The basic economic problem that arises because people have unlimited wants but resources are limited."Wants" is another word for demand, and if people have unlimited wants, then aggregate demand is unlimited as well. Much of economics is thus focused on the "Supply Side" or how to produce as much as possible to best satisfy the never completely satiable aggregate demand.
For the steady state, the economist John Maynard Keynes would agree with all of the above. But Keynes believed that:
[P]roblems such as unemployment, for example, ... result from imbalances in demand ... Keynes argued that because there was no guarantee that the goods that individuals produce would be met with demand, unemployment was a natural consequence especially in the instance of an economy undergoing contraction."The solution to such a situation, according to Keynes and his Keynesian followers, is to:
"step in and put under-utilised savings to work through government spending."The Keynesian position has an intuitive appeal, especially to someone who has never studied economics. Such a person might say, "I don't have unlimited wants, I have modest wants to match my modest income, and even if my income went up, I wouldn't increase my consumption to match. Therefore, I can see that lack of demand could always be a problem, and with technological job destruction and off-shoring of some of the remaining jobs, I can see it leading to a catastrophic downward spiral of employment and demand." In other words, "unlimited wants" is not intuitive for most people I've talked to, which makes them highly skeptical of the whole economic enterprise since "unlimited wants" is a premise to the fundamental economic problem of Scarcity.
Once the citizen-voter rejects the "unlimited wants" premise, politicians play to that perspective to get votes, especially because they get additional power because of the government expansion required to "put under-utilised savings to work" via government action. Because the politicians push this, economists who want funding are more than happy to advocate it.
So, whether or not Keynesian economic theory is right or wrong, Might makes it Right.
92 comments:
I minored in economics, read about economics, and still some of what Keynes said seems intuitively obvious.
Economic cycles have a mass psychological component to them that tends to make them overshoot, particularly on the downside, the underlying reality.
After 9/11, when losing my job was a matter of when, not if, we greatly contracted our spending. If enough people do the prudent thing in reaction to an economic, then all the individual prudent reactions become self-reinforcing.
That is why it is hard for me to completely knock Keynes, because sometimes government spending will counteract prudent individuals and create scarcity that they aren't.
So if I was head dude what's in charge, I'd run a counter-cyclical fiscal policy: surpluses during periods of growth, deficits during contraction, and aim for an average government debt roughly 30% of GDP in order to have headroom for those periods of deficit spending.
Hey Skipper,
I don't disagree that.
The problem is that I don't think anyone can tell when it's useful to use Keynesian stimulus and the track record for Keynesian stimulus is somewhere between pretty bad and "can't tell what effect it had." When it doesn't seem to work, it's "more and more and more of the same until it does!!!!"
So whether or not Keynes had a point, it's used by the politicians to collect power and expand government, not to help the economy. They only SAY that it's to help the economy.
Don't remember who made the point that Keynesian ideas provided justification for what politicians already wanted to do. In light of both the history of political thoughts and actions, it seems to fit.
When someone points out to me a government that actually cut spending during a boom, I will take Keynes seriously.
Bret,
I guess you wanted to give me a little bit of the taste you feel when reading Krugman - upon reading your thread, I could only feel you calling me "stupid, stupid, evil!".
I can only reply by pointing out that, as far as your premise goes (that dumb people like me can not believe in too much demand), it is surely false: I do live in a country where demand-driven inflation was always the rule, and no one around ever needed a major in economics to figure that out.
AOG,
I gave you one before, you just did not accept it.
Out of your last 10 Presidents, 7 left the office with lower Debt to GDP ratio then when they started. The last one to do so was Clinton.
I know you do not accept debt/GDP as a good measure here. But you know what? The Markets do, and that's what matter as far as the Economy is concerned.
Clovis,
I was stimulated to write this post when I read a recent post by economist Scott Sumner the other day (and then a series of articles seeded by the links in that post):
http://econlog.econlib.org/archives/2014/01/the_parrot_is_s.html
And I was thinking as I read it, it was yet another case where economists debate among themselves and really don't consider what seems common sense and/or intuitive to most people.
You were definitely NOT the focus of this post or even on my mind when I wrote it.
Note that I did NOT even pass judgement on the validity of Keynesian economics. Indeed, I believe that under certain circumstances, government monetary stimulus can help and that under somewhat rarer circumstances government fiscal stimulus can help. The only catch I see is that I believe it's impossible to know when those circumstances occur and that you can also do some damage, especially with fiscal stimulus.
[AOG:] When someone points out to me a government that actually cut spending during a boom, I will take Keynes seriously.
So Keynes is wrong because politicians are idiots?
In this regard, I think Keynes was right, and that is how you can tell politicians, and Krugman, are idiots.
In other economic news, reality bites.
The fight to increase the minimum wage continues, nonetheless.
Skipper;
A policy that can't be implemented by actual humans is not a valid policy.
Clovis;
I gave you one before, you just did not accept it.
Correct, because it didn't involve spending cuts. If you go by debt to GDP ratio, then Keynes is just saying "when the economy grows faster than goverment spending during a boom, the debt ratio decreases, and when the economy grows slower than government spending during a bust, the debt ratio increases". Do you really think that's the level of profundity of Keynesian economics?
As far as I can tell, if you actually take Keynes seriously, he means actual cuts in spending during booms because the point is to moderate the business cycle, which means offsetting more spending in the private sector with less in the public.
P.S. "The Markets do" - that really should take the prize for meaningless through vagueness. Which markets - financial, stock, consumer? What does "accept" even mean in any of those contexts?
Scott Sumner continues on his interesting rant today (worth reading IMO): http://www.themoneyillusion.com/?p=25813
I should mention that Scott Sumner is a advocate of NGDP targeting which, as my co-blogger Howard can attest, I suggested over 20 years ago before anybody had seriously discussed the concept.
aog wrote: "...he means actual cuts in spending during booms..."
I think what exactly he would've thought given fiat currency and growing population is a bit fuzzy. I would not say that Clovis is definitively wrong on this one.
aog wrote: "A policy that can't be implemented by actual humans is not a valid policy."
Exactly.
