Bubbles

by Henry on May 1, 2013

Clive Crook tells us again that Paul Krugman is shrill and angry.

[Krugman] is wrong about many of the people who disagree with him and about the best way to guide opinion. He’s enormously influential with those who need no persuading, which is to say not very influential at all. He would have more influence where it would actually make a difference if he developed—or at least could feign—some respect for those who aren’t his disciples. … Krugman says his opponents are motivated by politics. …. Talk about lack of self-awareness. Does Krugman imagine that he isn’t motivated by politics? A line has been crossed when the principal spokesmen for contending opinions have no curiosity whatsoever about their opponents’ ideas and radiate cold, steady contempt for each other. … Meanwhile, for the side that thinks it has the better arguments, naked contempt for dissenters is plain bad tactics. That isn’t how you change people’s minds.

Clive Crook previously on self-awareness of one’s own political motivations.

We floating voters see things differently. We approve of consensual politics, thinking that it delivers better policies. And we believe this for two main reasons. First, good policy involves trade-offs. … Second, good policy requires stability
the message to the electoral centre was consistent: Mr Obama would have let the left have its way if he could. What he should have done – and what he ought to do from now on – is simple. Instead of blessing leftist solutions, then retreating feebly to more centrist positions under pressure, he should have identified the centrist policies the country could accept and advocated those policies. … The left will tear its hair over another surrender and the centre will note where the president’s sympathies actually lay.
He should have chosen centrism unreservedly – as many voters believed he had promised during his election campaign. Then he could have championed, as opposed to meekly accepting, centrist bills that maintained the role of private insurance in healthcare and a stimulus that included big tax cuts. … Had he owned and campaigned for those centrist outcomes, the left would have been no angrier than it is anyway. The anger of the left, like the anger of the right, is always simply on or off: it cannot be modulated. But this fury could then have been co-opted as Mr Obama’s and the Democrats’ best asset going into November – proof to centrists and independents that the president was on their side.

Clive Crook previously on how one should be curious about the ideas of dissenters, rather than treating them with naked contempt.

The Democratic party’s civil libertarians seem to believe that several medium-sized US cities would be a reasonable price to pay for insisting on ordinary criminal trials for terrorist suspects.
Nothing short of the Scandinavian model (plus stronger unions, minus the commitment to liberal trade) will ever satisfy the Democratic left. Its role, its whole purpose, is to be betrayed. So betray it, Mr President, and start leading from the centre.

I think it would be fair to say on the evidence that Clive Crook fancies himself as a centrist only interested in the pure and disinterested exercise of good policy judgment, but is in fact strongly (and even irrationally) motivated by his partisan animus against the left. I think it would also be fair to say that he’s at the ‘naked contempt towards dissenters’ end of the spectrum himself when those dissenters have the poor judgment to be leftwing.

Crook closes the column by suggesting:

if Krugman got out of his bubble a bit more, he’d find that the other half of the country contains no more than its fair share of knaves, fools and lunatics—and a lot of thoughtful, public-spirited Americans whose views on the proper scale and scope of government are different from his, yet worthy of respect.

Perhaps Crook might consider taking this advice himself. I’d actually be willing to help set it up for him in the unlikely event that he did.

{ 150 comments }

1

Sebastian H 05.01.13 at 6:40 pm

You’re both right.

2

Ronan(rf) 05.01.13 at 6:42 pm

“He would have more influence where it would actually make a difference if he developed—or at least could feign—some respect for those who aren’t his disciples..”

A lot is hanging on this claim, and it doesn’t appear to be entirely true (? – afaik)

3

laconoholic 05.01.13 at 6:45 pm

People who have to demand respect for their arguments generally have arguments which fail to demand respect for themselves.

4

DCA 05.01.13 at 6:47 pm

Thanks for the “several medium-sized cities” quote–I remember being repulsed by this when it came out, but a memory glitch made me attribute it to Megan McArdle.

5

Steve LaBonne 05.01.13 at 6:59 pm

People who have to demand respect for their arguments generally have arguments which fail to demand respect for themselves.

And in the case at hand, those arguments are often flagrantly dishonest and thus worthy of contempt, not of mere lack of respect.

6

Substance McGravitas 05.01.13 at 7:07 pm

he’d find that the other half of the country contains no more than its fair share of knaves, fools and lunatics

I am not illiterate, no, not even a little bit
Nothing like an idiot, get it?

7

phosphorious 05.01.13 at 7:15 pm

Anyone who claims to be a moderate these days is a conservative. Anyone who complains about “tone” is a conservative.

It’s a better litmus test than Global Warming Skepticism.

8

In the sky 05.01.13 at 7:20 pm

I think the point of Henry’s post is to show Crook as hypocritcal, rather than to defend Krugman. That’s fair enough.

But FWIW Crook does have a point. Krugman has lost a lot of respect from academic economists for only portraying one side of the picture. For example, regardless of your political views, the only honest answer to how big is the multiplier is “We’re not sure. Estimates vary.”

9

Steve LaBonne 05.01.13 at 7:27 pm

Krugman has lost a lot of respect from academic economists for only portraying one side of the picture.

Given all the flagrantly venal right-wing hacks in their profession who seem to have retained “a lot of respect from academic economists”, I’m underwhelmed by this observation.

10

Cranky Observer 05.01.13 at 7:35 pm

In the Sky @ 7:20,
Whence then comes the certainty in backing “austerity” policies?

Cranky

11

In the sky 05.01.13 at 7:37 pm

Given all the flagrantly venal right-wing hacks in their profession who seem to have retained “a lot of respect from academic economists”, I’m underwhelmed by this observation.

Uh huh.

Among PhD economists, Democrats outnumber Republicans three to one.

