tag:blogger.com,1999:blog-7225373.post734165294128274393..comments2024-02-29T03:34:23.190-05:00Comments on Who Were the Sea Peoples?: Nick Rowe's Model Cannot Prove Anythinggcallahhttp://www.blogger.com/profile/10065877215969589482noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-7225373.post-11915399124907486312012-01-06T19:33:14.074-05:002012-01-06T19:33:14.074-05:00OK. If this entire model is based upon consumptio...OK. If this entire model is based upon consumption debts (no capital), then there simply is no way to pay down the debt, nor is there a way for subsequent cohorts to have a higher standard of living than the very first. <br /><br />Essentially, every generation will need to consume more and more into perpetuity.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7225373.post-82762770913436465742012-01-06T19:18:22.262-05:002012-01-06T19:18:22.262-05:00Gene: see my comment on your most recent post, whe...Gene: see my comment on your most recent post, where I spell it out a little more.Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-7225373.post-60326218377020740312012-01-06T18:56:31.839-05:002012-01-06T18:56:31.839-05:00But Nick, cohort C's apples are not even buds ...But Nick, cohort C's apples are not even buds yet. It is simply physically not possible for cohort A to eat them, anymore than they can eat their own great-great-great-great-grandchildren, or the favorite newly created food of the year 2500!gcallahhttps://www.blogger.com/profile/10065877215969589482noreply@blogger.comtag:blogger.com,1999:blog-7225373.post-1542223568699067832012-01-06T18:53:12.911-05:002012-01-06T18:53:12.911-05:00Gene: there were no new apples.
Cohort A got to e...Gene: there were no new apples.<br /><br />Cohort A got to eat some of cohort B's apples, and cohort B got repaid by eating some of cohort C's apples. And then cohort C didn't get repaid, because the government decided to pay off the debt.<br /><br />Bob Murphy lays out a neat numerical example:<br /><br />http://consultingbyrpm.com/blog/2012/01/future-generations-will-be-indebted-to-me-for-the-clarity-of-this-exposition.htmlNick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-7225373.post-83748747728840781822012-01-06T18:03:05.404-05:002012-01-06T18:03:05.404-05:00"Wasn't that the point (of his analysis)?..."Wasn't that the point (of his analysis)?<br /><br />No.<br /><br />"My question: where's the capital coming from?"<br /><br />In Rowe's model, there is no capital.gcallahhttps://www.blogger.com/profile/10065877215969589482noreply@blogger.comtag:blogger.com,1999:blog-7225373.post-50687355057949086822012-01-06T08:47:50.265-05:002012-01-06T08:47:50.265-05:00"was make the government a magic box that suc..."was make the government a magic box that sucked the apples out of existence"<br /><br />Wasn't that the point (of his analysis)? My question: where's the capital coming from? Surely, debt is not the source of capital... Somebody must produce enough to pay it back, and that requires capital.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7225373.post-13563843553899690252012-01-06T03:11:11.212-05:002012-01-06T03:11:11.212-05:00"The apples he later talks about are dollar b..."The apples he later talks about are dollar bills, not the numeraire good."<br /><br />And that's just totally irrelevant: he is trying to show C is hurt because they can consume fewer apples. But they can't consume fewer apples, because there is no place for the apples to go but in there mouths, but the very logic of his model. What he did was make the government a magic box that sucked the apples out of existence.gcallahhttps://www.blogger.com/profile/10065877215969589482noreply@blogger.comtag:blogger.com,1999:blog-7225373.post-65029937298315099952012-01-06T03:04:50.867-05:002012-01-06T03:04:50.867-05:00But Ryan, where did the new consumption apples com...But Ryan, where did the new consumption apples come from? And where did the taxed apples go away to? You haven't addressed these questions at all!gcallahhttps://www.blogger.com/profile/10065877215969589482noreply@blogger.comtag:blogger.com,1999:blog-7225373.post-35287721823814613522012-01-06T03:01:55.154-05:002012-01-06T03:01:55.154-05:00I think Rowe made a mistake, but it's much mor...I think Rowe made a mistake, but it's much more minor than you think. The apples he initially talks about are apples because he wants to emphasize that these are real resources and that everything is perfect and frictionless.<br /><br />The apples he later talks about are dollar bills, not the numeraire good.<br /><br />So it was technically wrong to slip between the numeraire good and money, but it doesn't make what he is saying incoherent. I can pretty easily read what he is saying and imagine how it would play out in the math and a typical neoclassical model.<br /><br />I don't think he should have played fast-and-loose with those words, but the effects he is talking about are real. I am also pretty sure that he was phrasing it the way he was to help communicate more effectively with neoclassicals, not to confuse.Anonymousnoreply@blogger.com