Showing posts from October, 2012

Summing up the Debt War

Ken B. does a good job.

Irrational Nonsense!

I had forgotten that the Grateful Dead sponsored the 1992 Lithuanian Olympic basketball team! But what I really look forward to is, as the rest of the audience sits in tears at the end of the movie, seeing what reaction Ryan Murphy gets as he catcalls "Irrational localism!"

(Hat tip Pete Boettke.)

Can a Jolt Be Good for You? (When Reductios Crash and Burn)

Bob Murphy tries to do a reductio of the case that disasters sometimes contain a silver lining by positing the absurdity of the analogous microeconomic case:
The "macro" case of an economy with idle resources, suddenly being jolted out of its rut by a hurricane, is analogous to a "micro" case of a man who was laid off, agonizing over what to do with himself. Should he go back to school, apply to work at fast food restaurants, start his own lawn-cutting business…? Then, in the midst of his indecision, he realizes his house is on fire! The man suddenly knows exactly what he needs to do with himself—he has to run to the kitchen and grab the fire extinguisher. Yet would anybody dare argue that the fire, notwithstanding the property damage to the house, at least solved the man’s problem of idle labor? Well, Bob, the answer, unfortunately for your argument, is that perhaps not in such an extreme case (but who knows without more details), but in closely similar cases, ye…

Window Breaking, Kuehn Versus Murphy

Kuehn defends Morici against Boudreaux here. Then Murphy responds, criticizing Kuehn: "For an example of an economist who quite clearly is saying that the storm is bad on a personal, human level, but that it might actually leave us better off in material terms, see this guy."

But what did Morici actually write?

"None of this is meant to discount the storm's costs to individuals and the temporary or even permanent disruption to lives and communities, much of which cannot be quantified. However, when government authorities facilitate quick and effective rebuilding, the process of economic renewal can leave communities better off than before in many tangible ways... A few years down the road, then, natural disasters on the scale of Sandy are not as devastating as they once may have seemed."

So Morici characterizes the post-hurricane state at some unspecified later time as better in many ways: the hurricane will prove to have been not as devastating as we tho…

The TV Weathermen Tick Me Off with This One

They are always hectoring listeners to "Stay inside unless you absolutely need to be out."  But, as Sullivan notes, you know who doesn't "absolutely need to be out?" Them! You could tell the conditions outside just fine from the doorway of a building, and be a lot safer. They are out there for ratings.

I Want to Take Part!


Poetry in Broadcast

A reporter on News 4 just said, "And for a moment you could see the whole bay so clearly, because the moon was shining so brightly through the non-existent clouds."

The Worst Effects of Sandy Are Still to Come

It is with great trepidation that I await the post-storm surge in accusations of who does and who doesn't understand Bastiat.

UPDATE: I see Daniel Kuehn was here already.

Dylan Byers: Confused About "Chance of Winning"


"So should Mitt Romney win on Nov. 6, it's difficult to see how people can continue to put faith in the predictions of someone who has never given that candidate anything higher than a 41 percent chance of winning."

What kind of clown is this guy? With the prediction quoted Silver is claiming, in essence, that if we held this election 100 times, Romney would win 41 of them. So if Romney wins this election, that's that? Silver is done for as a prognosticator?

Then Byers doubles down: "For all the confidence Silver puts in his predictions, he often gives the impression of hedging."

Uh, duh. That's what it means when he doesn't announce that Obama has a 100% chance of winning.

The Lighter Side of Sandy...

Was listening to Mayor Bloomberg "speak Spanish." My whole family was rolling around laughing.

Smiling Gods Looking Down from the Sky

"One sees in the newspapers photographs from beaming city officials and architects looking down on the successful model as if they were in helicopters, or gods. What is astounding, from a vernacular perspective, is that no one ever experiences the city from that height or angle. The presumptive ground-level experience of real pedestrians -- window-shoppers, errand-runners, aimlessly strolling lovers -- is left entirely urban-planning equation." -- James C. Scott, Two Cheers for Anarchism, p. 44

A photo from when my campus was being designed -- that's Nelson Rockefeller who is second from the left:

Here is the campus the way the designer saw it:

Lovely from way up there, isn't it? Too bad that's not where we hold class.

Minsky Concurs with Austrians on This Point!

Well, at least on the second half of it:

"It will be argued that the combined behavior of the government and of the central bank, in the face of financial disarray and declining income, not only prevents deep depressions but also sets the stage for a serious and accelerating inflation to follow." -- Stabilizing an Unstable Economy, p. 15

How Did the Dolphins Win Today?

They scored when it really counted... the beginning of the game:

'"It was very satisfying for us, as good as it gets," Bush said. "We wanted to have the opportunity to jump on them early and we accomplished that. Once we got them down early, I thought that was it."'

Why Investment Banks Like Having Booms and Busts

"In an unstable economy, speculation dominates enterprise." -- Hyman Minsky, Stabilizing an Unstable Economy, p. 17

Why It Is Hard to Use History to Prove Economic Theory

In short: History is concrete and complex, while economic theory is abstract and simple.

Case in point: I am reading Hyman Minsky's Stabilizing an Unstable Economy at present. I have often seen the contention that events of the 1970s disproved Keynesian economic theory, since we witnessed high inflation and high unemployment at the same time. Minsky thinks these same events, especially the rapid recovery from the downturn in 1974-75, prove Keynes was right.

Well, it keeps me employed, anyway!

An Interesting Point on Economic Camps

I just had lunch with a friend of mine who is a Marxist / Post-Keynesian economist. I was struck once again by something I first noted while meeting leftist economists in the UK like Tony Lawson and Andy Dennis: these folks tend to have much more respect for people like Mises and Hayek than do most mainstream economists (who have even heard of Mises or Hayek). They think Mises and Hayek got important things wrong, but at least they were wrestling with the really vital issues in basically the right sort of way, unlike today's mainstream, whom these leftists regard as (mostly) entranced by highly abstract models and out of touch with the real world. (My friend has great respect for the really top-notch mainstream people, whom he regards as being able to transcend those models and see them for what they are: abstractions.)

