The Keynesian Track Record

Keynesian Economics is all the rage these days, especially since the global financial crisis that began in 2008. The basic gist of Keynesian Economics is:

"...that private sector decisions sometimes lead to inefficient macroeconomic outcomes which require active policy responses by the public sector, in particular, monetary policy actions by the central bank and fiscal policy actions by the government, in order to stabilize output over the business cycle."

In practice, on the fiscal policy side, this amounts to calls for increased government borrowing and spending, and sometimes reduced taxation.

One important part of the Narrative for those who believe (or believe in) Keynesian Economics is that what brought the world in general, and the United States in particular, out of the Great Depression, was the stimulative effect of the greatly increased federal government spending due to WWII.

Maybe so (or maybe not), but let's consider the other side of the equation.  In 1943, during the midst of WWII, Paul Samuelson (Nobel Prize in Economics, 1970) wrote[1]:

"When this war comes to an end, more than one out of every two workers will depend directly or indirectly upon military orders. We shall have some 10 million service men to throw on the labor market. ... The final conclusion to be drawn from our experience at the end of the last war is inescapable ... were we again planning  ... to shift from astronomical deficits to even the large deficits of the thirties–then there would be ushered in the greatest period of unemployment and industrial dislocation which any economy has ever faced."

That is what Keynesians believed - that we faced the "greatest period of unemployment and industrial dislocation which any economy has ever faced."

Yet, we did "shift from astronomical deficits to even the large deficits of the thirties" (spending dropped from 43% to 14% of GDP) and what happened?  I'll let President Truman answer [2]:

"During 1946, civilian employment approached 58 million. This was the highest civilian employment this Nation has ever known— 10 million more than in 1940 and several million higher than the wartime peak. If we include the military services, total employment exceeded 60 million. ... 

"Thus, at the end of 1946, less than a year and a half after VJ-day, more than 10 million demobilized veterans and other millions of war- time workers have found employment in the swiftest and most gigantic change-over that any nation has ever made from war to peace."

Samuelson's prediction based on the Keynesian narrative simply couldn't have been more wrong.  Instead of the "greatest period of unemployment and economic dislocation" we had "the swiftest and most gigantic change-over that any nation has ever made from war to peace."

The Keynesian narrative was extended to handle this and other rather significant exceptions.  Nonetheless, for those of us who haven't swallowed it hook, line, and sinker, it looks like the Keynesian narrative explains the relationship between government spending and economic health - except when it doesn't.

References

[1] Paul Samuelson, “Full Employment after the War,” in S.E. Harris, ed., Postwar Economic Problems, 1943.
[2] Harry Truman, "The Economic Report of the President", page 1, issued January 8, 1947

High-Fructose Corn Syrup

I received the following email from a student at a local high school.  Explorer is a lower school that my daughters went to at the same time as this student.  My reply is below.

Hello, 

My name is xxxxxxxxx, I am a former Explorer student who is now a rising junior at High Tech High. I decided to send this email to the families of Explorer and former Explorer students because it deals with an issue that is very relevant to parents and children. 

The issue in question is high-fructose corn syrup. For those of you who do not know, high-fructose corn syrup is a processed corn sweetener that is common in a wide array of foods. Many respected and unbiased institutions- such as Princeton University, the American Journal of Clinical Nutrition, etc. have conducted studies on this food additive and have concluded that it is likely a major contributor to the American obesity epidemic. HFCS may also be linked to diabetes, heart disease, cancer, and other illnesses.

Because of this, I have started a petition on the White House website asking the Obama administration to reduce the availability of high-fructose corn syrup. I urge all who care about health and nutrition to sign my petition: 

http://wh.gov/lCiH9

Thank you very much! And please forward this link to your colleagues, friends, etc. 

xxxxxxxxxx 

PS Making an account and signing is very easy and takes only seconds.

The following is my reply.

Dear xxxxxxxxx, 

I too share your concerns regarding the adverse nutritional impact of high-fructose corn syrup (HFCS) and commend you for your investigations in the area of human nutrition.  I also share your concern regarding the "American obesity epidemic" and associated disease states such as diabetes. 

However, I am unable to support your petition for many reasons. 

