tag:blogger.com,1999:blog-17232051.post9156553845492495485..comments2024-03-18T22:32:52.802-04:00Comments on Noahpinion: Not a summary of economicsNoah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger105125tag:blogger.com,1999:blog-17232051.post-11079374125245091212014-05-15T20:43:53.110-04:002014-05-15T20:43:53.110-04:00Psst. Sargent is wrong. I can think of plenty of...Psst. Sargent is wrong. I can think of plenty of examples where government has far better information than "the people". The FDA is a great example!<br /><br />If that isn't convincing enough to you, the NSA certainly has *more* information than the people, though I don't think they have any incentive to analyze it properly.Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-3540493937147956742014-05-15T20:41:59.837-04:002014-05-15T20:41:59.837-04:00"If the national economy is capable of achiev..."If the national economy is capable of achieving a higher sustainable level annual output, then a government can in principle spend new money into the economy in such a way as to bring the economy to that higher level without generating inflation, and without having any need to get the spent money "back" from the public."<br /><br />Yep. This is the famous result of Keynes -- when people are unemployed, print some money to employ them to do something useful, and it's a complete win-win at no cost to anyone. I was seriously offended to hear Sargent spouting discredited anti-Keynesian nonsense.Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-32204396395054620942014-05-15T20:39:39.506-04:002014-05-15T20:39:39.506-04:00There is no evidence -- zero data -- to support th...There is no evidence -- zero data -- to support the theory of comparative advantage.<br /><br />At all!<br /><br />Absolute advantage works, of course. It's comparative advantage which is false. If country A is the lowest-cost, most-efficient producer of good #1, good #2, good #3, ... and indeed all goods, and country B is the highest-cost, least efficient producer.... then eventually country A will manufacture everything and the people of country B will go begging. Sure, country A has a larger advantage in good #1 and a smaller advantage in good #2 -- it'll dominate in both.<br /><br />Why? Because country A doesn't have to choose between investing in wool and investing in cotton; it can and will do both. In the real economy there are *practically always slack resources*. The theory of comparative advantage depends on country A being at full employment and full resource deployment, so much so that taking over the market for good #1 uses up all of its resources and it can't take over good #2. This simply doesn't happen often if at all.Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-5559860844433343342014-05-15T20:34:41.204-04:002014-05-15T20:34:41.204-04:00"10. When a government spends, its citizens e..."10. When a government spends, its citizens eventually pay, either today or tomorrow, either through explicit taxes or implicit ones like inflation."<br /><br />Complete, utter, arrant nonsense. Lies, in fact. This was proven false by John Maynard Keynes. <br /><br />When a government prints money and spends it to deploy undeployed labor (hire unemployed people) or to deploy other undeployed renewable resources (for instance, harnessing solar power, planting crops in fallow fields), its citizens benefit. Period. They never pay -- they only benefit. It's win-win!<br /><br />This is one of the most important results in all of economics. It requires understanding the nature of money (it's a social construct) and the nature of labor (if we don't use it, we waste it and it's a deadweight loss gone forever).<br /><br />Keynes spent a LOT of time explaining this very slowly to economists and politicians. His theories were tested, and they were right.<br /><br />Sargent should resign his position and return his PhD if he has one. He shouldn't spew such bull. It's dishonest.Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-72699485542194848392014-04-29T10:54:30.167-04:002014-04-29T10:54:30.167-04:00"The reason" is incentives. But of cours..."The reason" is incentives. But of course, social security systems can free people from only being concerned about current income - for example people living day to day in third world countries (ie most of the world's population). In this way it can provide the basis for savings and investment.<br /><br />This Sargent ideology is something we really have to battle against.