Saturday, January 21, 2012

Two good links

- Krugman, going back to the public debt issue. Maybe this one clarifies his position a little? I still think he said what I always thought he said, and I still think that (1.) Nick and Bob highlighted excellent points - even points that I hadn't thought about before seeing the modeling, but (2.) they still were not challenging or contradicting Krugman's argument. Neither was Don. Steve and Gene were right to come to Krugman's defense. This is actually a very good thing, people. It's OK if six professional economists choose to emphasize different aspects of a problem because they think different aspects are more important. It's more disconcerting if six professional economists come to wildly different conclusions on the same point. I don't think that is what happened.

- Andrew Sullivan shares some good points on the intergenerational obligations of government. This relates to things I've said in the past about temporal autarky and intertemporal externalities. Paine and Jefferson would heartily agree. I am less sure than I used to be about this "compact" language. It's probably safer to just say that government is an institution that emerges to solve many of these problems, it has characteristics similar to compact, but it's not exactly a compact - and leave it at that.


  1. Daniel: I think he still doesn't get it. Look at this quote:

    "What I was actually saying, of course, is that debt is a liability that we pass to the next generation — but it’s also an asset that we pass to the next generation."

    We "pass on" the asset by selling the bonds to the next generation (unless he believes in Ricardian Equivalence) but we don't "pass on" the liability by paying the next generation to take it. There's a massive asymmetry in how the asset and liability are "passed on".

    Now, if I were nasty, I might start talking about ideologically-motivated mistakes, and being rude, and saying that this is not a dinner party, and people shouldn't clutch their pearls when I start talking like the Faculty Club Leninist.

    But I won't.

    But I am getting peeved at PK. There's a double-standard here.

  2. Nick I'm not sure what the issue is with your comment and his quote.

    Yes, the nature of the institution of the state is that people face liabilities involuntarily. This is why nobody should be nonchalant about the public debt and the liabilities it does impose. That's right.


All anonymous comments will be deleted. Consistent pseudonyms are fine.