That's why I take it to the next level. Keynesian policies are tailor made for "Might Makes Right" style abuse.
Bret;
I would not say that Clovis is definitively wrong on this one.
That's quite possible. But then if you use Clovis' preferred metric you get Keynsian policy by simply having a constant rate of growth of government spending, in which case what's the actual policy? In fact, you could even spend more during booms and less during busts and still be Keynsian with that metric, making it even more pointless.
AOG,
---
Which markets - financial, stock, consumer? What does "accept" even mean in any of those contexts?
---
In this case, mostly the financial one. And "accept" here means they do not charge higher interests, for if the government spending grows in a way the debt ratio still falls, it is generally seen as a economy in good order, perfectly able to pay back what it borrows. I guess you know that pretty well and only asks in order to be the annoying old guy you are :-)
And no, I am not defending the debt ratio as the only relevant measure here. It is one of many, and one to have more weight mostly in long term thinking.
As for cutting public spending in booms in order to offset private one: we have evolved enough to understand that fiscal policy is not the only tool you have. So usually the present day central banker prefer to deal with the boom times first through monetary policy before dealing with the fiscal one. So your main complaint ("hey, govt. is not cutting by half the spending in boom times!!") is not wise policy.
Bret,
Sorry if I was self-centered enough to believe I was the butt of a joke.
I do think your claim sounds pretty old: Keynesianism as a umbrella for damned populists is an old charge. And a true one in some cases of the past.
I do not see it as valid in the last years in the US, though. There is reasonable evidence, in the form of comparison between US and Europe, to believe the US suffered less due to Keynes, even though you may not agree with Krugman in that the stimulus should have been bigger.
Bret,
BTW, I did read the Sumner links you posted. Overall, I don't get it. I would need to read something more introductory and directed to laymen on this Market Monetarism and its implications. After all, I am indeed "someone who has never studied economics".
Clovis;
I am not defending the debt ratio as the only relevant measure here
Then your claim I didn't accept your examples rings rather hollow, if you evidence is not something you'll defend as definitive.
present day central banker prefer to deal with the boom times first through monetary policy before dealing with the fiscal one
I thought we were talking about Keynes and his economic policies. One might also note that this defense also makes my non-acceptance of your examples much weaker, as it effectively admits that spending is not cut.
So my reading of your position is "you're right, spending wasn't cut, but it doesn't matter because we've evolved past Keynesian economics".
AOG,
----
So my reading of your position is "you're right, spending wasn't cut, but it doesn't matter because we've evolved past Keynesian economics".
----
I am no great source of economic insights, but as I see it, Keynesianism is to modern economic theory what Newtonian mechanics is to modern Physics: it is not the ultimate truth, it is over simplified and does not deliver in some modern complex settings. Nonetheless it is hugely useful for most applications you still use it and remains a powerful tool, full of nice insights into the way the macro world works.
So yes, we evolved past old dear Keynes, so what? We also evolved past Newton's Second Law, do you believe it makes that law less useful?
I see a pattern of thought in display here. You, Bret and a few others here have quite some difficulty to dissociate ideas from politics. Both Keynesianism and global warming research are treated with contempt not by their face values, but due to the political context they fit into. You guys give precedence to politics, always. It does lead to a few distorted views IMO.
Clovis,
You guys give precedence to politics, always.
Bravo, you've got it exactly backwards. Several of the people here have torn things/ideas apart and put them back together many times. Eventually some patterns emerge that cannot be ignored. That shapes political views. If you think views expressed here are always political, they're nothing compared to the approach of my progressive friends.
Clovis;
No, we reject things that have political impact because those things are either (1) unimplementable (Keynes) or (2) wrong (warmenism).
Interesting, Krugman writes "Yet the story of economics over the past half century is, to a large degree, the story of a retreat from Keynesianism and a return to neoclassicism". Could you ever write such a sentence about Newtonian mechanics and physics?
To repay you in kind, I would say your problem is that you are too parochial. Open your mind to the possibility that many things you think are believed by everybody are in fact strongly disputed.
'Don't remember who made the point that Keynesian ideas provided justification for what politicians already wanted to do. In light of both the history of political thoughts and actions, it seems to fit.'
Dunno who said that, but he didn't know anything about politicians. In both England and America during the period leading up to the 'General Theory,' politicians of all parties campaigned on contracting government expenditure.
And, yes, that includes Roosevelt.
politicians of all parties campaigned on contracting government expenditure.
Yes, clearly campaign promises are an excellent guide to what politicians really want to do.
In this case, yes. The Tories wanted to scerw the poor and Labour wanted to eliminate the military. Hoover and Roosevelt both wanted smaller government.
It was later, after a long struggle by his advisers to educuate him about what was going on, that Roosevelt changed course.
AOG,
---
Interesting, Krugman writes "Yet the story of economics over the past half century is, to a large degree, the story of a retreat from Keynesianism and a return to neoclassicism". Could you ever write such a sentence about Newtonian mechanics and physics?
---
I ask for corrections if I am wrong on this one - and I may be, this is far away from my field - but as far as I know you are being mislead by classic sounding names.
Emphasis in "economics over the past half century" shifted from macro to micro, where the greatest goal in some areas has been to predict/explain macro behavior by simulating the action of zillions of micro-actors. Heavy computation has been used lately for that.
You see, to explain macro behavior through the action of their micro-constituents is indeed a wonderful parallel with what happened to Physics. So my answer to your question is Yes.
---
To repay you in kind, I would say your problem is that you are too parochial.
---
I went for the dictionary. Parochial:
1. Of, relating to, supported by, or located in a parish.
2. Of or relating to parochial schools.
3. Narrowly restricted in scope or outlook; provincial:
I've been called worse things, I guess. Now, "narrowly restricted" as I am (supposing you've meant number 3), here I am discussing with you in your home field. Are you playing in Liberal fields to take some bullets too?
Howard,
---
Bravo, you've got it exactly backwards.
---
Here I am in a thread where Bret explicitly judged an economic theory not by its capacity to explain and describe experimental phenomena, but for its impact on politics. He even conceded that said theory may be right under certain circumstances. Still, it must be burned for it is dangerous in the hands of us mere mortals.
