Showing posts from November, 2012

Stupidest Legislation Ever?

Certainly not the most evil, but just the plain dumbest? Sullivan details how governments ban the safer e-cigarettes but leave the much more dangerous real ones on the market here .

Why Is "German" So Malleable?

Not the language, but the name for the language. Here it is in a few European languages: German Allemand Tedesco Saksa Njemački Deutsch Vokietijos Tyska By comparison, look at the word for Italian in the same languages: Italian Italien Italiano Itialainen Talijanski Italienisch Italijos Italienska Wow, that is a whole heck of a lot less variation... but why?

Haberler's Summing Up of Austrian Business Cycle Theory

""The most valuable and original contributions of the monetary over-investment theory are (1) the analysis of the maladjustment in the structure of production brought about by the credit expansion during the prosperity phase of the cycle and (2) the explanation of the breakdown as consequent on that maladjustment. But our analysis has also shown that the theory is not in all respects complete. The claim to exclusive validity is open to doubt. It is a little difficult, for example, to understand why the transition to a more roundabout process of production should be associated with prosperity and the return to a less roundabout process a synonym for depression. Why should not the original inflationary expansion of investment cause as much dislocation in the production of consumers' goods as the subsequent rise in consumers' demand is said to cause in the production of investment goods?" -- Prosperity and Depression

Egos and Superegos May Enter Pool, But:


Ever Have Trouble Leaving the Office?

I had a student who requested a meeting today. She was a couple of minutes late, and I had to use the gents, so I stuck a post-it on my door saying "Be right back." When I returned I took down the note, then thought, "Hmm, I might as well save this for future use: I'll just stick it on the inside of my door." The trouble is that now the note is facing in at me, so every time I try to leave the office, I see it and think, "Oh, someone is coming right back here: perhaps I had better wait for them."

Bob Murphy Calls in Airstrike on Berkeley

Brad DeLong last seen cowering in bunker in Tilden Park.

I Am in Shock

I am trying to get ready for a lecture, but I can barely compose myself. On the radio, on the drive in to work, I heard the most stunning news: Lindsey Lohan was arrested! In a bar ! Isn't that the cute little girl from the twin movie? How did she even get into a bar?

Daniel McCarthy Nails the Difference Between Someone Who Loves Tradition and Someone Who Is a Traditionalist

Here : "It’s a tart irony that people who imagine themselves champions of Christian, Western, and American tradition are in fact undermining the pluralism and elasticity that characterize those traditions in practice: conservatism like that is an act of taxidermy, preserving the form while losing the life." I demonstrated this difference vis-a-vis Rome in Oakeshott on Rome and America : the Romans had always loved their traditions. But as those traditions began to slip away, at a certain point, there arose "the traditionalist": the traditionalist did not love Rome's traditions as living, mutable creatures; instead, he wanted to mummify and preserve them unchanged forever. This is like "loving" one's children by killing them at a young age and then embalming them: the impulse, while understandable, is perverse.

Does Haberler Defend Austrian Business Cycle Theory?

The Mises Institute claims the following about Prosperity and Depression : "Professor Gottfried Haberler, an exponent of the Austrian theory, wrote a full and wonderful treatise on the topic... In the course of his narrative, he gives a full and robust presentation and defense of the Austrian perspective..." Is this so? Well, I can certainly say that Haberler takes Austrian Business Cycle Theory as a serious option on the table -- as do I, and as, I think should any scholar dealing with this topic. But is he an "exponent" of it? Does he "defend" it? Let us look at some passages from Haberler's discussion of Austrian cycle theory: "In the specific case of the American boom of 1925-1929, the [Austrian] authors are emphatic that the same thing applies to an expansion which does not lead to a rise in prices, but is just enough to prevent a fall in prices that would otherwise have taken place because of a continuous increase in the volume of pr

Haberler Highlights the Role of Accounting in Austrian Business Cycle Theory

I found this passage very interesting: Bookkeeping is more or less based on the assumption of a constant value of money. Periods of major inflations have shown that this tradition is very deeply rooted and that long and disagreeable experiences are necessary to change the habit. One of the consequences is that durable means of production--such as machines and factory buildings--figure in cost accounts at the actual cost of acquisition, and are written off on that basis. If prices rise, this procedure is illegitimate. The enhanced replacement cost should be substituted for the original cost of acquisition. This, however, is not done, or is done only to an insufficient extent and only after prices have risen considerably. The consequence is that too little is written off, paper profits appear, and the entrepreneur is tempted to increase his consumption. Capital in such case is treated as income. -- Prosperity and Depression , p. 49

Overheard in a Bar

"Man, the night you gave me that ecstasy, I wound up in my apartment, at dawn, hanging upside down from the rafters, watching planes fly by my window." "You're apartment has rafters?" "No!!"

Robert Lucas on the Business Cycle

One of the masterminds of real business cycle theory admits that sometimes financial shocks do matter, here . (Hat tip Ryan Murphy.)

Transcendent Angels Are Not Necessarily Epistemically Arrogant, and Jumped-Up Monkeys Are Not Necessarily Epistemically Modest

One theme running through Brad Delong's posts is that someone like myself or Thomas Nagel, who believes that our reason can (at least sometimes) lead us to objective truth, think we are some sort of omniscient demi-gods, while people like DeLong, who realizes we are just "jumped-up monkeys" making guesses, are epistemically modest. This is nonsense. In fact, I would suggest, it is the idea that the "truth is out there," and we should strive to reach it, that leads to true epistemic modesty, since we are liable to realize just how little of that truth we have actually managed to perceive. After all, it was Socrates, the nemesis of the first sophists (and the argument of DeLong, Kuehn, etc. is just sophistry in modern garb, although, holding philosophy in contempt, they know too little of it to realize this) who decided he might just be the wisest of men because he realized how little he knew. Meanwhile, the idea that it is all just guesses paves the way to arr

Hurry Up and Faint

I'm waiting on the platform for the 4 or 5 express. One 4 train is rolling in immediately, and the sign says another is due in two minutes. So what do New Yorkers do? Shove into the first train until they are packed like... Well, sardines don't even tolerate packing this close: Me? I waited two minutes, and got to sit the whole ride to Brooklyn.