84% of professional tax economists think the income distribution in the US is too uneven. This contrasts with about 60% of the population of the US.

Sure, right-wing hacks dominate our discourse.

12

William Eric Uspal 05.01.13 at 7:40 pm

“Krugman has lost a lot of respect from academic economists for only portraying one side of the picture.”

Can you substantiate this claim?

13

Steve LaBonne 05.01.13 at 7:41 pm

Sure, right-wing hacks dominate our discourse.

Reading comprehension fail. That bears no resemblance to what I said. What I did say is, that any economist who has “lost respect” for Krugman but not for, say, Mankiw, has some pretty peculiar standards for granting “respect”.

14

In the sky 05.01.13 at 7:42 pm

Whence then comes the certainty in backing “austerity” policies?

Honest answer: I don’t know if there is such certainty. There may be; I haven’t really heard it. For example, Justin Wolfers (bloom.bg/100F9dp about 2mins 40s in) says it depends on whether the money is spent on good ideas or bad ideas. Seems sensible.

15

Kalkaino 05.01.13 at 7:44 pm

This is just factually incorrect: “if Krugman got out of his bubble a bit more, he’d find that the other half of the country contains no more than its fair share of knaves, fools and lunatics.” The “other half” has much more than its share, is, in fact, almost entirely composed of knaves, fools and lunatics, or as I prefer to think of them, boobs, rubes, bigots, and exploiters of same.

Cold, steady contempt, if I may borrow a phrase, is what decent people have for today’s self-annointed “conservative.”

16

In the sky 05.01.13 at 7:46 pm

Can you substantiate this claim?

Not really, unfortunately. I’m basing it on comments during research seminars and conversations in elevators.

Let me be clear: his academic work is excellent. And everyone agrees he has good intentions. Many would agree with him politically. But he has lost respect/the reputation of honesty for becoming selective in what he tells the public.

This is not an enormous criticism.

17

Cranky Observer 05.01.13 at 7:47 pm

In the Sky @ 7:37,
And the corresponding percentages for economists holding significant policy-making positions in the USG, EU, Wall Street, and the major US & UK political parties’ policy arms? Why the “pivot to the deficit” and the drive for “fiscal reform” while 27% unemployment is ignored?

Cranky

18

In the sky 05.01.13 at 7:51 pm

And the corresponding percentages for economists holding significant policy-making positions in the USG, EU, Wall Street, and the major US & UK political parties’ policy arms?

No idea, I’m afraid. As they’re a very “select” sample, I wouldn’t be surprised if they had “select” political persuasions.

19

MPAVictoria 05.01.13 at 8:03 pm

“Justin Wolfers (bloom.bg/100F9dp about 2mins 40s in) says it depends on whether the money is spent on good ideas or bad ideas. Seems sensible.”

Good Ideas: Massive tax cuts for the Rich!
Bad Ideas: Anything else

20

In the sky 05.01.13 at 8:14 pm

William Eric Upsal: you asked for me to back up my statement that he has lost respect. Although far from perfect, here’s one example in the tone of I’m getting at: http://marginalrevolution.com/marginalrevolution/2012/01/krugmans-response-to-alex.html

Good Ideas: Massive tax cuts for the Rich!
Bad Ideas: Anything else

Around 80% (can’t remember the exact number off-hand) of economists think the deficit should be lowered by higher federal taxes. If you’re not joking, you have a breathtakingly skewed opinion of economists.

21

Ronan(rf) 05.01.13 at 8:16 pm

“Let me be clear: his academic work is excellent..But he has lost respect/the reputation of honesty for becoming selective in what he tells the public”

I don’t understand this complaint though, all specialists who blog/write for newspapers etc simplify for (or are ‘selective in what they tell) the public. I don’t see why Krugman should be held to a higher standard, if his academic work stands up

22

BJN 05.01.13 at 8:43 pm

I think that that is because Krugman was an academic economist and parlayed that into becoming a public intellectual, who comments on the popular economic discourse and opinions of policymakers. He mentions this in a recent blog: http://krugman.blogs.nytimes.com/2013/04/28/knaves-fools-and-me-meta/

He doesn’t always pull out the greek letters, but as far as people occupying the space that Krugman does at the level he does, absolutely no one comes closer to the beliefs of your colleagues than him. If they’re disappointed that his new album is totally mainstream, then tough. I’ll take Krugman’s overemphasis on his certainty over a thousand Clive Crooks.

23

Bloix 05.01.13 at 8:49 pm

“portraying one side of the picture” = being right.

Krugman is not trying to persuade people who are paid to pretend to be persuadable (e.g., Clive Crook). He is trying to inform people who are already sympathetic to his world view but are more or less ignorant of economics and thus are easy to bamboozle by people who are paid to appear to be reasonable and authoritative (e.g., Clive Crook). Crook would like him to shut up because he’s making Crook’s job harder.

24

js. 05.01.13 at 8:52 pm

Around 80% (can’t remember the exact number off-hand) of economists think the deficit should be lowered by higher federal taxes.

Where are you getting these numbers from? You’ve made a few such claims—any links with evidence?

25

dm 05.01.13 at 8:55 pm

Even if Mr. Crook had it right (and as a regular reader of Krugman, I don’t think he does), he ought to just accept the fact that sometimes in life *sshole’s will turn out to be right. It happens. Judging by the volume of reaction he generates in the media, Krugman is in fact one very influential *sshole at the moment. For Crook to argue otherwise is desperation.

In any case, Krugman’s contempt for his critics is fully justified. He is trying to counter political messaging with data and objective analysis while making his arguments accessible to a broad readership. His style was strongly influenced by the run-up to the Irag war where all objective analysis was swept away by the tsunami of dis-information from the Bush administration. One lesson is to keep pressing the attack long after his critics are in retreat to hold people accountable for mistakes that have destroyed peoples lives.

