tag:blogger.com,1999:blog-6276561747841568697.post1281893088851487191..comments2024-03-27T05:23:48.855-04:00Comments on Krugman-in-Wonderland: What is "the social contract" of which Krugman and Elizabeth Warren speak?William L. Andersonhttp://www.blogger.com/profile/01802990642236807359noreply@blogger.comBlogger35125tag:blogger.com,1999:blog-6276561747841568697.post-15977982602832461692011-09-27T08:49:16.327-04:002011-09-27T08:49:16.327-04:00It's quite obvious that there is not ONE rate ...It's quite obvious that there is not ONE rate of interest to rule them all. After all, that would be a "LK-ism": trying to make the world fit the theory.João Marcushttps://www.blogger.com/profile/08679910497915175200noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-27901500928616093952011-09-25T22:07:25.356-04:002011-09-25T22:07:25.356-04:00Regarding LK's claim that since there is not j...Regarding LK's claim that since there is not just ONE rate of interest, the entire ATBC is discredited really does not deserve an answer. It took me a long time to realize that the guy was serious.<br /><br />For example, there were lots of different interest rates for borrowers during the housing bubble, but that didn't mean that malinvestments were not happening. Overall, they not only were lower than they should have been, but government policies and programs were pushing far more people into home ownership than should have been the case.<br /><br />As for rights, I go with Natural Rights over utilitarianism. Sorry you don't like it, LK, but 'dass life.William L. Andersonhttps://www.blogger.com/profile/01802990642236807359noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-39202716190949101652011-09-23T19:33:27.863-04:002011-09-23T19:33:27.863-04:00Interesting, and I suspect that the actual percent...Interesting, and I suspect that the actual percentage might be less than that. I doubt that would persuade Warren, who is going to campaign on a platform of confiscating capital, which means that she is going to base her campaign on making this depression worse.William L. Andersonhttps://www.blogger.com/profile/01802990642236807359noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-1116415371568447682011-09-23T18:49:02.234-04:002011-09-23T18:49:02.234-04:00Here is the quote: "Yale economist William No...Here is the quote: "Yale economist William Nordhaus estimated that inventors, which I will assume <br />here to be proxies for innovative entrepreneurs, capture only 4 percent of the total social <br />gains from their innovations"<br /><br />Of the accuracy and value of such, I don't know.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-55066078726958956782011-09-23T18:44:02.109-04:002011-09-23T18:44:02.109-04:00"gains of their commercial success"
I c..."gains of their commercial success"<br /><br />I could swear I once read something on RealClearMarkets Entrepreneurship Resource Center about this... searching...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-33741216030352978812011-09-23T18:39:20.370-04:002011-09-23T18:39:20.370-04:00LK, since you appear to be so generous in offering...LK, since you appear to be so generous in offering your statist / Keynesian / Neo-Keynesian / whatever named solutions to things, what is your answer to the present environment dominated by:<br /><br />An insolvent banking system<br />A central bank filled with toxic waste paper assets backing the worlds reserve currency<br />25% of homeowners with negative equity and upwards of another 5 -10% near negative <br />Three years of 0% interest rates and negative effective rates with no recovery<br />Stimulus games that pulled demand forward but solved nothing<br />And on and on ...<br /><br />Please LK, tell us what your wise and powerful economic philosophy can offer as a solution to this tar pit we find ourselves in. Please tell us you can offer something more than "we didn't do enough, red herring, straw man or a laundry list of egghead citations. Please tell us you have something that will work in the real world. Please.Mike Mnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-68189422879294594202011-09-23T15:49:37.029-04:002011-09-23T15:49:37.029-04:00@Prof Anderson