A few threads ago, there was Skipper denouncing "global warmening" and reading a researcher words, most of them directed to his technical points and related to a technical paper no one bothered to look at, as he would read a speech by Obama.
Are you sure I am the one getting it backwards?
I am not even complaining about it, I think all this political heat makes for good and fun blogging. By this measure, this blog is just as fun as Krugman's (ouch, now I must have signed the death sentene of my IP access to this blog :-)
Clovis;
I am unclear on how being mislead by names can read "retreat from Keynesianism" as something other than Keynesianism becoming less relevant and less of a basis for economic thought, which is quite different from evolution or elaboration of an accepted theory.
As for dealing with tranzis, popular culture is filled with it. That's one advantage of being a conservative / libertarian -- it is impossible to avoid being exposed to contrary ideas. As for engaging, tranzis are not very forgiving of alternate viewpoints, I just tend to get banned if I try that. Consider Mr. Eagar - his goal isn't to persuade but to discredit and silence opposing views through ad hominems like "racist" and "tea-hadist". yet mr. eagar is very open minded compared to the mainstream of tranzi thought. How do you discuss anything with someone whose response is just cant like that, and ban you when you prove them wrong? For example, Eagar cites posts at Little Green Footballs, which is infamous for banning any contrary opinions, which means I can't go there to argue about it.
I can't argue about it because I am not registered. So what? I have my own blog.
I have never, anyway, asked you to engage whatever the LGF posters have to say about a subject, just to follow the link. It's an aggregator.
Then, too, when I call a person a racist, it would be because that person did a racist thing. Shrug.
Mr. Eagar;
If you wanted me to just follow the link and not look at LGF, why not just post the link and bypass LGF entirely? That's no more effort than linking to LGF. I also never claimed you asked me to engage them, so I have no idea why you're denying it.
Clovis wrote: "Bret and a few others here have quite some difficulty to dissociate ideas from politics..."
Ummm. This was a political post (notice the labels "politics" and "Power") so I think it would be odd to not include politics. A lot of my posts are written at the intersection of economics and politics. I think one of the main failings of economics is that it ignores the political aspect of economic systems.
I assure you that the vast majorities of ideas I consider, whether what to eat for dinner or algorithms to analyze images for robotics, I do NOT have politics on my mind.
Clovis wrote: "You guys give precedence to politics, always."
Always? For example, I posted the Bohemian Gravity song. Was that political? Maybe, I guess, within the realm of physicists. But not for me.
I was enthralled with communism when I was 16 and after 4 decades of carefully considering the theories and evidence I slowly, incrementally switched my political position. Howard is right about that process.
Sure, now when I write a political post, it's political and reflects my current economic and political thinking! No surprise.
Clovis wrote: "Bret explicitly judged an economic theory not by its capacity to explain and describe experimental phenomena, but for its impact on politics."
The game I'm playing with this post is "how would it look different if Keynesian Economic Theory was adopted for strictly political reasons without any consideration of its merit?" The answer is that it wouldn't look any different at all. It doesn't matter whether or not the theory is valid, helpful, or disastrous, it would still be adopted.
Clovis wrote: "Are you playing in Liberal fields to take some bullets too?
Yes. Though the main one is a email list of old MIT frat brothers, the vast majority of which are pretty far left. I've had too many comments deleted without explanation at DeLong's blog and others to bother trying to interact there.
Clovis wrote: " I would need to read something more introductory and directed to laymen on this Market Monetarism and its implications."
You could to worse than to start with the Wikipedia entry:
http://en.wikipedia.org/wiki/Market_monetarism
If you have questions after reading that, I'll be happy to try and answer them.
Clovis wrote: "There is reasonable evidence, in the form of comparison between US and Europe, to believe the US suffered less due to Keynes..."
You would have to be a Keynesian to find that evidence reasonable. :-)
More seriously, the central banks were doing radically different things here and there so the comparison isn't valid ("Quantitative Easing" here and much tighter money there).
Bret,
---
Clovis wrote: "You guys give precedence to politics, always."
Always?
---
I did not mean always as in every post.
---
I think one of the main failings of economics is that it ignores the political aspect of economic systems.
---
The little I've read from Keynes himself, he can hardly be accused of that.
---
[On Keynesianism] It doesn't matter whether or not the theory is valid, helpful, or disastrous, it would still be adopted.
---
And I have a hard time to understand why you believe so. As I see no evidence for this affirmation, neither you provided it, I can only conclude it is a politically motivated rant. Hence my accusations of political overreach in this thread.
Now, on Market Monetarism, it is either something really simple, to the extent it hardly deserves its own name as a separate theory in economics, or I am misled by that Wikipedia entry.
Instead of central banks explicitly targeting inflation and interests, it should target... NGDP. And that's it. OK. Talk about old ideas in new clothes.
It is not necessarily a criticism by my part, but it is noticeable how this supposedly brilliant idea has a little resemblance with old failed communism ("Hey, we made the USSR GDP to grow by 20% this year!"). The Wikipedia arguments even point to China as a good example in contrast to Japan. [Yeah, I am aware the tools used to achieve the desired NGDP in Market Monetarism are others and people (or at least some people) would understand what the "nominal" means, but I find the parallel - even more when such idea is defended in s Libertarian Blog - amusing.]
AOG,
---
I am unclear on how being mislead by names can read "retreat from Keynesianism" as something other than Keynesianism becoming less relevant and less of a basis for economic thought, which is quite different from evolution or elaboration of an accepted theory.
---
I do not see your point.
To state that Physics has retreated from Newtonian Physics is a perfectly valid statement.
It is a common mistake around to believe Physics had an "evolution" from Newton to our modern theories: relativity and quantum mechanics. No, those theories are completely different things, who happen to coincide with Newtonian results in the relevant limits.
So I expect that more modern and complete economic theories to be completely different from Keynesianism, but to be able to reproduce the same results in the relevant macroeconomic limits.
