Clemens & Murphy: Government, not Market, to Blame for Financial Crisis
Another PG article for ya. The thing that’s pretty neat in this one, is that I worked in a “cite” to YouTube. I haven’t seen too many op ed writers use this particular technique, but I think it will grow more popular over time.
The Other Economist Robert Murphy
…is calling for more looting of taxpayers:
“We need another stimulus package, and we need to do it in a way that is decisive, with a huge amount of resources,” said Robert Murphy, a Boston College economics professor. “Sooner is definitely better than later.”
I have probably already used this joke before, but I wonder if he has Google Alerts turned on for his name too. Do you think he is mortified at all the “crazy stuff that nutjob Robert Murphy says” all the time?
I think one of us should suck it up and start going by “Bobby” to avoid confusion. Maybe a best-of-five chess tournament.
Bloomberg (the company) Sues the Fed
This is rather interesting:
Bloomberg News asked a U.S. court today to force the Federal Reserve to disclose securities the central bank is accepting on behalf of American taxpayers as collateral for $1.5 trillion of loans to banks.
The lawsuit is based on the U.S. Freedom of Information Act, which requires federal agencies to make government documents available to the press and the public, according to the complaint. The suit, filed in New York, doesn’t seek money damages.
“The American taxpayer is entitled to know the risks, costs and methodology associated with the unprecedented government bailout of the U.S. financial industry,” said Matthew Winkler, the editor-in-chief of Bloomberg News, a unit of New York-based Bloomberg LP, in an e-mail.
HT2 Matt Machaj.
What Is the Probability That Caplan Knows What He’s Talking About?
Ah, Monday morning, the start of another week. That means: time to mock a GMU economics professor!
This installment of (what I’ve come to realize is) my mission in life concerns Bryan Caplan’s post on the Paulson bailout, made the day after the House voted it down:
We’re still likely to see a bail-out in the near future. So here’s a question: If the bail-out happens, how will we know if it prevented disaster? If unemployment stays under 8%, proponents will say that the bail-out prevented a recession. But if unemployment hits 8% or higher, proponents will say that things would have been even worse without the bail-out. Opponents, of course, will flip things: Good conditions mean the bail-out wasn’t necessary, bad conditions mean that the bail-out made things worse.
Ex ante, though, basic Bayesian reasoning doesn’t allow us to claim that whatever happens confirms our position. If the occurrence of X raises the probability of A, then the occurrence of not-X must reduce the probability of A….
Unfortunately, if you let people see whether X happens before they update, you can’t show that they’re being bad Bayesians. You only see how they updated, not how they would have updated if the news had been different.
So here’s my request: Tell us how you’re going to update in advance. Assume the bail-out happens. If unemployment stays below 8%, does that make you more or less confident that the bail-out prevented disaster? If unemployment rises to 8%+, does that make you more or less confident that the bail-out helped prevented disaster? If you’re a good Bayesian, you must give opposite answers to these two questions.
Now this is fine as far as it goes, except for one little problem: There are some things that you know from aprioristic reasoning. And in this set of truths are economic laws. Now it’s true, a good economist has to be able to sift evidence and exercise judgment when applying various economic insights. But those insights are derived from introspection, not from looking at a million different “economic” statistics (and you would only know how to use this adjective if you had an antecedent theoretical framework!) and then drawing generalizations from them.
Anyway, the specific problem with Bryan’s post is that he’s not allowing for the possibility that your “prior” doesn’t budge. For example, will your belief that 2+2=4 go up if there is rising unemployment next year? No? Oh, so it will go down then?
Even if we’re not talking about things literally deduced from self-evident axioms, Caplan’s post is still silly. Consider a more relevant analogy: Suppose I say that sacrificing virginal GMU professors will appease the unemployment gods. Caplan goes this week, then Cowen, then Tabarrok (I really hope it doesn’t last more than two weeks). Now let’s be scientific about it guys, no cheating! Tell me beforehand how your belief in the unemployment gods will change, depending on what we observe after each execution.
As with the putative unemployment gods, so too with the Paulson bailout: I don’t care what happens to unemployment, you are not going to convince me that taking $850 billion from the public at gunpoint, and giving it to reckless bankers who thought home prices could only go up, will make our economy recover more quickly.
