Friday, March 18, 2011

Assault of Thoughts - 3/18/2011

"Words ought to be a little wild, for they are the assault of thoughts on the unthinking" - JMK

- First, a jigsaw puzzle roundup. Steve Horwitz started things the other day by using a jigsaw puzzle metaphor to explain the difference between Austrians and Keynesians. Don Boudreaux concurred. I let them keep their description of themselves but corrected some misunderstandings of the Keynesian claim. Brad DeLong linked to me. I clarified what I thought the heart of the problem was - people read things like ditch-digging and assume Keynes was talking about make-work projects, when really his point was closer to Friedman's helicopter drop. Jonathan Catalan likes the metaphor if we keep in mind that it's oversimplified, and calls attention to Hutt's view on idle resources (which is often presented as an alternative to Keynes, but it strikes me as being different... more complementary than supplementary). Samuel Wonacott responds here. I was also fascinated to see the Joint Economic Committee Republicans' blog pick up Steve Horwitz and Don Boudreaux on this - and a Mercatus Center link. It's always interesting to see Austrians claim how hot and heavy Washington is for Keynesians and how they're shut out. Republican Congressmen are posting their stuff. Wouldn't it be great if Paul Krugman and Brad DeLong were on the White House blogroll? Ya - that's not happening. And while Hayek's portrait is up in at least two Congressional offices, I doubt Keynes is up in anyone's. Interesting to see that. Did I miss anyone's?

- Evan blogs about how theologians grapple with history

- Robert Vienneau blogs about Card and Krueger's work on the minimum wage and recent evidence.

- Scott Kuhagen updates us on Cucinelli's assault on Mr. Jefferson's University.

- Many people have pointed to Will Wilkinson's summary of the literature on the economics of disasters. I did a search on this literature too shortly after the earthquake, when all the broken window fallacy slandering was going on, and I came up with a lot of the cites that Wilkinson provides. Much of these are publicly available - it's worth a look. This is an empirical question, guys. It's not a morality play. It doesn't seem like we're likely to see any silver lining from this, but the logic of a silver lining from disasters is not crazy - you just have to be careful in how you talk about it and what precisely it is that you're claiming.


  1. "It's always interesting to see Austrians claim how hot and heavy Washington is for Keynesians and how they're shut out. Republican Congressmen are posting their stuff. Wouldn't it be great if Paul Krugman and Brad DeLong were on the White House blogroll?"

    I think the point is that they don't have to be. The Keynesian nightmare is the current paradigm.

    Silver lining for whom exactly? For this kid?

  2. "The Keynesian nightmare is the current paradigm."


    "Silver lining for whom exactly? For this kid?"

    If you post anything else on the tragedy in Japan on this blog that takes advantage of their suffering in an effort to dispute claims that people have made about economic impacts, I will remove the comment. If you have an argument, make an argument. Don't take advantage of this kid.

  3. Washington probably is not a hotbed for either the New Keynesian School, Post Keynesian School, Austrian School, Chicago School, or any school of economic thought.

    Washington probably just subscribes to the unique Washington philosophy on everything.

    The term Washington Consensus does not refer to supply siders, monetarists, or neoclassical Keynesians, but simply that hybrid of those things, that partly rejects many ideas of them as well. Even a top establishment man like Friedman had his ideas implemented briefly and imperfectly.

  4. Bingo Prateek.

    Having lived here most of my life, it's always interesting to see what people insist Washington is or isn't.

    Washington is full of three types of people: politicians/politicos, lobbyists, and policy wonks. Wonks do fall into certain schools of thoguht, but even they are less sectarian because they don't have the luxury of being insular in this town. Politicians/politicos and lobbyists don't fall into different schools of thought for the most part either - they're self-interested but will pick up ideology when it serves their interests.

    The other thing that bothers me is the juxtaposition of "inside the beltway" with "real America/home town America". Arlington, Virginia is my home town and it has been for several generations. It's weird to get dispossessed from the "hometown America" club and then get told we're the presumptuous ones!