In addition to HFCS, there are a huge number of foods, drinks, and other consumables that have adverse effects on human health when consumed in large quantities: sugar, candy, cookies, cakes, pasta, bread, trans-fats, sodas, beer, wine, liquor, and tobacco to name just a few.  HFCS doesn't even lead the list in terms of adverse impact on human health and life expectancy (that dishonor is held by tobacco).  If it's helpful to restrict HFCS in order to enhance the health of Americans, clearly it would be helpful to restrict or eliminate many of these other items as well. 

However, with the exception of tobacco, none of the things on this list, including HFCS, have adverse impacts on health when used in moderation by healthy people.  In addition, eating is a fundamental activity of humans (all animals), and the joy of consuming the "treats" on the list is substantial and should not be discounted.  In my opinion, nobody should make the tradeoff of the enjoyment of eating versus potential health effects for someone else, including you and the Obama administration. 

As you note in your petition, the government provides agricultural subsidies to corn farmers.  While I would support eliminating corn subsidies, the idea of adding restrictions on corn based products while subsidizing corn production makes no sense at all to me. 

It seems to me that Obama's administration is having enough trouble dealing with its current set of chores.  Some of the many examples include delays in implementing the ACA (sometimes known as "Obamacare"), NSA spying overreach, IRS targeting of political opponents, troubles with embassy security (e.g. Benghazi), and on and on.  It seems like the last thing our President needs is to have to figure out how to regulate, restrict, and perhaps eliminate a food item while balancing the desires of consumers and the needs of people working in agriculture. 

In addition, I think that the federal level is the wrong level of government to consider restrictions on HFCS.  For example, have you researched the health and dietary needs of everyone across the entire country? Do all of the people from Maine to the southwest deserts, from the everglades to islands in Puget Sound, from the  Mexican border towns to Canadian border towns all have the same needs and consumption patterns?  If not, perhaps nationwide action is inadvisable. Perhaps this sort of advocacy should occur at the State and/or local levels.  How about starting with having San Diego restaurants voluntarily pledge to avoid using HFCS and see how it goes? 

Information and education are good.  There are many ways to get your opinion heard and to educate people about the adverse effects of HFCS.  For example, are you aware of the Nutrition Science Initiative (NuSI, nusi.org)?  Perhaps volunteering with them would be a good approach to advocate for scientific based dissemination of nutritional information. 

If people are armed with the right information, at least there's a chance that they'll make decisions and take actions that optimizes the tradeoffs that are continually part of each of our lives. 

Sincerely,
Bret 

P.S. Your email and this response are being posted on my blog (with your name removed).  My readers can decide for themselves and perhaps some of them will sign on to your petition.

1,000

This is this blogs 1,000th published post.  It's also more or less the ten-year-anniversary of this blog (the first post was in September, 2003).

The name "Great Guys" was a joke among eight friends from college. The blog was started to help coordinate annual get-togethers and to provide a forum for continuing discussions from those get-togethers.  The get-togethers still happen every year.

At least one of the Great Guys never posted anything at all.  Three of us posted regularly for about a year.  Those were some interesting posts since the third regular poster was quite liberal, while Howard and I are, ummm, well, decidely less liberal/progressive/left-wing/statist/collectivist/etc. and too much less so for blogger #3 to continue so he dropped out.  That's unfortunate, because he provided balance to Howard's and my perspectives.

Averaging 2 posts per week for 10 years feels like decent output and decent staying power.  I'm likely to continue for several reasons:

• I enjoy the debates that many of my posts seem to stimulate
• It's a great way to keep in practice with writing and I find when I write proposals they go a lot faster and easier when I've been blogging
• It provides a way for me to organize my thoughts and think about things and I hope it does the same for at least some of my readers

I think Howard, who has become the infrequent co-blogger will probably continue at his current rate as well.

Well, at 1,000 posts per decade, I'm hoping to hit a 5,000 post (I'll be 94 then), but surely we'll see number 2,000 one day?

Many thanks to our loyal readers for all their support and feedback!

Teaching Moments: Beyond Reasonable Doubt

My younger daughter (age 13) came home from dance lessons and said, "everybody was talking about some white man who shot a black child and got away with it."  I wasn't thinking about the Zimmerman trial just then, so I was quite surprised.  Here is the conversation (more or less) that followed:

Me: Wow! That sounds terrible.  When did that happen?