Preparation: The Key to Spontaneity?

Monday I was dissatisfied with the lecture I gave. It wasn't awful; no, mediocre would be more like it. So for my last couple of lectures I pledged to do more prep work.

Thus, for today's lecture, I spent perhaps a couple of hours going over and sprucing up my Powerpoint presentation on Adam Smith. And I was very happy with my lecture this morning.

"So what?" you may think. "That is supposed to be news?"

It wouldn't be, except for the fact that... what I wound up talking about was very different than what I had prepared to talk about. Yet it still seemed to me that the preparation was essential to the improvement in performance. It was as though, knowing I had my prepared material down, I felt perfectly free to improvise. But on a day when I hadn't prepared a "canned" lecture as well, improvisation would feel like desperation: it would be strained all of the time.

Liberal, Pro-Choice Amy Sullivan Explains Mourdock

This is a very good piece.

But I heard Sullivan on the radio this morning and she said something curious. (It was the radio, so I quote from memory, but I think I have the essence of her remarks correct.) After explaining Mourdock's theodicy and theology, she said, "Now I think this theology is wrong. But I understand why some people hold it. I don't even think they shouldn't hold it."

Does that last sentence strike you as odd? It looks to me like our modern penchant for tolerance got the best of her there. It's one thing to not condemn someone for believing a bad idea, to still be friends with the person, to not want them vilified... but if we think an idea is bad, doesn't that imply we should think it would be best if people dropped it and moved towards the truth? If you think the square root of 17 is surely less than 4, I won't hate you, or persecute you, and we can still be friends, but I still think it would be better if you stopped believing th…

That Both Participants Think an Exchange Is Mutually Beneficial...

does not mean it is!

But Adam Ozimek at least writes as if it does mean that. What would Ozimek say about an adult male propositioning a thirteen-year-old girl? If she goes along with his suggestion, would Ozimek proclaim that the government was interfering with "mutually beneficial exchange" if it prosecuted the guy? If not, then he has already accepted the idea that "paternalism" can sometimes be A-OK.

Now, it is a good question as to how far paternalism should extend, and how much we should protect people from their own choices. But Ozimek's pat response to Bloomberg simply pretends the question does not exist.

And note: This has nothing to do with "statism": an anarchist legal order would have no less burden to decide these questions than would a "statist" one, unless it were to be pure anarchy in the bad sense, where, say, the mentally incapacitated could be forced to follow through on "contracts" totally exploiting them. Per…

The Chase?!

In court former NY Giant Lawrence Taylor explained why he pays for prostitutes:

"I know I'm 50-plus years old. I still like the chase, but I like to stack the deck in my favor. I don't like to work too hard."

The chase? This seems kind of like me saying, "I like to hunt for sport. But I don't want to work to hard, so I do most of my hunting in the meat cases at Staubitz Market."

"Doing" One's Homework

A young woman sat down next to me on the subway. She pulled from her knapsack an Italian language textbook. Naturally I became interested in what she was up to.

She took out a notebook and "did" an exercise in which she had to rewrite various sentences using different pronouns and so different verb conjugations. The way she proceeded was to pick a new pronoun, and then write any wich-wach verb conjugation that came into her head next to it, so, e.g., "Sono uno studente" became "Noi e' studenti." ("We is students," basically.)

Not once did she check the tables of verb conjugations that were on the previous couple of pages of her textbook. When she was done writing she simply closed the notebook.

Well, I suppose she had "done" her homework if we use "done" in the sense of "screwed." But the way she proceeded was probably worse than not having done anything at all: she was drilling nonsense conjugations into her h…

Too Bad the Subway Is So Crowded Today, Huh?

This guy was barely able to get the two seats his flowers needed! Lucky none of the dozen people standing up was able to grab either of them first!

Mums the Word!

Washington Square Park

Why Romney Must Lose

Some Romney-supporting, talking disembodied-voice on the radio, tonight in my cab, was claiming that Obama was proposing "devastating" cuts to the military budget that would "cripple" the U.S. military. Yes, sure, if our military only spends 39% of the total military expenditure of the world instead of 41%, it will be a "crippled" organization, barely able to defeat, say, Grenada in a war!

I like Obama better than Romney on some issues, and less on others. But we simply can't let the worst, most war-mongering crackpots win this year. I don't love Obama on foreign policy, but Romney is clearly so much worse that he must, must go down.

Models Do Not Prove Anything About the Real World, Ever

That, I think, is the take away truth from the whole debt debate. Nick Rowe rather arrogantly kept insisting if people just studied the OLG models they would "get it." But Steve Landsburg, Noahpinion, Ken B., Rob, and me, amongst others, did study these models. (I suspect Krugman has as well.) I know I have spent many hours looking over Bob's models, because I would much rather admit that I was wrong than go on being wrong! The problem is, we just don't interpret the meaning of the model in the same way that Rowe does. Of the people I named above, I think every one of then totally understands the flow of apples through Bob's models. What we disagree about is what this represents. The "Rowers" think it shows the burden of government debt being passed forward through generations, while we "Landlubbers" believe the model shows the effects of a series of inter-generational debt transfers each occurring at a single point in time, something that Le…

We Can Only Transfer Consumption Between Those Present at the Table

Let us create a new version of Bob's table as follows:

Period 1: We transfer 65 apples from Young Bob to Old Al.
Period 2: We transfer 99 apples from Young Christy to Old Bob.

OK, at this point, Bob is up 34 apples, and Al was up (he's dead now) 65. And here's the punchline:

Period 3: Old Christy says, "Screw this materialism business: Young Dave, take 197 of my apples. I can get by on 1."

Period 4: Old Dave say, "Young Eddy, I recall Old Christy's generosity. Just eat your 100 apples: let's cease all of this milking the young to benefit the old.