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-18127820654517478222014-04-28T15:36:27.837-04:002014-04-28T15:36:27.837-04:00This is nothing more than a 12 point mantra for Ma...This is nothing more than a 12 point mantra for Market FundamentalismAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-32514211139165405192014-04-28T05:34:08.012-04:002014-04-28T05:34:08.012-04:00"By discussing asymmetric information, he'..."By discussing asymmetric information, he's also saying "Other people know what's best for them better than you do, so if you try to help them with government policy, you might end up hurting them instead." "<br /><br />This same argument can be used against private charity (and in fact can be used to argue that public support - where people get to vote on the distribution is better than private charity). Very wishy washy arguments here in general. Almost none of them hold up to close scrutiny. Not a very good advertisement for economics.reasonhttps://www.blogger.com/profile/10958786975015285323noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-83922766132197946492014-04-28T05:26:36.230-04:002014-04-28T05:26:36.230-04:00"This is the basic idea of all of econ. But I..."This is the basic idea of all of econ. But I think Sargent has a special reason for reiterating it.<br />2. Individuals and communities face trade-offs.<br />Implied by #1, but in a speech this short I think we can forgive Sargent this slight verbosity."<br /><br />No 2 is not necessarily implied by 1. It is unfeasible to fly to the stars, but that doesn't create any tradeoffs.reasonhttps://www.blogger.com/profile/10958786975015285323noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-2653924072448664162014-04-27T09:43:20.006-04:002014-04-27T09:43:20.006-04:00Krugman is surprised that Cochrane favours tough r...Krugman is surprised that Cochrane favours tough regulation for the financial sector. But this is a classic monetarist position. Monetarists such as Sargent and Cochrane are against government intervention on equity grounds. But they are big on incentives. For that reason they are big on rules - especially monetary/financial, regulations and prudish Victorian morals and discipline. Rules above discretion. This is also the logic behind #7.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-86037026953512257822014-04-25T09:54:21.219-04:002014-04-25T09:54:21.219-04:00SpammerSpammerBarry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-207265197636461502014-04-22T16:38:47.285-04:002014-04-22T16:38:47.285-04:00"It's a comment on naive pre-Clintonian l..."It's a comment on naive pre-Clintonian liberalism."<br /><br />And this would be what, exactly? Carterian deregulationism?<br />LBJ's rather effective reforms?<br />The New Deal?<br /><br />Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-34822771725053809922014-04-22T16:37:36.493-04:002014-04-22T16:37:36.493-04:00"He is big on micro-foundations which assume ..."He is big on micro-foundations which assume limited resources and unlimited wants - greed - a major ideological and empirically questionable assumption about human behaviour to begin with - and a very cynical one."<br /><br />Brad Delong once pointed out that Ptolemaic astronomy had micro foundations, but the Gallilean astronomy did not (even after Newton, it didn't; gravity was an unexplained thingamajigger).Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-8161442263785605012014-04-22T16:20:02.210-04:002014-04-22T16:20:02.210-04:00Noah Smith12:29 PM
"By "smart" I m...Noah Smith12:29 PM<br /><br />"By "smart" I mean raw brainpower. Very few can compete with Sargent in that department..."<br /><br />That's actually skipping the question. How are you measuring raw brainpower?<br /><br />And, of course, my original point still holds, that even if he's a genius, that doesn't mean that we can trust what he says. Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-65573583803747355032014-04-22T16:18:01.793-04:002014-04-22T16:18:01.793-04:00doc: "The real problem is with the implicit ...doc: "The real problem is with the implicit definition of "efficiency," which seems to be "maximize the (inflation adjusted) value of current output." That is, it assumes that the appropriate definition of "efficient" use of resources is wholly determined by the use of those resources to produce market goods and services. The definition of "efficiency" rules out ex hypothesis any concern for distribution. The definition, then, flies in the face of one of the underlying concepts in economics, the principle of diminishing marginal utility. Something wrong there."<br /><br />To take it to psychotically logical conclusions (IOW, being a Chicagoist), what would be the effect of the rich buying the organs of the poor? If they can outbid the poor person, then they pay the money to the, ah - donor's choice of parties, and then harvest away!Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-63628380375108092772014-04-22T14:52:25.135-04:002014-04-22T14:52:25.135-04:00And yet here he is shilling. That he has done real...And yet here he is shilling. That he has done real research is immaterial. It's not right to pretend science supports your political views. This happens all the time with economists, and they don't appear to suffer any consequences.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-62848235681285142972014-04-22T10:02:57.183-04:002014-04-22T10:02:57.183-04:00"Sargent might actually believe in this whole..."Sargent might actually believe in this wholeheartedly,..."<br /><br />Which says nothing good about him.