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(The New York Times)   Some economist says we shouldn't trust some economists concerning the U.S. economy   (nytimes.com) divider line 209
    More: Interesting, Easy Useless Economics, United States, U.S. economy, making excuses, current affairs, fiscal stimulus, American Economic Review, economists  
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1899 clicks; posted to Politics » on 11 May 2012 at 6:42 PM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-05-11 09:58:38 PM

bootman: Laffer curve disciples simply claim we didn't cut taxes *enough*.
It works, it just does not do what its proponents think it does.


It's not that the Laffer Curve works, but that it's merely supposed to be a simple, non-specific sweeping generalization of taxes and revenues using polar opposite extremes to accentuate the bell curve. It is woefully inefficient at differentiating the various types of taxes, the additive value of each (and their role at the federal/state/municipal level), and other nitty gritty stuff. It just doesn't go there. Implementing actual tax strategy is far more complicated than the Laffer Curve lets on.

So while it is true, it's only true insomuch as it's a philosophical thought experiment. It has no practical application beyond that. Certainly not enough substance to construct an entire economic platform around.

Those are the only two data points on the Laffer Curve, but they are functionally useless -- taxes will NEVER be set at either 0% or 100%, so what good is it illustrating that neither will bring revenue? Great, Arthur, thanks for warning us about something we were never going to do.
 
2012-05-11 10:08:53 PM

DavidVincent: fusillade762: aaronx: Happily, these people have long histories of trying to explain the current economy. All you have to do to compare two economists is to check who was correct more often.

Krugman was one of the few who saw the housing crisis coming, iirc. The bulk of economists (including those in the Fed) seemed to think property values would continue to increase indefinitely.

Did he?

Here are some statements that seem to indicate he was optimistic on housing. I think he has come out in hindsight (he's an economist) and said he knew it was a bubble.


That's pretty weak tea, friend.
 
2012-05-11 10:10:16 PM

bootman: I thought that with Keynes it was the exact opposite. It does not matter what it is spent on because everything that is spent (not saved, invested or destroyed) is automatically converted into someone else's income.


No. The money MUST move north-south. It must move from rich to poor to middle back to rich. It doesn't matter who has the money so long as it keeps moving. It's like the water cycle -- if it stops, everyone dies of dehydration.

Currently, most of the money is not moving north-south. It is moving laterally, from richie to richie. What supply-side has created is an insulated money vortex among the upper classes where the money just keeps getting passed through various financial portfolios like cards, increasing the value of each and spiraling their paper-wealth up through the stratosphere. They sit on each other's Boards, they invest in each other's companies, they buy stocks from each other, and they prop up each other's holdings like sheeves of corn. It's good business if you can get into this little circle, because it doesn't interact with the outside world, all investments are no-risk, and all money ventures are safe, protected and guaranteed. Boom or bust, they are always the first to profit and the last to suffer.

Reagan's policies have, in effect, created a culture of insulated elites so divorced from the extreme consequences of their decision-making that they are barely-affected by anything going on in the country around them. They then use their power and influence to control policy and insulate themselves further and even as standard of living grows more decrepit, their lives are unaffected and they fight to ensure that things remain this way (in other words, they don't care how bad things get so long as they remain on top).
 
2012-05-11 10:13:42 PM

jso2897: This is what I try and fail to get across to today's crop of so-called "conservatives". The wealth gap is reaching the levels that predated the Great Depression, and it is a real problem. When too much money accumulates in the pockets of those who are not spending it, and don't need to, the economy slides inexorably downhill. And eventually, it will drag most of the wealthy with it.
It is in the best interests of America's wealthy to transfer more pf their wealth to their poorer countrymen in the long run, and indeed, smart rich people like Gates and Buffet understand this. The best thing we could do right now would be move Cap Gains up to regular levels, and slap a 15% addition on the top bracket, and spend every dime on extended unemployment benefits and welfare payments. That's right folks - strip the money from the "producers" and give it to the "bums". In the real world, it's the right thing to do, and I'm not afraid to say it.


