Assault of thoughts - 8/13/2012

"Words ought to be a little wild, for they are the assault of thoughts on the unthinking" - JMK

- It turns out Harry Byrd, leader of the Byrd machine in Virginia for many years, wasn't just backwards on civil rights. David Henderson shares that he was backwards on economics as well. Interestingly enough a lot of the examples given (the Wagner Act, the TVA, increasing government employment substantially in the early 1960s, when the economy was in pretty good shape) aren't really centrally Keynesian (TVA could be considered Keynesian, but the objection was over the social damage in that case), but he also wasn't too happy with Kennedy's tax cuts or departure from the dedication to balanced budgets.

- Ryan Murphy discusses Steven Pinker on essentialism here. I think I would make a bad philosopher, for one thing because I always have to look up exactly what "nominalists" argue. To me, essentialism and nominalism both sound extremist and entirely unhelpful. Are there "universals" or "essential essences"? Well of course it depends on what you mean by that. Different things have things in common and it's worth noting that they have those things in common. I'm not sure that makes me an essentialist. That just means I'm pretty much at Sesame Street level ("one of these things is not like the other, one of these things does not belong..."). At the same time these are just organizing categories even if they're very consistent organizing categories. So maybe I'm a nominalist? But since I keep having to google "nominalist" I don't know about that. I'm just always amazed anyone is any of these. And this is part of my frustration with philosophy. The average person knows there are comonalities and maybe those commonalities are really fundamental to a thing's identity. But I don't think the average person would go as far as the essentialist or nominalist claims, and I think the average person would be right in that. Cornel West once wrote about "the American evasion of philosophy", and when I read posts like this I feel very much in that tradition of evasion myself. I get the impression Ryan is on much the same wavelength, although he might not feel so evasive about the philosophy. He does not sound impressed with either position. Ryan also talks about how philosophical and methodological nominalism are correlated with political positions. I really don't follow him on this at all. I think it says more about what Ryan thinks of the left than it says about anything inherent in the left.

- Gene has some interesting thoughts on Peirce, types of signs, and IQ tests here. I'm more familiar with critiques of standardized tests like SATs and the PIAT which are reported to show that Americans aren't as sharp as foreigners. The complaint I usually hear is either different emphases of education in the U.S. (creative thinking and problem solving vs. rote memorization) or cultural differences (SAT verbal questions are written with a middle class life experience bias). So this more fundamental difference on IQ tests is a new thought for me.

- Jonathan has thoughts on one of the most important chapters of the General Theory, chapter 12 on long-term expectations. The first paragraph is very important to digest, because it's very different from the way people usually think about investment. Investment is determined by the interest rate, which is a limiting factor, and the marginal efficiency of capital. If the marginal efficiency of capital for an extra dollar of investment is lower than the interest rate it makes no sense to borrow to invest, but it also makes no sense to put cash you have into an investment; you should put it at interest instead. If the MEC is higher than the rate of interest, you borrow to invest more. That's the equilibrating mechanism. Supply of and demand for capital goods (what we normally think of as determining the quantity of investment and the interest rate) is all tied up in the marginal efficiency of capital calculations. The interest rate in this case is determined by liquidity preference. So although you've still got to functions set equal to determine the level of investment, it's a very different approach from what a lot of people are used to. Now I've spend a whole paragraph talking about his first paragraph! The rest of course speaks to the MEC, which is where investors' assessment of future returns enteres the calculations.