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Captain Capitalism video rebutting Paul Krugman
#26

Captain Capitalism video rebutting Paul Krugman

^^ See, that's how arguing against Keynesianism should be done! Logical, understandable and convincing. Clarey might start taking tips from Dismal Operator.

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#27

Captain Capitalism video rebutting Paul Krugman

America is a boom, bust economy. It has been this way since at least the 1890's and it will continue this way until we fall completely off a cliff. As I understand it the Petrol Dollar when replaced will be replaced by a Carbon Tax as we move to Green Energy. Just as oil can only be traded for dollars, the Carbon Tax can only be paid in Dollars.

Delicious Tacos is the voice of my generation....
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#28

Captain Capitalism video rebutting Paul Krugman

Sometimes I think people should be more charitable to Krugman. He may be a liberal columnist for NYT, but this isn't Ta-Nehisi Coates writing for the Atlantic or Lipstick Feminist Bimbo of the Day writing for Slate, this is a smart guy who has done good work, or at least was, once upon a time.

That being said, I wonder if Krugman has early on-set dementia (in general, I think Westerners under-estimate the frequency and magnitude of cognitive decline that can occur in some people in the 50s to 60s). His abrasive, ad-hominem communication style is a stark contrast to other professional economists (as well as statisticians, mathematicians, etc.), who tend to communicate in more measured ways. Maybe he's always been like this. However, his tone and degree of intellectual curiosity seem to be different than when he was younger. Steve Sailer posted a link to an old Krugman speech in the comments section on Marginal Revolution.

On a side note, calling him "Nobel Prize Winning" almost seems to be an insult, given how badly the Nobel Prize brand has been tainted by its Literature and most of all, Peace Prize selections. Obama and the European Union in recent years for basically... existing? Is the committee even taking this seriously?

I remember there was a time when people often asked, "How come there's no Nobel Prize in Mathematics, just the Fields Medal?"

Now it's more like, "Thank goodness there's no Nobel Prize in Mathematics."

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#29

Captain Capitalism video rebutting Paul Krugman

Quote: (07-19-2015 03:22 PM)Atlanta Man Wrote:  

America is a boom, bust economy. It has been this way since at least the 1890's and it will continue this way until we fall completely off a cliff. As I understand it the Petrol Dollar when replaced will be replaced by a Carbon Tax as we move to Green Energy. Just as oil can only be traded for dollars, the Carbon Tax can only be paid in Dollars.

The boom/bust cyclical nature of progress is always going to be with is, I agree. The key is that you have to endure the bad side of things, because it paves the way for the good down the road. This is true of nature in general. Things like forest fires for example are bad in a vacuum, but they have a role in clearing the forest of smaller underbrush. This prevents huge fires by eliminating the 'fuel' in the shape of overgrowth, as well as re-fertilizing the soil. The rise of mega fires like Yellowstone came about with the move to eliminate any and all forest fires. Getting rid of smaller, short term nuisances ended up creating longer term, far more damaging problems.

The US economy in the 1800s had regular panics, following regular bubbles mostly centered around railroad overdevelopment. Unlike today, those bubbles were allowed to play out with no stimulus and no bailouts. In the short run the affected parts of the economy were hit hard, but it also allowed the economy to learn lessons and move on along a more productive path. If and when green energy becomes viable, the transition to it will completely turn our current economic structure upside down. There will be a big depression, simply because the old way will become obsolete. We'd have to stop, adjust, and plug in to the new way, in stages. Modern economic thought can't deal with the short term bankruptcy, loss of jobs and so forth that would come from the need to abandon the petro world for the green world, and would call for stimulus to effectively support the former and prevent it from bowing out gracefully. All that will do is slow down the pace of the transition, which when completed will ostensibly usher in the next leg of progress.
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#30

Captain Capitalism video rebutting Paul Krugman

Umm, that's not how you argue against Keynesian theory.

We haven't had Keynesian activity in the western world since 1971. It is fallacious to say "2008 onwards proves Keynes doesn't work" when they aren't Keynesian.

Milton Friedman's Chicago school monetarist policies have been de jure policies throughout the west.

One of the major features of this is NAIRU, and is completely at odds with Keynesian economics. Friedman was also an adherent of consumer price inflation stability as a cornerstone of marking a healthy economy.

He also turned a blind eye to asset price inflation, believing that every private actor made rational decisions. It us the exercising of bidding up too high prices, then the concomitant debt that is the global financial crisis.

Keynes' policy's were mortally wounded in 1971 when Nixon went off the gold standard, and they buried the corpse in 1979 when Thatcher was elected. Throw in Reagan and his mandate to Volcker soon afterwards and it disappeared.

Its pretty trite to blame an economic school whose policies haven't been evident for nearly 40 years.

Stimulus isn't a policy subscription unique to Keynes. Friedman is not Keynes, but he is big on monetary policy stimulus. He is a mixture if Austrian and neo-classical. His policies gave also seen the biggest level of looting by the 1% in over a century.

One of his policy prescriptions is to manipulate interest rates to stimulate the levels of borrowing. His litmus is to assess asset prices, i.e. preserve what rich people own.
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#31

Captain Capitalism video rebutting Paul Krugman

T and A Man, both Keynesians and monetarists make the same fundamental error of viewing the economy as a set of aggregates that can be tweaked by policy makers to achieve a desired outcome, with the real difference being Keynesians preferring to work from the fiscal side and monetarists the monetary side. Underlying that Friedmanite moneterist prescription are very Keynesian ideas. From where I sit, there isn't much between them in terms of the real world effects of their policies. 'True' Keynesianism is always going to break down because of the reasons I mentioned before - namely that what stimulus giveth, it must also taketh away. A faulty structure of production can't be kept alive artificially without problems.

It is ironic, given his staunch free market, small government positions on just about everything else, that Friedman would be so terrible on monetary policy. He died in 2006, right as the bubble his polices helped to create was about to pop. If he hung on another 5 years I suspect he may have changed his views a bit.