26

sean matthews 05.01.13 at 8:55 pm

My first reaction is to wonder who would bother to pay attention to Clive Crook anyway, but I find my second more interesting: it is to ask what happened to the Clive Crook who used to write for the FT, whom I remember as a reasonable, intellectually coherent and honest person – someone you might disagree with, but nevertheless someone you would take intellectually seriously, which he isn’t anymore.

27

Ronan(rf) 05.01.13 at 8:55 pm

I remember this from Crooks a number of years ago

http://www.foreignpolicy.com/articles/2007/06/11/think_again_europe?page=full

28

Donald Johnson 05.01.13 at 8:56 pm

Krugman just replied–too lazy to link.

In the sky–what have Krugman-criticizing economists in those elevators and seminars been saying about the Reinhart/Rogoff paper? I mean before recent events. And on Krugman, what specific errors or misleading statements has he made according to these elevator conversations? I read the Cowen piece you linked to–he wanted Krugman to paint a sympathetic portrait of expansionary austerity and why people might believe it. But maybe Krugman didn’t think there was any good case to be made. At any rate, professional economists shouldn’t need Krugman to change his rhetorical strategy in order to determine how strong his position is.

29

P O'Neill 05.01.13 at 8:58 pm

The idea that Krugman doesn’t have influence on people who don’t agree with him is hard to reconcile with the European Commission feeling sure enough of their ground to engage in a tweet war with him less than 2 months ago — suggesting that his attacks had hit home. And that was right before the Commission made a complete hash of Cyprus, but of course all kept their jobs.

30

Jeffrey Davis 05.01.13 at 8:59 pm

There’s a cottage industry among the right wing trying to discredit Krugman. (So he has that going for him.)

Is there another non-elected official who draws that much fire? A friend of mine told me that the way to judge a politician was by his enemies.

So, 3000 cheers for Paul Krugman.

31

lemmy caution 05.01.13 at 9:00 pm

32

Bruce Wilder 05.01.13 at 9:17 pm

Clive Cook: . . . the other half of the country contains . . . a lot of thoughtful, public-spirited Americans whose views on the proper scale and scope of government are different from his, yet worthy of respect.

I’ve long had contempt for the conservative libertarian pretense that they want to have a principled debate on the proper size and scope of government, as if those could be objectives or values, of substance. Accepting that false frame for discussion is to lose the debate before you even open your mouth, let alone your ears. You cannot possibly persuade someone, when they aren’t willing to accept a framework of terms that encompasses their actual desiderata.

33

In the sky 05.01.13 at 9:38 pm

I don’t understand this complaint though, all specialists who blog/write for newspapers etc simplify

Understood, but it is degree of intensity rather than binary in nature. Someone mentioned Mankiw earlier. I’ve rolled my eyes a couple of times at what Mankiw has blogged. (Obama’s personal finances? Come on, Greg.) Krugman is worse.

Where are you getting these numbers from? You’ve made a few such claims—any links with evidence?

Certainly. There was a survey of the political beliefs of members of the American Economic Association ~4 years ago, and the National Tax Association published a similar sort of survey of its members a couple of months ago.

In the sky–what have Krugman-criticizing economists in those elevators and seminars been saying about the Reinhart/Rogoff paper?

I’m not a macro guy, but I never noticed much discussion. My sense of it was that it was an interesting correlation, but nobody ever took it as causal/well-identified. People talked about “This Time Is Different” much more.

There are also mundane background things at play. It was published in the AER May issue. Everyone in the profession knows that the May edition is a summary of the annual conference and is not peer-reviewed. Consider it a magazine, if you like. This professional subtlety doesn’t translate to journalists. (Or, it seems, to politicians.)

Looking over the last couple of paragraphs, another example of mundane background stuff is my distinction between “an interesting correlation” and “a well-identified relationship”. These two things are a world apart to economists, but maybe not to the public.

And on Krugman, what specific errors or misleading statements has he made according to these elevator conversations?

He’s far too smart to make any glaring errors or specifically misleading statements. Firstly, they’d get picked up by the army of right-wing hacks wanting his blood. Secondly, he’s honest enough to accept facts, so doesn’t speak pure nonsense. Nonetheless, the overall impression he gives is skewed. My very well educated (but non-economist) brother is biased by him, for example. To re-use my government multiplier example, a few months ago my brother said “There’s plenty of evidence that the multiplier is greater than one.” True. Equally, there’s plenty of evidence that it’s less than one.

Perhaps given the existence of the like of the Heritage Foundation and Fox News, Krugman’s approach is the right thing to do. It remains selective.

I read the Cowen piece you linked to–he wanted Krugman to paint a sympathetic portrait of expansionary austerity and why people might believe it.

I linked to that piece for its general idea rather than specific content. There are at least two critiques of Krugman. The first is that he is rude. The second, which is more important, is that he is not even-handed. There is no need to be even-handed about expansionary austerity, since the evidence is now mounting that it’s BS. However the lack of consensus means there is a need to even-handed about (i) the effects of government spending on GDP; (ii) the effects of government spending on employment; (iii) the effects of taxes on innovation; (iv) fiscal policy at the zero lower bound of interest rates; (v) the risks/benefits of taking more debt when Europe’s currency is volatile; etc etc. Personally, I side with Krugman on just about all things; but there is uncertainty there, and he gives the unfair impression that it’s all pretty simple and clear.

34

Sebastian H 05.01.13 at 9:41 pm

“I’ve long had contempt for the conservative libertarian pretense that they want to have a principled debate on the proper size and scope of government, as if those could be objectives or values, of substance. “

The proper scope of the government can’t be an objective or value of substance? So if the government wanted to say ban all abortions you would say what?