If you support either party then y...@Prof Anderson<br /><br />If you support either party then you are indeed supporting the police state (and a lot more as you know).<br /><br />So following the logic they must (whether they say it as much or not!).<br /><br />Also I noticed in the quote from Elizabeth Warren that the left seems to love so much she doesn't mention anything about the zillions of other boondoggles. Only paying back for the roads. If only we had to pay for roads...Mike Cheelnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-91425408527404995562011-09-23T15:43:24.954-04:002011-09-23T15:43:24.954-04:00And we live in a police state. I would guess that ...And we live in a police state. I would guess that Warren and Krugman support that, too. At least I never have seen Krugman complain about it.William L. Andersonhttps://www.blogger.com/profile/01802990642236807359noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-74105876885958938552011-09-23T14:22:41.727-04:002011-09-23T14:22:41.727-04:00In a free society the only legitimate function of ...In a free society the only legitimate function of the government is to secure the rights of the people.<br /><br />We do not live in a free society.Mike Cheelnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-67663334114659173902011-09-23T14:02:14.329-04:002011-09-23T14:02:14.329-04:00To add to my previous comment, Warren also seems t...To add to my previous comment, Warren also seems to be double-counting. Under our current progressive tax system, the rich pay more to maintain the roads, fund public education, support police forces. Warren points to these benefits and says the rich benefit disproportinately from the resources provided by "all of us" and need to pay disproportionate share of the taxes. It's circular logic. <br /><br />In addition, it is clear that for some government resources high-income earners aren't benefitting more than others, yet the still pay more than others. The per-person cost of our national defense is not greater for a high-income individual than it is for a low income one. Bill Gates likely pays exponential more taxes than the average person, yet he doesnt send 300 kids to public school. But then Warren is arguing that he benefits whenever anyone else goes to public school. So a benefit to one person is a benefit to everyone else and everyone should be taxed accordingly. Needless to say, I think this argument is absolutely absurd.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-4631039225964460752011-09-23T13:42:30.603-04:002011-09-23T13:42:30.603-04:00I agree that the social contract theory, put forwa...I agree that the social contract theory, put forward by Elizabeth Warren amd Paul Krugman, is incredibly cynical and dangerous to individual rights. An efficient government that promotes infrastracture, enforces property rights, and fosters other public goods can aid wealth creation but is not solely responsible for it. It would be hard to ignore the fact that some people work harder than others, are more intelligent, or have an above-average share of whatever qualities and talents society deems to be valuable. An individual should be able to benefit from his talents and efforts.<br /><br />Besides by Warren's logic, if all wealth created is a product of good government, then it would follow that all income should be taxed at the same rate. For example, if you make 50, 000 and pay 5, 000 dollars in taxes, then I, who make 100,000 dollars and receive twice the benefit of government's wealth creation properties, should pay 10,000 taxes. Why is it the high-income earners not only pay more taxes in absolute terms but also pay a higher rate?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-58025117106970871862011-09-23T13:17:02.448-04:002011-09-23T13:17:02.448-04:00And then there is Warren Buffet, who uses his “sta...And then there is Warren Buffet, who uses his “status” as billionaire capitalist to promote the progressive vision of a worldwide Stalinistic caliphate. Indeed, Satan is laughing and spreading his wings!nimrodnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-48155744936555550212011-09-23T12:33:17.753-04:002011-09-23T12:33:17.753-04:00"impose both an easy money scheme and claim t...<i>"impose both an easy money scheme and claim that if we have enough regulatory agencies, we won't have any problems."</i><br /><br /><i>Yeah, I guess you're incapable of ever responding to substantive issues.</i><br /><br />I guess Keynesians are incapable of ever responding to the substantive issues of economic calculation and inter-temporal coordination.<br /><br /><i>E.g., you want to explain how ABCT works without a unique natural rate? Any thoughts?</i><br /><br />Do you want to prove your claim that ABCT is invalidated by the assumption of multiple natural interest rates? No?<br /><br /><i>Oh, and what's the ethical theory you subscribe to by the way? Do you even have one?</i><br /><br />Do you have one? Or do you just reject natural rights ethics and say that they should pick from a LK-pre-approved list of mutually exclusive ethical theories?Petenoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-12669022430195763232011-09-23T12:07:46.209-04:002011-09-23T12:07:46.209-04:00Arguments of commenters here have a way of degener...Arguments of commenters here have a way of degenerating in to unrelated or loosely related areas.<br /><br />The Professor is right on. As the studies also show, these progressives are the stingiest of all people yet want the government to hand out the goodies. Why? How else would you have statism/collectivism? That is why private charity has been under attack by progressives for several years now.