Let me just say this to my readers: good job. I came home to lots of great comments on my two posts this morning. Good job Mark and Tom, and nice to see you drop in again Morgan. I kind of had a lark with the Hitler post and I'm amused to see that Mark Sadowski is now claiming even Hitler for Market Monetarism.
"Currency controls were imposed in July 1931, effectively taking Germany off the gold standard 18 months before Hitler became Chancellor. This freed the Reichsbank to pursue expansionary monetary policy, which according to Peter Temin, it had started by at least the summer of 1932. The League of Nations Statistical Yearbook states that Germany’s industrial production reached bottom in August 1932 and had already increased 6.8% by January 1933, the month Hitler entered office."
"By April 1934, when Germany issued its first MEFO bill, and started running its first “large” deficit (about 5.4% of GDP in FY1934 according Albrecht Ritschl, counting the “shadow” budget), industrial production was already 45.8% above the level it had been in August 1932."
"What Adam Tooze calls a “natural recovery” I call good monetary policy. You may not see it, but it’s there."
"Go read #9 here:
http://www.rogerfarmer.com/NewWeb/JournalArticles/ANIMAL%20SPIRITS.pdf
"Much recent business cycle research assumes that business cycles are driven by
technology shocks but we do not have a very good explanation of what these shocks
represent. The BFG model represents a plausible alternative to the real business cycle model. It recaptures an idea that is at least as old as Henry Thornton (1802), and recasts it in modern language."
"Why should we care if shocks arise in the productivity of the technology or in the minds of entrepreneurs? The answer is connected to the efficiency question. If business cycles arise as the consequence of the optimal allocation of resources in the face of unavoidable fluctuations in the technology, then there is not much that government can or should do about them. But if they arise as the consequence of avoidable fluctuations in the animal spirits of investors then the fluctuations that result are avoidable and the allocations are Pareto suboptimal."
"Look man, the problem is MINIMUM WAGE."
"Saxie, we spend $750B on welfare."
"Even though you disagree, YES it is GOOD we have welfare."
"See you want people to earn enough, none of them need welfare."
"If that's not possible, you want them to have welfare, or a guaranteed income or some thing that is a SOCIAL COMMITMENT."
"But that's not enough Saxie. Just saying a social commitment doesn't get down to brass tacks, WHAT is "fair"? We have to know."
"A two bedroom apartment, broadband, A/C, heat, hot water, food, health care - ok yes now we get somewhere."
"Many people cannot earn enough with their market based skills to buy these things in a market based market priced system."
"Many people can't cover their own nut."
"That is the "state of nature"
"So we use wealth transfers to make sure everyone has these things."
"Currency controls were imposed in July 1931, effectively taking Germany off the gold standard 18 months before Hitler became Chancellor. This freed the Reichsbank to pursue expansionary monetary policy, which according to Peter Temin, it had started by at least the summer of 1932. The League of Nations Statistical Yearbook states that Germany’s industrial production reached bottom in August 1932 and had already increased 6.8% by January 1933, the month Hitler entered office."
"By April 1934, when Germany issued its first MEFO bill, and started running its first “large” deficit (about 5.4% of GDP in FY1934 according Albrecht Ritschl, counting the “shadow” budget), industrial production was already 45.8% above the level it had been in August 1932."
"What Adam Tooze calls a “natural recovery” I call good monetary policy. You may not see it, but it’s there."
http://diaryofarepublicanhater.blogspot.com/2014/03/a-political-leader-with-right-economic.html?showComment=1395187027491#c4346090391700229857
I don't really see it but in fairness I don't see anything yet as I haven't even started the book though it's ready. I got to finish of Richard Koo first and then I got to choose my next book. Here are the books in the running for next. Tooze is one candidate. However, the others are:
1. Robert Reich's 'Aftershock'
2. Milton Friedman's "Monetary History of the United States' For the record this will be my first time reading this from cover to cover-I have read his 'Monetary Mischief.'
3. Randal Wray's 'Modern Monetary Theory Primer: a Primer on Macroeconomics for Sovereign Monetary Systems.'
They're all in my cue on Amazon Kindle. Where do I go next? I'll take recommendations? I'm guessing Mark might suggest Friedman and Morgan would say throw Wray out the window? Tom Brown probably thinks they're all fine books-being Switzerland as he is.
I'm not surprised that Hitler turns out to also be a MMer for Mark. Yet Hitler the other day said that his MMers are Ghandi and the MMTers are Hitler. Confusing...
Ok. Morgan had some interesting comments to chew on. He usually does. I always tell people I don't see why many of the other MMers scorn him-I think the point is to make him a kind of lightening rod. It's to say 'Look at this crazy Right winger here. We on the other hand are much more reasonable.' Yet I find a number of them pretty clueless. What I will say is that Morgan does something here that I haven't seen many conservatives do here.
