Consulting by RPM || Free Advice Blog

“I.e.” versus “e.g.”: I’m Huge

Some of us like to judge all of you by whether you correctly use “i.e.” and “e.g.” I’m not telling you to change your life just to please us, I’m just stating a fact. Here’s the distinction:

I.e. ==> “in other words”

E.g. ==> “for example”

So this line from a student essay is funny:

Austrian economists, i.e. Murphy, believe that the interest rate is actually a type of price.

I don’t think the student was suggesting that I was synonymous with Austrian economists. Or was he?

It’s Almost Heeeeere

The Night of Clarity is just around the corner–a week from Friday! I just drove downtown to see my man Joe the bouncer at Lonnie’s. He knows what the deal is and will take care of us. I am not exaggerating, you have not seen karaoke until you’ve seen Nashville karaoke.

Reservations are still coming in daily. If you are hemming and hawing, you need to act quickly because hotel space is limited because of the May flood. (Our hotel is fine physically, but the Opryland got crushed by the flood so Nashville’s overall hotel capacity is down for a few months.)

Carlos and I feel like we’re throwing a wedding. Today I just ordered some of Richard Ebeling’s books to have on the display table. Today 3,000 flyers went out to Nashville insurance agents and other financial professionals. We are going to introduce a whole bunch of people to Austrian economics next Friday.

So if you’re within driving distance–and that includes Auburn, which is only 6 hours or so away–come join the party.

BP, the Board Game

It’s not an Onion article, this is apparently real (HT2 Sam T.):

The game was developed in the ’70s, hoping to give players “the thrills of drilling,” along with its “hazards and rewards”.

Nearly 40 years later, life is imitating art.

Look familiar?

The only things missing are artistic renderings of dead pelicans and oil billowing out of the ocean floor.

The article says the game allowed four players acting as “would-be tycoons” to compete for oil, “building platforms and laying pipelines to their home countries.”

Apparently not many of the BP games sold.

Oh, really? I can’t imagine why.

Who wouldn’t want to “lay pipe” instead of play Battleship, Risk, or even The Game of Life?

Speaking of the game of life…

In what may be the most ironic part of the story, “Offshore Oil Strike” reportedly included “hazard cards”, like one which says “Blow-out! Rig damaged. Oil slick clean-up costs. Pay $1 million.”

Another Krugman Kontradiction?

Free Advice reader Matt Flipago tips us off to this Paul Krugman appearance on the Colbert Report. Start it around the 4:00 mark, and you will see Krugman explicitly say that the Great Depression was ended by the federal jobs bill public works program known as World War II.

Forget the sheer horror / craziness of that view; after all, most people think that, so we shouldn’t hold Krugman to a higher standard than the cashier at Starbucks. What is infuriating about this, is that when Robert Barro ran regressions to measure the multiplier of government spending during World War II, here is what Krugman said:

As I’ve already pointed out,the prospect of a Keynesian stimulus is having a weird effect on conservative economists, as first-rate economists keep making truly boneheaded arguments against the effort.

The latest entry: Robert Barro argues that the multiplier on government spending is low because real GDP during World War II rose by less than military spending.

Actually, I’ve already taken that one on. But just to say it again: there was a war on. Consumer goods were rationed; people were urged to restrain their spending to make resources available for the war effort.

Oh, and the economy was at full employment — and then some. Rosie the Riveter, anyone?

I can’t quite imagine the mindset that leads someone to forget all this, and think that you can use World War II to estimate the multiplier that might prevail in an underemployed, rationing-free economy.

Now as (almost) always with Krugman, this isn’t quite a literal contradiction. But note what Krugman is doing: He wants to take credit for WW2 military spending in ending the Great Depression. Robert Barro then looks at this period and actually runs neutral econometric analysis, and finds that the measured multipliers on government spending in this “classic” example of a pump-primed recovery, are much lower than the numbers being used by the Obama administration (and Krugman) when discussing the benefits of stimulus today.

In response, Krugman goes nuts at such boneheadedness and can’t understand why anybody thought World War II was supposed to be an example of the economic benefits of stimulus spending.

Now on Colbert, when asked why the government should extend unemployment benefits for purely economic reasons (i.e. not to alleviate suffering), Krugman matter-of-factly says it’s because that’s how we got out of the Great Depression.

