Ed Prescott for McCain?

Oh dear. "Bemused" informs me that it looks as though Berkeley Genetics Graduate Student Leonid Teytelman has been baiting Edward Prescott. He should have been moving small volumes of liquid from one test tube to another:

Grasping Reality with Both Hands: OT: Prof. DeLong, care to comment on the exchange with economist Ed Prescott documented here? http://pandagon.net/index.php/site/thats_nothing_paul_krugman_once_hit_on_my_wife/

All I can say is: "Wow!"

One note: apparently Ed Prescott has neither been to western Europe nor looked at the data in any detail. Western Europe has a much lower natural resource endowment per capita than the United States, and has chosen politically to have a lot more leisure time than the United States. Studies of the relative aggregate efficiency levels of the economies of the US and EU come out... inconclusive--not finding that the EU is depressed by 30%.

If we chop off the American south, however, efficiency differences do reemerge--but the American south's problem is certainly not overmighty unions...

From Pandagon:

Auguste: Still mild compared to that lost weekend with Alan Greenspan: Gmail’s spam filters having apparently taken the autumn off, I’m mostly inundated with offers for $1000 Wal-Mart gift cards or “CSI degrees” - which I assume mean forensic science, rather than cytoplasmic sperm injection - which is why Leonid Teytelman’s (teytleman at g mail dot com, shared by permission) e-mail almost slipped right past me.

Dear Pandagon Authors:

This is an exchange that I had with Edward Prescott, one of the five Nobel economists whose endorsement Senator McCain is touting as proof of good economic policies...

Let’s find out what [Prescott] has to say about...the Ruyssians*:

---

Forwarded Conversation
Subject: Soliciting your opinion on Obama’s economic policies

---

From: Leonid Teytelman
Date: Sat, Oct 11, 2008 at 12:00 PM

Dear Professor Prescott:

Two of my friends and myself have started a web site, http://www.obamaforeconomy.com

We would absolutely love to have a statement of support for Obama from you.

The inspiration for the site are the many conversations that we’ve had with supporters of McCain. Many people we know hesitate to vote for Obama because they are afraid that increasing taxes on the wealthy would derail the economy; some are concerned about their own income or capital gains taxes going up. The goal of the site is to dispel the illusion that Obama’s economic policies are a form of class warfare or redistribution by displaying the reasons why affluent supporters and experts believe Obama would be better for the US economy.

Sincerely,

Leonid Teytelman

---

From: Edward Prescott
Date: Sat, Oct 11, 2008 at 12:22 PM

Why is Western Europe by one-third depressed relative to the U.S. ? Answer is that they are following the policies that Obama is proposing. This is an established scientific finding.

All respectable students of public finance agree the taxing of capital income is bad policy. It distorts the inter temporal trade off between consumption today and consumption in the future.

The corrupt rich lawyers and Wall Street bankers support Obama. Obama caters to the special in interests. That is why the CEO’s of the big companies support him and the people oppose him

Edward C. Prescott

---

From: Leonid Teytelman
Date: Sat, Oct 11, 2008 at 12:35 PM

Dear Professor,

Thank you so much for the response. It is quite a forceful statement.

Given my former Soviet Union residence, I have a very strong revulsion when it comes to socialist or communist ideas. However, I do not see Obama’s proposals as anything near the socialist economics. It seems to me that investment in infrastructure is sorely lacking in the US, and I think that is the main reason why Bloomberg and “Economist” laude Obama’s infrastructure proposals. The overhead on our healthcare is an enormous drag on the US economy, and Obama’s healthcare proposal seems to be on the right track to reducing it.

As for populist messages and protectionism, I see these as a sad reality of American politics. I think that Obama spews nonsense and panders to the base when talking about many economic issues (protectionism, biofuels, etc.). I view that as a sad political reality that both McCain and Obama face. McCain is locked into the lower-tax-cut theme (or the ridiculous gas tax holiday) just because of his party, even though he opposed the tax cuts before.