As for some of your history, I don't know where you get that 1971 was the end of Keynes. He fought to rid the global monetary system of gold, which he only partially did with Bretton Woods in 1945. 1971 was the cementing of that aim, not the dismantling. What the end of gold did was expose the Keynesian endgame - rapid inflation and rising interest rates - while making a mockery of the Philips Curve during the rest of the 70s. That's what did Keyesianism in. Then Volcker jacked interest rates to 20% to save the dollar, and the monetarists took over and all of a sudden central bankers became famous where they once were in the shadows.

Monetarists hold the same slavish devotion to aggregate demand that the Keynesians do, they just think that they can print their way to serving the aggregate demand master as opposed to taxing and borrowing. It's two different sides to the same coin, and I disagree with the whole coin. With polices such as QE and other explicit asset purchases by central banks, the sides are slowly fusing together, which is partly why I made no distinction in my arguments.
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#32

Captain Capitalism video rebutting Paul Krugman

Quote: (07-19-2015 10:07 PM)Dismal Operator Wrote:  

T and A Man, both Keynesians and monetarists make the same fundamental error of viewing the economy as a set of aggregates that can be tweaked by policy makers to achieve a desired outcome, with the real difference being Keynesians preferring to work from the fiscal side and monetarists the monetary side. Underlying that Friedmanite moneterist prescription are very Keynesian ideas.

hmmm....'mistake' of aggregate ideas.

It is tautology to say the wealth of a country is how much product they bring to market. The cornerstone of Keynes is to maxmise the amount of product brought to market, and this maximisation can be smoothed due to the catastrophy that the private sector ALWAYS brings to market viaboom/bust.

Friedman has nothing to do with Keynes. Keynes ideas came about to preserve human dignity after he witnessed soul crushing long term unemployment.

Friedman' school was sponsored by a bunch of debt peddlers and real estate agents. It is telling that when monetarist theories came to pass, private debt was ignored as 'rational private decisions' and land prices were exempted from measurement of inflation.

Friedmans school of thought was a racket to fleece people via debt and high land prices. Keynes wanted everyone to have a job.

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From where I sit, there isn't much between them in terms of the real world effects of their policies. 'True' Keynesianism is always going to break down because of the reasons I mentioned before - namely that what stimulus giveth, it must also taketh away.

It doesn't have to take away.

Idle labour, inert labour, creates no production. Making this labour acticve adds to productive output. When they are unemployed, and the clearance is zero, using this idle labour doesn't take away from anyone. It's major impact is distributing profits to workers due to a tighter labour market, but this is a zero sum equation.

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A faulty structure of production can't be kept alive artificially without problems.

We had the greatest period of marginal increase of productivity, the greatest rate of scientific advancement, the highest wages for the middle class, and the lowest rates of unemployment, during the Keynesian era of 1946-1971.

We put man on the moon in this era, something we could not do any more.

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It is ironic, given his staunch free market, small government positions on just about everything else, that Friedman would be so terrible on monetary policy. He died in 2006, right as the bubble his polices helped to create was about to pop. If he hung on another 5 years I suspect he may have changed his views a bit.

It wasn't ironic when you come to realise he's all tip and no iceberg. He's a shill to fleece workers to make them pay more for debt, and more for land.

He didn't believe in a free market, when he explicitly endorsed the way markers for monetary policy be something that favours one class of people. His entire theory was anti-competitive.

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As for some of your history, I don't know where you get that 1971 was the end of Keynes. He fought to rid the global monetary system of gold, which he only partially did with Bretton Woods in 1945. 1971 was the cementing of that aim, not the dismantling.

He also endorsed a backing of global money by something that could not be manipulated.

He vehemently argued for the Bancor at Breton Woods I. He walked away not happy witht he gold exchange standard, but was at least satisfied the global reserve currency wasn't US fiat. He may not have wanted gold, it is inherently disinflationary, so it makes sense, but he'd have preferred gold above US fiat.

Breton Woods II in 1971 moved to US fiat as the reserve currency... which leads to....

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What the end of gold did was expose the Keynesian endgame - rapid inflation and rising interest rates

No, when the US moved to fiat, they essentially defaulted. This pissed off energy producers, and with fiat still able to cover any nominal debt, we saw parties around the world passing off expense (default premium) down the value chain, to avoid paying themselves.

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- while making a mockery of the Philips Curve during the rest of the 70s. That's what did Keyesianism in.

The Phillips curve itself is pseudo intellectual nonsense that cannot ever be qualified. The fact that monetarist always used to argument based on the prevailing policy settings being above the optimal intercept (1st quadrant) instead of below the optimal intercept (4th quadrant) showed it was an agenda working backwards.

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Then Volcker jacked interest rates to 20% to save the dollar, and the monetarists took over and all of a sudden central bankers became famous where they once were in the shadows.

Erhh, Voclkers action was the stock standard monetarist response, tightening the cash rate is monetarist heory, it's their de jure response, and you knew by that time they were 100% in charge. When monetarist rule #1 is to contain inflation by prohibiting the incentives via OCR, its a lay down statement to say this.

Not that I blame Volcker, he was a very brave man for doing what he did.

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Monetarists hold the same slavish devotion to aggregate demand that the Keynesians do, they just think that they can print their way to serving the aggregate demand master as opposed to taxing and borrowing.

Money is an accounting ledger entry.The world of political economy is how to portion the claim to the economy via money (re)distribution.

Production is wealth. Demand drives production. Always has, always will. Aggregate demand as a driver is tautology.

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It's two different sides to the same coin, and I disagree with the whole coin.

Tell me what is wealth if not for aggegrate production levels?

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With polices such as QE and other explicit asset purchases by central banks, the sides are slowly fusing together, which is partly why I made no distinction in my arguments.

Keynes did not care for asset prices, his measure was full employment flowing on to maximum level of demand, whch would drive maximum level of production. He never prescribed for bailing out producers, and prescribed their failure so debt would be repudiated.