In this scenario, the position of Al and Bob is exactly the same as in Bob's. And this shows us that all of the latter rows in Bob's spreadsheet were utterly irrelevant to the position of Al and Bob. Al benefited at the expense of Bob. And Bob made up for that by benefiting even more at the expense of Christy.

And that's it. Neither of them benefited at all from Dave, or anyone else in any latte…

How to Get Some Old People Alive Today to Benefit at the Expense of Some Young People Alive Today

Nick Rowe characterized Lerner's position as: "You can't make real goods and services travel back in time, out of the mouths of our grandkids and into our mouths." And he claims this position is false.

So let us look at Bob Murphy "backing" up Rowe's position. He offers the following table:

As I said, look. Look very carefully. How does Old Al benefit? He gets 65 apples from Young Bob, who is here in the present. Then Old Al dies. Therefore, every single further line of the table is utterly irrelevant to the welfare of Old Al! They have to be: he is dead. As far as Old Al goes, you can put your hand over the rest of the table. What we get is the surprising conclusion that, if we shift 65 apples of consumption from Young Bob to Old Al, Old Al is better off.

Now, Lerner clearly understood that such transfers could occur: "The real issue, and it is an important one, between the economists and Mr. Eisenhower is not whether it is possible to shift a b…

France Surges Ahead of Russia

As my second largest source of hits this week. Why? I think I can guess the reason.

You see blogger Rod Dreher is in France with his family at present. I think it is pretty obvious that one of his kids is bringing up one or another of my posts several times a day and saying, "Dad, did you see this one? This is how it is done!"

"He Plays Great When the Game Is on the Line Equals..."

"He has trouble focusing."

Because clearly the player in question has the skills to play at level X, that level we see at the end of games.

But for most of the game he plays at level X - Y.

If he played at level X all game instead, the game would be on the line a lot less often!

UPDATE: And, by the way, this isn't meant as a knock on Eli Manning. Even the pre-winning-drive Manning is pretty damned impressive. Eli Manning, with his ADD, is better than all but a handful of NFL quarterbacks who are more consistent: The Jets would swap the consistently mediocre Sanchez for the alternately merely very good and occasionally brilliant Manning in a heartbeat. (Sanchez tends to be inconsistent game to game, but I have not noticed him turning on the after-burners in the fourth like Manning.) You take people as an entire package, and Manning may not be capable of maintaining that intense, end-of-game focus all game long.

The "End of the Game" Illusion

So, Eli Manning threw for a touchdown with just over a minute left to win yesterday's game for the Giants. Today, on talk radio, the experts were saying, "Manning played poorly early, but he is always good when it really counts, at the end of the game."

Yes, think about how much it would have changed the game if Manning had thrown that touchdown one minute into the game instead of with one minute left (ceteris paribus, of course). Then, instead of the Giants beating the Redskins 27-23, the Redskins would have lost to the Giants 23-27.

Because you know what? Touchdowns, field goals, safeties: they don't count for different numbers of points when scored at different times during the game. All you need to do is to have more points than your opponent: it doesn't matter at all when you get them.

Now, we all love a great story, and snatching victory from the hands of defeat is a classic story line. But the first minute "really counts" every bit as much as th…

Justice in Athens

Athens had a distinction between private suits and public suits, which seems to be somewhat like ours between civil law and criminal law.

Guess which kind of suit one brought for murder, and which for adultery?

Thoreau Blogs Against Rationalism in Physics


"And I was reminded that, however much we search for better and more progressive educational approaches, in the end there is no substitute for spending a lot of time working on a problem, constantly evaluating your work against the highest possible standard, and getting constant guidance and feedback from fellow students and a more experienced master."

No substitute for apprenticeship to an experienced master. Oakeshott and Polanyi would approve.

How Could They Have Ranked West Virginia So Highly?

This question is more interesting to me than you might guess because it involves expert consensus, group think, and such.

My problem is this: After beating Baylor 70-63 and Texas 48-45, West Virginia was ranked fourth in the country in one poll and fifth in the other. This was a team that had just given up 108 points in their last two games. Now, I am no football expert, but I said to my son, "No way is W.V. the fourth best team in the country: they can't play defense. All that has to happen is for [QB] Geno Smith to have an average day and they will be crushed."

Well, the last two games Smith did not play as well, and W.V. lost 49-14 and 55-14. (Surrendering 212 points in their last four games!) If this was obvious to me, it had to be obvious to the genuine experts voting. But for some reason, they couldn't vote on this: it seems only the win-loss record could inform their vote. But in that case, why vote? Just have a computer do the job.

The War of 1812 Was Not Over When the Battle of New Orleans Was Fought

I remember encoutering the "fact" it was over a number of times in the past. But, although a peace treaty had been negotiated in Ghent and signed on Christmas Eve of 1814, it was not ratified by the US Senate until February 15, 1815. The war was not officially over until then.

This Demonic Pig

In my neighborhood actually butchers other pigs and sells their parts:

Why Teaching History of Economic Thought Is Important, Abba Lerner Edition

So Abba Lerner understood the idea behind these OLG models back in 1961, and was unimpressed:
"MESSRS. Bowen, Davis, and Kopf have shown that the real burden of a project using up resources in the present can be shifted to future generations by internal borrowing, providing one defines 'generation' in a particular way. It is just as easy to prove that all politicians are economists or that all economists are dunces, provided one defines 'economist' in a particular way...
"But there is no reason for supposing that the President was trying to use any language other than English, and what the President said is simply wrong (in English), unless indeed all the economists (including Bowen et al., as well as J. M. Buchanan, who plays similar linguistic tricks) are absolutely wrong.
"The real issue, and it is an important one, between the economists and Mr. Eisenhower is not whether it is possible to shift a burden (either in the present or in the future) from 

Hypnotized by the Margin of Error

This cartoon, while funny, got me thinking about how people become hypnotized by the margin of error for some statistic without understanding what it means. For instance, the cartoon writer seems to think that a movement in a poll that is "within the margin of error" is meaningless. Well, it could be meaningless, but if it was big enough to report, it probably is not. Let's say the margin of error on a poll is +/-4%, and the poll just moved 3%. If the poll was basing that on a 95% confidence level, that would mean (roughly) that there was only about a 10% chance that a move of that size would occur purely randomly. Ninety percent of the time that movement is meaningful! Similarly, if a poll reports Joe ahead of Mary by 3% with a margin of error of 4%, that does not mean the race is a "statistical tie"! It means there is a 77% chance Joe is really ahead; in fact, he could easily be up by 6 or 7%.