Trying to Clear Up DeLong's Muddle for Him

Previous post , should you want the background here. First, let us look carefully at Nagel's example, and see what he is using it to demonstrate (emphasis mine): "The distinctive thing about reason is that it connects us with the truth directly.... [S]uppose I observe a contradiction among my beliefs and “see” that I must give up at least one of them. (I am driving south in the early morning, and the sun rises on my right.) In that case, I see that the contradictory beliefs cannot all be true , and I see it simply because it is the case. I grasp it directly.... [W]hen we reason, we are like a mechanism that can see that the algorithm it follows is truth-preserving.... Something has... gotten our minds into immediate conact with the rational order of the world.... Rational creatures can... make up their own minds.... It does seem to be something that cannot be given a purely physical analysis and therefore... cannot be given a purely physical explanation. If

That Contradiction at the Heart of My Position... Well, That's My Whole Point!

I am going to rehearse a " tired old argument " one more time, because those it is directed at, when shown that their view is self-contradictory, somehow think the response "Well, that's the whole point!" relieves them of any obligation to clear up the contradiction. Brad Rorty-Kuehn claims "All human knowledge is just heuristic guesses!" Joe Reason responds, "So that claim you just made... that is just a guess as well?" "Of course it is!" "So if I told you I have access to some objective truths, you would regard that as quite possible, correct?" "No way! You are deluded! All human knowledge is just heuristic guesses!" "OK, but a minute ago you told me that proposition itself is just a guess." "Of course it is!" "Well, then, how can you think you can defeat my claim to know some objective truths with a guess that I can't know any?! I mean, I can see you being skepti

What Do You Do, at One Hundred and Two?

Well, if you're Ronald Coase, you launch a new journal !

One of Them Thar Canadian Economists...

gives a very good explanation as to why economists talk about elasticity instead of slope for supply and demand. I had never thought about scaling a demand curve like that before.

Who Said It II?

"The materialist doctrine that men are products of circumstances and upbringing, and that, therefore, changed men are products of other circumstances, forgets that it is men that change circumstances, and that the educator himself needs educating."

Practical Applications of Social Models

Well, the Prisoner's Dilemma is certainly a useful arrow to have in one's quiver: I once had two students whom I knew had cheated on a test, but without any decisive proof. So I called one of them in alone to my office, implied he was the less guilty party, and offered a reduced penalty for a confession. Man, it took the guy about two seconds to choose "defect."

Penetrating the Facade of Business Aggregates

"[We are] not content to focus analysis on the fluctuations of one or two great variables, such as production or employment [but seek] to interpret the system of business as a whole... to penetrate the facade of business aggregates and trace the detailed processes -- psychological, institutional, and technological -- by which they are fashioned and linked together." Who said it? (No googling!)

The Road to Addiction

Let's say a prominent psychologist writes a book with the above title. He is writing it as a warning to casual drug users: "You think you can just use heroin / cocaine / meth recreationally, but what you have done is you have set in motion a process that, unless counteracted, will lead to full-blown addiction." Now, it is one thing to argue, "This guy is overstating the dangers: there is nothing wrong with such usage if it is under control." But it is quite something else to claim he is been proven wrong because some recreational users you know did not become full-blown addicts, and this contradicts the author's claim that full-blown addiction is the inevitable result of any drug usage. Obviously, since he wrote the book to warn recreational users, he did not think there was any inevitability about the matter! And so it is with Hayek's The Road to Serfdom : I have my own criticisms of the book, but can we stop with the canard that Sweden, the UK, D

Notes on the Paradigms of Cyclical Processes

Day and night. The lunar cycle. The year and the seasons. The coming and going of the herds. The flooding of the Nile. Isis and Osiris. Persephone. Aristotle on the prime mover and the cosmic spheres. The "cosmic empires" of Voegelin's work are based on the cyclical pattern.

Former Supply-Side Guru

Bruce Bartlett declares : "For the record, no one has been more correct in his analysis and prescriptions for the economy’s problems than Paul Krugman. The blind hatred for him on the right simply pushed me further away from my old allies and comrades." Meanwhile, talking about blind... well, not hatred, but at least contempt, Bob Murphy takes two completely consistent statements by Krugman, which Krugman himself told us how to reconcile in a blog post, and tries to claim they are wildly inconsistent! Murphy is stunned by "Krugman now saying such threats [from our government's deficit] are impossible according to economic theory," completely ignoring the bit about "for a country in our situation." Because, you know, the US in 2003 was not in the situation the US is now, is it? For instance, the US in 2003 was not in a liquidity trap, which, according to Krugman, it is now. It is one thing to question Krugman's analysis, and, for instance, d

Brad DeLong Jumps the Shark

You see, because he once reasoned wrongly about a situation he found himself in, that proves that Thomas Nagel is dumb! When you find yourself calling one of the greatest philosophers of the last half century dumb, something has gone wrong. And in this case, the problem is that Nagel has trampled upon DeLong's religious faith, which is materialism. This is naturally a shaky faith, since there is not a single shred of evidence in favor of its truth. So when a prominent, non-religious philosopher like Nagel notes that besides lacking any evidence in its favor it seems very implausible, there is nothing for it but to declare him stupid, so he can be safely ignored and the faith can be protected. 