The central tenet of monetarists is NAIRU, which explicitly designs intentional levels of unemployment, higher than would naturally occur. It is a means to frighten the labour on the margins, by displaying a idle pool of labour who will be desperate enough to replace them.

It keeps labour frightened from striking and for asking for comensurate pay rises to their increase in productivity.

Hence wage share pretty much declining, and profit share increase, ever since 1971.. i.e. the same time keynesian polcies were abandoned.

What is telling is that no financial crisis between 1946-1971 was every as bad as those that have happened after keynesian policy was abandoned.

2008, 2000, 1990, 1982 (unless you want to count that as a keynesian hangover) were all worse.
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#33

Captain Capitalism video rebutting Paul Krugman

Paul Krugman
Noam Chomsky
Naomi Klein

All left leaning talk boxes who have critical mass for their words but never advise for any real change. These types all are just gate keepers and help keep the intellectual class in the dark by promoting purple pill spin.
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#34

Captain Capitalism video rebutting Paul Krugman

Thanks for the thoughtful response. We may have to agree to disagree; we aren't going to settle Keynesian v. Austrian economics in this forum thread. But I certainly would not attack someone who makes arguments like this in the same terms I attacked Clarey.

As to why I disagree, let me key in on what I think is your central problem with Keynesianism:

Quote: (07-19-2015 03:05 PM)Dismal Operator Wrote:  

The standard Keynesian playbook is fiscal and monetary easing in the face of crisis, then when the crisis abates, a normalization of policy is recommended. The issue with this is that easing polices can do no more than restore a previously existing economic structure, a structure which had already proven to be a failure, as evidenced by the crisis. The crisis necessitates that the preceding economic structure be torn down and rebuilt differently, which is something Keynesian and other big government types are reluctant to do. [...]

Fiscal stimulus (not monetary) was temporary and 'worked' in the short run, but its very nature means that once it goes, the gains go with it.

This misses what I understand to be Keynes' central insight: that an otherwise healthy economy (largely healthy, every economy has problems) can fall into recession through inadequate demand. Then it needs temporary measures to stimulate demand, after which it can return to health.

Think about the Great Depression. In 1930 the economy had about the same number of workers, railroads, factories, fields as in 1928. But in 1930, with the same stuff, the economy was producing radically less output. People were out of work; people needed the things--shoes, food, etc.--that workers could have produced; factories and fields were available to produce those goods. And yet the economy was drastically under-performing.

Krugman tells a story that illustrates how an otherwise healthy economy can fall into recession due to a demand problem: the baby-sitting co-op. A bunch of families created a market for babysitting, issuing coupons for hours of baby-sitting time. Couples could build up coupons by babysitting for other couples, then use them when they wanted to go out.

The problem was they didn't introduce enough coupons. So couples, knowing they'd need some for when they really needed to go out, hoarded them. But with everyone trying to hoard coupons, no one was willing to part with them for babysitting services. The coupons got scarcer, people hoarded more, 'production' fell (i.e. little babysitting was happening). The babysitting co-op fell into recession.

The solution? Given people more coupons.

As for applying this to the economy at large, I'll let Krugman do it.

For example, suppose that the U.S. stock market was to crash, threatening to undermine consumer confidence. Would this inevitably mean a disastrous recession? Think of it this way: When consumer confidence declines, it is as if, for some reason, the typical member of the co-op had become less willing to go out, more anxious to accumulate coupons for a rainy day. This could indeed lead to a slump—but need not if the management were alert and responded by simply issuing more coupons. That is exactly what our head coupon issuer Alan Greenspan did in 1987—and what I believe he would do again. [...]

Above all, the story of the co-op tells you that economic slumps are not punishments for our sins, pains that we are fated to suffer. The Capitol Hill co-op did not get into trouble because its members were bad, inefficient baby sitters; its troubles did not reveal the fundamental flaws of "Capitol Hill values" or "crony baby-sittingism." It had a technical problem—too many people chasing too little scrip—which could be, and was, solved with a little clear thinking.

http://www.slate.com/articles/business/t...onomy.html

Obviously this is a simplified model. But it does a good job of showing 1) how an otherwise healthy system can get into trouble and need some temporary help; 2) that just because an economy falls into trouble doesn't mean the whole structure is a failure; 3) how temporary stimulus can have long-lasting effects, i.e. can boost an economy out of a slump and get it running smoothly long after the stimulus is over.
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#35

Captain Capitalism video rebutting Paul Krugman

Quote: (07-19-2015 03:22 PM)Atlanta Man Wrote:  

America is a boom, bust economy. It has been this way since at least the 1890's and it will continue this way until we fall completely off a cliff. As I understand it the Petrol Dollar when replaced will be replaced by a Carbon Tax as we move to Green Energy. Just as oil can only be traded for dollars, the Carbon Tax can only be paid in Dollars.

I don't think this is true. Yes, America's economic history was a story of boom and bust every 20 years or so...up until WWII. After that, Keynesian economics mitigated the business cycle and America experienced its longest sustained period of growth and rising incomes, 1950's through 1970's. Name a major economic crisis in those years? Yes, there was the OPEC slump, but that was caused by external factors--a sudden increase in oil prices.

With the Reagan administration Keynes fell out of favor, was replaced by supply-side economics. Between that and deregulation, the economy is looking more and more like the early boom and bust period. The S&L crisis, the early 90's recession, then in faster and faster succession the dot-com bust and the mortgage crisis. And, not coincidentally, America is also becoming more and more unequal, looking more and more like the 1890's Robber Baron era (we may have exceeded that era's inequality).

