Breaking News…Murphy Surges in the Geeconosphere
The evangelical blogger from Nashville is surprising everyone by surging in the discussions of government debt. I don’t have time to write it up right now–got my mind on my money and my money on my mind–but check out the comments in this Landsburg post to see me on the cusp of solving this. I think I can write up something that will reflect the partial truths in the writings of Krugman, Yglesias, Nick Rowe, Don Boudreaux, and Steve Landsburg on all this stuff. (I think only the MMTers will scoff, because I will assume that people care about food, not dollar bills.)
Then, I fly out to meet with the Israelis and PLO.
A Burdensome Dialog on Debt
I can’t work until the Iowa results are in. So, consider the following dialog:
BOB: (writing checks) Man, this is painful. I have to write two $1,000 debt payments this month. Fortunately, only one is really a burden, since I owe the other one to myself.
STEVE: What do you mean?
BOB: Well, the one debt I owe to a credit card company from my Christmas purchases, so that $1,000 payment is obviously a burden. But the other “debt” is really just money that I moved from my business checking account into my personal checking account last month, when I was worried I might bounce a check. But the danger is over, so I’m moving the money back by paying off the “loan” to myself. So that particular payment isn’t really a burden, since I owe it to myself.
STEVE: Hmm, I thought you understood economics. Whether you are paying the credit card company or your business is irrelevant. You owe both debts to yourself.
BOB: (puts down the pen, closes his laptop, and looks straight at the professor) Steve, what in the heck are you talking about?
STEVE: (gets excited) Think about it. Last month, you bought $1000 worth of presents and charged it, right? If you hadn’t done that, but instead had spent the money out of your other assets, then you would now be $1000 poorer. The real burden was your decision to buy those presents, not to finance them with credit cards.
BOB: (goes cross-eyed) OK…but the reason it was a burden, is that I’m now in the position of having to send $1000 to an outsider. In contrast, the $1000 payment to my business isn’t a burden, because I own the business.
STEVE: (sighs) We’re moving in circles. No, your financing decisions are irrelevant. It’s your lifetime consumption and income that matter.
BOB: Fine, but what I said is still true. Of COURSE it matters if I owe $1000 to a credit card company, versus to my own company. The payment to the credit card is a burden to me.
STEVE: No it isn’t.
BOB: Yes it is.
STEVE: No it isn’t.
BOB: Aggghhh! Steve, you are changing the meaning of English words. If you’re saying it’s not a burden for me to have to pay an outsider some of my money, then what does ‘burden’ mean?
STEVE: I think you could benefit from a lecture on Peano Axioms.
BOB: (dialing furtively)
STEVE: Who are you calling?
BOB: Uh, a pizza.
STEVE: No you’re not, that’s long distance. Who are you calling?
BOB: (sighs) Yoram Bauman.
STEVE: ?!?!
BOB: I’m going to see if he’ll contribute to my plot to blow up your blog host. Yoram doesn’t strike me as selfish, so I think he will.
STEVE: That’s the most idiotic thing I’ve heard in a while. How would paying to hurt me, be an act of altruism?
BOB: I don’t know, but Yoram will.
(Curtain.)
Iowa Is Very Important, Unless Ron Paul Wins
This is funny. You don’t even have to be a conspiratorial Paulbot (or -tard, or whatever) to make this leap: They are actually saying it themselves. In that respect, the clips from 2008 are superfluous.
Potpourri
I’m still buried with “day job” work, but at this point I have so many tabs on my Firefox browser that it’s slowing me down. So this post is an investment in my future productivity, see.
* Glenn Greenwald once again delivers a very fair assessment of the political culture. It’s really impressive that GG is so honest about Ron Paul even though GG totally opposes his economic views. I am going to return the favor and defend Krugman from John Cochrane, Scott Sumner, Robert Lucas, et al. when I get caught up with my work. (Seriously, somebody remind me if I forget to do it.)
* Don’t ever get on Steve Landsburg’s bad side.
* John Papola makes fun of Keynesians at Forbes.
