A fascinating conversation. Jim does a superb job of allowing Jeff to develop his arguments, which surely go against much of what Jim himself believes. This is a great example of what a very classy guy Jim is. He's taken some pretty hard, low shots from the BHTV commentariat, but he always comes back in good humor. He's a wonderful spokesman for his point of view. I disagree with him much of the time, but he's about my favorite conservative commentator, and I always pay close attention to his arguments. As I was watching this I kept thinking of the quotation from Evelyn Beatrice Hall (often wrongly attributed to Voltaire), "I disapprove of what you say, but I will defend to the death your right to say it." This is democracy (and BHTV) at its best. Thanks Jim and Jeff!

fantastic NEW guest. thank you, bob. wow! conservatives are even dumber than i thought they were. and, double wow, libertarians are officially the stupidest, most cocky and delusional morons ever. thanks, Alan G! nice job

I'll add my vote: this was a good diavlog, and I was happy to hear the case for big government made so compellingly. I especially liked that Jeff pointed out that one of the problems in recent years is the growth in attitude that government can't help, only makes things worse, and so on. Perhaps with executive pay caps in place and other suggestions that there aren't easy fortunes to be made in the world of finance, we'll get some more smart people back into public service. Some questions for you, Bokonon ...

Quoting Bokonon: A fascinating conversation. Jim does a superb job of allowing Jeff to develop his arguments, which surely go against much of what Jim himself believes.

I appreciate that Jim conducted this as an interview rather than a debate, too, and that he gave Jeff the space to answer his questions. Still, I do have to wonder two things. First, do you think that toward the end of the diavlog, Jim was hinting that recent events have caused him, if not to change his views, but at least to be less sure of them? (If true, kudos to Jim for having an open mind. It should also be

Joan Walsh has a Salon piece posted on the Stimulus Package, Obama's message and Jeff's book. It deserves a sidebar link.

Quoting Wonderment: Joan Walsh has a Salon piece posted on the Stimulus Package, Obama's message and Jeff's book.

It deserves a sidebar link.

You're right. A good read. Thanks for the link. I guess I disagree with her a little in that I think Obama is already making the case that she wants him to make, but she might be right that he needs to simplify the message. I also think he can't do it alone -- one voice, no matter how good, has trouble against a chorus of howler monkeys, and the MSM is letting an awful lot of them on air without significant challenge. I'm speaking here not only of Rush and GOP members of Congress, but many of the Villager pundits, too. I wish we could have ten Barney Franks and ten Paul Krugmans just to balance out the talk shows. Oh, and by the way? How happy are you about this? Slightly O/T, I know, but it's worth pointing out that significant things are being accomplished, despite what many seem to think.

Quoting kidneystones: ... the politics of porky fear, with the poor communicator ,himself, squawking ...

The self-referential aspect of this cannot be overstated.

Oh, and by the way? How happy are you about this?

Great. An important piece of legislation. Having said that, it was a bi-partisan law that was passed several times previously, and was only vetoed by the bungling Bush and his cohort of hardcore right-wing radicals. This was, in other words, a slam dunk for Dems and not a bill that demonstrates Obama's clout or leadership qualities. As the NYT article implies the big news may be the Daschle dumping. I was very disappointed to see Daschle go down, since he DID have the leadership qualities we needed to reform healthcare as promised by Obama. The replacement will be interesting.

Quoting kidneystones: Build Nuclear Power Plants Now!

Why? Our coal plants are working so well.

Quoting Wonderment: Great. An important piece of legislation.

Having said that, it was a bi-partisan law that was passed several times previously, and was only vetoed by the bungling Bush and his cohort of hardcore right-wing radicals.

This was, in other words, a slam dunk for Dems and not a bill that demonstrates Obama's clout or leadership qualities.

Fair enough. But it was still good news. Given the waffling by the Dems over the past couple of decades, I wouldn't have been surprised if they had submitted to calls for it to be "debated" again. So, always be happy for what you get, I say.

As the NYT article implies the big news may be the Daschle dumping. I was very disappointed to see Daschle go down, since he DID have the leadership qualities we needed to reform healthcare as promised by Obama. The replacement will be interesting.

Meh, I don't know. It could be that I'm just seeing a lot of piling on from people angry at him for screwing up in such a boneheaded way, but the lobbying connections he and his wife had was news to me, and it made me wonder if he would have been as great

You could tell in the first few seconds that Jim's brain was screaming out to him to say "..and together we are..." to finish the shtick that he and David Corn do at the beginnings. I think everyone that comes on with Jim should be required to do the intro, but that might just be me.

Who have you heard mentioned to replace him?

Elizabeth Edwards, Dennis Kucinich and Barbara Lee. The only problem is that I am the mentioner.

Quoting Nate: You could tell in the first few seconds that Jim's brain was screaming out to him to say "..and together we are..." to finish the shtick that he and David Corn do at the beginnings. I think everyone that comes on with Jim should be required to do the intro, but that might just be me.

I really thought Jeff was going to say it, actually.

Quoting Wonderment: Elizabeth Edwards, Dennis Kucinich and Barbara Lee.

The only problem is that I am the mentioner.

Heh. I don't think I could support either of the first two (I don't know Barbara Lee is). I like their politics, but realistically, I think, to get NHC passed, it's going to take someone who isn't seen as an advocate, but as a chief negotiator or deal-maker.

Quoting bjkeefe: ... but I don't think Daschle is the only one on the planet with these qualifications.

More on this from flory at Whiskey Fire and Amanda Marcotte.

Quoting bjkeefe: I almost detect a degree of surprise from your comments that Jim would be courteous. Is this the soft bigotry of low expectations, directed at conservative commentators in general?

Brendan, If you want to know what I think, read what I write. Don't tie yourself in knots trying to read into it your own agenda. If I have low expectations, they're for some of our all too ubiquitous commenters. I'll give you the last word, since you always seem to need that.

This was a really enlightening discussion. I especially enjoyed the historical aspects.

Quoting Bokonon: I'll give you the last word, since you always seem to need that.

Thanks. Sorry for cutting a little too close to the bone.

The arguments of both Friedman and Hayek were misrepresented throughout this diavlog. In the thirties the quantity of money did decrease by a third. Comparing that to now makes absolutely no sense. Hayek never said that businessmen are smarter than government officials. Talk about oversimplifying: Keynesians like to say that since profits in the maket are falling the govt needs to step in and make the investments. Well, the govt and the market are two very different things. If you look at the hierarchy of power, govts are much more like individual businesses ad thus are just as stupid as individual businessmen might be. The people that defend markets do not (usually) defend individual businessmen. Friedman always said that it's a "profit and loss" system. Don't bail out, in short. The market represent a complex web of activities which mainly take place with no one in charge, through delicate feedback loops that have evolved over time, such as prices. Govt is more like a giant corporation with monopoly power. Usually giant corporations with monopoly power screw up. Because the checks-and-balances of competition and profit-and-losses are wiped out. So comparing govt to the

Doesn't this guy has it backwards? He claims government started performing poorly after people started clamoring for less. There would be a critical point during which the marginal utility of another dollar of government spending is less than another dollar not being taxed - this is common sense.

Quoting Silver~Guy: Doesn't this guy has it backwards? He claims government started performing poorly after people started clamoring for less. There would be a critical point during which the marginal utility of another dollar of government spending is less than another dollar not being taxed - this is common sense.

It would be instructive to see the data his analysis is based on; but, in a contest between a priori (common sense) vs. empirical analysis, I'll bet on the latter every time.

