Story from AFP-JiJi press speaks for itself.

In a public letter the 10 americans stated that Mr. Bush had,

" ... embarked on a reckless and extreme course that endangers the long-term economic health of our nation".

Of his much touted tax cuts they said they were,

" ... poorly designed and have therefore given scant stimulus to job creation."

and that their main effect has been to,

" ... turn budget surpluses into enormous budget deficits."

OUCH !!!

Of Mr. Kerry they claimed,

" ... (he) understands that sound economic policy requires a substantial change in direction and we support him for President."

So what do you expect to happen now? I'll tell you:

Certain Forum members will declare wholeheartedly that every bloody moron can get a Nobel Prize, that Nobel Prizes are for pinko-commie-surrender-sissies anyway, real men do work, and not think up cheese-eating theories and who the f#@k listens to those idiots anyway.

Wanna bet?  

You are right of course and the usual shit will begin BUT a lot of opinions are expressed on here about the merits or otherwise of tweedle dumb and dumber but so far not much worthwhile (or original).

I think this is different and why I posted it, otherwise I avoid this joke of an election altogether.

Just out of curiousity, I noticed that you elected not to name these nobel lauriets.


That wouldn't to keep us from challenging their conclusions, would it?

Not that which ones sent the letter really matters but rather that 10 of them combined did so. With an iota of effort you can surely find the names for yourself.

Not that you'd would know one laureate from another but I'll play. The article only names 2, Paul Samuelson (1971) and Joseph Stiglitz (2001).

It is the absolute clarity of the meassage that caught my eye. Economists are usually all 'ifs' and 'buts' ... until now.

Well I want to know.

These guys sound like Kensyans and convets to the nationalized economy, which the Soviet bloc proved doesn't work.

It would also go a long way to explain their hatred of GW's economic policies.

WTF is Keynesian (note the spelling) in the comments I posted ? Where do you get the idea they are "converts to the nationalized economy" from the 3 quotes posted ?

Please stop pretending you actually have a clue what you're talking about. People are not fooled much less impressed.

Is it so painful that people of standing have a strongly dissenting opinion that you attempt the usual character assasination ? Just keep trying it in this case I dare you.

Now that was just mean.

And as far as questioning the individuals who made up this letter and their qualifications.

Being a Nobel Lauriate doesn't mean that you actually have done anything productive.

See Jimmy Carter and Yassar Arafat.

Andreas, you called it. To L-188, anyone who doesn't believe in what's going on now-increasing the gap between rich and poor; giving corporations and the most wealthy Americans huge tax breaks of breathtaking proportion, while shifting the burden to the middle class; seeing excellent jobs shipped oveseas, being replaced by inferior jobs; the poverty rate climbing every year Bush as been in office, is just a leftie commie, who doesn't get it.

If Americans were smart, and REALLY looked at what Bush is doing economically, he wouldn't stand a chance in hell to be re-elected.

Ah, Alpha1, your bitterness shows through.

It is sad that the only way you can defend your viewpoint, is denegrate others.

Ah, Alpha1, your bitterness shows through.

Don't make me laugh, Mr. Republican! Bitterness? No. The state of the U.S. economy as it stands today? Absolutely. The gap between rich and poor, since Bush has taken office, is increasing faster and faster; the rich and corporations are receiving huge windfalls, while the burden of taxation falls harder on the middle, as they support the poorer of us, and make up for the taxes not paid by those who easily could; poverty is increasing at an alarming rate, even as the rich get richer; outsourcing is a national policy, and bringing back jobs that pay a lot less.

These are FACTS, L-188. The fact is you're so far up The Bush isn't my fault. If you lived in NE Ohio, you'd actually see all this, and couldn't brush it off like you do there living in Alaska.

What is sad, is you support everything I mentioned. And if you deny it, you're lying thorugh your teeth.

" Being a Nobel Lauriate doesn't mean that you actually have done anything productive. "

Oh really, thanks for the insight.

Now it's the whole concept of the Nobel prize which is a joke.

Just keep talking.

PS It's spelt Laureate not Lauriate

Give me a break.

It is 5 am here, and I am not taking breaks to use the spell checker.

And you're not taking breaks to put in any facts, either, L-188.

The fact remains that under Bush, the most wealthy have seen their income go way up, and the middle and the poorest are seeing it go down. But then again, that's what the GOP wants, since the GOP believes that the best way to national security is to help the rich and big business, and to hell with everyone else.

Does anyone want to, in an objective manner, define what a good economy is?

"Being a Nobel Lauriate doesn't mean that you actually have done anything productive."

Yeah, right.

Try telling that to the Nobel laureates in Medicine, Physics, and Economics. The work of Modigliani and Bob Solow is fundamental to the way economic growth is analyzed by markets today.

Stop deluding yourself jaysit, they're all worthless losers.

Them and that guy that split the atom and those dickheads that maped the human genome ... a waste of skin the lot !!!

A good economy, in my veiw, N6376m is this:

-A lot of Americans, not a select few, benefitting from it. That's not happening today, as the poverty figures will help to tell anyone with half a brain.