And the use of a 95% confidence level as a simple binary switch is…

Rich Corinthian War

I am listening to a lecture about the Corinthian War, and all I can hear is Ricardo Montalban saying "Rich Corinthian War: of course, why not the best?"

Adulterers Beware!

In ancient Athens, the penalties for adultery included having one's pubic hairs yanked out and a radish shoved up where the sun don't shine.

And Yes, Krugman Understood This Fine All Along

Just to make sure I get Murphy mad again, I have re-read Krugman, and he is not making any false statements or misunderstanding the OLG models, when he writes:

"It’s quite possible that debt can raise the consumption of one generation and reduce the consumption of the next generation during the period when members of both generations are still alive. Suppose that after the 2016 election President Santorum tries to buy senior support by giving every American over 65 a gift of newly printed government bonds; then the over-65 generation will be made richer, and everyone under 65 will be made poorer (duh)."

All the OLG models show is that if you keep doing the above sort of thing again and again, generation after generation, you will again and again make the old wealthy at the expense of the young. At every point in every one of the OLG models I have seen, what we have is a series of transfers from the young to the old occurring during the period when members of both genera…

Future Generations Have Not Planned Anything at All

Ryan Murphy contends that, if Ricardian Equivalence is not true, then:

"Debt becomes a burden on future generations when they have not planned for it. Meanwhile, the people who invested in treasury bills of whatever did plan for that money to be there."

This is an apples and oranges comparison. Of course future generations have not planned for a debt burden. They have not planned for anything at all: that will have to wait for the future, when they are one of the current generation. And sure, someone in the current generation who bought treasuries presumably planned to do so. But his future  progeny have not yet planned to inherit them, since they will only come to exist in the future. Ah, but what if this bond holder sells his bonds before dying? Well, then he will have cash or stock or something else to pass on to his heirs. What if he spends all of that on a huge party? Yes, that impoverishes future generations, but that is because he consumed his capital stock. Treas…

Chris Coyne's Best Role?

He has been very good as an economist:

But is he even better as Moriarity in Sherlock?

My Dear Friend Bob Visits a Clinic...

or at least that is how I read this.

The Founders: Simply Men of Their Time?

Sometimes the founders' attitudes towards slavery are excused because they were just "men of their time." Well, this defense, if true, is not terrible: for instance, as far as my research turned up, nobody, including American women, was saying in 1800 that women should have the vote. (Yes, I imagine I could have missed someone, but the point stands: this view was exceedingly rare.) So if basically no one was on about this, well, I think we can excuse Washington and Jefferson and Madison for ignoring the issue.

But when Madison writes about slaves that they had a "natural and habitual repugnance to labour" (Madison and Jefferson, p. 533) is he just being a "man of his time"? Doesn't it occur to him, as a supposed defender of liberty, that this repugnance it quite natural when you are being forced to labor at no pay for your slave master's benefit?

And what about Edward Coles, who was a man of the exact same time? "Coles grew up identifyin…

One of the Greats of Blogging...

has a birthday tomorrow, and is recovering from a serious health scare. Let's wish him well. (This is the latest post of his that I can locate.)

Please Dispose...

Of all lacrosse balls, matchbooks, wallets, compacts and pieces of red tape in the toilet.

Students Today

OK, so they may be weak in mathematics, foreign languages, science, philosophy, and so forth. But at least they are learning the really important subjects:

Irreality Run Rampant

Libertarians may sometimes feel I'm picking on them for ignoring reality, such as the reality of power. Well, as an ex-libertarian, it is true that I have focused on this more than the lack of realism in other views. But that does not mean that I think libertarians are unique in this regard.

Last night, for instance, I went down to my local to watch the debate, since it was hosting a debate party. When Romney mentioned that people ought to consider marrying before having children, the bar erupted in boos and catcalls. (And nota bene, I am not a Romney supporter!)

What the hey? In all of empirical social science, is there a better established truth than that children of stable, two-parent households have a leg up on those raised in single-parent ones? Of course, that doesn't mean we should make life harder for single moms, or anything like that. If my daughter became pregnant by a guy who vamoosed once that fact became known, I would let her know that her mom and I would do ev…

What Larison Said

"It is likely that the bad habits that marred Republican rule in the 2000s will resume, and the incentives to retain power will tend to trump any constitutional and fiscal objections to new legislation and increased spending. The identification of movement conservatism with the Republican Party is already almost complete, and regaining control of the Presidency after just four years out of power will finish the job."

Yeah, I think this is the ultimate, conservative case for hoping for an Obama victory: a Romney victory will entrench the stupidest, least conservative aspects of the contemporary GOP.

Why I Moderate Comments

Here at La Bocca, we have a very high class of commenters. Someone like rob, although he has been disagreeing with me, is clearly trying to carefully think through this whole government debt issue. He writes thoughtful, polite comments as to why he doesn't (yet) buy my angle on this. (He will come around!)

But when one ventures out into the wilder, untamed lands of the Internet at large, oy vey. You see scores and scores of people who have no understanding of the issue jumping into a pile around the "football" simply because "their guy" is somewhere down in the mash up. If they hate Krugman, they make comments on Murphy's blog about how brain dead Krugman is to have ever said what he said: but his point is something they themselves don't understand. If they hate libertarians, they make the opposite sort of comment at some other blog.