BTW, as far as I know, Economics is yet far from that level of maturity. It provides different theories with different ranges of applicability, with little coincidence in the regions those theories should agree on. One more picky observer could even defend it is not Science - although such accusation is a little bit unfair, for the scope of Economics is indeed a complex one to cover, given the dependence of the system on those damn human beings.
Clovis;
I have read a whole lot of physics, and even completed the equivalent of an undergraduate degree in physics at a major university, and you are the first person I have ever heard make that claim about Newtonian mechanics. I was taught and have read quite the opposite.
As you yourself claim, modern economics doesn't reduce to Keynes during economic downturns, it has a completely different mechanism.
AOG,
Can you specify which "claim about Newtonian mechanics" I did that looks alien to you?
I can not locate anything remotely polemical in what I've written before.
AOG,
---
As you yourself claim, modern economics doesn't reduce to Keynes during economic downturns, it has a completely different mechanism.
---
Now it is a good point to qualify the discourse. Can you specify which modern economic theory you are talking about, and how it fared in the last downturn?
RtO has lived on the watchword that nothing can be depended on to halt a deflationary spiral.
Keynesian mechanisms at least do not make it worse, and (depending on other factors) sometimes help some.
RtO's vew, which is not based on a theory but is merely observation, is that engineering deflation is the worst thing you can do to an economy, because nobody can surely fix it; which is not true of inflation.
The knock against pure Keynesianism, that in prosperous times, governments do not usually run surpluses, is valid to a point; although in proserous times good governments do invest in things that have long-term (and sometimes short-term) payoffs.
RtO does not believe that surpluses are, in themselves, good things. The history of England suggests that deficits make you rich.
Skipper,
On your minimum wage comment, I would like to have your take of this proposal:
http://dailycaller.com/2014/01/10/12-an-hour-is-conservative-rocket-fuel-says-ron-unz/
Please read the whole article if you can and tell me afterwards if the minimum wage idea keeps looking so bad to you.
Clovis;
With regard to Newtonian mechanics, it was your comment immediately preceding mine, and what we had been discussing for several comments. But since you seem to have forgotten it, I'll quote
"To state that Physics has retreated from Newtonian Physics is a perfectly valid statement."
Then you ask "Can you specify which modern economic theory you are talking about?"
The one you are talking about here.
With regard to raising the minimum wage, Krugman agrees with Skipper. Having read your cited article, I think it's a briar patch gambit.
I meanhere. Unfortunately you can't test local links in preview.
AOG,
---
But since you seem to have forgotten it, I'll quote
"To state that Physics has retreated from Newtonian Physics is a perfectly valid statement."
---
It is not that I forgot it, it is just that I also wrote other phrases about Newtonian physics other than that one.
Then comes the fact that I can hardly understand how someone who claims to have an undergraduate degree in Physics can possibly find a problem on this phrase. I look forward to your demonstration on how our two pillars of modern Physics, General Relativity and Quantum Field Theory, are very Newtonian theories.
On the modern economic theory, both links did not work.
---
With regard to raising the minimum wage, Krugman agrees with Skipper. Having read your cited article, I think it's a briar patch gambit.
---
Your remark over Krugman must be a slap in Skipper's face :-)
Now, when you say something is a briar patch gambit, it means... that you disapprove of it? Or that it is too complicated to judge?
Briar patching.
Scroll up to your comment at 4:05 AM.
AOG,
You mean that Ron Unz strategy is... to fiercely defend the minimum wage in order to make it not feasible?
A very interesting point of view, I give you that.
If not for the shear hapiness he looks to have in making America free of illegals, I would be more inclined to believe your briar patch theory.
Clovis;
No, to promote the minimum wage so that it looks like a political win and so convince his political opponents to run with it, thereby setting them up to fail. It's the same way Old Media will play up the Republican nominee they think least likely to win the general election. For instance, look at Old Media coverage of McCain before and after the nomination in 2004.
AOG,
It is possible you are right - although I do not know much about the guy (never heard of him before) to differentiate if this is a gambit or if this is for real.
From a legal point of view, I do not get all the fuss about the minimum wage. You still would have other ways to hire people and not paying the minimum wage (e.g. by hiring them as subcontractors), so all the arguments pro and against lose much of their sense.
We do have miminum wages set by law down here. As far as I know, fast food workers still can get paid less than that.
Apologies if this is an off topic excursion too far:
[Clovis:] A few threads ago, there was Skipper denouncing "global warmening" and reading a researcher words, most of them directed to his technical points and related to a technical paper no one bothered to look at, as he would read a speech by Obama.
While I admit yielding to a weakness for sarcasm, that post was directed at a very central conceit of warmenism: that they stand on the side of science.
But that cannot possibly be the case. Without saying anything about the ultimate impact of anthropogenic CO2, it is unavoidably true that trotting out some new study as a post hoc explanation of flat-lined warming fatally undermines warmenism's claims for existing models. They cannot possibly have sufficiently captured the behavior of the climate system, while also being completely ignorant of a factor that has completely overwhelmed their models. Admitting this is so should mean dumpstering every IPCC report.
While reading the report asserting deep ocean water soaked up the extra heat might be enlightening (if you sent it, I never got it), either way warmenism is, or should be, stuck between the devil and the deep blue sea.
If the researcher is correct, then all existing models are rubbish. If the researcher is wrong, then all existing models are rubbish.
All of which leads to a perhaps even more fatal flaw for CAGW's claim to have achieved the status of a scientific theory. SFAIK, and you are the one with the expertise to set me straight, all scientific theories are hypothetico-deductive. That is, in order to qualify as a theory, a hypothesis, in order to have some amount of truth value, must have deductive consequences.
Newtonian mechanics is a hypothesis with deductive consequences. Some phenomena did not adhere to some deductive consequences, which meant that, at the very least, Newton's theory is incomplete.
Naturalistic evolution is a hypothesis with deductive consequences. Should even one prove wrong, then the whole thing tumbles (or at least needs major revision).
Does CAGW have even one deductive consequence? Is there even one that must be true in order for CAGW to be true?
[Harry:] Then, too, when I call a person a racist, it would be because that person did a racist thing. Shrug.
Shenanigans.