Younger Daughter (YD): I think the trial just ended.

Me: Ahhhh.  Did they mention the name 'Zimmerman' by any chance?

YD: Yeah.

Me: Well, it's a little more complicated than that.

YD: But he killed a child and got away with it!

Me: How old was this child?

YD: I think they said he was 12 years old.

Me: No, Trayvon was 17 years old.

YD: But he did kill him?

Me: Yes. Do you think it is always a crime to kill someone?

YD: It should be.

Me: How about when a policeman shoots a criminal to protect the public?

YD: Well, that's different.

Me: How about when a soldier shoots a terrorist?

YD: That's different too.

Me: Yes, both the policeman and the soldier were defending people.

YD: What's that have to do with this?

Me: Zimmerman claimed he was acting in self-defense.

YD: But he was older and bigger.

Me: He was older, but Trayvon was 4 inches taller than Zimmerman and more athletic.

YD: But they said that Zimmerman was following Trayvon.  How could that be self-defense?

Me: Zimmerman noticed Trayvon walking around in the dark in the rain looking like someone might look if they were casing a house prior to breaking in.  Zimmerman called the police and wanted to keep track of Trayvon until the police arrived.

YD: He called the police before he killed Trayvon? 

Me: Yes.

YD: Then what happened?

Me: According to Zimmerman, Trayvon confronted him, punched him in the nose, knocked him to the ground, got on top of him, and started punching him and slamming his head against the concrete.  Zimmerman did have a fair amount of blood on the front and back of his head when the police arrived.

YD: And then he shot him?

Me: Yes.

YD: Why didn't he just shoot him in the thigh or something?

Me: Good question, but I have a hunch if you're being pummeled by someone on top of you, it may be hard to aim.

YD: How can we be sure that's what happened?

Me: There were no witnesses who saw it clearly so we can't.

YD: So he might be making the story up?

Me: Yes.

YD: But how can we let someone who killed someone who might be lying get away with it?

Me: Well, our legal system is based on the concept of innocent until proven guilty beyond a reasonable doubt.  In other words, before we punish someone we want to be very sure he's guilty and we'd rather let some guilty people go free if we can avoid punishing innocent people.

YD: So the jury gave him the benefit of the doubt.
Me: Exactly.  The jury didn't find him innocent, but rather found him not guilty beyond reasonable doubt.  He may very well be guilty, but there wasn't enough evidence to prove that guilt beyond reasonable doubt.

YD: It still doesn't seem right.
Me:  Yeah, I don't think there are too many parents who feel good about it.  The idea of having a child killed is horrifying regardless of the child's age.

YD: Yeah.
Me: Anyway, at least you now understand some of the more important details: that self-defense was claimed and that non-self-defense couldn't be proved beyond reasonable doubt based on the evidence, at least according to the jury.

YD: It's definitely not as bad as my friends at dance made it out to be.  I guess sometimes bad things just happen.

Vision Robotics on the News

My company, Vision Robotics Corp., was on the San Diego Channel 10 6PM news this evening. If you're curious, to see the segment, visit http://www.10news.com/video and find the link for "Robots created by San Diego company" (I haven't been able to figure out how to link directly to the video).

10news did a pretty good job - especially considering that they did everything (contacted us, shot the video, did the editing, and produced it) in a span of just over 6 hours.  The first three steps were all done by one guy.

The only noticeable mistake is that they call it a "Lettuce Trimmer" when it's actually a "Lettuce Thinner."

Pam Uphoff's Outcasts and Gods is Free Until the End of the Week

I've mentioned in a previous post that one of my favorite series of novels, fairly recently discovered by me, is the Wine of the Gods series by Pam Uphoff.  She's made the first book in the series, Outcasts and Gods, free for Kindle devices and readers until the end of the week.  This is one of those risk-free opportunities.  It's of the Science Fiction and Fantasy genre.

Grumpy Uncles

A friend of mine recently accused me in particular, and libertarians (and probably conservatives) in general, of being "grumpy uncles":

"I'm still looking for the avowed libertarian who doesn't come across as a grumpy uncle."