Trenchcoats Are a Burden on Future Generations

At time T1, a government agent, wearing a trenchcoat, transfers 3 apples from young Bob to old Al.

At time T2, a government agent, wearing a trenchcoat, transfers 6 apples from young Christy to old Bob.

At time T3, a government agent, wearing a trenchcoat, transfers 12 apples from young Dave to old Christy.

At time T4, a government agent, wearing a trenchcoat, transfers 24 apples from young Eddy to old Dave.

At time T5, a government agent, wearing a trenchcoat, transfers 48 apples from young Frank to old Eddy.

At time T6, a government agent, wearing a trenchcoat, transfers 10 apples from young George to old Frank.

At time T7, a government agent, wearing a trenchcoat, transfers 10 apples from young Hank to old George.

At time T8, a government agent, wearing a trenchcoat, transfers 5 apples from young Iris to old Hank.

At time T9, a government agent, wearing a trenchcoat, transfers 1 apple from young John to old Iris.

QED: The wearing of trenchcoats is a burden on future generations.

What I Have Been Getting At

Let's leave aside the question of whatever Baker and Krugman meant during the great debt flame wars. I will just try to clarify what I have meant.

Let us say that there have been several hammer killings in the news lately. This leads to calls for the outlawing of hammers, since they are "deadly weapons." But others point out that it is not hammers that are the real problem; no, it is murderous intentions. Hammers are also used for many worthy purposes. There is nothing inherently murderous about them; if hammers are banned, murderous people will simply pick up a rock or stout tree branch to kill their victims.

Now, you certainly can't show the latter set of people are wrong by showing how it is possible to murder someone with a hammer! But that is what I see Rowe and Murphy doing with their examples. We could just as easily contrive an example in which debt is used to fund capital projects that raise the consumption of future generations at the expense of the curren…

Murphy Conclusively Demonstrates...

that debt is a red herring here.

How so? Just go through his table:

Every time he wrote "borrows," replace it with taxation, and replace "pay off" with "transfers to."

The entire consumption pattern will be unchanged.

It ain't the debt, it's the inter-generational transfers.

UPDATE: The key to what makes Bob's model work the way he wants it is not the interest on the debt. At any point in time, for every dollar spent paying that interest, a dollar is received by someone who holds the debt. They key to Bob's model is that it is always the young who are being deprived of consumption to give the old more consumption. And it is very much key that they are alive at the same time so that this can be done! Of course, if you keep doing that, it will also be true that the young 100 years from now will be worse off.

Pandit Rhymes with Bandit!

Vikram Pandit earned over $200 million for driving Citigroup's stock price into the ground:

I can wreck your company's value just as nicely, and I would do so for only a few million! Headhunters, you can easily find my email address on the Internet.

(Hat tip Brad DeLong.)

Would You Secede?

Often anarchists say something like, "I'm fine if you people want to live in a statist society: just let me out!"

OK, so let's say the U.S. tomorrow offers any individual or political sub-entity the right of secession. (I think this actually might be a good idea: the approach Czechoslovakia took to the Slovaks is probably the right approach here: you want to go, fine, go.) Would any present American state do this? I doubt it. But would you personally?

Your initial reaction might be, "Hell yeah! I wouldn't have to pay taxes anymore, and I'd be free of all the oppressive U.S. laws regarding drugs and other victimless crimes."

But what would your situation actually be, if you individually seceded? Well, you wouldn't have to pay taxes, but for any goods you planned on exporting to the U.S., you would have to pay customs duties. And assuming the W.T.O. is not going to let you join as individual, those duties could be as high as the U.S. wants to set…

Mick Jagger Is an Excellent Singer

Evidence: I just heard Peter Tosh's "Walk and Don't Look Back," where Jagger trades verses with Tosh. Without sounding one bit less like Mick Jagger, he manages to sound completely at home backed by a reggae band, and he harmonizes beautifully with Tosh on the chorus.

How the Founders Recommended Dealing with War Protesters

"Jefferson [in 1812] called for different measures in different parts of the country... 'To the North they will give you more trouble. You may have to apply the rougher drastics of... hemp and confiscation.' -- by which he meant the hangman's noose and the confiscation of property." -- Madison and Jefferson, p. 511

Makes Dick Nixon look pretty soft by comparison, don't it?

UPDATE: Just to clarify, Jefferson was writing privately to Madison here, and this was not a serious policy proposal on his part.

Come Again?

"Conservative commentator" Rich Galen tells CNN:

"It is those people who I think saw something in Romney that they just hadn't been prepared for," Galen said, adding that voters such as Republican leaners wanted to be convinced. "It's like going to a movie that everybody else says is a great movie. You have to see it for yourself."

Or, maybe it was more like going to a movie everyone say really sucks, and discovering it is kind of OK after all.

And I'd Like a Pony

Magical thinking is one of the worst barriers to solving political problems sensibly. I was reminded of this upon hearing a story on the radio about what to do with Playland, the only government-owned amusement park in the U.S. The park has been losing money, and the county plans to sell it. The newscaster said residents were firm about three things:
1) It should stop costing them money;
2) It should remain an amusement park; and
3) It should draw more people, because that would overcrowd the area.
(And they want a pony.)

Supposing that the county wasn't seriously undercharging for ride tickets (and since they can just check the prices at other amusement parks I imagine they weren't), the only way to keep the place an amusement park and stop the bleeding of funds is... to draw more people!

The same sort of magical thinking is apparent in people  who drive around with anti-gas-pipeline bumper stickers on their SUVs. They are unwilling to stop using fossil fuels, and against ev…

When Seemingly Disparate Ideas Mesh...

it can be very nice.

This semester, I happen to be teaching both economic history and macroeconomics. In economic history, I was explaining to my class how dramatic was the transition between medieval society, were "prices" were set largely by tradition, and modern society, where they are set by supply and demand on a market. The medieval guild worker, for instance, had a wage that he "knew" that someone in his position "ought" to get, and that would enable him to live the life someone in his station in society and place in the great chain of being was entitled to live.