You called someone a racist who did nothing racist. When challenged, you changed the subject when you weren't sending the goalposts all over the field.
[Clovis:] Are you playing in Liberal fields to take some bullets too?
As it happens, I have, and there will be a post Any Day Now on the experience.
On your minimum wage comment, I would like to have your take of this proposal:
There are too many holes in it. Like many proposals of its type, it is far better at saying what is wrong with current policy than what might go wrong with the proposal.
For instance, it makes the assertion that more people will look for jobs if they pay more, but spends not one syllable on how many jobs will be available at the new, higher, wage. It is also problematic in that if the assertion is true in the first place, then wages would already have been bid above the $7.25 an hour go get sufficient workers. Since that hasn't happened, then the not only is the assertion likely wrong, it also fails to take on board the likelihood that the existing minimum wage has already excluded people from the labor market.
For all the blather about one study or another that shows increasing the min wage has no effect on employment, there has already been an historical study. Compare France, with a much higher min wage and restrictive labor laws, to the US.
Also, while greatly increasing the min wage sounds like it might move many things outside the political realm, that seems like pollyanna talking. Among the primary causes of poverty, the minimum wage doesn't feature at all prominently. To me it is wishful thinking that raising it will have any significant consequences other than the wrong ones.
When someone proposes increasing the min wage, I want to ask them: if it is such a wonderful idea, why play for such small beer? Quadruple it.
(The briar patching explanation never occurred to me; I would be an utter failure as a politician.)
Your remark over Krugman must be a slap in Skipper's face :-)
There was a time when Krugman wrote authoritatively. Now he is just rabid.
—
Speaking of Keynes, in one of the lead editorials in todays WSJ, the writer asserts that Bernanke's quantitative easing was the right thing to do, and has not led to the inflationary consequences its critics insisted would happen.
Clovis;
Do you mean, you can't understand why so many people make so much effort to raise the minimum wage? I think those who object to it have a much clearer reason, if only that's it's stupid to pass ineffective laws.
Skipper,
---
All of which leads to a perhaps even more fatal flaw for CAGW's claim to have achieved the status of a scientific theory.
---
Can you specify who here claims it has achieved the status of a scientific theory? I did call it "global warming research" and I hope you see the difference.
BTW, none of the IPCC reports are science. They are just a interpretation of a multitude of published results, with not even a clear process to separate between good and bad research. So if you want to criticize the IPCC from your political point of view, OK, go ahead. Just do not think you are talking science, please.
Only on your political mind would be a shameful thing to throw out all models we have on warming research and start all over. In Science, that's what you do, you test models and hypothesis, and if they end up being all wrong, you start it all over again with new ideas. No shame implied. Why don't you go there and do yourself a better job if you believe everyone out there is just so dumb? I can assure you your paper will be read if you have a better model to foresee worldwide temperature changes.
You do not need to believe anything on global warming to find the following question an interesting one: we do discharge huge amounts of heat trapping gases in the atmosphere every day. We have done it for much time, and intend to do so as long as we can - how it can possibly influence our global climate? And if it *does not*, how can that be possible without some utter disrespect for Thermodynamics?
It takes scientific illiteracy to find the above question irrelevant, and political madness to believe it a tranzi scheme to dominate world markets.
Clovis;
If warmening isn't settled science, then why do you find it odd (in your view) we treat as a political matter?
Otherwise, any time I go out to suffer some "liberal bullets" I am told by those "liberals" that global warmening is "settled science" and that anyone who disputes it is "ignoring science". If you let me know how many cites of that you want, I will provide them. That is the context in which we make our comments about global warmening.
Clovis:
Can you specify who here claims it has achieved the status of a scientific theory?
I meant only to describe the currently accepted wisdom by people who accept their own wisdom and greatly desire us to do the same; I have no idea what your position is.
However, calling it "global warming research" does seem to prejudge things a bit, doesn't it?
BTW, none of the IPCC reports are science. They are just a interpretation of a multitude of published results, with not even a clear process to separate between good and bad research.
The IPCC claims to report the state of climate "science". When the conclusion of the report summary says it is 95% sure of something like 3º C by 2100, that, according to them, is what the "science" says.
Only on your political mind would be a shameful thing to throw out all models we have on warming research and start all over.
Huh? IMHO, invoking post hoc explanations requires acknowledging that the climate itself has rejected the existing IPCC rubric.
That doesn't mean that all the models need to get pushed over the side; heck, for all I know, somehow there is a way to incorporate the mystery mechanism that warms water below 2000' while leaving the water above it untouched into models. After all, they may not necessarily be wrong, just incomplete.
And I don't need to be able to build a better model to epistemologically criticize warmenists claims that the "science" is settled.
You do not need to believe anything on global warming to find the following question an interesting one: we do discharge huge amounts of heat trapping gases in the atmosphere every day ...
I'm not aware of anyone who disputes the first order effects of increasing CO2. But if the ECS to a doubling of CO2 amounts to about 1º C, then all the climate stürm and drang will have been much ado about nothing. After all, the world has already been through 2.5ºC of global warming since the end of the LIA, without particularly upsetting anybody.
I don't think the question is irrelevant, only that the answers are nowhere near "scientific". More importantly, I can't think of a human endeavor other than religion that is the source of so many failed predictions.
No, sorry, even more importantly, every one of the legion of failed climate predictions has grossly overestimated what has actually happened.
CAGW is a tranzi wet dream. People, left to their own devices, will not cede control over their lives in the here and now to "help" the climate a century hence. we require our progressive overlords to make these decisions for us.
AOG,
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If warmening isn't settled science, then why do you find it odd (in your view) we treat as a political matter?
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Yeah, that's silly of me. Unsettled science makes for wonderful policy questions:
Reporter: Mr.Presidential Candidate, are you in favor of String Theory?
Candidate: Oh, yes, I am. I think it would greatly boost our economy and job creation, and further strength our shoelace industry. That would bring basic jobs back from China!
Skipper,
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[...] I have no idea what your position is.
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Which greatly illustrates our different approaches to the topic. I need not have a "position" on this, like it was a pro-life and pro-choice kind of *political* debate.