One other critical factor for me is John McCain’s early support for the rush to Iraq. I have no respect left for politicians (including Biden), who supported this war.

Best,

Leonid

---

From: Edward Prescott
Date: Sat, Oct 11, 2008 at 1:54 PM

Infrastructure investments are best made at the local and state level. The Army Core of Engineers and the levies in New Orleans were Bama in action.

Our health systemn was great until the federal government got involved. Mc Cain has made a serious proposal to improve the system. Obama’s proposal is to make a bad system worse.

Edward C. Prescott

P.S. With people like you I understand why Ruyssians can not governed themselves.

---

From: Leonid Teytelman
Date: Sat, Oct 11, 2008 at 2:31 PM

Dear Professor:

It is pretty obvious that we will never see eye-to-eye on these issues. There is a good reason why so many well-informed and educated people disagree on whether McCain or Obama would be better for this country. What I love about the United States is that such disagreements are welcome in public, and that in the upcoming presidential elections, there is a sort of a referendum on who has the better ideas.

While the elections are still far away and anything can happen, I do have to note that at this point, Obama is leading McCain by quite a margin in the polls. Particularly when it comes to the economy, the overwhelming majority of the public thinks that Obama would do a better job of leading the country. I am not sure how that reconciles with your statement that “CEO’s of the big companies support him [Obama] and the people oppose him.”

Lastly, I must say that I am perplexed by your comment that it is because of people like me that the Russians cannot govern themselves. To be sure, the Russian government and political system is a mess, thanks to the communism and the botched transition out of it. There are a million causes of the Russian problems, but people like me being one of them? I am a socially-liberal and fiscally-conservative voter. I am not registered with either party (find both of them pretty disappointing). I tend to form my opinions based on much reading and thinking. My opinions may differ from yours, but isn’t that the point of democracy and debate? Isn’t that how the correct decisions are ultimately made? How am I the problem?

---

From: Edward Prescott
Date: Sat, Oct 11, 2008 at 4:11 PM

Show some honesty. Facts are facts and you choose to ignore. Scientist collusions follow from their assumptions. It is not a matter of religious belief. Are you Russians goiung to getogether with the Germans again and split up Poland again? You invade Georgia.

---

From: Leonid Teytelman
Date: Sat, Oct 11, 2008 at 4:22 PM

Dear Professor:

I am a scientist. Facts and the scientific method are what I go by; but as always is the case in science, same facts can lead to different and competing models. I think this is exactly what is happening in our exchange - we observe the same facts, but our interpretations differ.

By the way, I am a United States citizen and came to this wonderful country in 1990 as a refugee from the former Soviet Union. I don’t think I bear much responsibility for the invasion of Georgia.

Leonid Teytelman

---

From: Edward Prescott
Date: Sun, Oct 12, 2008 at 6:45 AM

In economics there is almost always one theory or no theory. You and your think a likes destroyed Russia and now are destroying the United States. Society needs religion to get around the time inconsistency problem. Your religion of Statism is a not a good religion. It is detrimental to the welfare of the people. A basic tenet of my religion is free to choose and to enter into mutually beneficial contracts.

I thought about finding pull quotes - I’m particularly fond of “Are you Russians goiung to getogether with the Germans again and split up Poland again? You invade Georgia” but also “Our health systemn was great until the federal government got involved.” Oh, screw it, read the whole thing!

Disclaimer: Leonid Teytelman is cofounder of obamaforeconomy.com and graduate student in genetics, UC Berkeley. This is his statement regarding this exchange:

I inadvertently e-mailed [Prescott] asking for support of Barack Obama, and the exchange that ensued is rather striking...I showed this exchange to the founder of “Economists for Obama” http://econ4obama.blogspot.com/ and he said that this is most definitely Prescott, and that I probably sent Prescott into a rage with the Heckman quote that appears on the first page of our site http://www.obamaforeconomy.com

As for me, I have looked at the headers of the e-mails between Teytelman and Prescott and they certainly appear to be legitimate, but I am not an expert.

