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Ralph Musgrave
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The Baumol disease argument is weak. How about this: Productivity in connection with computers has increased at astronomic rates over the last 30 years compared to the equivalent increase for house construction. Ergo everyone should be induced or forced to buy ten times as many computers as they actually want.
Very interesting point by Chris in the above article. It should be possible to test his hypothesis, if only in a rough and ready way, by seeing whether those who have studied science at school or uni are better able to distinguish truth from fiction than those who have studied an arts subject. I suspect they are because those doing a science subject are taught what an experiment is, what statistical significance is, what double blind is, and so on.
“Why have we seen a recrudescence of a discredited and harmful economic ideology? H.G.Wells gave the answer: “Civilization is in a race between education and catastrophe.” I.e. we can educate all we like, but there’ll always be a plentiful supply of bores, idiots, etc on both the political left and right itching to scrub all that “education nonsense”. And then there are religions (no names mentioned) which go in for barbaric practices and ideas straight out of the 13th century.
Toggle Commented Aug 19, 2017 on On zero-sum thinking at Stumbling and Mumbling
Actually the real problem is Owen Jones and his leftie friends whose grasp of economics is so poor that all they've done for the last ten years is ape Tory austerity policies, as pointed out over and over by Bill Mitchell (Australian economics prof).
Also guilty are the significant proportion of economists who supported austerity or at least opposed full blown stimulus. Strangely there's a gaggle of them at Harvard: Kenneth Rogoff, Carmen Reinhart and Alberto Alesina.
Jim, You're spot on. The studies I've looked at which relate types of degree to subsequent earnings have found that arts degrees for males bring no increase in earnings. All other degrees do (i.e. science and vocational degrees for males and ALL TYPES OF DEGREE for females). Incidentally when looking at those sort of studies, see if they control for family background. Half of them don't. I.e. the fact that people with degrees earn more does not prove a causal relationship because kids from stable middle class backgrounds tend to go to university and that type of kid also tends to earn more even if they don't to university.
Toggle Commented Aug 16, 2017 on Job polarization at Stumbling and Mumbling
Capitalism is a system under which one man exploits another. Under communism, it's the other way round. Groan.
Toggle Commented Aug 13, 2017 on Entrepreneurial Marxism at Stumbling and Mumbling
“I’m thinking here of the concept of the structural budget deficit. This is an estimate of how much the government would borrow if the output gap were zero. Conventional wisdom says that the bigger is this structural deficit, the more likely we are to need to tighten fiscal policy.” If that’s what “conventional wisdom” thinks, then CW needs its head looking into. If the output gap is zero, i.e. if we’re at full employment and inflation is not excessive, then whatever deficit obtains at that point must be the right deficit. Thus the idea that in those circumstances we might need to “tighten fiscal policy” makes no sense: if the deficit is right, then it’s right. Obvious innit? Chris then tries to justify cutting that structural deficit in his next sentence. He says “One reason for this is that if the output gap is zero the economy is unlikely to grow quickly, so we can’t rely upon growth to narrow the deficit.” But whence the assumption that the deficit needs to be “narrowed”? To repeat, if the deficit is right, then it’s right. Chris does not seem to have got the point made by Keynes (which has been fully taken on board by MMTers and Positive Money) which is that the deficit needs to be whatever brings full employment (without exacerbating inflation). If that means a deficit of 2% of GDP, so be it. If it’s 4% or 6% so be it. As Keynes said: “Look after unemployment, and the budget (i.e. the deficit) will look after itself”.
Tut tut. Criticism of Tories by Labour supporters (and vice versa) is not allowed because it might "divide our communities". More lessons in dick-head leftie logic coming up shortly.
Guano wants a “model of the UK outside the Single Market”. I know of one: it’s called “New Zealand”. NZ has a similar land mass to the UK. Its people speak English. It’s standard of living is higher than the UK. It does little trade with any country within 2,000 miles (the average distance the exports and imports to Australia and New Zealand travel is around 6,000 miles). And the clincher is that NZ’s population is around 5 million. So on that basis, if the UK had no net immigration for decades, and instead had net EMIGRATION, it might eventually enjoy the same standard of living as NZ. Or perhaps I’ve missed something.
We have a recession sparked off by excessive and irresponsible borrowing. The solution adopted is to cut interest rates so as to encourage more borrowing. So far so logical. But when that proves inadequate, QE is adopted so as to encourage even more borrowing. Even more logical. And more logical still: the people who advocate more borrowing as a solution to excessive and irresponsible borrowing simultaneously give somber warnings about excessive household debts, i.e. borrowing. Or as I think Positive Money put it, “The Bank of England’s solution to excessive household debt is more household debt”. The moral: we can all sleep soundly in the knowledge that the great and the good know what they are doing.
