Almost Classical

Economists agree on more than they disagree. This might seem like an exaggeration, since the debates on policy are so heated. But policy debates are not about the resolved math or well-established theories within economics. Instead, policy debates are driven by value judgments. What economists and their colleagues in behavioral science, data science, psychology, linguistics, rhetoric (my little niche) and elsewhere can agree on are some rather basic tested notions. What we disagree on is what makes for a "good and righteous" society — and even if we want a values-based government at all. Charles Wheelan 's Naked Economics: Undressing the Dismal Science is 15 years old. Yet, the book reminds me that until recently there was generally more agreement than disagreement within the field of economics and its associated disciplines. I'm rereading Naked Economics  because the hyperbolic rhetoric from the left and right, which are not even that extreme in the United St...

For once, a post that agrees with Paul Krugman. He makes an argument I have advanced on this blog and I agree with his general premise that now is the ideal time for some infrastructure spending. See:  Ideology and Investment - NYTimes.com There’s an obvious policy response to this situation: public investment. We have huge infrastructure needs, especially in water and transportation, and the federal government can borrow incredibly cheaply — in fact, interest rates on inflation-protected bonds have been negative much of the time (they’re currently just 0.4 percent). So borrowing to build roads, repair sewers and more seems like a no-brainer. . I've posted an identical call for (sane and limited) infrastructure spending. We have billions of dollars in deferred maintenance that must be done. Now is the ideal time, with low bond rates and an anemic economy. I'm not calling for or supporting reckless spendthrift approaches to investment. I don't like waste (high speed r...

Repeatedly, I have written that "austerity" is not the source of problems in parts of Europe, since there hasn't been any real reduction in spending, no thoughtful labor reforms, and no general political reforms. Tax increases have certainly hurt in some nations, but overall the lack of serious change is the problem. Also consider Japan, where stimulus in the form of spending and monetary easing hasn't worked — though it is the "solution" proposed by many progressives. I'm not an absolutist, as the real solutions to economic stagnation are likely beyond simplistic and ideological adherence to any school of thought. Everything the Keynesians argue for, is and has been done. Yet, there is stagnation. The following article from Forbes  supports my views: 'Austerity' To Blame? But Where's The Austerity? http://www.forbes.com/sites/paulroderickgregory/2013/05/26/austerity-to-blame-but-wheres-the-austerity/ by Paul Roderick Gregory D...

Last week when Paul Krugman debated Joe Scarborough, the economist accused Scarborough of "ad hominem" attacks when confronted with his own past statements. What bothers me most about Krugman's charge is that he is often guilty of name-calling and hyperbole. Krugman's disdain for his opponents is cheered by like-minded progressives, but isn't this no better than the name calling on talk radio or on the Web? http://www.politicalruminations.com/2012/10/a-collection-of-15-quotes-about-paul-ryan-and-the-ryan-plan-by-economist-paul-krugman.html The most cited line from Krugman about Ryan is actually borrowed: As usual, Ryan makes me think of Ezra Klein's old line about Dick Armey: he's a stupid person's idea of what a smart person sounds like. — http://krugman.blogs.nytimes.com/2011/11/18/delusions-of-mobility/ I wish we could acknowledge that our "opponents" in politics, economics, philosophy, or any other discipline are not evil. We di...

Paul Krugman, at what is now his usual best (worst) as a columnist, managed to make so many false statements in one column that I lost count. And his loyal readers will never appreciate the facts, much less accept the reality that most libertarian-leaning (which is not "right-wing") economists did foresee the housing bubble and other financial failures on the horizon. Defending Cato from Paul Krugman's Inaccurate Assertions | Cato @ Liberty DANIEL J. MITCHELL If Krugman had bothered to spend even five minutes perusing the Cato website, he would have found hundreds of items by scholars such as Steve Hanke, Gerald O’Driscoll, Bert Ely, and others about misguided government regulatory and monetary policy. He could have perused the remarks of speakers at Cato’s annual monetary conferences. He could have looked at issues of the Cato Journal. Or our biennial Handbooks on Policy. The tiniest bit of due diligence would have revealed that Cato was not a fan of Federal Reserve...

I agree with this analysis, which was featured on CNBC. The stock market is in a bubble. Witness the differences between Apple and Amazon: Apple beats projections and the stock falls, Amazon misses earnings targets and by some strange logic of "improving margins" rises. We are witnessing institutional investors moving from bonds globally into equities (stocks). The casual investor ("retail investor") is also moving back into the market. Sounds a lot like 1999 and 2007. In the period from 1999 to 2003 or so, the Fed lowered rates and created liquidity. That masked some underlying issues -- not the least of which is governmental debts at the local, state, and federal level. Investors seek returns, and money in a low-interest economy moves to either bond price gaming or equities. Stocks and commodities rise as the dollar falls: inflationary, in Austrian/Chicago terms, not the same as consumer inflation (a point I've made several times, since Paul Krugman and othe...