Comments on Poirot

My latest anti-insomnia programming has been ITV's Poirot . Two comments: 1) David Suchet as Poirot is excellent. But Hugh Fraser as Hastings is an absolute disaster, so bad I can barely stand to watch him on the screen. Yes, he is cast as Poirot's Watson, someone of lesser intellect who puzzles over how the brilliant detective arrived at his conclusions. But he is still supposed to be somewhat smarter than a mentally defective baboon, which is about how Fraser plays him. And the range of Fraser's acting abilities apparently extend to one facial expression, of stupid surprise, and one tone of voice, of supercilious vacuity. 2) Two of the episodes supposedly took place in French-speaking countries. This faced the producers with a problem: Poirot's character is somewhat defined by his Gallic-style of speaking English. How should he speak in France and Belgium? And how should the "French" and "Belgians" speak? Normally, I think it is fine for eve

The Real Hot Hand Fallacy Rears Its Head

In ESPN's The Daily Dime , Jim Cavan writes: "The Knicks will and should ride Anthony's hot hand while they can." (No permalink seems to be available.) This is the notion that Gilovich, Vallone, and Tversky debunked. It is certainly out there, and they did a good job debunking it: the hot hand, if it exists, is useless for prediction. There is no sense trying to "ride" it.

How Bad American Politics Have Become

Scott Sumner lets us know . The tax system could be as progressive as Obama wants it to be and as simple as the flat taxers desire. But we can't get there, although, as Sumner notes, other countries have come close. Simple, obvious improvements to policy that ought to please both sides can't get passed, because the special interests are completely in control.

Doomsday Preppers

When we stay in hotels is when my family gets to watch cable, and check the pulse of the nation. A new show we picked up on this last trip was Doomsday Preppers , about apocalypse preparedness fanatics. In the advertisement for the show, one of the "preppers" asks, "Am I nuts, or are you?" The idea is, what if an apocalyptic disaster really does arrive soon? Then who will you think is nuts? Sorry, rugged-looking, goateed, survival man, the answer is, "Still you." People have been predicting end times for a couple of thousand years, and I don't see that your reasons are all that different from what theirs were. If people like you had their way, humanity would have spent the entirety of the last two millennia stockpiling things, and the cable network on which you are appearing wouldn't exist, as well as moveable type you use to spread your ideas, the wood stove you count on heating your home when the lights go out, the cans you are storing in yo

The Holidays Are the Season of Forgetting

Forgetting diary: Brooklyn, Tuesday, Nov. 20: Forgot my hat, somewhere. Brooklyn, Thursday, Nov. 22: Forgot to pack socks, sweats, and flip flops. Forgot the salsa on top of the refrigerator. Norwalk, Thursday, Nov. 22: Stopped to see my cousin. Forgot to get the other hat that I forgot at her house when I last stopped there, one year ago. Georgetown, CT, Thursday, Nov. 22: Stopped to see former co-blogger TT Tom. Forgot to get $80 from him for concert ticket. Old Wethersfield, Thursday, Nov. 22: Dinner with my family. Forgot pyrex dish in which I had brought the stuffing. Southbury, Friday, Nov. 23: Forgot something in the hotel. Not sure what yet, but I know I'll find out soon. Milford, PA, Sunday, Nov. 25: Forgot to bring drill back to Brooklyn.

How Intended Investment Can Fall Short of Investment, Personal Version

I caught and salted 100 cod fish last week. Here is how I allocated them: 20 I planned to eat. 60 I planned to sell on the market to finance other consumption.* 20 I planned to set aside as a store enabling me to work on capital goods in the future, e.g., a better fishing net. Here is what actually happened: 20 I ate. 50 I sold on the market, because, at the price I planned to sell, 50 was all that was demanded. 30 I set aside. My intended investment was 20 cod fish. But I wound up, due to unexpected market conditions, actually saving 30 fish. S = I, always. But sometimes I can include the unintentional piling up of inventories. That might be a problem, depending on whether you think the economy is more dominated by negative or positive feedback effects. * Mainly the high-blood-pressure pills I must take due to eating so much salt cod.

Haberler on Classifying Business Cycle Theories

"The various theories under review here have been examined, as far as possible, under the following heads: General characteristics. Explanation of the upswing (prosperity). Explanation of the upper turning-point (crisis). Explanation of the downswing (depression). Explanation of the  lower turning-point (revival). Reasons given for recurrence, periodicity, etc. International complications." -- Prosperity and Depression , p. 13

Very Naughty, Dr. Murphy!

I wrote : "What I can't figure out how to explain is why there are people saying Keynesianism is all about consumption and takes no account of investment." (Emphasis new.) I.e., I wrote "Keynesianism is not 100% about consumption and 0% about investment." Then Murphy wrote a response as if I had written "Keynesians are totally about investment and never think about consumption." I.e., he wrote "Gene thinks Keynesianism is 0% about consumption and 100% about investment." Any theory of the business cycle really ought to take both consumption and investment into account, don't you think? Wasn't it Mises who kept stressing that the only point of production is consumption? Should we be criticizing him for his silly "consumption-based" economics? UPDATE: Two other very naughty bits in Bob's post: 1) He notes that Keynesians sometimes talk about "the paradox of thrift" and "the marginal propensi

Bumper-to-Bumper as Far as the Eye Can See

On my street: And what are the drivers doing? Honking.

The Romeo and Juliet Fallacy Exposed

"Love" is a famously fuzzy concept. Two people who think they love each other might appear to others to be bitter enemies, while two people might each think they loathe each other, while their friends judge them to be in love but unwilling to admit it. What we need to do is to operationalize "in love" so that we can measure it and use it for prediction. Let us focus in on something people who claim to be in love often say to each other: "I will never leave you." Now, the length of time two people spend together certainly is measurable. Therefore, we will take claims about being "in love" to be predictive statements about the probable duration of time the people said to be "in love" will spend together. Thus, when we test Romeo and Juliet's love, we find their claim to have been in love absurd: they only spent a few hours together in their entire life! Furthermore, let's say we run a test on whether "being in love&qu

Murray Rothbard Is All Washed Up

My daughter spilled on him, but we've cleaned it:

How to Destroy Your Intellectual Opponents in One Easy Lesson

Think of something you don't like. Alex Rodriguez. Macroeconomics. Medicare. Opera. Ice hockey. Hayek's Nobel Prize. Now to deliver a devastating attack on the object of your scorn, just do this: Type the name of the thing, followed by LOL, e.g.: "Hayek's Nobel Prize. LOL." That's it. The simple fact that the letters "LOL" appear after the name of the thing you don't like all by itself acts as proof positive of its worthlessness.