I'm not sure how you would quantify it, but I think most people agree that over the last 30 years there's been a steady degradation of norms regarding civic life. The Republican's 30 year war against government is a big problem. It takes two parties to govern effectively. You need the debate. The Democrats can't do it by themselves. You need the parties competing with each on offering the best solutions. Okay, I know some loyal Republican out there will think they are, but really, they're not. That's why so many Republicans (Douthat, Salam, Frum, etc) are trying to get their shit together and come up with a program that addresses real problems for real people. Taxs cuts! Taxs cuts! Taxs cuts! doesn't count. I think Obama is doing the right thing by trying, but when Rush Limbaugh and Grover Norquist are calling the tune, it ain't going to happen. I think what's going on right now with the Republicans in Congress is even worse than Bush. I think Bush was a moderating influence on them. Ye gods. Mostly though I think the plutocracy and their puppets tore down the state because it was good for the plutocracy. This shit goes way back.

Quoting claymisher: Taxs cuts! Taxs cuts! Taxs cuts! doesn't count.

I think Obama is doing the right thing by trying, but when Rush Limbaugh and Grover Norquist are calling the tune, it ain't going to happen. I think what's going on right now with the Republicans in Congress is even worse than Bush. I think Bush was a moderating influence on them. Ye gods.

I think you're right, as I noted in a PS post in another thread. I don't know if they're serious, or just deploying this amendment (knowing it will fail), just so they'll have another talking point.

Quoting bjkeefe: I think you're right, as I noted in a PS post in another thread.

I don't know if they're serious, or just deploying this amendment (knowing it will fail), just so they'll have another talking point.

John Cole knows what I'm talking about:

Instapundit, Malkin, and Joe the Plumber discuss politics for PJTV.

There is so much to love about this, I don’t know where to start, but certainly Joe the Plumber bemoaning the lack of spending cuts and general program cuts in the stimulus bill was a highlight. It is almost as if he doesn’t have the first damned clue what he is talking about. A close runner-up would be Instapundit heralding Bush’s MBA as evidence of his awesome managerial skills. There was just so much to love, it is hard to narrow down the “best” parts.

I really don’t understand how bipartisanship is ever going to work when one of the parties is insane. Imagine trying to negotiate an agreement on dinner plans with your date, and you suggest Italian and she states her preference would be a meal of tire rims and anthrax. If you can figure out a way to split the difference there

Quoting claymisher: John Cole knows what I'm talking about:

LOL! Indeed. He's been on fire lately, and 90% of his posts feel like he's reading my mind and putting the thoughts into words much better than I could. (The 10% part where I don't feel that way is that he's more impatient that Obama Do. Something. Now. than I am.) But really -- most of the Republicans with power, both in Congress and in the media, really have no interest in compromise/bipartisanship/whatever. It's important for the left and moderates never to forget that.

Quoting bjkeefe:
Oh, and by the way? How happy are you about this?

Slightly O/T, I know, but it's worth pointing out that significant things are being accomplished, despite what many seem to think.

One of the things accomplished here was that Obama broke yet another campaign promise: As Politico notes: "Obama’s 5 p.m. signing came barely three hours after the House approved the bill, breaching Obama’s promise to have a five-day period of “sunlight before signing,” as he detailed on the campaign trail and on his website.

“Too often bills are rushed through Congress and to the president before the public has the opportunity to review them,” the Obama-Biden campaign website states. “As president, Obama will not sign any non-emergency bill without giving the American public an opportunity to review and comment on the White House website for five days.”
Change you can believe in

Quoting harkin: One of the things accomplished here was that Obama broke yet another campaign promise:

As Politico notes:

"Obama’s 5 p.m. signing came barely three hours after the House approved the bill, breaching Obama’s promise to have a five-day period of “sunlight before signing,” as he detailed on the campaign trail and on his website.

“Too often bills are rushed through Congress and to the president before the public has the opportunity to review them,” the Obama-Biden campaign website states. “As president, Obama will not sign any non-emergency bill without giving the American public an opportunity to review and comment on the White House website for five days.”

Boy, Politico's really becoming a reliable source of Republican talking points, aren't they? In this case, technically, yeah. But it's not like this bill hasn't been around for a couple of years by now. Also, I'd imagine that if you had a sick kid and no health insurance, you'd say this falls in the "emergency" category. But there's not nothing to this complaint, I'll grant. Keep the legitimate gripes coming!

Quoting bjkeefe: Boy, Politico's really becoming a reliable source of Republican talking points, aren't they?

They always have been, for the most part. I loved watching Nate Silver eat their lunch, last fall.

Quoting Unit: Sorry but I don't share his fascination with sheer power.

Unit, this is an extremely distorted paraphrasing of Mr. Madrick’s views. Even looking at corporations the best ones are where a strong leader is able to effectively communicate his vision and values so that it trickles down to the lowest level and makes a tangible impact. Steve Jobs comes to mind immediately. History shows that leaders in government can have a profound effect on a nation through sheer leadership in conjunction with policy. Where is the faulty logic in that? Also, I can’t argue with you on the history of economics because it’s not something about which I have a lot of knowledge, but theories aside, we have empirical proof that when government works, it can really do some amazingly good things. The fact that we’ve let that institution become so corrupt and inept I think says more about how we’ve handled our culture and value system than anything about the institution as a whole.

Quoting Wonderment: Elizabeth Edwards, Dennis Kucinich and Barbara Lee.

The only problem is that I am the mentioner.

This made me laugh out loud Wonderment :-D. Also, thanks for the Joan Walsh link. Excellent article, I really wish it would have been linked at the side.

Quoting kidneystones: .....Instead we get the politics of porky fear, with the poor communicator ,himself, squawking across the pages of the Wapo screaming in alliterated prose that this bad package is the Action Americans Need and must be passed OR ELSE....

Kidneystones! How I've missed you! You've abused me in the past and god knows I've been disgusted by your comments but you must have a certain masochistic hold on me because I'm so glad to see again your,... umm..., unique style of commenting (which has really mellowed, what's happened?).

Obama makes the case for passing the stimulus bill now: five minute video excerpt.

Wow - this one is amazingly good - I'm spellbound - thanks!

Quoting Unit: Keynesians like to say that since profits in the maket are falling the govt needs to step in and make the investments. Well, the govt and the market are two very different things. If you look at the hierarchy of power, govts are much more like individual businesses ad thus are just as stupid as individual businessmen might be. The people that defend markets do not (usually) defend individual businessmen. Friedman always said that it's a "profit and loss" system. Don't bail out, in short..

Governments can certainly act stupidly and often do, but comparing them to businesses is completely wrong, both conceptually and historically. For one thing, governments are not in the business of making a profit. They are "in the business" of defining and defending the public good, i.e. the good of all. What is the political equivalent of failure in business? As far as I know, there are only two: dissolution of the existing government (elections) and revolution. On the whole, I would agree that the government has no business bailing out failed businesses, but that isn't the essence of Keynesianism. Keynes simply thought that in times of a credit crisis (in both senses of the word: loss

Quoting Lemon Sorbet: Unit, this is an extremely distorted paraphrasing of Mr. Madrick’s views. Even looking at corporations the best ones are where a strong leader is able to effectively communicate his vision and values so that it trickles down to the lowest level and makes a tangible impact. Steve Jobs comes to mind immediately. History shows that leaders in government can have a profound effect on a nation through sheer leadership in conjunction with policy. Where is the faulty logic in that? Also, I can’t argue with you on the history of economics because it’s not something about which I have a lot of knowledge, but theories aside, we have empirical proof that when government works, it can really do some amazingly good things. The fact that we’ve let that institution become so corrupt and inept I think says more about how we’ve handled our culture and value system than anything about the institution as a whole.

Lemon, My point is that at best with a strong and smart leader we would get a govt behaving like a successful monopolistic corporation, and yes maybe the impact could be profound, but it's

Quoting Francoamerican: Governments can certainly act stupidly and often do, but comparing them to businesses is completely wrong, both conceptually and historically. For one thing, governments are not in the business of making a profit. They are "in the business" of defining and defending the public good, i.e. the good of all. What is the political equivalent of failure in business? As far as I know, there are only two: dissolution of the existing government (elections) and revolution.