-It's when American companies are adding good-paying jobs here, not shipping them overseas, to be replaced by lower-paying jobs, and jobs with fewer benefits.

-It's when the gap between the richest-who are benefitting enormously from the economics now, and the poorest, is decreasing, not expanding, as it is today. That is a sign that things are way off kilter.

-It's when more Americans can afford health insurance, and not drop it because they have to choose between housing, feeding and clothing themselves, and having a protection for illness.

These, in my mind, define a good economy, not the kind of economy we have today. When well over a million jobs have been lost, replaced by lesser-payng ones; when the gap between the richest and poorest are increasing at an alarming rate; when Americans have to give up health care in order to eat (something the rich won't ever have to face), then it's not a good economy.

There is something I wonder about an economic attitude, which I observed mostly with Americans, but sometimes as well with British asnd South Africans.
I´ll give an example:
The last two managements in our company have essentialy been screwing us over, more work for less money and little respect.
Now by German labour law the thing to do would be at least to elect a spokesman (Betriebsrat) with certain negotiating powers (doesn´t have to be a union member, but e.g. he can get an auditor to look in the company´s books if the bosses are complaining again how bad business goes). Our American, some British and South African colleagues are strictly against such a move, they are often siding with the bosses, in complaining about "too high labour costs", or public holidays. It seems that these guys are gambling a few hundred dollars in day trading on the stock or forgeign currency exchange and are thinking of themselves as the big capitalists. They seem to hope that some day they will be bosses of a aircraft maintenance company (which will never happen) and they don´t want those "pesky" labour laws to restrict them.

Jan

Alpha

I agree, especially with the overseas outsourcing which is akin to termites eating at the foundation of a house. Not readily visible and easily dismissable until the structure collapses.

But I'm curious how PJ and others in favor of o/s outsourcing (from past posts) reconcile their views with Kerry's.

Does anyone want to, in an objective manner, define what a good economy is?

Well in the liberal mind, a good economy is what we have when a Democrat is in the White House and a bad economy is what happens when a Republican is in the White House.

A good example of that is how CNN said during the Clinton administration that 5.6% unemployment was "low" and how during the Bush administration 5.6% is considered "high".

Well in the liberal mind, a good economy is what we have when a Democrat is in the White House and a bad economy is what happens when a Republican is in the White House.

Right, B757300. You say that because you see EVERYTHING in such black and white terms. I don't.

We had some pretty damn good economic times under Ronald Reagan. We had a damn good economy under Dwight Eisenhower. We had two good years under George H.W. Bush.

We had a lousy economy under Jimmy Carter. The economy, because of war and his bid for a "Great Society" did suffer under LBJ.

We've had good economies under Harry Truman, JFK and Bill Clinton. We had economic troubles under Richard Nixon.

It doesn't work that way, although both parties like to claim what you said, but that's polltiking. The truth is, a good economy, nor a bad one, is the sole property of one party or another. Nor is the the sole property of a president, since he must have help from Congress.

So, as usual, you're dead wrong.

Does anyone want to, in an objective manner, define what a good economy is?

Well in the liberal mind, a good economy is what we have when a Democrat is in the White House and a bad economy is what happens when a Republican is in the White House.

A good example of that is how CNN said during the Clinton administration that 5.6% unemployment was "low" and how during the Bush administration 5.6% is considered "high".

You left out one thing, B757300: In Clinton's 8 years, millions of jobs were created. Under Bush, over a million have been lost, and the ones coming back are paying less than the ones leaving. The unemployment stat that is being reported isn't the problem-it's how many jobs are/aren't being created that is more important. Plus, the unemployment stats don't count those who aren't even looking anymore-and read the latest poverty figures, and you'll see there a lot of those folks.

Ok guys, there are two very different schools of thought in Economics, someone correct me if I am wrong.

Keynesian: Believes that the key to long term success is messing with things in the short run, to quote Keynes himself "In the long run we are all dead." This is the school of thought more commonly accepted by the Left wing types because It typically calls for more government intervention to force a macro equilibrium.

Classical: This is a school of thought that concerns itself far more with long term economic issues. This school of thought on Economics has also been around a lot longer and calls for a more hands off approach to economic issues, this is favored typically by Republicans. In this school of thought the market finds its own equilibrium over time.

Finding 10 Keynsians to call Bushes Economic policies stupid is not a hard thing to do. Finding 10 classical theory followers to call them the work of a genius is about as easy. The same is true in any clash of basic schools of thought. (Designated hitter vs not, Astroturf vs grass, etc)

Personally I think some of Bushes stuff is pretty good, like the talk of dropping the farm export subsidies which hurts all of us in the short term because the price at the store will rise for now http://www.masslive.com/news/republican/index.ssf?/base/news-5/109247490536710.xml

Keynsians hate this idea because it hurts in the short run, but I will say it again, in the long run it helps. If you think 2-3 years down the road the market prices will stabilize at a level that is better for everyone. This goes back to that comparative advantage thing, if any of you remember that from my last economics lesson, it is where countries produce what they can produce better than anyone else, meaning the market has cheaper goods with higher quality

someone will say the source is biased but the facts in the article speak regardless of spin.


