"Words ought to be a little wild, for they are the assault of thoughts on the unthinking" - JMK
- Finally, the ambiguity is over! Or at least that's what I thought last night when I first read Paul Krugman's new post referencing broken windows which was careful to specifically talk about "demand", "employment" and "spending", rather than make vaguer statements like "some good" that apparently lead some people to conclude that Krugman thinks disaster and devastation is "morally acceptable". Alas, I may have thought that too soon - this morning I got an email from a world-renowned Austrian economist saying that while it "technically" didn't say anything, this sort of post leads people to jump to conclusions about Krugman. Oh well. Back to the drawing board. One of the things that I really liked about this post was this line: "Indeed, in the absence of effective policy, that’s how recovery eventually happens: as Keynes put it, a slump goes on until “the shortage of capital through use, decay and obsolescence” gets firms spending again to replace their plant and equipment." Creative destruction, if you will. The thing is, life is full of disasters and disaster responses. Thankfully in the developed world these are mostly mini-disasters, but it's true nonetheless. And that's the creation of real value. We get new cars when our old ones wear out. Is that valueless? No, of course not. I got a crown last week because I've got genetics that give me deep grooves in my teeth that make them prone to cavities. Is that valueless? No. Insulating ourselves from the vicissitudes of life and physics is a huge part of the value we create in the market. Recognizing that as a major contributor to economic activity doesn't mean you love broken down cars or tooth decay (or hurricanes or earthquakes).
- And another good Krugman post on the reality of austerity. And if you say "it's not as little government purchases as I would have liked - if they did as little as I would have liked things would have been better" - just remember how apoplectic you got when we said that. Nobody thinks that what is being done is perfect, so everyone is making a form of the argument "if they just did a little more in my direction everything would be better". It's obnoxious when people act like this is an absurd argument that only the other side is making, and then turn around and say the exact same thing themselves.
- Jonathan Catalan on spreading libertarianism. I think he's right in the end. For a while he goes on about how the moral case for libertarianism is hard to make, but there's also the consequentialist case. My first response was "well the consequentialist case is AT LEAST as hard to make as the moral case!!". He seems to say this too in the end - that both can be challenging. For non-libertarian readers, I think people are wrong to make the accusation that libertarians don't care about poor people (an issue that comes up in the article). Their ideas may hurt poor people, but that's very different from not caring about them and we shouldn't claim that. I don't think I've ever said anything like that on here. It's similar to their claims that we're statists or that we don't care about liberty or that we're no pro-market. Don't fall into that same trap. When I criticize libertarians, I try to stick closely to what they actually say. They oppose democratic problem solving by communities, for example. This is explicit in most cases and I think it's a really bad thing to oppose. So I try to take it down from vague complaints about "the state" to the actual claim - you want to close off or at least limit an avenue for communities solving their own problems. Stick to their actual claims - no libertarian claims they don't like poor people.
- Mark Thoma shares Gary Burtless's masterful take down of the regime uncertainty theory of the crisis. It's not that regulatory or policy uncertainty doesn't weaken growth. Everyone thinks this. The problem is it's a very poor way of explaining the current situation.
- A great Brad DeLong post on what to do about jobs.
Dan Carlin’s “Hardcore History”
5 hours ago