35

Medrawt 05.01.13 at 9:42 pm

Bruce Wilder @32 -

Indeed, but I think it’s one of the fundamental faultlines in American discourse right now: a belief that it is an inherently positive good for government to be small and constrained, creating the perception that people who disagree with that belief must believe that it is an inherently positive good for government to be large and empowered, and a refusal to accept that the parameters liberals consider in their opinions usually don’t take the size of government as an end in itself. (But divides like that are why I think political debate between people with broadly different political attitudes is largely a waste of time, a belief I developed after spending several years earnestly reading “serious” conservative blogs in the name of intellectual honesty.)

The argument there, particularly the part you quote, also is the kernel of what’s so dumb about Crook’s position: I don’t care about the good faith of “a lot of thoughtful, public spirited Americans whose views on the blah blah,” because they don’t know what they’re talking about. Crucially, neither do I. My insight into macroeconomics is almost worthless*. So is most everyone else’s, regardless of political allegiance. And it’s apparent that most of the political commentary on the issues Krugman focuses on in his column is worthless and mendacious, and not even capable of sustaining the other side of the reasoned empirical debate Crook “wants” to see. So instead he calls liars liars. Good for him. If his academic reputation suffers, so what? He’s already a professor at Princeton with a Nobel Prize. Maybe Krugman has more groundbreaking academic work inside him, but I’m happy with the proposition that he makes a greater contribution to the overall good by intemperately calling liars liars and annoying his colleagues (if that’s what he’s doing) than not.

* The worth of my insight being: “You keep saying you want austerity. I am pointing at countries that have recently done austerity. Please explain why you want what they’ve got.”

36

Substance McGravitas 05.01.13 at 9:53 pm

So if the government wanted to say ban all abortions you would say what?

I don’t think that’s much of a scope argument if the premise is that abortion is murder.

(To avoid misunderstandings I should mention that I am a fan of Henry Morgentaler.)

37

Hugh Loebner 05.01.13 at 9:57 pm

I am not an economist, but from what I have read it seems to me that Krugman has been dead on in predicting the failure of “expansionary austerity, ” the lack of inflation, the depressed interest rates of bonds, etc.

The refusal of his detractors, or those espousing opposite opinions, to acknowledge that they were wrong is telling.

When Krugman writes something, he always provides the data behind his argument.

38

MPAVictoria 05.01.13 at 10:41 pm

“Equally, there’s plenty of evidence that it’s less than one”

Really? Is JQ around as I would love to get his opinion on this.

From my, non economist, perspective Krugman has been right about nearly everything and his opponents have been wrong. Since they can’t beat him on the facts they have switched to a tone arguement.

39

Bruce Wilder 05.01.13 at 10:46 pm

In the sky: Krugman has lost a lot of respect from academic economists for only portraying one side of the picture. For example, regardless of your political views, the only honest answer to how big is the multiplier is “We’re not sure. Estimates vary.”

Several years ago, Clive Crook figured in a clash between Paul Krugman and Robert Barro, in which the size of the multiplier was one of the issues.
http://www.theatlantic.com/business/archive/2009/02/dismal-science-revisited/500/

A non-economist might get away with, “Not sure. Estimates vary”, because it might be difficult to muster the critical thinking necessary to sort out the estimates, and arrive at an informed assessment. An economist, though, ought to be able to sort it out, and be able to say, first of all, what is meant by “multiplier” and, secondly, which range of estimates is credible, and which are not. It’s the job of the economists — at least those, who specialize in macro policy — to do this.

Now, I will grant you, that many academic economists do not accept that separating truth from fiction is part of their job description. They think economics is a range of religious faiths, and the closest thing they can imagine to an even-handed or objective view is a kind of solipsistic ecumenism: all theories are true, or at least useful, sometimes, and it is a matter of taste, how one picks, chooses and applies. (This kind of weak-mindedness may be more common, left-of-centre than right, for whatever that’s worth, in explaining why many economists can propound a right-wing orthodoxy in the classroom and vote Democratic.) There’s no point in asking a theologian-economist for an opinion, let alone “an honest answer”. Essentially a noise trader in academic argument, he doesn’t know what “an honest answer” would be.

As a matter of theory, there’s a profound division, between those, who interpret “multiplier” (and macro theory, generally) quantitatively, and those, who interpret “multiplier” (and macro theory, generally) qualitatively. Among the former, and in the mainstream these are mostly the New Keynesians, the quantitative interpretation of “multiplier” is by how much the general (or aggregate) rate of economic activity will increase in response to an increase in the rate of spending. If the government chooses to spend an additional $1, by how much will overall activity in the economy increase. Will it be the amount of the purchase, $1 — a multiplier of 1? Or will the multiplier be larger than that, because the people, who receive that additional $1 as income, turn around and also spend part of their increased income? Or will the multiplier be smaller than $1, because the government’s purchase displaced part or all of someone else’s intended purchase? Did the government get to the store and buy that quart of milk on the shelf, and consequently, when Joe Blow came in to buy the quart of milk, it was gone, and he made no purchase?

The quantitative economist’s “honest answer” — at least their first-order answer — ought to be that it will depend upon context: will the monetary authority accommodate the additional spending with expanded money supply? Are there idle and unemployed resources available that can be committed to additional production to satisfy the demand implied by the additional spending? If all the cows are doing their level-best to produce milk, and the government to get a dollar to buy a quart of milk has to tax Joe Blow a dollar (because Ben Bernanke is being tight-fisted at the Fed), essentially to prevent Joe Blow from being able to buy that same, scarce quart of milk, then the multiplier will be very low, or close to zero, meaning that an additional dollar of government spending reduces private spending by the same amount. On the other hand, if the unemployment in the economy is high, and the monetary authority is printing money like crazy (figuratively speaking), then the multiplier will be very high — more than 1, certainly, and possibly close to 2, if unemployment is high enough and monetary policy loose enough.