Keynesian economics, together with sensible financial regulation, worked. But it came under sustained right-wing attack, financed by the sort of people whose wealth insulates them from busts and who benefit from less regulation and more inequality. We forgot what we once knew. This is why Krugman is always railing against people making the same economic mistakes, in theory and practice, that were made in the past (like when Britain tried to austerity its way out of the post-WWI slump).
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#36

Captain Capitalism video rebutting Paul Krugman

I've been a critic of Krugman for a very long time now. Criticisms above do a way better job than I, as a lay-person small businessman, could ever do. That said, I understand perverse incentives. I see them everyday here in Canada. Krugman's recent call for the EU and IMF to outright forgive Greek debt is simply ridiculous. Just think for a minute what that would lead to in Greece (ignoring the moral hazard and precedent it might create for Portugal, Spain, Italy, Ireland, and even North America). What would Greece do with the "breathing room" that would be allotted to it by forgiveness? To Krugman, the only way to go is anti-austerity, borrow borrow borrow, spend spend spend, prop up the economy with others $$$ and hope it somehow all works out. Greece has demonstrated no ability whatsoever to restrain itself when given access to other people's money. Forgiveness would simply lead to more of the same.

Don't get me wrong, the banksters hands in all this are not entirely clean. But the spend/borrow forever attitude in Greece is primarily the cause of that country's troubles. Forgiveness just gives them a do over that puts them in the same exact place in a few years. Krugman failed to address this likely probability at all in his call for forgiveness.

As for Cappy, yes his criticisms of Krugman are over the top and cartoonish. That is part of his appeal to his youtube audience, which he has said many times tends to be vastly different than his blog. I disagree with the conclusion that "Krugman isn't an economist", but the criticism that he and the Obama administration seem prone to adopt one another's economic arguments as sacrosanct is valid.

If you are looking for more authoritative and academic criticism of Krugman that is still not entirely void of etnertainment value (but quite a bit drier than Cappy), Stefan Molyneux and Peter Schiff are two significant critics of the Keynesian "religion" in general and Krugman in particular. They present very reasoned and rationale arguments why the Austrian school is the only way to go.
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#37

Captain Capitalism video rebutting Paul Krugman

T and A Man/ Ryre, you've both written a lot and have raised good points, but I'll focus on the following overarching points and leave the minutiae of things like Keynes v Friedman aside for now.

1. Wealth Production and the Use of Aggregates

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It is tautology to say the wealth of a country is how much product they bring to market. The cornerstone of Keynes is to maxmise the amount of product brought to market, and this maximisation can be smoothed due to the catastrophy that the private sector ALWAYS brings to market viaboom/bust.
...

Production is wealth. Demand drives production. Always has, always will. Aggregate demand as a driver is tautology.

Tell me what is wealth if not for aggegrate production levels?

Wealth is a pretty vague term, but I'll roughly define it as the abundance of goods and services that improves the quality of life in one way or another.

Demand is the ability and desire to purchase items which have been produced. One without the other is meaningless. Producers must anticipate that there is adequate desire for a product, and must have the ability to produce it such that those who desire are able to purchase it at a price which also leaves the producer with a return for his efforts.

Aggregate demand in Keynesian parlance is the sum total of receipts from goods and services sold. It is the actual consumption of goods and services which have already been produced, hence it comes at the end of the chain of events and does not 'drive' anything. The driver of wealth creation is the anticipation and recognition of unmet demands, followed by the steps taken to physically produce. Production, not consumption is the factor limiting economic growth.

The issue with aggregates is that it only tells you how much was spent, and little about the nature of the spending. It is the latter that is of more importance with respect to things like wealth production, and why I keep banging on about 'economic structures.' Considering the following Krugman comment:

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As far as creating aggregate demand is concerned, spending is spending - public spending is as good as but also no better than private spending, spending on bombs is as good as spending on public parks.

Spending on bombs is obviously destructive, but in a sense all consumption is 'destructive' in the sense that it reduces the stock of goods and services available. Of course viewing this way is ridiculous - the goods were created to be consumed. But consumption can't go on indefinitely without replenishment. This means that at times there is going to be less demand for the final consumption goods as those funds are diverted to the production process. Viewing that strictly from an 'aggregate demand' and GDP standpoint will cause one to come to the conclusion that the economy is shrinking when it is merely adjusting itself to produce more goods in the future.

2. Maximising Output in Recessions: Inadequate Aggregate Demand as the Root Cause

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Idle labour, inert labour, creates no production. Making this labour acticve adds to productive output. When they are unemployed, and the clearance is zero, using this idle labour doesn't take away from anyone.

Quote:Quote:

This misses what I understand to be Keynes' central insight: that an otherwise healthy economy (largely healthy, every economy has problems) can fall into recession through inadequate demand. Then it needs temporary measures to stimulate demand, after which it can return to health.

Think about the Great Depression. In 1930 the economy had about the same number of workers, railroads, factories, fields as in 1928. But in 1930, with the same stuff, the economy was producing radically less output. People were out of work; people needed the things--shoes, food, etc.--that workers could have produced; factories and fields were available to produce those goods. And yet the economy was drastically under-performing.

I mentioned before that 'demand' is really the ability and desire to purchase a given product or service at a given price. In blaming inadequate aggregate demand as the problem in recessions, Keynesians assume that the only thing wrong is the inability to pay a certain price. They don't consider the actual problem, which is that price is wrong.

Idle labor and capital would quickly be put to work again when their prices come down to a level in line with producers ability to pay. Recessions essentially happen when producers incur too great a cost to produce a product, which then can't be recouped at profit. This does not mean the goods can't be sold, it just means that producers have to take a hit in selling.

Keynesian pump-priming seeks to prevent producers taking a hit, and thus going through potential bankruptcies, layoffs etc, by supporting the ability for consumers to buy goods at profit clearing levels. However, these levels are not in line with the individual preferences of consumers as a whole. For example, the housing bubble died because the general populace had the inability to continue to pay for $300,000 McMansions. Printing or borrowing money to goad the populace into continuing to pay for $300,000 McMansions does not change the underlying fact that the average household did not have the wherewithal to support that kind of outlay. It merely added even more debt upon an already excessive amount.

Again, the evidence that the price level was too high was the shift of individual preferences away from consuming. This is not a 'healthy economy' which suddenly broke down. It was the mistake of producers who invested on the idea that the public wanted $300k houses. Having brought all of those unsalable goods to market, the only way to bring things back in to line is a falling price, and liquidation of failed enterprises.