QFT...1000x QFT
 
2012-05-11 10:16:39 PM

Ishkur: It's like the water cycle -- if it stops, everyone dies of dehydration.


Link

Link
 
2012-05-11 10:20:15 PM

o5iiawah: Then you need to read Hayek, who acknowledges that as much as men try to manipulate and understand the economy, they havent got a farking clue.


Yes, but the problem with Hayek -- and all Austrians, for that matter -- is that they run screaming like retards in the opposite direction. So while no one can understand everything completely about economics, the Austrians know even less (in addition to their theories being completely farking useless).

Austrian Economics consists entirely of ideological catchphrases, talking points and flowing rhetoric deliberately left open to interpretation. It has no scientific basis or any practical application, and it conflicts with obvious empirical data (the Austrian school is in opposition to empiricism. Its papers use no math, in a subject that is all about math). One of the most distinguishing characteristics of most followers of the Austrian school is that they often display a gross misunderstanding of modern economics.
 
2012-05-11 10:25:36 PM
It's easy. Don't trust the wrong ones.

/also,don't trust the socialist or marxist ones in capitalist society.
 
2012-05-11 10:30:11 PM

Ishkur: o5iiawah: Then you need to read Hayek, who acknowledges that as much as men try to manipulate and understand the economy, they havent got a farking clue.

Yes, but the problem with Hayek -- and all Austrians, for that matter -- is that they run screaming like retards in the opposite direction. So while no one can understand everything completely about economics, the Austrians know even less (in addition to their theories being completely farking useless).

Austrian Economics consists entirely of ideological catchphrases, talking points and flowing rhetoric deliberately left open to interpretation. It has no scientific basis or any practical application, and it conflicts with obvious empirical data (the Austrian school is in opposition to empiricism. Its papers use no math, in a subject that is all about math). One of the most distinguishing characteristics of most followers of the Austrian school is that they often display a gross misunderstanding of modern economics.


Just as "Objectivism" is autism expressed as a personal philosophy, and "Libertarianism" is autism expressed as a political philosophy, the "Austrian School" is autism expressed as economic theory.
 
2012-05-11 10:32:27 PM
I work in purchasing for a subsidiary of a world wide automobile manufacturer.

My job is to source business to the lowest bidder and thus I am a true "Job creator". The decisions I make on a daily basis can make or break tier 2 and three suppliers, the lifeblood of the US economy. The problem is that the places that submit the lowest bids do not pay their employees enough to purchase my end products.

Without buyers for my products, I have to find ways to make them cheaper. As I make them cheaper, less people can buy the products we sell.

Why do the dipshiats in charge not grasp the bigger picture here? Source items that are a little higher cost for the benefit of having customers? Is this such a difficult concept?
 
2012-05-11 10:36:30 PM

Chimperror2: It's easy. Don't trust the wrong ones.

/also,don't trust the socialist or marxist ones in capitalist society.


i18.photobucket.com
No fak u Gooby.
 
2012-05-11 10:44:37 PM

Ishkur: Yes, but the problem with Hayek -- and all Austrians, for that matter -- is that they run screaming like retards in the opposite direction. So while no one can understand everything completely about economics, the Austrians know even less (in addition to their theories being completely farking useless).

Austrian Economics consists entirely of ideological catchphrases, talking points and flowing rhetoric deliberately left open to interpretation. It has no scientific basis or any practical application, and it conflicts with obvious empirical data (the Austrian school is in opposition to empiricism. Its papers use no math, in a subject that is all about math). One of the most distinguishing characteristics of most followers of the Austrian school is that they often display a gross misunderstanding of modern economics.


You were doing so well before you started spouting off a bunch of strawmen thinking you're accurately describing what Austrian theory says about anything.

/this is Fark, though, so it's no surprise that I see it so often
 
2012-05-11 10:55:25 PM

jso2897: Ishkur: o5iiawah: Then you need to read Hayek, who acknowledges that as much as men try to manipulate and understand the economy, they havent got a farking clue.

