long krugman bio posted today. regardless of how you feel about him, could be a good read. have only gotten to the 1st two sections

cliffs; krug loves science fiction??

http://www.newyorker.com/reporting/2...?currentPage=1

He probably loves Foundation.

came into this thread to post this. Really enjoyed it.

Duh, are you surprised he loved Keynes? Oh, science fiction, not fictional science.

Let me guess: Star Trek?

The New Yorker has some really excellent long essay pieces, and some pretty crappy ones, and this was definitely the latter. I'm not saying that because I don't like Krugman, I'm saying that because 70-80% of the article was fluff . I seriously don't give a **** what it's like to hang out with Krugman at his summer home, what kind of folksy restaurants he likes, what his wife thinks about everything, or how they like to do their laundry when they are on vacation. I don't care in any way whatsoever about the fox that lives near their property and whether they've named him or not.

I could maybe understand the rationale behind doing a personality piece on a famous public academic- if he was interesting or somewhat eccentric. But he's not, Krugman and his wife sound like pretty typical upper middle class Northeastern academic type yuppies. I don't mean that as an insult, just that people like this are a dime a dozen at any famous research university. Long personality profile pieces in the New Yorker are best when they are done about people who are... interesting or special in some way.

As for the econ content, if you have regularly read newspapers or magazines in the last year or so, there is almost nothing that isn't rudimentary or in any way new. It's just boring.

Yeah; I couldn't even get through it.

Ok, let me speak less in terms of generalities. If high unemployment disproportionately affects certain areas, entire neighborhoods fall into disrepair and people start vandalizing property, stealing, rioting and so forth... is this supposed to be accepted because we don't want to lead people towards arbitrary or academic self-interest oriented ends?

No. You are using tricked because that is how Keynes feels about it. I'm saying we should create an environment in which people do not do self-destructive things. If a friend is depressed you don't lie to him and tell him is life is actually really awesome, don't worry that your wife left you for another man and your boss fired you, but you try to keep him company so he doesn't commit suicide. The social analog of that.

This is the same mistake Keynes makes: you are homogenizing individuals. Some people (and communities) cannot help themselves, not because there is something uniformly wrong with human decision making, but because in certain environments there is a tendency to commit certain mistakes that seem rational in the short term but clearly are harmful in the long run (for example, suicide). Because many people all exist in the same environment, a critical mass can err towards this destructive behavior at the same time, and we may need some people from outside that environment to fix the situation.

This silly talking point that "well if Joe Six Pack can't figure out his problem, who is to say that Bernanke can" ignores the fact that JSP and Helicopter Ben have entirely different vantage points on social ills. The mistakes Bernanke makes occur for entirely different behavioral reasons. It is absurd for someone interested in praxeology to ignore this very obvious behavioral fact.

I can't be sure of anything. That is why we should experiment with a variety of solutions, rather than assume that one is correct and apply it universally, as both you and Mr. Bernanke seem to think is the correct approach...

Yes. So these things should all be considered. You are looking at one side of the equation, and not at the other.

The Foundation series, specifically for this

great series though

this really gets down to what you see the foundation of economics as. how should the economy driven? by people's individual preferences or something else?

i dont see how this relates? For one we are talking about keynes and krugman by proxy, so how keynes feels is all that matters. anyways, how do you create an environment where people dont do self destructive things? the government solutions are specifically designed to make people think they are richer than they really are so are lying about the real situation. this isnt a debate about social programs in general or from the government. its about policies that are just masking the effects of the credit cycle.

ok, how do you ensure the government are the people who can help and the rest are self destructive? how do you preserve democracy and do this?

you are missing the point here. you cant effectively experiment with this because you never have two identical situations, and you'll never know what could've/would've happened in the absence or opposite of whatever strategy you tried. you also dont know objectively how to quantitatively measure success and at what point in time to declare to success and the end of the experiment. even if you have evidence for a certain group of people, you dont know that other people or the same people in the future wont act differently next time.

btw, if you want evidence people in the past didnt go crazy and kill themselves when the economy took huge adjustments in the production structure, industry liquidations, etc. then just look at what happens when the people go to war like in world war 2 and then the war suddenly ends causing huge shifts, the 1921 recession, among many other examples.

there is no non hypothetically twisted basis to defending krugmans policies. your argument is similar to saying, what if by hitler putting jews in camps he really couldve prevented some huger behavioral problem and there is no other means of preventing this than by doing what hitler did. sure if you make that up then the answer is clear, but so what? you could make this up for anything.

I'm not sure whether you are asking a normative or a positive question. I think there is no "foundation" of economics. You need first principles concepts based on supply/demand, Pareto efficiency, competitive advantage, and so forth. You need mathematical modeling based on these principles. You need historical statistical data and econometric analysis. You need a structured understanding of behavioral phenomenon on a micro and macro level. You need to be able to play these off one another to make sure that the absurd results that one method produce do not become policy.

People's individual preferences are, of course, what we should use. The more interesting questions are: how do we determine these preferences (or, rather, to what extent is "Bob's preference" even a coherent concept, if Bob may not know, or feel conflicted), and what do we do when preferences conflict?

Then there's been some confusion. I agree entirely about the current government's actions. I am asking a question that relates to ideas that Keynes brings up. I am not particularly interested in joining the self-congratulatory Krugman bashing.

How do you define pornography? I know it when I see it, I think most people will agree most of the time, and we will handle the borderline cases as they come. I'm not even sure I understand the question about preserving democracy. I think you will find that a majority of people would support government action when a particular economy fails and there is widespread unemployment and all of the social ills that follow.