To avoid misunderstanding, let’s try one more: If your initial probability for Bryan Caplan finding me funny is p1, and your estimate of this probability after he reads the present post is p2, is p1 greater than or less than p2?
Pat Buchanan Blames Cheap Goods and Workers for Republican Defeat
Usually I agree with Pat Buchanan, and plus I love his laugh. But I was flabbergasted to read in this column that he attributes the Republicans’ loss not to a foreign empire, not to a mountain of spending that would impress LBJ, not to a bank bailout, but to…(get ready)…low tariffs and open borders. Ta da! The Republicans did not use the force of the government to interfere enough with commerce,* and this is why they lost. In Buchanan’s own words:
Ultimately, however, the Beltway Republicans are losing Middle America because they are ideologically incapable of addressing two great concerns: economic insecurity and the perception that we are losing the America that we grew up in.
Economic insecurity is traceable to NAFTA-GATT globalization,** under which it makes economic sense for U.S. companies to close factories here, build plants in China and export back to the United States. Manufacturing now accounts for less than 10 percent of all U.S. jobs.
Social insecurity is traceable to mass immigration, legal and illegal, which has brought in scores of millions who are altering the character of communities and competing with U.S. workers by offering their services for far less pay.
These are the twin causes of death of the Reagan coalition, and as long as the Republican Party is hooked on K Street cash, it will not address either, and thus pass, blissfully addicted, from this earth.
* I know some libertarians think that the INS is a “market solution” to the movement of peoples across arbitrary geographical boundaries. Well, I don’t. If something requires armed agents of the state to implement it, I’m thinking it’s a bad thing.
** I also know that a staunch free trader could oppose GATT and NAFTA; in fact that applies to me. But Buchanan is making a standard mercantilist argument; he’s not complaining about supernational regulatory bodies in the above.
Another Post Containing Possibly Useful Advice
In an article that is surely tongue-in-cheek, Jeff Tucker reveals his deepest anxiety:
The fear is that while walking [in the park] and enjoying the day, a ball from one of these groups will inadvertently roll your way. Everyone on the team has his eye on that ball, which is now at your feet. You must pick up the ball and return it to the team in a manner fitting to the game.
So, for example, you can’t kick a baseball or basketball back. You have to throw the baseball with accuracy to the guy holding up the glove. The basketball must be returned with one of those two-hand push things and done in a manner that defies gravity. The football must be returned so that it flies like a bullet with no odd twists and turns. The soccer ball must be kicked bang on and straight to the person who awaits its return.
This trick must be performed without any warm up whatsoever. As a man, you must be able to instantly become the greatest player of the game in question. Why must you do this? Because…well, because you are a man!
For any man, this instills a sense of complete terror. Some men are so frozen by the prospect of screwing up that they pretend not to see the ball at all, which is a jerky thing to do. But it’s better to be regarded as a jerk than a complete incompetent.
First, can I ask: Is this really something that a lot of guys worry about? I remember Richard Feynman said the same thing in one of his books. I can honestly say that though I worry about a heck of a lot, this type of thing never concerned me. The only thing I can think of coming close, is that I would get a little nervous if people were playing frisbee, because then if it happened to come right for me, I would have to catch it rather than duck or otherwise dodge it. But even there, the worry wasn’t too severe, because it would really have to be coming right at me to make it obvious if I chose not to attempt to catch it, and even in that case, I would probably be able to catch it.
Now admittedly, probably the reason I am not terrified whereas Jeff (and Feynman) claim otherwise, is that I actually played soccer and basketball in leagues for several years–though never at the high school level, so you true athletes must understand that I am not boasting here. But my point is, there’s no doubt in my mind that I can return either of those balls appropriately, and moreover I can throw a decent spiral and a baseball toss too, so Jeff’s worry really is hard for me to imagine.
Anyway, let me give some tips in case this is really an anxiety some of you face. (And I’m assuming most of my readers are nerd guys, so presumably you will benefit from these tips.)
