Yearly Archives: 2016

Economic theory is next

Posted on by
Reply

From Instapundit:

PAUL KRUGMAN TWO WEEKS AGO ON ELECTION NIGHT: “If the question is when markets will recover, a first-pass answer is never.”

CNBC today: Dow closes above 19,000 as stocks notch record closing highs. “The Dow Jones industrial average rose about 70 points, closing above 19,000 for the first time ever, with Home Depot contributing the most gains. . . . The S&P 500 closed over 2,200 for the first time, as telecommunications rose about 2.1 percent to lead advancers. The Nasdaq composite also closed at all-time highs, rising approximately a third of a percent.”

Hey, it’s 2016. Anything can happen.

 

And here are the top five economists on twitter with their number of followers.

Rank Author Followers
1. Krugman, Paul R. 2088110
2. Stiglitz, Joseph E. 160653
3. Wolfers, Justin 112875
4. Easterly, William 88974
5. Shiller, Robert J. 84629

How fleeting is fame

Posted on by
Reply

jfk

I just went down to pick up some exams from admin and when I went to sign for them I had to ask the date, which is apparently November 22. So I said, oh look, it’s the anniversary of Kennedy’s assassination. And from the blank look, I did have to ask, do you know who Kennedy was, John F. Kennedy, you know, the former president of the United States? Did not know, had never heard of him, his name did not even ring the most distant bell.

For those who do not know since she would hardly be unique: November 22, 1963: Death of the President. It truly was a day that changed the world.

The clueless Janet Yellen discusses aggregate demand

Posted on by
Reply

But she’s only clueless because she takes mainstream economic theory seriously, like all the others. This speech was delivered way back in October but only reached me today: Macroeconomic Research After the Crisis. The first heading is, “The Influence of Demand on Aggregate Supply” for which I can give you the definitive answer. There is NO INFLUENCE WHATSOEVER of demand on aggregate supply. Not in the long term and not in the short term. There is none, which is why trying to explain recessions and unemployment by using fluctuations in aggregate demand will get you nowhere in just the same way that trying to induce recovery in an economy in recession by increasing aggregate demand will NEVER work. You want evidence? Just look everywhere around you. Now back to Janet, who wrote:

The first question I would like to pose concerns the distinction between aggregate supply and aggregate demand: Are there circumstances in which changes in aggregate demand can have an appreciable, persistent effect on aggregate supply?

Her answer is “blah, blah, blah, hysteresis, and more blah, blah blah. She grapples with the possibility that demand deficiency may be more than a passing storm and then, ever so gently, suggests that perhaps aggregate demand has nothing to do with it.

More research is needed, however, to better understand the influence of movements in aggregate demand on aggregate supply. From a policy perspective, we of course need to bear in mind that an accommodative monetary stance, if maintained too long, could have costs that exceed the benefits by increasing the risk of financial instability or undermining price stability. More generally, the benefits and potential costs of pursuing such a strategy remain hard to quantify, and other policies might be better suited to address damage to the supply side of the economy.

You know, we are heading back to Say’s Law. They are never going to acknowledge that I might have been right, because being right too soon never gets you credit. It takes time, but we shall see because there is now nowhere else for economic theory to go.

“Dishonest, deceitful liars”

Posted on by
Reply

Here’s a new world: TRUMP SLAMS MEDIA ELITE, FACE TO FACE.

“Trump kept saying, ‘We’re in a room of liars, the deceitful dishonest media who got it all wrong.’ He addressed everyone in the room calling the media dishonest, deceitful liars. He called out Jeff Zucker by name and said everyone at CNN was a liar, and CNN was [a] network of liars,” the source said.

“Trump didn’t say [NBC reporter] Katy Tur by name, but talked about an NBC female correspondent who got it wrong, then he referred to a horrible network correspondent who cried when Hillary lost who hosted a debate – which was Martha Raddatz who was also in the room.”

Whether it can do any good is still to be seen. The process for the media is to try one attack mode after another – eg “fake news” – and when that doesn’t resonate go onto another until they create a storm. If you are on the left, you get the pass. If you are not, you don’t.

The odd things some people believe

Posted on by
Reply

This is Peter Smith at Quadrant Online:

Among other things, commonsense tells you that the private sector creates wealth not government; that we can’t go on spending more than we earn: that wind and sun cannot generate base load power; that free speech is a bulwark against despotism; that marriage is between a man and woman; that children should not be confused into believing that their evident gender is a societal construct; that all cultures are not nearly equal; that a religion whose creed preaches supremacism, intolerance and violence is not benign or peaceful; that civilised society cannot exist without borders; and that there are bad people who wish to do us harm and have to be deterred by force of arms.

