Potpourri
==> Murray Sabrin has been our man in Cuba. Here’s an article in a series of posts on his visit.
==> Jerry O’Driscoll doesn’t heart Bernanke.
==> John Papola also caught something that I noticed about the Stiglitz/Krugman exchange (on inequality): Stiglitz quite explicitly said that low consumption spending was the reason for our recession, and when Krugman disagreed, he did NOT say, “No, it’s low demand, which could just as well be investment spending.” No, Krugman said (paraphrasing) “Hey rich people might consume a lot too, by buying yachts.” So John needs to apologize to no one–I have a certain grad student in mind–for his Christmas videos portraying Keynesians in practice as being “underconsumptionists.” I don’t know what more you would have to see, to give John a pass on that score.
==> A guy sent me this link to Krugman’s upcoming appearance at his school, hoping for some tips on what to ask.
==> Check out the Contrarian Take Databank at Forbes.
==> The cinematic von Pepe sends this clip of Iceland’s president talking about letting banks fail. (He also mentions social safety net stuff, but nobody’s perfect.)
==> I tried my best to offend people in this article on the dentist who fired his employee for being too attractive.
==> Is this Garret Jones analysis right? The notion that government spending shouldn’t count in GDP the same way that private spending does, is commonplace in our circles, but Jones is saying something different here. He’s claiming that there is a qualitatively different treatment–officially–in the GDP stats between government and private hires. Does anyone know if that is right?
==> A scary post on ObamaCare from David R. Henderson.
Dean Baker Is Not Very Creative
I’m on the road all week, so blogging will be sparse. Yet I couldn’t let this one go.
In this post, Dean Baker lectures Joe Scarborough for attacking the Obama stimulus package. Baker writes:
The best evidence here is the assessment of the Congressional Budget Office (CBO) from March of 2009. The reason this analysis is useful is that it is a look at what the economy was expected to do and the impact of stimulus at the time it was passed. CBO was looking at the actual stimulus as passed. It also in an independent agency with no motive to cook the books. [sic!]
Here’s the picture that CBO drew compared to what actually happened.
There are two points which should jump out at anyone. First, even as late as March of 2009 CBO hugely underestimated the severity of the downturn. The actual drop in employment from 2008 to 2009 was 5.5 million. The predicted drop was just 3.8 million. In other words, CBO underestimated the initial hit from the downturn by 1.7 million jobs, even after it was already well underway.
If anyone wants to blame the greater severity of the downturn on the stimulus they would have a hard story to tell. Most of the hit was before a dollar of the stimulus was spent. Employment in March of 2009 was 5.4 million before its year ago level. [Bold added.]
It’s one thing for Dean Baker to say he disagrees that the stimulus was what made the economy suddenly get worse than what even the nonpartisan straight-shooters at the CBO saw coming. But to say it’s a “hard story to tell”? Like, he can’t even imagine how one might entertain this notion?!
How about: The government announces a $700 billion stimulus package, and rich people realize their taxes in the future are going to be higher to pay for it? Is that really so crazy that Baker can’t even come up with that theory? That should be the baseline theory, and the burden of proof should be on Baker to explain why people are idiots and think government borrowing money today, won’t have any future consequences.
BTW, I’m not advancing full-blown Ricardian Equivalence. But Baker is doing the opposite mistake.
In case you’re not seeing my point: Suppose the government announced in January 2009, “In 5 months we are going to ban ammunition.” Then ammunition sales go through the roof in the 1st quarter. Would it make sense to say, “It’s hard to even tell a story that the government announcement had anything to do with the ammo sales, since not a single bullet had been confiscated by this point” ?
Capitalism Needs Losses, Too
This was the second talk I gave to a group of about 100 high school students in Houston a little while ago. I opened the event with, “The Social Function of Profits,” then Peter Klein followed with, “Big Business: Friend or Foe,” and I wrapped up with this one. Since I’m talking to high school students, it’s fairly peppy so you may prefer to listen to this, than do work on this Monday morning.
Is the Christian God Compatible With Misesian Action?
