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Grad Student Who Shook Global Austerity Movement

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Re: Grad Student Who Shook Global Austerity Movement

#101

Post by RyanMcGreal »

ctdonath wrote: post #97
RyanMcGreal wrote: post #73

Earlier quoted context omitted.

You mean aside from the essentially unserious nature of his fiscal proposals, which promise to balance the budget by cutting both spending and revenue in such a way that the numbers don't come anywhere close to adding up?

Laffer Curve. Look it up. Even JFK understood it.

I'm familiar with the Laffer curve, but I'm not sure what point you're trying to make. Under every incarnation of the Laffer curve that has even a passing acquaintance with empirical data, the Ryan tax cuts will sharply cut overall government revenue. That's because the US is already far to the left of the revenue peak. (Indeed, it was already to the left of the peak during the Reagan tax cuts, which also failed to increase government revenue. There's a reason even George H. W. Bush called it "voodoo economics".)

There is no plausible mechanism by which any versions of the Ryan plan we've seen can actually balance the books. It's nothing more than a generous gift to the country's most affluent taxpayers couched in hand-wavy ideological nonsense.

Re: Grad Student Who Shook Global Austerity Movement

#102

Post by laughfactory »

jbooth wrote: post #48
pmorici wrote: post #45

Earlier quoted context omitted.

In the case of economics it seems there might also be large conflicts of interest at play. The 2010 documentary, "Inside Job" http://en.wikipedia.org/wiki/Inside_Job_(film) about the economic crises talks about how several prominent academic economists are essentially paid to author studies that amount to not much more than puff pieces supporting a political view point of a political party or corporation. On another…

As far as the rates that the feds have to pay to borrow money -- that's set by the market. They can issue bonds at 0.25% and people will buy them, therefore the interest rate is that low. It's not like they're forcing people to buy. The feds aren't setting the price for that interest rate -- well, they are, but what people are willing to pay is actually what sets the price. Quantitative easing actually should, in the…

It'd be one thing if "people" were buying the debt they're issuing as you suggest. But a lot of the Treasury debt is being purchased by the Fed. So they're keeping it all in-house. Can you say, corruption? It's an artificially low rate which few people in their right mind would pay. Which is why the only taker is another arm of the government. Currently the Federal Reserve holds $1.825 TRILLION of US debt (Treasury Securities). I.e., the Fed owns more US debt than anyone else. China holds $1.22 Trillion, Japan hold $1.097 Trillion. http://research.stlouisfed.org/fred2/series/TREAST?cid=32218 http://www.treasury.gov/resource-center/data-chart-center/ti...

Re: Grad Student Who Shook Global Austerity Movement

#103

Post by laughfactory »

gph1 wrote: post #93
laughfactory wrote: post #90

Earlier quoted context omitted.

Your last sentence is frighteningly flawed. Because it suggests that the US is borrowing from other economies around the world at obscenely low rates. This is not true. Sure, we're borrowing a little bit from China as we've always done, but they're less and less interested in loaning us money (essentially). So now what we have is a powder-keg with a fuse which has already been lit. We've started borrowing from OURSEL…

Increasing the money supply is not in and of itself inflationary, nor does it logically imply a depreciating exchange rate. This is true no matter how many times Austrians and confused monetarists say so.

I suppose we'll just have to agree to disagree on that.

Re: Grad Student Who Shook Global Austerity Movement

#104

Post by eli_gottlieb »

Houshalter wrote: post #89
eli_gottlieb wrote: post #78

Earlier quoted context omitted.

Because obviously America needs zero improvements to its infrastructure. No high-speed rail, no electrical grid improvements, no roads or bridges, no fixing or improving the water system, no blue-sky scientific research, no teachers to hire to decrease class sizes.... NOTHING, YOU HEAR ME, NOTHING YOU STUPID LITTLE LIBERAL! Oh, I'm sorry, I thought I was supposed to sound like an Austrian "economist".

This is a pointless straw man argument. No one is claiming we should never invest in infrastructure. Some improvements in infrastructure have value certainly. It depends on the specific project. Spending for the sake of spending is ridiculous though.

Actually, the Austrians basically do advocate that the public sector should not exist, and should certainly not be constructing infrastructure, because if it was at all worthwhile, someone would make a private profit off it and do it that way!

No god but Capital, say the Austrians, and the Market is His Prophet.

Re: Grad Student Who Shook Global Austerity Movement

#105

Post by gph1 »

laughfactory wrote: post #96
RyanMcGreal wrote: post #75

Earlier quoted context omitted.

> the point is basic principles apply You make the common mistake of assuming macroeconomics is just microeconomics at scale. A national economy isn't just a really big household. There has been no correlation between public debt ratios and the Great Recession or its recovery. The Recession was not triggered by high debts, it has not affected countries with higher debts more severely than countries with lower debts,…

Hmmm, not true. Your simplistic statement falls short of the facts and research. Here's a quote from a very recent paper which refutes (in part) your statement: "The results of this paper have two important policy implications. First, since the results indicate a positive effect of government investment and a negative effect of government consumption, a reallocation of resources from consumption expenditure to invest…

Could you lay out the casual mechanism that this study is claiming, and how they make the distinction between govt consumption and investment?

