More Evidence on That Class Act, Brad DeLong
UPDATE Below
Readers may recall my brush with greatness when Brad DeLong decided to delete my comment calling him out for saying Mises’ work was “bats— insane.” Well, Mario Rizzo has been similarly blessed.
In a recent post with the neutral title, “Stupidest Party Alive,” DeLong named Steve Horwitz (as well as others) an “ethics-free Republican hack,” for the unimaginable crime of writing the following:
[Horwitz:] “The stimulus plans assume consumption is the source of economic growth. It is not. It is the consequence of said growth. The ‘stimulus’ is a redistribution of spending, at best, and will do little to help. The next Administration should avoid large scale programs and experimentation and allow the marketplace to correct the errors made by the last 8 years of misguided intervention.”
Well Horwitz mentioned this at his home court, and then Mario Rizzo reported:
BRAD DELONG DELETED MY COMMENT!!! I said ad hominem attacks were unprofessional and that calling critics “ethics-free” is terrible.
I am stunned and a little hurt, actually.
What is going on???
It’s funny because that was my reaction when DeLong deleted my comment. (I played it off like it didn’t bother me but “stunned” and “a little hurt” are actually very accurate.)
Now of course, just because Samuelson, Krugman, and DeLong are arrogant jerks doesn’t prove that their ideas are wrong. But it doesn’t help.
UPDATE: This is too funny. DeLong is such a con man. Before he called Horwitz (and my former undergrad advisor, Gary Wolfram) “ethics-free Republican hacks”–though in fairness, Wolfram would probably gladly put that on his consulting resume–DeLong wrote:
In fact, no current or former member of the President’s Council of Economic Advisers–Democrat or Republican, living or dead, sane or insane–has signed up for the Republican House caucus’s list of economists opposed to the stimulus package. None. Zero. Nada. Sifr. Efes. Wala sero. Kosong sifar. ‘Ole. Knin. Pujyam. Mann. Dim. Nocht. Null. Meden. Hitotsu. Sifuri. Ling. Sunya. Mwac. Ataqan. Saquui. Hun. Illaq. Wanzi. Wanzi. Pagh. Na. Uqua.
Nobody.
That should tell you something about today’s Republican Party.
Snoopy in the comments said, “Ummm…hitotsu means ‘one item’.” I did some quick googling and it seems Snoopy is right.
Doesn’t that just epitomize DeLong’s style? I wonder if he bluffs a lot in poker too?
Great Mankiw Article on the Problems With Gov’t "Stimulus"
Wow, I am really taken aback. Reading his blog over the last year or so, my opinion of Mankiw had gone way down (compared to my opinion from reading his textbook). But he is on fire in this NYT op ed (HT2EE).
Don’t get me wrong, he is still staying firmly within the mainstream worldview, and is just bringing up a few practical issues with stimulus. He still basically concedes the Keynesian framework that, on the surface, he seems to be rejecting. But even so, you gotta love passages like this:
If you hire your neighbor for $100 to dig a hole in your backyard and then fill it up, and he hires you to do the same in his yard, the government statisticians report that things are improving. The economy has created two jobs, and the G.D.P. rises by $200. But it is unlikely that, having wasted all that time digging and filling, either of you is better off.
People don’t usually spend their money buying things they don’t want or need, so for private transactions, this kind of inefficient spending is not much of a problem. But the same cannot always be said of the government. If the stimulus package takes the form of bridges to nowhere, a result could be economic expansion as measured by standard statistics but little increase in economic well-being.
The way to avoid this problem is a rigorous cost-benefit analysis of each government project. Such analysis is hard to do quickly, however, especially when vast sums are at stake. But if it is not done quickly, the economic downturn may be over before the stimulus arrives.
Oh, and check out this scary quote from Samuelson: “I don’t care who writes a nation’s laws or crafts its advanced treaties, if I can write its economics textbooks.” *shakes* Uhhhh! That guy gives me the willies.