I agree, but my point is that govts are more like an individual business than an entire market.

On the whole, I would agree that the government has no business bailing out failed businesses, but that isn't the essence of Keynesianism. Keynes simply thought that in times of a credit crisis (in both senses of the word: loss of trust and evaporation of lending), the government needs to restore trust and steer the market away from the precipice of depression by injecting liquidity into it (in this respect Friedman wasn't exactly the anti-Keynes some people imagine), but also by investing in projects that reallocate capital to productive uses (Don't forget: Keynes was the enemy of the rentier class, the hoarders of

Quoting bjkeefe: Obama makes the case for passing the stimulus bill now: five minute video excerpt.

The video of the full speech is now up on C-Span's site. About 21 minutes.

Quoting Unit: I agree, but my point is that govts are more like an individual business than an entire market..

True, but since its purpose isn't economic it shouldn't be evaluated in economic terms.

Quoting Unit: Have you seen this quote of Keynes himself? Apparently the latter Keynes disagreed with the former Keynes:
“Organized public works, at home and abroad, may be the right cure for a chronic tendency to a deficiency of effective demand. But they are not capable of sufficiently rapid organization (and above all cannot be reversed or undone at a later date), to be the most serviceable instrument for the prevention of the trade cycle.”.

Point taken, but what if the public works are much needed in any case? I know far too little about Keynes and economics in general to pursue this question on my own.

Quoting Unit: That's an assertion you are making ("always" and "everywhere" etc...). I'm not so sure about it. Yes there is a symbiosis between govt and markets that is hard to unfold, but I don't see why the solution is to grow big governments rather than growing big markets.

It is more than just a symbiosis. The relationship of

Krauthammer on the fraud of rushing a pork-laden $850+ billion dollar disaster: He nails the obvious point that the dems just won't admit: "So much for the president who in his inaugural address two weeks earlier declared "we have chosen hope over fear." Until, that is, you need fear to pass a bill..........."
"It's not just pages and pages of special-interest tax breaks, giveaways and protections, one of which would set off a ruinous Smoot-Hawley trade war. It's not just the waste, such as the $88.6 million for new construction for Milwaukee Public Schools, which, reports the Milwaukee Journal Sentinel, have shrinking enrollment, 15 vacant schools and, quite logically, no plans for new construction.

It's the essential fraud of rushing through a bill in which the normal rules (committee hearings, finding revenue to pay for the programs) are suspended on the grounds that a national emergency requires an immediate job-creating stimulus -- and then throwing into it hundreds of billions that have nothing to do with stimulus, that Congress' own budget office says won't be spent until 2011 and beyond, and that are little more than the back-scratching, special-interest, lobby-driven parochialism that Obama came to Washington to abolish. He said.

Not

Quoting harkin: Krauthammer on ...

So what's your position on the whole notion of a stimulus package, harkin? Don't spend at all? Spend, but spend differently? Do tax cuts instead? Something else? It'd be nice to hear positive alternatives, rather than just picking at very small (in percentage terms)* bits of the stimulus bill. ==========
* I mean, I have no idea about the merits of, say, livestock insurance. But in the context of the whole bill, it's a small fraction of one percent of the total package. While I agree that "a hundred million here, a hundred million there, and pretty soon you're talking real money" can always be said, how much of the bill do you really have a problem with? And again, what would you do differently?

Let us make a direct comparison starting with Presidents Reagan and Mitterrand. Reagan was President of the US from 1981 to 1989 and was considered a very right-wing, free-market zealot. Mitterrand was President of France from 1981 to 1995 and was a socialist, the first socialist president of France. This would be an apples-to-apples comparison of free-market vs. socialist governance. How did that work out? France was behind the US in 1980 and would fall further behind it in the following years. In 1980, France's GDP per capita was 84% that of the US. By 1989 it was down to 79% and by 1995 it was 78%. (For the various international comparisons throughout this article, see the US Statistical Abstract.) In 2006, the latest year for which data is available, it was just 74%. All that wonderful socialism in France just set it back further and further from the US

This has absolutely nothing to do with the exchange I had with Unit. But thanks anyway for the enlightening information. I always rejoice to hear that America is such a superior nation....except in the intelligence of certain of its citizens.

Quoting Silver~Guy: Doesn't this guy has it backwards? He claims government started performing poorly after people started clamoring for less. There would be a critical point during which the marginal utility of another dollar of government spending is less than another dollar not being taxed - this is common sense.

I'd say yes, he does have it backwards. To suggest that government got a lot worse after anti-government sentiment ascended implies that the LBJ/Nixon/Ford/Carter years were the absolute highwater mark of Good Government. There might be a few people out there who believe that, but I'll take the Reagan/Bush(I)/Clinton years over that era any day and twice on Sunday.

So what's your position on the whole notion of a stimulus package, harkin? Don't spend at all? Spend, but spend differently? Do tax cuts instead? Something else?

It'd be nice to hear positive alternatives, rather than just picking at very small (in percentage terms)* bits of the stimulus bill.

I don't think it's 'picking at very small bits' to point out that the CBO says that the entire bill in the long run is a loser. As to 'positive alternatives', while I'm not an economist I truly believe the best way to solve the problem is to convince everyone, but especially the government, to reduce debt. Part of this is to NOT bail out the banks that made loans to people with no credit nor the states for rewarding political partisans (public unions, etc) at the expense of infrastructure. I have no problem (nor do most conservatives) with spending on infrastructure if the money is spent wisely. Nor do I disagree with breaks on lending to the disadvantaged as long as the loans are based in sound reimbursement policy.
Regarding spending money we don't have, Niall Ferguson says it very well in the LA Times: "They need to grow up and

I thought this was pretty disappointing Diavlog, I kept waiting for actual engagement with the arguments made by the Freidman, Amity Schlaes, the Austrians, public choice economists, etc. all of whom were mentioned and then sumarily dismissed with ad populum arguments or amateurish empirical observations.

Really? Statistics that show how big government lessons the per capita GDP of it's citizens, in other words lessons the productivity of it's citizens, had nothing to do with the stupidity of big government. And then have the adaxcity to comment about the intelligence level of others!

Quoting harkin: I don't think it's 'picking at very small bits' to point out that the CBO says that the entire bill in the long run is a loser.

Let's clear this one up first: that Moonie Times talking point has already been debunked. Short version, two parts: First, it turns out the CBO's long range forecast gave a range of possible outcomes, and only the low end was used to build this story. Second, the bill is designed to boost short-term growth and relieve immediate hardship, and that's what the discussion should be focused on. And on top of that, it's a little silly to think that anyone can predict with certainty what the effects of an action will be on the economy ten years from now, don't you think? If we could do that, we wouldn't be where we are today, seems to me. Follow some of the links from here, here, and here if you want to see the data and more analysis. The second has a link to the report itself.

As to 'positive alternatives', while I'm not an economist I truly believe the best way to solve the problem is to convince everyone, but

Quoting piscivorous: Really? Statistics that show how big government lessons the per capita GDP of it's citizens, in other words lessons the productivity of it's citizens, had nothing to do with the stupidity of big government. And then have the adaxcity to comment about the intelligence level of others!

There are three grotesque errors in your English, which cast serious doubts either on your intelligence or your education. Hint: it's and adaxcity As for the benefits of "big government" spending I refer you to the following article from Slate, accessible even to someone of your low level of education. http://www.slate.com/id/2210570/

Quoting harkin: In November, I had no idea who Obama was because the press had done very little vetting of him. The only way to find out was to wait and see.

