This is reason's Typepad Profile.
Join Typepad and start following reason's activity
Join Now!
Already a member? Sign In
reason
Recent Activity
P.S. There is also a general bias in their charts from using the 10 year forward inflation expectations, because the whole period was a period of general disinflation, so that the expectations trailed the reality.
1 reply
Ben, to be more precise, I think there is a tilt on the blue line. It needs to be a 1-2 percentage points lower at the start and 1-2 percentage points higher at the end to allow for general changes in behaviour.
1 reply
P.S. I'm also really puzzled why they think that ten-year inflation expectations are the correct deflator for current year nominal wage changes. Do they think that average people take ten years to spend their current income or that firms take revenue from current production for ten years?
1 reply
Ben, let me put this a slightly different way - what IS the blue line, versus what is it being used to represent? Think about it! Do you see the problem? (It is being used to represent the average propensity of people to join the labour force - forgetting that real wages actually change that for a minute.) But notice that it doesn't try to model how that propensity might realistically change over time - it just looks at average for subpopulations and (for a very diverse time period) and projects them on to changing population ratios. For instance - do they really believe that voluntary early retirement will remain constant or that women's workforce participation rate is relatively constant (hence the 80's result). Their method of adjustment is kind of crazy - typical mathiness if you like - doing something technically complex but logically nutty.
1 reply
Ben Groves - so you believe their blue line? I don't, not for a minute.
1 reply
P.S. By the way you should notice that the only statistic they use in a raw form (without substantial adjustment) is the actual E/P ratio. None of the adjustments they use are "normal" (in the sense of being common and uncontroversial). The data really has been tortured. I don't know what controls they have used to test how sensitive their conclusions are to the particular adjustments they have made, but you do get a little suspicious that they kept trying until something produced the conclusion they wanted.
1 reply
P.S. The AHE anomaly continues through the early Obama years, and then disappears. What is wrong with that series? Should it be used at all?
1 reply
I still wonder if somebody knows the data well enough to explain the very odd AHE data during the Bush years. It is very anomalous in every sense. The Bush years are the only time when AHE substantially exceeds ECI & CPH, and the statistic they use for labour market pressure PEAKS, during the Bush years, despite everybody's experience of the time (and the contrary indications from ECI & CPH). Can anybody explain this?
1 reply
"My point is that they don’t change the conclusion that the no income tax states have substantially outperformed the high income tax states over every period since about 1970" .. but they haven't (unless "every period" actually means several carefully selected periods).
1 reply
So in summary, this looks like a classic case of what Robert Waldmann describe as "torturing the data enough that it admits to anything".
1 reply
P.S. Looking once again at the data - the AHE data for the Bush years really does look extraordinary. What gives?
1 reply
Another way to say what I was saying above is that they are implying that the NAIRU (with unemployment defined broadly) is rising. Do they really believe that - in the current deflationary environment?
1 reply
To explain why I think the finely defined cohorts is a dirty trick - you have to understand that workers in the market are in competition with one another and some workers drop out of the labour force because of discouragement. So that some cohorts (for cultural or prejudice reason) will have more workers struggling to find a job because they will in some sense be less "competitive" - and so at some level of unemployment will suffer at a higher rate. But extrapolating that the unemployment rate as whole should be higher because there are more of the group that historically were losers in the contest, is a fallacy of composition. You are projecting the distribution of unemployment on to the level of unemployment. It really is a dirty trick.
1 reply
Isn't the only foolproof way a genuine helicopter drop? You don't need inflationary expectations when you have actual inflation.
1 reply
I have some problems understanding why in the Bush years AHE is shown as growing faster than the ECI & CPH. That seems counterintuitive to me. What am I missing?
1 reply
Having read the fine print, I see what they have done. They notice that blacks and Hispanics have higher average un(der)employment levels and are becoming an increasing share of the population and so extrapolate that un(der)employment levels should be rising for the population as a whole. A really dirty trick in my mind.
1 reply
rayward, in fact uncertainty, properly understood is an argument not for allowing markets to do their magic, but for intervening to reduce the uncertainty.
1 reply
Second Best, yes you are correct, the idea of countervailing was an important, and unfortunately to some extent forgotten contribution. But then economics is no longer political-economy is it? rayward, I have no idea what you are trying to say. Mathematics is not always certain (you can use mathematics to model fractal systems which are anything but certain). In fact, as I see it the big gap in economics is in the treatment of uncertainty. It keeps saying it is doing things that it is not (like for instance calling basically deterministic models stochastic).
1 reply
What on earth is the blue line supposed to represent? Employment was too high during the W years? Seriously?
1 reply
Note also the odd sentence: " the union of one man and one woman as the DEFINITION of marriage". Why do think semantics are so important? (Do they think that laws are immutable and so the only way to change the law is to control the semantics?)
1 reply
"authentic economic progress for working Americans" - maybe the think (contrary to all evidence) that the gold standard would ensure that. Note the odd word "authentic".
1 reply
Here we have it again (the last point): "•Women exhibit higher risk aversion." (Meaning women EXECUTIVES, exhibit higher risk aversion). So the real question, is why is risk taking seen as necessarily a good thing (especially in executives who are agents for owners). If owners crave risk they can gamble (otherwise known as using leverage). Professional trustees should in most circumstances avoid unnecessary risk.
1 reply
I must say I enjoyed reading and listening to Galbraith, but if I am honest, I will also say that I didn't learn much from him. His most important contribution is the sentence "The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness." That clings as true today, as it ever did, and should always be used as a guide towards an appropriate level of scepticism.
1 reply
@Steven Clark I don't have much time for Nozick (basically, I think the static and dynamic concepts of justice he uses are different and there is no reason to think that starting "justice" and "justice" in transfer are sufficient to ensure continuing "justice". The whole think is full of very weak concepts, even if you ignore that the preconditions are impossible.
P.S. That should read there is no well specified and usable general equilibrium theory of economics and if there was the last thing it would do is explain trade.
1 reply