My Response to R Street’s Appeal to Conservatives to Support Carbon Tax
I was unusually saucy in this IER piece. Some excerpts:
Rather than reiterating our list of technical objections, let me in this post instead simply step back and ask: What is the point of studies such as the R Street proposal? It’s not as if President Obama or Gina McCarthy are making a substantive offer here. Rather, R Street’s proposal (and others like it) are fantasy land bargains from people with no political power in order to get conservatives and libertarians to abandon their opposition to a massive new tax. What is the point of this exercise?
…
Allow me to let Catrina Rorke and Greg Ip in on a dirty little secret: The typical progressive activist, and the typical administrator at the EPA, do not share their general admiration for the market economy. It is not as if the people of Greenpeace toss and turn at night, lamenting the Pareto inefficiencies in our economy and the fact that industry produces a bit above the “optimal” level of pollution. No, these people do not like capitalism, period, and think Americans are consuming too much.
…
In this context, it’s an irrelevant academic point of whether a new carbon tax, with all funds directed to tax breaks for corporations and capitalists, plus the elimination of all other federal regulations on emissions, would be economically beneficial on net. When I read studies like R Street’s, I feel like I’m a bank teller looking at guys storming in with shotguns and ski masks, and my colleague says, “Let’s offer them free checking.”
Nomination
I put forward my own name for Best Troll on an Economics Blog in 2016. Here’s but one example.
Now look, there are some master trolls who hang out at Landsburg’s blog, and there are arguable professionals at Marginal Revolution. So I’m not asking that I win. All I ask, is that you don’t ding me since I’m already up for Best Economics Blogger in 2016. That’s really not fair to say I can only be one or the other.
Your Father Knows You Need These Things
I recently had some personal experiences and found this passage very satisfying. (It was the topic of the Bible study I do in Lubbock and it really came in handy.) So I searched YouTube to see if I could find a nice video, maybe an animated Bible story or something, but instead I found this guy who has posted a bunch of videos. This one was exactly the topic I wanted, and it had 1 view, so I thought, “Maybe he made this just for me and my readers.”
Anyway:
Sarandon Is a True Progressive
I can respect Susan Sarandon, even though (of course) I disagree with a lot of her policy views. But I think this is incredibly brave of her. So I respect her the same way I respect Glenn Greenwald, who was totally anti-Bush because of the war and civil liberties, and then was consistent when Obama continued the same horrible policies.
I also love her lines near the end, where she says (paraphrasing) that “if you think it’s smart to shore up the status quo, then you don’t understand the status quo.”
This is why I so profoundly disagree with people like Steve Landsburg, Scott Sumner, and Scott Alexander. They all think (to varying degrees) that Hillary Clinton wouldn’t be nearly as risky as Trump, because hey at least it will be basically another term of Obama.
Uh, right. That’s why I actually think Trump might be better, though I can totally see why Trump is scaring the #$()#$ out of these guys.
It’s funny, people warn that “Trump is Hitler” a lot. But right now, if you want to talk like this, then the people “trying to take over the world” aren’t supporting Donald Trump. No, they are actively opposing him.
Johnson Supporters Inventing Their Own Reality
I did some soul-searching recently asking myself, “Is it true what they say? Do I just go out of my way to tear down the best chance for liberty in this election cycle?”
And no, that’s not what I’m doing. In my professional outlets, I don’t engage in libertarian catfighting. I have a podcast (co-hosted of course) devoted to taking down Paul Krugman. I write books hoisting up Mises.
But, on social media and my personal blog, yes I am going to point out when I think people on “my team” are engaging in the same qualitative (not quantitative) behavior that they recognize as ridiculous when it’s a Hillary or Trump supporter doing it.
Case in point: I have seen lots of Gary Johnson fans respond to his latest flub with the following excuses (listed after the video):
(1) “The mainstream media is lying, as usual. It wasn’t a “brain fart,” give me a break.”
(2) “It wasn’t an Aleppo moment, lying mainstream media. With Aleppo, Johnson was admittedly off, but this was a case of a gotcha question that no libertarian should answer.”
(3) “Johnson did the principled libertarian thing. *I* don’t respect any foreign leaders, do you Murphy?!!”
OK, the only problem with the defenses above, are that Johnson himself:
(1*) Was in the process of saying he was having a brain fart (see :30 – :40 in the video).
(2*) Explicitly said he was having an Aleppo moment (25 seconds in the video).