Comments

[Don Pedro of Economists for Obama]

Brad,

An important correction to what's in this post:

The guy wrote "I showed this exchange to the founder of "Economists for Obama" (http://econ4obama.blogspot.com/) and he said that this is most definitely Prescott and that I probably sent Prescott into a rage with the Heckman quote that appears on the first page of our site."

That's not correct. He did send us the emails, and I replied that Prescott's response wasn't surprising, but of course I can't attest to whether the emails are genuinely from Prescott. And I certainly didn't speculate as to why he would have written what's in the emails.

[Ken Houghton]

I find myself desperately hoping that Pandagon and/or Leonid Teytelman got punked or sonned or somesuchthing. Because the alternative is So Much Worse.

[Cosma Shalizi]

I see nothing here inconsistent with Prescott's views in his book _Barriers to Riches_ (with Stephen Parente); the spelling there is better, naturally, and the ideas are more carefully expressed, but they're just as insane. Several pages, as I recall, were devoted to arguing that Japan became rich while India did not, because the British, through misguided sentimentalism, allowed unions during the Raj, while the Japanese government kept the proles in line.

[JoddeHaa]

The headers might look correct, but such things are easily faked anyway, and so proves nothing.

[Laertes]

The most striking thing about the exchange is the relentless and unprovoked nastiness from Prescott. The second most striking thing about it is Teytelman's composure while being subjected to such withering scorn.

I guess I had this naive idea that world-class scholars would generally not act like belligerent gin-soaked wingnuts.

Can this possibly be the real Prescott?

[Frank Dean]

I once had the pleasure (?) of listening to a public lecture by Prof. Prescott. Ten minutes in he was mumbling about the virtues of locking Japanese teenaged girls in factories to promote industrial development. After another 15 minutes of incoherent murmuring, I left. The email messages do match his style!

[John Emerson]

I have to hold off until this is verified. People who know me know can guess what I'll say.

[Leila Abu-Saba]

The tone sounds exactly like that of a troll who excoriated me at Philip Weiss' blog (Mondoweiss) recently. My troll called me among other (more sexist and not exactly germane) names a statist. It was very strange, since I am not sure what a statist is or why I am one. He really seemed to be projecting quite a bit of his own worldview onto me and I ended by laughing in his face.

Impossible that my anonymous troll could have been the prize-winning economist, I'm giving myself airs. But too funny nonetheless.

[Leila Abu-Saba]

Ooh, my troll's name was Ed. He called me an airhead which given a year of weekly chemo infusions is probably true; my brain is indeed full of newly carved holes, and the exchange that set him off does look rather frothy in retrospect.

http://www.philipweiss.org/mondoweiss/2008/08/max-rodenbeck-who-panned-ken-pollacks-book-yesterday-in-the-times-has-a-fascinating-pedigree-son-of-john-and-buffy-rodenbe.html#comment-127897924

Well, compared to a Nobel-prizewinner, I am indeed an airhead with my lowly Creative Writing MFA and nought but the Bernard Cohen Short Story Prize to my resume. I knew my interlocutor was no dummy; I also knew he was delusional. (And I was feeling rather airheady about my college chum Max Rodenbeck that week).

I must thank you all. I do believe I've discovered the identity of my Mondo Weiss troll. Whether or not it's really Ed Prescott, I think it's the same as the author of that e-mail exchange.

Bubble, bubble!

[Leila Abu-Saba]

Here is Prescott's Nobel bio.

http://nobelprize.org/nobel_prizes/economics/laureates/2004/prescott-autobio.html

I like how personal it is. He doesn't sound unhinged here at all; but then I can't evaluate his economic theories.

[Measure for Measure]

Leila Abu-Saba:
Your Ed has a link to a webpage, Libertarian Today. The site appears to be edited by one Chris Moore. http://www.libertariantoday.com/

[Cosma Shalizi]

I didn't realize until Leila posted that he was a Carnegie Mellon product. I'm not sure how I feel about this.