* I am going to come back to this when I have more time (again, remind me if I forget), but wow Nick Rowe totally turned my head around on this “burdening our children with the national debt” stuff. I actually thought Krugman was totally right (insofar as he went) by saying that the government debt per se isn’t a burden on future generations, because (I reasoned) it merely involves a subset of our grandchildren making bond payments to another subset. The real burden of the debt, I had thought, was that it reduced private investment in our generation, and so we bequeathed fewer capital goods to our grandkids. However, Nick Rowe (linked by Boudreaux) gives a counterexample involving no physical saving at all, just transfers of apples in a pure endowment economy. My fragile little mind is still recovering from the paradigm shift. (I got the Boudreaux link from Daniel Kuehn, btw.)
* Sorry I can’t remember who sent this, but it’s pretty funny. Don’t try checking into a hotel without a credit card, you freak.
* Speaking of which, does airport security keep us safer? BTW I can vouch that this writer is truly an expert in this area.
* Tom Woods continues to push his radical agenda.
* John Carney tries to make peace with the MMTers. Be careful, John. They are a merciless bunch. (Sorry but I can’t comment more on it right now.)
* My cousin sends some funny Bernanke quotes. Most of these I’ve seen before, some I haven’t and are shocking, but unfortunately when I click the link on those ones, I can’t find the actual quote. So take with a grain of salt.
* In Barron’s I review Robert Frank’s book. If you’ve been reading EconLog, you’ll see that David R. Henderson and I are of the same mind on this. I’m pretty sure I didn’t just steal his critique. (If I had read him before I wrote mine, I think I forgot it.)
* Leah Farrow (not Mia Farrow), a host from the podcast “Liberty Belles” decides to tackle an age-old question: Why was it so hard for me to get a prom date?
* Some anti-Bernank artwork to bring joy in the New Year.
* Finally, if you haven’t seen it yet, check out the second cartoon in this Economist article on hetero economists. (See what I did there?) Also, if you wade through the people giving me free advice on my gut, there’s this guy John at Wenzel’s blog pointing out that I’m actually not punching Krugman in the cartoon. Upon further review, I think he’s right.
Newt Gingrich Soft on Conventional Murderers and Bank Robbers
That’s the only thing I can conclude from this video.
In Defense of the Mises Institute
A while ago I was a signatory to a truce between (for lack of better terms) the GMU Austro-libertarians and the Auburn Austro-libertarians. I pledged that not only would I not engage in conflict escalation between the two camps, but that I wouldn’t even make any internet comments that would likely induce others to do so.
Partly because of this pledge, and partly because I thought my observations would be obvious, I haven’t said anything thus far about the Ron Paul newsletters. But lately the attacks on the Mises Institute and Lew Rockwell have gotten so stupid, that I must speak up. Let me warn you in advance: I am not going to allow comments on this post, the first time I have (intentionally) made such a decision. (I’ve done it plenty of times by accident in the past…) I trust longtime readers know this isn’t because I’m afraid of criticism either of me or even people on “my side,” but rather that I know with near-certainty that the comment thread on this particular post would be nasty, brutish, and long.
OK so here goes:
#1. Anybody who refers to the Mises Institute as an anti-Semitic, racist, or homophobic institution doesn’t have a freaking clue what he is talking about, and I’d bet hasn’t been to the Institute anytime in the last ten years.
I have been attending the Mises Institute’s summer program, either as a grad student or as a lecturer, since (I think) 2000. I have to think that since then, there have easily been more than 1,000 undergrads who cycled through its Mises University. Shouldn’t there be all sorts of eyewitness testimonials to the crude jokes, lynchings, etc. in which we engage, if bigotry oozes out of the Institute? And yet, I’m not aware of any such thing.
Don’t get me wrong, there are plenty of people who will tell you on Facebook or their blogs that the Mises Institute is racist/homophobic/whatever. But when you ask for specifics, they’ll cite the newsletters, or a single footnote from Hoppe’s book on Democracy, or will say that Hoppe in a class in Nevada (not at the Institute mind you) used a particularly ill-chosen example to illustrate time preference, or (my personal favorite) will explain that one time, Hoppe invited a guy to his conference in Turkey, who wrote a book that was clearly bigoted (though his talk at Hoppe’s conference had nothing to do with said book). Nobody to my knowledge has ever said, “Yeah, once I was at a Mises event and Peter Klein got up and started bashing gays.” The reason is that nothing like this ever happens.