But you know, I have to say, something doesn’t feel right about this. All of a sudden, the “free market” guys who had been disappointing me–not just Mankiw but also my favorite economist–are all of a sudden lighting it up. Is it just that I have come to grips with my disillusionment, and now that I no longer have such a high bar, they seem awesome?
Or, is it that they have been more willing to come out forcefully against Big Government now that it is a Democrat proposing it? Note that this last question doesn’t require a conspiracy theory. It is entirely possible that with the election over, now a bunch of true right-wing hacks are going to do a 180 on Big Government, and then this changes the climate so that the true academics subconsciously feel more comfortable “going there.” Believe me, when you are writing for popular audiences who don’t share all of your views, you develop a sense for what will resonate and what won’t. (If I’m doing a radio show on energy issues, I can certainly rail against incompetent federal officials locking up American resources. But I would lose the listeners if I said, “Speaking of which, isn’t it about time we privatized the FAA?”)
Sneak Peak for My Upcoming Book on the Great Depression
If I were really creative I would do trailers showing me reading and typing, etc. Fortunately, I have no competence with video or graphic editing. So for those dying for the release of my forthcoming book on the Great Depression, you will have to be satisfied when I respond in the comments at Marginal Revolution like so:
Stan wrote:
The story I’ve heard about FDR and the Great Depression is a) he applied mild fiscal stimulus in the period 1933 – 1937 and reduced the unemployment rate from the mid 30’s to 14% (lower if you include public employment), b) he reverted to classical economics in 1937 and brought on a severe recession, and c) spent vast sums on the military during WW II and ended the Depression. If this isn’t true, would somebody explain why?
I’m not an economist, and I’m interested in the answer.Stan, I knew FDR raised taxes in 1937 but I wasn’t sure if he also cut spending; according to this site, he did. So yes, on the surface Krugman would have a pretty strong card to play there.
I’m actually working on a book on the Depression right now, and I’m going to deal with this very point. But for here, some really quick responses:
(1) If you play with the dates on this site, you can see that total federal spending absolutely collapsed during the 1920-1921 (some say -1922) depression. Unemployment shot up to more than 11 percent in 1921. I don’t have the figures handy, but wholesale prices declined very sharply too, I think even more quickly than they fell from 1929-1930. So according to your hypothesis, this should have been an awful Depression, and yet we don’t even hear about it in school. Unemployment was down to 6.7% by 1922, and down to 2.4% by 1923. And really, you should look at how much federal spending fell during this period from 1919 levels; it is shocking.
(2) To explain why the “depression within a Depression” of 1937-38 was so bad, and why unemployment was still over 14% in 1940, Vedder and Gallaway cite the high wages of the period. In particular, in 1937 the Supreme Court ruled that the Wagner Act (NLRB) was constitutional, and union membership shot up by 40% in a single year (the biggest jump in US history). Money-wages rose sharply, thus unemployment shot up. And, I would argue, the fact that you were still smack-dab in the New Deal prevented recovery.
(3) As far as WWII getting the US out of the Depression, the best refutation of that is Bob Higgs’ work. He probably has some essays online, but I am using his collection of essays in the book _Depression, War, and Cold War._ Very briefly, his point is that the official statistics are meaningless in the war years. Sure, measured unemployment went way down, but duh, if you ship millions of able-bodied men overseas, that will happen. And sure, official GDP stats shot up, but when the government imposes price controls and rationing, and then has outlays exceeding 40% of GDP, that will happen too. But it’s not obvious that this is a true economic recovery.
The Nigerian Miracle?
In a passage in my upcoming book I made an offhand remark about Nigeria, and I went to Wikipedia to make sure I wasn’t saying something dumb. (For one thing, I wanted to make sure “Nigeria” was an official place back in the 1940s.) I came across this rather startling passage:
According to the Economist Intelligence Unit and the World Bank, Nigerian GDP at purchasing power parity has nearly doubled from $170.7 billion in 2005 to 292.6 billion in 2007. The GDP per head has jumped from $692 per person in 2006 to $1,754 per person in 2007.
