Monthly Archives: June 2020

Reifying a classification

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In my previous post on how useless Keynesian economics is I wrote:

A Keynesian believes that economies are driven from the demand side and that recessions are due to a deficiency of demand. The cure for recessions are therefore increased public spending to increase the level of demand, raise the level of activity and return an economy to full employment. You know, from the equation Y=C+I+G etc, where more G leads to more Y and therefore more jobs. Introduced into economic theory in 1936, there has never been a single occasion when a Keynesian “stimulus” has led to a recovery. Not one, not ever.

The first comment was by 2dogs who wrote:

The problem with this is that it is a logic fallacy known as “reifying a classification”.

Y=C+I+G is merely a classification system, not some empirical result. One can create classifications to divide up the total transactions any number of different ways. The totals resulting are completely arbitrary; none of the classifications so created have a real existence in and of themselves. Suggesting that increasing the size of one classification will increase the overall total is mindless paper shuffling. I could just as easily create a different classification system that demonstrated the need to increase in the amount of money paid to me.

This, let me tell you, was a revelation. I have never heard of this particular form of fallacy nor has anyone ever before brought it to my attention. I often compare, and discuss in my text, the difference between the identity

Y ≡ C + I + G

which is the formula for calculating the National Accounts since it is essentially an accounting measure which is just true by definition, and this:

Y = C + I + G

which is the fundamental equation of modern macro, which says that an increase of any of the elements on the right side, such as an increase in government spending of any kind represented by G will lead to an automatic increase in output, represented by the letter Y. In fact, according to theory, Y will increase even more than whatever G is increased by because of supposed multiplier effects. The difference was highlighted by Duncan in a comment on the original article I cited.

Keynesian economics says that if you borrow $1m to dig a hole and $1m to fill it in you have ‘created’ $2m of ‘production’ and jobs.

In reality you have subtracted $2m from your wealth.

That is exactly right but requires a return to pre-Keynesian kinds of thinking. Why that is not obvious beyond argument I cannot work out. Nevertheless, the argument has now progressed so that even loss-making operations, or even activities that are wholly wasteful, can contribute to growth by adding to the number of jobs. Is it not obvious how stupid this is? No it’s not, and here’s part of the proof: With economic recovery far from assured, the PM’s nerve may be fraying by the ever unreliable Ross Gittens:

The plain truth is that the only way out of deep recessions is for governments to spend their way out….

Recessions always involve the private sector – businesses and households – contracting and the public sector expanding to take up the slack and get things moving again. In our particular circumstances, six years of weak wage growth and record household housing debt means consumers have little scope to start spending big.

This is economically illogical but such arguments are now almost universally held. And he even notices that we have already had six years of weak wages growth following the so-called stimulus packages that followed the GFC. It would never occur to him, nor to the millions of trained economists around the world, that real wages have fallen not in spite of the stimulus spending but because of them.

Would the real anti-Keynesian economist please stand up

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Classical Economic Theory and the Modern Economy

Here there are two anti-Keynesians in Australia and we both disagree with each other. The headline in the paper was kind of all right – It’s Keynes’s fault – again we go into debt to ‘stimulate’ the economy – but so incoherent was this as an anti-Keynesian rant that it has left me completely nonplussed (defined as: “so surprised and confused that one is unsure how to react”).

A Keynesian believes that economies are driven from the demand side and that recessions are due to a deficiency of demand. The cure for recessions are therefore increased public spending to increase the level of demand, raise the level of activity and return an economy to full employment. You know, from the equation Y=C+I+G etc, where more G leads to more Y and therefore more jobs. Introduced into economic theory in 1936, there has never been a single occasion when a Keynesian “stimulus” has led to a recovery. Not one, not ever.

I should also add that Keynes, in writing his General Theory, made a point about his rejecting this concept called “Say’s Law”. Mere detail to others who enter these discussions. And while I sort of agree with the conclusion, I am completely foxed by how it was arrived at:

Cutting government spending should take precedence over raising taxes. Reduced public spending, particularly on industry assistance and overlap in spending at federal-state levels, should be central to the recovery program.

This should be accompanied by tax reform (including to internationally uncompetitive company tax rates), business deregulation and industrial relations reform. Without this, our economy will remain in limp convalescence for decades.

