Curt Doolittle

Theme: Incentives

  • Elegant New Weapon in the Anti-Krugman Wars

    —“The real difference between Chicago and MIT macro is Chicago’s commitment to rules over discretion. Milton Friedman’s endorsement of a constant 3% increase in the money supply was meant to minimize the chance of hyperinflation and to make running the Fed a boring job such that investors had clear expectations of how Policy would be set. When “leaders” have discretion with respect to how they set policy, they have more fun on the jobbut “uncertainty” increases and this reduces investment.”—Matthew Kahn

    [I]n other words, the Chicago program seeks to define rules that will eliminate discretion. The MIT program seeks to identify opportunities for discretion. Rule of law = Lack of Discretion.

    I wasn’t able to come up with that myself. And it’s wonderful.

    MORE

    ANTI-KRUGMAN — THIS IS SO GOOD THAT I HAVE TO POST MORE OF IT.

     —-“At M.I.T., however, Keynes never went away. To be sure, stagflation showed that there were limits to what policy can do. But students continued to learn about the imperfections of markets and the role that monetary and fiscal policy can play in boosting a depressed economy. And the M.I.T. students of the 1970s enlarged on those insights in their later work. Mr. Blanchard, for example, showed how small deviations from perfect rationality can have large economic consequences; Mr. Obstfeld showed that currency markets can sometimes experience self-fulfilling panic.”—-Paul Krugman 

    “Point #1 Note the eagerness to introduce ideas from behavioral economics into economic policy making. A dangerous precedent arises here. If the “people are foolish“, then this creates an ugly elitist possibility that only the wise technocrats (the MIT graduates) can protect us. I don‘t like this worldview on a number of levels. Moral hazard lurks when sophisticated investors and economic decision makers are aware that the technocrats will step in and “save the world“ when ugly economic events take place (such as a plunging stock market, or rising unemployment). 

    “Point #2: The real difference between Chicago and MIT macro is Chicago‘s commitment to rules over discretion. Milton Friedman‘s endorsement of a constant 3% increase in the money supply was meant to minimize the chance of hyperinflation and to make running the Fed a boring job such that investors had clear expectations of how Policy would be set. When “leaders“ have discretion with respect to how they set policy, they have more fun on the job but “uncertainty“ increases and this reduces investment. 

    “Point #3; Dr. Krugman also refuses to acknowledge the power of Ed Prescott‘s work on time consistency and policy. Clear rules of the game create dynamically stable rules and this fosters investment. In Dr. Krugman‘s short run focus on the business cycle, he ignores the long run growth implications caused by the activist policies that he supports. 

    “Point #4; In the absence of randomized trials, the MIT trained technocrats (the 5 people listed above) do not actually know what policies are effective in mitigating business cycles. If they know that they do not know how the macro economy really works, then does this affect Dr. Krugman‘s optimism that MIT has won the policy debates. His piece isn‘t that modest (or honest) about the modeling uncertainty that now exists in modern macro economics. He makes the past debates sound settled. If he attended MIT‘s current 1st year PHD macro sequence, he would see a variety of different models being worked on and taught and I bet that the policy conclusions are very sensitive to the modeling choices.” —- Matthew Kahn (Environmental and Urban Economics )

  • ANTI-KRUGMAN — THIS IS SO GOOD THAT I HAVE TO POST MORE OF IT. —“At M.I.T., h

    ANTI-KRUGMAN — THIS IS SO GOOD THAT I HAVE TO POST MORE OF IT.

    —“At M.I.T., however, Keynes never went away. To be sure, stagflation showed that there were limits to what policy can do. But students continued to learn about the imperfections of markets and the role that monetary and fiscal policy can play in boosting a depressed economy. And the M.I.T. students of the 1970s enlarged on those insights in their later work. Mr. Blanchard, for example, showed how small deviations from perfect rationality can have large economic consequences; Mr. Obstfeld showed that currency markets can sometimes experience self-fulfilling panic.”—Paul Krugman

    “Point #1 Note the eagerness to introduce ideas from behavioral economics into economic policy making. A dangerous precedent arises here. If the “people are foolish”, then this creates an ugly elitist possibility that only the wise technocrats (the MIT graduates) can protect us. I don’t like this worldview on a number of levels. Moral hazard lurks when sophisticated investors and economic decision makers are aware that the technocrats will step in and “save the world” when ugly economic events take place (such as a plunging stock market, or rising unemployment).

    “Point #2: The real difference between Chicago and MIT macro is Chicago’s commitment to rules over discretion. Milton Friedman’s endorsement of a constant 3% increase in the money supply was meant to minimize the chance of hyperinflation and to make running the Fed a boring job such that investors had clear expectations of how Policy would be set. When “leaders” have discretion with respect to how they set policy, they have more fun on the job but “uncertainty” increases and this reduces investment.