Again, this isn’t quite a contradiction–Krugman could say, “Yes it ended the Depression but the measured multiplier was lower than it would have been in peacetime”–but that’s a pretty subtle distinction to use when calling someone else a bonehead. And of course, the whole point of Barro’s empirical exercise was to subject the Keynesian model to a fact-check. Krugman can simply assert that government spending would have a bigger effect without government rationing etc., but that’s the result of his model; Barro’s model would say the opposite. So Barro was trying to introduce some actual evidence (this is the point that Tyler Cowen made on their debate).

I am not making this up–and if any Keynesians are reading, please correct me–but Krugman et al. cannot point to A SINGLE EXAMPLE of a successful, demand-priming episode of government spending. In contrast, the pro-austerity economists can point to at least a handful of cases where cutting the deficit led to econometrically measurable growth. That doesn’t prove anything, of course, but it is very ironic in light of how “scientific” Krugman et al. think they are.

Last point: If you want to see (in my opinion) the most succinct demolition of the World-War-II-ended-the-Depression argument, check out my book.

Edward Gonzales Interview

Edward Gonzales–who has written here on his economic lessons learned as a Marine in Iraq–is being interviewed tonight at 6pm PDT. Here is the link to the Internet radio show.

When Will Krugman Achieve Zombie Parity?

About twice a day I have been checking the YouTube views for the Krugman video versus the zombie interview. At first it was about 0.001%, but now it’s up to about 9%. Sorry Tom, my time advantage (2:22 vs. 8:18) is unstoppable. Resistance is futile.

(Incidentally, the YouTube views don’t catch it when people embed it in their blogs, right? If that’s right, then a ton of people have seen Tom’s video already.)

Some Surprises for the Renaissance Man

(Tom Woods has referred to me as a Renaissance Man, because of my ability to procrastinate on several fronts.)

Naturally, I was hoping the zombie and Buckinghams’ performances would draw accolades. But I was expecting people to say, “That was hilarious!” or “Good job!” I was not expecting the supreme compliments of, “Who did you get to sing that?” and “Have you seen Tom Woods’ zombie video? It’s hilarious, here’s the link.” (I just got the latter today in my inbox.)

Of course, there are always unintended consequences. In Panera the other day, my 5-year-old out of the blue starts yelling in a monotone voice: “Neo-Confederate!!” Then he explained that I had no brains in Auburn, something that many people at the Mises Institute hear from their critics.

Dean Baker vs. Murphy, Rematch

In our NPR radio debate (last Easter), Dean Baker held his own. I still think his Keynesian nostrums were wrong, of course, but I admit I didn’t deliver a knockout punch.

Things don’t look so good for Dean when we grapple in print. In my ledger, my record is 1-0-1 against Mr. Baker. An excerpt:

So I don’t really see how this history is supposed to reassure us. The people who are saying that Social Security is broke are warning the public that we will need to either suffer a payroll tax hike, or deal with a reduction in promised benefits, or both. Dean Baker then comes along and says that’s nonsense, because we’ve been in this situation before, and we solved it — by raising taxes and cutting benefits.

Before leaving the Baker quotation, let me make one last observation: He is simply wrong when he says that NPR’s Marketplace isn’t as solidly funded as Social Security. When the CBO report says that Social Security can continue making its scheduled benefits payments for the next 34 years “with no changes whatsoever,” that figure still assumes that the payroll taxes continue piling in.

When Dean Baker rhetorically asked his question, “Can Marketplace Radio pay all its expenses for the next 34 years?” he led the reader to believe that the trust fund has 34 years’ worth of benefit payments stockpiled. But of course it doesn’t have that much. To repeat, the CBO projections show that the annual shortfalls between outgoing benefit payments and incoming Social Security tax revenues will eventually whittle away the trust fund to nothing by the year 2043.

So the analog for Marketplace Radio is not, “Do you guys have 34 years’ worth of expenses saved up in the bank?” No, the proper analog would be, “Do you have enough assets right now to cover any projected operating deficits over the next 34 years?” Since I assume Marketplace Radio is not filing for bankruptcy anytime soon, their answer would be, “Yes, Mr. Baker, of course we do. That’s why we’re solvent and we’re allowed to stay in business.”

In contrast, the Social Security System as currently configured is insolvent. The present value of their expected revenue stream is less than the present value of their expected expenses. That’s what it means to be bankrupt.