  5. I'm not taking advantage of anyone. I do find the whole "hey, look at the benefits" debate to be rather, hmm, pointless and kind of bile-worthy.


    Happily, as a soon to be resident again of the NW provinces of the empire, I don't have much experience with the workings of the beltway.

  6. "If you post anything else on the tragedy in Japan on this blog that takes advantage of their suffering in an effort to dispute claims that people have made about economic impacts, I will remove the comment. If you have an argument, make an argument. Don't take advantage of this kid."

    Indeed. I share you indignant reaction toward such callousness toward global tragedies. That is why I implore those who dare mock from afar to dare help near. Below is a link to a humanitarian organization emboldened to help the people of Japan. Go on in and show your support.

  7. But...but...doesn't living in the Beltway region actually make people insular?

    The White House press secretary retired, with a last salary of $120,000-something. Obama said it was sad to see a dedicated employee go, particularly one who did work for modest pay. Mark Shields, a columnist *based in Washington*, said this was a sign that Beltway people may be a little out of touch. Why? $120,000 was not exactly modest, except maybe by White House standards itself.

    Keep in mind, both the limited government and activist government crowd should support high salaries in the very top public sector - it attracts good talent and reduces the need for extra personnel, while also bringing in people who cut costs of projects dramatically. That's why a legendary Ford manager like Robert McNamara was well paid in the White House too.

    But who should pretend this is a modest living?

  8. Prateek - I said the same thing when Obama called that a "modest income". I agree completely. But again, thinking that daily life in the DC area is somehow intimately tied to the President's life makes about as much sense as other parts of America sneering at New York and associating it with investment banker living, or sneering at California and associating it with movie stars. Daily life around here is hometown life to me - Kate and I live pretty close to where we grew up, went to school, etc.

    That having been said, cost of living does vary and it does matter when you talk about those things. I agree and said at the time that Obama shouldn't have called that "modest". At the same time, I was personally shocked the guy made that little, living in this area and working at that job. For the area and for a job of that caliber it's not excessive - but when you're speaking to a national audience it's not "modest" either. The guy has a comfortable life, after all.

  9. By the way, you are from Arlington, Virginia? Don Boudreaux linked to Mark J. Perry who made a satirical "Buy Arglingtonian" campaign poster, in order to make fun of a Buy American campaign started by a man from Arlington. You heard of that one?

    Also, do you see Congressmen walking by on the streets on a day to day basis, while shopping in a grocery store or something?

  10. I saw the post but I hadn't heard of it before I read the post.

    I've seen a few Congressmen when I was down by Capitol Hill for an event (Hillary, when she was a Senator, was the most famous I saw). And it was just walking down a street in front of their offices, which was interesting. I went to one budget hearing with my boss, who was testifying, as well. I work on the west end of the city - half a dozen blocks west of the white house - so we're not near the main Capitol Hill area.

    I do see the president's motorcade go down Pennsylvania Avenue every couple of weeks - that's hard to miss - it's enormous. Alan Greenspan currently works on Connecticut Ave. - I used to walk right in front of his building the way I walked to work, and I saw him get dropped off their several times over the years... he typically arrived earlier than I did, so I only saw him when I went in early!

  11. More for famous economists you all might know... Bob Solow is on our board of trustees and I've seen him around the office every once in a while when the board is meeting.

  12. Ah, so Alan Greenspan, Robert Solow, Hillary Clinton, and a few Congressmen are seen now and then.

    Hans Hoppe had a long article where he described his frustration with the Washington think tank life. He complained that people in the Mont Perelin Society and the rest live so close to the capital that they are on somewhat good terms with Washington insiders.

    How can anyone say bad things about those whom one knows are otherwise nice people and with whom one is on good terms?

