tag:blogger.com,1999:blog-17232051.post4470527153617701748..comments2024-03-18T22:32:52.802-04:00Comments on Noahpinion: A standard Republican narrative of historyNoah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger36125tag:blogger.com,1999:blog-17232051.post-8541606569982152952012-01-25T21:52:17.044-05:002012-01-25T21:52:17.044-05:00Yes, it has been pretty obvious for a long time th...Yes, it has been pretty obvious for a long time that for the U.S., military expenditure acts as an economic stimulator. Putting people to work shooting bullets in the air rather than digging ditches, so to say. If I'm not mistaken, the 1950's spawned Nicholas Kaldor's phrase, "military keynesianism," now sadly underused. Basically, despite its size (U.S. army/population is smaller than most other countries), the military has too many synergies with other sectors to be hugely distortive.Ronald Calitrihttps://www.blogger.com/profile/07206853993777529429noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-24415287076243091612012-01-25T16:54:03.955-05:002012-01-25T16:54:03.955-05:00Will someone please explain to me how a trillion d...Will someone please explain to me how a trillion dollar a year defense budget, year in year out, isn't a massive economic stimulus /economic distortion program? Im not asking that rhetorically, it must have massive and ongoing economic effects.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-82788689700040937502012-01-24T14:13:44.043-05:002012-01-24T14:13:44.043-05:00And how do you square this narrative with the stat...And how do you square this narrative with the statements of people like Glenn Beck that even the America of the 1970s was still a country with freedom, and Obama has single-handedly turned us into a socialist hellhole? Or with people like Peggy Noonan who claim that the Democrats of the 1960s were worth voting for but not the ones now--as if the Democrats have become more socialist rather than more neoliberal over the years? Cochrane is comparatively more reality-based.wkdeweyhttps://www.blogger.com/profile/10868091938156254671noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-5719458585208004012012-01-24T14:08:32.968-05:002012-01-24T14:08:32.968-05:00"But budget deficits were low in the 1970s, a..."But budget deficits were low in the 1970s, and only exploded in the Reagan years (and again in the Bush years)."<br /><br />You would never know that from the rhetoric at the time. Even when deficits were at their low point (at least as a fraction of GDP) politicians were saying they were out of control!wkdeweyhttps://www.blogger.com/profile/10868091938156254671noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-79694553575823868902012-01-19T09:32:18.213-05:002012-01-19T09:32:18.213-05:00I should add that positional externalities are vas...I should add that positional externalities are vastly more than just, you envy your neighbors car. They are profound and pervasive. They are how you feel about the quality of your car and house and..., the sense of wellbeing they give you, whether you are happy and enjoying life in your 1500 square home with linoleum, formica, and carpet in the 1960's when it was in the 70th percentile, or unhappy with the exact same kind of home in the teens, when it's in the 20th percentile. The goal in dealing with these zero-sum-game externalities is to maintain position/rank/prestige for its benefits, but make the cost of attaining a given position much cheaper societally (i.e. a 5 carrot diamond gives the same prestige as a 10 carrot used to due to progressive taxation making carrots more expensive; see this AER article: http://ideas.repec.org/a/aea/aecrev/v77y1987i1p186-91.html) . <br /><br />Anyone who's serious about economics should know about positional externalities, and a good quick way to start is Frank's op-ed I link to above.Richard H. Serlinhttps://www.blogger.com/profile/09824966626830758801noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-4372506186549478812012-01-19T07:26:40.339-05:002012-01-19T07:26:40.339-05:00With regard to positional externalities, what Corn...With regard to positional externalities, what Cornell economist Robert Frank (and I) recommend are highly progressive taxation (like the rates we had in the 1950's and 60's) funding much greater public investment and insurance, not totalitarianism. Although to an extreme enough libertarian even one dollar of progressive taxation or spending on public goods, whether it's free schooling for children or basic medical research, is evil totalitarianism, or communism, or whatever. Anyway, for those of us who aren't extreme libertarians (thankfully almost everyone), Robert Frank has a very brief Washington Post op-ed that basically summarizes his new book, "The Darwin Economy". It's at:<br /><br />http://www.robert-h-frank.com/PDFs/WP.1.24.99.pdf <br /><br />And if you want something more academic, from the American Economic Review, 2005, "Positional Externalities Cause Large and Preventable Welfare Losses.", at:<br /><br />http://www.aeaweb.org/articles.php?doi=10.1257/000282805774670392Richard H. Serlinhttps://www.blogger.com/profile/09824966626830758801noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-46795863301840891602012-01-19T03:33:10.464-05:002012-01-19T03:33:10.464-05:00I can't see a single point in Cochrane I agree...I can't see a single point in Cochrane I agree with. Others points have already been addressed above. Nobody "won" the cold war. It was a staggering waste of resources all around. The slightly neoliberal Gorbachev decided on negotiated settlement. Then he abolished the employment guarantee. Then, with some US help, a coup ended the regime, bringing back old style tyranny with new rhetoric. Thatcherism/Reaganism has done nothing good for democracy anywhere, and the only freedom gained is freedom to shop, if you afford it, becoming evermore less likely for most.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-5770643811277078542012-01-17T16:32:39.031-05:002012-01-17T16:32:39.031-05:00The acid test of this Republican narrative for me ...The acid test of this Republican narrative for me will be the progress of Chinese political liberalization.<br /><br />If Friedmanite Economic Determinism -- the proposition that economic freedom *causes* political freedom -- is true, the China will indeed liberalize. <br /><br />I like to attribute this idea to Friedman because I think Milton and Rose Friedman were very influential in spreading the idea that "economic freedom is all you need". But Friedman's views were somewhat more nuanced. In this video (apparently from 2003): <br /><br />http://www.youtube.com/watch?v=ffFZ2T2rw_M<br /><br />Friedman is careful to say that economic freedom is a necessary but NOT sufficient condition for political freedom. But then moments later he starts encouraging the idea that China is going to be pushed to liberalize because of its economic reforms:<br /><br />"I predict that china will move increasingly toward political freedom if it continues its successful movement for economic freedom ..."<br /><br />I suspect listeners would tend to remember this prediction better than his careful logical formulation earlier on (necessary but not sufficient).Sethhttps://www.blogger.com/profile/16486234948199900568noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-5084916062741437612012-01-17T14:34:24.013-05:002012-01-17T14:34:24.013-05:00Richard H. Serlin mentions "positional extern...Richard H. Serlin mentions "positional externalities". For those who don't know, those occur when bad outcomes come about because we consume things not because we want them, but because we want to show (to others or ourselves) that we can. Like keeping up with the family down the block with newer stuff.<br /><br />Of course these exist, but totalitarians like Richard think they can judge all our consumption, they then decide what is "positional", and tax the **** out of us in order to fix it, all while they set up a giant regulatory state (to fix other "externalities") which, coincidentally, they run.<br /><br />That is, it's a fancy term misused to justify totalitarianism.<br /><br />Richard, you want to sound smart, you only sound evil.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-41846898392832098182012-01-17T13:32:50.205-05:002012-01-17T13:32:50.205-05:00The 80's, when CIA and School of Americas back...The 80's, when CIA and School of Americas backed goons could murder rape and torture South Americans with impunity. Some freedom.<br /><br />Friedman offered advise and praised Pinochet's economic policies - 'free' markets and jackboots. Of course Friedmans monetarism was a disaster and had to be reversed.<br /><br />On the other hand was likely a great time for Cochrane.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-90425199695751186502012-01-17T13:10:05.065-05:002012-01-17T13:10:05.065-05:00This, Cochrane's assertion about "Free to...This, Cochrane's assertion about "Free to Choose" is about the dumbest analysis I've ever heard about historical events. Not only is he apparently a determined ideologue in Economics but obviously in his reading of history. The Cold War was won by a bipartisan practice of the Truman doctrine, nothing less.<br /><br />You can take Friedman's book on it's merits but it is mostly a libertarian tract as opposed to a triumphant call to history. <br /><br />All that is necessary is to look at the Northern Western European democracies with there high level of regulation and use of taxes to provide social services as well as their pursuit of government industrial policies. Once compared it's easy to recognize the errors in thinking. <br /><br />Oh, and let's not forget what a hash some of the aggressive free market thinking did in many South American countries and in post Communist Russia.<br /><br />Just because Government sometimes overreach or have bad economic policies is not to say that all Government policy or intervention is bad. I could go on and on and on.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-27893994567684931232012-01-17T11:45:24.357-05:002012-01-17T11:45:24.357-05:00howard said...
