Curt Doolittle

Category: Economics, Finance, and Political Economy

  • What Are The Advantages And Disadvantages Of Different Philosophies Of Economics?

    You listed political philosophies but not economic philosophies.  They are two sets of questions.

    1) Political philosophies consider three different questions:
    a) How is the institution of property constructed (is property owned by individuals, the collective, an institution, or an authoritarian figure, and what are the limits on the use of that property)
    b) what institution is used to determine the use of property (the market, heads of families, bureaucracy, or a dictator)
    c) what claims do citizens (shareholders) have on the results of production or the profits from exchange. (Which are technically the same thing.)
    Everything else is trappings.  We know that incentives and the ability to calculate and plan determine the rate of innovation and effort put into work.  So the more individual property rights are, the more consumption is possible at the lowest cost.

    2) Economic philosophies fall into temporal categories from the short term to the long term, and advocates differer not so much on the utility of any given tactic, but on their approval or disapproval of the externalities (secondary consequences) of using the tactic. Economists then, tend to ally with political philosophies based upon those SECONDARY outcomes.

    These outcomes are driven by ‘fears’.  The liberal fears that the poor or less able will experience discomfort.  The conservative fears that society will be made fragile and uncompetitive.  If we work very hard and save then society will become hierarchical but safe.  If we redistribute and only a few work hard then society will have less discomfort but more fragility.  At least, that’s the theory. The left tolerates fragility and the right tolerates discomfort. It really boils down to that simple a difference.

    What economists do agree upon is that stimulating demand (consumption) stimulates the economy and does it quickly.  What they disagree upon is the good or bad consequences that come from stimulating the economy. The different economic strategies insert money into the economy in a range from very short to very long time frames.

    And the political ideologies are biased toward these two time frames: conservative the long term and liberal the short term.  In effect, the left wants the most redistribution possible right away in order to diminish the stress of the natural difference between teh classes, and think incentives are a means of coercion, and the right wants a meritocratic society where people have an incentive to be productive. (These are simply expressions of the feminine and masculine reproductive strategies. Nothing more.) 

    The different economic tactics below are organized from short term (liberal) to long term (conservative).  Economists tend to fall into camps that PREFER one or more of the tactics. 

    The Economic Tactics:
    a) Modern Monetarists (MMT): when necessary, just give money directly to people in order to stimulate consumption.  MMT is a counter intuitive theory that is widely disputed.  But the idea that we should be able to bypass the financial sector and directly credit consumer bank accounts is not a bad one. The data shows that tax incentives are not useful in the short term. (I was one of the people advocating that we just pay down consumer mortgages by 200K – it would be cheaper than letting the world economy collapse for a decade. Galbraith recommended the same thing before he died. And he and I are at opposite ends of the political spectrum.)   The counter arguments are that there isn’t any way to do this today, and it’s pretty hard to not create a moral hazard, and it’s pretty hard to be equitable, because you’re effectively rewarding people who used bad judgement.  FAVORED BY THE RADICAL LEFT

    b) Monetary Policy: when necessary, reduce the cost of credit (interest rates) so that people are more willing to borrow money. This puts cheap money into the banking system and money works its way through consumers and business into the economy.  This works well in ordinary times mostly as fine tuning, but when we are subject to shocks, like the recession, we can’t make money cheap enough that people actually will spend it. Right now, given the rate of inflation, money is effectively free to borrow. But people still aren’t lending or borrowing.  There is wide consensus that monetary policy is necessary under fiat (monopoly) money.  There is wide consensus that monetary policy can decrease the problems of money shortage compared to the gold standard. The criticism is that monetary policy exaggerates booms and busts.  WIDESPREAD CONSENSUS OTHER THAN LIBERTARIANS

    c) Fiscal Policy (Keynesians) : when necessary, the government borrows (or prints) and spends money on all sorts of programs in order to put money into the economy using the goverment’s spending network.  The problem is that it does take some time to work its way into people’s hands. There are not “shovel ready’ projects available and they take time.  And the real reason people object is because it finances political corruption, and the party in power tends to spend it in partisan fashion. (WHich is why the republicans won’t allow it right now.)  The other reason is that people just don’t trust the government any longer.  So they don’t want to reward the government.  The third reason is that conservatives in particular do not want to expand the government, but contract it.  FAVORED BY THE LEFT

    d) Industrial Policy: the government should (as do most other countries) invest in particular industries that will create jobs and lead to a competitive advantage.  INdustrial policy is usually accompanied by TRADE POLICY (import export controls and taxation).  The asian countries have used these policies to their benefit. China in particular.  The right and libertarians abandoned industrial policy and moved to free trade when the unions allied with the left.  But industrial policy is naturally attractive to the right.  For all intents and purposes, industrial policy has been abandoned in the USA. FAVORED BY THE RIGHT, DESPISED BY LIBERTARIANS.