[CalDem]

The intellectual ideas are consistent with Prescott's lunacy. The nastiness is consistent with the general demeanor of Chicago-style economists. But this seems too dumb and time-wasting for a busy guy like Prescott. I don't believe it.

[derrida derider]

IME Chicagoistas are often nasty and arrogant but detest ignorance and stupidity. And the person purporting to be Prescott comes across as really ignorant and stupid (as well as nasty of course).

So I'm with CalDem - I reckon its not Prescott.

[thorstein veblen]

i'd agree, whether the emails are Prescott or not, there's clearly nothing in the emails inconsistent with what Prescott would say, were he in such a conversation. I think we in the Economics profession need to take a step back, and think about how much RBC theory, which Prescott won his Nobel for, has informed the current crisis (i.e., not at all). Some of the best minds in Macro spent a decade-plus on the idea that business cycles are caused by random technology shocks (and RBC theory makes every "serious" program's first year curriculum), and hence, that recessions are all perfectly rational and shouldn't be treated with distortionary gov't policy.

Can someone else bait Prescott into telling us how it was a random tech shock which started this crisis? Pretty clearly, it was a sub-prime mortgage crisis. This seems like an opportune time to analyze why and how the RBC model and rational expectations were able to dominate the minds of so many economists for so long, and continue to do so.

[Anonymous]

I can't believe that this is Prescott. From everything I've heard he is the cornerstone of Minnesota theory and Minnesota's the only economics department where theorists manage to combine rigor with open-mindedness. This discussion seems to me to be totally inconsistent with the man's intellectual legacy.

[Another anonymous economist]

I know Prescott moderately well.

The first email definitely sounds like him, especially: "Why is Western Europe by one-third depressed relative to the U.S.?". Both the question and the phrasing sound like him, the use of the term "depressed" in this context is a giveaway --- see his Ely Lecture "Prosperity and Depression" (AER May 2002) where he introduces this terminology to contrast Europe and the U.S.

The verging-on-paranoid anti-government stuff in the subsequent emails also sound like him, though I have never heard him directly slur the Army Corps of Engineers before.

[Izabella]

Hmm. If any, er, Ruyssian graduate student wrote like Professor Prescott does here - or if any faculty member born in a non-English-speaking country wrote like that, for that matter - they would be disqualified immediately as illiterate in English and not worth having a discussion with.

[Robert Waldmann]

I have seen Prof Edward Prescott in Western Europe. Clearly he is counting leisure as worthless. I understand that this is his personal approach to work so, at least, he is not a hypocrite.

[bunbury]

Accepting for a moment that Prescott's analysis of the relative levels of economic development nd productivity are correct, is there a body of evidence that establishes that the gap is the result of relatively modest differences in taxation and not for example the effect of two world wars, the incorporation of former communist economies, lack of land and natural resources or the benefits of a large single market?

[Robert Bell]

Would Dr. Prescott really misspell "Corps"?

"Army Core of Engineers "

[Punditus Maximus]

This loony-tune works at a Federal Reserve bank?

...

[Lenny Teytelman]

I am the student who wasn't minding his yeast cells. I completely understand those who think that this exchange is fake.

I was soliciting quotes from Nobel-winning economists, having crossed off the list those who were on record as supporting John McCain. Edward Prescott was not on the list from the June letter as he only endorsed in October (as one of the 100 economists who called Obama's economic proposals "dangerous"); hence I ended up e-mailing him as well.

As the exchange unfolded, I was incredulous. At first, I was certain that some teenage niece or nephew had gotten to the uncle's computer and was responding from the university e-mail account. However, the exchange continued throughout Saturday, with the first letter from Prescott at 12:22 p.m. and the last at 4:11 p.m.

By the end of Saturday, I had assumed that Prescott was drunk or under the influence of some medication. But then, Sunday morning at 6:45 a.m., I got the last e-mail. After that point, I decided to stop the thread.

