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  #81  
Old 02-06-2009, 11:24 PM
bjkeefe bjkeefe is offline
 
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Default Re: The Case for Big Government

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Originally Posted by Unit View Post
Generally speaking Austrians try to find a middle ground between historicism (just collecting lots of data with very little theory) and scientism (economics modeled on the physical sciences with heavy reliance on math models).
Okay, that's a start. Thanks. But do they believe in testing, and if so, to what extent?

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We are talking here about a movement that began in the late 1800s and is currently still pursued by a non-negligeable portion of the economic discipline. Hayek's early work, for instance, tried to develop a theory to explain the business cycle. You can find all kind of people who call themselves Austrians.
I can think of three schools of thought, respectively 1400, 2000, and 5800 years old, that depend solely on reasoning from a set of assumptions, that each still have a whole lot of devoted adherents. That, in and of itself, does not make me think there's anything to any of them.

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Just because you find and article on the Mises.org website that doesn't agree with your world-view, it doesn't mean that you can go ahead and ridicule a whole branch of the economic enterprise.
Well, I've asked several times if that article was representative of the school of thought. You do not seem to want to say it's not, so that makes me think it is. That article is ridiculous in how little in touch with reality it is, and if you're not going to say, "That article is not representative of the Austrian school," then I think I do get to draw some conclusions.

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I gave you a link to a cnn page by a Harvard professor.
Read it. Responded underneath the post where you gave the link. To reiterate: seemed marginally more realistic, but only marginally.

And if I gave you a link to an article by a Princeton professor (who also won the Nobel prize), do you think I would be within my rights to demand that you accept its contents uncritically?

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But first you might want to climb down from that high horse of yours.
Don't be so flipping touchy. I'm not riding a high horse merely by questioning something, or even by making fun of it. You're acting like a devout member of those other schools of thought I alluded to above. This board is about discussing ideas. Why don't you defend the ideas, rather than taking immediate exception when they're criticized? Explain to me, for example, why calling for an immediate withdrawal from Iraq and Afghanistan, and setting the income tax rate to 0 overnight, are not proposals deserving only laughter.
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  #82  
Old 02-06-2009, 11:32 PM
sugarkang sugarkang is offline
 
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Default Re: The Case for Big Government

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Originally Posted by bjkeefe View Post
It often comes across that you believe once you have labeled something as what "liberals believe," you feel you have made your case.
What an asinine statement (not a personal attack according to you, because it's the statement and not person, right?). I'm sorry, you don't go to college and hang out with a circle of friends and become liberal. I have bit my tongue this entire time about these so called straw man accusations that I make. I'll freely admit that I make them. It's just retarded that you think you don't (according to your logic, I'm not calling YOU retarded, just your thought process is totally fucking retarded).

You say I speak in generalities, but ideologies don't turn on specifics. They start with very basic premises. So, I tend to challenge basic premises, as that is my way of trying to shift a person's paradigm. When Congress debates the stimulus bill, most of the disagreement does not come from specifics. Congressmen disagree because they differ on basic assumptions about human nature, government, etc. It's one thing to call for bi-partisanship in order to appear magnanimous. It's pathetically naive to think that you're going to change someone's mind by saying "let's sit down and talk about this." All positions depend on the fundamental ideology.

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Just think about how irritated you get when others lump you in to some "libertarian" belief that you do not share, and you'll see what I'm trying to get at.
Actually, I don't feel irritated by that at all. It only irritates me, as I mentioned before, when people confuse Bush policies with libertarian policies. I won't ever criticize you for talking trash about libertarians because they like markets. When I make criticisms about liberals, it's because there are plenty of liberals that actually believe that shit.

Last edited by sugarkang; 02-06-2009 at 11:38 PM..
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  #83  
Old 02-06-2009, 11:47 PM
Unit Unit is offline
 
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Default Re: The Case for Big Government

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Originally Posted by bjkeefe View Post
Okay, that's a start. Thanks. But do they believe in testing, and if so, to what extent?
I already answered that question. There are all kinds of Austrian economists. One point I think they share is that all observation is theory laden. In other words, they are generally skeptical of people who claims to have superior data or to be truer to the facts.


Quote:
I can think of three schools of thought, respectively 1400, 2000, and 5800 years old, that depend solely on reasoning from a set of assumptions, that each still have a whole lot of devoted adherents. That, in and of itself, does not make me think there's anything to any of them.
My point was that it's not easy to stereotype them. It's a bit like talking about Christians in general.

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Well, I've asked several times if that article was representative of the school of thought. You do not seem to want to say it's not, so that makes me think it is. That article is ridiculous in how little in touch with reality it is, and if you're not going to say, "That article is not representative of the Austrian school," then I think I do get to draw some conclusions.
I had only read one another piece by Bob Murphy before which I had liked. This one I didn't. But why can't you (or Clay) just criticize the piece for what the piece says instead of generalizing to all Austrians.

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Read it. Responded underneath the post where you gave the link. To reiterate: seemed marginally more realistic, but only marginally.

And if I gave you a link to an article by a Princeton professor (who also won the Nobel prize), do you think I would be within my rights to demand that you accept its contents uncritically?
My point was that Austrianish/Libertarianish economists don't just hang out at the Mises Institute, I didn't mean to imply that the Harvard label is anything more than that.

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Don't be so flipping touchy. I'm not riding a high horse merely by questioning something, or even by making fun of it. You're acting like a devout member of those other schools of thought I alluded to above. This board is about discussing ideas. Why don't you defend the ideas, rather than taking immediate exception when they're criticized? Explain to me, for example, why calling for an immediate withdrawal from Iraq and Afghanistan, and setting the income tax rate to 0 overnight, are not proposals deserving only laughter.
I'm not a devout member and I'm not being touchy, flipping or otherwise. I do defend the ideas. I take exception when blanket statements are thrown around in a mocking tone.

About your last line. Yes I agree, so why don't you point to those statements and leave it at that?
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  #84  
Old 02-06-2009, 11:51 PM
bjkeefe bjkeefe is offline
 
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Default Re: The Case for Big Government

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Originally Posted by Unit View Post
Would you care to elaborate?
Sure.

The reasonable-sounding parts: "Increase carbon taxes," esp. through increased gasoline taxes; "raise the age of eligibility for Social Security and Medicare" as part of getting entitlements under control, both for own sake and to boost confidence in the US to our foreign creditors.