You are mistaking the threshold for scientific knowledge with the threshold for practical understanding. Lessons from the past can be learnt. I submit that people make decisions all the time, even Very Important Decisions That Impact Many People, based on such lessons by analogy. How do you think large firms manage to structure their activities efficiently? They do the best they can, and when **** goes wrong, other firms avoid doing that sort of thing. This model isn't perfect, but it does happen to be the best we've got.

Ok? I see you are trying to have it both ways here, but I will argue that WWII is exceptionally exceptional. 1921 has many lessons to be learned, I agree with you there.

This is incoherent nonsense, but I will assume that is because you thought I was defending Krugman. Such things can lead to incoherence. I do not, have not, and will not defend him. That is a separate question from whether social economic stimulus has its merits, despite the downsides of misplaced capital allocation.

i know my point wasnt clear, my fault, and as a result, your response is off note. please dont take this wrong way but the discussion of this point is too long for me to get into right now, though i think this is pretty essential to the debate. ill get back to it if i have ample time.


i agree, these are difficult questions. a theory of my own, that im sure others touch on, is that action's purposefulness can occur on varying levels, so there is no black and white to this. how to resolve the grey areas is unsettled, but extremely important to policy. pretty much your'e hitting on a lot of the fringe issues that at least i havent totally resolved yet. the issue i have though is the authorities trying to deal with the issues dont understand nor have resolved these problems to the extent they can design a prescription so are just toying with everyone.

well i only joined this thread to debate schmitty, who was certainly not congratulating my bashing. though i will say i think that issue was clearly resolved, so ill affirm the self-congratulatory factor right now.

so if the majority of the people support it, why dont they do it without imposing on those who dont? if the majority of people want to jump off a bridge, should they push the minority who dont?

firms compete, the government does not. there is no objective right strategy that can be discovered via an experiment. we can at best allow competing strategies, i.e. free market. this doesnt answer everything, i know. it reverts back to the fringe problems you've hit on above.

even if social economic stimulus has merits you would have to show why it has particular jurisdiction via the government rather than private means.

Firms compete when there are many small firms all operating in a situation in which consumers can switch from one firm to another at relatively low cost. Firms do not compete when there is one large firm that has the vast majority of market share and costs of entrance of other firms are very high and costs for consumers to switch are very high. The exact same thing applies to government.

I don't particularly care who does it.

its not the same with business. the only fear to a business gaining a large market share is that they will stop servicing consumers, and gouge prices, act inappropriately, etc. but to whatever extent they do this they increase in proportion the margin by which competition will benefit from competing. if walmart raised their prices and had someone stand at the door and say **** you on your way out the ability for competitors to move in increases as a result. competition isnt stifled, at least not entirely, by high entry costs or large market shares per se. the government, on the other hand, has a extremely high cost of entry and limited competitive forces. the two are in entirely different leagues, and certainly are not equal.

well you dont see the difference then.

back to the krugman bashing

http://blogs.law.harvard.edu/philg/2...he-new-yorker/

comments on the bio piece.

My favorite:

What this thread lacked was definitely aspersions of homosexuality...

It appears as though, at least, he's smart enough to avoid a no win situation on some circumstances.

James Taranto looks at Krugman's Thursday column in the NY Times attacking Republican Senator John Kyl. Krugman was not impressed with Kyl's argument that extending unemployment benefits created an incentive that could actually increase unemployment.

So it turns out that what Krugman calls Sen. Kyl's "bizarre point of view" is, in fact, textbook economics. The authors of that textbook are Paul Krugman and Robin Wells. Miss Wells is also known as Mrs. Paul Krugman.

But he's a republican.

please quote correctly:

"In Mr. Kyl’s view, then, what we really need to worry about right now — with more than five unemployed workers for every job opening, and long-term unemployment at its highest level since the Great Depression — is whether we’re reducing the incentive of the unemployed to find jobs. To me, that’s a bizarre point of view — but then, I don’t live in Mr. Kyl’s universe."

krugman's point is that when unemployment is reaching great depression levels, worrying about suppressing the incentive of people to look for jobs is ignoring a more pressing issue.

Reaching great depression levels? Um no. We aren't even close to the UE of the depression (20% at it's peak, ~15% average btw). We aren't even close to the drops in GDP, productivity or just about anything.

Furthermore, no matter what the UE rate is, benefits that pay people while they don't work still reduces somebody's incentives to find a new job, and this should be blatantly obvious to anybody.

http://krugman.blogs.nytimes.com/201...-unemployment/


"Everyone agrees that really generous unemployment benefits, by reducing the incentive to seek jobs, can raise the NAIRU; that is, set limits to how far down you can push unemployment without running into inflation problems.

But in case you haven’t noticed, that’s not the problem constraining job growth in America right now. Wage growth is declining, not rising, and so is overall inflation. A wage-price spiral looks like a distant dream.

What’s limiting employment now is lack of demand for the things workers produce. Their incentives to seek work are, for now, irrelevant. That’s why comments by the likes of Sen. Kyl are so boneheaded — anyone who thinks that high unemployment in the first quarter of 2010 has anything to do with workers getting excessively generous benefits must not get out much.

And the truth is that unemployment benefits are a good, quick, administratively easy way to increase demand, which is what we really need. So right now they have the effect of reducing unemployment."

But right now we're paying people to not take the lower wage jobs they are inevitably going to get. Of course they aren't looking for work. This whole thing would bottom a lot faster if UE benefits were reduced.

That's great that Krugman thinks that, but it doesn't change the fact that UE benefits are an incentive to not get a new job.