A lot of people can’t understand how I can write such great stuff 6 days a week, but then go batty on Sundays. (Krugman and DeLong, in contrast, think I’m consistently nuts.) One thing in particular people like to throw at me, is this passage from Mises’ Human Action:
[T]he endeavors of philosophers to define neatly the attributes of an
absolute being, free from all the limitations and frailties of human
existence, by the use of praxeological concepts, are no less questionable.Scholastic philosophers and theologians and likewise Theists and
Deists of the Age of Reason conceived an absolute and perfect being,
unchangeable, omnipotent, and omniscient, and yet planning and
acting, aiming at ends and employing means for the attainment of
these ends. But action can only be imputed to a discontented being,
and repeated action only to a being who lacks the power to remove
his uneasiness once and for all at one stroke. An acting being is discontented
and therefore not almighty. If he were contented, he would
not act, and if he were almighty, he would have long since radically
removed his discontent. For an all-powerful being there is no pressure
to choose between various states of uneasiness; he is not under the
necessity of acquiescing in the lesser evil. Omnipotence would mean
the power to achieve everything and to enjoy full satisfaction without
being restrained by any limitations. But this is incompatible with
the very concept of action. For an almighty being the categories of
ends and means do not exist. He is above all human comprehension,
concepts, and understanding. For the almighty being every “means”
renders unlimited services, he can apply every “means” for the attainment
of any ends, he can achieve every end without the employment
of any means. It is beyond the faculties of the human mind
to think the concept of almightiness consistently to its ultimate logical
consequences. The paradoxes are insoluble. Has the almighty being
the power to achieve something which is immune to his later interference?
If he has this power, then there are limits to his might and
he is no longer almighty; if he lacks this power, he is by virtue of this
fact alone not almighty.Are omnipotence and omniscience compatible? Omniscience presupposes
that all future happenings are already unalterably determined.
If there is omniscience, omnipotence is inconceivable. Impotence
to change anything in the predetermined course of events would
restrict the power of any agent.
This is the most eloquent statement of, “Can God make a rock so heavy He Himself can’t lift it?” ever penned. But let me focus on the issue of action and uneasiness.
In the way I picture God, He does achieve His ends in one fell swoop. God is outside of time; He created time as we experience it. Picture someone drawing out the various scenes in a comic strip. Even though time passes “inside” the comic strip–in order for the story to make sense–it’s obvious that the creator isn’t bound by the time inside the story.
To see how odd Mises’ statements are, imagine that at the end of Return of the Jedi, R2D2 suddenly starts telling C3PO that he thinks there was am omnipotent guy, named George, who created everything in their universe, including their very personalities, and every word coming out of their mouths. Even though they felt like they were sentient, autonomous beings, in fact they were characters created by this omnipotent being George, who had the power to do anything he fancied in their universe.
Then C3PO says, “Nonsense, your circuits are crossed! If you are right, then why would it have taken so long to kill the Emperor? That would have happened in the first moment of Episode 1. And would a benevolent George have created Jar Jar Binks?”
More on Krugman’s Tale of Two Economies
Sorry my teeming fans, I’m still bogged down with work. But I can’t resist drawing your attention to Krugman’s post today, entitled “Our Incredible Shrinking Government,” in which he said:
Still, the report does highlight the role that shrinking government purchases of goods and services are playing in holding the economy back. And yes, I mean shrinking, not just growing more slowly than I’d like. Transfer payments like Medicare and Social Security are rising (although unemployment benefits are falling), but government purchases of stuff — mostly at the state and local level, where the stuff in question includes hiring schoolteachers — has been in fairly rapid decline.
He then shows a chart of government purchases after the dot-com crash and now our Great Recession, and concludes: “By this measure, the era since the Great Recession began has been marked by unprecedented fiscal austerity.”
So let me try to express my point differently:
Suppose you came up to me (or to Peter Schiff, or George Will, or any other “austerian”) in January 2009, and you said, “I think this is going to be awful. They will call it the Great Recession. Bob, what do you recommend?”
I would say, “Unprecedented fiscal austerity! Massive cuts in government spending like no one has ever seen!”
Then you say, “Bob, if we followed your advice, would interest rates shoot through the roof?”
I would say, “Of course not you fool! Why would they do that if the government implemented unprecedented fiscal austerity.”