"Animal Spirits" is the topic. It's pure Keynes."
"Go read #9 here:
http://www.rogerfarmer.com/NewWeb/JournalArticles/ANIMAL%20SPIRITS.pdf
"Much recent business cycle research assumes that business cycles are driven by
technology shocks but we do not have a very good explanation of what these shocks
represent. The BFG model represents a plausible alternative to the real business cycle model. It recaptures an idea that is at least as old as Henry Thornton (1802), and recasts it in modern language."
"Why should we care if shocks arise in the productivity of the technology or in the minds of entrepreneurs? The answer is connected to the efficiency question. If business cycles arise as the consequence of the optimal allocation of resources in the face of unavoidable fluctuations in the technology, then there is not much that government can or should do about them. But if they arise as the consequence of avoidable fluctuations in the animal spirits of investors then the fluctuations that result are avoidable and the allocations are Pareto suboptimal."
"Look man, the problem is MINIMUM WAGE."
"Saxie, we spend $750B on welfare."
"Even though you disagree, YES it is GOOD we have welfare."
"See you want people to earn enough, none of them need welfare."
"The PROBLEM Saxie is you can't or won't admit outloud and stick to it that:
"Many people cannot earn enough with their market based skills to buy these things in a market based market priced system."
"Many people can't cover their own nut."
"That is the "state of nature"
"So we use wealth transfers to make sure everyone has these things."
"Many people cannot earn enough with their market based skills to buy these things in a market based market priced system."
"Many people can't cover their own nut."
"That is the "state of nature"
"So we use wealth transfers to make sure everyone has these things."
"If that's not possible, you want them to have welfare, or a guaranteed income or some thing that is a SOCIAL COMMITMENT."
"But that's not enough Saxie. Just saying a social commitment doesn't get down to brass tacks, WHAT is "fair"? We have to know."
"A two bedroom apartment, broadband, A/C, heat, hot water, food, health care - ok yes now we get somewhere."
Morgan here you see really tries to get into the heads of liberals. Whether or not we can bridge the divide remains an open question-I'm not ruling it out but... However, he puts in real work. I give him credit for trying at least.
I mean that's pretty much true-we want there to be some sort of floor in the economy as with a country as rich as we are we should provide for those who can't do it for themselves. For the most part if people don't have those basic things it seems to me we have an unjust society. I mean I still think that homeless guy who died here in NY in the first storm of the winter late last year is a sorry commentary on our society. I mean nobody saw this guy and thought-maybe he needs help.
By the way not to get personal again-as some I guess see it as bad form-but what the heck. I'm technically no longer in the bottom 1 percent anymore. It seems I've come into some money. Now for the first time I feel Republican about inheritance taxes-LOL. No, just kidding. However, I will soon be able to move out of my parents' basement and actually get my own house-even before the leans years starting in 2009 I never could afford a house. Even if I am moving up in the tax bracket-not that much though as my wages are not in the top percent or anywhere near-I still do believe that we have to put some sort of bottom where not many people will fall. In many ways I'm a conservative myself.
Those who think I want communism-as some clueless conservatives think that's what all liberals want- don't know me at all. Like Keynes it's because I don't that we must figure this problem out. Morgan makes an interesting point:
"The PROBLEM Saxie is you can't or won't admit outloud and stick to it that:
"Many people cannot earn enough with their market based skills to buy these things in a market based market priced system."
"Many people can't cover their own nut."
"That is the "state of nature"
"So we use wealth transfers to make sure everyone has these things."
No doubt that's true today. However, was it true 33 years ago? That was the time we decided that government was the enemy. I get Morgan has animus with the MW, however, I'd argue that when we had a higher MW more people were indeed able to earn enough. I think the price support idea is basically kind of resignation-rather than make it so that most people can earn enough we give them the income supports, the transfers, etc. Wouldn't it be preferable if they made enough from their jobs-given the choice?
As for Farmer I have mixed feelings about him. I'm not at all sure that I buy his version of Keynes: to listen to him Keynes was basically Friedman without the religious opposition to using fiscal policy in a recession. Farmer also made me laugh when he claimed that Krugman stole everything he knows from him. Anyway, good session guys. I got more to say but the library computer's about to shut down. I'll pick this up at home-my parents basement.
P.S. So my remaining a liberal even as I move up in tax brackets proves that someone isn't a liberal just because of their own economic predicament as some things I've heard conservatives say implies this. The beauty of it is that you don't get taxed much on this kind of windfall in our country. God Bless the USA!
