Saturday, September 10, 2011

Assault of Thoughts - 9/10/2011

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

- Keynesianism is not consumptionism. If you've familiarized yourself at all with Keynesianism outside of bad high school history lessons on the Great Depression or libertarian talking points you should have at least some sense of this. If you read this blog regularly you better know that. Still, the error persists. Recently we've seen it from Boudreaux, Hayek, and now Robert Higgs. I have some comments on the first two links. If you want to know Keynes's own view of actual underconsumptionists, you can read Chapter 23 of the General Theory (he discusses underconsumptionists toward the end).

- Brian Cox on public funding of science. It's interesting how he credits CERN with the internet rather than DARPA.

- The new Econ Journal Watch is out. It's on property rights as bundles of rights.

- David Beckworth suggests an NGDP futures market as a key to robust monetary policy.


  1. What Cox probably means there is the creation of HTTP. Then again, Lee's thoughts were based on the already extant notion of hypertext; a concept that had been around for decades. Domain names, TCP, etc. were already in existence prior to HTTP as well.

    Anyway, you have to have a reasonable way to use HTTP, and really the first useful way to do so was designed at the U. of Kansas - in the form of Lynx (that was the first "browser" I ever used). Mosaic followed on pretty quickly after that (the second browser I ever used).

    The creation of the internets is a very complex thing; to say that one institution, or person, or whatever, created it, is silly, and fundamentally ignores the way real science and scientific history has unfolded. Science is interconnected and it is not teleological (this explains why the fruits of science are so hard to predict and why you can sink a lot of money into something that goes nowhere re: the creation of either useful applications or even coherent knowledge).

    Fundamentally the issue has never been funding; there is tons of private funding out there for science; if the government stopped funding science tomorrow you wouldn't notice the difference (the good to middling scientists who for public agencies would quickly be snapped up). So what are the real issues? First, is the claim that somehow without government funding certain areas of scientific pursuit would be underfunded; I'm skeptical of this claim. Second, I also think that public funding is a means by which either broad social groupings or smaller pressure groups make their views known on scientific and technological change generally - that's how we try at least to deal with one of the primary problems associated with modern science Hannah Arendt and others have pointed out - that the public at large, elected officials and even regulatory bodies have a hard time understanding exactly what these science and engineering types are up to (if you don't believe that do an experiment someday - interrogate every say fifth piece of technology, etc. you run across in your working day some time and see if you can discern how it works). So public funding of science has a very significant regulatory aspect to it and to me that is its primary role.

  2. Gary, I'm totally behind most of your post, but this one surprises me:
    "Science is interconnected and it is not teleological..."

    Now, if you just mean that science as a whole does not advance towards some specific goal like cheap nuclear fusion, that's OK, but not quite the right way to say it. But if you mean (what the statement seems to mean on its face) that science is a kind of aimless process that just happens to turn up quantum theory and relativity now and then, it ain't right.

    The telos is there, and it's easy to name: *Understanding*.

  3. "Keynesianism is not consumptionism."

    What's really weird on this is that, when I had to teach Keynes, the person who led me to realize this was... Roger Garrison.

    I mean, the crucial role of investment is starkly obvious in Garrison's models in his Keynes vs. Hayek Powerpoints.

  4. Gene,

    Well, I'm glad we can agree on something. Surely there is now hope for humanity.

    As for teleology, I'm just suggesting that you can't really predict what X or Y or Z will lead you to or those who use the knowledge you've discovered. So yeah, I take no issue with the realist background that makes up modern science (as opposed to the older, instrumentalist view). Still we are so often surprised by the fruits of science and technology, and that's mostly what I am getting at. Individual scientists and institutions even are generally not aimless in other words, and I agree with that.

    There have been scientists/defenders of science who thought otherwise; here I think of folks like Julian Huxley or Theodore Draper. In the case of Huxley he engendered a backlash from the religious minded for his claims regarding "progressive evolution," and in the case of Draper, he created a whole host of historical fallacies (ex. that renaissance/early modern thinkers thought that the world was flat - that was not the argument Columbus actually had - the argument was over the circumference of the earth - and Columbus was actually wrong in his calculations) that have plagued our ideas of the past ever since.

  5. I mean, John Draper (basically an advocate of the "conflict thesis"). Theodore was a totally different cat.

  6. Garrison is generally very good (my one concern - at least with Time and Money - is that he gives Keynes a loanable funds theory of the interest rate which turns out some odd results).

    I referenced Garrison a lot in the discussions several days ago about heterogeneous capital. Several people noted that "Keynesians use aggregates like K and I and C and L so they see it as a homogenous blob" - I responded that Garrison also uses every single one of these aggregates in his formulation of ABCT... is he guilty of homogenization too?

    I think not. :)

  7. Daniel,

    Who cares about that? Let's talk about the history of science. :)

  8. I am Gary - just a different science.

  9. I thought you were talking about economics.

  10. Im late to the party here, but I want to point out again that Higgs doesnt seem to understand that he should decompose "fixed private domestic investment" into it's residential and nonresidential components becuase while the "Keynsianism isnt consumptionism" piont is well taken the real reason "investment" is so low is ONLY because of the housing crisis and housing blurs the line between consumption/investment becuase its kind of just a big durable good that usually doesnt depreciate with use. I mean,. Higgs is clearly trying to draw a bold line between the business and household sectors with his regieme uncertainty thing but that line doesnt exist if you actually decompose the data.

    Delong has a good graph illustrating this point that he makes his undergrads read btw:

  11. Andrew,

    Whilst I appreciate being against absolutism, I don't think you can simply redefine consumer durables as capital goods. Houses DO depreciate with use and they don't facilitate new production.

  12. I wasn't redefining consumer durables as capital goods I was suggesting that housing is a lot like a consumer durable and as such it's not obvious that you can claim this is a "business" recession driven by "uncertainty".

  13. Daniel, are you saying Hayek was lying in that anecdote about what Keynes told him? Or that the doddering old man made a mistake?

    Isn't it possible that Keynes told Hayek something that slightly differed from what Keynes had written in 1936?

  14. Bob -
    I wouldn't say he's "lying", but we know Hayek changed his story a lot on a number of things regarding Keynes over the course of his life, particularly in this crucial pre-General Theory period that's so important for Hayek's own relationship with Keynes. That's just the way human memory works - I wouldn't call it a "lie".

    Keynes also makes quips and sweeping claims, so I suppose it's possible this is what he said to Hayek - it's just very different from what he says everywhere else.

    I think Hayek has a track record of changing his story and Keynes has a track record of saying what he thinks will scandalize people. This is so obviously different from what he was saying at the time about investment - and it plays into Hayek's line that Keynes was just naive - that I lean towards the former. Whichever it was, though (and we'll never know) the more important point is that that anecdote clearly doesn't characterize Keynes's thinking on consumption and investment.


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