The semi-reasonable parts (I say "semi" because he's really ignoring political realities here, at least in the short term, and/or because the devil is in the details that he didn't give, and/or because I don't completely agree to the proposal as a general principle): "Renew the U.S. Commitment to Free Trade;" "Expand Legal Immigration;" "Stop Bailing out Businesses that Took on Too Much Risk."

Just plain disagree with "Limit Union Power," at least as a general principle.

Unreasonable: rapid withdrawal from Iraq and Afghanistan; "Repeal the Corporate Income Tax;" "Eliminate Wasteful Spending."

The last is a pipe dream. An admirable goal, and worth hammering at in an ongoing fashion, but it's not going to happen any time soon, especially in these times.

Whether or not it's possible to do the first, the generals don't think it is. In fact, some of them are already flirting with going around their Commander-in-Chief and making the case via the MSM that they should stay in Iraq even longer.

The second is just not the kind of thing you can do just by flipping a switch, again, especially in these times, and I'm not at all convinced that zero corporate taxes makes for no serious revenue problems without a comprehensive rewriting of the overall tax plan.

Overall, his proposals -- pitched as a stimulus plan, don't forget -- seem to have very little that's practically attainable in the near term, for any number of reasons, not least of which is political. Some of the ideas seem completely pie in the sky (Who wouldn't want to be done with two wars tomorrow and have a government that didn't waste money?) and even the ones I called reasonable seem like they'd require a herculean effort to get into a bill that wants to address immediate problems.
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  #85  
Old 02-06-2009, 11:58 PM
Unit Unit is offline
 
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Default Re: The Case for Big Government

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Originally Posted by bjkeefe View Post
Sure.

The reasonable-sounding parts: "Increase carbon taxes," esp. through increased gasoline taxes; "raise the age of eligibility for Social Security and Medicare" as part of getting entitlements under control, both for own sake and to boost confidence in the US to our foreign creditors.

The semi-reasonable parts (I say "semi" because he's really ignoring political realities here, at least in the short term, and/or because the devil is in the details that he didn't give, and/or because I don't completely agree to the proposal as a general principle): "Renew the U.S. Commitment to Free Trade;" "Expand Legal Immigration;" "Stop Bailing out Businesses that Took on Too Much Risk."

Just plain disagree with "Limit Union Power," at least as a general principle.

Unreasonable: rapid withdrawal from Iraq and Afghanistan; "Repeal the Corporate Income Tax;" "Eliminate Wasteful Spending."

The last is a pipe dream. An admirable goal, and worth hammering at in an ongoing fashion, but it's not going to happen any time soon, especially in these times.

Whether or not it's possible to do the first, the generals don't think it is. In fact, some of them are already flirting with going around their Commander-in-Chief and making the case via the MSM that they should stay in Iraq even longer.

The second is just not the kind of thing you can do just by flipping a switch, again, especially in these times, and I'm not at all convinced that zero corporate taxes makes for no serious revenue problems without a comprehensive rewriting of the overall tax plan.

Overall, his proposals -- pitched as a stimulus plan, don't forget -- seem to have very little that's practically attainable in the near term, for any number of reasons, not least of which is political. Some of the ideas seem completely pie in the sky (Who wouldn't want to be done with two wars tomorrow and have a government that didn't waste money?) and even the ones I called reasonable seem like they'd require a herculean effort to get into a bill that wants to address immediate problems.
Well then we're not that far actually. Maybe we differ in our priors. Since I consider the current proposal quite a bit more unreasonable, I'm willing to cut this guy some slack.

However, I do believe that now it's not the moment for large spending increases and/or large tax cuts/increases....

Anyways, gotta go now...
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  #86  
Old 02-06-2009, 11:58 PM
bjkeefe bjkeefe is offline
 
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Default Re: The Case for Big Government

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Originally Posted by Unit View Post
I already answered that question. There are all kinds of Austrian economists. One point I think they share is that all observation is theory laden. In other words, they are generally skeptical of people who claims to have superior data or to be truer to the facts.

My point was that it's not easy to stereotype them. It's a bit like talking about Christians in general.
I'll grant the existence of diversity, but I still cannot tell from what you have said whether or not any of them believe in testing their theories, or whether they generally believe that at least some beliefs should be data-driven. If I had to guess, I'd think you were hedging about saying, "No."

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I had only read one another piece by Bob Murphy before which I had liked. This one I didn't. But why can't you (or Clay) just criticize the piece for what the piece says instead of generalizing to all Austrians.
Don't know about Clay, but remember, I made the conditional statement that if the piece was representational ...

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My point was that Austrianish/Libertarianish economists don't just hang out at the Mises Institute, I didn't mean to imply that the Harvard label is anything more than that.
OIC. Pardon the misunderstanding.

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I'm not a devout member and I'm not being touchy, flipping or otherwise. I do defend the ideas. I take exception when blanket statements are thrown around in a mocking tone.
Already explained why. Now that you've finally said, or at least hinted, that the Mises piece wasn't representational, okay.

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About your last line. Yes I agree, so why don't you point to those statements and leave it at that?
Because I don't see anything wrong with goofing around a little bit.
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  #87  
Old 02-07-2009, 12:00 AM
bjkeefe bjkeefe is offline
 
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Default Re: The Case for Big Government

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Originally Posted by Unit View Post
Well then we're not that far actually. Maybe we differ in our priors. Since I consider the current proposal quite a bit more unreasonable, I'm willing to cut this guy some slack.
Okay. I am not, at least as far as taking his proposals seriously as a means to provide short-term economic stimulus, and importantly, relief.

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However, I do believe that now it's not the moment for large spending increases and/or large tax cuts/increases....
We're fundamentally philosophically different on the spending part. Nothing to be done about that, I guess.

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Anyways, gotta go now...
'kay. See ya.
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  #88  
Old 02-07-2009, 12:27 AM
bjkeefe bjkeefe is offline
 
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Default Re: The Case for Big Government

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Originally Posted by sugarkang View Post
What an asinine statement (not a personal attack according to you, because it's the statement and not person, right?).
I'll be interested to see if you act like you really believe this in the future, and aren't just using it as some sort of momentary joust, or if you're going to go into another snit the next time you get an idea of yours disparaged.

