08 Aug 2015


Krugman, Potpourri, Tom Woods 33 Comments

==> I don’t know this guy personally, but he is a “colleague of colleagues” and his story about typical police treatment of a black driver certainly sounds quite sincere. Interesting reading.

==> Can anybody confirm that this charge against Rand Paul is correct? (They are saying he deliberately quoted the Ayatollah out of context in order to bang the war drums.) This is the worst thing I’ve heard about him, so I don’t want to file it away as true in case the translation is dubious or whatever.

==> Tom Woods has two recent guests (1 and 2) taking shots at me. It’s lonely up here at the top.

==> Mark Perry flags a really good gotcha on Krugman regarding the minimum wage. Just read the comparison of Krugman’s views from 1998 vs. 2015. In particular, the writer notes that Krugman today (while applauding Hillary Clinton for making higher wages part of her agenda, I note) wags his finger at those dastardly free market economists who won’t budge, even in the face of evidence like Card-Krueger. And yet, back in 1998–four years *after* the Card-Krueger paper was published (and five after the working paper was posted)–Krugman at that time said of their paper:

So what are the effects of increasing minimum wages? Any Econ 101 student can tell you the answer: The higher wage reduces the quantity of labor demanded, and hence leads to unemployment. This theoretical prediction has, however, been hard to confirm with actual data. Indeed, much-cited studies by two well-regarded labor economists, David Card and Alan Krueger, find that where there have been more or less controlled experiments, for example when New Jersey raised minimum wages but Pennsylvania did not, the effects of the increase on employment have been negligible or even positive. Exactly what to make of this result is a source of great dispute. Card and Krueger offered some complex theoretical rationales, but most of their colleagues are unconvinced; the centrist view is probably that minimum wages “do,” in fact, reduce employment, but that the effects are small and swamped by other forces.

What is remarkable, however, is how this rather iffy result has been seized upon by some liberals as a rationale for making large minimum wage increases a core component of the liberal agenda…

Note, the point of this is NOT that, “But Bob, if we control for blah blah blah…” It is that Krugman’s current stories about what an openminded scientist he is, following wherever the evidence may lead, are extremely self-serving and far from accurate.

(Also note, I think the author at the link is a little off himself. He is taking Krugman to be endorsing the Econ 101 logic full-throatedly, but Krugman is in fact being more nuanced, even back then.)

33 Responses to “Potpourri”

  1. aby says:

    When Rand used the incomplete quote the first time John Kerry corrected him. So the first time might have been and honest and careless mistake.
    However, according to Scott Horton, he used the quote again in an interview AFTER he had been corrected.
    I didn’t listen to the interview myself.

    • Major.Freedom says:

      “I am not my father.”

      True in more ways than one.

  2. Darien says:

    To the best of my ability (I don’t speak a lick of Persian, so I can’t directly vet translations), the Ayatollah’s full statement was indeed to the effect that nuclear weapons are anti-Islamic, and Iran wasn’t developing them with or without this deal. Here’s a different phrasing that contains the same substance: https://www.washingtonpost.com/world/national-security/ayatollah-says-nuclear-deal-will-not-change-irans-relations-with-us/2015/07/18/7470b531-ff12-4913-81e1-21101130fbdd_story.html

    Rand definitely quoted only part of the Ayatollah’s statement, and he did indeed do it twice: once while questioning secretary Kerry, and then later in an interview with Lou Dobbs: http://insider.foxnews.com/2015/07/23/rand-paul-says-nuclear-deal-iran-already-bad-start

    In fairness to Rand (and I am bending absolutely backwards here), he did not appear to be making the point that Iran is working on the bomb and won’t be stopped by this deal. I believe what he was getting at is that the Obama administration’s rhetoric about “this deal is the only way to stop the Iranians from getting the bomb other than war” is phony, since the Ayatollah himself says the deal had no impact whatsoever on any such plans. Though, being Rand, he was trying to play every side of the fence simultaneously, and made a mess of things.

