ALL BLOG POSTS AND COMMENTS COPYRIGHT (C) 2003-2016 VOX DAY. ALL RIGHTS RESERVED. REPRODUCTION WITHOUT WRITTEN PERMISSION IS EXPRESSLY PROHIBITED.

Friday, June 19, 2015

A fascinating confession

It appears the post-2008 economy has humbled, be it ever so slightly, the Nobel-prize winning economist, Paul Krugman:
[L]et me tell you about a dirty little secret of economics — namely, that we don’t know very much about how to raise the long-run rate of economic growth. Economists do know how to promote recovery from temporary slumps, even if politicians usually refuse to take their advice. But once the economy is near full employment, further growth depends on raising output per worker. And while there are things that might help make that happen, the truth is that nobody knows how to conjure up rapid productivity gains.
An interesting admission from a man who never saw a government spending program he didn't like. The truth is that both the Neo-Keynesians and the Keynesian heretics that call themselves monetarists are up a conceptual creek without a paddle, because both their intellectual models reject the possibility that the quantity of debt can have anything to do with the economy's ability to grow.

I realize that sounds ridiculously stupid, but it is nevertheless the case. And, as you may have noticed, events are proving otherwise.

Labels:

40 Comments:

Anonymous WhiteKnightLeo #0368 June 19, 2015 8:12 AM  

His use of magical terms like "conjuring" is telling. It's like he actually believes the technocratic model of central planners just wishing things into being.

I do not believe in God, but clearly neither does Krugman, and neither do most technocrats.

The difference between us is that I don't believe that me speaking aloud the phrase "Let there be economic growth" will accomplish anything.

Anonymous PhillipGeorge©2015 June 19, 2015 8:22 AM  

the quality of debt: I think that nails it. Remember the time when a man's word and a handshake was the contract? No, it was before we were born. I just believe it to be actual history.

Houses didn't need to be locked, cars did have keys and the terms "serial killer" and "teenager" hadn't been invented. They didn't exist. Cannibals were savages and pagans lived beastly carnal lives. Then relativism "stupefied" the masses. Most People Are Idiots is just "stupefied by relativism"

Then money changed. Every dollar created was a debt instrument without the "promise" of anything attached to it. Redeemable for nothing. A contract with a fictitious entity promising nothing but backed with your "accommodation" of the fiction. Diabolical isn't a sufficiently strong word.

But having turned from Jesus - declaring themselves homosapiens, wise men, what can one expect? This economy, is every inch, "man's wisdom", and deeper into they dig themselves.

Anonymous WhiteKnightLeo #0368 June 19, 2015 8:31 AM  

@PhilipGeorge

Vox doesn't say quality. He says *quaNTity*. His point has nothing to do with the type of debt but how much of it.

Secondly, houses didn't use to have locks because locks used to be expensive. I can assure you that people in the Middle Ages would have liked to have locks, if their houses had been sturdy enough to actually stop people from breaking the door down around the lock. But they couldn't afford locks.

The crime rate has actually been dropping with time (partially because of the cheapness of locks). And cheaters have always existed.

Blogger Quizzer W June 19, 2015 9:01 AM  

Once we've reached the 'peak' where we are now, the only way to improve the economy is to hang the bankers, lawyers, politicians, and economists. This stuff isn't that hard to figure out.

Anonymous Viking June 19, 2015 9:04 AM  

"But once the economy is near full employment, further growth depends on raising output per worker."

Seems like it would help to not kill a significant portion of your future workers as well.

Anonymous johnc June 19, 2015 9:12 AM  

"But once the economy is near full employment..."

I lol'd. Imagine the narrative if there was an (R) in the White House.

Anonymous WhiteKnightLeo #0368 June 19, 2015 9:13 AM  

@Quizzer

I dunno, I think we need bankers, economists, and lawyers who actually want to practice banking, economic science, and law. I certainly don't have the time, knowledge or training to manage my own money the way a banker can. Division of labor is important.



What we don't need are bankers, economists and lawyers who want to be practice *politics*..

Blogger cavalier973 June 19, 2015 9:23 AM  

Haven't you heard? Specialization is for insects.

Oh, wait, you said bankers, economists, and lawyers, didn't you?

I guess specialization really IS for insects.