Yes, but the problem with Hayek -- and all Austrians, for that matter -- is that they run screaming like retards in the opposite direction. So while no one can understand everything completely about economics, the Austrians know even less (in addition to their theories being completely farking useless).

Austrian Economics consists entirely of ideological catchphrases, talking points and flowing rhetoric deliberately left open to interpretation. It has no scientific basis or any practical application, and it conflicts with obvious empirical data (the Austrian school is in opposition to empiricism. Its papers use no math, in a subject that is all about math). One of the most distinguishing characteristics of most followers of the Austrian school is that they often display a gross misunderstanding of modern economics.

Just as "Objectivism" is autism expressed as a personal philosophy, and "Libertarianism" is autism expressed as a political philosophy, the "Austrian School" is autism expressed as economic theory.


THESE.

Hydra: You were doing so well before you started spouting off a bunch of strawmen thinking you're accurately describing what Austrian theory says about anything.

/this is Fark, though, so it's no surprise that I see it so often


Feel free to point out said strawmen and/or explain what you think Austrian theory says.
 
2012-05-11 11:05:19 PM
 
2012-05-11 11:08:26 PM

Gunther: o5iiawah: krugman said that 9/11 would stimulate the economy in NYC. I dont take a word he says seriously.

Question; what do you think of the various studies that have found him to be the most accurate pundit when it comes to predicting future trends?



I've never heard of Hamilton College. Is it a JC?
 
2012-05-11 11:17:01 PM
While I will readily admit I do not read Krugman on a regular basis, so it would be unfair to say the man has never met a debt he did not like. I would be equally unfair to claim he has NEVER talked about the actual cost to the economy of our debt.

That being said, it seems as if he discounts the actual cost of additional debt on the economy and that if we only borrow more, our problems can be solved.

Unfortunately, as it stands right now, government revenue is approximately $2.3 trillion and the yearly interest payments are roughly $400 billion, a figure approaching 20% of income. This is a staggering amount even if we do not add to the debt, which unfortunately, given the path we are on, will only increase dramatically.

I will not argue against the idea that temporary deficits can help a struggling economy, but unfortunately we are not talking about temporary deficits, we are dealing with deficits that are currently set on auto-pilot with, or without additional borrowing.

Unfortunately, austerity is going to have to play a part in any economic plan our country embarks on. Even if we can get to a point where we do not take on any additional debt, it would be a start and IMO unfortunately defense spending will have to play a part in these austerity measures.
 
2012-05-11 11:27:56 PM

jpo2269: the yearly interest payments are roughly $400 billion, a figure approaching 20% of income.


Government's income is not fixed. Both growing the economy and increasing tax rates (which, granted, can be a form of austerity) can increase it.

jpo2269: the actual cost to the economy of our debt


The interest rate on 10-year TIPS is currently NEGATIVE.

The government could borrow a buttload of money, spend it on literally anything with a return greater than inflation within 10 years, and come out ahead.

For example, hiring the unemployed to do stuff. It's hard for even a government project to be less useful than nothing.
 
2012-05-11 11:31:28 PM

NewportBarGuy: How else did the price spike over $20 per bbl in a single day in 2008? No supply disruptions, no economic chaos. Just a huge jump.


It could just mean the market is not "efficient".

Of course, I don't believe any market is efficient - there was a paper not long ago showing that even a weakly efficient market implies P=NP.
 
2012-05-11 11:33:18 PM

jpo2269: That being said, it seems as if he discounts the actual cost of additional debt on the economy and that if we only borrow more, our problems can be solved.


The way it's supposed to work is; you save during good times so you can spend to keep your economy afloat during bad. We've been spending during good times (which is idiotic). and now we've hit a bad patch we can either try to save with a depressed economy (suicidally idiotic), or borrow and spend until the economy has recovered enough to start saving safely again. Borrowing and spending sounds irresponsible, but it's actually by far the safer alternative.

jpo2269: Unfortunately, austerity is going to have to play a part in any economic plan our country embarks on.