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[...] That doesn't mean that all the models need to get pushed over the side;
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I dit not imply they necessarily will be. Only used the extreme case, where they all go to the trash bin, to make my point.
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And I don't need to be able to build a better model to epistemologically criticize warmenists claims that the "science" is settled.
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Fair enough. Only if your claims were only about how said science is not settled, instead of outright rejection of the topic as scientifically valid.
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No, sorry, even more importantly, every one of the legion of failed climate predictions has grossly overestimated what has actually happened.
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Did it? The IPCC panel has been always wrong in terms of predictions, but it is false they only overestimated it. Take a look yourself here:
http://www.ipcc.ch/publications_and_data/ar4/wg1/en/ch1s1-2.html
Figure 1.1 clearly shows that 1990 IPCC predictions were overestimations, while 1996 ones were underestimations.
But to your political mind, I guess it makes for good political discourse to state differently.
Clovis wrote [about market monetarism]: "Talk about old ideas in new clothes."
When has a central bank ever targeted NGDP?
I think it's a much bigger change than you think with a substantial impact on a number of central bank functions and money creation mechanisms and corresponding positive impacts on the business cycle and GDP growth.
Even your buddy Krugman likes it: "Later in 2011 Krugman publicly endorsed market monetarist policy recommendations, suggesting "a Fed regime shift" to "expectations-based monetary policy," and commending market monetarism for its focus on nominal GDP."
Clovis wrote: "Figure 1.1 clearly shows that 1990 IPCC predictions were overestimations, while 1996 ones were underestimations."
That graph stops in 2005. There's been eight years since then and now FAR, SAR, and TAR overestimate the observed temperatures.
Clovis wrote: "...and further strength our shoelace industry. "
LOL. I hadn't heard that one before.
Note that economics is also not science and an awful lot of policy debates are based on economic thought.
[Clovis:] Figure 1.1 clearly shows that 1990 IPCC predictions were overestimations, while 1996 ones were underestimations.
But to your political mind, I guess it makes for good political discourse to state differently.
Except that temperatures have been flatlining for at least 13 years now, maybe even 17. Long enough that post hocs are flying out of the woodwork.
The question whether human activities seriously affect climate is asked with increasing voice these days. Quite understandable since the climate appears to be out of control with the significant global temperature increases already seen during the last three decades and with still heavier temperature increases to come in the future according to prognoses, among others, in the recent comprehensive IPCC reports [1].
However, the most recent climate data [2], show global temperature development levelling off or even turning negative since 2001 in contrast to the anticipated course related to the steady increases in the concentration in the atmosphere of green-house gasses, primarily carbon dioxide and methane [1].
The purpose of this communication is to demonstrate that the reduced rate in the global temperature rise complies with expectations related to the decaying level of solar activity according to the relation published in an earlier analysis [3]. Without the reduction in the solar activity-related contributions the global temperatures would have increased steadily from 1980 to present. (para breaks added for readability)
This isn't about political discourse. Rather, it is about claims for CAGW's scienceworthiness. It is a post-hoc mishmash, still incapable of dealing with something so basic as clouds, and without a single deductive consequence. Yet anyone who brings this up is termed a denier, easily a nasty enough term to make the motives of those who use it perfectly clear.
I can remember once upon a time, roughly 2003, when Gavin Schmidt (a climate modeler for NASA) had a post at Climate Progress discussing climate models. I asked about how the solar cycle was factored in — after all, sun activity had been on the increase as temperatures were increasing. He said that there was no need — variations in solar activity weren't enough to affect climate. (Google will not find this, because, thanks to my famously incendiary commenting style, further questions caused all three of my comments to get deleted, and my banning.)
Then, including sun activity would have diluted the CO2 explanation; now sun activity is required to save it. But let's take this as read. Doing so just proves my epistemological point: the models cannot claim to explain the climate's reaction to increasing GHGs, because they are insufficiently competent, and making them so doesn't help. It is hard to see how ignoring the sun from 1980, then tossing it in after 2000 is anything other than an exercise in knob twiddling.
SFAIK, many solar scientists are predicting another Maunder minimum. The last one went on for 70 years. We may really, really, want CO2 to make things warmer.
Clovis;
How do you go from "outright rejection of the theory as scientifically valid" (my view of catastrophic anthropogenic global warming, or "warmening") to "outright rejection of the topic as scientifically valid"? Is your view that if I reject the "consensus theory" of a field, I therefore reject the entire field as incapable of scientific investigation?
Bret,
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There's been eight years since then and now FAR, SAR, and TAR overestimate the observed temperatures.
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Note quite. In the average (counting year by year), SAR still underestimated it. Take a look here:
http://www.skepticalscience.com/ipcc-overestimate-global-warming.htm
Even if in future SAR turns out to be an overestimation, the point is that the IPCC for a good time also made errors to the lower side, not only to the upper. The distinction is important, for errors only to one side would be a stronger indicative of bias, which is the accusation Skipper throws in disguise here.
On NGDP: if you actually follow the Krugman links at that Wikipedia page, you'll see he clearly sees the NDGP targeting as a disguise to the same thing he wanted (higher inflation targets).
But I am not taking my opinion from him - it looks like you guys are under the impression I believe everything he writes, and only what he writes.
As long as the targeting of NGDP is enforced through the same central bank tools used before, this really look like the old car with a new painting.
If in future such target is reached through that proposal of an open market system - which AFAIK is not in place yet - I really have no expertise to judge how good that may be. It looks like even the working of this system is under discussion yet, so this gets too speculative and technical to me.
AOG,
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Is your view that if I reject the "consensus theory" of a field, I therefore reject the entire field as incapable of scientific investigation?
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No. But it is my view that you rarely qualify your discourse on that, to the point your language strongly looks to vilify the whole enterprise.
Maybe it is my fault, or another problem with my English skills... but if other native speakers with whom you change bullets in the blogosphere also get you wrong, who knows it may even be a little bit your fault too.
Clovis,
If you think varying inflation for NGDPLT is the same as a fixed inflation target, then okay. To me, they are quite different, as different as a sine curve and a flat line.