Is Krugman denying that the austerians would have said this? So doesn’t the historical record, since the Great Recession began, validate their model? If you want to argue against them, you’d have to point at the high unemployment. That would be the problem with their recommendation for austerity, which–according to Krugman–the government obeyed.
P.S. I know, I know. This is me willfully ignoring Krugman’s caveats, subtleties, and cul de sacs. For example, in the quote above, he said, “BY THIS MEASURE, the era since the Great Recession began has been marked by unprecedented fiscal austerity.”
Yet this is exactly the kind of thing I’m talking about. Krugman will use some Measure A by which we’ve had unprecedented monetary and fiscal stimulus, when he wants to ridicule the austerian warnings about price inflation and interest rates. Then, when Krugman wants to explain why the economy is still crappy, he will cite some Measure B by which we’ve had unprecedented fiscal austerity.
To repeat, Krugman can use whatever measure he wants. But he can’t switch measures between blog posts, depending on the point he wants to make. Either Krugman thinks we’ve had unprecedented fiscal austerity since the Great Recession began, or he doesn’t.
Krugman: Government Spending Surged If It Helps My Case, Otherwise It’s a Dirty Right-Wing Myth
[UPDATE below.]
I am really busy with work deadlines, so not much blogging for another two weeks or so. But in the meantime, I wanted to point something out, though I don’t have time to buttress my claims with links. Here is my observation: Paul Krugman will say that government spending has surged under Obama (and Bernanke has engaged in monetary stimulus) when he wants to blow up right-wingers for their failed predictions, yet referring to the same period of time he will say that government spending has actually been either normal or even contractionary, when explaining why his Keynesian solutions haven’t fixed the economy. To spell it out more clearly:
==> Right-wingers warned that massive Fed and federal stimulus would lead to rising interest rates and price inflation. Krugman argues that we’ve had massive Fed and federal stimulus, but low interest rates and price inflation, so therefore the right-wingers’ views are totally refuted.
==> Krugman has recommended massive Fed and federal stimulus to fix the economy. He argues that we haven’t had massive Fed and federal stimulus, and that’s why the weak economy doesn’t refute Krugman’s views.
This isn’t simply a matter of “too little.” Krugman has argued that there was no surge at all in government spending under Obama, properly defined, certainly not in the last few years. And yet, he has no problem pointing to a right-winger warning of crowding out or inflation made in, say, 2010, as proof of what an idiot that guy is.
Krugman is allowed to disagree with what constitutes a large stimulus, either fiscal or monetary. But he’s not allowed to say we had a large stimulus when that fact embarrasses right-wingers, buta small stimulus when that fact rescues Keynesianism.
P.S. Let me give you one quick link to show what I mean. In this post, Krugman ridicules Paul Ryan for his “Paulite/Randite [sic]” monetary theories, in particular citing Ryan’s warnings on interest rates and price inflation. Krugman shows a chart starting in January 2011 of these two series. Year/year consumer price inflation rises to almost 4 percent around August 2011, then drops sharply. The yield on ten-year government securities also drops sharply around July 2011.
So, this would really be embarrassing for Paul Ryan, if the Fed engaged in a massive expansion of its balance sheet, starting in mid-2011, or if the federal government ramped up its spending in mid-2011. Yet the reality is the exact opposite. The Fed’s balance sheet stopped its massive expansion on a dime right at this time, and the federal government’s surge in “current expenditures” also turned around in early 2011.
I’m not trying to be coy here. Obviously people like me thought the absolute level of even officially reported consumer price inflation was going to be higher during the last 5 years than it was, in reality. But I just want to point out how blind Krugman is to any problems with his worldview. He can point to a chart that is prima facie great confirmation that the Fed and federal government move interest and price inflation rates in the directions that the “austerians” say, and thinks this somehow blows them up. To add insult to injury, he explicitly accuses them of being ignorant of, and impervious to, the empirical evidence.
UPDATE: As even Paul Ryan could have predicted, I have people in the comments saying that Krugman never denied that were was a surge of spending under Obama. OK, he literally mocks that notion in this post. But I’m just doing a “gotcha” I guess.