The one thing we should have learned from Europe over the past two or three years is that austerity does not work. Not only does it depress a depressed economy even further, it doesn't even save you any goddamn money; as the Business Insider put it:

"The reason austerity doesn't work to quickly fix the problem is that, when the economy is already struggling, and you cut government spending, you also further damage the economy. And when you further damage the economy, you further reduce tax revenue, which has already been clobbered by the stumbling economy. And when you further reduce tax revenue, you increase the deficit and create the need for more austerity. And that even further clobbers the economy and tax revenue. And so on.

Basically, austerity puts you into a death spiral in which you keep trying to cut your way to prosperity, but all you end up doing is digging a bigger hole. And in the meantime, tens of millions of people are out of work, the economy is retrenching, and everything is generally miserable."


That is the situation much of Europe is facing right now, and it's a situation we can easily avoid.
 
2012-05-11 11:34:02 PM

Chimperror2: /also,don't trust the socialist or marxist ones in capitalist society.


To be fair, you shouldn't trust the capitalist ones in a capitalist society, either.
 
2012-05-11 11:36:52 PM

Hydra: You were doing so well before you started spouting off a bunch of strawmen thinking you're accurately describing what Austrian theory says about anything.


You have just made an eloquent, resourceful rebuttal full of facts and logic that completely dismembers my position on Austrians, backed with a plethora of citations and numerous unignorable datasets. How on Earth can I possibly go on when matched against such astute wisdom and matter-of-fact clarity of thought?
 
2012-05-11 11:45:11 PM
Gunther Smartest
Funniest
2012-05-11 11:33:18 PM


jpo2269: That being said, it seems as if he discounts the actual cost of additional debt on the economy and that if we only borrow more, our problems can be solved.

The way it's supposed to work is; you save during good times so you can spend to keep your economy afloat during bad. We've been spending during good times (which is idiotic). and now we've hit a bad patch we can either try to save with a depressed economy (suicidally idiotic), or borrow and spend until the economy has recovered enough to start saving safely again. Borrowing and spending sounds irresponsible, but it's actually by far the safer alternative.

jpo2269: Unfortunately, austerity is going to have to play a part in any economic plan our country embarks on.

The one thing we should have learned from Europe over the past two or three years is that austerity does not work. Not only does it depress a depressed economy even further, it doesn't even save you any goddamn money; as the Business Insider put it:

"The reason austerity doesn't work to quickly fix the problem is that, when the economy is already struggling, and you cut government spending, you also further damage the economy. And when you further damage the economy, you further reduce tax revenue, which has already been clobbered by the stumbling economy. And when you further reduce tax revenue, you increase the deficit and create the need for more austerity. And that even further clobbers the economy and tax revenue. And so on.

Basically, austerity puts you into a death spiral in which you keep trying to cut your way to prosperity, but all you end up doing is digging a bigger hole. And in the meantime, tens of millions of people are out of work, the economy is retrenching, and everything is generally miserable."

That is the situation much of Europe is facing right now, and it's a situation we can easily avoid.


It is not that I disagree with what you are saying, but there is a point where taking on additional debt increases the need to have austerity measures. IMO we are at the point where each dollar in debt we take on actually has a multipier effect. There will come a time, in the not so distant future when our debt consumes everything we pay in taxes. Yes, "growing our way out" is the best answer, but unfortunately we have reached a point where we cannot borrow our way out of this mess.
 
2012-05-11 11:52:15 PM

jpo2269: Unfortunately, austerity is going to have to play a part in any economic plan our country embarks on


It will, but not until after the last Boomer dies.

In typical Boomer fashion, they don't plan to pay for anything. The debt is pretty much the Official Baby Boomer Unpaid Party Tab. You think they're going to stick around in the morning to help clean up this mess they made? ....course not. They're going to retire in splendor, raid the government coffers and stuff themselves with enough drugs to completely numb the horror of encroaching mortality. And there's nothing we can do do stop them because they're all in power, they outnumber all other demographics, and they'll continue to vote themselves more entitlements and benefits.

This is one of the things that OWS is upset about.
 