So, the “honest answer” is NOT simply that estimates vary, but that estimates will vary predictably with context, and plausible estimates will be high in a context of high unemployment and very low policy interest rates. An economist, who subscribes to the quantitative interpretation, who estimates a multiplier of less than one for a context of high unemployment and interest rates approaching the zero-lower-bound, is mistaken or lying.

Doing the estimate may still be worthwhile, because some kinds of spending may have a multiplier than others. People will spend a higher percentage of the additional income that spending generates, or spend that income more rapidly. But, the theory is pretty clear about what range of estimates to expect in a particular context.

Krugman, who is very much a conventional Keynesian, and thinks of the multiplier in strictly quantitative terms, is perfectly justified in being outraged by economists, like Barro, who seemed to be determined to obfuscate the issue. (I’m referencing the controversy Crook was involved in, which I cited earlier.) For Barro, to claim that he’s estimated the multiplier for additional government spending at the height of WWII, amidst super-high employment and rationing of all basic commodities and consumer goods, and that should be taken as an accurate estimate for our context, or to claim that he couldn’t possibly estimate the multiplier for New Deal spending a decade earlier — that looks like intellectual dishonesty, because it is intellectual dishonesty, or determined stupidity of a very high order.

40

nick s 05.01.13 at 10:52 pm

Clive Crook: Bobolicious.

41

nick s 05.01.13 at 10:55 pm

here’s one example in the tone of I’m getting at

Ah yes, from the highly-respected Marginal Revolution, online home of the Koch Foundation For Ethnic Restaurant Studies.

42

Marius 05.01.13 at 10:58 pm

In the sky @ 16: “This is not an enormous criticism.”

I suspect that if I trot through the interwebs to a blog titled, “The Conscience of a Liberal,” I’m not going to find peer-reviewed, even-handed commentary on the macroeconomic issues of the day. Even if the author leads a double-life as a peer-reviewed economist. Having said that, I’d agree that more even-handedness (as opposed to less) would be desirable for me as a lay consumer of interwebs hearsay, argument, and speculation. I don’t think it’s debatable, though, that more descriptive & predictive ability is even more desirable. More of both would be even better.

What I find striking, though, is the degree of attention paid to the even-handedness of a Princeton prof with a column/blog on the prominent-but-not-exactly-objective NYT, while I’ve heard little more than crickets about the failure of the entire economics profession to regulate conflicts of interest.

One has to search for explanations (from economic historian Alfred Coats) about why they failed to do so: “The AEA needed no special code of ethics because the canons of correct professional practice were too obvious to require specification.” That sounds even-handed, but I guess the important question is whether the “too obvious” explanation is correct.

I have my own suspicions about whether conflicts of interest are “too obvious” to need regulation (and about those portrayed in Charles Ferguson’s documentary), but I would think the failure to regulate conflicts of interest would generate more pub than the even-handedness of Krugman. I guess not.

In any case, I guess I can agree with In the sky @ 16 and Steve LaBonne @ 9 that, in the great scheme of the interwebs, observations about Krugman’s even-handedness aren’t exactly front page news.

43

QS 05.01.13 at 10:58 pm

My understanding of the economics academy, from reading Eric Helleiner and others, is that neoliberalism supplanted Keynesianism as the dominant paradigm thirty years ago. Ergo, my a priori assumption is that his pushing Keynesian solutions in the media would not win him the respect of the academy. To which, I reply: why should we care what the economics departments of America think post-2008, post Inside Job, post-Rogaine and Bravehart? Only those who think that the “truth” contains both sides of an argument–the “centrist” fallacy–would give a hoot.

44

chris 05.01.13 at 11:00 pm

#34: The proper scope of the government can’t be an objective or value of substance? So if the government wanted to say ban all abortions you would say what?

That’s a discussion of a *specific* thing the government could do or not do. “Size and scope of government” is a rhetorical trick intended to do precisely the opposite — reduce government to an amorphous, homogeneous mass that you can only have more or less of. And less is better, so don’t worry about all the individual things government could do or not to, just have less government, more freedom.

People who say this rarely turn out to actually be in favor of shrinking the part of government that locks up stoners. They are even more rarely in favor of shrinking the part of government that locks up murderers. Almost everyone, if backed into a corner, will admit that government has *some* legitimate functions, yet they are not necessarily willing to discuss government in terms of specific actions being good or bad.

Government should be as big as it needs to be to do the things that it needs to do, and no larger. All useful political debate is inevitably going to be at the level of deciding which specific things government should or should not do. Attempting to invoke sticker shock about the total size of government never sheds light on such an issue, it’s only ever an attempt to duck the details with sloganeering.

#35: Indeed, but I think it’s one of the fundamental faultlines in American discourse right now: a belief that it is an inherently positive good for government to be small and constrained, creating the perception that people who disagree with that belief must believe that it is an inherently positive good for government to be large and empowered, and a refusal to accept that the parameters liberals consider in their opinions usually don’t take the size of government as an end in itself.

Yes, that’s the next step after sweeping the details under the rug: strawman your opposition as having an equally absolutist position in the opposite direction.

To be fair, in some cases I think this isn’t consciously dishonest — it’s more like a mental impairment. Some people apparently actually *cannot* understand that some things government might do are different than other things government might do, and that people might have different opinions on those different things because they are different. If only those two polar opposite positions are even possible, then anyone not with you must not only be against you, they must specifically believe the exact opposite of what you believe, not something more moderate or complex.

Those people are merely wrong. It’s the con men practicing affinity fraud on the simplicity addicts that really deserve our contempt. And Krugman’s too. Long may he fulminate.