Then, in macro, I was talking about sticky prices, and I suddenly realized that a major cause of sticky prices is that the medieval mindset was not totally obliterated by the onset of the market mindset. (Note: I am not saying it should have been! I'm inclined to think it is not even possible to eliminate these "atavistic" attitudes: they are the foundation of what has been …

The Phonetics Blues

She's my bilabial frictive
I love her velar stop
She's my bilabial frictive
I love her velar stop
And when I see her in her dipthong
I want her all night long

She's got a lateral flap
Makes me want to clap
She's got a lateral flap
Makes me want to clap
And when you hear her clicks
You know she got some tricks

And if I'm feelin' shrill
She gives me that retroflex trill
And if I'm feelin' shrill
She gives me that retroflex trill
And if I'm feelin' blue
I get the linguo-ejective too

What Kuehn Said


The post he points to is a great example of "rationalism in morality," or "fatal conceitism": if I don't see the reason for some social institution or custom right now, then... contempt!

Well, some established practices really are useless. But sometimes we declare them vestigial, cut them out, and then discover they served an important role. The right attitude to approach these matters with is humility, not contempt.

Vote for Obama Because...

My friend Frank gave his argument for voting for Obama: "I watched him in the debate. He looks really tired. I think he may be too worn out to do much the next four years. And that would be great if it's true."

The Top Ten Best Superlatives That Are Superior to All Others

Just heard an ad claiming "Only Ford has the best combination of mileage and torque." Well, given Ford has the best combination, it wouldn't seem to be possible that, say, Toyota, also has the best combination. (They could be tied, but then neither would be the best.)

This sort of construction seems to be more and more common. I never recall hearing anything like this as a kid. But -- was it Letterman that was responsible? -- in the 90s I recall starting to hear "The top ten best cities to live in" and so forth.

Anyway, it still sounds really ugly to me, as if the speaker is not aware of what superlatives mean.

No Sleep till Brooklyn

B-Murph and his mysterious sidekick Baron von Pepe invade Brooklyn.

Weather Forecasts Contradict Free Will?

I'm reading Nate Silver's The Signal and the Noise. So far, it's a worthwhile book, but...

Silver's expertise is in prediction. But sometimes he tries to reach a bit higher, and then he falls flat on his face. For instance:

"You might not think of the weather report as an exercise in metaphysics, but the very idea of predicting the weather evokes age-old debates about predestination and free will." We then get a lecture from one Dr. Richard Loft that somehow ties Augustine and Calvin to successful weather prediction, and Aquinas and the Scholastics to... I'm not sure. Bad weather forecasting?

But this is complete nonsense. No sensible believer in free will would be swayed by extremely good weather forecasts, just as no believer in strict determinism is going to fold because we can't get the weather right. The idea of free will does not depend upon nothing being predictable -- indeed, it doesn't even depend on human action being unpredictable. (We…

This Is How I Get Home from the Bar in the Evening!

Brainless creature makes it way with memories constructed from slime.

The Debt Battle Rejoined

It's back!

Here's is Noahopinion saying what I kept pointing out in round one of this debate:

"But see, here's the interesting thing about Rowe's model: the government doesn't need to use debt to impose this burden on the young. It can achieve exactly the same result with zero debt, just by taxing the young directly and spending on the old (i.e. a Social Security system with unsustainably large contributions). In Rowe's model, debt is just an accounting system that keeps track of how much consumption has been transferred from the young to the old. But the debt itself doesn't really matter; only the consumption transfer matters.

"So I think this tells us something important about debt in the real world. What matters is not debt, it's intertemporal choice. The important question is not how much debt we rack up, but whether we want to move consumption from the future into the present or from the present into the future."

Exactly! Since we could …

The Revolution You Planned Is Not the Revolution You'll Get

In 462 BCE, Ephialtes directed a peaceful revolution in Athenian governance, implementing a radical democracy in which the entire body of citizens would theoretically hold power, voting on legislation and policy directly in the Assembly. No more elites!

What actually happened? Let us ask Thucydides: "So, in what was nominally a democracy, power was really in the hands of the first citizen (Pericles)."

Instead of "power to the people," the revolution produced one-man rule!

I am not aware of a single revolution in history, violent or peaceful, that did not produce a result significantly different than that the early leaders intended. Why will yours be any different?

"But I'm not power hungry!"

Exactly. That is why, when the revolution is over, you won't have power. Someone who is hungry for it, and will do whatever it takes to get it, will have power instead.

"But my revolution will only occur once people are convinced that grabbing that power…

Just Because You're Paranoid...

The little sucker above built a huge web across my back door. You know what she was thinking? "If only I can catch the big plump thing that comes out of that opening, my offspring can feast for generations to come!"

Was a Home a Good Investment?

Even before the bubble collapse, it turns out homes were pretty low return investments, contrary to popular belief. Over a century, from 1896 to 1996, in real terms a $10,000 home investment turned into $10,600: a 6% return over 100 years! (Source: The Signal and the Noise, p. 30)

The Curious Doctrine of Sectoral Imabalances re Say's Law

Say (when he was still fighting Sismondi), Ricardo, Mill and others often blamed gluts on "sectoral imbalances," denying there could be any such thing as a general glut: we could have too many guns and not enough butter, or vice versa, but never an overproduction of goods in general. The solution was always to produce more of the good relatively under-supplied, which could be used to buy up the glut of the one relatively over-supplied.

The curious thing about this is that it seems to assume sticky prices: otherwise, the price ratio of the two goods could simply change until the market cleared, and there would be no need to produce more of the one under-supplied: it is only under-supplied at some price. But once we assume sticky prices, we seem to have posited the condition needed for a general glut: goods in general have been produced at costs that cannot be recovered, but rather than dropping their prices and accepting a loss, producers sit on inventory.