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I'm sorry, you don't go to college and hang out with a circle of friends and become liberal.
Some people do. Me, for example, to some degree. And, as Mary Matalin has recounted in that book she wrote with her husband, sometimes the opposite happens -- one becomes anti-liberal as a result of the experience.

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I have bit my tongue this entire time about these so called straw man accusations that I make. I'll freely admit that I make them.
Thanks.

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It's just retarded that you think you don't (according to your logic, I'm not calling YOU retarded, just your thought process is totally fucking retarded).
I try not to. I encourage you to point out when I do use a straw man argument.

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You say I speak in generalities, but ideologies don't turn on specifics. They start with very basic premises. So, I tend to challenge basic premises, as that is my way of trying to shift a person's paradigm. When Congress debates the stimulus bill, most of the disagreement does not come from specifics. Congressmen disagree because they differ on basic assumptions about human nature, government, etc. It's one thing to call for bi-partisanship in order to appear magnanimous. It's pathetically naive to think that you're going to change someone's mind by saying "let's sit down and talk about this." All positions depend on the fundamental ideology.
I accept your view about most people being more or less bound by their ideological orientations, particularly members of Congress. (I would say the most important ideological consideration for most of members of Congress is keeping their jobs, though.) However, I would like to think that it's not impossible for some people to change their minds after discussion. I know I've changed my mind about a few fairly broad principles in my life, and in each case, almost entirely because of hearing other people make a better case for a different view. Some examples: At various times in my life, I used to believe in restricting abortions, I used to be pretty homophobic, I used to be a zealous advocate for gun control, I used to believe using military force was always wrong, I used to believe in God, and I used to be a wild-eyed fan of the free market. None of these things is true any longer.

For smaller, more well-defined issues, it's even easier for me to imagine changing my mind. Show me enough data, for example, or make a compelling enough case in another way. (This is part of why I dislike hearing someone say "liberals believe" or "as a libertarian, I ..." I don't think worthwhile people are bound by a creed.)

[As an aside, I also have to wonder that if you believe that people are bound as you say why you think it's better to try to undermine their whole belief systems, rather than focusing on a specific topic. Particularly since you say in the first place that it's "pathetically naive to think that you're going to change someone's mind."]

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Actually, I don't feel irritated by that at all. It only irritates me, as I mentioned before, when people confuse Bush policies with libertarian policies. I won't ever criticize you for talking trash about libertarians because they like markets. When I make criticisms about liberals, it's because there are plenty of liberals that actually believe that shit.
As far as your specific complaint goes, you do have to admit that Bush used a lot of language that matched what libertarians often preach. He often: praised the free market, insisted that the private sector could do things better, and said government regulations were bad and that corporations/industries/individuals could do a better job moderating their own behavior. He tried his level best to cut taxes wherever he could, tried to privatize Social Security, and argued against a number of government-assistance and -protection programs.

Nonetheless, I agree that ignoring any distinction between him and what you believe is something reasonable to be irritated by. I am saying that it is equally irritating to hear you say "liberals believe X" when it's the case that a significant fraction, maybe even a majority, do not.
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Last edited by bjkeefe; 02-07-2009 at 01:02 AM.. Reason: wordsmithing
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  #89  
Old 02-07-2009, 12:35 AM
claymisher claymisher is offline
 
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Default Re: The Case for Big Government

Sorry, I should have been clearer. Terminology varies from field to field ... anyway, I was trying to contrast theories that are testable propositions versus logical systems built up on their assumptions. Logical systems such as: define surplus value and use value, write 600 pages, and tada! communism. Or define the principle of human action, write 900 pages, tada! free-market utopia. Or invent the id, ego, and superego, and tell then everybody exactly what their problem is. By rejecting empiricism (to the extent that they actually do I don't really know) Austrians, and anyone else who is stuck in their own head, prevent themselves from learning more about the world. That is a problem. The sciences didn't really kick off until people got in the mud and rolled around in the data, and invented new ways of seeing the world.

I think economics generally has followed the wrong role model. Instead of pretending to be physics they should have followed biology. Biological systems are insanely complex. What biologists don't know is astounding. Last time I checked they still don't know the function of every part of a cell. Once the human genome was mapped everybody figured out that protein folding was also crucial to understanding what proteins do. And there's no unified theory of biology, and that doesn't bother anyone (You could make an argument for evolution, but the theory of evolution can't tell you why MC1R makes your hair red).

But holy cow, look at what biologists have accomplished! And before they really understood genetics, evolution, chromosomes, DNA, etc they spent centuries gathering observations. To link this back to the diavlog, like Madrick said, economists would be well-served to pay attention to actual economic history. It would improve their models, and help to generate new theories.

(On the flip side, back when physicians rejected mere empiricism and stuck to their Galenism, they just bled their poor patients to death. I think it's fair to judge a system on its consequences.)

There's plenty of under-experimented theory in mainstream economics. Public choice theory is really just naked cynicism. Game theory before the complexity folks got to it was just a bunch of inert math. There are some good natural experiments (monetarism was tried, failed, and everybody moved on). And now we have behavioral economics, which has actual reproducible experiments.

I actually agree with a lot of the Austrians critiques of neoclassical economics, but those critiques aren't unique to the Austrians, so they don't get that much credit for them. They were ahead of the curve on spontaneous order and self-organizing systems, but they've been left way, way behind by the complexity/Sante Fe school now. And I guess Hayek wrote about million things, so some of it is probably great.

Anyway, the big problem with Austrians is they say, those guys are wrong, government is bad because we said so, now come live in our libertarian utopia. Seriously. That's a hell of a stretch. They started at the end worked backwards. They have nothing to say about poverty or the income distribution. If they acknowledge externalities at all they discount them. They close their eyes to public goods. They more or less pretend unemployment doesn't exist. All they have on offer is a weary fatalism and a belief that growth will fix everything if you just believe in the system. It's like a doctor who pats you on the head and tells you "You're going to die, but it was really for the best anyway." I think the evidence shows that with democratic government we can do a lot better than that.

Or looking at it from another angle, make a list of the main policy prescriptions that someone from the Austrian school would make (I posted one earlier). Now make a list of policy prescriptions that your average I-got-mine-screw-you white dude would make, like Joe the Plumber. What's the difference? Is that really the best we can do?