Artificially keeping prices, and in turn 'aggregate demand' elevated only creates artificial scarcity as nobody can afford the goods in question (which is why there was a crisis in the first place). In the Great Depression farmers were made to destroy crops just to keep their prices from falling. The objective result there was an artificial scarcity in order to preserve artificial solvency of producers. Policymakers thought it better to have people starve rather than farmers go out of business because they mistakenly produced their crops too expensively.

In the pre Keynesian recessions and panics of the 1800s, the price level was allowed to do its work by going lower in response to the inability of the economy to support higher prices. The lower prices then made capital and labor more attractive, which then led to their consumption, production and rapid recovery. This is seen clearly in the data, for more have a look at Friedman and Schwartz A Monetary History of the United States . What's telling is that they even express confusion at the concept that the economy back then generally bounced back quickly from panics in the manner I've just described, specifically pointing out how it clashes with their 'modern' (read: Keynesian Deflation Sprial) understanding of things.

Keynesians are right in the sense that idleness is a problem. They prolong the idleness though by shielding producers and owners of capital from the market. They no longer are forced to liquidate assets when prices are kept artificially high. But at the same time, having JUST gone through crisis, they know full well that the high price they need to clear goods are not going to be met. So they stay relatively idle and focus on cost cutting. If prices fall, and capital and other factors of production are liquidated, ostensibly the purchaser is doing so because he thinks he can turn a profit, ie, produce and hire profitably at that lower price level.

If this is allowed to happen economy wide, the production machine can begin again. The only difference is the name on the title deeds have changed, and that 'aggregate demand' is going to be lower. Focusing on AD means you are going to fight tooth an nail to prevent that from happening, and this prevent the very restructuring that the economy needs to take off again. The idea that falling prices automatically leads to death spirals and a complete halt in commerce requires one to believe that human beings will never want to consume anything ever again, and thus there will be no use for investing in producing goods.

3. 1950-1980 Was the Golden Age of America and then Reagan Ruined Everything

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We had the greatest period of marginal increase of productivity, the greatest rate of scientific advancement, the highest wages for the middle class, and the lowest rates of unemployment, during the Keynesian era of 1946-1971.

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I don't think this is true. Yes, America's economic history was a story of boom and bust every 20 years or so...up until WWII. After that, Keynesian economics mitigated the business cycle and America experienced its longest sustained period of growth and rising incomes, 1950's through 1970's. Name a major economic crisis in those years? Yes, there was the OPEC slump, but that was caused by external factors--a sudden increase in oil prices.

In relative terms, the 19th century, specifically the period from 1865 through WWI had higher rates of real growth and probably did more to 'push the ball forward.' The post WWII period obviously was a better time to be alive in absolute terms, but in relative terms didn't have the same explosive growth that the 19th century did.

Viewing the post WWII period in a vacuum neglects the fact that it got there on the back of the US being the only major power left standing after the war, with its land left unblemished for the most part. It came through the war in this manner as a result of being the dominant force on the globe, which became on the back of the post Civil War economic conditions. For added perspective, consider that the Civil War was the deadliest war in the countries history, fought on its own turf, and wiped out a sizable portion of the very segment of the population most capable of production. Yet less than 50 years later it went from that to the eminent global power and was able to flex the muscle to prove it.

Having this platform laid for them, the Keynesians after WWII increased borrowing and money printing to engage in pump priming as an attempt to mitigate recessions, to maintain and expand the welfare state, as well as Vietnam. All of this culminated in a global run on the US dollar, and the need to get off the gold standard in 1971. T and A Man correctly labeled it a 'default,' and as such I find it odd that it can be said that polices which ended in the US government defaulting on an obligation to the world as evidence of 'no crisis.'

One of the main themes in my other posts was the nature of Kenyesianism to promote the short term and pretend like there are no connections to the longer term events down the line. The imbalances that led to smaller mini crises and recessions during the 1950s and 1960s were allowed to persist, which culminated in the larger problems of 1970s inflation. The neat compartmentalization of the 50s and 60s and the ills of the 70s allows the Keynesian to pretend that the two were not linked. As I keep repeating, the short term it 'works,' but only by changing the nature of the problem rather than eliminating it. The 'problem' of garden variety recessions was alleviated, but only at the expense of creating a larger debt and printing problem which was dealt with via the 1971 default.

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What is telling is that no financial crisis between 1946-1971 was every as bad as those that have happened after keynesian policy was abandoned.

2008, 2000, 1990, 1982 (unless you want to count that as a keynesian hangover) were all worse.

Continually sweeping problems under the rug rather than eliminating them is hardly an impressive record.

1982, 1987, 1990, 2000 and 2008 were all worse, and progressively so, exactly because of the mentality that in the immediate term, crises could be mitigated and smoothed over by easing policy. As discussed before, this only serves to maintain an artificially higher price level and thus the imbalances that went with it. As long as debt can continue to expand, the game 'works.' But the next crisis is that much larger, owing to the fact all of the prior gremlins haven't been dealt with. It's no surprise that the crises dates have all been larger than the last. The only reason the 1950-1970s period is tame in comparison is because that was the starting point, from a 'clean slate' created by the end of the War. In some ways you can argue we've been living in a continuous 60+ year bubble, which is never allowed to fully pop because of constant mitigation and smoothing. Every time the market tries to revert to the mean, the interventionists step in to prevent it. The economy pays for this in other ways, the most prominent being the consistent erosion of real wages, which has been a trend in place since the end of the gold standard, leading to the gutting of the middle class.

In the end there it is not possible to mitigate business cycles or smooth recessions because they are ultimately a consequence of shifting consumer preferences. Prices and production have to be permitted to shift along with this change in preference.
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#38

Captain Capitalism video rebutting Paul Krugman

Quote: (07-20-2015 07:05 PM)DannyAlberta Wrote:  

I've been a critic of Krugman for a very long time now. Criticisms above do a way better job than I, as a lay-person small businessman, could ever do. That said, I understand perverse incentives. I see them everyday here in Canada. Krugman's recent call for the EU and IMF to outright forgive Greek debt is simply ridiculous. Just think for a minute what that would lead to in Greece (ignoring the moral hazard and precedent it might create for Portugal, Spain, Italy, Ireland, and even North America). What would Greece do with the "breathing room" that would be allotted to it by forgiveness? To Krugman, the only way to go is anti-austerity, borrow borrow borrow, spend spend spend, prop up the economy with others $$$ and hope it somehow all works out. Greece has demonstrated no ability whatsoever to restrain itself when given access to other people's money. Forgiveness would simply lead to more of the same.