I'd also like to see an empirical example of the crowding out thesis. The idea that public deficits bid up borrowing rates and reduce private sector borrowing opportunities has been pretty thoroughly debunked.

Re: Grad Student Who Shook Global Austerity Movement

#106

Post by gph1 »

laughfactory wrote: post #103
gph1 wrote: post #93

Earlier quoted context omitted.

Increasing the money supply is not in and of itself inflationary, nor does it logically imply a depreciating exchange rate. This is true no matter how many times Austrians and confused monetarists say so.

I suppose we'll just have to agree to disagree on that.

I'd be delighted to revise or update my views in light of any evidence you could provide.

Re: Grad Student Who Shook Global Austerity Movement

#107

Post by kyllo »

laughfactory wrote: post #99
caseysoftware wrote: post #83

Earlier quoted context omitted.

The salary increases don't have to keep pace with inflation... they need to keep pace with the interest rate on the $1M which is generally going to be higher than the inflation rate. Regardless, that's an interesting perspective. My follow up would be "do you think the government is well-informed and future-thinking enough to pick the jobs with 20+ year lifespans?" Personally, I don't think anyone is. Ten years ago,…

If the interest rate on the $1M is 2% then each year the "cost" of the $50,000/yr job is $20,000. So even if we don't factor in inflation (which would certainly change these calculations), it would take more than 33 years to "pay off" the $1M. You'd have to have someone work well over 33 years at $50,000 to recoup much return on your initial investment of $1M. Besides which, as you pointed out, a lot can happen in 33…

This is again assuming that the person who fills that $50k/year job contributes exactly $50k/year in value to the economy.

And at some point, when you are talking about investing public funds to create jobs in a period of high unemployment, you need to think of it in terms of subtracting the cost of that person's potential unemployment benefits, medicaid, and other costs that an unemployed person imposes on the public.

So, it's kind of complicated to do a full cost/benefit analysis of this.

Re: Grad Student Who Shook Global Austerity Movement

#108

Post by sergiosgc »

rjtavares wrote: post #42
sergiosgc wrote: post #13

Earlier quoted context omitted.

Portugal entered the euro, and a couple of decades of economic stagnation while companies switch from producing cheap labor shoes to high value added goods was to be expected. Portugal did surprisingly well up until 2007, with small but consistent GDP growth and was clearly on the road to being a more evolved economy. 2007 saw a growth of 2.4%, by all measures good for an economy in transition. During the transition,…

> During the transition, some debt accumulation would be tolerable. Levels up to 120% were, prior to Reinhardt Rogoff considered acceptable. I may be rusty on my Keynesian Economics professor's lessons, but shouldn't you reduce government deficits in expansion times, so that you can safely let the stabilizers kick in if you enter a recession? > As such, the view that the timing of the financial crisis was particularl…

> I may be rusty on my Keynesian Economics professor's lessons, but shouldn't you reduce government deficits in expansion times, so that you can safely let the stabilizers kick in if you enter a recession?

Exactly my point. There was no expansion in the '00 decade, so debt growth was ok.

> Of course it was unfortunate, because the country (both public and private sector) were incredibly leveraged. Which is completely different than saying that it was the cause.

But the cause is also not a high debt level. Portugal was caught in a fragile state when a much wider crisis exploded.

Your chart is not the right one to observe the economy conversion success. This one is: http://i.imgur.com/ltAX8fe.png (it's the same data, viewed as YoY variation)

Re: Grad Student Who Shook Global Austerity Movement

#109

Post by Houshalter »

eli_gottlieb wrote: post #104
Houshalter wrote: post #89

Earlier quoted context omitted.

This is a pointless straw man argument. No one is claiming we should never invest in infrastructure. Some improvements in infrastructure have value certainly. It depends on the specific project. Spending for the sake of spending is ridiculous though.

Actually, the Austrians basically do advocate that the public sector should not exist , and should certainly not be constructing infrastructure, because if it was at all worthwhile, someone would make a private profit off it and do it that way! No god but Capital, say the Austrians, and the Market is His Prophet.

You are confusing Austrian economics with anarcho-capitalism. Many anarcho-capitalists subscribe to Austrian economics, but certainly not all Austrians are anarcho-capitalists.

Re: Grad Student Who Shook Global Austerity Movement

#110

Post by michaelwww »

paulsutter wrote: post #16

The solution is for authors to routinely publish the datasets behind their research. Unlikely though, for the same reason that Herndon didn't contact Reinhart and Rogoff about the error. Academics are even more interested in getting attention than they are in getting to the truth. Which is why this episode is more likely to discourage publication of data than encourage it.

> Academics are even more interested in getting attention than they are in getting to the truth.

untrue and insulting

> Which is why this episode is more likely to discourage publication of data than encourage it.

Why would you expect this? It seems more likely that data and the software used to produce results will have to be open sourced and verifiable in the future.

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