Toggle Commented Jul 20, 2017 on Asymmetric policies at Stumbling and Mumbling
TheBirmingham6, So what's wrong with the British National Party? If you're one of those leftie thickos who thinks the BNP is racist, how do you square that with the fact that Labour + Tories helped kill a million Muslims in Iraq for no good reason, while the BNP (like UKIP) opposed the war from day one? According to my calculations, that makes the Labour Party about a million times as racist as the BNP, though I'll settle for a hundred thoussand times or even ten thousand times, out of the kindness of my heart. You clearly have no grip on reality.
Toggle Commented Jul 20, 2017 on On BBC bias at Stumbling and Mumbling
Dipper, I’m fascinated by your claim that FGM is “a cultural practice that has a long history that predates the religion of Islam.” Can you quote any sources to back that up? I’ve never come across any mention of FGM in Ancient Rome, Ancient Greece, Ancient Egypt, etc. But I’m not the world’s expert. I look forward to seeing your evidence. I agree that FGM is not a strictly Islamic practice: as I understand it, some Hindus go in for it as well. Thus my above description of FGM as a “delightful practice introduced to the UK by Islam” (and being pedantic) could be re-worded as “delightful practice introduced to the UK by Muslims and Hindus”. As for the fact that acid attacks took place in Victorian Britain, are we supposed to believe that white yobbos who have recently taken to doing acid attacks are all keen students of Victorian social history and decided to adopt this practice as a result? I suggest it’s a thousand times more likely that the yobbos saw stories in tabloid newspapers about Muslims doing acid attacks and decided to do likewise. Rawliberal, “Brighton Rock” is a novel. The fact that an acid attack takes place in the novel is not brilliant evidence that acid attacks were common in the relevant country at the relevant time. I’m sure there are loads of novels in which people travel to Mars. Far as I know, no one has yet travelled to Mars.
Toggle Commented Jul 18, 2017 on On BBC bias at Stumbling and Mumbling
Dipper, Far from "neutralising" my point, that Guardian article CONFIRMS my point. The Guardian, as is entirely predictable, tries to argue that acid attacks are an inherently British vice by citing attacks that took place in Victorian times. Presumably you and The Guardian also think that having children work down coal-mines is a British vice in 2017. The reality, as you'll be well aware, though you're probably too dishonest to admit it, is that acid attacks were unheard of for several decades after WWII. Then Muslims arrived with their various delightful cultural practices (female genital mutilation, murdering cartoonists, etc etc)and acid attacks took off.
Toggle Commented Jul 17, 2017 on On BBC bias at Stumbling and Mumbling
A nice example of BBC bias done via FAILING to mention relevance facts: it's a report on acid attacks which fails to mention that this one of the delightful practices introduced to the UK thanks to Islam.
Toggle Commented Jul 17, 2017 on On BBC bias at Stumbling and Mumbling
“..higher interest rates. A mix of these plus looser fiscal policy would have some advantages” says Chris. Not a brilliant argument because it can easily be reversed: “lower interest rates (maybe negative rates) plus tighter fiscal policy would have some advantages” – which I’m sure it would. So the big question is: what’s the OPTIMUM rate of interest. Well economists long ago worked out the optimum price for anything, including the price of borrowed money: it’s the FREE MARKET PRICE, absent any compelling reasons for thinking social costs or benefits are so large that we need to overrule market forces - as is the case with for example kid’s education, which is available for free, or alcohol, which is only available at way above the free market price. Unfortunately, that conclusion leads to a problem as follows. The rate of interest is heavily influenced by the amount of government borrowing, and how much interest government pays for that. So what’s the optimum amount of government borrowing, and what rate of interest should it pay? Milton Friedman and Warren Mosler claimed the answer is “zero”: i.e. they argued that governments should offer no interest at all on their liabilities. That question is too complicated to answer here, but I think Friedman and Mosler were right, or least nearly so: i.e. there is no excuse for government paying more than one or two percent. Certainly government should not pay anything above the rate of inflation. Next, in advocating public sector pay rises, Chris needs to prove that public sector employees are paid less that private sector employess for given skills etc. Far as I know they aren’t. Blissex, your claim that interst rates are high is odd. Far as I know they’re lower then they’ve been for a good 30 years.
Toggle Commented Jul 5, 2017 on Money tree economics at Stumbling and Mumbling
Also journals and newspaper editors always prefer authors at the top of the profession – especially household name authors – because there is absolutely no way relevant editors can be criticised, however dreadful the content of articles or papers. For example when a Financial Times editor publishes a boring, content free article by Lawrence Summers (and normally they are pretty much content free), how can the editor possibly be criticised? I mean Lawrence Summers is former president of Harvard among other senior positions!!! End of argument. An additional factor at play here is that 95% of the population attach far more importance to fame than to ideas. New ideas require readers to actually THINK (shock horror). 95% of the population will run away screaming if told they’ll have to endure mental strain.