I read this point a lot during the election, and I don't quite understand it. It seems as though it could refer to two things: (1) I don't know what Obama's personality is (his beliefs, desires, values, dispositions, etc.) (2) I don't know what his legislative accomplishments are (I suppose a third option is that both (1) and (2) are meant). However, there were lots of profiles on Obama throughout the campaign (e.g., the one talking about his time as a lecturer at U of Chicago), not to mention his memoir, so unless you think everything we know about his personality is a lie, I don't see how you can ask for more about (1) (and if you think everything is a lie, on what basis? Do you think the psychological picture drawn of him based on what was reported is somehow incoherent?). As for (2), Hilzoy at Obsidian Wings did some important work detailing his legislative accomplishments as a state senator, but frankly, there's just not a lot to know--he hasn't been in public office

Obama's politics are garden-variety good-government nerd-wonkism, same as Al Gore, Bill Clinton, Michael Dukakis, etc. If you could know any of those guys you can know Obama. So don't worry about the knowability of Obama. What about the knowability of George W. Bush? Everybody should have been able to tell that guy had big problems in character, brains, and ideology departments, but somehow not nearly enough people could see it until it was too late.

Quoting DWAnderson: I thought this was pretty disappointing Diavlog, I kept waiting for actual engagement with the arguments made by the Freidman, Amity Schlaes, the Austrians, public choice economists, etc. all of whom were mentioned and then sumarily dismissed with ad populum arguments or amateurish empirical observations.

Freidman's monetarism ("Inflation is always and everywhere a monetary phenomenon") died in the early 1980s. Remember when interest rates where 15% and unemployment was 10%? I think they mentioned that. Public choice theory starts with the assertion that public servants are amoral monsters and derives a proof demonstrating that public servants are amoral monsters. For that you get some kind of Swedish prize. As for Schlaes, let me tell you, no one on any point of the ideological spectrum is aided by utter bullshit. It's bad for everyone. I'm somewhat familiar with the Austrians and their ideas, but can somebody please tell me what exactly contemporary Austrian economic policy would look like? Is it just laissez-faire?

It is always such a pleasure conversing with someone as congenial as yourself that believes insult is a path towards understanding. But then again if you can't make rational arguments to repudiate the given data attack the presenter.

More whining about tone. Whatever. You know, I actually was going to hold back on that, but really. I'm serious. If you believe in small government, stay away from crap artists like Shlaes. I mean, when you've got Milton Friedman, why fuck around with a propagandist with English degree like Shlaes?

I guess I got my answer. http://mises.org/article.aspx?Id=3316

Quoting harkin: Krauthammer on the fraud of rushing a pork-laden $850+ billion dollar disaster:

He nails the obvious point that the dems just won't admit:

"So much for the president who in his inaugural address two weeks earlier declared "we have chosen hope over fear." Until, that is, you need fear to pass a bill..........."

Seems like we're on to other things, but I just happened across Bob Cesca's response to this, and I thought you might enjoy it:

Stunning display of hackery from Romulan Charles Krauthammer:

So much for the president who in his inaugural address two weeks earlier declared "we have chosen hope over fear." Until, that is, you need fear to pass a bill.

No, see, here's how it worked. The president tried all sorts of congenial overatures -- for two weeks, he shmoozed and dined with Republicans to attain their input and support. They returned the favor by following Drudge and Limbaugh into the Shit. Fabricating CBO reports that never existed, fabricating line items about ACORN, threatening filibusters and demonizing cherrypicked line items that, when analysed below the surface, actually do create jobs. And, predictably, the spineless blue dog Democrats fell in line behind them.

So the president is rightfully cranking

Quoting claymisher: I guess I got my answer.

http://mises.org/article.aspx?Id=3316

Wait. He left out the part about how ponies would spontaneously sprout up in everyone's backyard as soon as we blew up the IRS building. Well, he did say his were "watered-down recommendations." All I can say is if that article is truly representative of "serious" "thinking" from the Austrian school of economics, I guess there's no need to bother learning anything further about them.

Quoting Francoamerican: True, but since its purpose isn't economic it shouldn't be evaluated in economic terms.

Usually yes, but now they're making the case for huge interventions in the economy per se, and not as impartial arbiter but as an actual player and entrepreneur. We've just finished witnessing what happens when entrepreneurs are insulated from losses and are given monopoly privileges (see financial collapse) and now they want to take that model and deployed on an even grander scale.

It is more than just a symbiosis. The relationship of the government (or state) to the economy is more like that of an all-encompassing framework of law and order which (1) protects the activities of individuals in society and (2) enables them to make decisions that concern the public good, i.e. the good of everyone. It makes possible economic activity, and other activities as well, by opening up a space of freedom and security. No society, except the most primitive, could exist without it. I think Americans, unlike Europeans and Asians, and for obvious historical reasons, are sometimes a bit naive about this relationship. They assume government (=the state) is somehow optional. But the alternative, as Hobbes et al. saw, is the war

Quoting bjkeefe: Wait. He left out the part about how ponies would spontaneously sprout up in everyone's backyard as soon as we blew up the IRS building.

Well, he did say his were "watered-down recommendations."

All I can say is if that article is truly representative of "serious" "thinking" from the Austrian school of economics, I guess there's no need to bother learning anything further about them.

One more thing: the eschew empirical methods, and prefer to reach their conclusions through logic alone. Just like the ancient Greeks.

Quoting claymisher: One more thing: the eschew empirical methods, and prefer to reach their conclusions through logic alone. Just like the ancient Greeks.

What's wrong with logic? Especially when empiricists can bring up statistics and data supporting whatever conclusion one might desire. Economics is not physics.

Quoting claymisher: I guess I got my answer.

http://mises.org/article.aspx?Id=3316

Here try this too: http://www.cnn.com/2009/POLITICS/02/...lus/index.html

Quoting Unit: What's wrong with logic? Especially when empiricists can bring up statistics and data supporting whatever conclusion one might desire. Economics is not physics.

There's nothing wrong with logic. There's everything wrong with using it exclusively. And while you're right that statistics can be fudged and data can be spun, it is not true that therefore, empiricism is wholly without merit. The two should be used to complement each other, and they are, by respected people in fields from physics to economics and beyond.

Quoting Unit: What's wrong with logic? Especially when empiricists can bring up statistics and data supporting whatever conclusion one might desire. Economics is not physics.

I'll tell you what's wrong: the real world can crush your little model. And since economics is about how people produce and allocate resources, it sure helps to check with the real world. Maybe the ought to do Austria a favor and change their name to Laissez Fairyland economics.

Quoting claymisher: I'll tell you what's wrong: the real world can crush your little model. And since economics is about how people produce and allocate resources, it sure helps to check with the real world.

Maybe the ought to do Austria a favor and change their name to Laissez Fairyland economics.

Clay, what's up with all this anti-intellectualism? The debate between logic and empiricism. the so-called "Methodenstreit" that gave birth to the Austrian school of thought is actually a fascinating subject. I wouldn't brush it away so easily.

Quoting claymisher: I'll tell you what's wrong: the real world can crush your little model.

...

Heh. Trust Bayes.

P.S. When does it become "a catastrophe," anyway?

Quoting Unit: Clay, what's up with all this anti-intellectualism? The debate between logic and empiricism. the so-called "Methodenstreit" that gave birth to the Austrian school of thought is actually a fascinating subject. I wouldn't brush it away so easily.

