http://hayekcenter.org/?p=4608If PK studied the history of economic thought, he would be rapidly confronted by the realization that the abstract methodology that he relies upon, and the ocean of data he has used for his analyses, is the record of, and methodology of, a ‘special circumstance’ of temporary economic conditions, and that his short term methodology is incongruous with the anglo political model that is the source of western political s
Source date (UTC): 2011-03-29 22:46:00 UTC
Having created, by accident, the empire, and having done so for the purpose of exporting our market system, and its trade routes, we are stuck with the very real consequences of creating power vacuums if we withdraw our military power, and create opportunity for the greater cost of NOT acting as we are acting. We have, after all, made a nice profit out of bringing the Hindu and Sinic cultures into the modern era. We have, and continue, to make a profit bringing the Islamic cultures into the modern era – by exporting debt (that we may questionably have to pay for) rather than by collecting tariffs or taxes for having done so. These efforts have been made under the rubric of political democracy for the purpose of popular opinion, but are actually for the institutional purpose of creating an economically incentivized and politically enfranchised middle class that is invested in perpetuating the world market system. I do not think that there is disagreement among political economists that we would be better off without having to support the empire. But when faced with the very real, and very negative impact that a withdrawal would have on the average (pampered) american, and on the average (schumpeterian) public intellectual, practical heads prevail.
[callout] Property rights are indeed the basis for prosperity. However, property rights are an institution that is created by the application of organized institutional violence. This fact is usually lost of ideological libertarians. [/callout]
As I understand it, the general thinking among the strategic thinkers (those who study military, political, and economic relationships, rather than just political, financial and social relationships) is that if we bear the burden long enough, the world will evolve into a sufficiently middle class economy (a synonym for democratic) that the purpose of the empire will decline at a rate equal to the relative importance of the american economy, allowing us to withdraw without creating shocks to the international system. A failure to understand military history is what separates ideological political economy from practicable political economy. Property rights are indeed the basis for prosperity. However, property rights are an institution that is created by the application of organized institutional violence. This fact is usually lost of ideological libertarians.
http://www.capitalismv3.com/?p=2439Property rights are indeed the basis for prosperity. However, property rights are an institution that is created by the application of organized institutional violence. This fact is usually lost of ideological libertarians.
Source date (UTC): 2011-03-28 14:25:00 UTC
The term “Structural unemployment” has a technical definition and a colloquial definition. And authors frequently criticize the colloquial as not matching the technical, rather than the premise put forth by the colloquial. However, the colloquial definition is correct. That is, that there are people trained and experienced in skills that will not return to the economy, and that there are few if any sectors of expansion available to absorb them in any potential recovery, and if unemployed long term, they may be permanently ostracized from the work force. As an aside, it is unlikely that the USA will return to a consumer-debt economy. We will not be ABLE to. Not unless we play tariff and protectionist games, and deprive other geographies of their ability to arbitrage prices. The high current level of liquidity is limited to the financial sector, and even there, to a narrow band of the financial sector. There are no savings going on anywhere, and instead there is debt reduction going on everywhere.. The country is operating at higher efficiency out of fear and necessity — a combination which cannot persist indefinitely. So, the colloquial concept of Structural Unemployment is accurate in it’s usage.
From Economist’s View (In reference to Schiller’s argument (in an exceptional recent paper) that economists should be more interdisciplinary.)
Is Adam Smith Partly an Economist, or Wholly a Moral Philosopher?, by Brad DeLong: Tiago at History of Economics Playground reacted very negatively to an AEA Annual Meeting presentation by Robert Shiller and Virginia Shiller:
This is a question that posits a false dichotomy. The correct question is either: a) “Is adam smith … an econometrician, or a moral philosopher?” He is a moral philosopher. b) “Is adam smith … an economist or an econometrician?” He is an economist. c) “Is an econometrician an economist?” The answer is “No.” An econometrician is a statistician that works on economic data. Why? Economics is a branch of moral philosophy, because the all branches of economics SOLVE for a political end – an end, and an input, without which the profession cannot exist as a discipline. (Yes, that’s right.) Therefore one cannot be an economist unless one is a moral philosopher, unless economics is a branch of statistics, in which case, there are no economic facts because there are no facts without theories. A fact is impossible to define without a theory in which to analyze it. Because being an economist in academia has lost it’s philosophical content, it is possible for Brad to ask this silly question. And if more economists spent more time on philosophy before interpreting statistics, they would understand the erroneous and somewhat ridiculous claims made by the profession are not grounded in demonstrable scientific reality. And they are not grounded in demonstrable scientific reality because economics is currently explanatory, but not predictive.
Do you know Godwin’s law? That any internet discourse eventually devolves into something involving Hitler? There is a new law. I’m coining it, as Doolittle’s law: The minute someone mentions Sweden in an economic argument, you know that they’re analysis is wrong. 1) As Felix Salmon states, Wealth is very different from Income. The WEALTH distribution in the USA and Sweden is similar because sweden is a capitalist country albiet one with a great deal of redistribution, and wealth must be in the hands of the people with the knowledge to EMPLOY that wealth in order for wealth to exist. 2) Felix also states that countries with great retirement schemes require less wealth accumulation, since wealth accumulation is a retirement scheme. So individuals with retirement schemes have less incentive to develop wealth. Swedes have fewer incentives to accumulate weath.
