"Words ought to be a little wild, for they are the assault of thoughts on the unthinking" - JMK
- Charles Krauthammer has a good article on Social Security. He doesn't mention the role of persistent growth but does mention something else important - than mandatory nature of the program. He's also a little too worried about the sustainability of the program, but his point is right on: this Ponzi scheme works because it's not like a Ponzi scheme in all the ways that matter. So let's keep it running until the electorate decides they don't want it anymore.
- Bob Murphy has a post critiquing the idea of measuring trend GDP from peak-to-peak. I think the key insight for why we do this comes from Friedman's "plucking model". I try to explain that in the comments, but Bob seems to think I'm saying Austrians can't explain long recessions (I'm not saying that - they do have an explanation for that). The point is that the plucking model gives us a reason for why we measure GDP potential from peak-to-peak. Maybe this weekend I'll do a more detailed post on the plucking model, but it's a very interesting empirical regularity.
- And speaking of empirical regularities and Bob Murphy, Chris Bertram sharply criticizes Bob's a priorism with respect to Graeber and the origin of money. Bob may point the finger at Gene Callahan for misleading him (I don't know which of these stories holds water), but all that misses the point and here Bertram hits the point dead on: a priorism is a bad way of understanding the world. What's ironic is that of the Mises Institute bunch, Bob is one of the most likely to give you data to support his argument. He is one of the least a priorist (in practice at least) of a very a priorist bunch. So I don't want to pile on Bob here - I just want to reiterate Bertram and Graeber's general point. As Graeber says: "Economists claim to be scientists. Normally, when a scientist’s premises produce such spectacularly non-predictive results, the scientist begins working on a new set of premises. Saying “but can you prove it didn’t happen sometime long long ago where there are no records?” is a classic example of special pleading. In fact, I can’t prove it didn’t. I also can’t prove that money wasn’t introduced by little green men from Mars in a similar unknown period of history." I just hope he realizes he's stumbled into an idiosyncratic little group that is very resistent to empiricism as a deliberate methodological position, and that most economists don't think like this at all.
- Karl Smith puzzles over being considered a liberal or a leftist. I have to post this because I have the exact same reaction. I've been referred to as a liberal for years now and it's still weird to hear people say that because I don't think of myself as being particularly liberal. There are three reasons for this I think. First and foremost, it's who we're talking to (the libertarians). I know other people don't think of me as a liberal. Second, in the middle of this recession I'm finding myself frustrated that Democrats sound increasingly like Republicans so I probably come across as "to the left" of them, whatever that means. Really it's just a disconnect with all but the more liberal politicians on one very big issue. And third, with the rise of the Tea Party supporting basic safety nets, basic public investments, etc. and thinking these are just smart and reasonable things to do has become suspect. So what would have been fine for a conservative to say thirty years ago is suddenly less tenable. These days, being of the view that Social Security, public education, a safety net, and investment in science is something to be celebrated can come across as "liberal".
Swiss National Bank vs. the Federal Reserve
2 hours ago