1. Kate was at Russian class last night so I went over to my parents' for dinner cause I'm a good son like that. My dad asked me "have you ever heard of an economist name Boudreaux from one of the schools around here?". Of course I told him yes - I'm quite familiar with Don Boudreaux! He had apparently heard him on the radio that day talking about Obama's jobs speech and what he thinks is the real problem. Don blogged on that yesterday too, and went more on the attack than he apparently did on the radio. The problem with Don's argument is that it's riddled with this fallacy that Keynesianism is consumptionism. He points to steady PCE expenditures as evidence against Keynesianism, says that low investment is the problem, and then whips out regime uncertainty to explain that. In the comments, I clarify that Keynesianism is primarily an explanation of low investment, that drops in consumption do occur as a result of the multiplier, but that he's not refuting Keynesianism by pointing to investment that is considerably worse than PCE: that's what Keynesians suggest too.
2. I've heard a lot of people call the proposals Obama's putting forward "more of the same". That seems odd to me. It's $447 billion rather than $787 billion, and he talked about debt reduction and "paying for" this new stimulus (which in Washington-speak means not financing it with deficits), so it seems to me by any reasonable measure this is doing "less of the same" rather than "more of the same". I also don't understand why doing "more of the same" is always treated like such an insult. I recently got a crown, and during the first couple days while I had the temporary crown my tooth hurt like hell. So I took an extra strength Tylenol. It didn't entirely work for the pain. Did I say "well I'm not taking any more Tylenol - that would just be doing more of the same"? No! I did double the same - I took two extra strength Tylenol, and lo and behold - my tooth felt a lot better! I just think it's so strange how people talk about the stimulus sometimes. And people who should know better - people who should understand counter-factuals - point to the Romer-Bernstein forecast and then just declare that it didn't work. If you have that poor a grasp of what claims you can and can't make from the evidence, you shouldn't be an economist. The other option, of course, is that they do understand counterfactuals but they are making these bad arguments anyway to sway people who don't understand counterfactuals. That would be unethical and even worse.
Friday, September 9, 2011
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Well, as you may recall from your chemistry courses, there is a diminishing return to medications (indeed, medicinal chemistry is a very complex sub-field of chemistry proper). Also, higher doses or prolonged use can be harmful; take your example of acetaminophen - it can cause liver or kidney damage (it is hepatoxic). So your analogy isn't quite as simple as you make it out to be.
ReplyDeleteAs for the whole "paying for" line, that actually means at some point in the future we promise to pay for this, you can trust us on this.
ReplyDeleteA fairly useful link: http://dailycaller.com/2011/09/08/fact-check-obamas-jobs-plan-paid-for-seems-not/?utm_source=MadMimi&utm_medium=email&utm_content=TheDC+Morning&utm_campaign=The+DC+Morning+&utm_term=2__29+Joe+Wilson+was+right
ReplyDeletere: "Well, as you may recall from your chemistry courses, there is a diminishing return to medications (indeed, medicinal chemistry is a very complex sub-field of chemistry proper)."
ReplyDeleteI can guarantee you that at my pain level and dosage level diminishing returns had definitely not settled in yet.
Anyway - the idea that because you've done some of something and haven't gotten the results you wanted out of it simply doesn't imply that more of that thing is a bad idea. It's extremely poor logic.
re: "So your analogy isn't quite as simple as you make it out to be."
How do you figure? You always seem to have a tough time keeping local and global claims untangled, Gary.
As I've said many times before, Gary - the right way to think about things is on the margin. A lot of your confusion on my posts seems to be an unwillingness (I'm assuming it's not an inability) to do this.
ReplyDeletePlease Gary, arguing via metaphor is...unrealistic, shall we say.
ReplyDeleteDan, please keep it up at Cafehayek. I think you're being very generous as to Don's motives, but I'm of the opinion he knows he's a paid shill and is intentionally arguing in bad faith on behalf of his billionaire employer.
Here's a screen shot taken from the Form 990 of the Mercatus Center:
http://i.imgur.com/ASX71.png
Daniel,
ReplyDelete"I can guarantee you that at my pain level and dosage level diminishing returns had definitely not settled in yet."
That's not the point though.
You don't talk about thinking on the margin; you just say take some more acetaminophen (if their is a marginalist position taken it is unwritten). I suppose that sort of analogy makes sense from a very narrow instrumentalist perspective, but that's all that it does. And of course I am talking about things on the margin - that's why I mention diminishing returns as related to dosage (diminishing marginal returns in other words). So I get to roll my eyes at you at this point. Doh!
This is ultimately why I am so often puzzled by economists as a group; so many of you talk about the physical sciences in such dumb ways. Not to pick on you though; this cuts right across the ideological perspectives of economists (there are so many train wrecks regarding evolution and the neo-Darwinian synthesis on this account that it is hard to keep track of them - those who talk about Hayek a lot are especially prone re: that from what I can tell).
Anonymous,
That's why it should be used carefully if at all.
"Anyway - the idea that because you've done some of something and haven't gotten the results you wanted out of it simply doesn't imply that more of that thing is a bad idea. It's extremely poor logic."
ReplyDeleteSupposedly the definition of insanity is doing the same thing over and over and expecting a different result. It is improperly attributed to Albert Einstein last I checked though.
"You always seem to have a tough time keeping local and global claims untangled, Gary."
No, I don't like crappy analogies.
Daniel,
ReplyDeleteOT, but I think you will like this and I thought it was a very fruitful conversation: http://bloggingheads.tv/diavlogs/38625
Do you think your tooth pain story is an appropriate analogy to criticize those who disparage future stimulus as ‘more of the same’? Most people I know agree that Tylenol is effective as a pain killer. It would be strange if people who thought it was would criticize someone taking more as ‘more of the same’ after the first dose didn't work. But, how many of those who are critical of financial stimulus saw it as an effective way to revive the economy in the first place? How many of them said it was probably harmful? How many of them saw it as primarily a bailout of political friends? Should one be that surprised that such critics would disparage Obama’s latest proposal as ‘more of the same’?
ReplyDelete- Richard Moss
Anonymous -
ReplyDeleteRight, the real disagreement is over whether it is effective or not. I wish we were having that disagreement.
In actuality, what I often hear is logically meaningless references to "more of the same". As if doing more of something that you did without the result you wanted logically implies you're doing something irrational. That's poor logic, but that's the argument I often face.
I'm not criticizing people who want to provide reasons why they think the stimulus is ineffective, given a reasonable counter-factual. I'm criticizing people who feel they can dispense with reasonable counter-factuals.
I'm criticizing the Russ Roberts's of the world who think they can point to the Romer-Bernstein forecast and draw a conclusion against stimulus. I'm not criticizing the Robert Barros of the world who point to impact estimates and think they can draw a conclusion against stimulus.