<br /><br />I'd be willing to bet Krugman gives next to nothing to charity. <br />As for Warren:<br />Her (and other progressives') demented rationale goes: the factory owner is indebted to the rest of the society for building the roads that enabled him to become rich. I don't know about you, but as much as I expect this kind of Marxist drivel coming out of their mouths, I never cease to be amazed. By their logic, everyone owes everyone else their good fortune. If this clip does not define what philosophically lies at the core of communism, I do not know what does.<br /><br />http://defendourconstitution.blogspot.com/2011/09/more-videos-of-week-with-commentary.htmlAmerican Patriothttp://defendourconstitution.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-84666946241279360932011-09-23T11:54:18.737-04:002011-09-23T11:54:18.737-04:00I stumbled onto your blog thanks to Google, and af...I stumbled onto your blog thanks to Google, and after reading your comments (which are mostly distortions) - and then your bio - all I can say is I hope you present more accurate information in your classes than you do in your blog. This would only be considered to be a "fair" analysis on Fox News.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-27968079835938970912011-09-23T11:38:55.063-04:002011-09-23T11:38:55.063-04:00For those interested, Dr. Anderson has a powerful ...For those interested, Dr. Anderson has a powerful and compelling article today on LRC on state homicide.<br /><br />http://lewrockwell.com/anderson/anderson324.htmlDaniel Hewittnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-26462946278935726472011-09-23T11:11:54.299-04:002011-09-23T11:11:54.299-04:00"impose both an easy money scheme and claim t...<i>"impose both an easy money scheme and claim that if we have enough regulatory agencies, we won't have any problems."</i><br /><br />Yeah, I guess you're incapable of ever responding to substantive issues.<br /><br />E.g., you want to explain how ABCT works without a unique natural rate? Any thoughts?<br /><br />Any thoughts on Murphy's work on ABCT?<br /><br />Oh, and what's the ethical theory you subscribe to by the way? Do you even have one?Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-43346414328686973632011-09-23T11:02:36.826-04:002011-09-23T11:02:36.826-04:00"Nope. Keynes was himself deeply concerned ab..."Nope. Keynes was himself deeply concerned about the effects of bubbles from asset price speculation."<br /><br />LK the genius will never realise that every asset price is by definition speculative. His lack of a theory of capital handicaps him and prevents him from understanding this fundamental truth.Balanoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-60313418911831192362011-09-23T10:52:55.498-04:002011-09-23T10:52:55.498-04:00Gee, impose both an easy money scheme and claim th...Gee, impose both an easy money scheme and claim that if we have enough regulatory agencies, we won't have any problems. How is it that regulators are going to do any better than profits and losses?<br /><br />Krugman himself has said he supports the government both pushing down interest rates AND making programs that enable people who can't put down 20 percent buy houses. In other words, the same regime but he says that if only we put in people who "believe in government," then we can make it work properly.<br /><br />It wasn't the government that put the kibosh on the housing and stock bubbles; it was the market. And please don't tell me that if we let Elizabeth Warren determine regulation, that it will be anything but what we already have seen. I've had enough comedy for the day.William L. Andersonhttps://www.blogger.com/profile/01802990642236807359noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-86215084649822345202011-09-23T10:49:39.035-04:002011-09-23T10:49:39.035-04:00LK:
"Speculators may do no harm as bubbles ...LK:<br /><br /><br /><i>"Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation."</i><br /><br />Too vague to be of any consequence. He might as well have said "Speculation is good in some amount I cannot say, and speculation becomes bad after some amount I cannot say."<br /><br /><i>The asset bubble needs to correct. You can stimulate the real sectors of the economy (where goods and services are produced) to provide employment while that happens. </i><br /><br /><i>You</i><br /><br /><i>(1) clean the banks up by the normal method by which the FDIC deals with insolvent banks: allowing deposits to be guaranteed by the government, the banks are then liquidated, shareholders wiped out, senior management fired, assets than sold off to pay for the losses. Whatever is left over goes to the bondholders.</i><br /><br />That just dirties them up with moral hazard, dirties them up with further inflation, and dirties up the market by infusing it with more ignorant political destruction.