That raising taxes is even an option is beyond me, but as for cutting public spending I am all in. But unless you understand the reasoning behind the pre-Keynesian position and Say’s Law, you won’t understand what needs to be done, and especially why it needs to be done. Everyone seems to be in for “infrastructure spending” but if we haven’t learned from the NBN, there is no hope for any of us.

Which reminds me that my latest book – Classical Economic Theory and the Modern Economy – is being released just this month.

Economic theory reached its zenith of analytical power and depth of understanding in the middle of the nineteenth century among John Stuart Mill and his contemporaries. This book explains what took place in the ensuing Marginal Revolution and Keynesian Revolution that left economists less able to understand how economies operate. It explores the false mythology that has obscured the arguments of classical economists, providing a pathway into the theory they developed.

I read other economists today and laugh since what else is there to do? Real wages have been falling across the world – other than in the US and then only until recently – since the stimulus programs that followed the GFC. If you want to know why, you could always buy the book, or at least get your library to order it in.

What a way to earn a living!

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The first one was in Atlanta the other day, the one below was of Floyd George in Minneapolis. What I find more amazing than anything is how patient the police are in both cases. And if you want an understanding of why the police use handcuffs, both are examples why but the one above is more than enough to see the point.

Defend the police. And put all that in the context of this:

Now go on and watch this.

Everyone knows idiots like these

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Via Instapundit, with a couple of comments below.

Sure wish I could meet an intelligent progressive. I’m in my fifties and it hasn’t happened yet. I’ve tried to have conversations with a few self-styled ones. It never takes long to conclude they don’t know much of anything. Not even stuff you would you think they might like literature, art or theater. Science, math, economics; don’t even try that.

Same experience . Amazing. What sets off progressives from others is that it is simply impossible to tell a progressive anything. They have no embarrassment being completely wrong on any particular issue regarding the facts. They have their beliefs. It is really amazing. For example, some years back a progressive younger friend bought a Prius to help reduce the CO2 in the atm. I asked him how much CO2 was in the atmosphere. He said about 20%. This young fellow was university educated, very smart, and a H.S. math teacher. When I told him the truth, (0.35%), he just shrugged off his abysmal ignorance. The facts just don’t matter to these people. On the other had, I know plenty of “blue collar types.” and they actually are much more fact driven than the college educated types. The only conclusion is that the progressives are a cult.

We have created such prosperity and immensely high per capita productivity that even morons survive.

In contrast with acceptable thuggery

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Far-right protesters clash with police in London as Priti Patel slams ‘unacceptable thuggery’. As the sub-head reads:

British Home Secretary Priti Patel has described violent scenes at a far-right protest in London as “thoroughly unacceptable thuggery”.

Here is the definition of “thuggery” at the online Cambridge English dictionary:

violent behaviour that is criminal or antisocial (= harmful to society):
The riots were condemned as “mindless thuggery” by a police commander.

Not quite on par with burning down city centres. Here’s the comment that comes with the video:

Rightwing demonstrators, who announced they would turn out on Saturday to protect London’s monuments from anti-racism protesters, were involved in scuffles with police outside Parliament. In and around Parliament Square, hundreds of people wearing football shirts, chanting ‘England, England’ and describing themselves as patriots, gathered alongside military veterans at the Cenotaph war memorial. The group sang songs in support of rightwing activist Stephen Yaxley-Lennon, who goes by the name of Tommy Robinson. ‘Winston Churchill, he’s one of our own,’ they also chanted, near his statue which last weekend was sprayed with graffiti reading: ‘Churchill was a racist’.

They were also saying things like this:

https://twitter.com/RikkiDoolan/status/1271755653153988609

And just think how bad all this is:

Right-wing activists and football fans who described themselves as patriots met in Whitehall, Westminster and in Trafalgar Square on Saturday to protect historical monuments, including the Cenotaph and a statue of Britain’s wartime leader Winston Churchill, from being vandalised.

Footage posted on social media showed groups chanting at police, holding ‘All Lives Matter’ signs and singing God Save the Queen on Saturday morning.

Other videos showed people throwing bottles and cans at officers, while riot police on horses pushed the crowd back.

Paul Golding, the leader of Britain First, could be seen wearing a ‘White Lives Matter’ T-shirt.