    “Point #3; Dr. Krugman also refuses to acknowledge the power of Ed Prescott’s work on time consistency and policy. Clear rules of the game create dynamically stable rules and this fosters investment. In Dr. Krugman’s short run focus on the business cycle, he ignores the long run growth implications caused by the activist policies that he supports.

    “Point #4; In the absence of randomized trials, the MIT trained technocrats (the 5 people listed above) do not actually know what policies are effective in mitigating business cycles. If they know that they do not know how the macro economy really works, then does this affect Dr. Krugman’s optimism that MIT has won the policy debates. His piece isn’t that modest (or honest) about the modeling uncertainty that now exists in modern macro economics. He makes the past debates sound settled. If he attended MIT’s current 1st year PHD macro sequence, he would see a variety of different models being worked on and taught and I bet that the policy conclusions are very sensitive to the modeling choices.”

    — Matthew Kahn (Environmental and Urban Economics )

    Source date (UTC): 2015-07-26 00:18:00 UTC

  • WEAPON IN THE ANTI-KRUGMAN WARS —“The real difference between Chicago and MIT

    http://greeneconomics.blogspot.com/2015/07/dr-krugmans-discussion-of-mit-vs.htmlELEGANT WEAPON IN THE ANTI-KRUGMAN WARS

    —“The real difference between Chicago and MIT macro is Chicago’s commitment to rules over discretion. Milton Friedman’s endorsement of a constant 3% increase in the money supply was meant to minimize the chance of hyperinflation and to make running the Fed a boring job such that investors had clear expectations of how Policy would be set. When “leaders” have discretion with respect to how they set policy, they have more fun on the job but “uncertainty” increases and this reduces investment.”—Matthew Kahn

    In other words, the Chicago program seeks to define rules that will eliminate discretion. The MIT program seeks to identify opportunities for discretion. Rule of law = Lack of Discretion.

    I wasn’t able to come up with that myself. And it’s wonderful.

    Source date (UTC): 2015-07-25 18:46:00 UTC

  • THE MEDIA AS DRUG DEALER It doesn’t make financial sense to operate a newspaper.

    THE MEDIA AS DRUG DEALER

    It doesn’t make financial sense to operate a newspaper. The FT generates 35M of profit per year on over 500M in revenues. That’s what, 7%? The reason to own a newspaper is influence: gossip.

    Now the financial times is, like the Journal, a financial rather than political newspaper. So by definition it’s an empirical and heroic medium rather than one of complaining, for the purpose of rallying shaming, and power accumulation.

    I went through five daily issues of Canada’s main newspaper a few years ago, circling correspondent articles (what I consider truthful) and you could find about three small articles a day. The rest were entertainment, created by appealing to the anglosphere’s erroneous sense of moral superiority.

    In other words, the newspaper business sells advertising to marketers, and then consumers buy signaling: a form of conspicuous consumption, that carries signals.

    And quite the opposite of what we expected: people are not able to insulate themselves from the most influential drug after sex: signals of moral fitness.

    If we look at the evolutionary reasons why this all works, it’s obvious: moral fitness makes us generous, and moral violation makes us punish.

    But we should look at the non-financial media as what they are: drug dealers.

    They’re causing suicide through addiction.

    Source date (UTC): 2015-07-24 05:07:00 UTC

  • “New institutions, or the demise of old institutions, alter incentives and conse

    —“New institutions, or the demise of old institutions, alter incentives and consequently mechanically affect material behavior and reproductive behavior, and metaphysically affecting spiritual condition. The resulting changes in material and reproductive behavior can be immense and rapid – as the normative changes in family support and reproductive behavior over the last 50-75 years illustrate. The spiritual changes are less rapid, perhaps due in some part to cultural inertia and to genetic memory as 50 generations of megalomaniacs and charming psychopaths were caught out and punished by their peers in the nobility and church.”— Karl Brooks

    Source date (UTC): 2015-07-23 04:38:00 UTC

  • Paul Krugman: Slow Roasting the West in Keynesian Ovens

    (trigger warning)(run with this meme) [P]aul; It’s not that you’re wrong. It’s that you’re a liar. You lie by telling half truths and then loading, framing and overloading them with moral falsehoods. You advocate institutional lying: the Keynesian economics of distorting the information system we use to cooperate so that we consume rather than accumulate capital; and you advocate theft on an epic scale: redistribution in lieu of voluntary exchanges between classes so that we accumulate normative capital rather than government scale. So I’m not saying you’re wrong – you do manage to state half truths. I’m saying you’re a lying, immoral fraud, a racist and a genocidalist. Putting people in ovens instead of showers is evil, immoral and dishonest. Putting people in economic and political ovens instead is just doing the same by slower means. I mean, you’re just a better liar, but you’re doing the same thing: genocide by lying.