    e) Human capital policy (Education) : Education policy is the means of improving the competitive value of citizens in relation to other countries.  It takes a very long time for  education policy to take effect.  The germans have demonstrated the best understanding of education. Although most americans would find their model invasive.
    FAVORED BY THE RIGHT, FAVORED BY LIBERTARIANS, ACTIVELY UNDERMINED BY THE LEFT.

    f) Strategic Policy (Military Policy): control of global trade routes, oil, and petro dollars is one of the most important reasons for the USA’s standard of living, despite the relative lack of competitiveness of it’s working classes.  This is a very complex and long topic, but strategic policy IS ECONOMIC POLICY.  The average american gets a pretty big return on his military expenditures. But that’s an unpleasant reality for many.  Strategic policy takes a very long time to play out. But most countries engage in it.  Iran for example is trying to become the core state of islamic civilization and control world oil supplies and prices, and by doing so, eliminate the discount that western citizens pay for oil. 
    FAVORED BY THE RIGHT, DESPISED BY LIBERTARIANS AND THE LEFT

    This needs to be a book length topic but hopefully it illustrates that political philosophy and economic philosophy are two different things.  But that economic philosophy is divided into specialties that correlate with the different sides of the political spectrum.

    One thing is for certain: economists will talk as if they are far more certain than they are or can be. We are too inexperienced in the field of economics, and the problem is far too complex for us to be sure of what we are doing. In effect, we are running a very big experiment on humanity. It seems to be working reasonably well. But some patients are definitely harmed in the process.  The most important of which is that we are expanding the population to questionable levels.

    (I have a splitting headache so i will have to come back and check this for edits this later.  -Cheers)

    https://www.quora.com/What-are-the-advantages-and-disadvantages-of-different-philosophies-of-economics

  • Stiglitz Joins In On Keynesian Spending In Order To Expand The Oppressive State

    The Keynesian debate promoted by such writers as Krugman, Delong, Thoma, Smith, and Stiglitz is misleading. Human beings are well aware that spending can increase demand, and that demand will improve the economy. The problem is, that we’re also aware of the externalities that are caused by that spending: the increase in government interference in our lives, the expansion of government’s size, the corruption created by the use of the funds, the use of the funds to support one’s opposition, the destruction of our savings, and the near prohibition on the institution of saving. These negative consequences all support the secondary Keynesian objectives: the strong and increasingly egalitarian state. So Keynesians promote spending as much because of it’s externalities as for its impact on the economy. Just as we oppose those externalities because we desire freedom from an oppressive state, even if we must pay a high cost for doing so. The germans resent supporting the greeks, italians and spanish just as much as americans resent supporting their liberal leaning underclasses. And while it may be true that the scale of our economy allows us to print money, that is not to say that each of us could not be more free, more prosperous, more secure and more competitive, as smaller collections of states rather than a continental federation of states oppressed by the coasts. The Keynesian arguments are convincing on first blush. But they are only convincing because in their simplicity they ignore the true costs of government spending – the externalities that come from empowering the state: it is not debt alone that we face. It’s the destruction of meritocracy and the submission to the state. The germans and the americans are right to oppose it.

  • FROM: Krugmanville QUOTE: “I’m waiting for the .1% to realize that increase in d

    FROM: Krugmanville

    QUOTE: “I’m waiting for the .1% to realize that increase in demand will bring increase in earnings. The path to profit maximization does not include depression. At some point politicians and private equity firms will realize stimulating the economy is in their interests.” /QUOTE

    Curt Doolittle, Seattle WA

    It may be comforting to view one’s opposition as clueless, stupid or ignorant. But it isn’t true. This conservative strategy has been consistent since the Reagan era, when conservatives looked at demographic data and determined that it was no longer possible to work within the state, only in competition with it, in an effort to bankrupt it.

    So your argument about the .1% “realizing” something, or that they can make more money funding consumption doesn’t wash. It’s not about money. It’s about constraining the state. The .1% are ‘hired’, and empowered by the conservatives as an opposition to the intrusive state’s assault on norms. So, no one is clueless here. It’s a strategy and it’s working. And it’s going to continue to work because of demographics. Because of those demographics, polarization is a permanent property of the American empire.