Also, a while back Bush was de-valuing the dollar to try to encourage other countries to buy more American stuff, it was a pretty good idea and worked to a certain extent. Believe it or not our economy is actually in a recovery.
http://www.sounddollar.org/mnews67.html

"He said the recent slide in the dollar, which makes imports from Europe and Japan more costly in U.S. markets, was not the issue for those economies."

OK think about that for a second, if imports cost more because the dollar is devalued, isn't that a way of protecting US jobs and manufacturing without doing anything as asinine as slapping a protective tariff on something, which only weakens the industry in the long run? I know Bush is out to put all the unskilled workers out of work, but think beyond your political biases for a second. It is not a long term solution but in an economic downturn it is a good way of slowing the dive.

OK, lets see some intelligent arguments, I know most of you are capable of doing it.

edit: grammar

[Edited 2004-08-27 16:52:41]

That's a generally accurate summary, Captoveur, but the schools can be broken down a little more:

Keynesian: recessions are the product of inherent instabilities in the capitalist system. Market "failures" need to be fixed with fiscal and monetary policy tools. "Old" Keynesians placed more emphasis on fiscal policy than most modern Keynesians.

Monetarist: pioneered by Milton Friedman; also called the Chicago School (a broader term also incorporating microeconomic policies). Recessions are the product of monetary imbalances in the economy, usually caused by unstable money supply growth. High and increasing money supply growth produces inflation, while declining or negative money supply growth causes recession. Monetarists would probably blame the recent recession on the Fed's contractionary policies in 1999 and 2000.

New Classical: recessions are caused by unanticipated changes in aggregate demand or the money supply. Anticipated changes cause adjustments in firm and worker behavior that offset the initial change. Since policy reactions are easy to anticipate, government interventions are counterproductive. This is the famous "New Classical policy ineffectiveness proposition."

Real Business Cycle: booms and recessions are due to "technology shocks," specifically those impacting the productivity of labor and capital. Since technological advances are out of government control, there is nothing policy-makers can do to avert or mitigate a recession.

Austrian: recessions are due to government manipulation of the interest rate. Expansionary monetary policy drives interest rates below their equilibrium level, setting off booms in the financial and physical capital markets. When the resulting inflation causes the Fed to tighten, fixed capital investments become unprofitable and must be liquidated.


I'd say 30% of prominent macroeconomists are Keynesians of one sort or another, 20% are monetarists, 30% are New Classicists, 10% are RBC, 5% are Austrians, and 5% fall into some other category. The Austrian School embraces a quite different conception of economic methodology than the others, which accounts for its slim representation in academia, but its cycle theory is not particularly radical.

Most of the 10 economists who signed the letter are Keynesians, if they subscribe to any macro school at all. Paul Samuelson is Mr. Keynesian himself. This is just bizarre, in that Keynesian theory explicitly calls for deficit spending and tax cuts during economic recessions. Keynesians spent decades arguing that deficits don't matter, at least in the trough phase of the cycle. For Samuelson and others to pull a complete 180 and attack Bush over deficits is completely inconsistent with Keynesian theory.

Then again, Keynesianism has been on the decline for 30 years. It could not explain the stagflation of the 1970s and its policy tools have been singularly ineffective in Japan and the US (we should be growing like gangbusters right now if Keynesian theory were true). Each new edition of Samuelson's textbook has backed further away from Keynesian policy recommendations. Partisans on both sides have never let economic theory get in the way of a juicy political attack.

--B2707SST

Being a Nobel Lauriate doesn't mean that you actually have done anything productive.

There is a difference between winning a Nobel Peace Prize and winning a Nobel Prize for science.

The scientists have all accomplished something of monumental import to the human condition.

N

Austrian: recessions are due to government manipulation of the interest rate. Expansionary monetary policy drives interest rates below their equilibrium level, setting off booms in the financial and physical capital markets. When the resulting inflation causes the Fed to tighten, fixed capital investments become unprofitable and must be liquidated.

I'd say 30% of prominent macroeconomists are Keynesians of one sort or another, 20% are monetarists, 30% are New Classicists, 10% are RBC, 5% are Austrians, and 5% fall into some other category. The Austrian School embraces a quite different conception of economic methodology than the others, which accounts for its slim representation in academia, but its cycle theory is not particularly radical.

I am a backer of the Austrian school, notably Ludwig von Mises.

Check out for details. Brilliant stuff to read and learn from.

So a bunch of Keynesian intellectual dinosaurs endorse the liberal candidate? I'm shocked!!! Shocked, I say!!!  

A good example of that is how CNN said during the Clinton administration that 5.6% unemployment was "low" and how during the Bush administration 5.6% is considered "high".

The unemployment rate is a highly misleading number; but under the Bush administration it has become so misleading that the press can no longer ignore it. Unemployment is at 5.5-5.6% not because this economy is creating a lot of new jobs, but because discouraged workers have dropped out of the work force. See: http://www.bls.gov/news.release/empsit.nr0.htm As has been noted, not since Herbert Hoover has an economy eliminated more jobs than it created in a Presidential terms. Run the numbers yourself here: http://www.bls.gov/webapps/legacy/cesbtab1.htm

So please spare me your cries that Bush is being judged unfairly. The stats speak for themselves, this is the worst job market in memory, bar none.

am a backer of the Austrian school, notably Ludwig von Mises.