    • Bharat says:

      “In fairness to Rand (and I am bending absolutely backwards here), he did not appear to be making the point that Iran is working on the bomb and won’t be stopped by this deal. I believe what he was getting at is that the Obama administration’s rhetoric about “this deal is the only way to stop the Iranians from getting the bomb other than war” is phony, since the Ayatollah himself says the deal had no impact whatsoever on any such plans. ”

      I’m confused why you think that. It seemed clear to me he was suggesting that the Iranians think they can build a nuclear weapon and the Americans won’t stop them. Why else would he find it troubling? “I find it troubling that you guys think that you stopped them when they stopped themselves!” I don’t think so.

  3. Daniel Kuehn says:

    Can we stop using “econ 101 logic” to describe the theoretical arguments against the minimum wage? The defense is in econ 101 too.

    • Transformer says:

      You had better tell Krugman, since that quote is from him.

    • Major.Freedom says:


      You know what the “logic” is behind the defense?

      If someone repeatedly steals from you, but you don’t notice it, in that your wealth does not go down in absolute terms over time, then “econ logic 101”, meaning crude positivism, suggests that there is no evidence that stealing from you does not reduce your wealth, and if your wealth in increasing absolutely over time, that the evidence even suggests that stealing from you increases your wealth?

      The whole idea of “other factors swamping out the effects” is really just a tactic to ignore actual economic logic in favor of naked aggression.

    • E. Harding says:

      The defense does not apply in the real world evah, as discouraged workers are not contributing to a labor shortage.

  4. W. Peden says:

    Let me be the annoying Krugman-defending douchebag for a change.

    If you look at Krugman’s current position, he says-

    “Until the Card-Krueger study, most economists, myself included, assumed that raising the minimum wage would have a clear negative effect on employment. But they found, if anything, a positive effect.”

    Here he is talking about what economists assumed prior to the mid-1990s. C&K made them question the position, and Krugman’s position in 1998 is consistent with that i.e. C&K was iffy but intriguing.

    Krugman then says-

    “Their result has since been confirmed using data from many episodes.”

    – and so he can say that it’s the wealth of studies replicating the C&K result that have changed his mind since even 1998. So there’s no Krugman Kontradiction here.


    Ugh. That was horrible. Back to normal now!

    Krugman’s summary of the research is very misleading. Firstly, SOME studies have replicated the most famous C&K result i.e. that the minimum wage doesn’t raise unemployment levels; others have not. It’s like saying “Observations on the maximum velocity of objects have found that the speed of light is not a maximum.” Well, yes, and almost all of them have found that it isn’t. Partial and tendentious summaries of data is not science.

    Secondly, note how the mentions the “positive effect” bit. As far as I know, THAT part of C&K has been very hard to replicate, even for researchers who would LOVE for it to be true, and who have a huge professional and philosophical motivation to replicate it. Yet, from Krugman’s summary of the literature (which is all that a lot of people will read or at least believe) you’d think that the research since C&K had all found a positive effect on employment for minimum wage rises.

    Thirdly, Krugman talks about “raising the minimum wage”, when well-read defenders of minimum wages know that at best what they can claim on the basis of the empirical literature is that small increases in the minimum wage don’t have large effects on employment.

    Not a Kontradiction, but certainly an extremely misleading summary of the literature.

    • Bob Murphy says:

      W. Peden I get what you’re saying. For sure, Krugman was not being *as* slippery in this one as Mark Perry and the original blogger were suggesting. But, Krugman is still being really slippery.

      • W. Peden says:

        Oh, absolutely. I’m just very suspicious about the prospects of finding contradictions, even in the thoughts of those people I disagree with. Even in someone like Marx, I think it’s very hard to find straightforward deductive mistakes, as opposed to harder-to-classify bad reasoning. Contradiction is a very interesting logical relationship, and most of intellectual life just isn’t that exciting!

        What really annoys me in the minimum wage debate is how such half-baked and misleading summaries of the literature have encouraged a HUGE degree of intellectual complacency on the issue on the left.

  5. guest says:

    I like what someone said in the comments of the first Tom Woods link (Walter Block):

    “To build up a free society it is sufficient to privately exchange a gold coin with your neighbor for a bushel of apples or fixing your sink. Multiply such acts many fold and the State becomes irrelevant.”


    It doesn’t have to be gold or silver, either (and certainly not bitcoins).

    Sound money comes out of barter, so if you want sound money, then you have to engage in price discovery in terms of goods and services and your own opportunity costs, trying to ignore the price noise that comes from bank notes.