If This Is a Consumption-Based Theory of the Business Cycle...

So, I'm teaching Keynesian economics for the second time. And once again, I'm telling my students that, per Keynesians, recessions occur when intended investment falls short of savings. And the best way to fix this, per Keynesians, is for the government to invest in roads, bridges, parks, education, etc. I'm fine with explaining all that. What I can't figure out how to explain is why there are people saying Keynesianism is all about consumption and takes no account of investment.

What a Messed Up Way to Win!

J.J. Adande writes : "But those were teams that were better defensively, not as dependent on simply outscoring their opponents." The Lakers of old were so good defensively that they could score fewer points than their opponents and still win. But these slackadaisical Lakers of today actually need to outscore their opponents before they record a victory.

Mein Gott, I Wish I Were Freed from Gottfried!

I've just begun reading Haberler's Prosperity and Depression , at the recommendation of George Selgin, and am experiencing the bittersweet feeling I have been disturbed by a few times before: what I thought was an original idea of mine was thought well before I thought it. That is disappointing. On the other hand, the person who arrived at it was a brilliant thinker, so that is reassuring. For instance, Haberler writes: "That by analysing various theories it should be possible to give an explanation of the business cycle which, while leaving some questions open or offering in other cases alternative answers, nevertheless clarifies a number of problems presupposes that the difference between the theories analysed is not so radical as is sometimes believed." -- p. 2 Oy, I thought I was original in concluding this today, but Haberler saw this 75 years ago. Or, on page 6, paragraph 2, he essentially foreshadows the paper Steve Horwitz and I wrote on ideal types a

A Taxonomy of Business Cycle Theories

As part of our research project, my colleague and I are doing a taxonomy of business cycle theories. Haberler famously differentiated between endogenous and exogenous theories of the cycle. But we can add at least two more contrasts, I believe: True cycles versus illusory cycles: Real business cycle theory does not contain any cycles. The illusion of cycles if produced by random shocks with hysteresis. (This is not a criticism of RBC, any more than pointing out the amphibians have no fur is a knock against amphibians!) Minsky's cycle theory, on the other hand, contains a true cycle, since he offers an explanation (true or false is not the point here!) as to why conditions (are likely to) return to a state similar to the starting state of the cycle and then proceed roughly as they did before. Note that "true versus illusory cycle" is orthogonal to the question of "endogenous versus exogenous." A theory of the business cycle based on sunspots is a true cycle

I'm an Idea Man

You really want to stop iPhone theft? Well, stop pussyfooting around with this "Find My iPhone" nonsense. What we need is "Detonate My iPhone." That'll larn 'em.

Although I Meant to Call My Wife...

I called her accidentally. Philosophers, at least analytical philosophers, love little puzzles like this, relating the ideas if "on purpose" and "accidentally" to intentions. What happened was this: I reached in my pocket to grab my phone and call my wife. But, it being a touch-screen smartphone, just picking it up can kick off various activities. And in this case, the activity it kicked off was calling my wife. What interests philosophers here is that a first cut at defining what we mean by "on purpose" might be, "Well, one plans to do something, and then one does it." But here, although I meant to call my wife, and I did call her, I did not call her on purpose. And this points us to a refinement of our definition: "One plans to do something, and then one does it in accordance with the plan ."

Pittsburgh Versus Baltimore

Well, Pittsburgh lost and no wonder: for some reason, they were ordered to appear on the field today dressed as bumblebees. How can a team be expected to win a football game when every play the players' main thought is "I hope no one is watching the game today!"

Carefully Pulling Apart Two Claims About the Hot Hand

Claim one : The idea of a "hot hand" is useless for predicting basketball players' next shot. There is no point in feeding the ball to a player who is "hot," because the fact he is "hot" (if that really has any meaning) has no predictive value as to how his next shot will fair. Tversky et al. have won here! I acknowledge this is true, as I have every time I have written on the topic. Claim two : The notion that players are sometimes "in the zone" is merely a statistical illusion. If you are a player and think you are "hot," you are merely being deluded by your faulty understanding of statistics. As opposed to claim one, people making claim two want to deny that the subjective experience of being "on" has any validity at all. This claim is definitely floating around out there. I post this as Steve Landsburg writes me: "Here's a much simpler model [than yours, Callahan]: "Half the time, players hav

The Hot Hand Fallacy II

I thought it might be useful to create in a simple, model situation in which hot hands do indeed exist but which yields results totally consist with the finding of Tversky, Gilovich, and Vallone on the phenomenon . Let us assume there is a player, Smith, who has genuine hot streaks when she is "in the zone."* She is ordinarily a 50% shooter, but during those times, she shoots 70%. However, how long she will stay in the zone is random, and on every new shot she has a 50% chance of "losing" the hot hand. At the moment she loses the flow, since she loses through some sort of disruption in her concentration,** she only has a 30% chance of making her next shot. It should be obvious that even when Smith genuinely has a hot hand at time x, for any shot at x + 1 there is a 50% chance the shot will go in, which is exactly her normal shooting average. Applying the method and the criterion of Tversky et al. to Smith would yield their conclusion, "the hot hand is an i

Kahneman's Muddles: The Hot Hand "Fallacy"

I'm beginning to detect a pattern of the sort Kahneman likes to find, in his errors. Kahneman talks about times when someone is asked a hard question ("Will Obama win re-election in 2012?" asked in 2011) but substitutes an easier question without realizing it ("What are Obama's poll numbers today?"). Kahneman suffers from the reverse cognitive problem: he asks (or sees someone asking) a narrow question, but when the answer is found, he thinks it is the answer to a broader question. Thus, Kahneman finds the answer to the narrow question , "Do people see patterns in things that aren't really there?" which is "yes," but he thinks he has found the answer to the much broader question, "Is the word more or less orderly than we suspect it is?" Similarly, Kahneman's colleague, Amos Tversky, and two co-authors ask the question, "Does a player having made a series of shots in a row in basketball imply a higher likelihoo

Jets Versus Rams

The question of the day: can mind-boggling incompetence defeat astounding ineptitude?

