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I admit I have no context here, but Mises would fail rhetoric 101 with this paragraph: 'Attempts to carry out economic reforms from the monetary side can never amount to anything but an artificial stimulation of economic activity by an expansion of the circulation, and this, as must constantly be emphasized, must necessarily lead to crisis and depression.' This is clearly circular. Since monetary stimulus is artificial, it will be unsustainable. He has to prove the first statement. 'Recurring economic crises are nothing but the consequence of attempts, despite all the teachings of experience and all the warnings of the economists, to stimulate economic activity by means of additional credit' Begging the question: what is so bad about additional credit? Why does it lead to crises?
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Funnily enough, they do tend to be. For instance, I once read Greg Ransom arguing that evolution was unfalsifiable on a CT comment thread. Bob Murphy is also a creationist, though I can't say I'm aware of his views on Darwin.
Toggle Commented Nov 10, 2011 on Keynes vs. Hayek at Economist's View
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'The 1% have an enormous material interest in making the tax system less progressive.' You know, I'm not 100% sure of this, because: a) The guys at Angry Bear have calculated a robust empirical link between higher marginal tax rates and economic growth. If growth is higher then post tax income may actually end up higher. b) Imagine a tax cut for the rich as simply giving them all $x. Surely you'd expect inflation to erode much of the gain, particularly as the goods they buy become more inaccessible to ordinary people?
Toggle Commented Nov 4, 2011 on We Are the 100% at Grasping Reality by Brad DeLong
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If they had a laundry list of demands it would defeat the entire point of the movement. Michael Hudson has a great video on this:
Gee, how about repeating what we did the last time we had massive austerity and needed job creation: reducing short and long term interest rates down to 2-3%. Unemployment didn't even budge post WW2.
Rognlie is an unfortunate example of a great intellect pinned down by the flaws in textbook economics. Here he seems to cling to the textbook vision of banks as intermediaries between borrowers and lenders, rather than the reality (they create assets and liabilities simultenaously through double entry bookkeeping, and they are taken out of circulation when paid back). There is no question os savings being needed to fund investment as investment creates its own savings; the relationship is tautological. The interest rate determines rather than is determined by the level investment. That's why is should be as low as possible.
Toggle Commented Oct 6, 2011 on links for 2011-10-06 at Economist's View
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'The point of this distinction is not merely philosophical: it suggests that long-term investment behavior will sometimes be irregular, unstable, and given to doldrums and stampedes. ...' Yes and his main policy conclusion was low long term interest rates to induce investment and reduce volatility! Why can't more people realise this :(
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Some facts: UK abandoned Gold Standard on Sept 19th, 1931 UK annual inflation starting 1931: -4.3%, -2.6%, -2.1%, 0.0%, 0.7% UK RGDP growth: -5.1%, 0.3%, 1.1%, 3.8%, 6.8%
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Chris, It has been empirically and theoretically demonstrated that the MW does not increase unemployment. The infallible Robert Vienneau has a blog post on this: For far more detailed treatment see 'Economics for the Rest of Us' by Moshe Adler.
@Jimmy Hill Well, empirical evidence suggests higher tax rates are actually good for growth. The Angry Bear guys have a fair few posts on this with strong supportive evidence: You should be able to find the others from here.
Toggle Commented Oct 2, 2011 on The growth raindance at Stumbling and Mumbling
The thing that concerns me about this is Krugman's framing. 'In a liquidity trap' wage cuts do not increase employment. Putting aside the liquidity trap debate: cutting wages never increase employment. Keynes assumed flexible wages in Chapter 19 of TGT and still came to that conclusion (in fact, he concluded sticky wages/prices nullify the business cycle by keeping AD buoyant).
Toggle Commented Sep 30, 2011 on "Wages and Recovery" at Economist's View
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I don't really buy the 'this is a special case' arguments put forth by Cowen etcetera, mostly because every crisis seems to have people saying that. My contribtion would be: - LVT. Spurs production, raises revenues, can't be passed on. What's not to like? - Low long term interest rates with another BW style stabilisation scheme. This is the best path to inducing investment. - Writing off loans/writing them down to ability to pay. Private debt is too high.
@ Nick '2) Financial metaphors are always simplistic (though Ed M was also using the credit card analogy today on Marr programme, though in different sense from the "maxing out" point of view). However, there is a perfectly literate argument that government's must live within their means, which means borrowing in times of recession, but also means that in times of boom if you want to increase government spending you also need to increase taxes to pay for it. You can't just borrow through good times and bad.' Labour's borrowing was modest - they were well within EU limits and George Osborne actually said he was going to increase spending. The bond markets were never panicking and we've had debt far far higher than now. And you are wrong about 'living within our means'. Because we measure debt as a % of gdp, in a growing economy the government can and should be in the red the majority of the time. Also: the government can simply print money to pay down debt. (If 'inflation' pops into your head then you misunderstand the nature of our banking system).
George, yes. That was the main aim of the original 90% income tax on the top 1%:
Toggle Commented Sep 20, 2011 on Three Laffer curves at Stumbling and Mumbling
4. People's pretax income is quite clearly NOT their individual effort. Even after you 'take' 50% of it their post tax income is far higher than if you simply dumped them in a field and told them to labour. so 2) is a false premise.
Toggle Commented Sep 8, 2011 on The morality of 50% at Stumbling and Mumbling
ortega, I couldn't really follow your comment. Were you being sarastic or not? If not, please could you clarify why it's OK for an authoritarian structure to exist in the marketplace?
Toggle Commented Sep 6, 2011 on Hierarchy & hypocrisy at Stumbling and Mumbling
'Governments’ promise to maintain full employment in the 50s and 60s led to over-investment and wage militancy and hence to inflation and a profit squeeze in the 70s which led in turn to mass unemployment.' Whilst union militancy and low unemployment played a part in the stagflation, I would dispute your overall explanation. I think financial deregulation and the resultant credit expansion, dismantling Bretton Woods & buffer stock schemes and supply side shocks were the real culprits.
Toggle Commented Sep 5, 2011 on Revenge effects at Stumbling and Mumbling
It is fairly obvious at a basic level that bosses have the power over their workers, as capital is scarcer than labour - indeed, capitalism requires an army of unemployed workers to function. For example, can anybody argue with a straight face that people have control over the amount of hours they work? It is decided not by workers or even employers, but by capital, which will want them as long as possible, lest the state intervenes. So to dismiss complaints about work on the grounds that employees have entered a voluntary agreement is incredibly weak.
Toggle Commented Sep 5, 2011 on Hierarchy & hypocrisy at Stumbling and Mumbling
ABC doesn't fit the crisis well at all, because it was a story of excess consumption and asset price inflation. Austrian theory is based around malinvestment in capital goods. Hayek tried to get around this by redefining consumer durables as capital goods, but, erm, you can't do that. I believe Jean-Baptiste Say would have said 'I agree with Marx, Malthus and Keynes': Right now he'd be saying 'how the hell can you idiots believe general gluts are impossible when there's clearly one in front of you?' Or something.
Toggle Commented Aug 31, 2011 on Hayek, Marx and crises at Stumbling and Mumbling
Really interesting post, Chris.
Toggle Commented Aug 25, 2011 on Humans and incentives at Stumbling and Mumbling
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Aug 25, 2011