It's not anti-intellectualism. It's anti-obscurantism. Economists have this joke ... A physicist, a chemist, and an economist are stranded on an island. A crate of canned food washes ashore, which is great, but they have no can opener. The physicist says, "If we drop it from this height it should open alright." The chemist suggests heating the can over a fire to pop it open. The economist says, "Assume we have a can opener." Economists are bad enough as it is, but Austrians think this is a positive virture. To think you could get anywhere starting from scratch is ludicrous. Any field you look at needed new experiments, new data, and new kinds of instruments (microscopes, telescopes, etc) before they could make progress. Often simple new experiments demolish long-established theories. It's kind of a neat trick really -- here's our theory, and we're against testing it, so you can never prove us wrong!!! LOLZ!!1! Also, Austrians go on about "human action." They define "human action" as only what people do. So if you have feelings

"In November, I had no idea who Obama was because the press had done very little vetting of him."
If there's some award for obviously lame attempts to insert oneself into political discourse, that drivel deserves it.

Quoting claymisher: It's not anti-intellectualism. It's anti-obscurantism.

Economists have this joke ... A physicist, a chemist, and an economist are stranded on an island. A crate of canned food washes ashore, which is great, but they have no can opener. The physicist says, "If we drop it from this height it should open alright." The chemist suggests heating the can over a fire to pop it open. The economist says, "Assume we have a can opener." Economists are bad enough as it is, but Austrians think this is a positive virture.

To think you could get anywhere starting from scratch is ludicrous. Any field you look at needed new experiments, new data, and new kinds of instruments (microscopes, telescopes, etc) before they could make progress. Often simple new experiments demolish long-established theories. It's kind of a neat trick really -- here's our theory, and we're against testing it, so you can never prove us wrong!!! LOLZ!!1!

Also, Austrians go on about "human action." They define "human action" as only what people do. So if you have feelings or thoughts, that doesn't matter. Well, guess what, it does. People care about equity and justice in ways they can't express by their individual actions, but can by working together. So does the entire Austrian enterprise crumble

Quoting Unit: Who's against testing theories?

How do you test theories in a purely logical system?

You're not making much sense ...

Quoting Unit: Who's against testing theories? You started by saying we didn't need theories (logic). You're not making much sense, have you read anything relevant to this discussion?

I've made the same point as clay more than once. Nobody's making the claim that theory is unnecessary or irrelevant. Economic theory ain't physics. People choose from among a menu of econ theories (many of which almost certainly have some claim to truth, despite the widely inconsistent views embodied from one to the next) almost at random. The point about empiricism vs. theory is that the world will surprise you. Even in physics, but especially in econ, because the theories are incomplete, based on assumptions that aren't quite Euclidean axioms, and because there are a huge number of hidden, imperfectly understood, or partially measured variables. Looking at identical circumstances Keynes and Hayek would not have been likely to have made predictions that looked much like each other. What hope is there for mere mortals?

Quoting bjkeefe: How do you test theories in a purely logical system?

The point the early Austrians were making was that all observation is theory-laden. I don't understand how can Clay call this obscurantism. He's assigning cartoonish positions to a whole school of thought and then pats himself on the back for so cleverly shooting them down.

Quoting AemJeff: I've made the same point as clay more than once. Nobody's making the claim that theory is unnecessary or irrelevant. Economic theory ain't physics. People choose from among a menu of econ theories (many of which almost certainly have some claim to truth, despite the widely inconsistent views embodied from one to the next) almost at random. The point about empiricism vs. theory is that the world will surprise you. Even in physics, but especially in econ, because the theories are incomplete, based on assumptions that aren't quite Euclidean axioms, and because there are a huge number of hidden, imperfectly understood, or partially measured variables.

Looking at identical circumstances Keynes and Hayek would not have been likely to have made predictions that looked much like each other. What hope is there for mere mortals?

Nicely put.

Quoting Unit: The point the early Austrians were making was that all observation is theory-laden.

Even if we stipulate they were right at the time, did they believe in testing theories? And if they did, how did they do it, or propose that it should be done?

I don't understand how can Clay call this obscurantism. He's assigning cartoonish positions to a whole school of thought and then pats himself on the back for so cleverly shooting them down.

If by "obscurantism" he meant "a policy of opposition to enlightenment or the spread of knowledge," and that post he linked to was any indication of current Austrian thinking, and they truly do not believe in gathering data or other empirical methods, I'd say I can understand why he chose the term. I'd also say that post was pretty cartoonish, where by "cartoonish" I mean "a comical representation of the real world." So far, you have not disputed that that post was not representative of the Austrian school of thought. Is it? Because if it is, I don't see a whole lot of reason to do much more than mock them. The recommendations made are a total fantasy. We're

Quoting bjkeefe: All I can say is if that article is truly representative of "serious" "thinking" from the Austrian school of economics, I guess there's no need to bother learning anything further about them.

For fuck's sake! Stop making sweeping generalizations about liberals!

Quoting sugarkang: For fuck's sake! Stop making sweeping generalizations about liberals!

I didn't. I made a conditional statement. You do know the difference between an assertion and a conditional statement, don't you, sugar?

Quoting Unit: Here try this too:

http://www.cnn.com/2009/POLITICS/02/...lus/index.html

Is Miron of the Austrian school? That column seemed a little more reasonable. [Added] Well, no. I just read it again, and now I'll say "just barely marginally more reasonable."

Quoting bjkeefe: I didn't. I made a conditional statement. You do know the difference between an assertion and a conditional statement, don't you, sugar?

Do you seriously think you won on a technicality? I don't even care about your statement. In fact, I found it pretty damn funny with ponies sprouting up and all. The point is, nobody can escape generalizations.

Quoting bjkeefe: Even if we stipulate they were right at the time, did they believe in testing theories? And if they did, how did they do it, or propose that it should be done?

Generally speaking Austrians try to find a middle ground between historicism (just collecting lots of data with very little theory) and scientism (economics modeled on the physical sciences with heavy reliance on math models). We are talking here about a movement that began in the late 1800s and is currently still pursued by a non-negligeable portion of the economic discipline. Hayek's early work, for instance, tried to develop a theory to explain the business cycle. You can find all kind of people who call themselves Austrians. Just because you find and article on the Mises.org website that doesn't agree with your world-view, it doesn't mean that you can go ahead and ridicule a whole branch of the economic enterprise.

If by "obscurantism" he meant "a policy of opposition to enlightenment or the spread of knowledge," and that post he linked to was any indication of current Austrian thinking, and they truly do not believe in

Quoting bjkeefe: Is Miron of the Austrian school? That column seemed a little more reasonable.

[Added] Well, no. I just read it again, and now I'll say "just barely marginally more reasonable."

Would you care to elaborate?

Quoting sugarkang: Do you seriously think you won on a technicality?

I don't seek to "win."

I don't even care about your statement.

I figured that out for myself, but thanks.

The point is, nobody can escape generalizations.

Agreed. But there are generalizations, and then there are generalizations, and when the crux of an argument depends on that generalization being absolutely true, we should take a little care. I will grant that most liberals believe certain things, and I do not ask that you carefully qualify a statement like "liberals believe the government should help poor people," but you go well beyond that. You frequently use "liberals" as a straw man or a whipping boy or as a convenient way to contrast your pride in your libertarian ideals, and you do so rather than supporting your argument otherwise. It often comes across that you believe once you have labeled something as what "liberals believe," you feel you have made your case. From your earlier statement about "used to be a liberal," I'm going to guess that as with Mary Matalin, you got exposed to a small group of like-minded people in college and were turned off by them, and have

Quoting Unit: Generally speaking Austrians try to find a middle ground between historicism (just collecting lots of data with very little theory) and scientism (economics modeled on the physical sciences with heavy reliance on math models).

Okay, that's a start. Thanks. But do they believe in testing, and if so, to what extent?

We are talking here about a movement that began in the late 1800s and is currently still pursued by a non-negligeable portion of the economic discipline. Hayek's early work, for instance, tried to develop a theory to explain the business cycle. You can find all kind of people who call themselves Austrians.