I waited a week before making this public. Given that the last e-mail was sent on Sunday, I doubt that this is a prank or a compromised e-mail account.

If someone (obviously unrelated to me) were to contact Prescott to verify this exchange, that would be great. I used his Arizona State e-mail address, but for verification, it might make sense to e-mail him at his Federal Reserve address (available in his CV here: http://minneapolisfed.org/research/economists/staff_display.cfm?id=2).

If you would like to contact me, please e-mail teytelman at berkeley dot edu.

Leonid Teytelman

[John Emerson]

I have held off from commenting in order to guard against confirmation bias. I see no reason to doubt that the messages are genuine. He seems more intemperate and less literate than the average Chicago School economist, but I've seen very few unedited communications from any of them. Several people have said that the emails are consistent with what they know about his views.

All this perfectly fits my theory that economics is a corrupt, almost fatally-flawed quasi-science infested with hard right ideologues. Prescott may not be a typical economist, but he's not a terribly unusual one either.

[CalDem]

Exposure to RBC (capped off by the worst lecture ever from Prescott) not only made me ignore everything besides the math from my grad macro course, it seems to have performed a total wipe of all my macro related knowledge.

The money quote from prescott was that the early 90s recession was caused by a negative productivity shock from increased regulation in the beginning of Bush I, so everybody took a vacation. I think he implied the great depression was the same story.

It is funny that mainstream economists like Brad are eager to exile heterodox economists, but welcome RBC theorists, who are far more demonstrably wrong.

[Barkley Rosser]

Prescott is now in Arizona, but was at Minnesota for a long time, with his degree from Carnegie Mellon. Although clearly RBC is heavily influenced by Lucas-style ratex, Minnesota has long had its own tradition in that, starting, I suppose with Wallace, and I think Sargent was there for awhile, although Sargent is very reasonable.

It is my observation that Minnesota has become this center of nearly cultlike belief in ratex, RBC, and the newer DSGE models. One can see this in papers coming out of others there in recent years by people like Kehoe. They argue that RBC is the answer, and that is that. I have interviewed students out of there for jobs, and one gets the same attitude. They have the answer and are available to enlighten all the unwashed, ignorant masses. I do not know how much Prescott contributed to all this, but the complete irrelevance of RBC to anything going on now makes it somewhere between hilarious and pathetic.

As for this rant from Prescott, well, I do not know if it is him or not, but if it is, truly pathetic.

[Lenny Teytelman]

Sorry, the e-mail is "teytelma" at berkeley dot edu, or "teytelman" at gmail dot com.

[Ken Houghton]

So that clears up that Lenny T. isn't pwning anyone (which wasn't exactly a high-odds probability in the first place). And the hope that he was in turn pwned by someone who has access to Prescott's e-mail account is starting to fade.

There is, however, good reason that Hope was considered the most evil of all the entities in That Box (op cit. Zelzany for the definitive short-fiction explanation). And I will cling to it, feeling more and more like the woman in the opening scene of _Cliffhanger_.

[Blah]

I think Schopenhauer actually had that idea, if not first, then at least before.

[Steve Roth]

Ian, thank you for bringing up the key, crux argument (IMHO), with a little help from The Economist.

Europe was catching up with us by leaps and bounds for decades after the war. Then they stopped.

Why hasn't Europe caught up?

[Well, on labor productivity, Europe has: remember, you are entitled to your own analysis, your own values, and your own opinion--but not your own facts.]

[Ian Maitland]

Brad says: "Well, on labor productivity, Europe has [caught up]."
Out of genuine curiosity, if labor productivity per worker is similar, how much of that is a result of the fact that labor force participation in Europe (say, in France) is lower and unemployment higher than in the US, not to mention the effects of France's 35-hour work week? In other words, isn't the "catch up" in part an artifact of European labor policies and not truly comparable with the US?