Doesn’t even rate as a football crowd outside a Liverpool-Chelsea match. So this is what the government said:

British Home Secretary Priti Patel described the violence as “thoroughly unacceptable thuggery”, promising the perpetrators would face “the full force of the law”. “Violence towards our police officers will not be tolerated,” she said. Ms Patel also repeated calls for protesters to “go home”, warning Britain was still in the grip of “an unprecedented national health emergency”. “Gathering in large numbers at this exceptional time is illegal. Doing so puts everyone’s lives at risk,” she said.

What she said about defacing statues of Churchill was not mentioned. Compare and contrast with this from a few days before.

Floyd George edition

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My favorite version of “Three men walk into a bar” is, “A natural philosopher, an architect and an astronomer walk into a pub”. Except, it really did happen. Robert Hooke, Christopher Wren and Edmund Halley walked into a pub, had some beers and argued about why the planets moved the way they did. They made a bet, that whoever could solve the problem would win a few pounds (!!). Halley went to see a certain Cambridge math professor for help and Newton told him that he had solved the problem twenty years earlier. Beer, it even helps you solve the mysteries of the Universe!

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The arguments never change and the tactics stay the same

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The surest evidence I need that someone is an ignoramus about the Cold War is that they are a critic of Joe McCarthy. Much of politics is opaque with many moral considerations involved. For most issues, there are no hard and fast answers, but the Cold War has none of these. The position taken by Joe McCarthy is so unambiguously righteous that to take any other side means someone is ignorant (usually the case) or a person of the left if you are reading something in print. It is the left who continuously bring McCarthy into the story, this being a man who died in 1957. But so long as his name works as a scare word to help entrench the left’s agenda, out his name will come.

So now there is a new bio of Joe McCarthy reviewed here: In McCarthyism’s Long Shadow. The website the review is found on is titled, Law and Liberty which are unambiguously good things, about which the left are its most certain and deadliest enemies. Here is the final para of the review. Do you think you can guess which side the reviewer is on by just reading his conclusion?

McCarthy was an opportunist politician who glommed onto an issue that frightened the American public. His sudden ascent was, in part, owed to missteps by the Truman Administration which initially downplayed the extent of Soviet subversion. From the President’s own characterization of the Hiss Case as a “red herring,” to Secretary of State Acheson’s comment after his conviction that he would not turn his back on Alger Hiss, many Americans gained the impression that the Administration did not take the issue seriously enough. That Truman also reversed FDR’s willingness to tolerate cooperation with communist and pro-communist forces, culminating in the ouster of Henry Wallace and his allies in 1948, began an effort to weed communists out of the government, built NATO, resisted communist aggression in Korea—all before McCarthy’s rise—is compelling evidence that whatever its errors or missteps, liberal anti-communism got it mostly right.

It is one of the hallmarks of the left in dealing with Joe McCarthy and his defenders to concede that he was right but overstated the case or went too far. The classic case in our own time are the punishing reviews that have been visited on Diana West’s must-read exposure of the Roosevelt White House. This is the book that has been criticised by many a supposed member of the anti-communist right: American Betrayal: The Secret Assault on Our Nation’s Character. Her home page, which you really ought to frequent, is http://dianawest.net/Home/tabid/36/Default.aspx or you can link here. It’s as much a lesson in contemporary politics to read the reviews of her books by supposedly anti-communist writers as it is to read the books she has herself written.

Diana’s latest post is Plus Ca Change Plus C’est La Meme Communists. She is discussing how the army was deployed in 1932 to defend the White House from the same kinds of tactics found on the streets of Washington today.

Nearly ninety years ago, “Red organizers” were already using civil strife — in this case, the stress and poverty of thousand of unemployed WWI veterans nearly three years into the Great Depression — to try to spark a violent overthrow of the federal government, or cause as much chaos and mayhem as possible in the attempt while demonizing the anti-communist President Hoover and General MacArthur.

Interestingly enough, the D.C. police commander, Pelham Greenford, was more on the “woke” side than we might expect of law enforcement at the time. Fortunately, the D.C. government and the Secretary of War were clearly on the side of protecting law, order and the White House, and not the agitators — patriotic support President Trump has not enjoyed.

Here’s how events unspooled in 1932. Thousands of “Bonus Army” protestors had camped out in and around the District on federal property since May. After Congress failed to comply with their demands to issue an immediate bonus for their war service, President Hoover was able to get a bill passed providing them with travel fare home. Thousands left the city. Those who remained were increasingly under Communist Party influence and increasingly violent.