Kahneman's Muddles: Consistency and Coherence

I'm reading Daniel Kahneman's Thinking, Fast and Slow . It is a very interesting book. When Kahneman is on his own ground, psychology, he seems to be a brilliant thinker. (Not being a psychologist, I feel the need to hedge this with a "seems to be": I'm really not qualified to judge!) I think he probably deserved the Nobel Prize he received. But as soon as Kahneman starts talking philosophy, he begins to make terrible errors: we might say he is suffering from the "illusion of understanding." Let us examine a few of these, starting with consistency and coherence . Kahneman litters his text with statement such as "we are prone to exaggerate the consistency and coherence of what we see," or we "produce a representation of reality that makes too much sense." This is because "we are pattern seekers, believers in a coherent world." At first glance, it might seem that this is just a psychological truth, something Kahneman ha

Teaching Coase

Nick Rowe with some very interesting thoughts on teaching Coase. UPDATE: I stand corrected: the blogger was Frances Woolley, who co-blogs with Nick Rowe. The problem with my original post was I had thought of Nick Rowe as the Canadian economist, and so simply had assumed it was him writing. Now I realize they have at least two up there!

The New Center of Brooklyn


How Most People Evaluate Ideas

Pulled from the comments at Cafe Hayek : "This is awesome, because its what I've believed." Judge ideas by whether they confirm what you think already!

Help the Victims Rebuild... Inland

The victims of Sandy should be helped to rebuild their homes. But for many of them, their should be a string attached: move inland. These storms have been getting worse, and the odds seems to be high they will keep doing so. I don't think it was ever sensible to subsidize beach construction, economically or environmentally. However, it is getting less sensible every year. See the Wall Street Journal on the topic here .

Real Business Cycle Theory: A Gag?

Imagine someone says to you, "I have developed a satisfactory explanation of why sunspots sometimes ebb and sometimes flow at various times." "OK, that's great. And it is?" "Well, see, I looked at ten variables. None of them explain the sunspot cycle." "OK...." "So what explains the sunspot cycle is residuals ! The things that are left out of my model!" I would hope you would dismiss this fellow as a jokester. His model has totally failed to predict sunspots, and what accounts for them is not in his model at all. But when I began reading up on real business cycle theory, I began encountering what seemed to me to be just this sort of explanation for "fluctuations." Surely, I thought, I must not have adequately understood RBC yet: could any serious scholar really advance such a notion? I needed to read more! But as I did, I realized that other serious   thinkers have pointed out just this ridiculous aspect o

Real Business Cycle Theory: A Misnomer?

In my continuing research into theories of cycles in social life, I have been reading up on real business cycle theory, and it seems to me the name is a misnomer. It really ought to be "illusory business cycle theory," as the main thrust of the idea is that there actually isn't any such thing as a business cycle at all: instead, there are a series of exogenous shocks to the economy the give the illusion of a genuine cycle. Nothing returns the system to an earlier state at which a cycle starts over, except that enough random jiggling around, in a system that exhibits hysteresis, will create cycle-like behavior. UPDATE: Noah Smith makes the same point here : there is no cycle in RBC. UPDATE II: Pulled from Smith's comments: "Economists who support RBC could be publicly shamed by those who want to actually do science. UPDATE III: And just to be clear, a model of a "genuine" cycle would be something like the predator-prey model . It is a true cycle

Weber on the Concrete Nature of Historical Concepts

"'Historical concept-formation' does not seek to embody historical reality in abstract generic concepts but endeavors to integrate them in concrete configurations, which are always and inevitably individual in character." -- Max Weber, The Protestant Ethic and the Spirit of Capitalism

Stravinsky on Mussolini

"I don't believe that anyone venerates Mussolini more than I ... I know many exalted personages, and my artist's mind does not shrink from political and social issues. Well, after having seen so many events and so many more or less representative men, I have an overpowering urge to render homage to your Duce. He is the saviour of Italy and – let us hope – Europe." -- Igor Stravinsky, 1930 And what had Mussolini saved Italy from, per Stravinsky? Bolshevism. I note this not to condemn Stravinsky, but to put Mises's remarks on Il Duce in context ( once more ). Many, many people had good things to say about Mussolini in the late 20s and early 30s. Mises had lots of company!

A Rake's Progress

I currently have a student in one of my classes who has a 4 average. No, not a 4.0 average. His average, counting attendance, participation, and a couple of quizzes, is 4 out of 100. The thing is, he had until last Friday to drop my class. But he didn't. Why in the world didn't he? He almost certainly will fail, and get no credit for the class. But if he withdrew, he still would get no credit, but no 'F' against his GPA. I have seen this a number of times. Why do these students stay enrolled?

What the *&#*$ Is This?