I am as well. The current recessions in the US and Japan fit the Austrian cycle theory to a T, while other schools are struggling mightily to explain them. Mises' Human Action is a work of pure genius. I'm embarking on a self-guided tour of the Austrian classics, having just read Carl Menger's Principles, I'm in the middle of Bohm-Bawerk's Capital and Interest. It's proving difficult to get ahold of Hayek's early books on capital and cycles, work for which he was awarded the Nobel Prize in 1974, but I'll keep looking.

It's mind-blowing how the Austrians' profound insights, especially capital theory, got dumped along the road during the Keynesian revolution. Keynes and others simply couldn't be bothered to deal with the difficult issues of heterogeneous fixed and circulating capital, so macro got a single, fixed capital aggregate represented by the letter "K" instead. When capital is fixed and interest rates don't coordinate saving and investment, the obvious result is a fundamentally unstable economy -- just what Keynes needed to promote his policy objectives. K has been a straightjacket for the past 70 years.

Short-run macroeconomics is only now getting back to where it was in the 1920s. Even mainstreamers are beginning to admit that Keynesianism has been nothing but a long and unproductive detour. Solow and others have made important contributions on long-run growth theory, but even these insights are presented more clearly and comprehensively as part of Austrian capital theory. Mainstream econ is unable to bridge short-run Keynesian and long-run Solow or neoclassical growth theory, so now they're off looking for an "economics of the medium run." A wild goose chase if ever there was one. It's a shame that so many brilliant talents spent so much time on a dead-end theory.

--B2707SST

Hayek wouldn't support Kerry (or Bush), that's for sure.


The tax cuts didn't create the huge deficits, it's Bush's free-spending absolutely unconservative policy of passing enormously expensive entitlements like the Medicare drug BENEFIT and "No Child Left Alone."

Unemployment is at 5.5-5.6% not because this economy is creating a lot of new jobs, but because discouraged workers have dropped out of the work force.

So please spare me your cries that Bush is being judged unfairly. The stats speak for themselves, this is the worst job market in memory, bar none.

Wrong. The Bureau of Labor Statistics' own data shows that this explanation is bogus. The souce is their "alternative measurements of labor underutilization," whose data series include unemployment rates with discouraged workers.

http://www.bls.gov/webapps/legacy/cpsatab12.htm

As we know, the official unemployment rate was at 5.5% in July 2004, versus 5.5% in July 1996 during the wonderful Clinton economy. Luckily, we also have access to statistics on discouraged workers.

Let's take a look at U-5, defined as "Total unemployed, plus discouraged workers, plus all other marginally attached workers, as a percent of the civilian labor force plus all marginally attached workers"

July 1996: 6.5%
July 2004: 6.5%

Oh my. That's not good at all. Well, maybe we're still not counting enough people. Let's look at U-6, the broadest measure of labor force underutilization, defined as "Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers."

July 1996: 9.7%
July 2004: 9.5%

Yes, the stats do speak for themselves.

--B2707SST

Who are these 10 Nobel Prize winning economist? Have they ever run an organization themselves or do they just make their living writing about what others do?

You know the old cliche about those who can do and those who can't teach.

Does anyone have a link to the article?

-76M

Finding 10 Keynsians to call Bushes Economic policies stupid is not a hard thing to do. Finding 10 classical theory followers to call them the work of a genius is about as easy.

Then where is the Bush list? Can you find me any Nobel laureates in economics that are endorsing Bush and his economics policies?

Ok guys, there are two very different schools of thought in Economics, someone correct me if I am wrong.

I don’t think that is such a useful distinction anymore. Our current President is proof of that. While he sold the initial Spring 2001 tax cuts on what could perhaps be considered classical grounds (reducing the government’s role in the economy) his entire tax policy since then has been explicitly Keynesian: cutting taxes to stimulate the economy. As many economists predicted, because (1) the tax cuts benefits upper income brackets more than middle and lower income brackets; and (2) because they were phased in over periods as long as ten years, they didn’t have much stimulative effect. In fact, today, 2Q GDP growth was reduced from the initial estimate 3.0% of to 2.8%. http://story.news.yahoo.com/news?tmpl=story&ncid=749&e=1&u=/nm/20040827/bs_nm/economy_dc Those are very low numbers for an economy that is supposed to be in recovery mode.

The signers are:

Here is the list of the economists: George Akerlof and Daniel McFadden of the University of California at Berkeley, Kenneth Arrow and William Sharpe of Stanford University, Daniel Kahneman of Princeton University, Lawrence Klein of the University of Pennsylvania, Douglass North of Washington University, Paul Samuelson and Robert Solow of MIT and Joseph Stiglitz of Columbia University. See http://www.reuters.com/newsArticle.jhtml?type=politicsNews&storyID=6066396

Theoretically some of these guys could be called Keynesian. Solow and Samuelson are explicitly “neo-Keynesian”. Stiglitz is pretty dependent on Keynes too. But Keynes is now accepted across the political spectrum. Not everything he said was right (and not even Adam Smith was always right), but you can’t be an economist without accepting that much of what Keynes said was accurate, particularly, of course, his thoughts on the role of government and fiscal policy, as well as the influence of the “liquidity preference” that was one factor in the great depression (and I think even Hayekians accept that these days).