45

Bruce Wilder 05.01.13 at 11:08 pm

I should probably say something about economists, who interpret the multiplier and macro theory generally, qualitatively, as I put it. This is basically the position of mainstream conservative economists of the New Classical or Real Business Cycle schools — the people Krugman calls, “freshwater”. Krugman has been pretty clear that he thinks this part of the profession has opted to enter a dark age of ignorance and stupidity, where Keynes was “wrong”, and that’s all anyone needs to know about Keynes, end of story.

When I say, “qualitatively”, what I mean is that they are not focusing their theoretical analyses on what the quantitative effects of policy, on whether unemployment is 6% or 8%, or GDP growth is 2% or 3%, might be. Their concern about policy is whether policy is qualitatively, pareto-improving; that is, does a policy intervention make us better off. They take it as a given that the market economy is a self-equilibrating mechanism that is always tending to optimal results in this best of all possible worlds, but in the spirit of inquiry, are willing to allow for the possibility that policy might compensate for some “market failure” or another (such as wages that are sticky downwards, because of “inflexible” labor markets — because isn’t it obvious that falling wages would be a great pareto-improvement!?).

A quantitative multiplier is scarcely credible, in the framework of this kind of thinking, because the self-equilibrating economy is always right. If there’s high unemployment, there’s a good reason for it, which the economist will think of real soon now. (How do you feel about the idea that a whole bunch of people got tired of working and decided to take a vacation? No? Hmm. Give me a few more minutes to think of something. Recalculation! Do you like the ring of that?)

A qualitative multiplier is more in the nature of a metaphor, a stand-in for the economist’s political judgment about the efficiency of government and the desirability of government spending, generally. The multiplier is bound to be less than 1, because governments tend to pick lousy projects and even when the government, by chance, picks a good project, they muck it up and waste a lot.

The qualitative and quantitative multipliers are truly incommensurable. But, it doesn’t stop some very confused discussions, in which economists of different persuasions talk past one another.

As social science, the economics of the proponents of a qualitative multiplier isn’t worth spit, but it is well-funded, because it serves the interests of some very rich and very powerful parasites.

46

In the sky 05.01.13 at 11:09 pm

So, the “honest answer” is NOT simply that estimates vary, but that estimates will vary predictably with context, and plausible estimates will be high in a context of high unemployment and very low policy interest rates.

Well Bruce, that has certainly softened my cough! You’ve resolved an enormous and enduring academic puzzle, all by yourself.

And you didn’t even have to read the literature, or nay bother cast a scornful eye o’er the data. Oh, what a scholar.

(PS I’m out. Ciao, folks.)

47

Barry 05.01.13 at 11:39 pm

In the sky: ” I’ve rolled my eyes a couple of times at what Mankiw has blogged. (Obama’s personal finances? Come on, Greg.) Krugman is worse.”

And again, not a single example.

48

Donald Johnson 05.01.13 at 11:42 pm

In the sky left, but in case you still read this–the issues you listed are, for the most part, issues where most non-economists aren’t going to know much about anyway, even after Krugman. I’ve seen people debate the size of the multiplier at other blogs, but I certainly don’t have an opinion on it dictated by my avid reading of Krugman, or any opinion at all. What I have picked up on is what others mention–there’s really no good evidence for expansionary austerity, yet much or most of our policy debates have centered around how to cut the deficit. Krugman has pushed back hard against this, and Krugman has been right. Why haven’t your elevator economists been doing their best to fight the doctrine of expansionary austerity in a less shrill way? I could for the sake of argument accept all of your criticism of Krugman and still think that he’s been doing us all a public service, which is more than I could say about the people who think that Krugman is the problem here.

49

Bruce Wilder 05.02.13 at 12:10 am

In the sky: “You’ve resolved an enormous and enduring academic puzzle, all by yourself.”

I didn’t resolve it. I correctly identified it, though I didn’t make that identification explicit, so I don’t expect a footnote.

There are genuine puzzles of far more than academic significance, which concern how to manage the central “planning” and regulatory functions of a highly organized, somewhat decentralized economy. I differ from the bulk of conservative economists, in thinking that stupid and ignorant are not a People’s virtues, even in a Straussian politics, but I’m not naïve enough to think they are entirely wrong, about the risks of over-centralizing spending decisions through Keynesian policy. I wish academic economists, in their ivory towers, were more serious about engaging with each other on commensurable terms.

I like Krugman better than, say, Mankiw, and a lot better than Glenn Hubbard or Robert Lucas. But, I’m not actually a fan of either Krugman’s economics or his style of political rhetoric. My criticisms, though, would be very different from the corrupt, complacent centrism of Clive Crook (alliterative enough for you?). I think the economy has structure, and serious “structural” problems, and I would like policy to address those structural problems; I think lopsided income distribution is an aspect of some of those structural problems, and policy, which doesn’t address those problems, is unlikely to “fix” unemployment. I think the ballooning of the deficit and national debt actually is a problem, though I agree austerity is not a remedy for that problem. I think an economist, who tries to think about the macroeconomy without some kind of model for money and finance, as Krugman does, is playing the fool.

The discussion of economics and economics policy is made far more esoteric and difficult than it needs to be, by people of seriously ill-will. I think Krugman should be credited with earnest and honest effort, and many other economists — including the bulk of the profession, frankly — should not.

50

Bruce Wilder 05.02.13 at 12:54 am

In the sky: To re-use my government multiplier example, a few months ago my brother said “There’s plenty of evidence that the multiplier is greater than one.” True. Equally, there’s plenty of evidence that it’s less than one.

I’ve already written too much, and this is just going to repeat something I said already, but this really annoys me. Conservative economists do this, a lot, and it is akin to malpractice.

