"Words ought to be a little wild, for they are the assault of thoughts on the unthinking" - JMK
- Jonathan Catalan responds to my critique of him and Mario Rizzo on unemployment. I don't think he quite addresses my concern. My initial point was: "yes, if you intervene to boost employment it could distort the capital structure, which would have negative consequences, but distortions of the capital structure are not exhaustive of the unemployment problems you can have and indeed distortions of the capital structure may be small beans compared to other problems facing the economy." Jonathan's response seems to be "distortions of the capital structure and reduced demand are not mutually exclusive." Well of course they're not Jonathan - that's why we care about distortions of the capital structure! That's why I had said it is a problem in my original post. But my point was not that they are mutually exclusive (a point that nobody made but which you ably refuted). My point was that malinvestments do not exhaust the possible causes of deficient demand, and no airtight theory of malinvestments can demonstrate that they do. ABCT hits on one important process. It offers no reason to think its the only important process and if it is a relatively minor process in a specific downturn, then intervention is much more plausible.
- Tyler Cowen quotes Robert Sloss from 1910, making predictions about the "wireless telegraphs" we'll all have in 2010. He really nails a lot of these points - sounds very familiar!
- Arnold Kling is still reviewing the Leamer textbook, and he has a post on a couple interesting ways in which Leamer suggests that price discrimination can explain macroeconomic phenomena. It's pretty interesting, if not entirely conclusive. At the end it dawns on him that his "labor as investment" theory has a Keynesian flavor to it, which is something that I've mentioned in the comment section there before.
- Chris Perridas at the blog H.P. Lovecraft and His Legacy pins down the date that a young Lovecraft met one of his heros, Teddy Roosevelt.
- The 1920-21 depression article is resubmitted! Does anyone know the turnaround time at the Review of Austrian Economics? This is why I need to write more... I'm very impatient. If I had several irons in the fire then they'd come out at regular enough intervals I wouldn't be antsy.
Demand, Supply, and Macroeconomic Models
23 hours ago