Interestingly, it isn’t just the Nobel laureates in Economics who are signing petitions against Bush. In July a scientific organization collected the signatures of more than 4,000 scientists, including 48 Nobel Prize winners, 127 members of the National Academy of Sciences, and several former top science advisors to Republican presidents criticizing the Bush Administration’s science policies and calling on Bush for a “restoration of scientific integrity in federal policymaking," http://www.washingtonpost.com/wp-dyn/articles/A37968-2004Jul8.html

"Who are these 10 Nobel Prize winning economist? Have they ever run an organization themselves or do they just make their living writing about what others do?"

I would be surprised if they ever ran an organization. They are economists, all they do is write about theory, they are the business equivalent to physicists, eg they know the theories about why everything works but they leave the actual application of their theories to others. These guys have nobel prizes to their credit, they can make enough money writing books and doing consulting to never need a real job again, assuming they ever had one.

Also, for the record, it would be impossible to completely govern the economy strictly under one economic school of thought, that is why there is a pool of economic advisers instead of just one, which is why under any administration there will be a mixture of all the above mentioned schools of thought, some administrations will lean more one way or the other though.


"Then where is the Bush list? Can you find me any Nobel laureates in economics that are endorsing Bush and his economics policies?"

They are out there but they saw little need to get together and come out to endorse it probably. Every time someone comes up with something like this there is not automatically an organized group with the opposite opinion.

(and I think even Hayekians accept that these days).

Not on your life.

"They are economists, all they do is write about theory, they are the business equivalent to physicists, eg they know the theories about why everything works but they leave the actual application of their theories to others."

First of all, one does not get a Nobel after you choke up one theory. It takes years of building up a body of research and the real world application of that research to be worthy of a Nobel. Nobel economic theories are not mere mathematical algorithms locked away in a vault. They are tried and applied in the real world, and its their contribution to the understanding of how modern economies work that earn them the Nobel.

Do Nobel economists understand how everything works? As much as that phrase can possibly allow. Erego, they often offer the best prognosis of how federal monetary and fiscal policies affect an economy.

But Keynes is now accepted across the political spectrum.

Unfortunately true, because politicians love meddling with the economy. There's too much political capital to be gained to pursue a laissez-faire approach. It was in this sense that Nixon said "we're all Keynesians now." Bush is no exception: his fiscal policies, especially on the expenditures side, have been a disaster and the deficits are reaching truly dangerous levels. But for Keynesian economists to criticize him for running up a deficit during a recession is, as I noted above, the height of hypocrisy, since that is exactly what their models call for.

but you can’t be an economist without accepting that much of what Keynes said was accurate, particularly, of course, his thoughts on the role of government and fiscal policy, as well as the influence of the “liquidity preference” that was one factor in the great depression (and I think even Hayekians accept that these days).

I wouldn't agree with this -- there are plenty of heterodox economists, especially Austrians, who think nearly every key point in The General Theory is wrong. See http://www.mises.org/etexts/hoppekeynes.pdf for an example.

Regarding liquidity preference, it is certainly true that the desire to hold cash may increase during economic crises, and that this will exert a downward pressure on prices. But Keynes interpreted the interest rate as the price that clears the money market, whereas one of the Austrians' (including Hayek) most foundational theories is that the interest rate clears the time market, that it is the discount rate that brings the present-oriented activity of consumption into equilibrium with the future-oriented activity of saving.

In the Keynesian model, savings have no direct effect on the interest rate, and hence no direct effect on business investment or aggregate expenditures. Savings are "sterile" and simply disappear from the economy: an exogenous increase in savings will shift or rotate the aggregate expenditures line down, resulting in lower equilibrium incomes and output. The quantity of savings that triggers this contraction never re-enters the circular flow; it just vanishes, presumably under someone's mattress.

Likewise, the funds that the government spends to rejuvenate the economy appear out of nowhere. Government must pay for every dollar of spending through taxation, borrowing, or printing money. The first option reduces aggregate expenditures, causing further problems. The third option is allegedly ineffective in a depression, due to the liquidity trap: new money is held instead of spent. The second and preferred method should theoretically crowd out private investment as the neoclassicals argued, but Keynesians maintain that it does not. The question then arises: where do these funds come from? They must be diverted from consumption spending, investment spending, or savings -- there is no other source of funds. But if that's the case, we're back to the circular flow, and the government is simply redirecting -- not injecting -- spending streams. How can government spending in place of private spending be stimulative to the macroeconomy?