Last edited by claymisher; 02-07-2009 at 12:53 AM..
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  #90  
Old 02-07-2009, 12:51 AM
x9#z6 x9#z6 is offline
 
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Default Re: The Case for Big Government

This is a good diavlog. I'm also happy to see three macroecon themed diavlog's in a row even if two of them featured libertarians.
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  #91  
Old 02-07-2009, 01:13 AM
sugarkang sugarkang is offline
 
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Default Re: The Case for Big Government

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Originally Posted by claymisher View Post
All they have on offer is a weary fatalism and a belief that growth will fix everything if you just believe in the system. It's like a doctor who pats you on the head and tells you "You're going to die, but it was really for the best anyway." I think the evidence shows that with democratic government we can do a lot better than that.
Right. I think Megan addresses this shortcoming as well. I think that's when her inner liberal kicks in because she mentioned in one of her diavlogs that she cares about the lowest 10% of society and their social, economic mobility. I have similar concerns as well, but my priorities are on the middle class.

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Or looking at it from another angle, make a list of the main policy prescriptions that someone from the Austrian school would make (I posted one earlier). Now make a list of policy prescriptions that your average I-got-mine-screw-you white dude would make, like Joe the Plumber. What's the difference? Is that really the best we can do?
Yes, to be blunt about it. I guess the theory is that the egalitarian alternative would make us all equally destitute. Ubermensch FTW. I do share your concerns though.
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  #92  
Old 02-07-2009, 01:41 AM
Lemon Sorbet Lemon Sorbet is offline
 
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Default Re: The Case for Big Government

Picivorous,

Advocating for bigger and better government is not the same as advocating for turning U.S. into a Socialist nation.
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Originally Posted by piscivorous View Post
Let us make a direct comparison starting with Presidents Reagan and Mitterrand.....This would be an apples-to-apples comparison of free-market vs. socialist governance.
It would be nothing of the kind. For one, France is not, and was not, a Socialist country. Though many nations have active socialist parties in and out of power, there are actually not that many true Socialist nations with whom you can do a true systematic comparison of Socialism vs. Capitalism, maybe Cuba. I really don't know what it is that you think Mr. Madrick is advocating that worries you that we will turn into France. Plus, France is a capitalist nation with some socialist policies thrown in, and it has totally different political, cultural, and historical context than the U.S. So the comparison would be like having a gifted or autistic child on one side, and a normal child on the other, and trying to determine from 10 years of data if spanking works. Just because one child turned out better means nothing. You can do a side by side with Reagan and Mitterrand on a number of things, but in discussing whether government can or should play a bigger role in the well being of a nation, the study model you propose is meaningless.

But if you insist on getting some sort of conclusions on socialist policies, lets just cut to the chase nevermind GDPs or other technical data, lets just go straight to what makes people happy and content with their lives. After all, isnt that what all of this is about in the end? Is it a coincidence that in a poll on happiness of populations around the world, 10 out of the top 12 are nations in which Socialist governments are either in power, in a coalition government, or were previously in power for a long time and enacted many Socialist programs? Some on the list that come to mind are Norway, Ireland, Sweden, Switzerland, Canada, even Columbia(!), with its purported violence and kidnappings. Maybe when people feel confident lifes basic safety nets such as healthcare, unemployment, pensions, etc., are taken care of by its government, they feel more happy and confident despite it all. But you know what? Im not going to put too much stock in that poll because its got way too many holes, but not as many holes as the Reagan/Mitterrand apples to apples comparison.

Last edited by Lemon Sorbet; 02-07-2009 at 02:05 AM..
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  #93  
Old 02-07-2009, 01:56 AM
Lemon Sorbet Lemon Sorbet is offline
 
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Default Re: The Case for Big Government

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Originally Posted by Tara Davis View Post
I'd say yes, he does have it backwards.

To suggest that government got a lot worse after anti-government sentiment ascended implies that the LBJ/Nixon/Ford/Carter years were the absolute highwater mark of Good Government.
How do you get that logic? Government could have been at the pinnacle in say, the 30's, but that it nosedived during the 70's. This seems to be taking a statement and drawing your own conclusions that are not even implied.

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There might be a few people out there who believe that, but I'll take the Reagan/Bush(I)/Clinton years over that era any day and twice on Sunday.
I'm perplexed by this statement as well, and not only because it is dependent on the first faulty logic to make sense. Who wouldn't want to live during the good times rather than bad? But what does that have to do with what we are discussing here, the premise of which is that government can be used for excellence but we've let it decline?
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  #94  
Old 02-07-2009, 03:21 AM
Unit Unit is offline
 
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Default Re: The Case for Big Government

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Originally Posted by bjkeefe View Post
I'll grant the existence of diversity, but I still cannot tell from what you have said whether or not any of them believe in testing their theories, or whether they generally believe that at least some beliefs should be data-driven. If I had to guess, I'd think you were hedging about saying, "No."
You seem reluctant to acknowledge that economic theories are very hard to test: you can't rerun historical events and lab experiments have their problems too. These are not simple questions. As I said they are part of old and ongoing debates.
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  #95  
Old 02-07-2009, 03:41 AM
bjkeefe bjkeefe is offline
 
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Originally Posted by Unit View Post
You seem reluctant to acknowledge that economic theories are very hard to test: ...
Sorry. Didn't mean to. I so acknowledge.

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you can't rerun historical events and lab experiments have their problems too. These are not simple questions. As I said they are part of old and ongoing debates.
Also agreed. Still, there are some tests that can be conducted; e.g., pilot programs on regions smaller than countries, and it also seems to me that instituting a new policy in a country is a test of sorts. And there's no doubt that data can be collected.

But, yes, it is often hard to interpret the results so that close to unanimous interpretation is achieved.
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  #96  
Old 02-07-2009, 05:21 AM
Francoamerican
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Originally Posted by Unit View Post
Usually yes, but now they're making the case for huge interventions in the economy per se, and not as impartial arbiter but as an actual player and entrepreneur. We've just finished witnessing what happens when entrepreneurs are insulated from losses and are given monopoly privileges (see financial collapse) and now they want to take that model and deployed on an even grander scale..
So far the interventions in the economy--bailing out the banks etc.--have been emergency measures to prevent the whole financial system from collapsing, as it did in 1929-31. Letting the banks fail would have punished all Americans (and many foreigners too). It would have been sheer folly to let such a thing happen just to administer a lesson in free-market economics to the incompetent and rapacious bank executives et al. responsible for the crisis. Personally, I think it would have made more sense to nationalize, temporarily, the banks instead of taking over the "toxic assets." At least, the tax payer might then have expected to gain in the end.

