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  #41  
Old 03-30-2011, 12:57 AM
T.G.G.P T.G.G.P is offline
 
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Default Re: Full-Frontal Geeky (Karl Smith & Megan McArdle)

Though I have some ideological sympathies with Megan, I found it a bit tiring all the time she spent beating up on people she disagrees with who weren't there to defend themselves (surely I must be sexist for complaining now about something all men do!). Introducing listeners to accelerationism & seignorage, good. Crying hypocrisy (even if accurately) on the Bush tax giveaways (my impression is that they were ineffective, but I'm a non-Keynesian), meh. I doubt many Republicans even remember deficit-driven criticism of them from back then.

Surprised Karl didn't link to his post on being a dove.

On those european immigrants, "not being perceived as white", I think Megan is buying into "whiteness studies" nonsense. Regarding her and my ancestors, see No Irish Need Apply: A Myth of Victimization. Karl is wrong to think the Germans were religiously inoffensive. We associate Protestantism with Germany, since that is it's birthplace, but a great many of them (including large portions of those who came to the U.S) were Catholic. The Ku Klux Klan opposed both Catholic & Lutheran schools, favoring instead mandatory universal public education for American-ness (and "separation of church & state"). And his "different levels" only works on a ceteris paribus basis, although I suppose increasing tolerance is precisely the point he's making. But for the real debunking of the today's Mexicans equals yesterday's Italians idea, see "Generations of Exclusion". That book doesn't mention the welfare state, but I'd also include that as important. On the threat of Irish politics in Boston, see Ed Glaeser's paper The Curley Effect: The Economics of Shaping the Electorate.

A right-wing economist who says we shouldn't be bothered by deficits, not just now but in general, is Casey Mulligan. He cites Robert Barro for backup on that view.

Last edited by T.G.G.P; 03-30-2011 at 01:44 AM..
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  #42  
Old 03-30-2011, 05:28 AM
Florian Florian is offline
 
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Default Re: Full-Frontal Geeky (Karl Smith & Megan McArdle)

Quote:
Originally Posted by nw111 View Post
I am confused by your statement. How does the Federal Reserve rack up debts? To my knowledge it has no mechanism for borrowing (unless I am totally ignorant of governments financial structure, which is a distinct possibility). It is THE lender (obviously, since it prints the money). Did you mean debts racked up to the Fed [from the Treasury]? If so, that makes more sense, my only quibble would be that many of those debts were not just for financial bailouts but for more general spending.
Maybe you or someone else can enlighten me. I said I am not an economist.

When the FED buys up US treasuries through "quantitative easing," i.e. by extending lines of credit to the NY Federal Reserve to buy bonds, is it not increasing the amount of debt on its books? True, the "money" is being lent to the government, but the money in question is nothing but a fiction. It is created out of thin air by virtue of the authority invested in the FED to make credit available to member banks, so that they can buy treasuries, i.e. lend money to the government! This is supposed to have the threefold effect of keeping bond yields low, freeing up credit for other purposes, and shifting money into the stock market, where it will be richly rewarded no doubt! Bernanke has said that this was the purpose of QE2.

And presto: the US economy is saved, until the next bubble.
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  #43  
Old 03-30-2011, 10:26 AM
badhatharry badhatharry is offline
 
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Default Re: Inflation and unemployment

Quote:
Originally Posted by Don Zeko View Post
It allows you to create negative real interest rates.
Aha! Clear as mud.

So let me see if I can assimilate yet another bit of economc jargon. Negative interest rates mean that the rate of inflation is higher than any kind of interest someone would be able to get from saving so that person should be more likely to spend, right?

But how does that affect employment? People spend more, more stuff needs to be produced, more people can be employed?

