Knowing about macroeconomics
February 16, 2015, 9:49 pm
Filed under: Uncategorized

Scott Sumner and Noah Smith (and, I gather, Paul Krugman although I cannot confirm as I’m constitutionally unable to read Paul Krugman) ask the timeless question, “Why do non-experts think they know about macroeconomics?”

Sumner gives examples from physics. Non-physicists don’t question physicists about physicsy type things that physicists say about quarks or whatever. The point I guess being: Why can’t economics be treated the same? You know, like a….

Aww. Poor, poor economics. The Pinocchio of sciences: always wishing it were a real science.

I have a better question though: Why do expert economists think they know about macroeconomics?

After all ask N different ‘experts’ in economics a thing about macroeconomics and it wouldn’t be surprising in the slightest to get N different answers. There are then two possibilities. One is that at least N-1 of those experts are wrong. (In which case, a layperson would be right to have doubts!) The other, to be fair, is that the question under discussion, due to reasons of subtlety and complexity and interpretation and the like, doesn’t have a ‘right’ answer per se. (In which case, a layperson would be right to object when the economist feigns certainty and claims to have the ‘right’ answer.)

Either way, in that context the question raises itself: what, exactly, is this ‘knowledge about macroeconomics’ to which the rest of us non-experts are supposed to be so deferent and just shut up about? The linked blog posts touch on one answer: it’s terminology. ‘Experts’ in macroeconomics are people who took classes and read texts/papers where they learned some specific terminology – definitions of jargon as it uniquely pertains to macroeconomics – that non-experts won’t, by definition, have. Leaving aside the fact that economists don’t always agree with each other on their terminology, I guess when an expert macroeconomist defines a word one way it is indeed fair to object when a non-expert, unfamiliar with that definition, uses it wrong and extrapolates from there.

But I think this is also where this argument loses me, because mere definitions and jargon are not necessarily knowledge. Don’t get me wrong: They can be, if and where they encode genuine tangible observations and facts about the world. Observations and facts that have stood the test of time, that have solved real problems, that have survived against rival theories.

Is that the case for the field these guys call ‘macroeconomics’? Given how frequently and with what bitter ferocity they argue with each other, it certainly appears not. So what then is wrong with a non-expert pointing this out and reasoning accordingly? Meaning: on any given issue, it’s likely that either N-1 of them are wrong, or they’re affecting false certainty about an issue where none can exist.

And this brings up perhaps a more immediate problem with economics: its most visible (cough Krugman cough) spokespeople nowadays are often a-holes who posture as enlightening the rest of us with Eternal Unalloyed Axiomatic Truth, and anyone who questions or argues with them on any point is a mouthbreathing idiot. This perhaps wouldn’t be as much of a problem if the theories they spouted in their weekly op-ed pieces and Brookings Institution-funded PR/political campaigns were Eternal Truth – ‘settled science’, about quarks and whatnot. But that’s just it: they’re clearly not. If they were, economists wouldn’t have this case of physics-envy in the first place let alone go around affecting Utter Certainty while asking these fundamentally insecure questions like (paraphrasing) ‘why don’t people just believe us like they do real scientists?’ all the time.

Finally let’s note that it’s not exactly a healthy sign that these economists – some of them genuine, working economists with actual research-focused academic positions – spend all this time worrying about how they are perceived (as opposed to: whether what they’re researching is right). If you go too far down this road you end up like the Climategate climate-scientists, conducting meta ‘science’ entirely as a PR campaign. Let me just say, never go full Climategate.

When fighting ‘debt myths’ or fighting ‘inequality’, pick a talking-point
February 16, 2015, 3:07 pm
Filed under: Uncategorized

1. Here’s a thing you can think: whether there’s a lot of ‘inequality’, in and of itself, has big implications for growth. Mark Thoma, for example, thinks or claims to think that “too much inequality reduces growth” or can, anyway. Growth, according to this view, is a thing that, even when all else equal, can be materially affected by ‘inequality’ – that is, by the distribution of resources within a nation. Growth potential is not only not independent of distributional concerns, but we are supposed to pay attention to distribution (‘inequality’) precisely because of its (supposed) implication for growth, in and of itself.

I don’t really think this thing, mind you. But it’s a thing you can think.

2. Here’s another thing you can think: national debt that ‘we owe to ourselves’ – that is, debt that is wholly owned within the country, so that today’s borrowing just replaces taxes and tomorrow’s taxes just go to pay debt-service on the borrowing, all being just transfers among people in the same country – can’t possibly have growth implications. This view recognizes that all that taxing/transferring can have distributional implications, but thinks that can’t possibly matter for future growth because it’s ‘just’ about distribution after all. Paul Krugman, for example, says debt “has distribution implications, and it may have macroeconomic effects because of those distributional issues. But again, all this is within the current generation”. So uh it’s cool or something, I guess.

Like #1, this is a thing I don’t really think, but it’s a thing you can think.

Now, I could be wrong in thinking neither #1 nor #2. You can think one of those things and argue with me and prove me wrong not to.

What you can’t think, however, are #1 and #2 together. If you want to complain about ‘inequality’ because of its (supposed) effect on future ‘growth’, then you can’t also poo-poo the future growth implications of debt that with the very same breath you acknowledge to have a big distributional footprint. If inequality in and of itself harms growth then to the extent debt feeds inequality it must necessarily harm growth too. Similarly, if you wish to claim, with Krugman, that the distributional effects of debt are all ‘within the current generation’ (whatever that means exactly), then you can’t at the same time raise the spectre of future growth as a reason to care about ‘inequality’. Because so what if things are ‘unequal’, why should I care or assent to that as a reason to take my stuff, that’s just distributional so while it ‘may have macroeconomic effects’ it’s all ‘within the current generation’ see?