These problems are caused by the fact that, in the Keynesian system, savings and investment are not linked in any meaningful way. Of course, by the rules of national income accounting, S + T must equal I + G, but this relationship is mathematical, not causal: the other variables (Y and C or preferably G and T) must do the adjusting to make S = I. But from an income-expenditures perspective, one is counterproductive and should be discouraged, while the other fluctuates wildly according to the "animal spirits" and psychological instabilities of the business community. What a surprise, then, that Keynes ends up with a profoundly unstable economy? In such an environment, of course we need government as a balancing force. If the interest rate is assigned the function of coordinating money demand, not coordinating the capital structure, the policy conclusions flow almost trivially.

As Roger Garrison of Auburn University notes, any macroeconomic theory should explain how the economy can work right before tackling how and why things can go wrong, because we observe empirically that the economy functions at a basic level. Keynesian theory is unable to do this -- full employment, or anything remotely resembling full employment, only happens by accident.

--B2707SST

[Edited 2004-08-27 20:00:00]

And the other 50 plus Nobel Laureates (economic), have not spoken up. Your right, that statistic does speak for itself.  

Wrong. The Bureau of Labor Statistics' own data shows that this explanation is bogus. The souce is their "alternative measurements of labor underutilization," whose data series include unemployment rates with discouraged workers.

Here’s your mistake: you are using data from “the Household Survey”. (Table A-12/U5) As we all know, it is acknowledged among economists that the Household Survey is much less reliable than the definitive “Establishment/Payroll Survey”. Here is Alan Greenspan saying that the Establishment Survey is better: http://www.reuters.com/newsArticle.jhtml?type=reutersEdge&storyID=6048124
Here is a Report from the Federal Reserve Bank of San Francisco saying that the Establishment Survey is more accurate: http://www.frbsf.org/publications/economics/letter/2004/el2004-23.html
Curiously, the only people who prefer the Household Survey are the Bush Administration.

So what does the “Establishment/Payroll Survey” say about the employment situation? As I mentioned in my last post, it is pretty bleak:

Non-farm Payrolls, seasonally adjusted (Establishment Survey)*
January 2001: 132,388,300
June 2004: 131,272,000

Again, no President since Herbert Hoover has seen a decline in the number of employed persons during his presidency.

* Sources:
ftp://ftp.bls.gov/pub/suppl/empsit.compaes.txt
http://www.bls.gov/news.release/empsit.t14.htm

Here’s your mistake: you are using data from “the Household Survey”.

True, but if you want to argue that the official household survey unemployment rate is misleading because it doesn't include discouraged workers, as you did above, you can't respond by pointing to the establishment survey when I quote you the household survey unemployment rate that does include discouraged workers.

If we conclude that the entire household survey is garbage, we not only throw out half of the BLS' data, we must forget about discouraged workers, because the establishment survey does not and cannot measure them. Until that point, anecdotal evidence about hordes of discouraged workers (which is all the Kerry campaign has) is no substitute for actual statistics conducted with rigorous scientific methodology.

Again, no President since Herbert Hoover has seen a decline in the number of employed persons during his presidency

Again, true, but this only makes logical sense if you pin the entire blame for the job losses on Bush. It is clear that the economy was headed south well before the 2000 election: some leading indicators began to fall as early as January, the stock market bubble popped in March, and the unemployment rate began creeping up late in the year. GDP contracted in 3Q 2000, six months before Bush took office. The NBER has dated the onset of recession as March 2001, a month after he was inaugurated.

I don't blame the Democrats for making political hay out of the job situation -- the Republicans would be doing the same if their roles were reversed -- but serious economists cannot maintain that Bush could have done anything to prevent the onset of recession. Further, as I apparently have to keep noting, Bush and Greenspan followed the Keynesian and monetarist presciptions to the letter. In fact, they threw in the kitchen sink: deficits at 5% of GDP, double-digit money supply growth, and negative real interest rates constitute the most aggressive policy response to a recession in American history since at least the Great Depression.

There is a tradition in ethics that we only hold people to blame for things they could have prevented. Bush took office right at the onset of recession. Add to that the bursting of the tech bubble, 9/11, the corporate accounting scandals (the majority of which took place during the previous administraton), rising oil prices, and the multitude of other shocks we've experienced in the last 5 years, and I'm surprised the economy has done as well as it has.

The key question about Bush's economic policies is not whether job losses have occurred under his watch. This is a classic post hoc ergo propter hoc fallacy. The question is whether those job losses would have been greater or smaller under an alternative policy framework. First, there is no way to obtain an answer to that question, and second, the policies those Nobel economists seem to be advocating run counter to their Keynesian theories. Although I freely admit that many of them are brilliant and remarkable scholars, I am forced to conclude that they have ditched economic theory for political expediency.

--B2707SST

True, but if you want to argue that the official household survey unemployment rate is misleading because it doesn't include discouraged workers, as you did above, you can't respond by pointing to the establishment survey when I quote you the household survey unemployment rate that does include discouraged workers. If we conclude that the entire household survey is garbage...

I can certainly make both arguments because I never argued that the household survey is “garbage”. While the Household survey is useful, the Establishment Survey is a better measure of aggregate employment, and I think we agree on that. The Establishment Survey also shows a remarkable deterioration of the employment situation, and I think we agree on that too.

