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Tuesday, November 30, 2010

Accepting the Idea of a General Glut: A Heresy?

I've been going through Roger Garrison's absolutely wonderful Powerpoint presentations on Keynes versus Hayek (how the heck does he do all that stuff, anyway?!), and the process has brought to the fore something that has been in the back of my mind for a while now: Bob Murphy has referred to himself and me as "heretics" for concluding that a general glut is possible, contra some interpretations of Say's Law. But if we are, we are in good company, as Garrison's models allowing an economy to be "temporarily beyond the PPF" are exactly what Malthus and Sismondi were talking about back in the early nineteenth century -- it is possible for a person, or even the people making up an economy in general, to produce at "too high" a rate, in that the production will only be sold at a loss, and people later will regret having worked so much for the meagre benefits received. In fact, Roger and I, in our 2003 paper on the dot-com boom-and-bust, gave specific examples of this (as I recall!), for instance, a software engineer who worked 90-hour weeks at a dot-com startup in anticipation of huge returns when the company went public, only to regret her decision later, when the bust came and made that IPO impossible.

In any case, I thought I was doing pretty well with Powerpoint in preparing my lectures this semester, but Roger's skill blows me away. And he uses Powerpoint in what I think is the "right" way -- to add visual elements to a lecture, not to merely repeat it on screen.

1 comment:

  1. I am not as skilled as Garrison, but I have trained at the master's feet. I'll send you my most animated PP show, and you can see how it's done. (Roger's are so complex that it's hard to reverse engineer them.)

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