[Chris]

If these comments really reflect Prescott's ideas then I need to revise my opinion of the Nobel Prize in Economics. I thought it certified the winner as sensible and unusually intelligent. I may have to revise that viewpoint.

[Chris]

Of course a Nobel Prize winner can deserve the honor for technical wizardry and yet be a fool in general. I think of Kary Mullis who discovered PCR but thought or thinks O J Simpson was innocent.

[Eli Rabett]

Among other things, remember what happened to the Warsaw Pact and the Soviet Union in 1990. In particular, this would have affected German economic statistics quite strongly, and Germany is one of the major economies in Europe. Even assuming that only the NATO+Swiss+Sweden countries are included, economic performance in Europe should be viewed by country. For example, Spain, Portugal and Ireland are tigers. In summary, the 30% thing looks like a cherry pick, and you would have to dig into the assumptions.

[jm]

A good example of "autistic economics".

[Steve Roth]

Brad?: "Well, on labor productivity, Europe has: remember, you are entitled to your own analysis, your own values, and your own opinion--but not your own facts."

Absolutely. My point--or one of my points--exactly.

Since I guess Brad doesn't want me to link out from here, I'll move my response to Mr. Maitland's excellent point here. Formatted version with links on my blog. You'll notice I fundamentally disagree with Mr. Maitland, but am pleased that he went to the crux.

=============

Finally! Someone has come back at me (well he didn't know he was talking to me) with the key, perhaps-trumping argument on my Europe vs. US longatribes. I gave this argument away in a previous post, hoping someone would pick it up, but have yet to hear it well enunciated elsewhere.

Summary of my arguments: the US and Europe have been growing at the same rate for decades, despite huge disparities in tax burdens (28% versus 40% of GDP), and profound, systematic differences in social support systems. Sort of suggests that their system is not the disaster, growth-wise, that many like to believe it is.

Ian Maitland (I'm assuming it's this Ian Maitland) comments on a Brad DeLong post:
>Brad writes: "Studies of the relative aggregate efficiency levels of the economies of the US and EU come out... inconclusive--not finding that the EU is depressed by 30%."

>How does that square with this (from The Economist, "Old before their time," 5-11 March 2005, p. 73)?: "In the post-war years to the 1980s, the world's richest economies were mostly converging towards similar levels of income per person. During the 1990s, however, that convergence came to a halt. Nowadays, income per person in the euro area is around 30% less than in America... And average growth rates in the euro area lagged behind
America's in the ten years to 2003."

>Brad says that: "Western Europe ... has chosen politically to have a lot more leisure time than the United States."

>Isn't it more accurate to say that Europe has "chosen politically" to take away people's choices, say, regarding whether or not to continue working after they are 60? In the same article we read: "The OECD has attempted to measure the implicit 'tax'on working for someone nearing retirement age.... For 55-year-olds in Germany or France, this implicit tax amounts to 50% of the average wage for people in that group. For 60-year-old Dutch people, the loss of benefits is 90% of the wage; Belgians face an effective tax rate of 80%. Faced with such arithmetic, why should older people bother to work?... If the EU does reduce the obstacles to work, many Europeans might still choose to toil less than Americans. But that would be an entirely different matter--a choice made freely, rather than in response to powerful government-supported incentives."

Okay, point by point:
>Economist: "In the post-war years to the 1980s, the world's richest economies were mostly converging towards similar levels of income per person. During the 1990s, however, that convergence came to a halt."

Correct. (Though I'd say the catchup ended in 1980. They did hit almost 90% of US GDP in a couple of years in the 90s, but right now they're about even with '80.)

[graph of US versus EU gdp per capita over time]

There was a big, easily explicable European catchup effect for three decades after the war. They've been pretty much stuck, comparatively, ever since.

>Economist: "average growth rates in the euro area lagged behind America's in the ten years to 2003"

As I demonstrated, you can cherry-pick your periods as you wish. Which is what our Economist correspondent did here. While I rarely recommend ignoring The Economist, you really should do so in this case.

>Economist: "Nowadays, income per person in the euro area is around 30% less than in America."