Anonymous CunningDove June 19, 2015 9:25 AM  

This was a howler:
Why is that funny? Because everyone except Mr. Bush knows that, during those years, Florida was booming thanks to the mother of all housing bubbles.

Isn't this the same Krugman that insisted that there was no housing bubble, until it burst? The same guy that said all we need to do is print more money! We just didn't create a "big enough" stimulus plan. Even though what was implemented was bigger than what he called for? This guy is a great con man.

Anonymous CunningDove June 19, 2015 9:29 AM  

This was a howler:
Why is that funny? Because everyone except Mr. Bush knows that, during those years, Florida was booming thanks to the mother of all housing bubbles.

Isn't this the same Krugman that insisted that there was no housing bubble, until it burst? The same guy that said all we need to do is print more money! We just didn't create a "big enough" stimulus plan. Even though what was implemented was bigger than what he called for? This guy is a great con man.

Blogger Quizzer W June 19, 2015 9:37 AM  

@WhiteKnightLeo

I was being hyperbolic. If it makes you feel better I didn't include the word 'all' in my statement.

Anonymous Geoff June 19, 2015 9:37 AM  

It is interesting that economists like Krugman don't even include banks in their models even though banks create most of the money supply.

Anonymous Roundtine June 19, 2015 9:37 AM  

If we're talking solely about government statistics, I can conjure up rapid productivity gains easily. Deport everyone one standard deviation below the median productivity. Would also generate an incredible decrease in crime.

Blogger Aquila Aquilonis Fulminata June 19, 2015 9:37 AM  

Luckily their actions will never result in full employment so they will never be naked and exposed like he fears.

Anonymous Giuseppe June 19, 2015 9:38 AM  

N 0368
I would be happy to manage your money like a banker. Please buy gold and mailbit to me. I'll keep it safe and issue you with bona fide Giuseppe Dollars aka Dago Promissary Notes.
Ship allvof the gold, it's a real deal!

Anonymous Giuseppe June 19, 2015 9:43 AM  

Quizzer,
Once WKL send me all the gold I have some sturdy lamposts I'd be happy tobsell youvat a discounted price. You can pay in gold too.

Unrelated sidenote to Philpgeorge,
Can I buy some lamposts from you? I'll pay 50% above market price using Dago Notes.

Anonymous Mr. Rational June 19, 2015 9:45 AM  

Seems like it would help to not kill a significant portion of your future workers as well.

Killing your future criminal class does help, though it would be better just to pay folks not to breed it in the first place.

Blogger Quizzer W June 19, 2015 9:48 AM  

@Giuseppe

Are you a Nigerian Prince by any chance? I only do my banking via Nigeria.

Anonymous Giuseppe June 19, 2015 9:48 AM  

All,
Anyone want to become President / CEO of my International Bank WopDagoWop?
Please hurry in submitting your CV. This once in a lifetime opportunity is limited.

Unrelated side note: our subsidiary, StrongString is in the market for all sorts of sturdy rope. We pay 50% above market price in Dago Notes.

***
Ok. Remedial economics class now over.
And that is why it will be a cold day in Hell before I learn anything real from an economist.

Anonymous Giuseppe June 19, 2015 9:52 AM  

I actually lived in Nigeria. No joke. I think that qualifies me as actually being emperor. Your gold.is secure! Ship it today!

Anonymous PhillipGeorge©2015 June 19, 2015 10:07 AM  

White Knight, a former police chief of Chicago, black, changed my thinking radically on this point. Growing up in the great depression, going to bed physically hungry some days, no-one in his neighborhood, his words, "would have dreamed of stealing the milk" left on a neighbour's door step. No locks.

Times are different. But you are modern. I'm not.
It's the quality of debt. Write downs can be managed. Bad contracts are a different thing. Admittedly the observations might be useless; as in, incomprehensible. Seen valor in a newspaper lately? Lots of archaic words/ dropping out of the lexicon. Not defeatist.

Anonymous zen0 June 19, 2015 10:09 AM  

... because both their intellectual models reject the possibility that the quantity of debt can have anything to do with the economy's ability to grow.

Similar to the theory that drag and gravity don't have anything to do with the ability to fly.

Wait, there is no theory like that. I guess engineers and economists are different.

Blogger automatthew June 19, 2015 10:33 AM  

Secondly, houses didn't use to have locks because locks used to be expensive. I can assure you that people in the Middle Ages would have liked to have locks, if their houses had been sturdy enough to actually stop people from breaking the door down around the lock. But they couldn't afford locks.