    The founder’s use of majority rule assumed a dominant christian agrarian populace. It was a vehicle for preserving the power of that social order through common interest. Addition of women to the electorate undermined that dynamic. Immigration altered it. Breeding rates made it permanent. Urbanization and density preference exacerbated it. And the result is necessary polarization as one group that’s biased female uses the state and the other that’s biased male uses commerce. And nothing is going to change that dynamic other than a substantial decrease in single parenthood, and small households, or a rapid change in racial breeding rate distributions. Since those factors are unlikely to occur in an industrialized society, the polarization will be exacerbated and permanent until there is some conflict that restructures the constitution, or some innovation that renders the state less meaningful as a means of redistribution.

    Source date (UTC): 2012-06-09 10:43:00 UTC

  • YOU SHOULD READ: ENRICO MORETTI’S THE NEW GEOGRAPHY OF JOBS I had the privilege

    http://www.forbes.com/sites/modeledbehavior/2012/05/23/richard-florida-is-wrong-about-creative-cities/BOOK YOU SHOULD READ: ENRICO MORETTI’S THE NEW GEOGRAPHY OF JOBS

    I had the privilege of living in Seattle during the rise and crest of Microsoft. Galleries, and playhouses, the experimental “Entros” restaurant, the expansion of the art-glass movement, the rise of seattle as metalsmithing community. The northwest painting movement imitating Z Z Wei. And today the innovation in home design is still heavily influenced by the seattle market. Microsoft gave more of its profits to employees than perhaps any company in history. And Seattle’s unique character reflects it.

    There is a difference between the Creative Class and the Innovative Class. Creativity is a luxury good. Innovation is an economic necessity that makes that creativity possible.

    The arts are a luxury good produced as a byproduct of wealth. The arts become a draw for the creative class. And the creative class improves the overall environment. But it’s industry, and in particular, industry that produces exports that makes it possible for a city to afford the arts.

    Unfortunately there is a meme or perhaps desire, within the creative fields that they are the leaders rather than followers of prosperity. During the ‘oughts’ a series of books were published heralding the new leadership of the ‘creative class’.

    And similarly, a meme among the political class, that government creates prosperity. The effect of which can be seen in the failure of large scale urban projects such as those produced by Detroit. Or the hulking travesties of the old industrial northeast. Even in Seattle, the government all but drove Boeing out of the state, in one of the greatest political vanities in history.

    Source date (UTC): 2012-05-23 09:28:00 UTC

  • Why Is Socialism Such A Bogeyman?

    You would need to understand the term “Socialism”
    1) Original meaning: central control of the means of production.
    2) Current meaning: redistributive democracy -central ownership of the profits from individual actions.

    The first It has a bad name because:
    In the name of socialism nearly a hundred million people died (disruption of incentives). Because it’s economically impossible (economic calculation debate).  And because it held people in poverty.

    The second is just a slow means of achieving the first.

    Small homogenous Germanic countries who’s strategic needs are subsidized by the united states or whose economies are subsidized by natural resources appear to be egalitarian. (It’s called ‘getting to denmark’ in political economy.) This is because they have a rigid normative structure and the different groups are not large enough to create a bloc.  The usa is a large heterogeneous economy with many factions in direct opposition, and unenforced norms, racial and cultural conflicts, facing both internal and external strategic threats that subsidizes much of the world, and where access to government allows access to power over other groups. The USA also has dramatic redistribution through inefficient benefit programs rather than directly via money.   People are not charitable to others who they feel they are in competition with.

    (And before you get too impressed with those countries go live there for a year. It is extremely expensive and you will be able to consume only a fraction of  what you do in the states.)

    It is entirely possible to have a great deal of redistribution if norms are consistent and there is no access to poliitcal power.  But that means ‘small is good’.  And ‘small is good’ is what you should learn from the nordic countries.

    https://www.quora.com/Why-is-socialism-such-a-bogeyman

  • How Is An Economic Stimulus Package Supposed To Work?

    There are a series of possible stimuli available from the short term to the long term.
    1) Spending – Fiscal Policy: the government borrows money, then spends it on any number of projects.  This puts money in the hands of consumers, consumers spend on things not related to the projects, and businesses respond in order to serve demand. Their employees spend too, and the cycle expands.  Problem? It takes a long time for money to move into the economy.
    2) Monetary Policy: the government borrows money and then auctions it off at low rates.  Bankers buy this ‘cheap’ money and sell it as lower cost loans to business and the public.  Problem? Sometimes (now) no matter how low you make the cost of credit (effectively zero) people will not borrow it.
    3) Trade Policy. Sometimes you can tax or reduce taxes on goods and services to make them cheaper or more expensive. So, for example, if you want to create jobs in say, clothing manufacture, you highly tax clothing imports.  Problem: this just makes goods and services more expensive for consumers, so it has to be paired with monetary policy.
    4) Industrial policy: what we did with the auto companies. You find a way to create or expand industries that create jobs or create demand.
    5) Education policy: train or retrain your population to produce goods and services that are desired, when the goods and services they produce are no longer as desirable.