I was texting with one of my sisters about Thanksgiving plans. I pocketed my phone. About five minutes later I pulled it out of my pocket to see if I had a new message. Instead, the box where I fill in text was filled with the following -- and it had been empty when I pocketed the phone: Allora frangirumore maggior parte di un test? Colui al quale ore svitai a chi in Afghanistan in assenza un bacio? Dispregiarmi unaqui sono nuovo Trying to translate this from a couple of dictionaries, I get something like: Then breaker noise most of a test? He to whom hours unscrewed to those in Afghanistan without a kiss? Dispregiarmi here are in a new (The above involves breaking a couple of the words up into meaningful component pieces.) OK, what the heck happened here? Auto-correct of nonsensical, accidental typing, you suggest? Well, that would be an excellent explanation... except auto-correct is turned off! (I couldn't get it to stop auto-correcting half in Italian and half in Eng

Elegy for Ron Paul

Well, Lew Rockwell actually made me burst out laughing today: "It seems that the mean-spirited and envious Republicans will finally allow Ron to deliver his eloquent 'Farewell Address.' While it is a so-long to Congress and the various crooks, liars, con men, and clowns who comprise it..." Since Rockwell and Paul have been allies for decades and share much the same views, I think we can assume: 1) Ron Paul thinks that his fellow members of Congress are "crooks, liars, con men, and clowns." 2) Rockwell finds it "mean-spirited" that they have waited so long to give him a platform to call them these names! (Hat tip B-Murph .)

Why Anarchism Does Not Solve the Problem of Coercion: IP Version

Even committed anarcho-capitalists, such as Murrary Rothbard and Walter Block, have disagreed on the propriety of intellectual property laws. (Rothbard thought copyrights were acceptable; Block does not.) So, imagine you and I are such ancaps: perhaps my credo is that copyright is entirely valid, while your anthem is that copyright is theft. I compose an avant-garde, dissonant ballet entitled, say, The Right in Autumn (its subject matter being the decline of the American conservative movement). I copyright the work by registering it with my protection racket agency. But you, as mentioned, have no truck with copyright, and you decide to put the work on at your venue, Théâtre des Champs-Élysées, which you have just opened. I hear about the performance and send my boys around to collect my copyright fee; you meet them in the wings with derisive laughter and call my attempt to charge you "un vero scherzo," telling my lads they have as much chance of collecting as they do of

Miracles of Evolution

I am always stunned at how chickens evolved to have all of their internal organs neatly contained in a little plastic bag in their body cavity. That is clearly a sign we were meant to eat them. Stravinsky, I think, would have liked this.

Phil Lesh Conducts Stravinsky

Welcome to your all-Stravinsky, all-the-time blog! UPDATE II: Screw this autoplay nonsense: Here is a link to the piece if you'd like to hear it. "That was a very exciting experience for me, conducting music that I really, really love: Stravinsky and Elliott Carter." -- Phil Lesh Ken B, your evaluation? UPDATE: Does anyone know how to stop autoplay of this mp3?

Stravinsky Mashup

Well, today, for the first time ever, we discussed Stravinsky on this blog. I came home tonight, and my oldest son, who studies jazz at LaGuardia High School, was the only one around. I said, "Let me show you something." It was a YouTube video of Phil Lesh and Friends, including jazz great Stanley Jordan, performing "Stairway to Heaven" two nights ago in Manhattan. I thought he'd get a kick out of it because of Jordan, because he is a Zeppelin fan, and because the drummer in the band (Joe Russo) is good buddies with my son's drum teacher:  Well, this got him in the mood to hear music on YouTube, and he selected a Phish video. I said, "Do you realize, when you were about ten, you saw Phil Lesh, half of Phish, and Joe Russo all sharing the stage at Bethel Woods?" He didn't. Anyway, then he chose a second video. It was the duo that had been at his school today. The video was of the pair performing... The Rite of Spring : So on the s

An Apology to Carl Scott

I contended that Carl Scott's reaction to Obama's election was over the top. I apologize, Mr. Scott, as I had no idea what over the top meant in this context. Among our old friend Eric Dondero's plans: "Cutting all ties with Democratic family members, friends, and lovers; refusing to work for a Democratic boss; spitting on the ground when a Democrat talks to you; and possibly shitting on your Democratic neighbor's lawn..."

Criminals Is Dumb

So this guy apparently robbed a bunch of homes on Long Island during Sandy. The thing is, he kept going into occupied homes . Thousands and thousands of people had evacuated homes all over the island, and he repeatedly entered homes that had people in them, after which he threatened and assaulted the people. Burglarizing empty houses during a crisis is pretty nasty business. But what this fellow did is both dumber and nastier.

What's in a Name?

You did notice the guy who made off with billions of dollars of his investors' money was named Madoff, right? Well, I was listening to the radio today, and it sounded like they were talking about "General Betray-us." Coincidence, or yet more evidence of cosmic design?

Stand by Your Book, and Tell the World You Love It

I have sometimes seen people saying that I don't "stand by" what I wrote in 2000, or 2004, or some other, earlier time. I find this a truly extraordinary "sin" of which to accuse an author. Things I wrote in the past were not marriage vows or pledges of financial aid or military assistance. They were reports of my best attempts to understand markets or war or politics or society or whatever. Since then, I have kept striving to improve those understandings. When I have done so, I have reported back on how they have improved. Someone who "stands by" everything they wrote a decade ago is standing still, and has failed as an intellectual. These accusations are as though I was a painter who had improved his technique, and then was accused of "betraying" his cruder, earlier paintings.

The Coherence of the Market

"The [substitution] principle states that higher relative prices tend to discourage and lower relative prices encourage the use of a commodity or service. [Demand curves slope downward.] "If the principle of substitution is sufficiently strong, then decentralized markets are reliable tools for allocating output to households and input to businesses. However, in financial and capital-asset markets, in which speculative and conjectural elements are powerful, the principle of substitution does not always apply. A rise in the relative prices of some set of financial instruments or capital assets may very well increase the quantity demanded of such financial or capital assets. A rise in price may thus breed conditions conducive to another such rise." -- Hyman Minsky, Stabilizing an Unstable Economy , p. 106

The Dumbest Club in the World?