Can you back up that assertion?

Anonymous fish June 19, 2015 10:36 AM  

Hence, Krugman's comment taken out of context doesn't make sense.

Krugman taken in context doesn't make sense either.

Anonymous Quartermaster June 19, 2015 11:08 AM  

"Secondly, houses didn't use to have locks because locks used to be expensive. I can assure you that people in the Middle Ages would have liked to have locks, if their houses had been sturdy enough to actually stop people from breaking the door down around the lock. But they couldn't afford locks.

Can you back up that assertion?"

Metal was very expensive then and not used unless there was nothing else that would do the job. If the money to buy the metal was not available, then the job simply didn't get done. Those of us who lived in Europe, and have been into old structures built during the middle ages, have observed the paucity of locks except in places that absolutely had to be secured. As it was, only the wealthy and government was able to afford locks.

Blogger Cail Corishev June 19, 2015 11:14 AM  

Secondly, houses didn't use to have locks because locks used to be expensive.

I'm not buying it. My house has locks, but I don't use them. I don't even know where the keys are anymore. My car is sitting in the driveway right now with the keys in it. Most of my neighbors do the same. We have far more worth thieving than a medieval peasant had. Why don't we feel the need to lock things?

Anonymous RefugeeResettlementProgram June 19, 2015 11:26 AM  

My house has locks, but I don't use them... My car is sitting in the driveway right now with the keys in it. Most of my neighbors do the same

Please tell where you house be at, you need more diversity. Obama have new HUD plan just for you. http://theconservativetreehouse.com/2015/06/11/obama-hud-plans-to-use-federal-government-to-diversify-rich-neighborhoods/

Blogger Salt June 19, 2015 11:30 AM  

But once the economy is near full employment

DOH!

Anonymous WhiteKnightLeo June 19, 2015 11:32 AM  

@automatthew

Until the invention of the blast furnace, iron was worth more than gold. This is because a charcoal, or even a coal, furnace cannot burn hot enough to actually liquefy iron without having bellows attached. Until someone figured out how to make it work, they could only soften iron. This made it extremely difficult to remove all the slag from the metal; they had to literally pound it out with a hammer.

Thus ANYTHING made of iron was fantastically expensive until the invention of the blast furnace. And even after the invention of the blast furnace, iron was still very difficult to work with, because anything you made had to be worked by hand. Handcrafted stuff in any material today costs more than mass-produced stuff.

QED locks, which were made of iron, would have been well outside the average peasant's income.

As an aside, that's one way you can tell what time period Skyrim is set in, technologically-speaking: they have blast furnaces AND windmills, but no overshot waterwheels or water locks. AND iron tools aren't worth their weight in gold. So it's after blast furnaces, but before power hammers (the early power-hammers were powered by waterwheels).


@Cail Corishev

You also aren't as poor as a peasant, and you can more easily replace anything that does get stolen or broken. Until the invention of the power loom, how many peasants could afford to own more than 1 or 2 suits of clothing? Answer: not many.

If your car gets stolen, your insurance would cover a new car. If you didn't have insurance, you would still have many transportation options that could tide you over until you had enough cash to buy a car, assuming you didn't already have that cash on hand. One of the many benefits of living in a 1st World nation.


@PhilipGeorge

I wasn't saying that the quality of the debt didn't matter. I was saying that VOX didn't say anything about that quality.

Blogger Bard June 19, 2015 11:33 AM  

Cail,,
Same here. I dont even carry a house key.

Anonymous clk June 19, 2015 12:16 PM  

"But once the economy is near full employment, further growth depends on raising output per worker"

So really is the concept of economic efficiency -- the value of output /cost of input . So where prices of goods are fixed due to stagnation/low inflation and foreign competition.. reducing the cost of input is one the way to increase eff and drive up rates (in this model its the only way - but is a simple model) ... you can only beat the slaves to increase output so much so the next thing is to pay them less... which is what we got here in the US... so the answer to problem above would follow by reason maybe, which the economists cant seem to answer, be pay the employees more ... which allows them to buy more goods and thus allow pricess to rise ...

Theres a multiloop system here just begging for some old fashion feedback system analysis...

Blogger Cail Corishev June 19, 2015 12:20 PM  

You also aren't as poor as a peasant, and you can more easily replace anything that does get stolen or broken.