I can think of three schools of thought, respectively 1400, 2000, and 5800 years old, that depend solely on reasoning from a set of assumptions, that each still have a whole lot of devoted adherents. That, in and of itself, does not make me think there's anything to any of them.

Just because you find and article on the Mises.org website that doesn't agree with your world-view, it doesn't mean that you can go ahead and ridicule a whole branch of the economic enterprise.

Well, I've asked several times if that article was representative

Quoting bjkeefe: It often comes across that you believe once you have labeled something as what "liberals believe," you feel you have made your case.

What an asinine statement (not a personal attack according to you, because it's the statement and not person, right?). I'm sorry, you don't go to college and hang out with a circle of friends and become liberal. I have bit my tongue this entire time about these so called straw man accusations that I make. I'll freely admit that I make them. It's just retarded that you think you don't (according to your logic, I'm not calling YOU retarded, just your thought process is totally fucking retarded). You say I speak in generalities, but ideologies don't turn on specifics. They start with very basic premises. So, I tend to challenge basic premises, as that is my way of trying to shift a person's paradigm. When Congress debates the stimulus bill, most of the disagreement does not come from specifics. Congressmen disagree because they differ on basic assumptions about human nature, government, etc. It's one thing to call for bi-partisanship in order to appear magnanimous. It's pathetically naive to think that you're going to change someone's mind by

Quoting bjkeefe: Okay, that's a start. Thanks. But do they believe in testing, and if so, to what extent?

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

I can think of three schools of thought, respectively 1400, 2000, and 5800 years old, that depend solely on reasoning from a set of assumptions, that each still have a whole lot of devoted adherents. That, in and of itself, does not make me think there's anything to any of them.

My point was that it's not easy to stereotype them. It's a bit like talking about Christians in general.

Well, I've asked several times if that article was representative of the school of thought. You do not seem to want to say it's not, so that makes me think it is. That article is ridiculous in how little in touch with reality it is, and if you're not going to say, "That article is not representative of the Austrian school," then I think I do get to draw some conclusions.

I had

Quoting Unit: Would you care to elaborate?

Sure. The reasonable-sounding parts: "Increase carbon taxes," esp. through increased gasoline taxes; "raise the age of eligibility for Social Security and Medicare" as part of getting entitlements under control, both for own sake and to boost confidence in the US to our foreign creditors. The semi-reasonable parts (I say "semi" because he's really ignoring political realities here, at least in the short term, and/or because the devil is in the details that he didn't give, and/or because I don't completely agree to the proposal as a general principle): "Renew the U.S. Commitment to Free Trade;" "Expand Legal Immigration;" "Stop Bailing out Businesses that Took on Too Much Risk." Just plain disagree with "Limit Union Power," at least as a general principle. Unreasonable: rapid withdrawal from Iraq and Afghanistan; "Repeal the Corporate Income Tax;" "Eliminate Wasteful Spending." The last is a pipe dream. An admirable goal, and worth hammering at in an ongoing fashion, but it's not going to happen any time soon, especially in these times. Whether or not it's possible to do the first, the generals don't think it is. In fact, some of them are already flirting with going around their Commander-in-Chief and making the case via the

Quoting bjkeefe: Sure.

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

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

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

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

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

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

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

My point was that it's not easy to stereotype them. It's a bit like talking about Christians in general.

I'll grant the existence of diversity, but I still cannot tell from what you have said whether or not any of them believe in testing their theories, or whether they generally believe that at least some beliefs should be data-driven. If I had to guess, I'd think you were hedging about saying, "No."

I had only read one another piece by Bob Murphy before which I had liked. This one I didn't. But why can't you (or Clay) just criticize the piece for what the piece says instead of generalizing to all Austrians.

Don't know about Clay, but remember, I made the conditional statement that if the piece was representational ...

My point was that Austrianish/Libertarianish economists don't just hang out at the Mises Institute, I didn't mean to imply that the Harvard label

Quoting Unit: Well then we're not that far actually. Maybe we differ in our priors. Since I consider the current proposal quite a bit more unreasonable, I'm willing to cut this guy some slack.

Okay. I am not, at least as far as taking his proposals seriously as a means to provide short-term economic stimulus, and importantly, relief.

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

We're fundamentally philosophically different on the spending part. Nothing to be done about that, I guess.

Anyways, gotta go now...

'kay. See ya.

Quoting sugarkang: What an asinine statement (not a personal attack according to you, because it's the statement and not person, right?).

I'll be interested to see if you act like you really believe this in the future, and aren't just using it as some sort of momentary joust, or if you're going to go into another snit the next time you get an idea of yours disparaged.

I'm sorry, you don't go to college and hang out with a circle of friends and become liberal.

Some people do. Me, for example, to some degree. And, as Mary Matalin has recounted in that book she wrote with her husband, sometimes the opposite happens -- one becomes anti-liberal as a result of the experience.

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

Thanks.

It's just retarded that you think you don't (according to your logic, I'm not calling YOU retarded, just your thought process is totally fucking retarded).

I try not to. I encourage you to point out when I do use a straw man argument.

You say I speak in generalities, but ideologies don't turn on specifics. They start with

Sorry, I should have been clearer. Terminology varies from field to field ... anyway, I was trying to contrast theories that are testable propositions versus logical systems built up on their assumptions. Logical systems such as: define surplus value and use value, write 600 pages, and tada! communism. Or define the principle of human action, write 900 pages, tada! free-market utopia. Or invent the id, ego, and superego, and tell then everybody exactly what their problem is. By rejecting empiricism (to the extent that they actually do I don't really know) Austrians, and anyone else who is stuck in their own head, prevent themselves from learning more about the world. That is a problem. The sciences didn't really kick off until people got in the mud and rolled around in the data, and invented new ways of seeing the world. I think economics generally has followed the wrong role model. Instead of pretending to be physics they should have followed biology. Biological systems are insanely complex. What biologists don't know is astounding. Last time I checked they still don't know the function of every part of a cell. Once the human genome was mapped everybody figured out that protein folding was also crucial to understanding what proteins

This is a good diavlog. I'm also happy to see three macroecon themed diavlog's in a row even if two of them featured libertarians.

Quoting claymisher: All they have on offer is a weary fatalism and a belief that growth will fix everything if you just believe in the system. It's like a doctor who pats you on the head and tells you "You're going to die, but it was really for the best anyway." I think the evidence shows that with democratic government we can do a lot better than that.

Right. I think Megan addresses this shortcoming as well. I think that's when her inner liberal kicks in because she mentioned in one of her diavlogs that she cares about the lowest 10% of society and their social, economic mobility. I have similar concerns as well, but my priorities are on the middle class.

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

Yes, to be blunt about it. I guess the theory is that the egalitarian alternative would make us

Picivorous, Advocating for bigger and better government is not the same as advocating for turning U.S. into a Socialist nation.

Quoting piscivorous: Let us make a direct comparison starting with Presidents Reagan and Mitterrand.....This would be an apples-to-apples comparison of free-market vs. socialist governance.

It would be nothing of the kind. For one, France is not, and was not, a Socialist country. Though many nations have active socialist parties in and out of power, there are actually not that many true Socialist nations with whom you can do a true systematic comparison of Socialism vs. Capitalism, maybe Cuba. I really don't know what it is that you think Mr. Madrick is advocating that worries you that we will turn into France. Plus, France is a capitalist nation with some socialist policies thrown in, and it has totally different political, cultural, and historical context than the U.S. So the comparison would be like having a gifted or autistic child on one side, and a “normal” child on the other, and trying to determine from 10 years of data if spanking works. Just because one child turned out better means nothing. You can do a side by side with Reagan and Mitterrand

Quoting Tara Davis: I'd say yes, he does have it backwards.