Toggle Commented Jun 29, 2017 on Selecting for groupthink at Stumbling and Mumbling
Nice article, except that Chris argues in his last two paras that we should increase growth IN ORDER TO help cut the debt/GDP ratio. Strange argument, given that growth is desirable ANYWAY. The crucial question is: what’s the optimum size of the debt. Or more accurately (as MMTers keep pointing out) what’s the optimum amount of “debt plus base money”. As Martin Wolf, MMTers and a few others have explained, debt and base money are essentially the same thing. Since the rate of interest paid on “debt plus base” varies with the amount of D+B, there are a range of choices: from “zero interest” and a smallish amount of D+B (favoured by Milton Friedman and Warren Mosler (founder of MMT)) to more D+B accompanied by a higher rate of interest. The Friedman & Mosler zero rate has plenty going for it. Though you could argue that locking up that money in the form of government bonds (i.e. paying SOME INTEREST) is desirable because it makes it more difficult for the private sector to go mad and spend all that money at once (given an outbreak of irrational exuberance) which would result in hyperinflation. I quite fancy the latter argument, while paying a rate of interest that is less than inflation. That way government profits at the expense of its creditors. So I vote for a rate of interest on the debt of around 1% and whatever D+B that results in.
Toggle Commented Jun 23, 2017 on A case against austerity at Stumbling and Mumbling
The normal assumption in economics is that GDP is maximised when prices (including the price of borrowed money) is at its free market level, except where there are obvious social reasons for thinking otherwise, as is the case for example with kids’ education. Given that government borrowing has a huge influence on interest rates because of the sheer amounts that governments borrow, that begs the question as to what level of government borrowing would give us a genuine free market rate of interest. Well Milton Friedman and Warren Mosler (founder of MMT) said the answer is “nothing”. I.e. they argued that governments should not borrow. The arguments here are complicated, but for various reasons I think Friedman and Mosler are right, or at least nearly so. And that in turn means that to maximise GDP, QE or “monetary activism” to use Chris’s terminology should be taken even further: i.e. government should print more money and eventually buy back the entire national debt. That is obviously at variance with Chris’s above conclusion. Of course the latter policy would increase inequalities, but much of that profit would be taxed away via capital gains tax.
Toggle Commented Jun 16, 2017 on The landlords' party at Stumbling and Mumbling
Doug, Thankyou for your statement of the blitheringly obvious. So I'm supposed to wipe the Iraq war from my mind or something am I? I've no intention of doing so any more than I intend wiping the holocaust from my mind. Of course you could argue that far more people were killed in the holocaust than in the Iraq war (about six times as many). But then the holocaust was about six times as long ago. So speaking very roughly, there's a valid parallel there. Moreover, the people being killed in London and Manchester in 2017 are being killed in part because of the blundering buffoons at the top of the Labour and Tory parties. Another reason not to forget.
Toggle Commented Jun 6, 2017 on Under-estimating Corbyn at Stumbling and Mumbling
So we're all happy to vote for one of the racist parties (Labour or Tory) which helped kill a million Muslims in Iraq are we? How super.
Toggle Commented Jun 6, 2017 on Under-estimating Corbyn at Stumbling and Mumbling
Wren-Lewis's arguments are flawed. See: As for the idea that immigration promotes growth, the Optimum Population Trust puts the optimum UK population at HALF its present level, from I conclude that several years of net EMIGRATION would be beneficial.
Toggle Commented May 30, 2017 on Unsayable truths at Stumbling and Mumbling
Basic budget rules: 1. Given a recession, run a deficit, as prescribed by Keynes. And as Keynes said, it doesn’t matter whether the deficit is funded via new money or new national so called debt. 2. If interest demanded by debt holders is anything significant, tell them to get lost and fund the deficit via freshly printed money. 3. When the economy gets to full employment, the latter printing will prove inflationary. So rein it back. And finally Keynes’s claim that “The only chance of balancing the Budget in the long run…” is very questionable. Reason is that in an average year, there will always be a deficit. Reason is thus. If the national so called debt and stock of base money are to remain constant relative to GDP (which in the very long term they do) then given inflation and economic growth, the real value of the latter stocks relative to GDP will fall. Ergo those stocks have to be topped up. And the only way of doing that is via a deficit. In fact if you do some back of the envelope calculations which should take you all of 30 seconds, you should come to the conclusion that the deficit in an average year will be roughly 2% of GDP. Incidentally the sum of the latter two stocks is sometimes referred to MMTers as “Private Sector Net Financial Assets”. It’s an important quantity.
Toggle Commented May 10, 2017 on The "fully costed" fallacy at Stumbling and Mumbling
Chris seems to have missed out another very simple reason for May's wholly dishonest immigration target: it attracts or keeps anti-immigration UKIP & Tory voters voting Tory. Likewise Corbyn will make similar fatuous and dishonest promises about "controlling immigration" or some such with a view to attracting those voters to Labour.
Chris says “people deceive themselves in order to better deceive others..”. That’s 90% right. What’s missing is the point that to make a point in as persuasive a way as possible, you must seriously believe in it yourself (even if your intellect is telling you the point is BS). Actors make that point when they say (apparently) that to act out a part as well as possible, the actor must actually become the character they are acting.
Toggle Commented May 2, 2017 on Costs of overconfidence at Stumbling and Mumbling