I have to look at …

Toothpaste Fail

I stopped at the health food store the other day and asked where the toothpaste was. The clerk reached up on the shelf and handed me a box. It was Tom's, which I've used before. I didn't really look more carefully.

When I got home I saw that the flavor was orange-mango. This seems kind of weird. I tried it.

It was weird. The thing is, it tastes like food. And food, of course, is what you are trying to get out of your mouth when you brush. But this toothpaste leaves you feeling like you've just replaced one food with another.

What's next, fish-flavored toothpaste?

The U.S. Treasury Cowboy

Looks like he may be a Keynesian.

Key the Spooky Music

Monday night was the 666th NFL Monday night football game. One of the two quarterbacks in the game, Mark Sanchez, has the following stats (as pointed out here):

• Touchdown passes: 6
• Interceptions: 6
• Passer rating: 66.6
• Average yards per attempt: 6.6
• Longest completion: 66 yards
• Sanchez's uniform number, of course, is 6.

NYC Weirdness

My friend told me that she lives near the Brooklyn-Battery Tunnel. The other day, the "Tunnel-to-Towers" race was starting there. Driving home, she saw that several streets near her had signs up saying that there was no parking on them due to the race. But she found a street with no signs and parked.

The next morning she woke up and looked out her window to find the street emptied of vehicles. What the...? She called the police precinct near her. "Oh yes," they said, "we towed it" -- wait for it -- "to a new parking spot. It's parked illegally now, but we put a sign on it saying not to ticket it for 48 hours."

How bizarre.

No House for a Claustrophobic


The Political Class

There is nothing essential in the theory of the state that requires a "political class" to exist or requires that this class exploits a "productive class." Nonetheless, it must be said that, in practice, this structure may arise. And the (possible) existence of this structure seems to be a major brief in the case people like Tom Knapp make against the state.

So here is a question for Tom, and others in his position: let us say we had a state very like ones we see around us today, but where political office was assigned by pure sortition, i.e., a lottery or something of the sort. In that circumstance, there could not be anything like a "political class": everyone has an equal shot at office, and will rotate in and out of politics as his or her name is drawn. There are no lobbyists throwing around cash to finance elections, because there are no elections.

Would that state be OK?

I Love Listening to Tinny, Distorted Versions of Dance Songs All Day

And I'm so glad I get so many opportunities to do so while riding public transportation, since others generously turn up their MP3 players to the point that their music is audible from eight seats away.

The funny thing is, if they just had a boom box and were simply playing the music, I would find it less bothersome. It is "listening" to music that is just on the edge of being truly heard, loud enough that it rises above the level of background noise, but not loud enough to be enjoyed as music, that drives me nuts. I want   it turned down or up, the same way you might want someone you're dating casually to either commit or stop seeing you: just don't leave me neither here nor there!

Hobbes May Have Been Wrong; He Was Not Dumb

A commenter in another thread claims that someone like Hobbes is talking "nonsense" with his contract theory:

"They make this claim [it's not clear what "this claim" is here], but that is not what happened, and to claim it is 'as if' it happened is utter nonsense -- on par with claiming that the state of affairs [in a robbery] is 'as if' you gave me all your stuff, so I'm not a thief, and really do own these things."

It strikes me that others may misunderstand Hobbes's argument in a similar fashion, and so it might be worth pulling my response to the top level. Let's begin by looking at several examples where we use "as if" that aren't nonsensical:

1) Two people meet by accident and fall in love. Later, they say, "Do you remember that night? It is as if we were meant to meet!"

2) Four bridge lovers meet by accident on a cruise. They wind up playing together the whole vacation. One of them says, &quo…

Oy Vey

At halftime of the Monday night game, Chris Berman announced that because of Columbus, we know "the world's not flat, it's round."

What's really remarkable about this nonsense is that if we didn't know this before Columbus, how in the world would Columbus's voyages would have shown it? He only showed there was land to the west of Europe.


A little while ago, I asked, "Would Aristotle have thought other-directed wage workers to be slaves?"

Well, I still am not sure of the answer to that; but now I am sure that Cicero so thought them:

"Vulgar are the means of livelihood of all hired workmen whom we pay for mere manual labour, not for artistic skill ; for in their case the very wages they receive is a pledge of their slavery." -- De Officiis

The key thing here is not what contractual basis the works takes place under -- whether I own you or I pay you -- it is whether you work (almost) entirely under my direction, or you have active control over some non-minor part of your labor. The artistically skilled craftsman accepts wages, but is not a slave because he directs -- indeed, must direct, in that his employer does not have his skill -- a large part of his own labor. The slave is not a slave because he is owned (although he may be), but because he does not own his own time.

I think this is indirect …

Why Is Metronorth Taunting Me?

I slept, literally, for about one minute last night, and I'm delirious from lack of sleep. So I left my car on campus and caught the train from Port Chester. The announcer keeps telling us: "The next station is wry."

What do i care about its sense of humor? How can a train station even have a sense of humor? Just tell me its name!

The Purpose of Human Life

Many people have troubled over the above question for a lifetime. Some have declared it unanswerable, and meaningless. Poppycock! Not only can it be answered, but the answer is easy: we exist to give plants a way to get around.

I realized this as I was lugging two heavy potted plants into my apartment yesterday, two plants that had just traveled from Pennsylvania to New York via automobile. Here's what happened: long, long ago, plants dominated the earth, but they realized they were unhappy with one part of their existence: their immobility. They talked this over (with chemical messages, that's how!) and decided that, through careful manipulation of the environment, they could ensure the evolution of a creature that one day would be willing to bring them around on little tours hither and thither.

So that's why we are here. Now get moving them there plants! In fact, I think your rubber tree would like to go for a ride.

That's a Whole Mess'o Bugs


There's Nothing Conservative About Many Republicans...