<br /><br /><i>(2) re-impose financial regulation to stop leckless lending standards and future asset bubbles</i><br /><br />The unhampered price system is the only way to stop reckless government standards in banking.<br /><br /><i>(3) implement large scale fiscal stimulus to drive the economy back to high employment</i><br /><br />Government spending only dirties up the economy more by making it dependent on a productionless consumer who can replace it's spending with coercive taxation and inflation.<br /><br />Any employment gained in this process is detrimental to innocent people's lives who have to work and pay for it and get nothing in return.<br /><br /><i>exactly as was done in post 1945 America:</i><br /><br />Government spending collapsed post-1945 after the war ended. But production rose in 1946.<br /><br /><i>As for the real capital structure, consumers will purchase whatever commodities satisfy their subjective utility preferences, companies that don't do that will go bankrupt.</i><br /><br />They can't know what consumer preferences are temporally because interest rates are manipulated by the central bank.<br /><br /><i>Malinvestments clear.</i><br /><br />You just claimed that equilibrium is capable of being reached in the economy you moron, after countless posts denying such a thing.Petenoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-73815938726953425612011-09-23T10:49:25.275-04:002011-09-23T10:49:25.275-04:00LK:
"Deflation doesn't CAUSE depressions...LK:<br /><br /><i>"Deflation doesn't CAUSE depressions, LK. etc etc</i><br /><br /><i>Red herring. I didn't say it did.</i><br /><br /><i>I noted that deflationary depression in the Weimar republic caused a lot of suffering.</i><br /><br />No, it is the prior inflation that caused the suffering. The deflation was a consequence.<br /><br /><i>"Austrians do not say that the depression is a time of great happiness and joy."</i><br /><br /><i>Yeah, you don't say. Mass unemployment, poverty, homelessness, mass business collapses - and you have the gall to complain that some regard you as "enemies of the people".</i><br /><br />Oh yeah, government spending and inflation, and you have the gall to complain that MANY regard you as enemies of the people.<br /><br /><i>Fine, but are you also saying that we could have sustained the housing bubble forever? Are you saying that was NOT a series of malinvestments?</i><br /><br /><i>(1) You rely on a totally discredited business cycle theory. </i><br /><br />You have not shown that it is "totally discredited."<br /><br /><i>Back in 1932, Piero Sraffa showed Hayek how the Wicksellian unique natural rate of interest, the fundamental equilibrating rate that is supposed to prevent the cycle effects from happening which is present to this day in expositions of ABCT like that of Roger Garrison, was totally non-existent outside a fantasy world of equilibrium.</i><br /><br />The existence of multiple natural interest rates does not in any way invalidate the core of the ABCT's theory.<br /><br /><i>Yet you spin your imaginary business cycle theory as if nothing ever happened.</i><br /><br />It's not imaginary. The Keynesian myth that spending creates prosperity is imaginary.<br /><br /><i>Fine, but are you also saying that we could have sustained the housing bubble forever?</i><br /><br /><i>Nope. Keynes was himself deeply concerned about the effects of bubbles from asset price speculation. That is whole point of his passage:</i><br /><br />Bait and switch. He didn't say "speculation", he said BUBBLES. There is speculation in bubbles, just like there is speculation all the time. But BUBBLES are financed by credit expansion and inflation.Petenoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-68191428667027916142011-09-23T10:12:36.625-04:002011-09-23T10:12:36.625-04:00Fine, but are you also saying that we could have s...<i>Fine, but are you also saying that we could have sustained the housing bubble forever?</i><br /><br />Nope. Keynes was himself deeply concerned about the effects of bubbles from asset price speculation. That is whole point of his passage:<br /><br />"Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation."<br /><br />The asset bubble needs to correct. You can stimulate the real sectors of the economy (where goods and services are produced) to provide employment while that happens. <br /><br />You<br /><br />(1) clean the banks up by the normal method by which the FDIC deals with insolvent banks: allowing deposits to be guaranteed by the government, the banks are then liquidated, shareholders wiped out, senior management fired, assets than sold off to pay for the losses. Whatever is left over goes to the bondholders.<br /><br />(2) re-impose financial regulation to stop leckless lending standards and future asset bubbles<br /><br />(3) implement large scale fiscal stimulus to drive the economy back to high employment, exactly as was done in post 1945 America:<br /><br />http://socialdemocracy21stcentury.blogspot.com/2011/01/keynesianism-in-america-in-1940s-and.html<br /><br />As for the real capital structure, consumers will purchase whatever commodities satisfy their subjective utility preferences, companies that don't do that will go bankrupt. Malinvestments clear.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-85717918729883666842011-09-23T10:12:01.921-04:002011-09-23T10:12:01.921-04:00@Prof Anderson