I’m not sure if there is any constituency left for these kinds of views. In this regard, I might mention this posting under the heading All Cultures are Equal at SmallDeadAnimals in which it might be said that she is taking the same side as Peter. Obviously they share a view that is on its way out. The teaser in this second story reads:

“The monkey pulled off one of the girls’ head scarf, leading men from the Awlad Suleiman tribe to retaliate by killing three people from the Gaddadfa tribe as well as the monkey…”

I’m not sure what we are supposed to make of that, but there you have it.

@realAlexanderHamilton discusses immigration

Posted on by
Reply

The title of the article is Alexander Hamilton, Immigration Skeptic, and if this quote is accurate, he was certainly that. It is therefore interesting that the non-white-by-design cast of Hamilton of all things decided to give the VP-elect the benefit of their views on diversity. Here is the real Alexander Hamilton.

“The safety of a republic depends essentially on the energy of a common national sentiment; on a uniformity of principles and habits; on the exemption of the citizens from foreign bias, and prejudice; and on that love of country which will almost invariably be found to be closely connected with birth, education, and family.

“The opinion advanced in [Jefferson’s] The Notes on Virginia is undoubtedly correct, that foreigners will generally be apt to bring with them attachments to the persons they have left behind; to the country of their nativity, and to its particular customs and manners. They will also entertain opinions on government congenial with those under which they have lived; or, if they should be led hither from a preference to ours, how extremely unlikely is it that they will bring with them that temperate love of liberty, so essential to real republicanism? There may, as to particular individuals, and at particular times, be occasional exceptions to these remarks, yet such is the general rule. The influx of foreigners must, therefore, tend to produce a heterogeneous compound; to change and corrupt the national spirit; to complicate and confound public opinion; to introduce foreign propensities. In the composition of society, the harmony of the ingredients is all-important, and whatever tends to a discordant intermixture must have an injurious tendency.

“The United States have already felt the evils of incorporating a large number of foreigners into their national mass; by promoting in different classes different predilections in favor of particular foreign nations, and antipathies against others, it has served very much to divide the community and to distract our councils. It has been often likely to compromise the interests of our own country in favor of another. The permanent effect of such a policy will be, that in times of great public danger there will be always a numerous body of men, of whom there may be just grounds of distrust; the suspicion alone will weaken the strength of the nation, but their force may be actually employed in assisting an invader.”

And whether he was right or wrong, these are views at least fifty years out of phase with the time in which we live.

A billion here, a billion there and soon you’re talking big money

Posted on by
Reply

If you want some idea how truly bad our governments have been, and in particular that economic illiterate of a Prime Minister of ours, let me begin with this: Government loaning NBN $20 billion to finish rollout.

NBN Co has abandoned plans to borrow money from debt markets to complete the roll-out and will instead borrow $19.5 billion from the federal government “on commercial terms”. This takes total government contributions to the project to nearly $50 billion.

They no doubt abandoned such plans because no one would give them the money since it is a project that is destined never to make a cent. Meantime, I want you to keep both the present $20 billion and the $50 billion in mind as we move to the next part of the story.

Here we come to the bit Judy has highlighted:

Treasurer Scott Morrison has left open the door to considering a Grattan Institute proposal to curb or scrap three aged-based tax breaks that cost the budget $1 billion a year.

Wow, save a billion by screwing Australians whose aim is to stay in the paid workforce, that is, to remain productive by earning an income. These are the very people the government should be doing everything they can to keep in the value-adding part of the economy, rather than just spend and drain productivity away. And then to go with these, there is this:

Much lower than expected wage growth has knocked a hole in the government’s budget projections, blowing out deficits right through until 2019-20.

The worse position, confirmed by Treasurer Scott Morrison, comes despite a doubling in the price of coal and a 50 per cent jump in the price of iron ore. . . .

Deloitte is expecting an underlying cash deficit of $40.5 billion in 2016-17, around $3.4 billion worse than budgeted.

We have possibly the most incompetent economic managers this side of Greece, with no vision, no will and no concept of what they are doing wrong. The NBN remains my favourite because it is so stark. But do you think Malcolm has any idea of what’s wrong with what he has done? Instead they sit around shredding their hankies worrying about the trade effects of Donald Trump. Even if he deliberately set out to undermine the Australian economy, he could not do more damage than these clowns have already done all by themselves all on their own.