    • E. Harding says:

      Sounds like some dark African country to me.

      • guest says:

        Well, if the government stayed out of the way, then real price discovery – where prices reflect subjective use-value – would result in various regions discovering mediums of exchange that work best for them, and then middle-men would extend the structure of production from one region to another.

        Eventually, you’d have a widely-traded commodity money, again.

        • E. Harding says:

          Again, sounds like some dark African country to me.

          • Andrew_FL says:

            Could you be a little more specific about what you don’t like about the society guest is describing, or are you content with sounding vaguely racist?

            • E. Harding says:

              No country has ever become rich without a strong government (the United States in the 19th century had a Federal system, with strong local governments relied on to consistently enforce central government laws). Today, there are no countries without a strong government outside Africa (and maybe the Pacific) and a few small war zones. The state might be irrelevant in much of Africa (e.g., Somalia, East Congo, South Sudan), but these places certainly are not free societies, and they aren’t going to be anytime soon.

              • guest says:

                It doesn’t matter if countries become rich. Austro-libertarianism is about individuals becoming as rich as they can without being robbed, and without robbing others.

                Rothbard notes, in a section called “Economics Beyond the Borders”, in his book, “Making Economic Sense“, the following interesting account of government intervention in South Africa that gets blamed on laissez faire:

                Chapter 95: Are Diamonds Really Forever?:

                “The international diamond cartel, the most successful cartel in history, far more successful than the demonized OPEC, is at last falling on hard times. For more than a century, the powerful DeBeers Consolidated Mines, a South African corporation controlled by the Rothschild Bank in London, has managed to organize the cartel, restricting the supply of diamonds on the market and raising the price far above what would have been market levels. …”

                “… So, how could DeBeers maintain such a flourishing, century-long cartel on the free market?

                The answer is simple: the market has not been really free. In particular, in South Africa, the major center of world diamond production, there has been no free enterprise in diamond mining. The government long ago nationalized all diamond mines, and anyone who finds a diamond mine on his property discovers that the mine immediately becomes government property. The South African government then licenses mine operators who lease the mines from the government and, it so happened, that lo and behold!, the only licensees turned out to be either DeBeers itself or other firms who were willing to play ball with the DeBeers cartel. In short: the international diamond cartel was only maintained and has only prospered because it was enforced by the South African government.”

                There’s *too much* government in this case.

              • Tel says:

                No country has ever become rich without a strong government (the United States in the 19th century had a Federal system, with strong local governments relied on to consistently enforce central government laws).

                No creature with a backbone has ever evolved to be free of parasites either. So what’s your point? Should we all kneel down and worship the parasites and diseases that made us what we are today?

              • Tel says:

                … the only licensees turned out to be either DeBeers itself or other firms who were willing to play ball with the DeBeers cartel.

                Firstly, don’t buy diamonds other than for industrial uses. Diamonds suck, cubic zircon looks just the same.


                Secondly, if you do feel like you have to buy diamonds, then buy from the competition.

              • Andrew_FL says:

                I’m disappointed, I was hoping for something more specific and less cum hoc ergo propter hoc.

              • guest says:

                “Firstly, don’t buy diamonds other than for industrial uses.”

                If you refrain from buying diamonds, the victims will be worse off, as bad as they have it.

                They are coerced, and have few options, but removing that source of income from them to hurt the cartel would hurt them, too.

              • E. Harding says:

                “I’m disappointed, I was hoping for something more specific and less cum hoc ergo propter hoc.”
                -That’s not a cum hoc ergo propter hoc; it’s pointing out that there are no real-world examples of the anarcho-capitalist dream in the modern world. And that mere acts of barter do not a free society make.

              • E. Harding says:

                Also, that’s an interesting point, guest, I did not know that. But it wasn’t what I was talking about here. I’m talking about places where state authority is more assertion than reality.

              • Andrew_FL says:

                You are inferring from an absence of empirical examples, the theoretical impossibility of a particular kind of society.

                Also you absolutely implied that societies get rich because of having central governments, by saying non has ever done so without one. That was absolutely cum hoc ergo propter hoc.

    • guest says:

      I don’t think Bob is being inconsistent, as Walter Block does, if he uses such things a buildings and roads that were built using money stolen by the government.

