Consulting by RPM || Free Advice Blog

Jon Stewart vs. Paul Krugman

I had to dig this up for some people who hadn’t heard of it. Thought I would share (again) with you folks.

“The fraud of classical liberalism”

I always like to skim articles like this to see how someone could come up with a title like that. In my (obviously defensive) reaction, I would say the author points to things that are clearly not consistent with classical liberalism–like using armies to engage in “free trade”–or he is simply mistaken about historical causality–like blaming the Great Depression on the gold standard.

However, this is surely what a true socialist thinks when reading a libertarian author who documents the horrors of explicitly socialist regimes. So, are we both at fault? Or do I get to say “That’s not what my philosophy entails!” but the socialist doesn’t get to disavow Pol Pot?

Two Interpretations of Jesus’ Atonement

This is intended for believing Christians, and perhaps even there will only interest Protestants. I was working through different interpretations (coming from professing Christians) on the same stipulated events from Biblical history. I should stress that both sides can point to ample scriptural evidence for their perspective, and yet they paint quite different pictures of the nature of God.

Note that I am going to exaggerate the interpretations in order to bring out their contrast. Obviously in reality, most Christians would not be purely one or the other. And in fact, the resolution of this might be that both sides are stressing certain features of a very complex reality.

Interpretation A

Adam and Eve committed the Original Sin in the garden of Eden. The wages of sin is death. God Himself had warned Adam that if he ate of the tree of knowledge, he would surely die.

Since Adam and Eve sinned, humanity was cursed. God is a just God, so He couldn’t just overlook sin. He needed to punish it. However, God poured His wrath out on Jesus, who took our place on the cross.

A good analogy for this perspective is that God is a judge who announced to a defendant that he owes a billion dollars because of his crimes. The defendant cannot possibly pay this amount. The judge wants to show mercy on the man, but the judge is just and can’t simply overlook the law. But then the judge’s own son volunteers to pay the fine for the man, so that justice is served, but the guilty defendant is saved by the innocent son.

Interpretation B

I’ve previously discussed a whole sermon from John Crowder critiquing the above perspective; here’s a blog post I found while searching for stuff just now. Here, let me just summarize some of the pushback:

Would you punish your kid in order to satisfy your own wrath at somebody else’s kid’s crime? So are you saying God is a worse parent than you? Does God the judge really not care about tailoring the crime to person who committed it?

After their sin, Adam and Eve hid from God. He went out looking for them. It wasn’t that they were in close union and then He expelled them because of their transgression.

Paul actually writes, “Once you were alienated from God and were enemies in your minds because of your evil behavior” (my emphasis).

God didn’t kill Jesus, we did. Yes, of course that event was a crucial part of His plan for our salvation, but it doesn’t seem to have the same flavor as (say) God using His “servant” the King of Babylon, let alone God ordering Joshua to wage war in His name, in order to effect divine retribution. It was more akin to God using the quite conscious crime of Joseph’s brothers to achieve good. (I.e., it’s not that the Roman soldiers who nailed Jesus to the cross thought they were carrying out God’s wishes.)

So we see God willing to allow this horrible thing to happen to His Son *if it would help*, but why does it help? It’s not because “God needs to see somebody die, and He doesn’t care who it is, just as long as there’s some bloodletting.”

Rather, *we* need to believe that we are truly forgiven. If Jesus can endure that and still ask His Father to forgive those who had just tortured Him and nailed Him to a cross, then there’s nothing you did that is unforgivable. It’s arrogance to think you’re worse than David, Peter, Saul and the sins they committed.

Murphy Magic

Some of this may be repeats, but I haven’t posted my stuff in a while and need to catch up…

==> Ep. 49 of the Lara-Murphy Show covers Chapter 2 of our new book, The Case for IBC.

==> Ep. 50 of the Lara-Murphy Show is a bonus episode, featuring my remarks at the Yale Political Union debate on climate change. At the link, I give highlights in case you are pressed for time. (Note, the audio isn’t great, but if you give it a chance you can adapt and tell what I’m saying.)

==> A recent post at IER: “The Gas Tax Has Little to Do With Road Costs”

==> Contra Krugman ep. 129 is about tariffs (and a fun clip from Jesse Jackson).

==> Contra Krugman ep. 130 is about Robert Reich.

==> On the Tom Woods Show, I debate against MMT.

The “Calculation Problem” and “Knowledge Problem” Are Distinct

I know there is some bad blood on this topic, but I am being sincere in my praise for Hayek. Anyway:

Mises and Hayek were both brilliant economists who made numerous contributions in the Austrian tradition. Yet is inaccurate to refer to “the Mises-Hayek position” in the famous socialist calculation debate, and to do so obscures the Misesian understanding of calculation, which is necessarily monetary calculation. Although scholars should always take care to exercise courtesy in their assessments, it is proper to disentangle distinct arguments that are sometimes lumped together.

The Worthy King

I’m sharing this on a Tuesday because I was traveling and don’t want to keep missing my “Sunday” posts…

In church, because of the lyrics of a song we were singing, I started thinking about the character of Jesus. (If you’re not a believer, you can still appreciate the “character of Jesus” as depicted in the gospel accounts.)

After the Last Supper, when a mob came out with clubs and swords to take Him into custody, Peter intervened with his own weapon in a misguided attempt to save Jesus. (Of course, Jesus saves Peter, not vice versa, in the grand scheme.) Everybody knows the famous line when Jesus says to Peter, “Put your sword back in its place, for all who take up the sword die by the sword.” (This has been adopted by popular culture as “live by the sword, die by the sword.”)

