"Words ought to be a little wild, for they are the assault of thoughts on the unthinking" - JMK
- Mark Thoma highlights a nice passage from an interview with Romer about the Great Depression. She talks about how we can trick ourselves into imagining the fiscal stimulus of the New Deal was bigger than it was because of the myth of FDR and the physical legacy, and also compares it to ARRA and talks about what happened with the states. This was a particularly good passage: "Even under Roosevelt the fiscal expansion was modest. When we think about the New Deal, we tend to remember things like the WPA [Works Progress Administration relief program], which built dams and bridges, and the Civilian Conservation Corps, which constructed so many buildings in our national parks. These programs left enduring legacies, and so we often think of the fiscal policy response of the New Deal as being big and aggressive. But what Chandler points out, building on a classic paper by E Cary Brown, is that the fiscal response to the Great Depression was actually quite small – not nearly as large as the American Recovery and Reinvestment Act of 2009. Even when Roosevelt increased the Federal deficit in the mid-1930s, a move to budget surpluses by state and local governments meant that the net fiscal stimulus was much smaller."
This was one of those five books interviews. Her books were: Golden Fetters (Eichengreen), A Monetary History of the United States (Friedman and Schwartz), Essays on the Great Depression (Bernanke), America's Great Depression (Chandler), and The End of One Big Deflation (Temin and Wigmore).
- Gene Callahan argues that liberalism imposes a moral viewpoint, that it is not morally neutral as many suggest, and that we should be honest about this. I strongly agree. Richard Rorty said something very similar, although he put it in terms of cultural norms rather than morals (but really - is there a difference?) he wrote: "The rhetoric we Westerners use in trying to get others to be more like us would be improved if were more frankly ethnocentric, and less professedly universalist. It would be better to say: Here is what we in the West look like as a result of ceasing to hold slaves, beginning to educate women, separating church and state, and so on. Here is what happened after we started treating certain distinctions between people as arbitrary rather than fraught with moral significance. If you would try treating them that way, you might like the results." I don't always live up to that - I talk about univesalist ideas and I talk as if liberalism is morally neutral all the time, I think. But if you pinned me down on the point, I'd agree with Gene and Rorty.
- Russ Roberts has a great post on Van Halen and their M&M contract. Contract theory is really fascinating stuff. I took a class on information and contract economics at GW - it was when I really first got introduced to this stuff, as well as two great economists (I'm calling them both economists, although they don't always get referred to as such): Avner Greif and Elinor Ostrom. Anyway, I think contract theory is important to bring to the table when we're bringing theories about marginal product equaling wage rates to the real world. I've been thinking about this a lot myself with the labor market for scientists. I'm bothered by the way journal publications are often treated as a measure of productivity and therefore as some kind of direct determinant of wages in a standard labor market model. I suspect that publications are more of a status symbol, and also one of these contract monitoring devices - but have very little direct relevance to thinking about the productivity of scientific labor.
- Ryan Murphy pokes fun at Russ Roberts being over the top about the Keynes vs. Hayek debate. I agree. He's refering to the same post that botched Keynesianism by reducing it to underconsumptionism, and thereby completely missing how much Mill and Keynes agreed about the determinants of output. Russ really should know better than to keep telling students and the public that Keynesianism is consumptionism. It's not a good thing, and ever since that post where he openly declared he said things for ideological reasons, it worries me.
- Jonathan Catalan replies to my post on re-framing the discussion of Keynes and Hayek. He writes: "Second, and more importantly, Daniel is looking to frame the discussion from his point of view." Well, yes. I'm reminded of a response Christopher Hitchens often gave to people who accused him of just offering "his opinion". "Of course", Hitchens would reply, "who else's opinion would you expect me to offer?". I think this is what Keynes thought and I think this is what most Keynesians think, and I think that Keynesians who don't think like this are in many ways wrong about Keynes and Keynesianism. Certainly some people disagree with me on that. That's almost another matter entirely because I still think the MMT/Minsky/Post-Keynesian types that disagree with me on that are still closer to my interpretation than Brian Doherty's interpretation is to my interpretation of Keynes. My point is simply this: if you want to argue with Keynes, argue with Keynes - not your preferred underconsumptionist, big-government, anti-market strawman (that's not directed at Jonathan - it's a general "your preferred"). If you want to argue with an underconsumptionist, big-government, anti-market strawman, then go find such a person to argue with. They're certainly out there. My concern with my re-framing post is that even putting it in the terms that Doherty (and many other people) do skews the argument. It's like I said about the Keynes-Hayek rap when it came out: I've always liked Hayek, but if you find me rooting for Hayek against Keynes, something seems wrong with your portrayal of Hayek, Keynes, or both of them. And the important point I was trying to make is that a lot of people who don't really know Keynes watch that video and now have a completely different impression of Keynes. That's not trivial when it comes to the economics dialogue.
- Speaking of Keynes, I found a neat new picture of him. That may not interest anyone else, but I like finding these. My favorite so far is the one of him and Lydia dancing.
Multipliers: What We Should Have Known
2 hours ago