You know this doesn’t happen in the main lectures; they are all online for the public’s inspection. But it doesn’t happen either in the informal discussions, or even when we’re hanging around drinking (when you’d think the bigotry would flow freely). I am thinking back over the last 11 years in which I’ve gone down there, and I can think of one remark that a lecturer made–at the bar after getting alcohol in him–that many people would construe as racist. Also, I didn’t hear this firsthand; I heard someone else say he said it, so I don’t even know if the charge is true. (In contrast, I’ve been visiting my parents’ retirement village in Florida for the last two weeks, and have heard three racist comments already.)
There are black students who come back repeatedly to the Institute, and there are openly gay people associated with it. I guess they didn’t get the memo, or are blind to what we’re “really about.”
Seriously, what do these critics think? How are they actually imaging that things go down? At lunch, do Roderick Long, Mark Thornton, and I sit at a table in the corner with our fingers in our ears, while everybody else talks about how much they hate fruits and coloreds? This whole thing is so stupid I can’t even believe it.
Yes, we rip on people after hours when we’re drinking, but it’s free bankers. Yes, I imagine some people feel uncomfortable at the “atmosphere” we put out, but it’s minarchists.
To switch back to being serious: When I was still a grad student, and spent summers down there doing research, two events are worth relaying. First, there was a female student studying there who complained to me that some of the other students were telling a lot of sexist jokes in her presence. I told her that knowing the guys in question, my guess was that they had no idea she was offended, and that the phenomenon was partly because the guys felt they could “speak freely” without fear of getting sent to a PC reeducation seminar as would happen at their own colleges. However, I said if it was bothering her she should say something to the LvMI staff. So she did, and then like the next week (I think, I don’t remember the exact timing) the Institute made us all sign a contract saying we would be respectful to the Auburn University and hotel employees, some other stuff, and that we wouldn’t say anything that would be offensive to other students attending Institute events. This made some kids (forced to sign this contract) complain that it was “unlibertarian,” and I pointed out that no, it was the Institute’s private property, duh. So there’s yet another example of how awful the Institute is, making attendees sign a contract promising not to offend other attendees.
Then another thing I remember is that I said early on to Lew Rockwell that I thought some students might get the idea (even though nobody ever said this) that they would get in trouble if they criticized Rothbard. I don’t know if my comment had anything to do with it, but at the next Mises U I noticed that Hans Hoppe of all people, in the opening lecture, told everybody that although he (Hoppe) had been friends with Rothbard and thought he was an amazing scholar, even so he thought Rothbard made mistakes occasionally. So, Hoppe encouraged us to ask questions if we thought the faculty were saying things that were wrong, or if Rothbard had been wrong on something they were teaching. Some cult, huh?
Speaking of criticism, the first summer I spent down there, I guess I was trying to prove I was tough or something, and I decided that I would write a full-scale critique of Guido Hulsmann regarding cardinal/ordinal utility and mainstream representation theorems. Because of the warnings some “GMU camp” (not actually from GMU) people had given me before I descended into the fever swamps of Auburn, I actually was worried they were going to revoke my funding and send me packing. But no, Guido called me into his office and we debated it for a long time, and Jeff Herbener and I must have had at least 3 lengthy email exchanges on it. I didn’t change their minds (and they didn’t change mine), but it’s not like the Institute purged me for that–they’ve since run one or two articles from me, you may have noticed.
#2. The charge that Lew Rockwell is hurting Ron Paul’s election chances by his cowardly refusal to acknowledge authorship of the newsletters, is arguably the stupidest claim I’ve heard in 2011.
Let’s state the obvious: There were some pretty shocking things in those newsletters, and I wish they never got published, so that we wouldn’t be having this conversation right now. Having said that, let me point out that most (not all) of the offending passages were jokes in very poor taste. Furthermore, to call a black politician “Barbara Morondon,” or to say Martin Luther King Jr. was a plagiarist who “beat up his paramours,” isn’t actually racist. It’s mean, and it would appeal to racists (duh), but strictly speaking, a lot of the things being quoted to show how racist Ron Paul’s ghostwriter must be, actually aren’t racist.