After twice advising against providing Army assistance to Washington metropolitan police, MacArthur writes, “on July 28, the crisis was reached.”

A mob 5,000 strong began to move up Pennsylvania Avenue toward the Treasury Building and the White House. The police were outnumbered five to one. [Police commander] Glassford was mauled and stripped of his police superintendent’s gold badge, gunfire broke out, and a score or more were badly injured. It was evident that the situation had gotten beyond the control of the local authorities.

A request was immediately made through the Board of Commissioners for the District of Columbia for federal troops.

Note that in 2020, after three days of rioting and looting in D.C., including in and around Lafayette Square during which some 60 Secret Service and special agents “sustained multiple injuries” defending the White House, and St John’s Church was torched, D.C. Mayor Bower was more adamant about fending off  National Guard assistance than fending off protestors. She even went so far as to eject members of the Utah National Guard from a D.C. hotel, and, infamously, permitted 16th Street, NW, to be emblazoned with the words “Black Lives Matter.”

As for the book under being reviewed above, this is the start of its description at Amazon

The definitive biography of the most dangerous demagogue in American history, based on first-ever review of his personal and professional papers, medical and military records, and recently unsealed transcripts of his closed-door Congressional hearings.

If you want to actually understand McCarthy and his travails, this is the book you must read: Blacklisted by history : the untold story of Senator Joe McCarthy and his fight against America’s enemies by M. Stanton Evans. A revelation page after page.

Questions that need answers

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The answer to all questions is that none of this is to reduce racism and all of it is to undermine democracy and free market capitalism. Not only are these people ignorant and stupid, but they are psychologically deranged, along with, of course, also being ideological enemies.

There is then this from John Cleese who gets the dementia that has spread across the left who have no answers to any problems but are such psychological wrecks that ruining our societies, which aside from being the freest and most prosperous in history are also the least racist in any sense of the word. Where else would any of these fools live but in a first world economy with democratic control of the courts and the police? He has just put this out and in his tweet he asks another question, “Hard to tell if I recorded this 30 years or 10 minutes ago…”. This is the excerpt he included on his tweet.

Finally this, to remind you that as insane as all this is because for the moment we are protected behind a thin wall of common sense, just imagine what this might mean: “Why Trump-Biden race is much closer than you think”.

And you do know that the Hitler we know from history was experienced as a different sort of person before the War began in 1939. The left are not just ideological enemies, they are fools who are shallow and uninformed to a fantastic degree.

HERE IS THE JOHN CLEESE VIDEO IN THEIR MORE COMPLETE MODE: This is the five minute version. And while he was parodying the right side, he in any case got very close indeed to my own views about most of it.

This is the ten minute version.

Slaves to political fashion

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From the comments on SAY IT AIN’T SO, HORATIO!.

And as we all know, all races have been slaves and all races have owned slaves. I believe that Saint Patrick was a Roman Briton who was kidnapped and enslaved by the Irish.

8.25 million slaves by the Ottoman Empire 1441-1830 CE, mostly from Russia.
The Khan of Crimea was depopulating southern Russia with slave raids – it’s how they made their money – until Catherine The Great finally ended it by conquering Crimea in 1774.

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The Ottoman Empire continued slave raiding until the USA’s Barbary Wars. Instead of paying ‘tribute’, we sent the US Marines with our new US Navy.

“The Mayor of London, Sadiq Khan.” Let that sink in.

Reporter: Do you support tearing down the statue of Cecil Rhodes?
Student: Yes I do.
Reporter: Why?
Student: Well, actually, I’m not exactly sure who he is.

Why call these people ‘activists’ and ‘protestors’ when they are clearly terrorists and criminals? This is why we keep losing all debates .. we open by conceding our opponents premises.

“On 25 March 1807 Britain formally abolished the Slave Trade, prohibiting British subjects from trading in slaves, crewing slave ships, sponsoring slave ships, or fitting out slave ships. The Act also included a clause allowing the seizure of ships without slave cargoes on board but equipped to trade in slaves.”-Wikipedia

Every single aspect of BLM and it’s adjuncts are evil. Tearing down the monuments, burning down cities, destroying peoples’ reputations, getting people fired, erasing deceased people, cancelling speeches, stealing valor . . . and so on. No one can look at any one aspect of this and not be frightened, let alone all of it. And yet nobody knows what to do about it.

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