The only well-balanced, “honest answer” in economics to most policy questions is, “it depends”, and, often, economics can give some pretty good indications of what it depends upon. There’s nothing in theory that tells you, if an increase in price will result in increased sales or decreased sales, but there’s a lot to tell you what might might account for one outcome or the other.

Will an increase in the minimum wage hurt or help low-wage workers? Will an increase in the minimum wage tend to reduce employment of low-wage workers? Will it increase their incomes? The correct answer is: it depends. Rather obviously, I would think, the consequences depend on how high a minimum wage. There’s some minimum wage high enough that further increases will almost certainly reduce the employment and/or income of low-wage workers. And, there’s some minimum wage low enough that an increase might plausibly increase both incomes and employment of low-wage workers. You cannot know any answer, which is independent of contextual qualifications.

One of the reasons I know Mankiw is a hack is that he won’t admit, even in his textbook, where he has an obligation to a high standard to even-handedness, that an increase in a relatively low minimum wage might actually increase employment.

The same is true of the multiplier. The multiplier is not some physical property of an object in the natural world, like the tensile strength of some steel alloy, which can be taken as invariant over a practical range of conditions. It may depend, to some extent, on what the government spends money on; it certainly will depend upon the policy stance of the monetary authority and the extent of involuntary unemployment.

So, yeah, you really showed your brother. There’s solid evidence that the multiplier on government spending in the U.S. in 1943 was less than 1. Yes, Virginia, in the midst of the supreme national effort of Total War, with rationing of everything, forced savings, financial repression, and an unemployment rate threatening to break into fractions, the multiplier was less than 1. Whoopdeedoo!

51

John Quiggin 05.02.13 at 1:19 am

Coming in late on multipliers and sticking to the quantitative aspect, the critical question is not whether the multiplier is greater than one, but whether it is greater than zero. If the multiplier is between zero and one, an increase in government spending may be partially offset by increased private saving, or reduced investment, but the net effect will still be to increase employment and output.

The anti-Keynesian position is that the multiplier may sometimes be positive, at other times negative with an average of zero. The (now discredited) “expansionary austerity” work of Alesina, Ardagna and others claimed to find conditions where the multiplier was less than zero.

To strengthen Bruce’s point a little, Keynesians would expect a zero multiplier in conditions like those of 1943. Under “normal” full employment conditions, the multiplier would be small enough that the benefits of running surpluses (more room to stimulate when the economy turns down) exceed the costs. In depressed conditions, the multiplier is well above zero, and in deeply depressed conditions, above 1.

The recent empirical evidence, largely from the IMF is that, in the deeply depressed conditions of the crisis, the multiplier has in fact been greater than 1. As Blanchard and Leigh showed, optimistic forecasts of the benefits of austerity reflected underestimates of the multiplier.

http://www.imf.org/external/pubs/ft/wp/2013/wp1301.pdf

52

Sev 05.02.13 at 1:35 am

In the Sky at #11

“84% of professional tax economists think the income distribution in the US is too uneven. This contrasts with about 60% of the population of the US.”

I don’t know the basis of this claim, but I doubt it:

http://voices.washingtonpost.com/ezra-klein/2011/02/what_americans_think_about_inc.html

53

MPAVictoria 05.02.13 at 2:15 am

Thank you JQ. That was very informative.

54

Terence 05.02.13 at 3:20 am

Agree with MPAVictoria: thanks John!

55

Collin Street 05.02.13 at 5:36 am

chris@44: To a dogmatist, all heterodoxies are the othodox heterodoxy.

[I was told that this was originally said by Louis Agaziz[sp], an american geologist of note: I’ve not been able to confirm this.]

56

Z 05.02.13 at 9:18 am

Considering that Agassiz was one of the last noted geologist and paleontologist to defend creationism as well as a strong proponent of scientific racism, I don’t know what to make of this aphorism. Also, Louis Agassiz was Swiss.

On the main topic, Krugman’s answer is actually quite excellent. Not everything is political. Most of Krugman writes about is almost purely factual. His predictions and analyses have held up very well. Those of his intellectual opponents not at all, often comically so. So if you disagree with him, quit whining and do some work.

57

Robert 05.02.13 at 11:31 am

What do you think of Krugman’s idea that looking at the effect of income inequality on macroeconomic dynamics would be mixing political value judgments with a description of how things are?

58

Trader Joe 05.02.13 at 12:21 pm

@39
A quite well written discussion of multipliers. Well worth the read for anyone ever confounded by the random way this is often talked about.

Thanks BW

59

Polonius 05.02.13 at 12:46 pm

What’s really strange reading Crook for this long-time reader of Krugman is that I’ve always thought that Krugman for many years bent over backward trying to be civil toward those who attacked him, especially since so many of their attacks were so intemperate. In the last couple of years he has finally lost his patience with the blatant whoring of people like Mankiw and, less obviously, Rogoff and Reinhart* and politicians’ granting of legitimacy to clowns like Kevin (“Dow 36,000) Hassett.

As for uncertainty about the value of the multiplier, does anyone really still contend that that it’s less than 1.0 in the liquidity trap most of the wealthy West has been in for 4 years or so now? No wonder Krugman’s pissed off & has trouble not showing it, since, as he says, so much of the profession threw out macroecomics 101 when push came to shove.

*I’m not an economist but was for a while the stats and methods editor of a refereed psychology journal and my only reaction to how R&R handled their data is a McEnrovian “You cannot be serious.” Also, is economics such a primitive discipline that correlational papers are accepted that contain no attempt to establish causality? Countries with higher debt have slower growth. BFD. At least in psychology, this is called an “Aunt Fannie” finding–my Aunt Fannie could’ve told you that. Their “star” finding that the relationship was discontinuous at a debt-to-GDP ratio of 90% was absurd on its face — what’s magical about that number. If they had had a huge sample of data with no obvious statistical problems caused by a very questionable aggregation method, that might have been an interesting finding. But, given their data and their methods, it surprises me that a referred journal would publish it and that R&R would promote it as having important policy implications — well, assuming that R&R weren’t hankering badly after public intellectual cache ala Krugman and further goodies by the austerian sugar-daddy Pete Petersen.