OK but put that stuff aside; I’m certainly not here to defend the statements themselves–Ron Paul himself has repeatedly disavowed them. What I am here to do, is to point out how stupid one of the charges floating around about Lew Rockwell is. Specifically, the charge goes that Rockwell is hurting Ron Paul’s candidacy because he (Rockwell) is unwilling to take responsibility for writing those things.
Here’s the problem: By their own admission, these critics think this newsletter business was a conscious strategy to appeal to the bigoted fringe. Indeed (depending on the critic), the Mises Institute only exists to cater to these people. So why would Rockwell be afraid? Shouldn’t he be like Jack Nicholson in A Few Good Men, saying, “You’re damn right I ordered the Code Black!”
That’s what’s so ridiculous about this whole thing. On the one hand, people criticize Rockwell for his non-stop, throw-decency-to-the-winds promotion of Ron Paul. They also say Rockwell caters to racists. And yet, a lot of these people are also saying Rockwell is unwilling to admit he wrote racist things, even though by doing this he would help Ron Paul.
Lew Rockwell himself has denied that he wrote the newsletters. I can’t seem to find the quote, but he said something along the lines that the actual author is no longer with us. So here are two general theories to explain the current situation:
(A) Lew Rockwell didn’t write the newsletters, and doesn’t want to throw his dead associate under the bus because he knows full well this won’t do anything to satisfy the hyenas.
(B) Lew Rockwell wrote the newsletters, knows that if he fesses up, it will help Ron Paul’s campaign, but nonetheless remains silent because Lew Rockwell is the kind of guy who really cares what others think about him, especially people who are very concerned about showing sensitivity to minorities.
I’m not saying (A) and (B) exhaust all possibilities, but of those two choices, which do you think is more likely?
Last point: Just do a forensic analysis. Does Lew Rockwell crack jokes in his writings? When he’s on the radio being interviewed, does he crack jokes? No, he’s as serious as cancer. So just the style of those newsletters is nothing like the official Lew Rockwell material, at least since I’ve been following him in the last dozen or so years.
All right, Happy New Year everybody.
The Laureates Need to Give More After-Dinner Talks
Tony sends this astounding video. Thinking that maybe the person who cut it up was being unfair to recent economic Nobel (Memorial) laureates Christopher Sims and/or Thomas Sargent, I watched the second video, which isolates Sargent’s full reply. (I didn’t see a link for Sims’ full response.) Uh, it’s not pretty.
Let me repeat: Every economist needs to start coming up with his alibi, so that when the government collapses and angry mobs begin stringing people up, he can say, “Huh? I’m not an economist. I’ve been cutting hair for the last three years, since I got laid off from GM. You wanna see my setup in the garage?”
European Bond Bask
Krugman is at it again, arguing that the (now visible) bond vigilantes who are attacking Europe aren’t doing so because of excessive government borrowing. Rather than this being about too much debt, it’s about governments not being able to borrow in their own currency. So I have two questions:
(1) For people who think this is basically right, how do you explain the progression of the crisis in Europe? It didn’t start with Germany or France, and then bounce around. No, it started with the country everyone–even Krugman–acknowledges was fiscally irresponsible, Greece, and then it started spreading to the other governments that were also in objective (fiscal) trouble. It was only fairly recently that the crisis spread to governments that have relatively low debt-to-GDP ratios. So why should the crisis have developed in this fashion, if this is a story about currency areas and not government profligacy?
(2) Can anyone dig up data on corporate bonds in the countries in question, so that we can look at (say) what happened to the spread between government and major corporate yields in various European countries? It would also be good to look at the spread between corporate yields across countries. (Part of where I’m coming from is that the German government might be in trouble now, because it is on the hook for the ECB’s foolish commitments to bailing out the PIIGS. In contrast, major corporations in Germany wouldn’t be affected nearly as much, so their yields shouldn’t have spiked as much as German sovereign debt did recently. But if it’s just a matter of currency, then obviously every entity in Germany that issues debt should have been affected the same. Or another way: Krugman likes to show that euro governments see their interest rates going up, while non-euro governments have rates that are falling. OK, does the same thing hold for the corporations in those countries?)
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