Paul Krugman is at it again, either intentionally misleading readers or demonstrating an odd lack of familiarity with an economic theory. I'm assuming he is misrepresenting the theory he discusses and is misleading readers. Broken Windows and the iPhone 5 http://krugman.blogs.nytimes.com/2012/09/11/broken-windows-and-the-iphone-5/ September 11, 2012 There's been some buzz about a report suggesting that the iPhone 5 could, all by itself, give a significant boost to the US economy. The key point is that the optimism about the iPhone's effects has nothing (or at any rate not much) to do with the presumed quality of the phone, and the ways in which it might make us happier or more productive. Instead, the immediate gains would come from the way the new phone would get people to junk their old phones and replace them.   In other words, if you believe that the iPhone really might give the economy a big boost, you have — whether you realize it or not — bought into a versi...

Many in the chattering class, especially the economists and politicians on the left, keep telling us "Austerity has failed!" No, austerity hasn't been tried. I won't even bother with links to Paul Krugman's near-daily calls for stimulus — and inflation — in Europe, which would require a complete disregard for European experiences and German biases towards savings and low-inflation. Such economic arguments are beyond silly: convince Germans that an 11 percent savings rate is a bad idea? Really? Cause inflation in the hopes it will force Germans to spend money? Krugman and other economists can suggest these solutions because they know, they must know, that German citizens are not about to go on a spending binge and buy Greek, Spanish, or Italian goods. Yes, Germans really do save more than 11.4 percent of their income. And for ten years, Germany employed true austerity and labor reforms. They loosened labor restrictions (compared to the rest of Europe), slowed...

When Paul Krugman and other progressives talk about the risks of austerity in Europe, they are forgetting a basic fact: Europe and Japan are getting grayer and grayer. There are more retirees than young people, and that means lower and lower rates of productivity. I often cite two authors willing to confront this truth: Megan McArdle and Robert Samuelson. In the April 2012 issue of The Atlantic, McArdle bluntly assesses the issue of a graying population in the Western nations. It is a problem the United States will soon experience, too. First, a few paragraphs from the lengthy McArdle piece. You absolutely should read the entire article. (If you don't read The Atlantic, you should.) Europe's Real Crisis The Continent's problems are as much demographic as financial. They won't go away soon. By MEGAN MACROCELL  http://www.theatlantic.com/magazine/archive/2012/04/europe-8217-s-real-crisis/8915/   Italy's fertility rate has actually been inching up from it...

This is an extremely long post — this topic is one I feel almost daily since entering academia. I've heard many colleagues discuss the evils of business and capitalism, and then they ask what I did before joining an English Department faculty. I generally omit most of my experiences and focus on my creative writing. Many of us "capitalists" believe there is a gulf between some academic disciplines and the larger community. Outside business schools and some of the sciences, I know my experiences and beliefs will be insulted or dismissed, usually with "respect" and other polite framing that barely masks derision. People wonder why there is such deep division in our culture? We've become entrenched in dichotomies, when life is not binary (except for the ideological extremists, I suppose). Writing instruction and rhetoric in particular seems entangled in political views. We enter this field with the idea of changing something. You don't teach communica...

Paul Krugman, unfortunately, is the dominant voice among left-leaning economists. His columns are too often a sad example of what passes for great intellectual insight from the Coastal Elites in today's United States. Consider this series of logical leaps: Moochers Against Welfare   By PAUL KRUGMAN Published: February 16, 2012  [The] regions in which government programs account for the largest share of personal income — are precisely the regions electing those severe conservatives. Wasn't Red America supposed to be the land of traditional values, where people don't eat Thai food and don't rely on handouts? Krugman is a master of misleading arguments, resorting to a mix of straw man arguments and ad hominem insults that are meant to belittle conservative voters. Why the use of the word "moochers" for people on aid? If the goal is to make a point that people on aid are not  moochers, Krugman fails. Instead, his use comes across as insulting. A moocher...

As I've written before, Paul Krugman exemplifies a problem with modern economics: his views swing with the politics of his choosing. For research supporting my assertion, see the post: http://almostclassical.blogspot.com/2010/06/do-economists-change-their-tune-on.html The New Year's Day column by Krugman is that frustrating mix of absolutely right and definitely wrong that come from economists. Again, I've posted on the astounding lack of accuracy among economists of all political persuasions, so this isn't a left/right debate: I'm opposed to the "scientism" behind dominant economic thought. Krugman's column left me with a dozen issues I want to address, so forgive the length of this post. I have beliefs (and they are beliefs) about economics that run counter to Krugman in several ways. At the same time, the differences between most (roughly) free-market economists and thinkers isn't as great as the media or the scholars might have the publ...

Paul Krugman Is Still Wrong about Texas - By Kevin D. Williamson - Exchequer - National Review Online Kevin D. Williamson, deputy managing editor of National Review, makes several points I have been making to individuals when they suggest that the Texas economy is either "dumb luck" or simply an illusion. Left-leaning commentators, and I include Paul Krugman in that category (he long ago surrendered his economics qualifications, as I've explained in previous posts), are avoiding serious comparisons of economic models across various states. The right is no better, but I used to expect better statistical analyses from Krugman. What, indeed, does population growth have to do with job growth? Professor Krugman is half correct here — but intentionally only half correct: A booming population leads to growth in jobs. But there is another half to that equation: A booming economy, and the jobs that go with it, leads to population growth. Texas has added millions of people and ...