      The money was stolen, but the real goods and services provided by the individuals who are paid by the government were not.

      Bob isn’t providing the government anything in his use of government-built offices.

      In fact, the best case scenario is that everyone uses them, and no one pays the government to do so, and no one asks for the government to continue these projects but instead seeks private sector solutions.

      The roads go into disrepair, and those roads that people would pay for, voluntarily, are kept up.

      • Tel says:

        In our city, most of the big roads are toll roads, and the best ones were privately built. So by using the road, you are paying for it, and if you don’t use it you don’t pay.

        There’s also a tax on the fuel so people pay for maintenance by consuming the fuel, but it’s a well known fact that only about 25% of that fuel tax ever gets spent on the roads, the rest goes into other government rubbish. Thus, road users are actually paying more than the cost of the road. Now Walter is saying that people who pay for something shouldn’t be allowed to use what they have paid for?

        Besides, government didn’t make the land, and ultimately that’s what you are walking on, with or without government you would be walking on the same land.

    • Tel says:

      It must be tough for Rand living in the shadow of his dad all the time. Most politicians get away with a lot, their voters don’t pay a whole lot of attention and the politicians are telling them what they want to hear, no one worries how true it is.

      Rand gets a lot more fine grained scrutiny… which is good, but I think overall he’s about average in the political sphere, it just looks bad because everyone compares him to his dad.

      • Sam Geoghegan says:

        Rand has his foot in both camps, trying to please the establishment and the libertarian constituency.
        He will fail, therefore it’s a gargantuan wasted opportunity.
        His father’s candidacy was more or less a platform for ideas and here Rand is presented with a similar opportunity to expose the GOP as the faux-conservative, bloodthirsty cult that it is.


        • Tel says:

          Rand nibbles at the edges, he throws the odd bone to the real libertarians. Rand is a politician, his father was exceptional because he was not.

  6. Mike B says:

    About the black guy being pulled over:

    When people tell stories they tend to tell it from their own perspective and in a way that makes them look like the good guy and the other look like the bad guy.

    If you’ve ever worked at a restaurant, especialy in management or for a long time you know that when customers complain, they are saints and the server or manager is evil. We who have served in the past all know that customers can treat servers very bad. I not only worked as a server for a few years but my ex runs a chain in a large city. They’re all Thai and you know how nice Thai people are. Well they don’t speak the best english so I helped out with customer complaints sent in writing to the owner. Again, every single customer painted themselves as inncocent victims to the evil Thai waiters or managers. I would talk to all those involved and they would always tell a completely different story. It was always clear who was stretching the truth.

    For a short time, I considered being a teacher. I got a masters and for part of the program, I had to follow teachers. Well one teacher that put me with was a very bad teacher. She literally sat at her desk 90% of the class and gave horrible lectures. So I went into a parent/teacher conference one time and I knew exactly both the teacher and the student. During the conference, the parents tried to blame the teacher and the teacher expertly told a tale that technically was true but painted her to be the saint that constantly offered help and the evil student just was lazy and did nothing. My point is that the teacher was awful, lazy, and typical of Math teachers. You remember them don’t you? Well in that conference she was the best teacher in the world.

    So I’m not saying this guy is exaggerating but the chances of him telling a fair account of the event are very small. It’s human nature to paint yourself as the hero and others as villians.

    Why don’t we hear from police officers? Because anything they say will be shot down with one very specific and damning word: racist.

    I’m not an advocate for the police but why are black people always the heros in these stories and the police always so evil? Is it possible that this guy gave a little attitude that he of course wouldn’t share in his story? Is it possible that the police acted professionally and no matter what they did, the story would be twisted?

    • Scott D says:

      I can imagine a retelling of this story that is very flattering of the officers, recounting how they very politely asked this man to step out of his vehicle, politely handcuffed him, and politely searched his car. Politeness doesn’t change the fact that these officers had no right to detain him or search his property without a warrant. No amount of niceness can make up for a server giving their customer food with shards of glass in it.

      The only way that you might twist this in the officers’ favor is to accuse the author of outright lying. He would have had to omit having committed some infraction, or to have fabricated events, such as being placed in handcuffs. “A little attitude” is not and should never be sufficient reason to treat someone that way.

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