So pick one. Tell me debt levels have no growth implications. Or tell me I’m supposed to worry about ‘inequality’ because of growth. Just don’t tell me both.

Oh Google, we decided you were great based on nada, and you betrayed that trust
February 15, 2015, 9:14 am
Filed under: Uncategorized

Recently I started to notice problems with my Chrome browser. It would hang indefinitely on ‘Processing request…’, I’d be unable to close tabs, who knows what else. Naturally, I assumed I did something wrong and inadvertently downloaded some malware or viruses or hostile-foreign-state infiltration technology or some such. Then I read this: Fuck It, I’m Going Back to Firefox. And indeed, I had gone back to Firefox for a while. But there’s like a couple extensions I still need in Chrome!

(Remember ‘first world problems’?)

Here’s another article that asks google where did it all go wrong. And this jumped out at me:

And most damning of all: you have squandered our trust. You used to be special, Google. Or at least we used to believe you were special.

Because that’s when I remembered that – as RWCG readers know – there was no objective basis for that ‘belief’ that Google was ‘special’. Ever. People just faddishly decided that based mostly on the primary colors. I guess the utter lack of substance informing the perception of Google’s ‘specialness’ is finally catching up to us. But still and all, can’t all those overpaid Stanford grads in beanbag chairs please at least just fix the dang ‘Processing request’ problem??

What swung Roberts
February 14, 2015, 12:00 pm
Filed under: Uncategorized


Meanwhile, it is widely thought that in the first Obamacare case, NFIB v. Sebelius, the supporters of Obamacare “worked the refs”—specifically that a concentrated campaign to affect Chief Justice Roberts’s views worked to get him to change his mind by appealing to his jurisprudential minimalism, and to his concern for the political reputation of the Court. Who know if this actually contributed to Roberts changing his mind about the case and casting the deciding vote to uphold most of Obamacare

Of course not. A campaign ‘appealing to’ ‘jurisprudential minimalism’ is what swung his vote and led to the superstorm of illogic that he used to justify it? That’s ridiculous.

Roberts was clearly just blackmailed. There’s no other explanation that makes any sense. I don’t know why people are so resistant to the obvious explanation about this.

Open borders – another dialogue
February 13, 2015, 7:53 pm
Filed under: Uncategorized

This post from Bryan Caplan on philosophy or something is a dialogue that begins like this:

Glaucon: Guess what? I’m writing a book about moral philosophy!

Socrates: Cool. What do you say?

Glaucon: I’m a pragmatist. We should do whatever maximizes human welfare.

Socrates: So the main point of the book is to advocate open borders?

Glaucon: No, no, no, Socrates. I said I’m a pragmatist.

Socrates: You don’t think allowing low-skilled immigrants to get jobs in the First World would sharply raise human welfare, on balance?

Glaucon: I suppose it would. But voters wouldn’t accept it.

Socrates: But if your thesis is correct, they are morally obliged to….[etc]

Hey, that’s cool and all. But here’s another way this dialogue could’ve gone.

Glaucon: I’m a pragmatist. We should do whatever maximizes human welfare.

Socrates: So the main point of the book is to advocate open borders?

Glaucon: Huh? Where did you get that from what I just said?

Socrates: You don’t think allowing low-skilled immigrants to get jobs in the First World would sharply raise human welfare, on balance?

Glaucon: Nah.

Cutting ‘carbon’ emissions to affect the climate is a form of geoengineering
February 11, 2015, 7:35 am
Filed under: Uncategorized

Can technical fixes provide a viable solution to climate change or are they a high-risk, irresponsible distraction from the need to cut carbon emissions?

No. Just stop.

Periodic reminder, everyone:

Using behavior controls to artificially ‘cut carbon emissions’ is also a form of geoengineering. It is trying to, one might say, engineer a certain climate outcome for the, well, earth, using, you know, our smarts and understanding of how such-and-such forces affect the climate.

That’s ‘geoengineering’ in my book and whether you want to geoengineer your pet climate-outcome using space mirrors or ‘carbon’ [sic] taxes is just a question of methods. They are not different categories of thing. The metrics along which they can and should be distinguished have only to do with their costs/benefits, effectiveness and risks.

So if you say you want carbon taxes/controls ‘instead of’ geoengineering you are speaking nonsense. You want geoengineering too, just a different kind. And – just like those other geoengineering fans – if you think your geoengineering method is best the way to establish this is to demonstrate that it wins on cost/benefit/effectiveness/risk grounds, not by slapping a scary-sounding label on all other approaches.

Student loans – step 3: profit!
February 8, 2015, 3:35 pm
Filed under: Uncategorized

Noted deep financial thinker Elizabeth Warren has been known to complain that “the government is making a profit on student loans”.

Well, problem solved!

the Obama administration revealed this week that its student loan program had a $21.8 billion shortfall last year, apparently the largest ever recorded for any government credit program.

So frankly, I really don’t think Senator Warren has anything to worry about. And never did, as would be readily seen by anyone who looks into how student loans are being accounted. But we mustn’t judge Senator Warren too harshly; it’s probably just this lack of understanding of financial matters that allowed her ancestors get swindled out of Manhattan.


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