[callout]Doolittle’s law: The minute someone mentions Sweden in an economic argument, you know that they’re analysis is wrong.[/callout]
3) Redistribution that affects one’s family, tribe and culture is one thing. Redistribution that allows a group or class to compete with you is something else. Redistribution that is used for purposes that one objects to is something else entirely. No one is against redistribution. It’s the USE of redistribution that gets people up in arms – whether it’s the concentration of wealth in the hands of a competing minority or class, or redistribution to minorities seeking political power. And they’re right to do so. Homogenous cultures are comfortably redistributive. Heterogeneous cultures aren’t. That’s why multiculturalism fails, and always will fail. One can only have multiculturalism under a political system where there is no means by which competing interests can gain political power, and no matter of redistribution. This is why european cities were multicultural before the advent of democracy and nationalism. 4) Sweden is an outlier. It is a small, genetically homogenous, protestant, ascetic, nordic, resource economy with no border issues that did not experience the second world war. It is an abnormal country. It cannot be compared to heterogeneous countries of much larger size. The cultural comparison at scale is Japan, not the USA. Japan is an island based, racially homogenous ascetic culture. 5) Sweden doesn’t have all that much ‘wealth’ with which to create a distortion. The bigger the economy, the greater the potential for concentration of wealth. Sweden is a small country of 10M people, 85% of whom live in a very dense area, and who benefit from the remainder of the country’s low population density and the ability to export natural resources easily into europe. In the USA we have cities that big – and they are full of tribal and competitive minorities, and complex social class structures competing for political influence in order to demonstrate social status for themselves and their tribes. So, that’s why there isn’t a vast difference in income. It’s because sweden is a small country, it isn’t an empire, it doesn’t have the ability to concentrate capital, it doesn’t have the ability to create liquidity and it has a small market. 6) When comparing the USA to another country you must use the whole of western europe, because that is the degree of diversity in the USA. We live in the Nine Nations of North America. And different nations are not generous to each other. They cannot be. I’m happy to debate this with anyone. But humans cannot build a large country with complex relationships and have high redistribution, unless they want to invite civil war. 7) The evidence is pretty clear. You an live a better life with more choices in the USA for less money if you ‘enter the system’. Entering the system means consumer credit, housing, and working reasonably hard for a living. If you don’t want to ‘enter the system’ you’re going to be in the lower quintiles. It’s pretty simple. Furthermore, It’s terribly expensive to live in Sweden and it takes little research of expat writings to see how few people from the USA want to live there after trying, and inversely, how many swedes come the USA and stay here because of greater economic freedom. Social status matters because it determines access to opportunity, and access to mates. Status hierarchies are more valuable in-group than across groups, which means that humans will always be naturally racist and anti-culturalist except under two scenarios: a) at the margins where mate selection is advantageous for one or two generations, or b) (as in the UK) where a a social class can gain temporary social status for one or two generations by demonstrating ‘tolerance’. No data will demonstrate otherwise. And that is what makes good economics. Use of statistics to create ‘errors of aggregation’ and ‘ignoring causality’ in order to intentionally create a false argument is bad economics. Whether bad economics is a a form of fraud and deception, or whether it is immoral, is a matter for someone else to decide. But I’m willing to stipulate that regardless of those potentialities, it’s is simply bad economics.
http://www.capitalismv3.com/?p=2427a) “Is adam smith … an econometrician, or a moral philosopher?” He is a moral philosopher. b) “Is adam smith … an economist or an econometrician?” He is an economist. c) “Is an econometrician an economist?” The answer is “No.” An econometrician is a statistician that works with economic data.
Source date (UTC): 2011-03-26 01:15:00 UTC
http://www.capitalismv3.com/?p=2425I’m coining a new term. Doolittle’s law: The minute someone mentions Sweden in an economic argument, you know that they’re analysis is wrong.
Source date (UTC): 2011-03-26 01:14:00 UTC
http://krugman.blogs.nytimes.com/2011/03/25/deficits-and-the-printing-press-somewhat-wonkish/Agreed that we need stimulus. Agreed that we can finance the debt.The question on the right, is rather, “How can we insert that money into the economy without subsidizing the bureaucracy, and instead, creating a competitive advantage for our business community, which will then create profits from which we can extract taxes to pay for our borrowing?”So, unless your argument consists of BOTH the explanation of financin
Source date (UTC): 2011-03-25 21:57:00 UTC
http://bit.ly/ePQU0SYes. But a) Wealth is not the same as cash, and is not the same as income. The money is largely held as debt which is in use and recirculated in the economy. Which means it is being USED by people outside the upper 5%. Money does not make more money unless it is invested. It actually depreciates. So it has to be invested and used by you and me. b) What percent of the knowledge and skill required to make use of that
Source date (UTC): 2011-03-25 12:35:00 UTC