I don't think I qualify as an "avowed" libertarian, but some background is in order.  I would describe my friend as being enamored with Statism and I take the definition of Statism right out of the dictionary: "the principle or policy of concentrating extensive economic, political, and related controls in the state at the cost of individual liberty."  He believes that the reduction of individual liberty is more than made up for by the solutions made possible using the resources available to a large and powerful government.

Each of us occasionally sends the other a book to read.  The last book I sent him was A Conflict of Visions by Thomas Sowell which makes the argument (compellingly, in my opinion) that a vast number of ideological disagreements can be traced back to assumptions about human nature and the extent of the malleability of human nature.

My friend continued with:

"Although I've experienced plenty of times with you when joy was the operative factor, your written language almost always comes across as negative when it comes to evaluating the human condition (starting with yourself)."

I'm no angel and I know it and I rather doubt that the world is populated with all that many angels or even saints.  Perhaps I'm projecting, but I think it's likely that most people are like me, and with the right incentives have a capacity to live good lives that are beneficial to themselves and those around them.  However, without those incentives or with the wrong incentives, they have the capacity for evil, perhaps great evil.

An example I've given both to my friend and detailed in comment sections of various blogs (including this one) is that I'd be a disaster if I was working within a government framework and had much power.  While I probably wouldn't hurt any fellow citizens if it didn't benefit me (and my family, friends, and communities), if I was presented with a situation where I could extract a penny from every citizen and line my pockets with it, I wouldn't hesitate.  A mere penny.  Even the poorest of poor would hardly miss a penny.  And given a population of 300 million, that would be $3,000,000 in my pocket.  Definitely a worthwhile tradeoff to me.  I wouldn't even feel guilty - a mere penny!

When a million politicians, bureaucrats, lobbyists, government contractors, and constituents all do the same thing, it turns into many thousands of dollars out of the pockets of every citizen every year.  And that's pretty much how the whole lobbyist-bureaucrat game works.

So yes, starting with myself, I have a pretty skeptical view of the human condition when it comes to running governments.

The other reason I'm a grumpy uncle according to my friend, is my disdain for the concept of utilizing experts to tell me and the rest of us how we should live:

"The no-so-subtle loathing by people like Sowell for those of us who dare to imagine that we can actually make the world a better place by taking action at a level above that of the individual used to surprise me given how much empirical evidence there is for the progress wrought on behalf of collective ends.  Sowell and others deride "experts" as if experts have never accomplished something useful."

Yes, I am continually unenthusiastic about assigning yet more resources for yet more "experts" to come up with yet more regulations and programs administered by yet more government costing me yet more money while reducing my liberty every step of the way.  I can see how Statists would find my attitude as decidedly grumpy.

My friend can't understand why I might be grumpy just because I'm forced to fund and be subject to his beloved government and I wanted to try and enlighten him.  Conveniently, he's an avowed Atheist - the type that's certain that deities don't exist, that anyone who's not certain of their non-existence is seriously deluded, and that all religion is evil.  Given that, I wrote the following (unedited) to try to enlighten him as to the cause of my grumpiness:

But let me give an analogy that I think sheds light on why libertarians are "grumpy uncles"... 

So let's say that suddenly, the super majority of Christians in the country managed to get a constitutional amendment passed repealing freedom of religion and declaring the United States to be a Christian nation with forced daily church attendance and whatever the Christian version of sharia law is called including enforced donations to the church.  In addition, the Christians are absolutely certain that this move is required in order to halt and then reverse the rapidly degrading morality that, in their minds, is clearly leading to barbarism and the collapse of the nation.  Because of their certainty of the goodness of their cause, they're also convinced they have the moral high ground in addition to the constitutional and legal high ground. 

And let's take it one step further such that every country on earth also became a Christian country except a dozen poverty stricken hell holes.

So I rather imagine that if you found yourself in this Christian world with mandatory daily church attendance, you might be a rather grumpy uncle.  Or would you go to church with joy in your heart? 

That's what the world looks like to libertarians, except substitute centralized government for church.  That's why we're grumpy uncles.

I'm not religious and for me Big Church and Big Government look remarkably similar.  They have leaders, followers, power, corruption, certainty of rightness (moral superiority, better world or afterlife, etc.), evangelical leanings, ostracizing or dealing harshly with heretics, etc.

From the outside, all dogmas look the same and are annoying to everyone else.

Hence the grumpiness.