Wrong. I'm no more wealthy than a peasant compared to the norm, and maybe poorer compared to each era's richest. I may have more wealth, but my expenses are also higher, and it would be proportionally more expensive for me to replace my stuff. In terms of how many hours I would have to work to replace what thieves could make off with in a night, I'll bet my number would be higher than a peasant's.

If your car gets stolen, your insurance would cover a new car.

Wrong again, I only have liability insurance.

If you didn't have insurance, you would still have many transportation options that could tide you over until you had enough cash to buy a car

Wrong again. There are no buses or trains where I live, and I don't own a horse or a donkey, so my only options would be to hoof it 10 miles to town or hitchhike.

Your basic premise is just wrong, and the fact that there are people like me proves it. There aren't more people locking their doors today than a century ago because locks have gotten cheaper. There are more people locking their doors today because their neighbors have gotten worse (and closer and more numerous). In places where the neighbors haven't gotten worse, like where I live, the extra time spent digging for keys isn't worth it even when the homes and cars come with locks built-in. It's the prevalence of crime, not the availability of locks, that makes the difference.

Blogger Chris Mallory June 19, 2015 12:23 PM  

Whiteknight,

My truck only has liability insurance on it, I also leave the keys in it while it is parked at the house. Can't remember the last time I locked the house doors.
Unless you choose to live in an urban hellhole, which includes every urban area, locks aren't that important.

Anonymous BGS June 19, 2015 12:35 PM  

You also aren't as poor as a peasant, and you can more easily replace anything that does get stolen or broken.

Are we all forgetting about barring the door with a piece of wood functioned as a lock & that many times more than one nuclear family lived in a house, so there would be someone home that barring the door would be as good as a lock? If grandma lives with you and can lift up the bar you have a lock without metal. I have been inside the villas of Pompeii and they where designed for defense.

Anonymous Rolf June 19, 2015 12:45 PM  

Some things, like communism and Keynesianism, look great on paper... right up until you look at their unstated assumptions, at which point you can't help but roll your eyes like a tweener girl and say "really? You are going to assume something that stupid?!"

Blogger automatthew June 19, 2015 1:33 PM  

BGS, exactly. "I don't believe in God" Boy has an agenda.

Anonymous p-dawg June 19, 2015 6:05 PM  

You want productivity gains? Get rid of salary and hourly and pay for production, by the job. This only works for jobs which are actually productive, so it also gets rid of money sinks like HR and middle management.

Anonymous A Reader June 19, 2015 7:04 PM  

Look, this is how you promote economic growth: keep taxes down, and government regalation down.

Heck, putting our lawmakers in a spaceship in orbit around the sun would give a one time boost to the economy: people would know that our lawmakers cant make things worse.

Anonymous Jack Amok June 19, 2015 11:56 PM  

Don't send your gold to Giuseppe. He's a fine fellow and all that, but I'm far more economically sophisticated. Send your gold to me instead, and I'll not only issue you genuine Promissary Notes from the Amok Bank of Securities and Commodities Online Network Depository (affectionately called "JackBacks"), but I will also send you a free toaster as a gift of appreciation for your business (minimum deposit of 2 troy ounces of gold or 100 Troy ounces silver). Plus, since I know you care about Giuseppe and don't want him to completely miss out, I will also send him, and eight others just like him, an equal amount of JackBacks.

And if you get a friend to open a deposit account with ABSCOND (again, minimum deposits apply) you will receive a lovely pen set (your choice of in colors, red,
rosso, or κόκκινος).

Don't delay - act today!

Blogger Michael Maier June 21, 2015 1:51 AM  

Chris Mallory June 19, 2015 12:23 PM
Whiteknight,

My truck only has liability insurance on it, I also leave the keys in it while it is parked at the house. Can't remember the last time I locked the house doors.
Unless you choose to live in an urban hellhole, which includes every urban area, locks aren't that important.


Spare me. If you have neighbors that know where you house is, you're vulnerable.

If you haven't had some scumbag try to steal from you, you're just lucky. It ain't just city folks that will rob you blind, as my friends in the relative middle of nowhere recently found out.

Post a Comment

Rules of the blog
Please do not comment as "Anonymous". Comments by "Anonymous" will be spammed.

<< Home

Newer Posts Older Posts