Again, true, but this only makes logical sense if you pin the entire blame for the job losses on Bush.

It is a tradition that Presidents get blamed for what happens to the economy on their watch, and the Bush administration shouldn’t be exempt from this. Bush has sold some very aggressive tax and spending policies based on the assertion that those policies would improve the economy. He can’t simultaneously argue that his economic program must be implemented in order to revive the economy, and then at the same time say that the performance of the economy is beyond his control when bad economic news comes out.

There is a tradition in ethics that we only hold people to blame for things they could have prevented. Bush took office right at the onset of recession.

Under that criteria the Bush administration clearly should be held responsible for the current state of the economy. Indeed, the Bush Administration itself believes that it could have prevented this deteriorating employment situation because it has long asserted that its economic policies would dramatically improve the worsening employment situation. As I’ve mentioned elsewhere, it promised less than two years ago that its policies would bring non-farm payrolls to 138 million in 2004. Today we are seven million jobs short of that. (See “Economic Report of the President, 2002” , pages 41-49 for the President's purported job-growing policies, and see page 53 for the 138MM figure, the report is available here: http://www.gpoaccess.gov/usbudget/fy03/pdf/2002_erp.pdf)


Add to that the bursting of the tech bubble, 9/11, the corporate accounting scandals (the majority of which took place during the previous administraton), rising oil prices, and the multitude of other shocks we've experienced in the last 5 years, and I'm surprised the economy has done as well as it has.

Again, these aggressive tax cuts were supposed to take care of all those economic shocks, see above. Those excuses might have worked in July 2002, but the Bush administration promised that its radical economic policies would result in remarkable job growth. They were wrong, and those excuses don’t work now, in late summer 2004.

The key question about Bush's economic policies is not whether job losses have occurred under his watch. This is a classic post hoc ergo propter hoc fallacy. The question is whether those job losses would have been greater or smaller under an alternative policy framework. First, there is no way to obtain an answer to that question,

That’s all very true, and it is one reason why economics is not a science. But one effective way of evaluating an economics program of a President is to check and see how accurate his projections are. You can make an argument that the President isn’t always responsible for the state of the economy. But the President is absolutely responsible for the economic projections and promises that he makes.

On that basis the Bush administration has performed very poorly. Its projections are always off and always way off . Whether it is the job market or government deficits, the Bush administration’s projections have been consistently wrong. And one can’t explain this away by reference to 9/11, the tech bubble bursting, etc. These fallacious Bush projections were all made well after those events.

First, I have to tell you that it's good to read about hard-core economics here without it devolving into name-calling and ad hominem epithets. This has been a great thread from that standpoint and it's awesome to see us sparking together--even in disagreement--more brain cells in APPLYING theory than these economists are.

Then where is the Bush list? Can you find me any Nobel laureates in economics that are endorsing Bush and his economics policies?

To this point, there aren't any. That's not an impugnation of Bush as much as it is the etntire system. Bush is spending to a huge degree, even when adjusted for net % of the Fed budget. The new entitlement programs are predicated upon growth of government. Therein lies the inherent flaw of Keynesian economics--it requires a sadistic perpetuation of feeding the beast.

To B2707SST's points (which were EXCELLENT sir!), the Austrians had such forethought about the factors impacting a macro economy that it's spooky. Hayek and von Mises also had a very profound insight into the evils of double-taxation and the disincentives that creates upon an economy. Most importantly, they knew that ultimately, economics is not a macro nebulous thing, but is predicated upon the individual. Combine these individuals as a whole, and biggety bam, you have a sound macro economic theory to go along with a time-tested money supply approach.

Keynesian economics is a betrayal of America--it disregards the fruits of one's individual labor. It addresses platitudes or government involvement at every step and rampant interventionism.

Just as our Republic was founded on the value of an individual, so must our economic theory and practice. To that end, there is no doubt in my mind that the Austrian school of thought is clearly superior.

The practical problem we face in 2004 is that we've created an underclass of citizens dependent upon government...stopping that cycle and the unending wave of pork is going to be the toughest challenge. In that regard, sadly, neither party is up to that challenge out of concern for political expediency and the grasp for power.

And the other 50 plus Nobel Laureates (economic), have not spoken up. Your right, that statistic does speak for itself.

Interesting point. Does you "reasoning" (for lack of a better word) apply to the swift boaters, too?

Therein lies the inherent flaw of Keynesian economics--it requires a sadistic perpetuation of feeding the beast.

That may be theory, but it is not practice. Discounting the spike from 1942-1946, government spending as a %GDP was actually less during the ultra-Keynesian period of 1934-1950 than it was during the anti-Keynesian era of 1981-1990.

Hayek and von Mises also had a very profound insight into the evils of double-taxation and the disincentives that creates upon an economy.

I’m sure you know Hayek and Mises better than I do, but I wasn’t aware that they had any problems with sales tax and other consumption taxes, which are all of course double taxes.

Just as our Republic was founded on the value of an individual

Really? Individual rights were important, but if you read through the Declaration of Independence it seems our founding fathers were much more concerned with home rule, constituent assemblies, business and trade, and subduing “merciless Savages” .