The fact that emergency measures to save the economy in a crisis are necessary, and can only be undertaken by the government because the government alone has the means and the authority to act on such a scale, does not change the nature of government: to act for the good of ALL. That doesn't mean the government is becoming an economic actor. Hence I disagree with your next statement:

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Originally Posted by Unit View Post
Again, you are talking about the institutional role of govt, while proponents of big govt want it to produce hamburgers and flip house mortgages..
This is nothing but an exaggeration for comic effect. Once again a stimulus package, such as the one Obama wants to introduce, intervenes directly in the economy only in order to stimulate demand by keeping enough people employed to prevent a recession from turning into a depression....which, by the way, it may not succeed in doing.


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Now on the point about institutions, laws, conventions, yes sure govts are usually needed for that. But this can also be overblown. Norms evolve in society through the interaction of millions of people and it's a good thing when the govt limits itself to acknowledging what crystalizes in society. A good example is the issue of gay marriage in California, where through a laborious process involving individuals agreeing to abide to a private contract and being able to find judge that would recognize it, had succeeded in evolving new norms and convention. Then came the majority vote and the legislative branch could now very well erase what had emerged spontaneously. There are many other examples of this ranging from the fact that half of all policing is done by private security forces, to the example of commercial credit card companies that are accepted around the world despite the fact that we don't have a global govt.
You have to distinguish between norms, or customs, and the framework that allows them to coexist. In the final analysis, it is the state that decides, whether by vote or by judicial ruling, what customs are to be allowed in the same territory (for example states that have a Christian heritage have decided that polygamy is unlawful...but in Saudi Arabia polygamy is perfectly legal). Since I believe that the state has the rightful authority to decide what is or what is not marriage, or what is or is not a civil union, I am not troubled by your example. Private security forces may be necessary in the US (in Europe they are rare),they are still subordinate to the law of the land. They cannot, for example, take part in a criminal investigation.

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  #97  
Old 02-07-2009, 12:04 PM
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So far the interventions in the economy--bailing out the banks etc.--have been emergency measures to prevent the whole financial system from collapsing, as it did in 1929-31. Letting the banks fail would have punished all Americans (and many foreigners too). It would have been sheer folly to let such a thing happen just to administer a lesson in free-market economics to the incompetent and rapacious bank executives et al. responsible for the crisis. Personally, I think it would have made more sense to nationalize, temporarily, the banks instead of taking over the "toxic assets." At least, the tax payer might then have expected to gain in the end.
You seem to have internalized Bush's narrative, but not everyone agrees. Kling, Cochrane, et al., for instance, think that the govt could have helped
with a rational dismantling of the too-big-to-fail banks. Again the analogies with eighty years ago might not be relevant here. So far the current strategy doesn't seem to work and it's not like pain is erased: it's just shifted to somebody else (the tax-payers and my kids in this instance).



Quote:
The fact that emergency measures to save the economy in a crisis are necessary, and can only be undertaken by the government because the government alone has the means and the authority to act on such a scale, does not change the nature of government: to act for the good of ALL. That doesn't mean the government is becoming an economic actor. Hence I disagree with your next statement:
The nature of govt is definitely NOT to act for the good of all. What's good for me might not be good for you. There's no such thing as the "good of all". Also time and time again we see govt acting for the good of some people to detriment of others. So I can't follow you here.


Quote:
This is nothing but an exaggeration for comic effect. Once again a stimulus package, such as the one Obama wants to introduce, intervenes directly in the economy only in order to stimulate demand by keeping enough people employed to prevent a recession from turning into a depression....which, by the way, it may not succeed in doing.
You seem to have internalized Obama's narrative. But again not everyone agrees. The composition of the workforce is such that the direct intervention of govt instead of employing the idle resources, will steal away from healthy sectors crucial forces, hence making the situation doubly grim. Let me give you an example: right now people with higher-ed degrees are loosing their job, do you think they'll pick up a shovel to build the round-a-bouts and the "shovel" ready project that Obama likes so much? Or is it more likely that very few high-skilled and hyper-productive (think of all the machinery they are able to operate) construction workers will get the job?



Quote:
You have to distinguish between norms, or customs, and the framework that allows them to coexist. In the final analysis, it is the state that decides, whether by vote or by judicial ruling, what customs are to be allowed in the same territory (for example states that have a Christian heritage have decided that polygamy is unlawful...but in Saudi Arabia polygamy is perfectly legal). Since I believe that the state has the rightful authority to decide what is or what is not marriage, or what is or is not a civil union, I am not troubled by your example. Private security forces may be necessary in the US (in Europe they are rare),they are still subordinate to the law of the land. They cannot, for example, take part in a criminal investigation.
I see. So the state has the rightful authority to decide, but two individuals wanting to sign a private contract don't. Well that's where are differences lie. However, just because the state succeed in writing down a law black-on-white it doesn't mean it is a law in civil society. Just because the speed-limit is 60mph it doesn't mean the average speed on the highway won't be 70mph.
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Old 02-07-2009, 01:48 PM
claymisher claymisher is offline
 
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You seem reluctant to acknowledge that economic theories are very hard to test: you can't rerun historical events and lab experiments have their problems too. These are not simple questions. As I said they are part of old and ongoing debates.
There's a huge gulf between acknowledging the difficulty of testing and being against testing in principle. You can't hide behind epistemological problems. Otherwise why should anyone assume Austrians are better that communists?
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Old 02-07-2009, 02:10 PM
Francoamerican
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You seem to have internalized Bush's narrative, but not everyone agrees. Kling, Cochrane, et al., for instance, think that the govt could have helped with a rational dismantling of the too-big-to-fail banks. Again the analogies with eighty years ago might not be relevant here. So far the current strategy doesn't seem to work and it's not like pain is erased: it's just shifted to somebody else (the tax-payers and my kids in this instance)..
The vast majority of professional economists disagree with you. I have nothing to add, although I agree that your kids are going to be picking up the tab for the irresponsible behavior of the baby boomers and their kids.

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The nature of govt is definitely NOT to act for the good of all. What's good for me might not be good for you. There's no such thing as the "good of all". Also time and time again we see govt acting for the good of some people to detriment of others. So I can't follow you here. .
If you think the government acts only for the good of a few, there is nothing I can say to make you change your mind. But you will never make me change my mind about the market: it does NOT represent the common good.