Skipper,
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Rather, it is about claims for CAGW's scienceworthiness. It is a post-hoc mishmash, still incapable of dealing with something so basic as clouds, and without a single deductive consequence
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I think you purposefully fail to make a distinction here.
It is AGW that usually takes the title of a settled science in much of the Liberal establishment. You add that "C" there only to make the thing more of a straw man.
As for the sun influence, I have a hard time to believe that some NASA climate modelers would tell you it does not make a difference. Maybe that's what you understood in the heat of the discussion, but not what he really meant.
Please follow the last link I posted to Bret above, and you'll even see references on estimates where they try to rule out the El Nino and Solar factors to compare how much the anthropogenic factor matters.
Bret,
Let me redraw your analogy. The difference would be more like between a Sine curve and a Seesaw one, if you take many years in your graph.
Do you believe our economic knowledge about it all can really differentiate the extent to which both curves may lead to different results?
Clovis wrote: "Let me redraw your analogy."
Yes, I suppose a flat line is a seesaw curve of infinite period; or a sine wave with infinite period. I'm not sure why you think that's a good analogy.
A fixed inflation target of 2% regardless of GDP growth is much different than a varying inflation target that provides additional liquidity and additional incentive to not sit on cash during recessions.
Clovis wrote: "You add that "C" there only to make the thing more of a straw man."
Nobody would care about climate if not for that "C". There would be minimal funding for climate science and no or minimal policy debates. The "C" is not a strawman, it is the heart of the debate. No "C", no debate.
Bret,
You get me wrong on the analogy thing.
A "vigilant" central bank would set different inflation targets every year, as it thinks proper for the Economy. Hence it would be a flat line every year, but different flat lines year by year - hence a seesaw curve over time.
The NGDP target would be a way to set the inflation in less rigid ways - but as the NGDP target is still set by the central bank, it is just the same central power setting things, but now allowing for the inflation target to vary more smoothly (i.e. its targeting would be updated more frequently, instead only once or twice per year).
In the long run, the comparison is between a Seesaw curve shadowed by a Sine curve whose lower order period would match the seesaw one.
Hence my question: do you believe we can truly differentiate between both macroeconomic end results in real life?
Clovis;
Here is the kind of thing we see as the warmening side - Democratic Party Congressmen warn that climate change could drive women to prostitution. When we laugh and mock warmening, this is what we mean.
Clovis,
The Fed inflation target has been between 1.5 and 2.0% for many years. For NGDPLT the corresponding inflation rates would swing from negative to 7% or even more.
Yes, it would be very easy to measure the difference to the economy.
[Clovis:] As for the sun influence, I have a hard time to believe that some NASA climate modelers would tell you it does not make a difference. Maybe that's what you understood in the heat of the discussion, but not what he really meant.
No, Dr. Schmidt was quite specific: the variation in solar radiation over a cycle was too small to make any difference. Until it isn't, that is. That study I linked to was specifically about that which had previously been excluded: solar variation.
Please follow the last link I posted to Bret above, and you'll even see references on estimates where they try to rule out the El Nino and Solar factors to compare how much the anthropogenic factor matters.
Thanks for the link … scanning … annnd, I think I found the part you are talking about.
A paper published in Environmental Research Letters by Rahmstorf, Foster, and Cazenave (2012) applied the methodology of Foster and Rahmstorf (2011), using the statistical technique of multiple regression to filter out the influences of the El Niño Southern Oscillation (ENSO) and solar and volcanic activity …
The paper was done in 2012, which makes it a post hoc explanation. It could well be correct, but doesn't that invalidate the premise upon which all previous models were sold?
Also, I can't help but notice that the error bars are very large — roughly 50% of the anticipated change. At risk of using a concept incorrectly, that seems as if the models are extremely poor at filtering signal from noise, in this case noise being variation that would have occurred no matter what humans do. To me, that makes their conclusion, … the IPCC has thus far done remarkably well at predicting future global surface warming. The same cannot be said for the climate contrarians who criticize the IPCC and mainstream climate science predictions utterly worthless. The only way observations could have invalidated the models is if temperatures completely unnaturally sank like a greased safe. No model, no CAGW advocate, no climate "scientist" would have suggested in 1998 that temperatures were going to flatline for the next 15 years.
But they did, nonetheless.
That leaves the impression with this heavy equipment operator that CAGW has many of the aspects of a religion: it explains everything, no matter what. I also can't help but notice that the time horizon for the parade of horribles keeps retreating further into the future.
(And that is before addressing the drum beat of CAGW horror fables. Everything is going to get horribler if the earth gets warmer? Really?)
(While I'm at the parentheticals, A Recent Study, not done by those horrible denier peoples, suggests climate models are inadvertently capturing energy usage. Which isn't included in climate models.)
Bret,
From where are you getting those numbers on "negative to 7%"?
And yet my point remains: a vigilant central bank can set the inflation target between negative and 7% all the same, with the difference it will set it once per year (or semester?), while the open market advocated by market monetarists would update it much more frequently.
Skipper,
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To me, that makes their conclusion, [...] the IPCC has thus far done remarkably well at predicting future global surface warming [...] utterly worthless.
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It does indeed. The defense of their results in that link is the best one possible, yet they fail to remark on how their appellation to that big error bar frustrates some of the effort. They were pretty honest in recognizing how the recent trend is downward in data, but not in models - but they do so in too timid a way, as if there were not much to take from that.
But I did not point out that link to defend their results. My intent was to show a more updated SAR graph and discussion, so maybe you can stop saying the IPCC only overestimated temperatures.
I do happen to know a few people who work with atmospheric physics and related fields. The view I have is that none of them ever gave much weight to whatever the computational models were saying: the limitations involved were always transparent for anyone involved.
None of them dismiss, though, the possibility that anthropogenic action may turn to CAGW in some unknown future. The heart of the matter is to understand if, how and when it could happen. The very reason those questions are unanswered (hence it is no settled science) is the reason we should care for them.
Bret tells me that if there is no present proof of the C, it means "there would be minimal funding for climate science and no or minimal policy debates" - I tell you it would be a bless to the whole field.