The numbers I've run suggest that Europe runs more like 25% behind, but that's just noise. This is the crucial question for all us teat-sucking socialists: Why can't Europe catch up?

There are many many factors, but it's really a simple answer, and both Ian and Brad are right: each "capita" works less in Europe than in the U.S. This is both a good and a bad thing.

I like Bernard Wasow's quote:

>Between 1970 and 2000, GDP per person rose by 64% in the United States and by 60% in France. In America, this came about because productivity per worker rose by 38% and hours worked per worker rose by 26%. In France, it came about because productivity rose by 83% while hours worked fell by 23%.

The Europeans prefer free time, while American's prefer big houses and big cars. Fine.

But the fact is--and both Brad and Ian stipulate to this, at least implicitly--to a great extent the society you live in imposes that choice on you. Sure, Europe has in many cases removed the option of people choosing "whether or not to continue working after they are 60." But the U.S. has effectively removed the option of working 35-hour weeks and taking six-week vacations. (Milton Friedman's obsession with coercion is well-placed, but he fails to realize--or at least acknowledge--that coercion goes beyond the physical; any economic system is coercive.)

Europeans have chosen leaders who instituted policies that provide (and to some extent require) what they care about. Ditto in the U.S.

But preferences are changing in this country, and globalization is coercing those changes--especially on those of more modest means. The quarter-acre lot with two or three cars is beyond the reach of most people these days, absent dual incomes and long hours/multiple jobs.

Given that reality, more people are liking the looks of the European system. Yeah, you have to give up the house/castle idea. But what do you get in return? The time to do things that---pretty much everybody agrees--actually provide a joyous life. If I have to be coerced, that's what I'll choose.

One last thing that really sticks in my craw: Each society is free to choose what it prefers. But when Europeans have so much time to spend with their families and friends—and when they do in fact use that time for that purpose (think: long, leisurely afternoon lunches at tables filled with loved ones, lounging in pleasant town and city courtyard cafes as your neighbors stroll by to chat)--how dare American get-back-to-work conservatives crow about their devotion to "family values"?

[coberly]

i suppose i am agreeing with steve roth here, but i wanted to say it a little differently.

whoever wrote the emails, it is not hard to believe that a famous academic is ill mannered or even wrong about things just outsied of his expertise. and not, for me, all that interesting after a point.

i think he was quoted as making a case that business cycles are natural and interference with them reduces "efficiency." the proper answer is that "efficiency" is not the goal of governments or the people who establish them. it does me little good to be told that the suffering i experience during a down turn will be more than made up for by additional plastic toys during the next upturn. money is not the measure of man. and if it turns out that laissez faire is more "efficient" because the total of money returned to "the economy" is higher "in the long run" we still are permitted to notice that the money in the hands of the rich is more than they can use sanely, while the money in the hands of the poor still does not add up to a life worth living.

i am not an economist so i don't know how well "economists" understand this, but based on the media, and my first exposure to "econ 101" my guess is that it rarely occurs to them.

[srg]

"would anyone who is semi-decent human post private conversation on the web?"

Dan, I've a question in response to your question: Would any semi-intelligent person presume communication with a stranger would be kept private?

[me]

> Dear Professor Prescott:
>
> Two of my friends and myself have started a web site,
> http://www.obamaforeconomy.com
>
> We would absolutely love to have a statement of support for Obama from you.

What in the message would lead a semi-literate reader to believe they were participating in a private conversation, when the invitation says "a statemetn of support ...."? Such would not be private.

[Pira]

If we are going to talk about GDP/capita (rather than productivity) then it's noteworthy that the US has run ever larger trade deficits for a very long time while European trade has on the whole been balanced. That would strongly imply an overvalued dollar, which will even skew PPP calculations. Now, throughout 2007 and 2008 the trend has been a weakening dollar, though with considerable fluctuations recently. The result has been that many European countries look better or comparable with the US when it comes to GDP/capita.