And just one more thing. Your terminology "allows you to create..." is spooky to me. It suggests some kind of manipulation rather than a natural effect.
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  #44  
Old 03-30-2011, 10:55 AM
badhatharry badhatharry is offline
 
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Default One more question for Born Again

Another question occured to me. You mentioned Keynes and Freidman advocating tinkering with the money supply to avoid lowering wages. Is that why (or one of the reasons) they call the Chicago School monetarists?...that they saw the Fed as a viable way to control what the economy did?
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  #45  
Old 03-30-2011, 12:29 PM
BornAgainDemocrat BornAgainDemocrat is offline
 
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Default Re: Inflation and unemployment

Quote:
Originally Posted by badhatharry View Post

So are you saying that because prices are going up the buying power of wages is reduced? If so, why does that have an effect on the total volume of employment? In your scenario it seems the total volume of employment would stay the same. Please enlighten me.
[Apologies to badhatharry: I wrote a reply yesterday but it got lost somewhere in the the post-a-sphere.]

The buying power of wages -- how many groceries, etc., you can purchase with an hour's work -- is the very definition of the price of labor. So yes, if the price of everything except an hour of labor (except is the key word here) goes up, then wages real fall and the demand for labor (measured in man-hours) rises.

A little historical context will make this clearer. During the 19th century it was thought that if wages were free to move up and down in an open labor market then the problem of unemployment would take care of itself. But it was realized that workers didn't take kindly to hourly pay cuts, the unemployed be damned. Often as not they would go out on strike. As a way around this problem Keynes & Co. ( including Milton Friedman) allowed that expanding the money supply would achieve an equivalent result, but stealthily, and whether the workers liked it or not. By mid-century however powerful labor unions had become wise to this ploy; they negotiated automatic cost-of-living adjustments, which defeated the purpose of an inflationary monetary policy. This was the period of "stag-flation (remember the 1970's?) when high inflation and high unemployment went hand-in-hand. But now the unions are gone and automatic cost-of-living adjustments are a thing of the past. Which means an expansionary monetary policy should be able to work its magic again.

I have no doubt this is what Bernanke and friends have in mind, though of course they are much too politic to say so out loud and clear. We have mass unemployment, therefore real hourly wages need to go down. We should therefore expect more inflation and a further decline in the American standard of living in the decade ahead.

Last edited by BornAgainDemocrat; 03-30-2011 at 12:40 PM..
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  #46  
Old 03-30-2011, 02:29 PM
ImmRefDotCom ImmRefDotCom is offline
 
Join Date: Jan 2008
Posts: 35
Default Yet another fake "debate", Part 430231

Yet another pointless, fake "debate" between two people who basically agree.

A few years ago, "Jane Galt" tried to show how my list of differences between yesterday's and today's immigration was wrong. As can be seen, she failed:

janegalt.net/archives/009851.php

The BH I'd like to see would be more like a prosecution, where "Jane Galt" or whatever other hack BH provides is relentlessly grilled on what they support and completely discredited.

I know I'm never going to see that here, because BH is basically just a sham.
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  #47  
Old 03-30-2011, 04:33 PM
badhatharry badhatharry is offline
 
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Default Re: Inflation and unemployment

Quote:
Originally Posted by BornAgainDemocrat View Post
[Apologies to badhatharry: I wrote a reply yesterday but it got lost somewhere in the the post-a-sphere.]
Actually, I read your original response. And I had two follow up questions.

Here: Thanks. I understand the part about purchasing power being the price of labor. But I'm still unclear about what you mean by increasing total volume of employment. Do you mean that if wages can be lowered more people can be employed?

I'd like to put what you said in my own words and see if I'm close.
Because of labor unions, wages were kept high despite fluctuations in the economy. If markets were allowed to work, in times of low demand, workers' pay would be cut or people would be laid off. But because wages were held artificially high, prices needed to be raised, causing an inflationary spiral.

So I may be wrong to this point but if I am right why would inflation work any magic in the realm of solving mass unemployment?

Sorry for being obtuse.