    Hoppe said they were too mum and too restrained in making hard criticisms of hard issues. The likes of Cato waste time on discussing the wrongs of having cars slow down when driving near schools. The moment one criticises a major administrative program, one could be offending a neighbour.

    Eventually, in this superficial life, all manners of think tank duties are little more than commentaries on short term issues and having a place to work when one is briefly out of academia or politics. This was at least the case fore free market think tanks.

    Hoppe found that organizations in more rural regions had both contentious discussions and often - he noted - better educated people, who could speak Italian, Latin, Koine, French, and German and would read classics in the original language. It sort of explains why Mises Institute people like him regard the frontier groups as intelligent and the mainstream as badly educated.

    PS: Is the Center For American Progress near you? Have you ever seen Matt Yglesias?

  13. I have no idea where CAP is located, and I've never seen him before.

    The Urban Institute is a lot more "wonky" than other groups in town that are more politically oriented. I don't think we've ever had people from Cato, Heritage, CAP, etc. here and I've never atteneded any of their stuff.

    On Hoppe - the argument just doesn't make sense to me. I think you can be civil with people and still highly critical of what they do. Hoppe strikes me as being escapist rather than a useful critic.

  14. The Urban Institute is as politically oriented as any other think tank.

  15. It really isn't and I'd venture to say you have no idea what you're talking about.

    Urban, Brookings, Rand, Abt, Mathematica are not all that political. New America and AEI are sort of mid-range. Cato, EPI, and Heritage are highly political. If you think they're comparable you'd demonstrated you have no idea what you're talking about.

  16. The Urban Institute is a well known center-left outfit. I guess it depends on what one means by "political," but that seems rather political to me.

    Hell, it was founded by LBJ for goodness sake. Politicians don't found and then pour lots of government money (my money) into organizations without them being highly political (and it still gets its majority of funding from the federal and state government - so I get to fund speech I don't agree with - yeah!).

  17. Gary -
    The little commentary that goes on here could probably be called center-left... mostly insofar as we don't go out on either a left or a right limb and we find nothing inherently wrong with the welfare state.

    But that's an extremely small portion of what we do. The analyses I run would come out with the same numbers no matter who was running it. There's always some interpretive wiggle, but not all that much.

    This is rightly described as "less political" than groups that do a substantial amount of commentary, and that have ideologically oriented mission statements, and who actually ask new hires during interviews if they are comfortable following a party line.

    When I was interviewed, I was asked whether I used STATA or SAS.

    You really are out of your depths.

  18. Daniel,

    Sorry, but you're getting lots and lots of government money; that means the government is your master; and the government is inherently political.

    I may in fact be talking out of my depth, but you're talking about your employer.

  19. We sell non-political research. When governments want political work they seek out other organizations - PR firms, lobbyists, etc.

    You are far too preoccupied with government, as usual. The government buys lots of goods, services, information, and insights with no ideological content whatsoever. There are lots of other organizations out there that don't take a cent of government money that are extremely ideological.

    Think of us as an organization that provides diagnostic tests. Government wants to know if its stuff works. Defense contractors are paid to do diagnostic tests on military equipment. The only thing the government wants is to know whether it works or not. We do diagnostic tests on policies. The government doesn't want to be fed inaccurate information. Trust me, if they get an answer they don't want publicized they know how to bury the report. That's their business. My five years here isn't a particularly long time, but it isn't short either. I haven't seen a single instance of the government influencing any of our substantive results.

    In a few cases a private funder has tried to do that, and we've just made clear that that's now how we work.

  20. "We sell non-political research."

    There is no such thing as "non-political research." Politics is to anything a government does as gravity is to Newtonian physics.

    "Defense contractors are paid to do diagnostic tests on military equipment."

    And they lobby the government to do all sorts of things.

    "The only thing the government wants is to know whether it works or not."

    Really? Because that sort of notion flies in the face of years of social science research about what government agencies want, agency capture, iron triangles, interest group politics, etc. This is not really a terribly persuasive counter-example.


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