L'Esprit de l'Escalier: March 22, 2013
Natalie Raabe firstname.lastname@example.org wrote: "In the forthcoming issue of The Atlantic, National Correspondent Jeffrey Goldberg profiles King Abdullah II of Jordan, the most pro-American Arab leader in the Middle East—and arguably the most candid..." Would it not be much, much, much, much better if Jeffrey Goldberg conducted a series of interviews with himself, explained the bullshit he wrote in 2002 and 2003, and set out concrete steps for how we was going to operate in the future to avoid misleading his readers to such an extraordinary degree?
If you want to raise the Medicare and Social Security ages, you had better have a full-employment economy that produces lots of jobs...
At least as I read him, O'Brien does not deny that the U.S. might someday run into the unpleasant monetarist arithmetic of fiscal dominance. And his denial that the U.S. can become Greece seems to me well-founded. As he writes: "Countries that borrow in a currency they control play under a different set of rules. They can never run out of money to pay back what they owe, since they can always print what they need as a last resort. That's not to say they actually do or should turn to the printing-press to finance themselves. But the option to do so calms markets. After all, inflation is a lot less bad than default for creditors. That's why it's no so easy for countries that don't borrow in a currency they control. They can default. And this is a case where thinking can make things so. Indeed, as Paul De Grauwe points out, countries that don't have their own central bank, like euro members, can fall victim to self-fulfilling panics that push them into bankruptcy. In other words, markets force up interest rates because they fear default -- which then pushes them into default. It's a bank-run on a country." Where you [James Hamilton] go most wrong, I think, is in your claim that: "Whether a country is able to borrow in its own currency is completely irrelevant for the above calculation.... [P]rinting money does not generate any magical resources with which to resolve a real fiscal shortfall." But it does. A country that can print money has the option of taxing nominal debt holders and sticky-price contract participants to resolve a real fiscal shortfall. A country that cannot is forced into an explicit default that robs its debt of its status as a safe nominal asset. Unless you believe that the costs of explicit bankruptcy are trivial (and why, after Lehman Brothers, would anybody ever believe that?) the option to tax nominal debt holders and sticky-price contract participants to resolve a real fiscal shortfall is a valuable one.
The Republican plan for dealing with Medicare is like the Republican plan for dealing with Katrina. It's like Obama is saying: "I'll get you a Honda Accord for $25,000". While the Republicans are saying: "No, what you really want is a Honda Civic for $50,000!"
My view is that what America needed during the Bush years was mostly a weaker dollar in order to boost employment. A higher higher inflation target than Greenspan's 2% would not have hurt either. And, of course, smarter financial regulation. In retrospect Greenspan's combination of extremely lax financial regulation coupled with a true low inflation target appears to have been quite expensive for the economy as a whole. And then you add on the strong dollar policy, which was past its sell-by date by 2000.
The meta-message of the Obama campaign was that the Romney campaign was basically an exercise in the candidate looting the country for the benefit of himself and the small group of people like him.
What do you mean [my critique of Ron Unz is] “wrong”? Do people with–call it a New York literary-intellectual-culture style of argument–have a much easier time getting into Ivy League universities than people with other kinds of smarts I suspect are equally as smart in some transcendental smartness sense and equally capable of benefiting from elite education? Probably. Are Ron Unz’s numbers the right numbers? Probably not: the thumb seems to be on the scale more often on one side than on the other. Is Ron a bad actor? I don’t believe so: inevitably you make decisions as to how to conduct analyses, and inevitably your priors lead you to make judgments that people with other priors think overstate the strength of the evidence on your side. Are “the Jews” bad actors? No. Is there something suspicious and bad in there being lots of Jewish provosts at Ivy League colleges? No. Do admissions officers fear they will be fired and have to go back to catching raccoons if they don’t admit enough Jews? No. Ron [Unz] sounds like a nut–which means that anybody coming to the debate from outside will in all likelihood fairly conclude that Ron is a nut. You need to present yourself as a not-nut if you want people to think it is worth investing time in crunching your numbers… http://www.theamericanconservative.com/meritocracy-gelmans-sixth-column/
How about the Greeks between the Dorian invasion and 400 BCE, as described by Thoukidides: “In early times the Hellenes and the barbarians of the coast and islands, as communication by sea became more common, were tempted to turn pirates, under the conduct of their most powerful men; the motives being to serve their own cupidity and to support the needy. They would fall upon a town unprotected by walls, and consisting of a mere collection of villages, and would plunder it; indeed, this came to be the main source of their livelihood, no disgrace being yet attached to such an achievement, but even some glory. An illustration of this is furnished by the honour with which some of the inhabitants of the continent still regard a successful marauder, and by the question we find the old poets everywhere representing the people as asking of voyagers- “Are they pirates?”- as if those who are asked the question would have no idea of disclaiming the imputation, or their interrogators of reproaching them for it. The same rapine prevailed also by land. And even at the present day many of Hellas still follow the old fashion, the Ozolian Locrians for instance, the Aetolians, the Acarnanians, and that region of the continent; and the custom of carrying arms is still kept up among these continentals, from the old piratical habits. The whole of Hellas used once to carry arms, their habitations being unprotected and their communication with each other unsafe; indeed, to wear arms was as much a part of everyday life with them as with the barbarians. And the fact that the people in these parts of Hellas are still living in the old way points to a time when the same mode of life was once equally common to all…” I don’t think anybody would maintain that Thoukydides’s Hellenes were a society that had been “fundamentally and tragically shaped by colonialism”. I think back on the forensic archeology seminars I have been to which seem to show rates of violent death on the order of 1/10–equal to Stalin’s Russia or Hitler’s Europe or (perhaps) Mao’s China, and exceeded only by Pol Pot’s Cambodia. And I wonder: what are the mechanisms that in pre-state societies are supposed to limit decentralized deadly force as a way of “settling” disputes supposed to be, and why wouldn't we use them–why do we resort to our police and our courts if we could live as peacefully without them?
Francis Bator on Milton Friedman on the chairlift in Alta: "I am for anything that reduces the government."
It is far easier to get rid of excesses and structural maladjustments in times of boom than in times of depression. Shifting people from somewhat unproductive sectors into the totally unproductive sector of the unemployed is not a net gain from a structural person. It is much better to pull people out of unproductive sectors into more productive ones by high demand and productive sectors them to push people out of unproductive sectors into even more unproductive unemployment.
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Let me (unfairly) complain that what I thought (and wanted) to see in this post was a discussion of: R. G. Hawtrey (1925), "Public Expenditure and the Demand for Labour," Economica 13 (March). Mind you, this is very good free ice cream. It's just that I also want the sprinkles and chocolate sauce on top...