"My god, cochrane is even mor...howard said...<br /><br />"My god, cochrane is even more of an idiot than I thought he was."<br /><br />He's not stupid - one doesn't get a tenured position in the Chicago B-School by being dumb. I suspect, however, that one also doesn't get it by being honest.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-51562301966961432842012-01-17T11:43:49.867-05:002012-01-17T11:43:49.867-05:00Krugman discusses this, when it was Fama's tur...Krugman discusses this, when it was Fama's turn to have a fact-free post:<br /><br />http://krugman.blogs.nytimes.com/2009/11/05/the-lost-generation/<br /><br />This covers developed countries, but IIRC the USA fits this pattern.<br /><br />Also, see http://krugman.blogs.nytimes.com/2011/07/30/the-corrosion-of-the-conservative-economic-mind/<br /><br /><br />One of the many facts which Cochrane is ignoring is that productivity growth rates remained depressed (again, in the USA) until the mid-1990's, long after the Friedmanite reforms have started (which would be ~1978). IIRC, both the decrease and increase in productivity growth rates were coincident with increases and decreases in the price of oil, but that never bothered Chicago Boyz.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-6051965403358721442012-01-17T11:00:43.305-05:002012-01-17T11:00:43.305-05:00My god, cochrane is even more of an idiot than I t...My god, cochrane is even more of an idiot than I thought he was.howardnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-63325572202317852012012-01-17T09:46:04.645-05:002012-01-17T09:46:04.645-05:00Inflation peaked in 1982 so it couldn't have e...Inflation peaked in 1982 so it couldn't have ended in 1980.<br /><br />If it had ended in 1980, that would mean that Jimmy Carter ended it.<br /><br />Neither Thatcher nor Reagan did anything to end inflation, btw.Jeffrey Davishttps://www.blogger.com/profile/17966839006518642902noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-82758798113470114962012-01-17T08:33:05.470-05:002012-01-17T08:33:05.470-05:00I read the book back in the eighties, as an Europe...I read the book back in the eighties, as an European student. Friedman struck me as a conservative USA nationalist. Not as a libertarian or something like that. He wanted to go back, not ahead. Especially the implicit and explicit nationalism made it hard to swallow. <br /><br />Merijn KnibbeAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-54659056132850176212012-01-17T08:28:44.306-05:002012-01-17T08:28:44.306-05:00Didn't Carter appoint Paul Volcker to the Fed?...Didn't Carter appoint Paul Volcker to the Fed?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-65987976048313562282012-01-17T08:17:48.847-05:002012-01-17T08:17:48.847-05:00I have read both Prof. Friedman's and Prof. Ha...I have read both Prof. Friedman's and Prof. Hayek's books. Both are good. However there are many other similar books, i.e. philosophically-oriented, by notable economists that are equally good that present different perspectives on economics and society. Because their arguments do not lend support for the nonsense from many among the segment of USA population with the greatest wealth and highest income, those books and their arguments are ignored while Friedman's and Hayek's, or at least certain portions of them, are trumpeted continually in support of absurd arguments that favor grossly unequal distribution of income and low taxation of those with the highest income. They are used for the rankest propaganda purposes.Wendell Murrayhttps://www.blogger.com/profile/15164744065595552689noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-68263857635339721782012-01-17T07:43:00.358-05:002012-01-17T07:43:00.358-05:00In fairness, loose monetary policy can be classed ...In fairness, loose monetary policy can be classed as stimulus. The idea is that a recession is due to a lack of demand, which can be stimulated using either fiscal or monetary policy (or both). It's IS/LM economics. In the 70s, this was combined with a belief in a stable Phillips curve, so you could trade off higher inflation for lower unemployment.<br /><br />Friedman was very influential in showing the shortcomings of this approach. He popularized the idea that inflation could be controlled by monetary policy, and that attempts to reduce unemployment below the natural rate are futile.