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You seem to have internalized Obama's narrative. But again not everyone agrees. The composition of the workforce is such that the direct intervention of govt instead of employing the idle resources, will steal away from healthy sectors crucial forces, hence making the situation doubly grim. Let me give you an example: right now people with higher-ed degrees are loosing their job, do you think they'll pick up a shovel to build the round-a-bouts and the "shovel" ready project that Obama likes so much? Or is it more likely that very few high-skilled and hyper-productive (think of all the machinery they are able to operate) construction workers will get the job?.
Maybe, but you are missing the point. If demand collapses because of unemployment, the whole economy will collapse.

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I see. So the state has the rightful authority to decide, but two individuals wanting to sign a private contract don't. Well that's where are differences lie. However, just because the state succeed in writing down a law black-on-white it doesn't mean it is a law in civil society. Just because the speed-limit is 60mph it doesn't mean the average speed on the highway won't be 70mph.
Sorry, but you are simply mistaken. The state is the ultimate authority. Whether it be speed limits, marriage contracts, or the definition of first-degree murder, the state decides. Just try acting on some other hypothesis. Good luck--- although I agree that breaking the speed limit from time to time can be fun.
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Old 02-07-2009, 04:00 PM
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The vast majority of professional economists disagree with you. I have nothing to add, although I agree that your kids are going to be picking up the tab for the irresponsible behavior of the baby boomers and their kids.
Not true.

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If you think the government acts only for the good of a few, there is nothing I can say to make you change your mind. But you will never make me change my mind about the market: it does NOT represent the common good.
I never said the market represent the common good. Stick to your claims.

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Maybe, but you are missing the point. If demand collapses because of unemployment, the whole economy will collapse.
"Demand" is an abstract aggregate concept that you are treating like an ingredient in a recipe. Stop the voodoo economics please.

Quote:
Sorry, but you are simply mistaken. The state is the ultimate authority. Whether it be speed limits, marriage contracts, or the definition of first-degree murder, the state decides. Just try acting on some other hypothesis. Good luck--- although I agree that breaking the speed limit from time to time can be fun.
Just because the state is declares pot to be illegal it doesn't mean people stop smoking it. So sure, stick to your nice theory, but it doesn't have much to do with reality.
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Old 02-07-2009, 04:02 PM
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There's a huge gulf between acknowledging the difficulty of testing and being against testing in principle. You can't hide behind epistemological problems. Otherwise why should anyone assume Austrians are better that communists?
I have no idea what you just said.
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  #102  
Old 02-07-2009, 04:24 PM
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Here is Hayek's Nobel Lecture which is quite relevant to this discussion.

http://nobelprize.org/nobel_prizes/e...k-lecture.html
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  #103  
Old 02-07-2009, 04:25 PM
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I posted this below, but let me post it here too, since it applies to what you were saying. This Hayek's Nobel lecture:

http://nobelprize.org/nobel_prizes/e...k-lecture.html
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  #104  
Old 02-07-2009, 05:30 PM
claymisher claymisher is offline
 
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I have no idea what you just said.
I give up.

http://www.huppi.com/kangaroo/L-aussm.htm
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  #105  
Old 02-07-2009, 11:36 PM
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Ok. I agree with a lot that's in this article. Yes, Austrians do not think economics is a science. But they also go further and say that those who pretend to be "scientific" (economists) are merely mimicking real science. In reality their "data" is cherry-picked and dictated by their biases (most of which they are unaware of). They talk about radical uncertainty and organized complexity, "The pretense of knowledge" is the title of Hayek's lecture. I don't think you can easily laugh this position away or accuse it of dogmatism. Mathematics too is simply based on logic and yet you wouldn't call it a religious faith.

But let's look at what is going on right now. The politicians are (whether Bush or Obama) quite happy to push forward the most cockamamie spending projects under the pretense of being backed by the macroeconomic profession, when in fact they are not. Paul Krugman is not a macroeconomist. His Nobel is in International Trade theory. So my question to you and Brendan is this: was the theory that there's even such a thing as "aggregate demand" ever tested? That was one of the original point that Hayek made to Keynes. How can you build a whole theory on averages? Where every quantity is just a number hiding all kinds of fluctuations, some demand that goes up, some that goes down, some prices that change here, but not there, and time, where do you put time in all this? Was any of this ever tested? Of course not. We are now being used as guinea pigs in a giant experiment based on a theory-laden skewed view of how the world works. There's no science here.
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Old 02-08-2009, 02:15 AM
piscivorous piscivorous is offline
 
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...Paul Krugman is not a macroeconomist. His Nobel is in International Trade theory. ...
Robert Barro
Quote:
Robert Joseph Barro (born September 28, 1944) is an American conservative macroeconomist and the Paul M. Warburg Professor of Economics at Harvard University. He is among the most influential economists in the world according to IDEAS/RePEc.[1]
In an article in the Atlantic titled "An interview with Robert Barro" which I found to be an interesting read; has this to say about Paul Krugman
Quote:
Do you read Paul Krugman's blog?

Just when he writes nasty individual comments that people forward.

Oh, well he wrote a series of posts saying he thought the World War II spending evidence was not good, for a variety of reasons, but I guess...

He said elsewhere that it was good and that it was what got us out of the depression. He just says whatever is convenient for his political argument. He doesn't behave like an economist. And the guy has never done any work in Keynesian macroeconomics, which I actually did. He has never even done any work on that. His work is in trade stuff. He did excellent work, but it has nothing to do with what he's writing about.

I'm not in a position to...

No, of course not.

I'm not in a position to know things like the degree to which Paul Krugman counts as a relevant expert on new Keynesian economics.

He hasn't done any work on that. Greg Mankiw has worked in that area.
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Old 02-08-2009, 02:36 AM
bjkeefe bjkeefe is offline
 
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In an article in the Atlantic titled "An interview with Robert Barro" which I found to be an interesting read; has this to say about Paul Krugman
Ahem:

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Originally Posted by piscivorous View Post
Yep that's the new politics. Ignore the data and tout the opinions of insightful economic thinkers. Well insightful economic thinkers, being human, have agendas of there own. Their opinions are the reflection of those agendas and their desired policy preferences. I personally prefer the data to opinion, no matter how prescient, insightful and decorated the orator.
Ahem:

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Originally Posted by piscivorous View Post
But then again if you can't make rational arguments to repudiate the given data attack the presenter.
Via unsupported assertions from a second party, no less.