And here: Another question occured to me. You mentioned Keynes and Freidman advocating tinkering with the money supply to avoid lowering wages. Is that why (or one of the reasons) they call the Chicago School monetarists?...that they saw the Fed as a viable way to control what the economy did?
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So now I will read your current post.
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"By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it." Adam Smith
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  #48  
Old 03-30-2011, 04:40 PM
badhatharry badhatharry is offline
 
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Default Re: Inflation and unemployment

Quote:
Originally Posted by BornAgainDemocrat View Post
[Apologies to badhatharry: I wrote a reply yesterday but it got lost somewhere in the the post-a-sphere.]
You did a good job of reconstructing your original answer! But I don't think it was lost. Here it is. It was your 666th post so that might be the problem.
:-)

I hope you'll find the time to answer my two follow ups.

And here's another one for you. I'll preface it by saying I think I like Hayek's view that no one knows enough to manipulate the economy with great success or rather completely favorable outcomes.

Quote:
To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.
Why do they do it? Can people like Keynes and Friedman not have been aware that fiddling around here will cause something to go badly over there? Why not let the economy just run the way it does? People always adjust and consumers are the best judges of what prices should be.
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Last edited by badhatharry; 03-30-2011 at 05:45 PM..
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  #49  
Old 03-30-2011, 08:07 PM
karlsmith karlsmith is offline
 
Join Date: Aug 2010
Posts: 10
Default Re: Yet another fake "debate", Part 430231

Quote:
Originally Posted by ImmRefDotCom View Post
Yet another pointless, fake "debate" between two people who basically agree.

A few years ago, "Jane Galt" tried to show how my list of differences between yesterday's and today's immigration was wrong. As can be seen, she failed:

janegalt.net/archives/009851.php

The BH I'd like to see would be more like a prosecution, where "Jane Galt" or whatever other hack BH provides is relentlessly grilled on what they support and completely discredited.

I know I'm never going to see that here, because BH is basically just a sham.
I actually downplayed our disagreement. My thought was that intelligent discussion should strive to give the most charitable interpretation of the other person's position. I have received steady feedback that this is not in fact what people want to see and am taking it to heart.
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  #50  
Old 03-30-2011, 08:22 PM
handle handle is offline
 
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Default Re: Yet another fake "debate", Part 430231

Quote:
Originally Posted by karlsmith View Post
I actually downplayed our disagreement. My thought was that intelligent discussion should strive to give the most charitable interpretation of the other person's position. I have received steady feedback that this is not in fact what people want to see and am taking it to heart.
Don't tell Bob.
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  #51  
Old 03-30-2011, 09:17 PM
T.G.G.P T.G.G.P is offline
 
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Posts: 278
Default Re: Yet another fake "debate", Part 430231

Quote:
Originally Posted by karlsmith View Post
I actually downplayed our disagreement. My thought was that intelligent discussion should strive to give the most charitable interpretation of the other person's position. I have received steady feedback that this is not in fact what people want to see and am taking it to heart.
Be charitable, but cutting. Talking at cross-purposes and having people insist they've been misrepresented is less interesting. Think world-class fencing, not wrestling in the mud. Although I would actually like to see someone literally wrestle the proverbial pig and determine whether or not said pig actually likes it.

Come to think about it, we've got youtube so I can find out right now. I'd say the pig is not making sounds of enjoyment, but participants do indeed get muddy.
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  #52  
Old 03-30-2011, 11:02 PM
BornAgainDemocrat BornAgainDemocrat is offline
 
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Default Re: Inflation and unemployment

Quote:
Originally Posted by badhatharry View Post
But I'm still unclear about what you mean by increasing total volume of employment.