2012-05-11 11:52:22 PM
So, the fact that the United States is in long-term decline is not a structural issue? I would say the lack of demand identified by Mr. Krugman is, in fact, evidence of a fundamental problem. But not a problem of skills, it's a problem of consumption. As more money has made its way into the coffers of the few, the consumers in society, the strong middle class, has all but faded away. The bifurcation of the economy is not good for the overall health of the country.
 
2012-05-11 11:53:33 PM
Krugman and Brooks need to f*ck and get it over with.
 
2012-05-11 11:54:01 PM

DavidVincent: I've never heard of Hamilton College. Is it a JC?


It's one of the so-called "Little Ivies." In 2011, it was ranked 17th in the nation among liberal arts colleges by US News. Alumni include Elihu Root, Ezra Pound, and B.F. Skinner.
 
2012-05-11 11:55:08 PM

jpo2269: It is not that I disagree with what you are saying, but there is a point where taking on additional debt increases the need to have austerity measures. IMO we are at the point where each dollar in debt we take on actually has a multipier effect. There will come a time, in the not so distant future when our debt consumes everything we pay in taxes. Yes, "growing our way out" is the best answer, but unfortunately we have reached a point where we cannot borrow our way out of this mess.


Pretty much your point in graphical form

endoftheamericandream.com

More debt is not the answer. We really do need to get our financial house in order. Sorry, Krugman, just raising taxes is not going to cut it.
 
2012-05-11 11:55:48 PM

BMulligan: It's one of the so-called "Little Ivies." In 2011, it was ranked 17th in the nation among liberal arts colleges by US News.


17th in liberal arts, 1286th in legitimate employment after graduation.
 
2012-05-11 11:59:04 PM

HeadLever: Pretty much your point in graphical form

[endoftheamericandream.com image 640x466]


There's some pretty massive assumptions built into that graph about interest rates as well as future deficits for entitlement programmes...
 
2012-05-12 12:00:18 AM
Gaseous Anomaly Smartest
Funniest
2012-05-11 11:27:56 PM


jpo2269: the yearly interest payments are roughly $400 billion, a figure approaching 20% of income.

Government's income is not fixed. Both growing the economy and increasing tax rates (which, granted, can be a form of austerity) can increase it.

jpo2269: the actual cost to the economy of our debt

The interest rate on 10-year TIPS is currently NEGATIVE.

The government could borrow a buttload of money, spend it on literally anything with a return greater than inflation within 10 years, and come out ahead.

For example, hiring the unemployed to do stuff. It's hard for even a government project to be less useful than nothing.


Well, the current interest rate while very low, is not zero, so even at cheap rates every dollar we borrow increases the debt by more than the amount borrowed.

While I do agree with you, government receipts are not set in stone and will grow and contract as a function of the economy, it is safe to say borrowing more money will not grow us out of this structual problem, nor will borrowing money set this economy on fire.

Absent any concrete actions, our $16 trillion debt will continue to grow and will do so at a rate that out grows our ability to grow our way out of this mess.
 
2012-05-12 12:02:49 AM

Shaggy_C: 17th in liberal arts, 1286th in legitimate employment after graduation.


Typical conservative - contemptuous of education and critical thinking.

BTW, among modern economists, Hyman Minsky FTW.
 
2012-05-12 12:05:29 AM

jpo2269: IMO


verydemotivational.files.wordpress.com
 
2012-05-12 12:11:40 AM

BMulligan: Typical conservative - contemptuous of education and critical thinking.


Hey, one of the degrees I earned in college was a BA. It was interesting and fun, sure, but it was in no way going to be a moneymaker. I feel sorry for the people who took those classes seriously as a starting point for their future careers.
 
2012-05-12 12:16:18 AM

make me some tea: That's interesting.

World War II was the largest per capita era of wealth redistribution the world has ever seen.


Yeah, it went from the dead people to the alive people while spurring a vast increase in American productive capacity and giving Europe a really good reason to build a bunch of new infrastructure. From the ground up so to speak.

Let's kill a bunch of people in another world war!

Unless you're seriously into doing some serious central planning. In which case, I recognize that as a valid viewpoint, but do not adopt it personally.
 