Well, I guess this thread is gone by now, but I thought interesting to add this point by Krugman (yes, him!), that touches offer and demand in more nuanced ways:
http://krugman.blogs.nytimes.com/2014/01/27/soup-kitchens-caused-the-great-depression-aff-edition/?module=BlogPost-Title&version=Blog Main&contentCollection=Opinion&action=Click&pgtype=Blogs®ion=Body
I read the column.
At the outset, he puts me off by the current of nastiness that runs through everything he writes.
What surprised were the comments. Ordinarily they are a parade of sycophants, but in this case a good third of them slammed his reasoning.
Curiously (at least Ben Bernanke found it curious), during the Great Depression overall wages did not fall.
For the unemployed (nearly 1 in 4 at times), they did fall, to 0, but despite ferocious deflation, for businesses that survived, wage scales remained 'sticky.'
This was not coerced by gummint but some average decision of managers. Bernanke never quite persuaded himself why this was so, but it was so.
I imagine Clovis would say removing a quarter of potential customers would be bad, overall, for the broad economy. I think so.
Reducing wages in a downturn would, any sensible person would surmise, speed up the fall.
But 'sensible persons' excludes 'Austrians.'
I am not at all surprised that there were negative comments. True believers are always on the alert to stamp out heresy wherever it is found.
I almost wrote 'critical comments,' but I bethought me, now who will be commenting, and will they be critical?
And, of course, the answers were, zealots and no, so I wrote 'negative comments' instead. Then I turned to them, and, lo!, here was the latest:
'Krugman is a Federal Reserve lackey, a loyal central bank drone who undoubtedly gets some form of kickback by continuing to advocate his dark master. He's a liar and a crook, and he'll get what's coming to him soon enough.'
Dunno if that one would put Skipper off.
Some comments were substantial criticisms. Your picking out a rant only proves that the internet remains the internet, while missing all the puerile vitriol that typifies progressives in NYT threads in general, and Krugman's in particular.
True believers are always on the alert to stamp out heresy wherever it is found.
Pot, meet kettle.
I read the first 20 or so, which were all negative. I did not find any substance in any of them. The same old ideological bromides that do not withstand exposure to real conditions.
Wow, such an acutely and thoroughly reasoned response.
(BTW, in case you hadn't noticed, about 90% of what you say is ideological bromide ... as evidenced by picking out a rant, instead of a reasoned comment.)
I didn't find any reasoned comments.
Krugman Claims Mises Couldn't Explain the Great Depression:
http://mises.org/daily/6651/Krugman-Claims-Mises-Couldnt-Explain-the-Great-Depression
and
In this brand new paper, which combines elements of mainstream with the Austrian theory, there is model, which shows pretty clearly why booms based on monetary expansion are unsustainable.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2382233
No one is as blind as those who refuse to see.
And here is an argument from personal experience.
Following the bust which was a foreseeable outcome of the CRA, my company realigned its pilots so as to minimize the disruption in case furloughs were required.
In other words, I took a significant pay cut.
The union geniuses were furious -- and blind to the fact that their objections would have required several hundred pilots be laid off, instead.
The complete absence of income, or even the prospect, causes much worse things than a decrease.
Krugman, and you, apparently favor destitution over adjustment.
Skipper, you have apparently forgotten that bromide that in order to make an omelet (metaphor for socialism) one needs to break a few eggs (metaphor for destroying those cogs who don't fit in aka human beings). To make up for the fact that you would have been unemployed and without much prospect of gaining employment elsewhere, you would have been put on the dole, given a faux credit card and an obamaphone presto change-o, another serf is born.
WIN_WIN!!
erp, nice description of 'creative destruction.'
Skipper, the Austrian solution to correcting the Depression was tried in Mississippi: Result: poorest state in the union.
Skipper, the Austrian solution to correcting the Depression was tried in Mississippi: Result: poorest state in the union.
Your addiction to single factor explanations is nothing short of amazing.
BTW, what was Mississippi's ranking before the Depression?
BTW, what was Mississippi's ranking before the Depression?
I don't know, but I'm willing to bet it was similar to Arkansas' place in the 50 state ranking of public schools after Hillary got through improving it, Arkansas went from 49th place to 50th.
Yet she because of her accomplishments, will be the next president if she doesn't meet with a tragic accident and the first alleged female president will be the brilliant and beautiful fashionista, Michelle Robinson Obama ... Chelsea is still too young ... although Constitution, be d*mned, she is the most qualified.
erp:
Hilary is a joke. She is like Sarah Palin, except for the fact that Sarah had to accomplish things on her own.
Minor detail, I know, but I had to mention it.
What continues to fascinate though, is how progressives can trot out a factoid and then "So There."
As it happens, I was in a hotel today. I spent a fair amount of time pestering our google overlord in order to find out what Mississippi's income ranking was in 1920.
Fail.
I know this is a bold prediction, but I'm betting that pre-depression it was a cellar dweller.
So the fact that it remained in the cellar after the Depression didn't exactly yield a death blow to my preference for market discipline.
But it did create almost soul crushing disappointment in the veracity of Progressivethink.
(almost [adverb]: not anything like, completely opposite from, totally unsurprisingly not even close to)
Skipper, I am intimately acquainted with Hillary's singular accomplishment which was to find a big piece of totally amoral charismatic meat, get behind him, push and shove him to a position of power and then stand beside him as a co-equal partner.
Palin is accomplished and good looking. Unforgiveable among collectivist (couldn't you find a shorter word to type :-)) women. Had she had the polish she would have gotten at an Ivy league school, she would be president now.
Well, Skipper, I am not the one who invented the 'Austrian' solution, which was to liquidate the failed enterprises so new capital could come in and start anew (what Mellon wanted to do in 1930).
That was done in Mississippi. Complete liquidation. Fresh start. No recovery.
Since Mississippi was already a paradise for unrestricted entrepreneurs before 1930, I don't think your argument that it was poor then, too, is one you want to press too far.
Skipper, the Austrian solution to correcting the Depression was tried in Mississippi: Result: poorest state in the union.
Still completely devoid of meaning.
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