Sorry for being obtuse.
I'm sorry, I've been away and had no idea I had started a thread. The total volume of employment means the total man-hours of employment over a period of time. That would be the total number of people working x the average number of hours each person worked for that period. Thus 3 men working 8 hours a day would be the same as 4 men working 6 hours a day. In fact one way to employ the unemployed is to reduce the number of hours each person works. That approach does not require inflation because it leaves the volume of employment the same and real hourly wages unchanged. A "job" on the other hand can mean almost anything, from thirty minutes a week feeding a neighbor's dog to 12-hours-a-day and 7-days-a week. We really should be thinking in terms of wages and hours, balancing the value of our leisure time off the job against the purchasing power of the money we earn.



t

Last edited by BornAgainDemocrat; 03-30-2011 at 11:25 PM..
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  #53  
Old 03-31-2011, 12:05 AM
BornAgainDemocrat BornAgainDemocrat is offline
 
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Default Re: Inflation and unemployment

Quote:
Originally Posted by badhatharry View Post
But I'm still unclear about what you mean by increasing total volume of employment.

Sorry for being obtuse.
I'm sorry, I've been away and had no idea I had started a thread. The total volume of employment means the total man-hours of employment over a period of time. That would be the total number of people working x the average number of hours each person worked for that period. Thus 3 men working 8 hours a day would be the same as 4 mean working 6 hours a day. A "job" can be anything, from a few hours a week to 14 hours a day, whereas a man hour is a man hour is a man hour.
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  #54  
Old 03-31-2011, 10:54 AM
badhatharry badhatharry is offline
 
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Default Re: Inflation and unemployment

Quote:
Originally Posted by BornAgainDemocrat View Post
We really should be thinking in terms of wages and hours, balancing the value of our leisure time off the job against the purchasing power of the money we earn.
I think, because of this correction, lots of things have the potential of changing. But change is hard and people resist it. Even if it is the perfect solution, we want to go back to what we know.
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  #55  
Old 03-31-2011, 02:05 PM
rcocean rcocean is offline
 
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Default Conn is completely wrorng on Social Security

Quote:
Originally Posted by conncarroll View Post
Just to put real numbers on Social Security's very current account deficits:
Social Security paid out $37 billion more then it took in last year.
Social Security will pay out $45 billion more then it will collect this year.
Over the next ten years Social Security will add more $600 billion to the national debt.
http://www.cbo.gov/budget/factsheets/2011/5-oasdi.pdf
The Social Security crisis is real and it arrived yesterday.
Given that the Deficit is at LEAST 1,000 billion this year, 37B is a silly drop in the bucket. You also forgot to mention that Social Security has been reducing the deficit for over 30 years. So now the General Fund will have to transfer money to SS instead of other way round. The numbers aren't significant as percent of Projected GDP.

In any case, just get rid of the Social Security Tax Wage cap and problem solved.

But never under-estimate stupidity of the Republicans - they'll probably listen to Conn. Their predicted 2012 campaign slogan

"Elect Romney, he'll bust unions, increase illegal immigration, and cut Social Security".
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  #56  
Old 04-03-2011, 08:46 AM
rfrobison rfrobison is offline
 
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Default Re: Karl assumes tax revenue can be increased

Quote:
Originally Posted by AemJeff View Post
harry, invoking Kudlow in an argument about economics is a lot like bringing a propeller beanie to gun fight.
OK, then. What about a little fiction from a Harvard economist?

The problem, as I see it, is systemic. And much as her legion of detractors will find reasons to think otherwise, Ms. McArdle has it right. Our politicians keep promising us that everything is just fine with our nation's fisc. People on the left say: "Tax the rich," conveniently forgetting that the bottom half of income earners already pay basically no federal taxes.

Those on the right say, "Cut spending...but not defense, social security, medicare, corn subsidies..."

The U.S. absolutely depends on foreigners, particularly Asians, to buy our debt in the form of U.S. Treasuries. If, for whatever reason, they begin to doubt we're good for it, we'll see a spike in interest rates, the dollar will crash, inflation will take off and the 2008 meltdown will seem like the good ol' days.

Me, I'm planning on getting zero from Uncle Sam when I turn 65. Our spineless pols and deluded voters simply can't bring themselves to face unpleasant realities. Sooner or later, though, reality will win.
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Last edited by rfrobison; 04-03-2011 at 08:56 AM.. Reason: deleted extraneous comma
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