And then there is the matter that for about a half-million residents of the “Republic”, their only value as an individual was what they could fetch at a slave auction. Samuel Johnson summed up the cause well: "How is it that we hear the loudest yelps for liberty among the drivers of Negros?" Like every country in the world, our history does not always live up to our ideals.

The practical problem we face in 2004 is that we've created an underclass of citizens dependent upon government...stopping that cycle and the unending wave of pork is going to be the toughest challenge.

Not sure who you mean by this “underclass”, I wouldn’t call cotton farmers or tobacco farmers members of the underclass, but they are certainly dependent on government subsidies, government export initiatives and government-enforced protectionist trade policies (in the case of cotton). Or do you mean red-states like Mississippi (those cotton farmers again), Oklahoma and Alaska that depend on wealth transfer via federal taxation from hard core blue states like Massachusetts, New Jersey and California?




[Edited 2004-08-27 23:56:13]

Bush has sold some very aggressive tax and spending policies based on the assertion that those policies would improve the economy.

Good grief. Bush's tax cut was minor, not "very aggressive." And clearly his spending policies reflect political expediency, not what is good for the nation as a whole. The Medicare drug benefit was merely to gain the votes of old geezers, for example.


Discounting the spike from 1942-1946, government spending as a %GDP was actually less during the ultra-Keynesian period of 1934-1950 than it was during the anti-Keynesian era of 1981-1990.

Well, duh! Government has been increasing almost every single year after FDR left office. Reagan couldn't really genuinely cut off the welfare queens because he had to deal with a Democratic-controlled Congress who regarded those welfare queens as their voting constituents.


I’m sure you know Hayek and Mises better than I do, but I wasn’t aware that they had any problems with sales tax and other consumption taxes, which are all of course double taxes.

All taxes are a drag on the economy. There is no such thing as benevolent taxation that does not reduce economic output in some way.


Or do you mean red-states like Mississippi (those cotton farmers again), Oklahoma and Alaska that depend on wealth transfer via federal taxation from hard core blue states like Massachusetts, New Jersey and California?

Cut taxes and everyone will be better off. Mississippi has had the poorest population in the state of the union for a long, long time. They survived before FDR and LBJ, somehow. Just because there are a bunch of rich white folks in Massachusetts is not going to change that.

"Interesting point. Does you "reasoning" (for lack of a better word) apply to the swift boaters, too?"

It just might, it j u s t might.   Though I really don't care either way about the swift boat discussion.

Username: N6376m
From United States, joined Aug 2003, 1760 posts, RR: 22
Reply: 30
Posted Fri Aug 27 2004 19:07:04 UTC+1 and read 187 times:
Who are these 10 Nobel Prize winning economist? Have they ever run an organization themselves or do they just make their living writing about what others do?

You know the old cliche about those who can do and those who can't teach.

Does anyone have a link to the article?

-76M

Let's examine this post a little more carefully. I remembered a post a while back about other Nobel laureates endorsing Kerry, so out of curiosity, I went back to take a look at it. Can be found here:

https://www.airliners.net/discussions/non_aviation/read.main/582678/4/

In that thread:

Username: N6376m
From United States, joined Aug 2003, 1760 posts, RR: 22
Reply: 9
Posted Tue Jun 22 2004 14:54:42 UTC+1 and read 379 times:
Note that not a single one of these has a Nobel prize in economics. What does that say?

First he implies that non-Economic Nobel laureates can't give the complete picture. In fact, he finds it "amazing" that not one economic laureate signed on. Now, when economic laureated DO show their support for Mr. Kerry, he questions their credibility.

At the risk of interrupting your fun little game with Jaysit (which you can find in the linked thread, as well), please explain yourself N6376m. Do economic Nobel laureated have credibility or not. It seems from the above statements that they had credibility before they didn't have credibility.

Captoveur:

Thank you for more eleqently makeing the point in reply #22 that I was trying to blurb out earlier.

The Kensyans will never admit that their policies where the root cause of the recession and poor economic progress that the US endured during the 1960's and 70's.

Hate to do this N6376m, but since you're so adamant about people answering your questions (see https://www.airliners.net/discussions/non_aviation/read.main/623603/ ), and repeat them until they are answered, hopefully you can answer mine. Lord knows you hate flip-floppers.

Really? Individual rights were important, but if you read through the Declaration of Independence it seems our founding fathers were much more concerned with home rule, constituent assemblies, business and trade, and subduing “merciless Savages” .

Yes, the right of free commerce is certainly a foundational plank in the Declaration of Independence, but you will kindly note that MOST of the Colonial economy was driven by INDIVIDUALS.

Jefferson, Franklin, Adams, and most of the Founding Fathers commented repeatedly on the value of the individual--the fact that a man's work was sacred, his labors should not be violated, and his taxes should not take away the incentive to create goods, services, etc.

If you don't comprehend or refuse to understand that the innate glory of the Founders rested on the INDIVIDUAL, then it will be tough to have any rational discussion of the Constitution.