2012-05-12 12:18:30 AM

Shaggy_C: BMulligan: Typical conservative - contemptuous of education and critical thinking.

Hey, one of the degrees I earned in college was a BA. It was interesting and fun, sure, but it was in no way going to be a moneymaker. I feel sorry for the people who took those classes seriously as a starting point for their future careers.


Well, you know, not everyone is cut out to make it in trade school. The world needs policy makers too, I guess.
 
2012-05-12 12:18:38 AM
Sorry Wendi, not sure what you are trying to say...
 
2012-05-12 12:20:07 AM

Unimpressed Man: make me some tea: That's interesting.

World War II was the largest per capita era of wealth redistribution the world has ever seen.

Yeah, it went from the dead people to the alive people while spurring a vast increase in American productive capacity and giving Europe a really good reason to build a bunch of new infrastructure. From the ground up so to speak.

Let's kill a bunch of people in another world war!

Unless you're seriously into doing some serious central planning. In which case, I recognize that as a valid viewpoint, but do not adopt it personally.


Yeah. Roads and space programs are only good if they're preceded by massive death tolls.
 
2012-05-12 12:24:05 AM

BMulligan: Well, you know, not everyone is cut out to make it in trade school. The world needs policy makers too, I guess.


Funny, I'm pretty sure "Economics", "Finance", and "Political Science" are all science degrees, not arts.
 
2012-05-12 12:27:47 AM

jpo2269: Sorry Wendi, not sure what you are trying to say...


I'm trying to say your opinion is shiat.

Take this for example...

Well, the current interest rate while very low, is not zero, so even at cheap rates every dollar we borrow increases the debt by more than the amount borrowed.

While I do agree with you, government receipts are not set in stone and will grow and contract as a function of the economy, it is safe to say borrowing more money will not grow us out of this structual problem, nor will borrowing money set this economy on fire.

Absent any concrete actions, our $16 trillion debt will continue to grow and will do so at a rate that out grows our ability to grow our way out of this mess.


That's almost a paragraph of nothing. I'll give you your props though. That's the kind of BS that'll get you a recurring spot on Morning Joe.
 
2012-05-12 12:29:12 AM

HeadLever: jpo2269: It is not that I disagree with what you are saying, but there is a point where taking on additional debt increases the need to have austerity measures. IMO we are at the point where each dollar in debt we take on actually has a multipier effect. There will come a time, in the not so distant future when our debt consumes everything we pay in taxes. Yes, "growing our way out" is the best answer, but unfortunately we have reached a point where we cannot borrow our way out of this mess.

Pretty much your point in graphical form



More debt is not the answer. We really do need to get our financial house in order. Sorry, Krugman, just raising taxes is not going to cut it.


You post that chart in every. farking. thread.

It's a hypothetical projection from the INTRO to a 2009 report. It hasn't come true and it will never come true.

And yet you keep posting it. You sound like a parrot, repeating noises you don't understand.
 
2012-05-12 12:30:59 AM

Shaggy_C: BMulligan: Well, you know, not everyone is cut out to make it in trade school. The world needs policy makers too, I guess.

Funny, I'm pretty sure "Economics", "Finance", and "Political Science" are all science degrees, not arts.


You can get a B.A. in any of those fields. Did you even go to college?
 
2012-05-12 12:34:42 AM

Wendy's Chili: You can get a B.A. in any of those fields. Did you even go to college?


You can also get an associates degree in them too. What's your point?
 
2012-05-12 12:34:47 AM

HeadLever: Pretty much your point in graphical form


Would you stop posting that farking graph? It doesn't even have any farking resonance with anything resembling real life.
 
2012-05-12 12:37:20 AM

Shaggy_C: Wendy's Chili: You can get a B.A. in any of those fields. Did you even go to college?

You can also get an associates degree in them too. What's your point?


The point is that economics and political science are classic elements of the liberal arts curriculum. So are the hard sciences, for that matter.
 
2012-05-12 12:38:01 AM

quatchi: Feel free to point out said strawmen and/or explain what you think Austrian theory says.