Don't get me wrong, the banksters hands in all this are not entirely clean. But the spend/borrow forever attitude in Greece is primarily the cause of that country's troubles. Forgiveness just gives them a do over that puts them in the same exact place in a few years. Krugman failed to address this likely probability at all in his call for forgiveness.

As for Cappy, yes his criticisms of Krugman are over the top and cartoonish. That is part of his appeal to his youtube audience, which he has said many times tends to be vastly different than his blog. I disagree with the conclusion that "Krugman isn't an economist", but the criticism that he and the Obama administration seem prone to adopt one another's economic arguments as sacrosanct is valid.

If you are looking for more authoritative and academic criticism of Krugman that is still not entirely void of etnertainment value (but quite a bit drier than Cappy), Stefan Molyneux and Peter Schiff are two significant critics of the Keynesian "religion" in general and Krugman in particular. They present very reasoned and rationale arguments why the Austrian school is the only way to go.

Actually Krugman's primary recommendation for Greece is for Germany/the EU to allow some inflation. There's a thing called price stickiness. It's particularly powerful when it comes to wages. In a frictionless economy, if a nation was overspending and everyone needed to take a pay cut, wages could just be slashed by 10% across the board. But think how that has to work in a real economy. Each boss has to realize that he needs to cut wages. Then he needs to go around to each worker and inform them their pay is being cut. Some people may have contracts that prevent that. Others will go on strike. A messy, cumbersome process.

Now imagine that the EU was allowing 4% inflation (pretty moderate). In a nation that was doing well, like Germany, people would get 4% raises too, and relative buying power would stay the same. Whereas in Greece, wages could stay flat. Everyone's taking a 4% haircut, but without all the messiness of individual wage negotiations, etc.

This is normally what countries do when they get in a little over their heads--they let the currency devalue a little. Everyone's buying power falls a little across the board, prices right themselves, and you move on. Greece's problem is the Euro straightjacket prevents them from doing the natural correction.
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#39

Captain Capitalism video rebutting Paul Krugman

Quote: (07-20-2015 08:34 PM)Dismal Operator Wrote:  

T and A Man/ Ryre, you've both written a lot and have raised good points, but I'll focus on the following overarching points and leave the minutiae of things like Keynes v Friedman aside for now.

Yeah, like I said, I am not an economist and this is approaching the limit of my ability to intelligently discuss it.
Quote:Quote:

Idle labor and capital would quickly be put to work again when their prices come down to a level in line with producers ability to pay. Recessions essentially happen when producers incur too great a cost to produce a product, which then can't be recouped at profit. This does not mean the goods can't be sold, it just means that producers have to take a hit in selling.
Here I think is where price stickiness comes in. Yes, producers may need to cut prices; workers may need to take lower wages. But in practice, in the real world, this is a cumbersome process. Producers, unable to sell a product at the previous price, instead of cutting prices may just cut production. "I can only sell 700 widgets at 5$ each where I used to be able to sell 1000. Better stop assembly line 2, lay some people off, and hope things get better." "I used to get $20/hour. I could take this job for $15/hour, but I'm going to hold out for something better." These are basically versions of people putting money in their mattresses instead of into the economy. Yes, prices eventually right themselves, but with a lot of avoidable suffering in the meantime. This is why some inflation, 3-5%, is good. Instead of having to give people an actual wage cut--hard to do for various human reasons--you can just hold wages steady and achieve an across the board de fact cut. It's actually good policy in a slump to allow a bit of inflation, because it lets prices normalize smoothly. But of course inflation is anathema to the right wing.
Quote:Quote:



In relative terms, the 19th century, specifically the period from 1865 through WWI had higher rates of real growth and probably did more to 'push the ball forward.' The post WWII period obviously was a better time to be alive in absolute terms, but in relative terms didn't have the same explosive growth that the 19th century did.

That may be true. My memory of history class was that there was a LOT of poverty and suffering among the workers and farmers. Boom and bust was really hard on people. But we did eventually develop the continent coast to coast so the economy in aggregate did grow a ton.

Quote:Quote:

All of this culminated in a global run on the US dollar, and the need to get off the gold standard in 1971. T and A Man correctly labeled it a 'default,' and as such I find it odd that it can be said that polices which ended in the US government defaulting on an obligation to the world as evidence of 'no crisis.'
The economy needs a certain amount of liquid money to function well. It may need different amounts at different times (see the babysitting co-op example). Why should we limit the amount of money in circulation to the amount of soft yellow metal we can dig out of the ground? When we need to change monetary policy, we send more or fewer miners into the ground? How retro.

Seems to me it's as if the babysitting co-op decided to use bottlecaps from a rare, expensive Belgian beer as babysitting tokens. Now, instead of putting into circulation the amount of tokens needed to make the system work well, we're limited by how many bottlecaps we can find. If we need more tokens, we have to run around to specialty beer shops and spend money. Why?

"Historical data shows that the magnitude of swings in prices were far higher under the gold standard....