SOCCER BALL: OK this one is easy: Do not kick it with your toe. First of all, you might hurt yourself, second of all, it could fly off at a weird angle, and third of all, it will be obvious you have never played soccer. Rather, hit the ball with the inside of your foot. (This is really hard to describe on a blog post; I now understand Hayek’s point about inarticulable knowledge.) So when the ball is in front of you, you want to approach it and then (with your strong foot of course) sweep your leg forward, so that you strike the ball on the inside of your foot, in between the ball of your foot and the heel. Note that your foot is still parallel to the ground; i.e. you’re not striking the ball with the bottom of your foot. It’s better to err on the side of kicking it too hard, because as long as it’s in the general vicinity of one of the guys, he can always trap it. In contrast, if you kick it way too softly, that might look kinda dumb if the guy still has to run up 10 feet to retrieve it. The beauty of kicking it with the side of your foot in a sweeping motion, is that it will naturally keep the ball down. Ideally, you want to be slightly lifting your foot higher as you sweep forward and make contact with the ball, so that you’re almost rolling it. Of course you should practice this a few times before trying it out, but once you get the hang of it, you’ll see it’s almost impossible to screw up. The worst you could do is not kick it hard enough, in which case you’re still helping the guys.
BASKETBALL: OK there is really no reason AT ALL to be afraid on this one. If the intended recipient is too far for you to confidently reach him with a straight-on chest pass, then do a two-handed chest pass (i.e. pushing it outward from your chest) to the ground at a point in between the two of you. (In my head, I can’t picture where you want to aim, e.g. before or after the midway point. It partly depends on how hard you’re pushing the ball.) If you are so far away that you’re not even confident you can reach the guy with a single bounce, then don’t pass it with a double-handed push. Instead, just toss it towards the recipient with a single hand, so that it bounce-bounce-bounces over. You can toss it underhand, or overhand in a very weak baseball throw. Those are both perfectly acceptable. The only way you could look stupid returning a basketball, is if you don’t throw it straight. But as long as you get that down, the manner in which you deliver it is fairly immaterial.
BASEBALL: Now it starts getting tougher. With the baseball, there is the possibility that you really could make an ass of yourself, and that would be the deadly sin of throwing like a girl. If you throw like a girl, then yeah, you should probably structure your park walks to minimize the chance that you will be expected to return a baseball. (And no, there’s no way I can explain over the Internet how to not throw like a girl.) But, assuming you know how to throw, and you’re just worried about calibrating what may very well be the first baseball throw you’ve executed in months, I guess my advice is to at least make sure you are helping. So for example, if one guy is running towards you, and you overthrow it, that’s still fine, so long as he just picks up the ball on his route back to the game anyway. But make sure you don’t throw it such that he ends up having to run more than if you hadn’t intervened at all. If your accuracy is really terrible, it’s probably safest to err on the side of underthrowing it. He will still have to jog out towards you, but you’re still saving part of his time. And then you can add a “whups sorry” when it’s obvious your throw was off.
FOOTBALL: OK this one really is tough. Ideally you would like to throw a tight spiral into the chest of the intended recipient. But, most guys can’t do that on the first throw. If the guy is close enough to you, you could consider an underhand toss. But, chances are you are just going to have to suck it up and hope to eke out a wobbly spiral.
In conclusion, just remember that these guys are in the middle of a game; they don’t really care about the guy strolling in the park who tosses them back the ball. So long as you are actually helping matters, it’s all good.
Another Post on Why Kids Are the Key to the Kingdom of God
My son (almost four) has developed this obnoxious habit where he repeats the same #)($# sentence indefinitely, until something changes the situation. For example, if we’re going to school (where his favorite friend is Ainsley) he’ll say, “You wanna go school find Ainsley!” in the car, over and over and over and over…, from the moment we leave the driveway until the moment we park. (Fortunately, we live very close to the school.)
Lately, whenever I get frustrated with Clark–particularly if he is frightened of a lawnmower across the street and I actually get offended that he doesn’t trust me to protect him from it–I regain perspective by thinking of ways that I do the exact same thing, vis-a-vis my (heavenly) Father.
And guess what, it works in the repeating-phrase case too. Because probably 75% of the “conversations” I have with God really involve me saying the Our Father. So just as I have to keep saying, “That’s right buddy, we’re going to school so you can find your good friend Ainsley” I imagine God is thinking, “That’s right Bobby, My will will be done on earth, just as it is in heaven. Just like you said yesterday and the day before. Is there anything else you want to talk about? I notice your hair has almost completely fallen out; something you want to get off your chest?”
Great Depression II?
In this TownHall piece I repeat arguments that I have been making here and in interviews for a while now, but if nothing else I thought the TownHall readers should get a link to the scary FRED graph on monetary base:
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