(3*) Tried to name a foreign leader he respected (former president of Mexico), but blanked out on the name. Then said “FOX!” when his running mate rescued him.
But other than that, yes, it was a mainstream lie.
P.S. Johnson himself, afterwards, perpetuated this false narrative–sort of like George Costanza and the Jerk Store. So the one thing he had going for him–that he was a straight shooter who admitted when he screwed up–is now gone too.
P.P.S. For those of you mad at me for not jumping on the Johnson-Weld bandwagon, be honest with yourself: Did you ever think it was remotely possible that you would have to explain your guy saying this?
P.P.P.S. Of COURSE if I had to pick between President Johnson and President Trump, I’d prefer Johnson. But I don’t have that power, go figure. What I can and will do is point out when Libertarians are doing the same type of thing that they so easily recognize and ridicule in Trump supporters. (“Ha ha, look at them squirm and try to explain away the latest ridiculous thing he said!”)
Contra Krugman: We Take on Hillary’s Promises About Family Leave and Mental Health
BTW, I am now going to call her “Hillary” because her own campaign site does it. (I explain in the episode.)
Here’s the link. If you don’t listen to these religiously, let me plug this as a particularly good one. Jokes, economics, Krugman Kontradictions… what more do you want? By the end of the episode Tom is in awe of my quick wit.
Developing Story: Leading Market Monetarist Rebukes Christian
Recently Scott Sumner focused his attention on 1946 (here and here), which (he claimed) was quite embarrassing for Keynesians. This is the opening of his second post, which gives a flavor of his analysis:
Over at Econlog I did a post discussing the austerity of 1946. The Federal deficit swung from over 20% of GDP during fiscal 1945 (mid-1944 to mid-1945) to an outright surplus in fiscal 1947. Policy doesn’t get much more austere than that! Even worse, the austerity was a reduction in government output, which Keynesians view as the most potent part of the fiscal mix. I pointed out that employment did fine, with the unemployment rate fluctuating between 3% and 5% during 1946, 1947 and 1948, even as Keynesian economists had predicted a rise in unemployment to 25% or even 35%—i.e. worse than the low point of the Great Depression. That’s a pretty big miss in your forecast, and made me wonder about the validity of the model they used.
Everyone got that? Keynesians are big on fiscal policy being the key to avoiding recessions, and so it’s really awkward for them that there was so much fiscal tightness in 1946, with no plunge into Depression. Sumner thinks this is a pretty big smoking gun to tell us that Keynesian models are wrong. I agree with him.
But what’s interesting is that the end of World War II also coincided with extreme monetary tightening. I am old school and like the monetary base as a key indicator. Check it out:
Can’t get a much crisper “regime change” than that, right? From December 1941 – December 1945, the monetary base almost doubled, but starting in 1946 the base was basically flat for the next 5 years.
As far as short-term safe interest rates, they were steady throughout 1946 but then began rising sharply in mid-1947:
But as we all know, Market Monetarists are not fooled by the monetary base or interest rates. Instead they focus on NGDP growth as the ultimate criterion of whether monetary policy is tight or loose.
On this count, it’s not as clear cut as with the monetary base, but nonetheless (using annual data) you see the growth in NGDP collapsed to zero after the war:
And, Sumner himself reports that if you look at the beginning of 1945 through the beginning of 1946, NGDP actually drops 10%. (For context, using quarterly data, the biggest drop from the preceding period in NGDP during the 2008 financial crisis was -7.7%. So for an annual drop of 10% after World War II, that was way way worse of a monetary shock, if you’re a Market Monetarist.)
So, I think the above shows that there was, by all accounts, monetary tightening (or at least a failure to engage in “monetary offset”) following World War II. Since the standard Market Monetarist story is that massive fiscal contraction is indeed bad because it reduces Aggregate Demand, but can be offset with appropriate monetary loosening, it seems that this year 1946 poses a pretty big challenge to the Market Monetarist model as well as the Keynesian model.
Someone brought this up in the comments of Scott’s Money Illusion post. And yet, not only did Scott not provide a satisfactory explanation, he blew the guy off like it was a stupid question.
*whistles innocently*
P.S. It’s not just 1946. The Market Monetarists tried to say Canadian fiscal austerity only worked in the 1990s because of monetary offset, but there again I showed (here and here) that using all sorts of reasonable metrics, the Bank of Canada tightened right at the crucial moment.
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