Mensa? I'm watching an episode of Columbo which concerns a club that is an obvious take-off of Mensa, and I found myself thinking, "Why in the world would I want to join a club consisting of people who scored very highly on some test, except to boast that I scored highly on that test?" Chess clubs, economics clubs, math clubs, soccer clubs, fishing clubs, group-sex clubs: all of these I understand. But "We-all-scored-highly-on-some-test clubs"? Well, other than ego fulfillment, I don't get it. But I suppose that could be enough. UPDATE: Consider: Would Einstein ever have been interested in joining Mensa? Gödel? Eco? Chomsky? Crick? Joyce? Picasso? Stravinsky? No, real geniuses just roll ahead and do the thing they are geniuses at. Only failed geniuses would bother to take the time to join an organization devoted solely to proving they are geniuses.

The Sort of Person Upon Whom Marx Based His Labor Theory of Value


Jacques Barzun Is Dead

At 105, in case you haven't heard. This remarkable man released one of his greatest works at the age of 93! If you don't know of him, you should . In the above review, we find: "Modern civilization in the West, Barzun ascertained, has lost its way and its purpose, and has thus fallen into decadence. 'The culture,' he wrote, 'is old and unraveling.'" Yes, that is just right. Barzun loved Western culture, but he realized its day is done. The progressives who think they are advancing it while they dismember its corpse and the traditionalists who want to prop the corpse back up and make it repeat the movements it undertook 100 or 200 or 500 years ago are equally deluded.

Filipino Mop, Baby Version

Now, one of the best innovations I have absorbed from my exposure to Filipino culture is the improvement in mopping the floor I have learned. You keep a couple of rags in the corner of the kitchen. Then, when you are cooking or whatever, and you notice the floor is dirty, you spray a little cleaning solution on the floor, and proceed to walk around with the rags under your feet as you work. I'm quite serious, this is a relatively painless way to get the floor clean; much better than getting out a mop and bucket. But now, someone has come up with a way to have your baby do this for you! Yes, this is a serious product! As SNL Weekend Update put it, this is just what you need, if you were thinking, "How can I get all of this dirt and bacteria off of the floor and onto my baby?" UPDATE: Perhaps I was duped: what was a picture of the baby mop last night became a picture saying "I love Gadizimo!" this morning. A marketing ploy -- release a stupid product campaig

The Case for Local Shops

"It is surely the case that 'big box' stores can, owing again to their clout as buyers, deliver a host of manufactured goods at a cheaper price than the petty bourgeoisie. What is not so clear, however, is whether, once one has factored in all the public goods... the petty bourgeoisie provides--informal social work, public safety, the aesthetic pleasures of an animated and interesting streetscape, a large variety of social experiences and personalized services, acquaintance networks, informal neighborhood news and gossip, a building block of social solidarity and public action, and (in the case of the smallholding peasantry) good stewardship of the land--the petty bourgeoisie might not bem in a full accounting, a far better bargain, in the long run, than the large, impersonal capitalist firm." -- James C. Scott, Two Cheers for Anarchism If you have never lived in a neighborhood with a thriving culture of local commercial activity, you will have no idea how differen

A Short Proof of God's Existence

e iπ + 1 = 0

Overheard on the Changing Nature of Special Education

Child: There are lots of special ed kids on the basketball team. Mom: Special ed kids?! They make the basketball team? Child: Not like when you were a kid, mom. They have ADD or behavioral problems, not Down's syndrome. Mom: Are there Down's syndrome kids in special ed? Child: No way! The special ed kids would terrorize them.

Steven Landsburg Says...

Ken B. and I got him right in the great debt war debates. He only wonders whether his argument is an extension of Krugman's argument, or an additional point : he never even contemplates the notion that his argument contradicts Krugman's in any sense.

Targeting an Observational Statistic Changes Its Nature

"Goodheart's law... holds that 'when a measure becomes a target it ceases to be a good measure.' And Matthew Light clarifies: 'An authority sets some quantitative standard to measure a particular achievement; those responsible for meeting that standard do so, but not in the way which was intended.'" --James C. Scott,  Two Cheers for Anrachism , p. 115

Do You See What Is in Our Eyes?

After reading this "the apocalypse is upon us" post from Carl Scott, I'm thinking, "Yeah, I see it: someone has lost it and is about to go postal!"

As Amazed as Whom?

"I'm as amazed as everyone else by the results on Tuesday night." -- Andrew Sullivan Everyone else? Tuesday morning, my wife said to me, "This is going to be really close, huh?" "No," I replied, "Obama is going to win fairly easily." "What makes you say that?" "Nate Silver." It was not merely his predictions, nor even mostly his predictions: it was his extensive explanations as to why his model was getting the results it was getting. They made sense . And they were pretty clearly simply an attempt to get things right, rather than a partisan effort to influence things. Of course it was not certain things would go the way the model said they would. But it was a pretty safe bet. (In case you think this is useless postdiction, I publicly offered to bet Kate Pitrone, who was claiming Romney would win easily, several hundred dollars with odds well in her favor. She declined.)

Our Oldest Enemy?

In 2004, piqued by France's unwillingness to support every crazy war the Bush administration planned to hold, a pair of neocon authors declared that France is " our oldest enemy ." But what did people in the early republic think of the French? Well: "In advance of the fiftieth anniversary of the American Revolution, Congress and President Monroe had invited Lafayette to return to the United States to see how it had grown, and how beloved he still was. It was no exaggeration. During his thirteen-month tour... the last surviving commander of Continental Army troops grabbed headlines week after week. Accompanied by his son, George Washington Lafayette, he was heralded everywhere as 'the nation's guest'... adulatory crowds formed wherever he was spotted. Young ladies competed to set flower wreaths upon his head; balls were held and toasts drunk." -- Madison and Jefferson , p. 594 Conclusion: Neocons are nitwits.