However, as long as you now appear to find what one person says about another so persuasive, please enjoy this post from Paul Krugman:

Quote:
War and non-remembrance

As Ive 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, Ive 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 cant 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.

Update: I should also point out this, in Barros article:

Quote:
John Maynard Keynes thought that the problem lay with wages and prices that were stuck at excessive levels. But this problem could be readily fixed by expansionary monetary policy, enough of which will mean that wages and prices do not have to fall.
Is it too much to ask that someone criticizing Keynes actually, you know, read Keynes at least enough to know that he devoted a whole chapter to explaining why a fall in wages would not expand employment? Or that someone commenting on contemporary policy at least be aware that the whole reason were talking about fiscal expansion is that monetary policy has run out of room?
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  #108  
Old 02-08-2009, 03:37 AM
piscivorous piscivorous is offline
 
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Actually BJ as per usual you have read into it what you want. The post about Paul Krugman was merely to support the part of the quote I included
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...Paul Krugman is not a macroeconomist. His Nobel is in International Trade theory. ...
about Krugman's background from someone that should know. I know you are a big fan of his but the data is that macroeconomics is not his realm of expertize. Mr. Krugman is free to pontificate upon anything his heart desires, economics, politics... the color of the sky for all that matters. His opinion is informed by his knowledge but that does not make it any more salient than the opinion of another highly regarded economist, from a different school of thought, it just makes it different.

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  #109  
Old 02-08-2009, 03:42 AM
bjkeefe bjkeefe is offline
 
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Actually BJ as per usual you have read into it what you want. The post about Paul Krugman was merely to support the part of the quote I included about Krugman's background from someone that should know. I know you are a big fan of his but the data is that macroeconomics is not his realm of expertize. Mr. Krugman is free to pontificate upon anything his heart desires, economics, politics... the color of the sky for all that matters. His opinion is informed by his knowledge but that does not make it any more salient than the opinion of another highly regarded economist, from a different school of thought it just makes it different.
You think because he won the Nobel prize for international trade theory he therefore cannot possibly know anything about macroeconomics?

Do you also believe that a solid-state physicist knows nothing about Newtonian Mechanics? That a philosopher who specializes in Hume knows nothing about Kant? That a professor who teaches Wordsworth could have nothing useful to say about Shakespeare?

Seems to me that the post Krugman wrote in response to Barro's claims about WWII and GDP hits the nail on the head. It isn't a matter of my liking Krugman or what his principal area of expertise is -- the rebuttal is obviously sound.
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Old 02-08-2009, 04:07 AM
piscivorous piscivorous is offline
 
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As I said "his opinions are informed by his knowledge." I'm quite sure that he believes his understanding of it is sufficient to allow him to feel secure in his pronouncements. As to their validity I have made no argument; I linked to the article to provide a different perspective from someone that is probably at least as knowledgeable but professes a different take on the matter. Argue the finer details with Professor Barro just as Paul Krugman does or wait a few years and interpret the results, of this experiment, from the results or lack thereof. But have no doubt about it; this massive spending on borrowed money is an experiment and I hope that the politicians can continue to find someone to finance it.

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  #111  
Old 02-08-2009, 04:14 AM
bjkeefe bjkeefe is offline
 
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As I said "his opinions are informed by his knowledge." I'm quite sure that he believes his understanding of it is sufficient to allow him to feel secure in his pronouncements. As to their validity I have made no argument; I linked to the article to provide a different perspective from someone that is probably at least as knowledgeable but professes a different take on the matter. Argue the finer details with Professor Barro just as Paul Krugman does or wait a few years and interpret the results, of this experiment, from the results or lack thereof. But have no doubt about it; this massive spending on borrowed money is an experiment and I hope that the politicians can continue to find someone to finance it.
That much seems reasonable.
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  #112  
Old 02-08-2009, 04:53 AM
claymisher claymisher is offline
 
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But let's look at what is going on right now. The politicians are (whether Bush or Obama) quite happy to push forward the most cockamamie spending projects under the pretense of being backed by the macroeconomic profession, when in fact they are not. Paul Krugman is not a macroeconomist. His Nobel is in International Trade theory. So my question to you and Brendan is this: was the theory that there's even such a thing as "aggregate demand" ever tested? That was one of the original point that Hayek made to Keynes. How can you build a whole theory on averages? Where every quantity is just a number hiding all kinds of fluctuations, some demand that goes up, some that goes down, some prices that change here, but not there, and time, where do you put time in all this? Was any of this ever tested? Of course not. We are now being used as guinea pigs in a giant experiment based on a theory-laden skewed view of how the world works. There's no science here.
We're all always guinea pigs. There's no escaping it. What are you going do?

I'm not an expert (just a BA in econ), but I can tell you Krugman knows as much about macro as Barro does. You can't really do trade without macro.

It's funny that Barro comes up. Barro doubles down on the rational agent approach for his macro. You mean not believe this, but Barro's model has no role for money: he assumes everybody calculates the inflation rate into prices, and that their calculations are correct. Yikes. That is crazy talk.

As for the general equilibrium stuff, I don't really buy it either. I think it'll be reconceptualized with a new foundation in complexity economics someday, and turn out to have been a pretty good approximation.

It's true, economic can't be a science like chemistry, but it can be more than thought experiment: it can be a practical craft based on experience, trial and error, and with inspiration from continually update models based in reality. It turns out most things in life aren't like chemistry (including chemistry) and we do pretty well. We don't turn to fixed principles laid out by long dead system-builders and we don't throw our hands up in the face of difficult problems. We muddle through.

Martin Wolf can say it better than I can.

Time for an episode about William James and John Dewey!
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  #113  
Old 02-08-2009, 05:12 AM
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What I said about the state isn't a theory. It is a fact. Of course, people can disobey the laws, and do whatever they please---and as long as they are not caught I suppose you could say that they are "free". The fact remains that all actions that concern OTHER PEOPLE are regulated by the state.

That is what is usually meant by the common good.

Thank you for the Hayek. But I have already read him. By the way, in his Constitution of Liberty Hayek defends a theory of the state as the rule of law that I find perfectly acceptable.
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  #114  
Old 02-08-2009, 06:48 AM
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PS

I read Hayek's speech and found myself nodding in agreement with much of what he said. The scientific pretensions of economists are largely quackery. For all the reasons Hayek gives---the complexity of the data, the large number of variables, the impossibility of knowing what the millions of economic actors know etc.---economics will never be an exact science, capable of making the kinds of causal predictions we expect of science with a capital S.