However, as I stressed in this essay, what Jesus said next is incredibly intimidating. He continued with Peter: “53 Do you think I cannot call on my Father, and he will at once put at my disposal more than twelve legions of angels? 54 But how then would the Scriptures be fulfilled that say it must happen in this way?”

As I commented in that essay:

Do you understand what a bad*ss Jesus was? He had the option of calling down heavenly slaughter upon His enemies, but refrained from doing so, electing instead to let these ignorant fools mock Him and torture Him to death. And why? Because that’s how much He loved them. That type of moral strength should make your jaw drop.

Now, was Jesus a sucker? Did people take advantage of Him? Did He not know how the world really worked? Did He not know what you had to do to “get ahead in life”?

Now what really struck me in church this week, wasn’t the stuff about the twelve legions of angels, but the line that came right after it. Jesus didn’t say to Peter, “Oh, I have to be arrested, tortured, and murdered, because otherwise humanity is lost.” No, instead His argument was that this needed to happen to fulfill the Scriptures. If God said it through His prophets, then it was going to happen, end of story. To suggest otherwise was talk from the devil. It’s always impressive if someone is willing to endure torture and death for a cause, but when the cause is, “The fulfillment of the Word of God,” it is extra admirable.

Just to top it all off, when Jesus was dying on the cross, it occurred to Him to look up to heaven and say, “Forgive them Father, for they know not what they do.”

As Bob Dylan says, you’re going to have to serve somebody. If you think you don’t serve any man (or woman), you might be right, but Dylan elaborates: It might be the devil, or it might be the Lord–but you’re gonna have to serve somebody. I choose the Lord.

Fun With Graphs! Murphy vs. Erdmann

I don’t want to put too much stock in this post. My main point is to demonstrate that you can tell just about any story you want, if you play with FRED long enough. This is why Russ Roberts asks people when they present their slides showing p-values: “How many regressions did you run before you got this result?” (He talks about that in this interview.)

Anyway, in the comments of a recent post here, Kevin Erdmann rushed to defend the honor of Scott Sumner. Erdmann challenged my view (which is actually close to the conventional wisdom) of what happened with the housing crash. Among other points, he presented the following chart and commentary:

[Kevin Erdmann talking about the above:] “The funny thing is, if you look at Phoenix – the quintessential bubble city – construction and non-construction employment also both start to drop at the same time in mid 2006. And, in Phoenix, where you might think the drop in construction should have led the collapse, the drop in non-construction employment was actually a little sharper than the drop in construction employment.”

You can stare at Kevin’s chart for a bit and see if you follow his argument. (If you see Elvis, you’ve been staring too long.) Make sure you look at the units he uses.

OK, great. Now I’ll take the same variables Kevin chose, but I’ll pick different units. That gives me this picture:

I would argue that my picture corresponds pretty closely to the conventional wisdom on this one. Construction employment (expressed as an index, since after all there are way more total jobs than simply construction jobs) spiked and tanked far more severely in Phoenix than general employment. Contrary to Scott Sumner’s interpretation, you can clearly see that the collapse in construction employment slowed the rate of growth in total employment and “pulled it down”–it wasn’t that these construction workers were easily absorbed into other sectors, so long as the Bernank kept NGDP humming. (That was Scott’s theory, when he was looking at the stats on new housing starts.)

Before closing, one thing I’ll admit: I had expected the national unemployment rate to lag the Phoenix one, and that isn’t apparently correct. (It’s not on this chart I’m showing you–I wanted to just use Kevin’s variables–but I added it on my other browser tab to see.) So that might be a feather in Kevin’s cap.

Last point: Kevin says in his comment, “Yet, something caused all of that job growth and migration [in Phoenix] to suddenly break down in mid 2006.”

This observation is way more consistent with the Austrian story, than with Sumner’s story. According to Sumner, everything was fine until a self-fulfilling prophecy occurred in 2008, when the markets suddenly expected the Fed to fall asleep at the wheel and let NGDP growth collapse. The Fed said “Yep that is indeed what we’re going to do,” and then we had the worst recession since the 1930s, for no other reason than that the Fed stopped paying attention to TIPS yields. There was no “real” “structural” problem in the economy that would have required a recession. (Of course I’m somewhat caricaturing Scott’s position to make a point, but this isn’t made up.)

In contrast, the Austrian story says that the Fed slashed rates after the dot-com crash, brought them down to 1% by June 2003, held them there for a year, then started raising rates from June 2004 onward. So yeah, I agree that “tight money” caused the crash, but not in the way Scott means.

Note also that our disagreement on this is similar to how Krugman thought he blew me up (story here) by pointing out that central banks can influence the business cycle. Right, that’s key to the Austrian theory. Monetary disturbances cause malinvestments–setting in motion an unsustainable inflationary boom–which then necessitate a bust for “real” reasons. The Austrian theory is neither purely demand nor purely real.

Potpourri

==> The latest Contra Krugman tackles Modern Monetary Theory (MMT).

==> Wendy McElroy writes about privacy and the (modern) connection to cryptocurrencies.

==> A few people on Twitter were giving me a high-five for my old article on trade deficits and fiat currency. I re-read it and thought, “I agree. That *was* a good article.”

==> Hey kids, don’t let me forget: Check out Don Boudreaux’s pushback against Scott Sumner, on the issue of whether the people in a country have to “pay back” trade deficits. I think this is a really interesting issue, and I see where both Scott and Don are coming from. (I mean, they’re both coming from Fairfax, but you get what I’m saying.)