Mainstream economists believe that economic recessions can be largely mitigated by increasing the money supply during economic downturns.[69] A gold standard means that the money supply would be determined by the gold supply and hence monetary policy could no longer be used to stabilize the economy.[70] The gold standard is often blamed for prolonging the Great Depression, as under the gold standard, central banks could not expand credit at a fast enough rate to offset deflationary forces.[71]
[...]
The money supply would essentially be determined by the rate of gold production. When gold stocks increase more rapidly than the economy, there is inflation and the reverse is also true.[54][76] The consensus view is that the gold standard contributed to the severity and length of the Great Depression."
https://en.wikipedia.org/wiki/Gold_standard
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#40

Captain Capitalism video rebutting Paul Krugman

Quote: (07-20-2015 09:45 PM)Ryre Wrote:  

Actually Krugman's primary recommendation for Greece is for Germany/the EU to allow some inflation. There's a thing called price stickiness. It's particularly powerful when it comes to wages. In a frictionless economy, if a nation was overspending and everyone needed to take a pay cut, wages could just be slashed by 10% across the board. But think how that has to work in a real economy. Each boss has to realize that he needs to cut wages. Then he needs to go around to each worker and inform them their pay is being cut. Some people may have contracts that prevent that. Others will go on strike. A messy, cumbersome process.

Now imagine that the EU was allowing 4% inflation (pretty moderate). In a nation that was doing well, like Germany, people would get 4% raises too, and relative buying power would stay the same. Whereas in Greece, wages could stay flat. Everyone's taking a 4% haircut, but without all the messiness of individual wage negotiations, etc.

This is normally what countries do when they get in a little over their heads--they let the currency devalue a little. Everyone's buying power falls a little across the board, prices right themselves, and you move on. Greece's problem is the Euro straightjacket prevents them from doing the natural correction.

Ryre, I won't pretend to be nearly as plugged in as you and there may be something I missed, particularity more recently.

But this is the Krugman quote I was keying off of that he recently said (just after the referendum):

Quote:Quote:

But the key point is that the austerity ended up being not just incredibly painful but completely futile, because it wasn’t accompanied by massive debt relief.

http://krugman.blogs.nytimes.com/2015/07...in-greece/

He's also said, to my recollection, "Greek debt is just a number on a page" held by laregly unethical creditors, who must forgive to achieve some semblance of a return on their loans (couldn't find that quote readily).

To my mind, forgiveness is a powerfully perverse incentive, even in combination with other "reforms", assuming the reforms would ever be accepted by the Greek populace. You're bound to end up in the exact place you started from.

But as before, I am just a layman...
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#41

Captain Capitalism video rebutting Paul Krugman

Quote: (07-21-2015 06:53 PM)DannyAlberta Wrote:  

Quote: (07-20-2015 09:45 PM)Ryre Wrote:  

Actually Krugman's primary recommendation for Greece is for Germany/the EU to allow some inflation. There's a thing called price stickiness. It's particularly powerful when it comes to wages. In a frictionless economy, if a nation was overspending and everyone needed to take a pay cut, wages could just be slashed by 10% across the board. But think how that has to work in a real economy. Each boss has to realize that he needs to cut wages. Then he needs to go around to each worker and inform them their pay is being cut. Some people may have contracts that prevent that. Others will go on strike. A messy, cumbersome process.

Now imagine that the EU was allowing 4% inflation (pretty moderate). In a nation that was doing well, like Germany, people would get 4% raises too, and relative buying power would stay the same. Whereas in Greece, wages could stay flat. Everyone's taking a 4% haircut, but without all the messiness of individual wage negotiations, etc.

This is normally what countries do when they get in a little over their heads--they let the currency devalue a little. Everyone's buying power falls a little across the board, prices right themselves, and you move on. Greece's problem is the Euro straightjacket prevents them from doing the natural correction.

Ryre, I won't pretend to be nearly as plugged in as you and there may be something I missed, particularity more recently.

But this is the Krugman quote I was keying off of that he recently said (just after the referendum):

Quote:Quote:

But the key point is that the austerity ended up being not just incredibly painful but completely futile, because it wasn’t accompanied by massive debt relief.

http://krugman.blogs.nytimes.com/2015/07...in-greece/

He's also said, to my recollection, "Greek debt is just a number on a page" held by laregly unethical creditors, who must forgive to achieve some semblance of a return on their loans (couldn't find that quote readily).

To my mind, forgiveness is a powerfully perverse incentive, even in combination with other "reforms", assuming the reforms would ever be accepted by the Greek populace. You're bound to end up in the exact place you started from.

But as before, I am just a layman...

Yeah, I'm not saying he hasn't talked about debt relief for Greece, just that his main theme seems to me to be the way the strictures of the Euro have made Greek recovery impossible. But I haven't followed the Greek crisis very closely or read everything he's written on it.

P.S. Did a little quick reading on his blog. He talks about debt relief in the context of austerity. Austerity caused the Greek economy to shrink radically. If not accompanied by debt relief, this means that the ratio of debt to GDP deteriorates, the same way that your mortgage feels a lot bigger if your income drops from 100k to 60k. I think Krugman's lesson is if you are going to insist that a debtor state crash its GDP with a harsh austerity program, you'd better provide some debt relief.
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#42

Captain Capitalism video rebutting Paul Krugman

Quote: (07-19-2015 12:22 PM)Ryre Wrote:  

First off, there is no Nobel for Economics, Mr. Respect-Mah-Authoritah. Feel free to respond once you've figured out why.

Yes there is. http://www.nobelprize.org/nobel_prizes/e...laureates/

Did you even read the webpage you linked to?

Every other prize is "The Nobel Prize in Physics/Chemistry/Peace/etc." because it was funded by Alfred Nobel in his will. What you call the Nobel in Economics is really the "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel." The short version is that a bunch of hacks in a pseudoscience hijacked Nobel's good name to give themselves and their field a credibility that they don't deserve.

And there's absolutely nothing wrong with that, right? That's why I'm starting the "not_dead_yet Prize in Pickup Theory in Memory of Alfred Nobel," which you can call the Nobel in Game.

I'll be awarding it to someone later this year, probably not you.

"I'm not worried about fucking terrorism, man. I was married for two fucking years. What are they going to do, scare me?"
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#43

Captain Capitalism video rebutting Paul Krugman

Here is the recent Freedomfest debate between Steve Moore and Paul Krugman. I haven't watched it yet because it was just uploaded, I'll give my immediate thoughts later.