As Andrew Sullivan notes, quoting Rep. Broun: ""All that stuff I was taught about evolution and embryology and the Big Bang Theory, all that is lies straight from the pit of Hell."

A real conservative respects traditions, including our scientific tradition. A real conservative might take notice of the fact that the Big Bang theory was first developed by a Catholic priest. He might recognize that modern science is a uniquely western enterprise, a crucial component of our cultural legacy. People like Broun are radicals, intent on stripping our civilization of all its inheritance that does not fit in with their own, idiosyncratic interpretation of a single book.

Our Broken Politics

Forwarded through Scott Sumner:

"One of the greatest reliefs is the simplification of tax administration. Since the tax reforms of 1990 abolished almost all deductions, while cutting rates, tax declarations have become extremely simple. Ninety per cent of taxpayers simply confirm with a phone message that the declaration automatically prepared by the tax authorities for them is correct."

Why, oh why, can't we do this? Let's just (for the moment) except the current level of taxes as a given, and then figure out how to cut the time it takes us to pay those taxes down to an average of a minute or so. Then we can go back to fighting over the level of taxes.

But, of course, we can't, because our system is so beholden to special interests. But Sweden did it! Why could they do so, while we can't? Any answers?

The Peaceful Founding Fathers?

Non-interventionists today often claim that their foreign policy is that of Washington, Jefferson, and Madison, who sought to make the U.S. a peaceful, neutral nation. Yes, it is true, the founders wanted to avoid European wars. But they sure didn't object to conquering the bejesus out of anyone in the Americas. Many of them took it for granted that the United States would one day, and one day not too far off, incorporate Florida, Cuba, Canada, and Mexico. And they didn't mind the idea of using war to incorporate them. There were even those who wanted to carry war to the Spanish colonies in South America. Forcing the Indians beyond the Mississippi was seen as a natural move.

This post is not meant as an argument for imperialism. It is an argument for making your case stand on its own, rather than invoking mythical figures to justify it.

Independent Republics Now a Part of the U.S.

I can think of four:

West Florida

Were there any others?

Southern Mind, Better Keep Your Head

Historians can be cruising along nicely, doing a great job of explaining what actually happened in the past, when they are suddenly struck by Diamond syndrome: they grow fearful that they have gone on doing history too long without giving some master explanation at a higher level than individual action. Consider the following:

"Once again it is the southern mind, its long-prevailing sense of opportunity, competition, and risk, that explains all governing motives in the Gulf are drama of 1810-1811." -- Burstein and Isenberg, Madison and Jefferson, p. 492, emphasis mine

Burstein and Isenberg are explaining the actions of four main figures: Jefferson, Madison, George Matthews, and Fulwar Skipwith. The thing is, each of them acted somewhat differently in regard to Spanish possession on the Gulf of Mexico. And yet somehow all of those different approaches have one explanation: the southern mind.

Certainly there would be commonalities in the way most southerners saw things, and t…

Why Won't They Ever Send Me This Useless Stuff?

Yet another assertion that our dollars aren't "really money":

"Central banks of the world’s terminally indebted countries prefer the fiction that paper money that’s printed at little cost, or digital bookkeeping entries that are created at no cost, is money and therefore constitutes real wealth."

I keep asking the people saying things like this to send me all of the worthless pieces of paper they have collected so I can get rid of them for them... but they never do.

Positivism Makes for Muddles

Razib Khan knows that there is something wrong with the idea that beauty is "purely subjective." But, entranced by positivism, he can only place this non-subjective aspect in biology and evolution. Although he makes a passing mention of the Greeks, he seems to have given little thought to Plato's conception of beauty.

The only small problem with his attempt to rescue some objectivity for beauty along biological lines is that it fails utterly. Biology can indicate to us fitness, but not objective truth. It is easy to come up with scores and scores of cases where believing a falsehood is more adaptive than admitting the truth, or where it is simply not important. A trivial case: Let's imagine that people from all cultures see the soldier on the right in the linked illusion as tallest. That certainly would not mean that objectively he is the tallest!

In fact, Khan's evidence could easily be trumpeted by someone who believes beauty is an illusion! "See," he…

Over Enthusiasm

Thoreau asks: "I mean, have you ever met somebody who’s so into healthy and environmentally conscious eating that you just want to stuff your face with bacon cheeseburgers after talking to them?"

Wabulon and I did, once upon a time. We spent a couple of hours listening to his preachy environmentalism and food sanctimoniousness. Then, it was time for dinner.

"Where shall we go?" our (corporate) guest asked.

I thought for a second: "Hey, what about that new endangered-species restaurant?"

Wabulon picked right up on it: "Ah, you mean the one that serves that delicious hummingbird tongue pie?" He turned to address our guest directly. "It takes several thousand hummingbird tongues to make one pie!"

He looked horrified. "What do they do with the rest of the bird?"

"Oh, they just throw it away."

So, You've Read The Euro Crisis for Dummies...

and a couple of similar books, and now you declare yourself an expert in economic methodology?

Well, that would be no sillier than reading a few pop history books and declaring yourself well-informed about the historical method. I'm not thinking of anyone in particular, but if, for instance, you read this blog, and your name ends in 'n,' and begins with 'r,' and there are maybe a 'y' and an 'a' in between, you might want to take special note here.

For example, I just picked up The Rise of Rome by Anthony Everitt. In the first two pages, I find:

"What was it that enabled a small Italian market town by a ford on the river Tiber to conquer the known world?"

Well, nothing, because it didn't. Look, Alexander had conquered all the way to India, so the Romans certainly knew about all the lands out there, but their empire ended roughly 2500 kilometers to the west of Alexander's. They also certainly knew of Germany, Scotland, Ireland, Ethi…

There Are Synechdoches, and There Are Synechdoches

My fellow Americans, it is fine to use "Wall Street" as a synechdoche for "the financial industry." No one is offended.

But when you say "England" but really mean "the United Kingdom," the Welsh, Scottish and (northern) Irish do find it a bit disturbing. OK?