18 Jun 2018


Contra Krugman, Potpourri 11 Comments

==> In the latest Contra Krugman, we use a suggestion from one of our Contra Cruise bonus winners, and explain what Krugman won the Nobel Prize for. (Obviously if any technical wizards are listening and think I got something fuzzy, let me know.)

==> He interviewed me over the phone so some of my position didn’t come through fully, but this Reason writer used quotes from me to challenge Greg Ip of the WSJ.

==> This is apparently a famous lecture about the power of exponential growth. (Someone on EconTalk cited it.) I think this is a great example of how smart people who don’t know economics, end up saying silly things. Should I critique this somewhere or does nobody care? (Be honest, I can take it.)

==> James Bovard on the IG report on the FBI.

11 Responses to “Potpourri”

  1. Josiah says:

    I listened to the first few minutes of that Al Bartlett lecture. It was obviously dumb, so I stopped.

    • Harold says:

      The video is categorised as comedy. Do you now what year it was?

    • JimS says:

      If your displeasure with the video doubled every ten minutes, how displeased would you be after 112 minutes?

  2. Giovanni P says:

    If it is really famous, you should critique it. I think you should go on criticizing every non-economist talking bullshit to non-economists everywhere. That may be a good marketing and also very good work from you.

  3. JimS says:

    I’d be a little unhappy taking a class from a physicist and getting this. None of the students (all male, if the female participation in the class doubled every ten years….). I’d be equally as disappointed taking an econ class and having a physics lesson.

    Hey! There’s an idea; Dr. Bob should do a video explaining the laws of the universe!. You do touch on string theory and game theory. You need to get more heavy duty into physics in your ample spare time.

    • Khodge says:

      It never hurts to review the basics. When I was in HS, slide rules were still in use. Exponential growth is at the heart of that tool. Years later, in my first real job – in the oilfield – charts were manual and I saw the real-world application of exponential growth. My most recent job – data analyst – would have been well served by a bit more attention to basic math.

      If you have not reviewed the concept in a while, you will be well-served by putting your thoughts to paper.

  4. Tel says:

    Not wanting to gripe too much about your description of Good Krugman and his past works, but I’d merely like to suggest that the educational aspect of the podcast could be improved with a better contextual picture (i.e. more background).

    The idea of “Reflexivity” in economics and science is old but has always been one of those topics under the surface that misses out on exposure. There’s a pretty decent Wikipedia page as an overview, and they note Karl Popper and Ernest Nagel writing about this problem (not directly in an Economics context, but broadly pertaining to the philosophy of science iteself). George Soros has also talked about it, right from his early books, and recently he’s written a more generalized coverage of that.


    The same concept links to Charles Goodhart (Goodhart’s Law) and Robert Lucas (Lucas critique) and later on Paul Ormerod wrote the fairly famous book “The Death of Economics” explaining why this is always going to happen with economic models, and why it invalidates a lot of what economists do with regards to equilibrium.

    The idea of positive feedback, negative feedback and system stability have a long history in engineering too, although perhaps you would be going overboard to talk about that, but just to get the mental picture of how broad this really is, Edward Lorenz of course wrote the game changing paper “Deterministic nonperiodic flow” in 1963 which opened up all of Chaos Theory which is really a study of what nonlinear feedback can do.

    So, not to take away from the work of Good Krugman but in isolation it seems a bit surprising, except that this did not happen in isolation, it’s been chugging away in many areas for quite a while, and Krugman popped up in the middle of that.

    For what it’s worth, “Reflexivity” or positive feedback if you prefer, can easily be used to demonstrate Coase is quite wrong in the claim that legal judgement in favour of one party or the other party has no effect on the overall economy (if we ignore transaction costs). Consider two initially identical countries sharing a sizable border. In both countries you have a dispute between railway operators throwing sparks into crops and farmers upset about their burnt crops. In one country, a Judge rules in favour of the railway operators, and that becomes the established common law tradition across all of that country. In the other country a Judge rules in favour of the farmers and that becomes established common law over there.

    You can see what’s going to happen… more railways get built where the legal regime gives favour to the railway operators because the return on investment for building railways is better under that jurisdiction (also, for the converse reason there will be fewer farms). Investment money flows to the place where best returns are available. Over in the country where common law favours the farmers you get the opposite effect: more investment goes into farms, and less investment into railways.

    But wait, now you get gains from trade between the countries … it’s cheaper to import food from the country that has lots of farms than it is to buy local food, but it’s cheaper to transport goods and passengers in the country that has more railroads. Over time the railroad-friendly regime becomes a transport hub and it’s actually easier to route your goods through that country than suffering high domestic transport costs in your own country.

    Then you get knock-on effects… machine parts become cheaper in the place where railway is a big customer for parts, but at the same time seedlings, fertilizer and agricultural science are all much better in the country where farms are a major export producer. Gradually they move further away from each other and specialize … all because of that initial judicial decision which Coase tried to claim had no effect whatsoever (and transaction costs really have no effect on this path dependence situation, they could be zero and it still happens). That’s the power of positive feedback.

  5. Craw says:

    I doubt it’s worth replying to a video that old, whose predictions are already disproven. But if you do, hurry, before the internet runs out of electricity.

    • Bob Murphy says:

      The only thing is that I have heard before that thought experiment about the bacteria doubling every minute and every”body” thinking things are fine at 11:58. But if nobody else has heard that before maybe I just had a particularly socialist biology class in high school.

      • Harold says:

        There is a well known puzzle about lily pads doubling every day an covering the point in 30 days – what day is the pond half covered?

        It is obvious with hindsight but lots of people get it wrong, so his lecture has some good points.

  6. Geoff says:

    I would be interested in reading your response. I think the beginning of the video is decent for those who want to hear about compounding interest and the Rule of 72 (although, I think he refers to the number 70). He obviously goes very wrong after that. I wonder why he didn’t think about the acceleration of food production and technology to accompany his worries about population growth.

    This is an example of someone who knows too much and gets things wrong, whereas someone who barely knows anything on the topic wouldn’t be espousing the wrong ideas.

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