Porc Fest: It’s on Like Donkey Kong
OK I just bought my plane tickets so it’s official: I’ll be at “Porc Fest” from Wednesday the 22nd through Sunday. Details of the event are here. I am doing (I think) at least one event per day, and I believe karaoke night is Wednesday. I hear Dan D’Amico, Roderick Long, and Stefan Molyneux will also be there. (I’m going to try to interest them in a Bible study.)
So come on up before we all go to jail. It will be a story for your grandkids.
In Economics, Believing Is Seeing
On NPR today there was a market commentary by some guy from Wharton. Early on he said something like, “We’ve been in this recession for so long, it’s clear that the economy is not going to just fix itself.” Then he went on to call for more stimulus.
And people make fun of Mises for saying economics is an a priori science.
Murphy on FreedomWatch Tonight
It’s a pretty quick hit, talking about the government acting like a household. MMTers are sure to enjoy it.
My Victory Over Krugman Is Complete
He endorses privatizing the military today at his blog. Clearly he has been reading my stuff. The truth is irresistible.
Rules Are for Suckers
Glenn Greenwald has an interesting post titled, “The War in Libya Growing More Illegal by the Day.” I was curious what he could mean by that, and was surprised to learn:
To the extent that the War Powers Resolution (WPR) authorized President Obama to fight a war in Libya for 60 days without Congressional approval — and, for reasons I described here, it did not — that 60-day period expired 12 days ago. Since that date, the war has been unquestionably illegal even under the original justifications of Obama defenders, though I realize that objecting to “illegal wars” — or wars generally — is so very 2005. After making clear that they intended to contrive “some plausible theory” to justify this illegal war, the White House finally settled on the claim that the war in Libya — despite featuring substantial U.S. military action with the goal of destroying a foreign army and removing that nation’s leader — is too small and limited to be a real “war” under the Constitution and the WPR.
Even the White House seemed to recognize the absurdity of that excuse — the WRP explicitly applies “in any case in which United States Armed Forces are introduced (1) into hostilities” — and the President thus subsequently requested a Resolution from Congress approving the war. That authorization, however, never came…
Also, GG has a neat post summarizing the budding anti-war alliances among the “far” left and Tea Party right in Congress.
Condensed Murphy Testimony vs Kucinich
OK thanks to Steve Miller (who’s going to dance, dance, dance now that his chores are all done) for compiling my recent testimony down to 11 minutes and change. So if you were waiting for it to come out on DVD, here ya go:
The exchange with Kucinich (on whether the Fed should be transferred under direct Treasury control) is about 2/3 through it.
Our Continuing Slump
[UPDATE below.]
What?! In this article I actually claim that the Austrians have held their own against the Keynesians when it comes to steering through the choppy waters of the housing boom and now bust. I imagine Daniel Kuehn and some of the other frequent commenters here will not agree.
One thing that I didn’t realize until recently involves this:
Now, it is true that Krugman (and Mark Thoma) were warning by this point that such an amount wouldn’t be big enough. But go look at Krugman’s analysis at the time. His point was not so much that the Romer team’s numbers were wrong (though he did think their projections of what would happen without the stimulus were very optimistic). Rather, he was saying that on their own projections, they weren’t anywhere near to closing the “output gap.”
For the full details, go check out my article. But what I’m saying is that I’ve been conceding too much to Krugman for lo these many months. He actually wasn’t saying, “We need to spend more, because the economy is worse than Romer et al. realize.” Rather, he was saying, “Even on their own numbers, they aren’t getting the job done, so I don’t understand why Romer et al. aren’t proposing a bigger stimulus package.”
To be fair, Krugman does say that he thinks the economy is worse than they do. But it doesn’t look like he’s anywhere close to predicting what actually happened, after the stimulus kicked in. So I have no problem saying that Krugman was caught flat-footed by how bad things got, after the stimulus kicked in, just as Romer & Co. were. But hey I’m open to debate on this point…
UPDATE: Wow I see Daniel Kuehn has already thrown up his hands in frustration. This is a crucial point so let me quote him and explain my position:
[W]hat exactly is Bob under the impression the “output gap” is? That is a proclamation that the estimates are too rosy, is it not? And what’s this talk about Republicans? Nothing Bob links to seems to mention Republicans at all. Certainly Krugman and others were worried that Republicans would scuttle the stimulus, but from the beginning the complaint was that this wasn’t enough – that it would help but we would still have high unemployment. How Murphy gets this: “Therefore, when it comes to the effects of the “stimulus” package, the free-market economists (including the Austrians) were right, and the Keynesians were wrong” is beyond me…
OK here’s the deal: Romer’s team said, “If we spend $787 billion [or however they scored it, that’s one estimate that was prevalent at the time], then unemployment will peak somewhere around 8 percent and then come down gradually over the the next few years. If we do nothing, unemployment might get as high as 9 percent.”
Of course, in reality what happened is they passed they stimulus and we got unemployment higher than 10 percent–worse than Romer et al.’s “do-nothing” scary scenario. So as other Austrians and I were pointing out as this occurred, “What more could possibly happen to discredit Keynesianism?”
Now the standard response from the Keynesian camp is to say, “We were wrong in the baseline forecast of how bad things would get. The stimulus still helped, but it kept unemployment at 10 percent instead of hitting 12 or 13 percent. And anyway, Krugman was saying from the get-go that unemployment was going to be too high, even with the stimulus. So he nailed it, it’s just some other Keynesians like Romer were off on their baseline.”
This is the point I’m criticizing. Go look at Krugman’s analysis at the time. When he was urging them to spend more, his main argument was that Romer’s own numbers showed unemployment well above the “natural” rate for at least three years, i.e. actual GDP would be well below potential GDP for at least three years. So Krugman was asking, “Why are we settling for an incomplete package? Why not propose spending that will actually close the output gap in a reasonable amount of time, before the Republicans can discredit the stimulus?”
So yes, to answer Daniel’s question, I do know what he means by an “output gap.” And Krugman was telling everybody that Romer’s own projections showed there would still be a sizable gap 3 years out.
If you want to make the point that Krugman knew the economy itself was worse than Romer et al. did (as of January 2009), then all you’ve got are two sentences from the one blog post where he says he thinks Romer et al. are being very optimistic on their ex-stimulus projections. Yet even there, look at the numbers he throws around. It doesn’t look to me like he had any idea unemployment would break 10 percent even with the stimulus. But I’m open to debate on that.
What is clear, however, is that Krugman’s main argument for spending more, was that Romer’s own projections showed unacceptably high unemployment for years. He wasn’t saying their baseline was wrong, and gosh they’d better spend more because of that mistake.
Tom Woods Hits It Out of the Park
Several people had been praising this particular speech, and I thought, “Great, so Tom gave a good speech. He always gives good speeches. Why would I bother listening to this one?” Well I’m glad I did, and not just because he talks about me in the beginning.
All joking aside, this gets really awesome by the end. If you’ve got 48 minutes, I highly recommend it.
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