be considered half a compliment were Mises around to write it of you. Whatever you may be, at least you’re not a communist.
And the fact that — historically speaking and in any coherent, justifiable definition of fascism — it was an ideology characterised by
(1) ultra nationalism
(2) authoritarianism and abolition of democracy
(3) ultra racism and social Darwinism so extreme that in the worst of the fascist regimes there was the mass murder of the disabled, gays, mentally ill, and certain ethic minorities like the gypsies and Jewish people
doesn’t give you pause and make you think that you have abused the term “fascist” and stripped it of real meaning in a vicious attempt to smear you opponents with these things?
Of course, you don’t.
Even increased government intervention in the economy was not a universal part of historical fascism, for the first fascist regime under Mussolini had an early policy of more laissez faire and less government intervention in the economy:
“From 1922 to 1925, Mussolini’s regime pursued a laissez-faire economic policy under the liberal finance minister Alberto De Stefani. De Stefani reduced taxes, regulations, and trade restrictions and allowed businesses to compete with one another.”
Sheldon Richman, “Fascism,” Concise Encyclopedia of Economics
http://www.econlib.org/library/Enc1/Fascism.html
“The first remark to be made is that it is a task of tremendous difficulty to define clearly the essentials of Fascist Economics. Regarding the literature and the verbose documents of Fascism and National-Socialism … one might be tempted to give up the task as hopeless and to dismiss it as economic Dadaism. The anti-capitalistic programme of Communism is at least clear and unequivocal and provides a relatively well-defined basis of discussion; we know where we are and we can take our stand. Not so with Fascism. … More than any other form of political radicalism, Fascism sails along with a minimum of intellectual freight — and is proud of it. Any interpretation of Fascism which fails to give due weight to this irrationalism misses one of the most important points. (s. 86)”
Röpke, Wilhelm (1935). ”Fascist Economics.” Economica, 2(5): 85—100.
Additionally, 3 is a point exclusively true of Nazism. It was not true of Italian fascism.
Quite apart from the fact that there never is, and never was, such a school of thought “Social Darwinism.”
“When dealing with such a race as Slavic – inferior and barbarian – we must not pursue the carrot, but the stick policy…. We should not be afraid of new victims…. The Italian border should run across the Brenner Pass, Monte Nevoso and the Dinaric Alps…. I would say we can easily sacrifice 500,000 barbaric Slavs for 50,000 Italians….
—Benito Mussolini, speech held in Pula, 20 September 1920
LK-The Italian Fascists did not engage in genocide, as the Nazis did. What you have shown is that Mussolini was a nationalist. That’s covered under your 1), Not 3).
““When dealing with such a race as Slavic – inferior and barbarian “
So that does not qualify as racist in your view? That is fascinating.
It is often said that Italian fascism was not inherently racist and Mussolini had “mixed” and conflicting views on race, but the regime had clearly become racist by the late 1930s when the anti-Semitic Manifesto of Race (14 July 1938) was promulgated.
And in addition to its anti-Semitism, there was the ethnic cleansing of and attacks on the Slovenes in Italy which began in the 1920s.
http://en.wikipedia.org/wiki/Italian_Fascism_and_racism
LK-What qualifies as racist depends on how one defines race. But you alleged genocidal racism and Anti-Semitism are necessary features of fascism. That is false.
What’s “fascinating” here is that to you, a failure to say an ideology is racist is a tacit endorsement thereof. Fascinating indeed, but for what it says about you, not me.
Interesting quotes from both of you. Thanks.
“But you alleged genocidal racism and Anti-Semitism are necessary features of fascism”
Actually he said “ultra racism and social Darwinism so extreme that in the worst of the fascist regimes there was the mass murder …” This does not say genocidal racism is necessary, just that ultra racism is, and in the worst of regimes led to genocide.
He listed off the points as the essential features of Fascism. It was highly misleading for him to phrase things that way.
After you read what you wrote you thought you better add “serious question” before submitting. I still don’t believe it
And note this is not the first time M_F has accused Keynesians of being fascists.
Here he is accusing Daniel Kuehn of being a “fascist” for supporting central bank policies to stop bank runs:
“You’re preaching economic fascism, DK.”
http://consultingbyrpm.com/blog/2013/04/a-note-on-intellectual-honesty.html#comment-60946
You’re preaching logical fasism, LK.
(Yes, I’ve deliberately mistyped the word starting with ‘f’. Ban-proof!)
The only type of fascism I like is Squirrel Fascism.
The Tang and Riley paper is indeed good news if it turns out to be the final word – the authors do point out that more work needs to be done to further study and quantify the interactions.
The New York carbon reduction thing is surely intended to be symbolic. It is New York making a statement, rather than New York trying to save the world by its actions directly. It surely must be obvious that one city will make little difference directly. It only makes sense as a symbolic gesture to say -“look, we will do it – you can do it too!”
I am happy to accept that the “double dividend” may be largely illusory. Otherwise it would make sense to make these tax changes even if there were no predicted harm from CO2, and that does not sound right intuitively. There are of course plenty of calls to reduce tax on capital. However, whilst there may not be positive gains, there would be a reduction of the losses.
How bold of the NYC Council. I mean if they were truely serious and not grandstanding they would have attempted to resolve a non-existent calamity by enacting their idiotic proposals and instead caused an economic calamity.
I voted for this guy, so far haven’t regretted it. Lot of empty seats in the back there, kind of like when Daniel Hannan addresses the EU, but it’s a new technological world out there and you good viewers at home can fill those empty seats.
https://www.youtube.com/watch?v=UlIVN97CAsQ