Child Labor

Many defenders of "capitalism" (a contested term, I grant you: we have markets anarchists like Rod Long promoting "markets not capitalism"!) note that child labor was nothing new in the industrial revolution: most children had always worked in human history, from the time they were old enough to do so. But this ignores a huge qualitative difference in what "work" meant: going out to hunt one's own lunch in the wild (go to about 9:10 in the video) is a wee bit different than laboring 14 hours a day in a textile mill or coal mine, because the ruling class had enclosed all of the common land you might have used to go fetch your own lunch.

Who Will Hold Power After Your Revolution?

If your answer is "No one," realize that in actuality, that will mean "No one whom I planned!" Remember Hannah Arendt on the Russian Revolution: "The Bolsheviks found power lying in the street and picked it up."

No Child Left Unquantified

I am often left dumbfounded by folks like those who write for an outlet like The Postmodern Conservative . They generally seem like intelligent people, but then go and get enthusiastic about an empty suit like Mitt Romney. Let's get this straight: I can completely understand a genuine conservative holding her nose and voting for Romney as the less bad of two bad choices. But to declare that Romney made one proud to be a Republican , as an otherwise very bright man like Peter Lawler did?! Romney is perhaps more representative of the modernist, managerial, technocratic elite, the most effectively anti-conservative force in history, than any previous candidate for the presidency. I am as dumbfounded as if Lawler had declared free love the ultimate conservative principle of sexual morality. I was spurred into contemplating this while reading about one of the most unconservative legislative acts of our age, foisted on us by the GOP: the No Child Left Behind Act. The idea that th

Shared Space Traffic

Removing traffic lights can make driving, biking and walking in dense conditions safer... when done properly. Hans Moderman, the pioneer of this concept, did not simply yank the light from the busiest intersection in Drachten, the Netherlands: he replaced it with a traffic circle, a bike path, and a separate pedestrian area. Furthermore, as James C. Scott notes, drivers' increased alertness is "abetted by the law," which penalizes those it holds responsible for accidents. ( Two Cheers for Anarchism)

A Bad Argument for the Virtue of Voting

Here : "The whole strident non-voting blogging and facebooking thing always struck me as perfect for that "Things White People Like" website. After all, the added-to-the-voting-rolls-in-the-last-hundred-years-both-here-and-abroad community is quite decidedly a community of color. There is a genuine racial dimension to this. When you fought for these rights in your lifetime you're not going to be too sweet on the idea that voting is such a bad thing." I am going to give a very similar argument to show how bad the above is. It does not prove voting is bad! It does not say the object of the argument I give is "just the same" as voting! What I am demonstrating is an argument that is just as good as Kuehn's above. So, here goes: "The whole 'don't discriminate against blacks' things always struck us Irish as perfect for that 'Things White People Like' website. After all, we Irish really only got into a position where we

So Nate Silver Was Exactly Right

How many of the people saying he was wildly biased will now recant? My prediction: none of them will. They will simply continue working for Fox News or the Wall Street Journal .

Constants of Human Nature

"Jefferson himself reckoned that one-third [of the University of Virginia's students] could be described as 'idle ramblers.' At length it became clear that alcohol had been smuggled into students' rooms, when someone launched a bottle through a window. Two professors were physically harassed, one of them hit by a rock." -- Madison and Jefferson , pp. 595-596

Voting: The Rational Thing to Do?

A case is made for that here . (Hat tip Daniel McCarthy.)

Moral Principles Are Abstracted from Moral Experience

In Two Cheers for Anarchism , James C. Scott tells the story of a community of French farmers who had, when asked in the abstract, refused to help Jewish refuges from the Nazis. But when faced with actual Jews, they hid and fed them. He concludes: Once the individual villagers had made such a gesture, they typically became committed to helping the refuges for the duration. They were, in other words, able to draw the conclusions of their own practical gesture of solidarity -- their actual line of conduct -- and see it as the ethical thing to do. They did not enunciate a principle and then act on it. Rather, they acted, and then drew out the logic of their act. Abstract principle was the child of practical action, not its parent. -- p. 131

What Is a Constitution?

Let us ask " the Philosopher ": "The constitution [of a polis] is not a written document, but an immanent organizing principle, analogous to the soul of an organism."

Some Days They Are Very Cheery and Helpful

Other days, they just yell at you, or break down in tears when you arrive for support:

Economic Means Versus Political Means

"Political means" of gaining wealth are often contrasted with "economic means": political means involve aggression, while economic means are voluntary. But "voluntary" exchange assumes property rights, which must either be politically established or established by pure force. Note: "politically established" does not necessarily mean "deliberately legislated." It means "established by considerations of justice in the community in question." There is no obvious "matter of fact" about, for instance, just what entitles one to call a piece of land "one's own." Private property in land is a late development in human social life; hunter-gatherers did not have such a concept. Therefore, economic means are derivative of political means.

I'm One of a Kind!

Dr. Pepper is running a commercial showing hordes of people taking off their outer shirts to reveal they are wearing identical t-shirts bearing slogans such as "I'm one of a kind!" Ah, capitalism is so individualistic.

Scott Sumner Profiled

Here . This part puzzled me: "Sumner, who stands with the rounded shoulders of an academic economist." I know lots of academic economists, and have detected no particular propensity to "rounded shoulders"! Now, there are some prominent round bits of economists that they could have noted instead:

Thoughtful Images

You know, like how you planned to be born on your birthday, and how you've scheduled your death, right? This showed up at my door today and it is incredible! They apparently have started putting entire web sites on paper and shipping them to people. One thing about us New Yorkers: you put up a tape telling it's dangerous to go in some area, and we listen. It's tough for me to walk the streets this time of year. All of this gunk starts collecting on stoop railings, and I always feel compelled to lend a hand and clean it off.