    Most of the time, governments quickly adjust monetary policy then they try spending policy.  The argument today is that we should spend more. The problem is that people don’t trust their government to spend it wisely, and they therefore prefer to suffer a slower economy than fund bad behavior in government.

    https://www.quora.com/How-is-an-economic-stimulus-package-supposed-to-work

  • Why Is Socialism Such A Bogeyman?

    You would need to understand the term “Socialism”
    1) Original meaning: central control of the means of production.
    2) Current meaning: redistributive democracy -central ownership of the profits from individual actions.

    The first It has a bad name because:
    In the name of socialism nearly a hundred million people died (disruption of incentives). Because it’s economically impossible (economic calculation debate).  And because it held people in poverty.

    The second is just a slow means of achieving the first.

    Small homogenous Germanic countries who’s strategic needs are subsidized by the united states or whose economies are subsidized by natural resources appear to be egalitarian. (It’s called ‘getting to denmark’ in political economy.) This is because they have a rigid normative structure and the different groups are not large enough to create a bloc.  The usa is a large heterogeneous economy with many factions in direct opposition, and unenforced norms, racial and cultural conflicts, facing both internal and external strategic threats that subsidizes much of the world, and where access to government allows access to power over other groups. The USA also has dramatic redistribution through inefficient benefit programs rather than directly via money.   People are not charitable to others who they feel they are in competition with.

    (And before you get too impressed with those countries go live there for a year. It is extremely expensive and you will be able to consume only a fraction of  what you do in the states.)

    It is entirely possible to have a great deal of redistribution if norms are consistent and there is no access to poliitcal power.  But that means ‘small is good’.  And ‘small is good’ is what you should learn from the nordic countries.

    https://www.quora.com/Why-is-socialism-such-a-bogeyman

  • How Is An Economic Stimulus Package Supposed To Work?

    There are a series of possible stimuli available from the short term to the long term.
    1) Spending – Fiscal Policy: the government borrows money, then spends it on any number of projects.  This puts money in the hands of consumers, consumers spend on things not related to the projects, and businesses respond in order to serve demand. Their employees spend too, and the cycle expands.  Problem? It takes a long time for money to move into the economy.
    2) Monetary Policy: the government borrows money and then auctions it off at low rates.  Bankers buy this ‘cheap’ money and sell it as lower cost loans to business and the public.  Problem? Sometimes (now) no matter how low you make the cost of credit (effectively zero) people will not borrow it.
    3) Trade Policy. Sometimes you can tax or reduce taxes on goods and services to make them cheaper or more expensive. So, for example, if you want to create jobs in say, clothing manufacture, you highly tax clothing imports.  Problem: this just makes goods and services more expensive for consumers, so it has to be paired with monetary policy.
    4) Industrial policy: what we did with the auto companies. You find a way to create or expand industries that create jobs or create demand.
    5) Education policy: train or retrain your population to produce goods and services that are desired, when the goods and services they produce are no longer as desirable.

    Most of the time, governments quickly adjust monetary policy then they try spending policy.  The argument today is that we should spend more. The problem is that people don’t trust their government to spend it wisely, and they therefore prefer to suffer a slower economy than fund bad behavior in government.

    https://www.quora.com/How-is-an-economic-stimulus-package-supposed-to-work

  • THE TOP THEORETICAL TAX RATE REALY 70% OR IS IT REALLY 50%? This article discuss

    http://www.nationalreview.com/agenda/300373/guest-post-arpit-gupta-saez-and-diamond-taxes-arpit-guptaIS THE TOP THEORETICAL TAX RATE REALY 70% OR IS IT REALLY 50%?

    This article discusses top tax rates in tolerably accessible terms.

    I’ll buy that it’s 48%, depending upon where it’s graduated. But as I’ve stated repeatedly, it has to be constructed on a rolling average of income, not that of a single year, which penalizes the middle class for rare events that pay for their retirements. Otherwise there is no 1% (or the more accurate .017%) because something close to 30% of people end up in that high tax bracket at some time in their lives, and that’s too big a block to alienate through aggressive taxation that threatens their retirement savings that come from almost entirely from rare events.

    Source date (UTC): 2012-05-19 17:47:00 UTC

  • BULL MARKET OVER? “You can blame Europe…you can blame the Fed…or you can blame h

    BULL MARKET OVER?

    “You can blame Europe…you can blame the Fed…or you can blame high energy prices. But no matter where you put the blame – it appears that our brief, nine-week bull market is over.” – William James, Eastman

    Source date (UTC): 2012-05-17 14:33:00 UTC