To suggest that government got a lot worse after anti-government sentiment ascended implies that the LBJ/Nixon/Ford/Carter years were the absolute highwater mark of Good Government.

How do you get that logic? Government could have been at the pinnacle in say, the 30's, but that it nosedived during the 70's. This seems to be taking a statement and drawing your own conclusions that are not even implied.

There might be a few people out there who believe that, but I'll take the Reagan/Bush(I)/Clinton years over that era any day and twice on Sunday.

I'm perplexed by this statement as well, and not only because it is dependent on the first faulty logic to make sense. Who wouldn't want to live during the good times rather than bad? But what does that have to do with what we are discussing here, the premise of which is that government can be used for excellence but we've let it decline?

Quoting bjkeefe: I'll grant the existence of diversity, but I still cannot tell from what you have said whether or not any of them believe in testing their theories, or whether they generally believe that at least some beliefs should be data-driven. If I had to guess, I'd think you were hedging about saying, "No."

You seem reluctant to acknowledge that economic theories are very hard to test: you can't rerun historical events and lab experiments have their problems too. These are not simple questions. As I said they are part of old and ongoing debates.

Quoting Unit: You seem reluctant to acknowledge that economic theories are very hard to test: ...

Sorry. Didn't mean to. I so acknowledge.

you can't rerun historical events and lab experiments have their problems too. These are not simple questions. As I said they are part of old and ongoing debates.

Also agreed. Still, there are some tests that can be conducted; e.g., pilot programs on regions smaller than countries, and it also seems to me that instituting a new policy in a country is a test of sorts. And there's no doubt that data can be collected. But, yes, it is often hard to interpret the results so that close to unanimous interpretation is achieved.

Quoting Unit: Usually yes, but now they're making the case for huge interventions in the economy per se, and not as impartial arbiter but as an actual player and entrepreneur. We've just finished witnessing what happens when entrepreneurs are insulated from losses and are given monopoly privileges (see financial collapse) and now they want to take that model and deployed on an even grander scale..

So far the interventions in the economy--bailing out the banks etc.--have been emergency measures to prevent the whole financial system from collapsing, as it did in 1929-31. Letting the banks fail would have punished all Americans (and many foreigners too). It would have been sheer folly to let such a thing happen just to administer a lesson in free-market economics to the incompetent and rapacious bank executives et al. responsible for the crisis. Personally, I think it would have made more sense to nationalize, temporarily, the banks instead of taking over the "toxic assets." At least, the tax payer might then have expected to gain in the end. The fact that emergency measures to save the economy in a crisis are necessary, and can only

Quoting Francoamerican: So far the interventions in the economy--bailing out the banks etc.--have been emergency measures to prevent the whole financial system from collapsing, as it did in 1929-31. Letting the banks fail would have punished all Americans (and many foreigners too). It would have been sheer folly to let such a thing happen just to administer a lesson in free-market economics to the incompetent and rapacious bank executives et al. responsible for the crisis. Personally, I think it would have made more sense to nationalize, temporarily, the banks instead of taking over the "toxic assets." At least, the tax payer might then have expected to gain in the end.

You seem to have internalized Bush's narrative, but not everyone agrees. Kling, Cochrane, et al., for instance, think that the govt could have helped
with a rational dismantling of the too-big-to-fail banks. Again the analogies with eighty years ago might not be relevant here. So far the current strategy doesn't seem to work and it's not like pain is erased: it's just shifted to somebody else (the tax-payers and my kids in this instance).

The fact that emergency measures to save the economy in a

Quoting Unit: You seem reluctant to acknowledge that economic theories are very hard to test: you can't rerun historical events and lab experiments have their problems too. These are not simple questions. As I said they are part of old and ongoing debates.

There's a huge gulf between acknowledging the difficulty of testing and being against testing in principle. You can't hide behind epistemological problems. Otherwise why should anyone assume Austrians are better that communists?

Quoting Unit: You seem to have internalized Bush's narrative, but not everyone agrees. Kling, Cochrane, et al., for instance, think that the govt could have helped with a rational dismantling of the too-big-to-fail banks. Again the analogies with eighty years ago might not be relevant here. So far the current strategy doesn't seem to work and it's not like pain is erased: it's just shifted to somebody else (the tax-payers and my kids in this instance)..

The vast majority of professional economists disagree with you. I have nothing to add, although I agree that your kids are going to be picking up the tab for the irresponsible behavior of the baby boomers and their kids.

Quoting Unit: The nature of govt is definitely NOT to act for the good of all. What's good for me might not be good for you. There's no such thing as the "good of all". Also time and time again we see govt acting for the good of some people to detriment of others. So I can't follow you here. .

If you think the government acts only for the good of a few, there is nothing I can say to make you change

Quoting Francoamerican: The vast majority of professional economists disagree with you. I have nothing to add, although I agree that your kids are going to be picking up the tab for the irresponsible behavior of the baby boomers and their kids.

Not true.

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

I never said the market represent the common good. Stick to your claims.

Maybe, but you are missing the point. If demand collapses because of unemployment, the whole economy will collapse.

"Demand" is an abstract aggregate concept that you are treating like an ingredient in a recipe. Stop the voodoo economics please.

Sorry, but you are simply mistaken. The state is the ultimate authority. Whether it be speed limits, marriage contracts, or the definition of first-degree murder, the state decides. Just try acting on some other hypothesis. Good luck--- although I agree that breaking the speed limit from time to time can be fun.

Just because the state is declares pot to be illegal it doesn't mean people

Quoting claymisher: There's a huge gulf between acknowledging the difficulty of testing and being against testing in principle. You can't hide behind epistemological problems. Otherwise why should anyone assume Austrians are better that communists?

I have no idea what you just said.

Here is Hayek's Nobel Lecture which is quite relevant to this discussion. http://nobelprize.org/nobel_prizes/e...k-lecture.html

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

Quoting Unit: I have no idea what you just said.

I give up. http://www.huppi.com/kangaroo/L-aussm.htm

Quoting claymisher: I give up.

http://www.huppi.com/kangaroo/L-aussm.htm

Ok. I agree with a lot that's in this article. Yes, Austrians do not think economics is a science. But they also go further and say that those who pretend to be "scientific" (economists) are merely mimicking real science. In reality their "data" is cherry-picked and dictated by their biases (most of which they are unaware of). They talk about radical uncertainty and organized complexity, "The pretense of knowledge" is the title of Hayek's lecture. I don't think you can easily laugh this position away or accuse it of dogmatism. Mathematics too is simply based on logic and yet you wouldn't call it a religious faith. But let's look at what is going on right now. The politicians are (whether Bush or Obama) quite happy to push forward the most cockamamie spending projects under the pretense of being backed by the macroeconomic profession, when in fact they are not. Paul Krugman is not a macroeconomist. His Nobel is in International Trade theory. So my question to you and Brendan is this: was the theory that there's even such a thing as "aggregate demand" ever tested? That was one of the original point that Hayek

Quoting Unit: ...Paul Krugman is not a macroeconomist. His Nobel is in International Trade theory. ...

Robert Barro

Robert Joseph Barro (born September 28, 1944) is an American conservative macroeconomist and the Paul M. Warburg Professor of Economics at Harvard University. He is among the most influential economists in the world according to IDEAS/RePEc.[1]

In an article in the Atlantic titled "An interview with Robert Barro" which I found to be an interesting read; has this to say about Paul Krugman

Do you read Paul Krugman's blog?

Just when he writes nasty individual comments that people forward.

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

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

Quoting piscivorous: In an article in the Atlantic titled "An interview with Robert Barro" which I found to be an interesting read; has this to say about Paul Krugman

Ahem:

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

Ahem:

Quoting piscivorous: But then again if you can't make rational arguments to repudiate the given data attack the presenter.