The discussion begins at the 4 minute mark.
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#44

Captain Capitalism video rebutting Paul Krugman

Quote: (07-22-2015 09:36 AM)not_dead_yet Wrote:  

Quote: (07-19-2015 12:22 PM)Ryre Wrote:  

First off, there is no Nobel for Economics, Mr. Respect-Mah-Authoritah. Feel free to respond once you've figured out why.

Yes there is. http://www.nobelprize.org/nobel_prizes/e...laureates/

Did you even read the webpage you linked to?

Every other prize is "The Nobel Prize in Physics/Chemistry/Peace/etc." because it was funded by Alfred Nobel in his will. What you call the Nobel in Economics is really the "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel." The short version is that a bunch of hacks in a pseudoscience hijacked Nobel's good name to give themselves and their field a credibility that they don't deserve.

And there's absolutely nothing wrong with that, right? That's why I'm starting the "not_dead_yet Prize in Pickup Theory in Memory of Alfred Nobel," which you can call the Nobel in Game.

I'll be awarding it to someone later this year, probably not you.

Huh, so when I go to the Nobel Prize website and it lists a prize in Economic Science right alone with physics, medicine, chemistry, etc. (check the dropdown for "Nobel Prizes and Laureates"), that isn't a Nobel Prize? Sounds like you want the Nobel Prize to be limited to the original categories. Unfortunately the Nobel Prize organization disagrees, and is going to keep giving out Nobel Prizes in economics.

"The Nobel Memorial Prize in Economic Sciences (officially Swedish: Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne, or the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel), commonly referred to as the Nobel Prize in Economics,[1] and as a "category of the Nobel Prize" by the Nobel Foundation itself,[2] which owns the name Nobel Prize,[3][4] is an award for outstanding contributions to the field of economics, and generally regarded as the most prestigious award for that field.[5] It is not one of the prizes that Alfred Nobel established in his will in 1895, but instead was established 73 years later by a donation to the foundation from Sweden's central bank, the Sveriges Riksbank, on the bank's 300th anniversary.[5][6][7][8] Winners are announced with the Nobel Prize winners, and receive the award at the same ceremony.[5]

Relation to the Nobel Prizes[edit]
The Prize in Economics is not one of the original Nobel Prizes created by Alfred Nobel's will.[5][17][18] However, the nomination process, selection criteria, and awards presentation of the Prize in Economic Sciences are performed in a manner similar to that of the Nobel Prizes.[9][14][19] The Royal Swedish Academy of Sciences awards the prize "in accordance with the rules governing the award of the Nobel Prizes instituted through his [Alfred Nobel's] will,"[9] which stipulate that the prize be awarded annually to "those who ... shall have conferred the greatest benefit on mankind."[20]"

https://en.wikipedia.org/wiki/Nobel_Memo...c_Sciences

I like your idea for a pickup prize, but you might get into trouble with the whole "Nobel Foundation...which owns the name Nobel Prize" part. Otherwise you're good man!
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#45

Captain Capitalism video rebutting Paul Krugman

Made the mistake of clicking on a Captain Capitalism post again. Attempting to show that climate change/global warming is a leftist hoax, he claims that we don't hear about the hole in the ozone layer/ozone depletion anymore because it "proved to be another leftist bogus scare tactic."

Wrong. We don't hear about the hole in the ozone layer anymore because effective regulation of CFC's/development of alternatives fixed the problem and the hole is now closing. http://www.wired.co.uk/news/archive/2015...ozone-hole

Is there such a thing as negative credibility? If this guy told me it was raining I'd reach for sunglasses.

I hope this does not get me suspended again. I'm not just bashing on someone for the sake of bashing on him. There's a bigger point. Too often I see people in the manosphere/red pill community who, having had the wool pulled from their eyes regarding certain mainstream beliefs, erroneously conclude that if a belief is mainstream it must be wrong. The red pill is about seeing with your own eyes, looking out for your own real interests and not the ones society says you should have, relying on evidence and reason, and not limiting your inquiry or conclusions to stay within PC bounds. Puncturing 'pretty lies' and getting to truth.

"If liberals say it, it must be wrong" is just another dogma.

[Note that this is different from my attitude about Cappy, which might be described as "If person X, who has very, very frequently been wrong or said things that are untrue (either from ignorance or on purpose) says it, it is probably wrong (and certainly should be double-checked)." I don't take Dick Cheney's views on Middle East policy as true. I don't trust Lindy West or Jessica Valenti when it comes to rape claims or facts about gender in society. People who have claimed hyperinflation is just around the corner for the last 6 years have lost my trust on economics. Etc. Credibility and track record matter.]
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#46

Captain Capitalism video rebutting Paul Krugman

Quote: (07-20-2015 08:55 AM)kosko Wrote:  

Paul Krugman
Noam Chomsky
Naomi Klein

All left leaning talk boxes who have critical mass for their words but never advise for any real change. These types all are just gate keepers and help keep the intellectual class in the dark by promoting purple pill spin.

This clearly shows that you have never read Chomsky and stating your opinion as if it was fact.
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#47

Captain Capitalism video rebutting Paul Krugman

Whenever I see the vomit of Keynes showing up I just shake my head. It's like a bad smell that just won't wash out of some clothes. Am I really still hearing about "price stickiness" and "stimulating aggregate demand" "pump-priming" bullshit?

I strongly recommend reading, or attempting to read, his book "General Theory". The moment you see is writing style you'll recognize the nature of that man. A stupid windbag, ever so eloquently spouting complete and utter shit for hundreds of pages, who got his high reputation because that shit supported what the political class wanted to do and "claim to be" anyway.

In the ideal world, his nonsense would just be summarily be deleted from academic courses, we'd go back on the gold standard, constitutionally restrict so called "pump-priming", and leave wages during recessions and deflation up to the free market. There are dozens of ways for the private sector to handle labour and wages during deflation.

I suspect much of the support for Keynesianism to stem from the "hazing effect". People support hazing, or the teaching of bullshit, because they themselves had to go through with it, and thus feel the need to justify its worth.
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