"Second, I will be happy to a...@Prof Anderson<br /><br />"Second, I will be happy to answer that question if you will tell me what you believe your obligations are to others. Do others have a right to what you own? Should they be permitted to just take what they want or claim to need?"<br /><br />I only believe you have an obligation to the ones whom you have promised obligation to, either implicitly (such as having children) or explicitly (such as in a contract). I do not believe that others have a right to what I own and they should not be able to just take what they want or claim they need. <br /><br />I believe no one owes me anything and I don't owe anyone anything (other than what I have mentioned as obligations). This doesn't mean I don't believe in personal charity or that I don't believe in treating others they way I expect or want to be treated. My ethics and views dictate what I do, not other people's.<br /><br />How about you?Mike Cheelnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-75964107206021803482011-09-23T09:59:00.059-04:002011-09-23T09:59:00.059-04:00"Deflation doesn't CAUSE depressions, LK....<i>"Deflation doesn't CAUSE depressions, LK. etc etc</i><br /><br />Red herring. I didn't say it did.<br />I noted that deflationary depression in the Weimar republic caused a lot of suffering.<br /><br /><i>"Austrians do not say that the depression is a time of great happiness and joy."</i><br /><br />Yeah, you don't say. Mass unemployment, poverty, homelessness, mass business collapses - and you have the gall to complain that some regard you as "enemies of the people". <br /><br /><i>Fine, but are you also saying that we could have sustained the housing bubble forever? Are you saying that was NOT a series of malinvestments?</i><br /><br />(1) You rely on a totally discredited business cycle theory. <br /><br />Back in 1932, Piero Sraffa showed Hayek how the Wicksellian unique natural rate of interest, the fundamental equilibrating rate that is supposed to prevent the cycle effects from happening which is present to this day in expositions of ABCT like that of Roger Garrison, was totally non-existent outside a fantasy world of equilibrium. <br /><br />Try reading just one paper from your fellow Austrian Robert Murphy. In particular:<br /><br /><i>“In his brief remarks [sc. in reply to Sraffa], Hayek certainly did not fully reconcile his analysis of the trade cycle with the possibility of multiple own-rates of interest. Moreover, Hayek never did so later in his career. His Pure Theory of Capital (1975 [1941]) explicitly avoided monetary complications, and he never returned to the matter. Unfortunately, Hayek’s successors have made no progress on this issue, and in fact, have muddled the discussion. As I will show in the case of Ludwig Lachmann—the most prolific Austrian writer on the Sraffa-Hayek dispute over own-rates of interest—modern Austrians not only have failed to resolve the problem raised by Sraffa, but in fact no longer even recognize it.</i><br /><br />Robert P. Murphy, “Multiple Interest Rates and Austrian Business Cycle Theory.”<br />http://consultingbyrpm.com/uploads/Multiple%20Interest%20Rates%20and%20ABCT.pdf<br /><br />Yet you spin your imaginary business cycle theory as if nothing ever happened.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-32735565170763438952011-09-23T09:56:15.530-04:002011-09-23T09:56:15.530-04:00What's missing from Warren's commentary on...What's missing from Warren's commentary on factory owners is any discussion or acknowledgement of the concept of risk. What sets a capitalist apart from anyone else is that when they establish a factory or business, they are putting their time, their money, their savings and their livelihood at risk. There is no guarantee that the business venture will succeed; in fact many will fail, and the owners will lose everything in the process. <br /><br />In many businesses, you are only one wrong decision away from living in a cardboard box under a bridge. Just when you have proven your ability, jumped over all the hurdles that the market throws at you and succeeded, along comes a parasite-broker like Warren or Krugman who declares that they deserve a "hunk" of your livelihood, like some grunting caveman, while refusing to acknowledge, much less share, in any risk that you may have undertaken to make your venture the success that it is.Dennisnoreply@blogger.com