Unfortunately, politicians and the economists who advise them cannot afford to be sceptics about the possibility of knowledge. The future depends on what they do now. Even if they are completely in the dark.

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  #115  
Old 02-08-2009, 10:21 AM
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We're all always guinea pigs. There's no escaping it. What are you going do?

I'm not an expert (just a BA in econ), but I can tell you Krugman knows as much about macro as Barro does. You can't really do trade without macro.

It's funny that Barro comes up. Barro doubles down on the rational agent approach for his macro. You mean not believe this, but Barro's model has no role for money: he assumes everybody calculates the inflation rate into prices, and that their calculations are correct. Yikes. That is crazy talk.

As for the general equilibrium stuff, I don't really buy it either. I think it'll be reconceptualized with a new foundation in complexity economics someday, and turn out to have been a pretty good approximation.

It's true, economic can't be a science like chemistry, but it can be more than thought experiment: it can be a practical craft based on experience, trial and error, and with inspiration from continually update models based in reality. It turns out most things in life aren't like chemistry (including chemistry) and we do pretty well. We don't turn to fixed principles laid out by long dead system-builders and we don't throw our hands up in the face of difficult problems. We muddle through.

Martin Wolf can say it better than I can.

Time for an episode about William James and John Dewey!
There again Wolf thinks Keynesians are the "technicians", the ones free of morality tales, when in fact they are not. Now that Austrians were in favor of the "liquidationist" theory in the thirties turns out not to be correct see here

http://economics.sbs.ohio-state.edu/...7056/07056.pdf

That of course doesn't mean that liquidation is not the right strategy right now.
How can we possibly argue by analogy with the world of 90 years ago?
It is not the same crisis, the composition of the work-force is different, the global economy is different, the gold-standard, etc...there are so many fundamental differences that all these debating about the Great Depression is completely useless.


PS: I actually was not referring to Barro at all.
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  #116  
Old 02-09-2009, 06:25 PM
Bobby G Bobby G is offline
 
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That a philosopher who specializes in Hume knows nothing about Kant?
I can assure you that there are people out there who do Hume and don't know very much about Kant. Now, "not knowing very much" is not the same as "knowing nothing", of course, but in some ways it's more pernicious. Often, what non-Kant scholars know about Kant is something some Kant scholar told them fifteen years ago that has since been shown to be wrong, misleading, or extremely unlikely. Or they gleaned it from their own reading of Kant and didn't know enough background to really understand what Kant meant by, say, "maxim."

I fear that you will dismiss this as mere nitpicking, but I think it in fact affects the larger point. I don't know much about economics (I do have a B.A. in it, though), but my guess is that the difference between studying macroeconomics and international trade is about as big as the difference between studying, say, metaphysics and epistemology, or normative ethics and meta-ethics, or perhaps even greater than that. And if that's right, then I wouldn't be at all surprised to learn that Krugman made a surprisingly bone-headed error in macro.

That said, Krugman is a brilliant man, and so it's perfectly possible that, even though he's not a specialist in macro, he knows just as much, if not more, than many specialists in it. But it's also possible, at least from my experience, that he may believe extremely outdated things about it.
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  #117  
Old 02-09-2009, 06:30 PM
Bobby G Bobby G is offline
 
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I'm not an expert (just a BA in econ), but I can tell you Krugman knows as much about macro as Barro does. You can't really do trade without macro.
Just because you can't do trade without macro doesn't mean that Krugman knows as much as Barro, who is considered one of the best macroeconomists around (at least he was back in the mid-90s, when I was doing my econ degree).

Quote:
It's funny that Barro comes up. Barro doubles down on the rational agent approach for his macro. You mean not believe this, but Barro's model has no role for money: he assumes everybody calculates the inflation rate into prices, and that their calculations are correct. Yikes. That is crazy talk.
Of course it's crazy if it's assumed to be literally true. But if made just as an assumption for a model whose main use is predictive, it isn't crazy, if it's in fact predictive. That said, my guess would be that it doesn't predict all that well; the question is, how well does it predict compared to its more realistic, and therefore more complicated, competitors?
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  #118  
Old 02-09-2009, 07:59 PM
claymisher claymisher is offline
 
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Originally Posted by Bobby G View Post
Just because you can't do trade without macro doesn't mean that Krugman knows as much as Barro, who is considered one of the best macroeconomists around (at least he was back in the mid-90s, when I was doing my econ degree).



Of course it's crazy if it's assumed to be literally true. But if made just as an assumption for a model whose main use is predictive, it isn't crazy, if it's in fact predictive. That said, my guess would be that it doesn't predict all that well; the question is, how well does it predict compared to its more realistic, and therefore more complicated, competitors?
That's exactly what I would have said three years ago.
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  #119  
Old 02-10-2009, 12:30 AM
bjkeefe bjkeefe is offline
 
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Default Re: The Case for Big Government

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Originally Posted by Bobby G View Post
[...]
Fair enough. But if you're going to admit these possibilities, then you also have to admit the possibility that someone who claims to specialize in a given field may have very wrong-headed ideas about it, particularly when the field is so prone to being approached from one's ideological predispositions. Think of Marcus Ross, to take an extreme example -- earns a Ph.D. in geosciences, still insists the Earth is only a few thousand years old.

Now, granted, Krugman is as susceptible to leanings as anyone else. The only points I really tried to make in the post you replied to are that (1) it's a little silly to conclude that because Krugman won honors for work in one particular branch of economics, it therefore follows that he cannot know anything about any others, and (2) that it is more reasonable to expect that someone who is an expert in a given field is likely to know considerably more than average about closely related matters, especially those that are more fundamental to the general field.

It should also be pointed out that Krugman is hardly alone in his views of the issues of the day. He's merely one of the best-known of the economists advocating what he is advocating.
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Last edited by bjkeefe; 02-10-2009 at 12:43 AM..
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  #120  
Old 02-10-2009, 01:46 AM
Bobby G Bobby G is offline
 
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Default Re: The Case for Big Government

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Originally Posted by claymisher View Post
That's exactly what I would have said three years ago.
I don't know what that means, but ok.
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