Via unsupported assertions from a second party, no less. However, as long as you now appear to find what one person says about another so persuasive, please enjoy this post from Paul Krugman:

War and non-remembrance

As I’ve already pointed out,the prospect of a Keynesian stimulus is having a weird effect on conservative economists, as first-rate economists keep making truly boneheaded arguments against the effort.

The latest entry: Robert Barro argues that the multiplier on government spending is low because real GDP during World War II rose by less than military spending.

Actually, I’ve already taken that one

Actually BJ as per usual you have read into it what you want. The post about Paul Krugman was merely to support the part of the quote I included

Quoting Unit: ...Paul Krugman is not a macroeconomist. His Nobel is in International Trade theory. ...

about Krugman's background from someone that should know. I know you are a big fan of his but the data is that macroeconomics is not his realm of expertize. Mr. Krugman is free to pontificate upon anything his heart desires, economics, politics... the color of the sky for all that matters. His opinion is informed by his knowledge but that does not make it any more salient than the opinion of another highly regarded economist, from a different school of thought, it just makes it different.

Quoting piscivorous: Actually BJ as per usual you have read into it what you want. The post about Paul Krugman was merely to support the part of the quote I included about Krugman's background from someone that should know. I know you are a big fan of his but the data is that macroeconomics is not his realm of expertize. Mr. Krugman is free to pontificate upon anything his heart desires, economics, politics... the color of the sky for all that matters. His opinion is informed by his knowledge but that does not make it any more salient than the opinion of another highly regarded economist, from a different school of thought it just makes it different.

You think because he won the Nobel prize for international trade theory he therefore cannot possibly know anything about macroeconomics? Do you also believe that a solid-state physicist knows nothing about Newtonian Mechanics? That a philosopher who specializes in Hume knows nothing about Kant? That a professor who teaches Wordsworth could have nothing useful to say about Shakespeare? Seems to me that the post Krugman wrote in response to Barro's claims about

As I said "his opinions are informed by his knowledge." I'm quite sure that he believes his understanding of it is sufficient to allow him to feel secure in his pronouncements. As to their validity I have made no argument; I linked to the article to provide a different perspective from someone that is probably at least as knowledgeable but professes a different take on the matter. Argue the finer details with Professor Barro just as Paul Krugman does or wait a few years and interpret the results, of this experiment, from the results or lack thereof. But have no doubt about it; this massive spending on borrowed money is an experiment and I hope that the politicians can continue to find someone to finance it.

Quoting piscivorous: As I said "his opinions are informed by his knowledge." I'm quite sure that he believes his understanding of it is sufficient to allow him to feel secure in his pronouncements. As to their validity I have made no argument; I linked to the article to provide a different perspective from someone that is probably at least as knowledgeable but professes a different take on the matter. Argue the finer details with Professor Barro just as Paul Krugman does or wait a few years and interpret the results, of this experiment, from the results or lack thereof. But have no doubt about it; this massive spending on borrowed money is an experiment and I hope that the politicians can continue to find someone to finance it.

That much seems reasonable.

Quoting Unit: But let's look at what is going on right now. The politicians are (whether Bush or Obama) quite happy to push forward the most cockamamie spending projects under the pretense of being backed by the macroeconomic profession, when in fact they are not. Paul Krugman is not a macroeconomist. His Nobel is in International Trade theory. So my question to you and Brendan is this: was the theory that there's even such a thing as "aggregate demand" ever tested? That was one of the original point that Hayek made to Keynes. How can you build a whole theory on averages? Where every quantity is just a number hiding all kinds of fluctuations, some demand that goes up, some that goes down, some prices that change here, but not there, and time, where do you put time in all this? Was any of this ever tested? Of course not. We are now being used as guinea pigs in a giant experiment based on a theory-laden skewed view of how the world works. There's no science here.

We're all always guinea pigs. There's no escaping it. What are you going do? I'm not an expert (just a

What I said about the state isn't a theory. It is a fact. Of course, people can disobey the laws, and do whatever they please---and as long as they are not caught I suppose you could say that they are "free". The fact remains that all actions that concern OTHER PEOPLE are regulated by the state. That is what is usually meant by the common good. Thank you for the Hayek. But I have already read him. By the way, in his Constitution of Liberty Hayek defends a theory of the state as the rule of law that I find perfectly acceptable.

PS I read Hayek's speech and found myself nodding in agreement with much of what he said. The scientific pretensions of economists are largely quackery. For all the reasons Hayek gives---the complexity of the data, the large number of variables, the impossibility of knowing what the millions of economic actors know etc.---economics will never be an exact science, capable of making the kinds of causal predictions we expect of science with a capital S. Unfortunately, politicians and the economists who advise them cannot afford to be sceptics about the possibility of knowledge. The future depends on what they do now. Even if they are completely in the dark.

Quoting claymisher: We're all always guinea pigs. There's no escaping it. What are you going do?

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

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

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

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

Quoting bjkeefe: That a philosopher who specializes in Hume knows nothing about Kant?

I can assure you that there are people out there who do Hume and don't know very much about Kant. Now, "not knowing very much" is not the same as "knowing nothing", of course, but in some ways it's more pernicious. Often, what non-Kant scholars know about Kant is something some Kant scholar told them fifteen years ago that has since been shown to be wrong, misleading, or extremely unlikely. Or they gleaned it from their own reading of Kant and didn't know enough background to really understand what Kant meant by, say, "maxim." I fear that you will dismiss this as mere nitpicking, but I think it in fact affects the larger point. I don't know much about economics (I do have a B.A. in it, though), but my guess is that the difference between studying macroeconomics and international trade is about as big as the difference between studying, say, metaphysics and epistemology, or normative ethics and meta-ethics, or perhaps even greater than that. And if that's right, then I wouldn't be at all surprised to learn that Krugman made a surprisingly bone-headed error in macro. That said, Krugman is a

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

Just because you can't do trade without macro doesn't mean that Krugman knows as much as Barro, who is considered one of the best macroeconomists around (at least he was back in the mid-90s, when I was doing my econ degree).

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

Of course it's crazy if it's assumed to be literally true. But if made just as an assumption for a model whose main use is predictive, it isn't crazy, if it's in fact predictive. That said, my guess would be that it doesn't predict all that well; the question is, how well does it predict compared to its more realistic, and therefore more complicated, competitors?

Quoting Bobby G: Just because you can't do trade without macro doesn't mean that Krugman knows as much as Barro, who is considered one of the best macroeconomists around (at least he was back in the mid-90s, when I was doing my econ degree).

Of course it's crazy if it's assumed to be literally true. But if made just as an assumption for a model whose main use is predictive, it isn't crazy, if it's in fact predictive. That said, my guess would be that it doesn't predict all that well; the question is, how well does it predict compared to its more realistic, and therefore more complicated, competitors?

That's exactly what I would have said three years ago.

Quoting Bobby G: [...]

Fair enough. But if you're going to admit these possibilities, then you also have to admit the possibility that someone who claims to specialize in a given field may have very wrong-headed ideas about it, particularly when the field is so prone to being approached from one's ideological predispositions. Think of Marcus Ross, to take an extreme example -- earns a Ph.D. in geosciences, still insists the Earth is only a few thousand years old. Now, granted, Krugman is as susceptible to leanings as anyone else. The only points I really tried to make in the post you replied to are that (1) it's a little silly to conclude that because Krugman won honors for work in one particular branch of economics, it therefore follows that he cannot know anything about any others, and (2) that it is more reasonable to expect that someone who is an expert in a given field is likely to know considerably more than average about closely related matters, especially those that are more fundamental to the general field. It should also be pointed out that Krugman is hardly alone in his views of

Quoting claymisher: That's exactly what I would have said three years ago.

I don't know what that means, but ok.