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-21332359565552380552014-04-22T10:02:55.932-04:002014-04-22T10:02:55.932-04:00I don't have a problem with Sargent saying tha...I don't have a problem with Sargent saying that well-intentioned progressive tax systems and social welfare systems can distort incentives and therefore lead to a welfare loss. What I do not like is when it is dressed up in algebra and presented as a universally applicable scientific fact.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-34235354944352776822014-04-22T09:02:44.897-04:002014-04-22T09:02:44.897-04:00Adding on - when was the last time that we saw the...Adding on - when was the last time that we saw the elites in a field look at massively dis-confirming data, and blithely proceed on as if nothing happened?Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-75758427583476763182014-04-22T08:39:39.866-04:002014-04-22T08:39:39.866-04:00Noah: "...(a strong contender for "smar...Noah: "...(a strong contender for "smartest living economist")..."<br /><br />I don't care if he's smart, I care if he's trustworthy. I've seen lots of really, really smart economists spouting bullsh*t. I've seen lots of really, really smart economists look at their bullsh*t, look at contradictory reality, and continue spouting bullsh*t.<br /><br />In general punditry and commentary, describing somebody as 'nice' arouses my suspicions ('he's a really nice guy; he always sends flowers to his victims' funerals...').<br />In economics, describing somebody as 'smartest' is d*mning praise.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-42484424409185060912014-04-22T07:10:14.573-04:002014-04-22T07:10:14.573-04:00Re: Sargent's "brain power," I feel ...Re: Sargent's "brain power," I feel like it's worse to be smart, but stay stupid stuff anyway. It reminds me of something Orwell wrote about Wells: "since 1920 he has squandered his talents in slaying paper dragons. But how much it is, after all, to have any talents to squander."Nate O.noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-31372012580782565072014-04-22T03:41:41.435-04:002014-04-22T03:41:41.435-04:00It's common for firms, governments, and people...It's common for firms, governments, and people to spend money without immediate value realized. That's typically called "investing." <br /><br />Maybe one of those dead kids would've invented cold fusion, or maybe 1000 of those dead kids would've become productive members of society. It seems silly to allow your (human) capital stock to decline given how cheap it would be to maintain it. <br /><br />Like Doc mentioned, diminishing marginal utility means that, even if Larry "deserves" tremendous compensation, is it really "efficient" to give him total control of so many assets, given investments the world needs to make in other areas, not just the "make Larry feel warm and fuzzy" industry. Nate O.noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-59314035797925669542014-04-22T00:05:51.967-04:002014-04-22T00:05:51.967-04:00"When a government spends, its citizens event..."When a government spends, its citizens eventually pay, either today or tomorrow, either through explicit taxes or implicit ones like inflation"<br /><br />I think the key word there is "eventually". What do you get to do with that money in the meantime? And, when the citizens do re-pay, what does the government do with those repayments? I'm sure we had to repay the government for the TVA, but after repaying them, we had this real nice electricity distribution system left over...Cesiumhttps://www.blogger.com/profile/02025636403503365433noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-18414958851004998062014-04-21T20:45:34.986-04:002014-04-21T20:45:34.986-04:00This is an interesting and reasonable interpretati...This is an interesting and reasonable interpretation of Sargent's list. However, how do you know this is what Sargent intended? Sargent might actually believe in this wholeheartedly, not merely as a mental inoculation for Berkeley grads. Your interpretation appears to be putting too much words into Sargent's mouth here: "It's not hard to see why Sargent - himself a Clintonite sort of Democrat - might emphasize this point to a bunch of Berkeley grads. ... Sargent, of course, knows that, and is just playing to a very particular audience of what he takes to be starry-eyed, wet-behind-the-ears, do-gooding Berkeley hippies"Joung W. Hwanghttps://www.blogger.com/profile/02978954184186022564noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-22846126249014918422014-04-21T20:36:01.510-04:002014-04-21T20:36:01.510-04:00I agree this one was a disturbing thing to say (co...I agree this one was a disturbing thing to say (combined with the "That's why it's difficult..."), either because it's silly to someone who's studied game theory or because it gives an entirely false impression of equilibrium to someone who hasn't. Even stepping away from government interventions, this seems an argument against mechanism design.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-16237158825786981112014-04-21T20:28:37.224-04:002014-04-21T20:28:37.224-04:00It is also very striking that no form of market fa...It is also very striking that no form of market failure (even those implied by #3, #6, or #11) make the list.Anonymousnoreply@blogger.com