Alright. Since you're referring directly to Ishkur's post, I'll do it in the context of some of his charges since fully explaining the Austrian school would make this post as long as a book.

Before I begin, though, let me give you a link to a video that does a fairly good job of giving a quick overview of the Austrian school (not a complete overview of any of the economic theories they propose, by any means, but certainly a fair explanation of some of the main ideas that drive many of the economic theories that Austrians have come up with - I should point out that this guy in the lecture separates Rothbard and Anarcho-Capitalism from the Austrian school as he explains it here; not sure Rothbard himself would agree, but it's probably to try to draw a distinction between Rothbard's anarchism and the rest of the Austrian school considering the kind of connotation just the word "anarchism" has; it's a minor detail in the context of this lecture, really).


Ishkur: Yes, but the problem with Hayek -- and all Austrians, for that matter -- is that they run screaming like retards in the opposite direction. So while no one can understand everything completely about economics, the Austrians know even less (in addition to their theories being completely farking useless).

Austrian Economics consists entirely of ideological catchphrases, talking points and flowing rhetoric deliberately left open to interpretation.


Strawman number 1. He just calls their theories retarded and completely farking useless while failing to point out any of these "ideological catchphrases," which is surprising if they're so numerous.


It has no scientific basis or any practical application, and it conflicts with obvious empirical data (the Austrian school is in opposition to empiricism. Its papers use no math, in a subject that is all about math).

This has been an area of legitimate debate among economists of ALL schools for decades now, and certainly one of the most legitimate criticisms of modern-day economics is the use of faulty mathematics and misleading statistics. Ed Leamer published a well-known (among economists, at least) article titled "Let's take the con out of econometrics" about this very subject. Too many economists at the time had "physics-envy" and were so hellbent on turning economics into a mathematically-oriented profession while paying little attention to the human element (which is why your posts looked so promising in the beginning since you seemed to understand this concept). Their assumptions blow up once you include the fact that people are not numbers - EVERY single person is different from every other person. There certainly are similarities, but those nuanced differences that make each one of us unique matter a HUGE amount when trying to pigeonhole people into economic situations.

The housing crisis is a perfect example of how putting too much trust in mathematical models and statistics can lead to bad outcomes. There was a plethora of statistics which everyone had at their disposal during the boom that became nothing more than a rorschachs test of a person's opinion on the economy - you could end up reading into them whatever you want depending on how you gathered them, tested them, modeled them, and poked and prodded them until they told you what you wanted them to tell you in the first place. A perfect example of this is when the New York Fed published a paper in 2004 that concluded there was no housing bubble - when the bubble was staring it right in the face.

Having said all of this, there is something to be said for the use of empirical data in support of an economic theory, and this was Milton Friedman's critique of the Austrians - here's an interesting speech he gave on that topic (among others). Empirical data, so long as it's gathered honestly and tested correctly and transparently, can teach us a lot about economic action and the consequences of economic decisions and policies. It's sort of like using dynamite to mine in a quarry - so long as you use it properly and for the right reasons, it can be useful; if you abuse it or use it the wrong way, you end up blowing yourself up.

The path that modern economics has taken has arguably gotten too mired in the mathematics and modelling while often dismissing the context - failing to see the forest for the trees, so-to-speak - and the Austrians are the ones at the other end of the spectrum trying to get the Keynesians and Chicagoans to recognize this. Like I said, it shouldn't be negated entirely, and that was one of Friedman's many contributions to economics - just don't put all of your eggs in that basket.


One of the most distinguishing characteristics of most followers of the Austrian school is that they often display a gross misunderstanding of modern economics.

Once again, he needs to give an example of this (it's actually hard to call this a strawman when he fails to construct much of an argument in the first place).

In my experience (here on Fark and elsewhere), Austrians can oftentimes articulate the mainstream Keynesian theory better than many Keynesians can. They fail to agree with Keynes because they can see the shortcomings of his theories (e.g. a multiplier that's unproven and often assumed in Keynesian studies, a dismissal of the role of savings in an economy, the role of interest rates in an economy - Keynes actually advicated for ALL interest rates to be set at ZERO in his General Theory, etc.).