P.S. So my remaining a liberal even as I move up in tax brackets proves that someone isn't a liberal just because of their own economic predicament as some things I've heard conservatives say implies this. The beauty of it is that you don't get taxed much on this kind of windfall in our country. God Bless the USA!
Quoting myself:
ReplyDelete"Currency controls were imposed in July 1931, effectively taking Germany off the gold standard 18 months *before* Hitler became Chancellor."
So you're saying he's not a Market Monetarist? Why? If he wasn't then wouldn't he have reversed this policy the minute he came in? What makes you think that he wouldn't have done currency controls if it were up to him?
DeleteI mean you're giving credit to the Hitler recovery to capital controls but not you want to somehow leave Hitler out of it. It's semantics. I'm must having fun anyway. I will note that Krugman himself has called for currency controls in countries like Greece and Spain in recent years.
Hey Mike
ReplyDeleteCongrats on the elevation of tax brackets. You now have the privilege of paying more into the system which supported you so well while you were down ( cough cough)
That sentence could actually be true if we ran our govt that way, but we are more like Somalia than Scandinavia
I agree that there is a lot to Morgans comment. He does have a way of making you think but when he says "its the state of nature" I bristle a little. To describe our created world as "nature" is as fallacious as it gets. Its like I tell people; Life, as in the random machinations of the universe which may result in tornadoes or cancer, is unfair. People, in the way they organize their societies CAN be as fair as they want. There is no natural impediment to how much fairness people can exhibit.
Describing what we do to each other as natural is THE big lie
Yes, it sure did a lot for me. LOL. Yet I'm still a liberal. Of course, as this will be a one shut deal my regular paychecks still won't be at the top 1% tax bracket and that's a considerable mercy I admit.
ReplyDeleteGuys, you are missing my point a bit:
ReplyDeleteThe state of nature - is that many people can't survive on their own. That's basic Hobbs Locke etc.
If you ADD IN TO NATURE we are social creatures and have social commitments - which I do - then we recognize people can't survive on their own and we will commit to help them.
BUT NOW we have to ADMIT we are HELPING THEM WHEN WE PRICE THEIR LABOR.
We are spending basically $500B on non-medical welfare this year.
And we have 30M+ unemployed.
When we set the "Minimum Wage" OUR GOAL IS NO LONGER TO PAY PEOPLE A LIVING WAGE.
I repeat: your PROBLEM, is that you hear or think the idea of "Living Wage" and you have a positive happy Pavlovian non-critical feeling that says YES! WE WANT PEOPLE TO HAVE THAT!!!
And because you are not thinking critically you say silly things about Minimum Wage:
"I'd argue that when we had a higher MW more people were indeed able to earn enough."
Saxie you get it wrong here.
IF we got rid of the social commitment - IF we didn't spend $500B this year in welfare - wages would be higher WITHOUT ANY MINIMUM WAGE.
WHY????
Because while yes we would have some people, many people, who no longer could have the 2 bedroom heat hot water, etc.
We would also have people demanding higher wages SO THEY CAN EAT.
What do you liberals always say about Walmart? They are underpaying bc their employees are on welfare!!!
At the macro level, when we stop paying taxes to cover welfare, that extra money goes to higher prices to pay people at Walmart more money.
Look, it is GOOD to have the social commitment.
This is nobody who wants to work falls thru the crack even if they are the least valuable employee in America in ROI terms.
BUT once we agree on having the social commitment, it is HORRIBLY WRONG AND TOTALY IMMORAL to price 30M out of jobs!!!
Look, a welfare recipient sitting on the couch, may be that very least valuable employee worth more like $40 per week, or he may be worth $200 per week, but every day he sits on couch HE BECOMES LESS VALUABLE.
And having the government direct his labor - DOESN"T INCREASE HIS VALUE.
He's not going to be building new valuable roads, he's going to be taking a shitty class on how to remove lead paint from homes built before 1973, because his shitty govt job is to weatherize a shitty home housing a welfare recipient (who's paying a shitty landlord in Section 8 vouchers) who refuses to keep the attic door closed or the window closed because the welfare recipient is ALSO getting energy assistance and like fresh air, and you can't weatherize that home under Federal regulations unless you first remove all the lead paint...
How do we know??? Because this was Obama's only true example of a shovel ready job in 2007-2008 - and in the end - IT DIDN"T WORK.
If instead we just use wage subsidies and the internet:
https://medium.com/p/1d068ac5a205
We have the EXACT SOLUTION KEYNES WOULD CHEER FOR HIMSELF.
Minimum Wage and Welfare DO NOT WORK TOGETHER.
Instead it means that the 30M+ in poor areas sit on the couch, and the welfare checks we give them DO NOT BUY AS MUCH STUFF FOR THEM.