    Curt Doolittle (No way outta that box Paul. You’re done. Time to hang up the keyboard.)

  • Paul Krugman: Slow Roasting the West in Keynesian Ovens

    (trigger warning)(run with this meme) [P]aul; It’s not that you’re wrong. It’s that you’re a liar. You lie by telling half truths and then loading, framing and overloading them with moral falsehoods. You advocate institutional lying: the Keynesian economics of distorting the information system we use to cooperate so that we consume rather than accumulate capital; and you advocate theft on an epic scale: redistribution in lieu of voluntary exchanges between classes so that we accumulate normative capital rather than government scale. So I’m not saying you’re wrong – you do manage to state half truths. I’m saying you’re a lying, immoral fraud, a racist and a genocidalist. Putting people in ovens instead of showers is evil, immoral and dishonest. Putting people in economic and political ovens instead is just doing the same by slower means. I mean, you’re just a better liar, but you’re doing the same thing: genocide by lying.

    Curt Doolittle (No way outta that box Paul. You’re done. Time to hang up the keyboard.)

  • The Anglo-Saxon Subversion of French Elites

    [T]he combination of “Anglo-Saxon” economics (accepting the dynamism of open markets) and of “Anglo-Saxon” politics (governments as seriously responsible–British version–or accountable–Washington version–to their voters) is doubly subversive to the French elite’s entire modus operandi. The “Anglo-Saxons” provide an identity to define oneself against and, in the case of the US, a counterpoint to seek to surpass. (One cannot really say “rival” because the US fails to feel threatened by European unity–indeed, actively promotes it; which is, if anything, even more infuriating.) –Michael Philip

  • The Anglo-Saxon Subversion of French Elites

    [T]he combination of “Anglo-Saxon” economics (accepting the dynamism of open markets) and of “Anglo-Saxon” politics (governments as seriously responsible–British version–or accountable–Washington version–to their voters) is doubly subversive to the French elite’s entire modus operandi. The “Anglo-Saxons” provide an identity to define oneself against and, in the case of the US, a counterpoint to seek to surpass. (One cannot really say “rival” because the US fails to feel threatened by European unity–indeed, actively promotes it; which is, if anything, even more infuriating.) –Michael Philip

  • Putting Another Misesian To Bed

    —“I generally do not follow socialistic thinking processes such as the concept of trade between groups. Methodological individualism is, to me, the way to go, as Ludwig von Mises pointed out. So I am sorry I cannot agree with this analysis. Individuals trade, and individuals act. This idea of a group having some kind of living reality jump straight out of Plato and was debunked back in the Middle Ages by the philosophers called nominalists.”— Lawrence

    [W]ell, you have to create an argument other than ‘the way to go’. Because that’s not an argument. it’s an expression of taste. 

    Individuals cooperate. They form families. They form friendships. They form cooperative alliances. They form partnerships, corporations, armies, and nations. So empirically, that is what people do. And praxeologically we can easily explain why it is in their interest to do so. And we can explain praxeologicaly why it is against their interest not to do so. Groups who cooperate out-compete groups that do not cooperate. Universally. And the higher the trust, the more truth, the faster the rate of economic and inventive velocity. The more competitive the group. The west has successfully out-competed other groups precisely because we produced commons. Including the commons of property rights, rule of law, the common law, the militia, and truth telling. Even science was produced as a commons. There are productive commons, and parasitic commons. it matters only whether the commons is productive (moral) or parasitic (immoral). A commons is, like violence, value neutral. Commons and violence can be use to create productivity or they can be used for purposes of parasitism. So not only is cooperation at scale, and the production of commons methodologically individualistic, but it fails the test of methodological individualism to suggest people not seize the opportunity to cooperate to produce returns unachievable by individual action. Cooperation exists and moral intuition exists to preserve cooperation, for the simple reason that the rewards of cooperation are disproportionately higher than the rewards of individual production. So the only question is whether you can voluntarily participate and exit such commons, and if you have universal standing in defense from parasitism. If so, then only productive commons can be constructed. This is what we call the Civic Society. But if you don’t participate, why will members of that Civic Society tolerate your presence? They usually don’t. So you can’t be right. Praxeologically you can’t be right. Just how it is. Curt Doolittle The Propertarian Institute Kiev, Ukraine (London).