<br /><br />As for Friedman's broader legacy, I think where he influenced policy (US, UK, China, Chile) he had a very positive effect, but Cochrane does go overboard on the successes. The fact is Friedman was only marginally influential, if it were up to him policy would have been more Ron Paul than Ronald Reagan. But I think a lot of people on the Left are in denial about how much worse things would have been in the US and UK if 1970s polices had continued. On the other hand, those on the Right tend to exaggerate the improvements and ignore the fact that most of the gains have gone to the rich (although I think the increase in inequality would have occurred anyway, being mostly due to globalization and technical change).econojonhttps://www.blogger.com/profile/11836028530972814027noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-21052082071090684192012-01-17T07:04:05.257-05:002012-01-17T07:04:05.257-05:00Cochrane seems to be suggesting that the 1980s mar...Cochrane seems to be suggesting that the 1980s marked the end of stagnation in the US and the UK. Can I give a British perspective on this? Assuming there was some increase in the rate of growth and/or general prosperity in the UK in the 1980s (I don't know), could this have anything to do with the fact that during that period Britain became one of the largest oil producing countries in the world?Lukenoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-19074425008524997432012-01-17T06:43:43.379-05:002012-01-17T06:43:43.379-05:00I haven't read any of his books, so perhaps I ...I haven't read any of his books, so perhaps I shouldn't comment, but I've been curious that nobody has mentioned his involvement in post-Allende Chile.I know there are still right-wingers who think Pinochet was a great humanitarian, but that's not the opinion of most people who lived under his rule. On the other hand, Friedman earnestly supported him. I can only take from this that he loved the "free market" so much that he believed it sh0uld be defended by dictatorship and death squads. Post-Soviet Union Russia, too.Procopiushttps://www.blogger.com/profile/17554355440319405363noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-88234232156051631232012-01-17T06:08:13.569-05:002012-01-17T06:08:13.569-05:00Having spent my 40s in the '80s, I don't r...Having spent my 40s in the '80s, I don't remember any "sense of idealism, promise, and heroism."<br /><br />I remember ideology instead of idealism. In fact, I remember Republicans scoffing at idealism.<br /><br />I remember triumphalism instead of promise. An owner (a very liberal Democrat) of a high-end women's clothing/accessories boutique in Alexandria VA told me at the time, "You can't believe how much money the Republicans taking over this town (DC) have and how freely they spend it!"<br /><br />I remember "greed is good" rather than heroism.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-36424573947844029122012-01-17T00:52:15.450-05:002012-01-17T00:52:15.450-05:00I can assure you that most of us who lived through...I can assure you that most of us who lived through the Goldwater-Regan-Bush years of Friedman idolatry knew the guy as quite the right wing looney. I was just a teenager but had read Keynes; and Friedman was o say can you say of Chapter 1. The tea party was out in force; and I can personally recall him supporting local religious groups to control school curricula. <br /><br />Sorry, there is another Friedman of a few very good papers; but get a long spoon before fishing the pond.Ronald Calitrihttps://www.blogger.com/profile/07206853993777529429noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-67899359315187516892012-01-17T00:38:23.946-05:002012-01-17T00:38:23.946-05:00The dirty secret of the 1980s was the rise of leve...The dirty secret of the 1980s was the rise of leverage.<br /><br />The Fed was fighting the baby boom's proclivity to borrow (and borrow it could as they began turning 30 en masse) but threw in the towel in 1983:<br /><br /><a href="http://research.stlouisfed.org/fred2/graph/?g=4of" rel="nofollow">http://research.stlouisfed.org/fred2/graph/?g=4of</a>Troynoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-89868935206359567062012-01-16T23:51:24.427-05:002012-01-16T23:51:24.427-05:00Also, I get a kick out of Cochrane claiming credit...Also, I get a kick out of Cochrane claiming credit for China, considering that China is heavily Keynesian (and also fairly mercantilistic). They don't bother with social safety nets, it's true, but they are much farther away from any libertarian ideal (even purely in economics) than they are from Keynesianism. Government interference in markets isn't exactly light there.Richardnoreply@blogger.com