I do think we had something of a breakthrough with him this week after so much storm and stress in the fiscal multiplier is zero wars. While he is quick to emphasize he hasn't changed his mind just framing the issue a little differently, framing effects clearly can make a big difference.
http://diaryofarepublicanhater.blogspot.com/2015/06/scott-sumner-takes-it-down-notch.html
http://diaryofarepublicanhater.blogspot.com/2015/06/sumner-hasnt-changed-his-mind-but-has.html
Nevertheless there is still a lot of room for him and I to disagree very vigorously. Let's start with his post today that on the face of it might seem to be a lighter subject-the NBA draft. Yet right away he says a bunch of stuff I couldn't disagree with more:
"No, the draft is not unfair. No, it doesn’t violate antitrust rules. Although NBA teams compete in an athetic sense, they don’t compete in an economic sense—they cooperate. The economic competitors to the Chicago Bulls are not the San Antonio Spurs, the competitors are the Chicago Blackhawks, Chicago area movie theaters and nightclubs, and Chicago area TV programming. It helps to think of the NBA as a single firm, with lots of franchises, which collaborate to produce the most entertaining product possible–in a vastly larger entertainment “industry”. I’ve never heard anyone complain that Cirque du Soleil is violating antitrust laws if they assign acrobats to one of their 19 stylish circuses."
http://www.themoneyillusion.com/?p=29782
Well in markets another word for cooperate is to collude or fix prices. And teams most certainly do compete-for players. If for instance the Cavaliers lose Lebron James to the Lakers-perish the thought-then that hurts not just athletically but economically or does Sumner think a teams athletic success is unrelated to a team's economic success? The relationship is not 1 to 1 but surely not 1 to 0.
The various team sports leagues have come up with rules that call for some cooperation but the relation between the different teams is surely not wholly cooperative. I'd say there are elements of cooperation but its mostly competitive. To the extent that the teams cooperate a la Bud Selig then it violates antitrust law just like would be the case in any other industry.
Not surprisngly this is not the only thing he says I disagree with. His claim yesterday that Keynesians in not supporting the Japanese consumption tax failed to understand their own Keynesian model is also off the mark.
"I was particularly dismayed to see that some Keynesian economists opposed the 2014 Japanese tax increase, and then later claim the policy failed. Both views are absurd."
http://www.themoneyillusion.com/?p=29771
It's absurd to oppose the tax increase? In fact the tax lead to a recession. So I don't see how opposing it is absurd. Maybe you want to argue that it's preferable to cause a recession than have a high debt to GDP level but this isn't an opinion I could follow.
"And please don’t say that deficits are no problem because interest rates are low, and will remain low for many years. “Many years” is not forever. Suppose the Japanese debt eventually gets up to 400% of GDP, and interest rates rise to 5%. Then it would take 20% of GDP to simply service the debt. But they only collect 10% of GDP for all central government activities! (I know, they can borrow 20% of GDP each year to service the debt. Why didn’t I think of that?)"
Suppose it hits 400%? Well suppose it doesn't. Arguing in this vein obviously isn't going to get us very far. One way to bring down the ratio is to increase growth and tax revenue. I just don't see why you would want to cause a recession to forestall the very unlikely prospect of 400% debt.
As he's telling Keynesians how Keynesianism works, he should remember that the time to worry about a debt is not when the economy is struggling as Japan has a for 20 years.
http://diaryofarepublicanhater.blogspot.com/2015/06/scott-sumner-takes-it-down-notch.html
http://diaryofarepublicanhater.blogspot.com/2015/06/sumner-hasnt-changed-his-mind-but-has.html
Nevertheless there is still a lot of room for him and I to disagree very vigorously. Let's start with his post today that on the face of it might seem to be a lighter subject-the NBA draft. Yet right away he says a bunch of stuff I couldn't disagree with more:
"No, the draft is not unfair. No, it doesn’t violate antitrust rules. Although NBA teams compete in an athetic sense, they don’t compete in an economic sense—they cooperate. The economic competitors to the Chicago Bulls are not the San Antonio Spurs, the competitors are the Chicago Blackhawks, Chicago area movie theaters and nightclubs, and Chicago area TV programming. It helps to think of the NBA as a single firm, with lots of franchises, which collaborate to produce the most entertaining product possible–in a vastly larger entertainment “industry”. I’ve never heard anyone complain that Cirque du Soleil is violating antitrust laws if they assign acrobats to one of their 19 stylish circuses."
http://www.themoneyillusion.com/?p=29782
Well in markets another word for cooperate is to collude or fix prices. And teams most certainly do compete-for players. If for instance the Cavaliers lose Lebron James to the Lakers-perish the thought-then that hurts not just athletically but economically or does Sumner think a teams athletic success is unrelated to a team's economic success? The relationship is not 1 to 1 but surely not 1 to 0.
The various team sports leagues have come up with rules that call for some cooperation but the relation between the different teams is surely not wholly cooperative. I'd say there are elements of cooperation but its mostly competitive. To the extent that the teams cooperate a la Bud Selig then it violates antitrust law just like would be the case in any other industry.
Not surprisngly this is not the only thing he says I disagree with. His claim yesterday that Keynesians in not supporting the Japanese consumption tax failed to understand their own Keynesian model is also off the mark.
"I was particularly dismayed to see that some Keynesian economists opposed the 2014 Japanese tax increase, and then later claim the policy failed. Both views are absurd."
http://www.themoneyillusion.com/?p=29771
It's absurd to oppose the tax increase? In fact the tax lead to a recession. So I don't see how opposing it is absurd. Maybe you want to argue that it's preferable to cause a recession than have a high debt to GDP level but this isn't an opinion I could follow.
"And please don’t say that deficits are no problem because interest rates are low, and will remain low for many years. “Many years” is not forever. Suppose the Japanese debt eventually gets up to 400% of GDP, and interest rates rise to 5%. Then it would take 20% of GDP to simply service the debt. But they only collect 10% of GDP for all central government activities! (I know, they can borrow 20% of GDP each year to service the debt. Why didn’t I think of that?)"
Suppose it hits 400%? Well suppose it doesn't. Arguing in this vein obviously isn't going to get us very far. One way to bring down the ratio is to increase growth and tax revenue. I just don't see why you would want to cause a recession to forestall the very unlikely prospect of 400% debt.
As he's telling Keynesians how Keynesianism works, he should remember that the time to worry about a debt is not when the economy is struggling as Japan has a for 20 years.
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