Ishkur: You have just made an eloquent, resourceful rebuttal full of facts and logic that completely dismembers my position on Austrians, backed with a plethora of citations and numerous unignorable datasets. How on Earth can I possibly go on when matched against such astute wisdom and matter-of-fact clarity of thought?


Aside from a few sweeping generalizations (with the same lack of examples you accused me of, I might add), you have yet to make any actual positions or arguments on anything.


Shaggy_C: So, the fact that the United States is in long-term decline is not a structural issue? I would say the lack of demand identified by Mr. Krugman is, in fact, evidence of a fundamental problem.


Agreed.


But not a problem of skills, it's a problem of consumption. As more money has made its way into the coffers of the few, the consumers in society, the strong middle class, has all but faded away.

I agree, but for different reasons than what you probably meant.

It is a problem of consumption, but the problem is that we've had too much contemporary consumption (meaning consumption in past present times - if that made sense...) at the expense of future generations. Everyone likes consumption just like how they like getting drunk at a party - it's awesome while the effects of the alcohol are coursing through your system as you take your shirt off and pee on things that aren't the toilet, but the after-effects are a biatch (boom to bust). No politician in his right mind was going to get up and say, "Banks should tighten up their credit standards and stop making so many subprime loans!" while bankers were saying, "We probably shouldn't lend to this borrower who defaulted three times on his car payments and... oh hell, we're just going to package it up and sell it off, anyway, so we don't keep the credit risk on our books!" and the borrower was saying, "Wow! I've never owned a home before! And because prices keep going up, I'm making a pretty great investment, too! And since the price keeps appreciating by $50,000 every year, I can even quit my job!"


The bifurcation of the economy is not good for the overall health of the country.

Agreed - no one in his right mind wants rent seekers (I know you know what that means, but just for the benefit of anyone reading who doesn't) to get richer and the politicians to get more powerful by the abuse of the political system. The difficulty is deciding on a solution to the problem.
 
2012-05-12 12:41:30 AM

o5iiawah: Of course, real economists will laud the virtues of saving but meh..


Silly me, I thought economists were scientists seeking to understand the real world. Now, with your help I have learned that "real economists" are priests who expound virtue and morals.
 
2012-05-12 12:44:51 AM

Ishkur: HeadLever: Pretty much your point in graphical form

Would you stop posting that farking graph? It doesn't even have any farking resonance with anything resembling real life.


He always retreats to, "if you can't read a simple chart I'm not going to explain it."
 
2012-05-12 12:47:32 AM

Hydra: The path that modern economics has taken has arguably gotten too mired in the mathematics and modelling while often dismissing the context - failing to see the forest for the trees, so-to-speak - and the Austrians are the ones at the other end of the spectrum trying to get the Keynesians and Chicagoans to recognize this.


Yeah, you don't want to rely too much on evidence, data, empirical research and all that crap - Austrians know you just need to go with your gut. Sure, if you just look at the evidence, they're dumbasses, but if you listen to your gut, they're... still dumbasses, actually. I guess if you really love Ayn Rand it all makes sense or something.
 
2012-05-12 12:58:45 AM
www.conservativedailynews.com

Obummer has some strange priorities
 
2012-05-12 01:01:23 AM

Mildot: [www.conservativedailynews.com image 590x427]

Obummer has some strange priorities


Phony War on Women?

So I guess all those attempts by the GOP to curb abortion and reproductive care rights for women was all just a bad dream then?

Class envy? Which pretty much means anything short of kissing the ass of rich people job creators.

God that cheesy cartoon made me want to barf.

/Yes I'm Angry...my Cardinals lost!
 
2012-05-12 01:02:05 AM

Gunther: Yeah, you don't want to rely too much on evidence, data, empirical research and all that crap - Austrians know you just need to go with your gut.


It's actually more of a case of empirical evidence contradicting their theories so therefore they don't use it.
 
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