Is that last stat a typo? If not, that means Nigeria:
(a) Had the most impressive economic growth in mankind’s history,
(b) Killed a bunch of people,
(c) Had massive price inflation.
Any thoughts?
A Less Immodest Proposal
In a previous post I explained that President-elect Obama could do a lot more good (given his publicly stated objectives) by identifying, say, the 10 million households most in jeopardy and then cutting them checks. That would make a heck of a lot more sense than what they’re going to do instead, where even Obama and Krugman are hedging themselves (by warning us times will be tough for years and the proposed stimulus isn’t enough).
But there’s another proposal that also beats Krugman’s ideas, even on their own terms. Let’s review his diagnosis of the recession: for whatever reason, Americans aren’t spending enough. Then since demand for goods and services drops, that reduces Americans’ incomes, so they cut back on spending even more. So on and so forth until we’re all unemployed.
Given that diagnosis, Krugman’s prescription is for the federal government to borrow $1 trillion+ on our “behalf,” and spend it on anything. (I’m not putting words into his mouth: It doesn’t really matter what the feds spend the money on, in terms of curing the recession. Obviously the government might as well look for useful things to buy, but that has nothing to do with depression-destruction.)
Well, I have a much better idea. Inasmuch as the government is going to increase the quota of the federal debt for adult Americans by about $10,000 each, I’m sure they would prefer to be able to spend that borrowed money themselves. So rather than borrowing the money and spending it for us, the government could pass a law saying that every household’s revolving debt has to increase by $10,000 this year, or else they go to jail. Sure sure, that would be tough for people who are struggling to get out of debt, catch up with their delinquent utility bills, etc., but that’s thinking selfishly. If we could all just agree to each go $10,000 deeper into debt, buying CD players, fancy dinners, etc., then all of our incomes would go up enough to offset the debt increase. We’d lick this recession in a jiffy! And best of all, you could spend that $10,000 wisely on your own stuff, rather than getting solar panels in L.A. to show for it.
Now granted, there would be some issues of enforcement. Some antisocial households would cheat by trying to pay their normal bills with credit cards etc. But c’mon, does anyone think this type of objection is the real reason politicians haven’t proposed it? Of course not. The real reason you will never hear something like my less immodest proposal is that the politicians can’t direct the billions of new spending into their cronies’ pockets.
Peter Schiff Warns of the Bubble in Treasurys
Note that I am not simply heeding him, since he was was right about the the housing bubble. If I had briefed him before this interview, I couldn’t have been happier with Schiff’s responses (HT2LRC):
Unfortunately, I think what’s going to happen to a lot of regular Americans is this: They got spanked in their stock portfolios in 2008 while government bonds did very well. So, they are now shifting out of stocks and into fixed-income assets. But then in the next few years (probably 2009 but I’ll give myself a cushion), I think it is unavoidable that U.S. interest rates, even on Treasury debt, are going to skyrocket with the CPI. Even though equity in U.S. corporations and real estate won’t be a great thing, it will be better than owning a stream of green pieces of paper.
Coining a New Term for the Coming Economic Disaster
OK kids, I think we are in store for a very severe recession (i.e. depression) and very big price increases. It will be stagflation but worse. So we need a catchy term. The two contenders I’ve come up with are infression and depflation, but the first is hard to pronounce and the latter is very easily confused with deflation. Any thoughts? Should I just punt and go with hyper-stagflation?
Obama Nominates a Socialist
President-elect Obama has tapped former EPA head Carol Browner to take “on a broad new portfolio with responsibility for Obama’s ambitious agenda on the environment, energy and climate change.”
Guess what? She’s a socialist. Really.
I grant you, she’s no longer listed at the Socialist International website, but she used to be. “Oh, back in college I suppose, right, you rabid right-winger?!”
Actually, more like, earlier this week (HT2 Dan Simmons):
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