MLK on Loving Your Enemy
The commentary always gets so political on the official Martin Luther King Jr. holiday itself, but I had been reminded of this 1957 sermon on forgiveness and loving your enemy, and thought I’d quote from it now:
He who is devoid of the power to forgive is devoid of the power to love. It is impossible even to begin the act of loving one’s enemies without the prior acceptance of the necessity, over and over again, of forgiving those who inflict evil and injury upon us…
Forgiveness does not mean ignoring what has been done or putting a false label on an evil act. It means, rather, that the evil act no longer remains as a barrier to the relationship. Forgiveness is a catalyst creating the atmosphere necessary for a fresh start and a new beginning. It is the lifting of a burden or the canceling of a debt…
Without this, no man can love his enemies. The degree to which we are able to forgive determines the degree to which we are able to love our enemies.
…
This simply means that there is some good in the worst of us and some evil in the best of us. When we discover this, we are less prone to hate our enemies. When we look beneath the surface, beneath the impulsive evil deed, we see within our enemy-neighbor a measure of goodness and know that the viciousness and evilness of his acts are not quite representative of all that he is. We see him in a new light. We recognize that his hate grows out of fear, pride, ignorance, prejudice, and misunderstanding, but in spite of this, we know God’s image is ineffably etched in being. Then we love our enemies by realizing that they are not totally bad and that they are not beyond the reach of God’s redemptive love.Third, we must not seek to defeat or humiliate the enemy but to win his friendship and understanding. At times we are able to humiliate our worst enemy. Inevitably, his weak moments come and we are able to thrust in his side the spear of defeat. But this we must not do. Every word and deed must contribute to an understanding with the enemy and release those vast reservoirs of goodwill which have been blocked by impenetrable walls of hate.
…
So when Jesus says “Love your enemies,” he is setting forth a profound and ultimately inescapable admonition. Have we not come to such an impasse in the modern world that we must love our enemies–or else? The chain reaction of evil–hate begetting hate, wars producing more wars–must be broken, or we shall be plunged into the dark abyss of annihilation.
Brad DeLong Once Again Mines the Clear Blue Sky for a Statistic to Use Against His Opponents
[UPDATE below.]
Michael Tew sent me a link to Brad DeLong’s fair and balanced discussion of Republicans:
I suspect that some 6% disapprove of interracial marriage but won’t tell the Gallup interviewer because they want to save their face–that 20% of Americans today disapprove of interracial marriage. That means that 40% of Republicans disapprove of interracial marriage, and thus that perhaps 60% of Republican primary voters really do not think as the rest of us Americans do.
Neither Tew nor I could make any sense of this paragraph. When DeLong says “[t]hat means that 40% of Republicans disapprove of interracial marriage,” I’m pretty sure he’s just making that number up.
Now to be clear, when I say DeLong makes up numbers out of the clear blue sky, I don’t mean he randomly picks them. No, I realize there is some type of computation involved. But since his inputs into the computation are his personal guesses, that hardly renders them accurate. Thus, I could say, “I suspect that some 10% of the time, Krugman and DeLong are each fair to austerians. Thus, on a day when they both write about austerians, there is only a 1% probability that they will both be fair.” Did I just make that number up out of the clear blue sky? I agree it’s a semantic issue.
Anyway, the actual Gallup poll–which formed the basis for DeLong’s post–shows that 77% of Republicans approved of interracial marriage, meaning 23% did not. I still do not see how DeLong turned 23% into 40%, but his personal judgment is probably better than the polling.
UPDATE: Okay, I’ve at least figured out the first step in DeLong’s calculation. The Gallup poll shows that in the population as a whole, 86% approve of interracial marriage. So DeLong is saying 6% of the American people just lied, thus only 80% actually approve, meaning 20% disapprove. But I’m still at a loss as to how he turns that into 40% of Republicans, and 60% of Republican primary voters. Maybe he’s basing it off the proportions on the reported results? Is he taking into account the fact that Republicans are proud of their racism (and thus wouldn’t lie to the pollster) more than the average respondent? Don’t know, but anyway, just thought I’d point out that DeLong is taking a poll saying 23% of Republicans disapprove of interracial marriage and–without citing that actual number anywhere in his post–is telling people “that means 40% of Republicans” disapprove of interracial marriage.
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