60

sibusisodan 05.02.13 at 12:56 pm

He would have more influence where it would actually make a difference if he developed—or at least could feign—some respect for those who aren’t his disciples. …

I know this is of a piece with the rest of the article in offering no reason to believe any of its statements are correct, but isn’t the response to Obama’s post-partisan strategy all the evidence one needs to consider that statement a crock of stupid? The response to anger and patience alike appears to be derision.

61

Daragh McDowell 05.02.13 at 1:32 pm

Krugman is pretty exceptional in US opinion journalism in that he is clearly very interested in policy, as well as very adept at analysing and discussing it. This takes quite a bit of intellectual ability, training in certain academic disciplines and willingness to engage in plain old hard work. Krugman has all of these attributes in spades – it’s also why he is a Nobel laureate. His thinking is also that of an academic – the evidence is here, the work is shown, the policy courses we should follow have been revealed so why aren’t we? To be clear, I think this is a damn good thing, and journalism and policy making should have more of it.

Crook is by contrast, totally disinterested in policy and prioritises a certain form of politics above all things – that of the ‘centrist voice of reason.’ The CVoR’s credibility amongst other CVoRs is dependent entirely upon his/her demonstrating that they are equidistant from both sides of an argument and can therefore synthesise some form of ‘truth’ out of the argument. In other words, a more shrill and angry (as well as accurate) description of the CVoR might be ‘The Overton Window’s Gimp.’ Crook’s former employers, The Economist represent the ne plus ultra of this phenomenon.

So why do CVoR’s exist and why are they popular? My first instinct is because it’s damn easy. Critically evaluating competing claims by different interest groups takes time and effort. Asking, ‘What would Joe Lieberman do’ and then scribbling it down is a trifle by comparison. In this instance, the MEANS by which an argument is made become far more important than the argument itself, which inevitably rules out any argument that attempts to show that one ‘side’ or another is completely wrong, not matter how truthful the claim may be.

But of course, there is also an economic and class component. CVoR’s are generally the product of upper or upper-middle class parentage and appear in publications targetted towards the same. Their interest is preserving the stability of the conditions that put them on top – neo-liberal economic theory seems to be the one ‘idea’ CVoR’s will reflexively and constantly defend on the perceived policy merits. FWIW, I’m guessing this is the reason Crook was replaced at the FT (where his output was terrible) with Ed Luce (whose output is generally very good.) The pink ‘un actually cares about policies and caters to readers who do. Bloomberg… not so much.

The TL:DR – Krugman thinks and writes like an economist. Crook thinks and writes like The Economist.

62

Hazel Meade 05.02.13 at 2:08 pm

Almost everyone, if backed into a corner, will admit that government has *some* legitimate functions, yet they are not necessarily willing to discuss government in terms of specific actions being good or bad.

I could get into a discussion of some of those things that government shouldn’t do that people think it should do, but to list all of them would take a very, VERY, long time and would be a discussion that would probably last months.
Thus people use “size and scope of government” as a shorthand for an exhaustive list of issues where they feel the government is too heavily involved. What you’re missing is that there are often proposals for how to do certain things outside of government, but you’re never going to even get to that discussion without engaging in the discussion about scope. You have to be willing to consider that government is not the only mode of collective action worth talking about.

63

Steve LaBonne 05.02.13 at 2:16 pm

You have to be willing to consider that government is not the only mode of collective action worth talking about.

I will do that when my interlocutor is not a nutjob who thinks government is NEVER the correct vehicle for collective action (except as concerns blowing up brown people who follow the “wrong” religion”.) Unfortunately, this condition nowadays is essentially never met when dealing with anyone on the right.

64

Barry 05.02.13 at 2:23 pm

Daragh: “Crook is by contrast, totally disinterested in policy and prioritises a certain form of politics above all things – that of the ‘centrist voice of reason.’ The CVoR’s credibility amongst other CVoRs is dependent entirely upon his/her demonstrating that they are equidistant from both sides of an argument and can therefore synthesise some form of ‘truth’ out of the argument. In other words, a more shrill and angry (as well as accurate) description of the CVoR might be ‘The Overton Window’s Gimp.’ Crook’s former employers, The Economist represent the ne plus ultra of this phenomenon.”

The ‘centrist voice’ is quite interested in policy, but IMHO usually in right-wing policies which can’t be justified openly. Therefore the ‘centrist’ acts to legitimize them.

Also, the ‘centrist’ plays the game:
Democrats: ‘Cake!’
GOP: ‘DEATH!!!!’.
Centrist – ‘let’s compromise – a cupcake, and a maiming’.

65

William Timberman 05.02.13 at 2:32 pm

What interests me about the arguments between Krugman and the various bogeymen of the right is something the Bruce Wilder alludes to now and then in various CT comment threads, but never fully fleshes out — presumably because it would take a book or two to do it properly. Briefly stated, with apologies beforehand if I’m creatively misunderstanding BW, this something is the question of whether the current immiseration of labor is cyclical or structural. To put it another way, is Keynes all we need, or is Marx — or some modern somebody a lot like Marx — necessary to understand that immiseration?

Brad DeLong thinks we’re doing fine as we are. All we need to do is shout Keynes a little louder until the guys at the levers of power start listening. Besides, as he says whenever he has a moment free, Marx was wrong about a lot of stuff. He was wrong about the Labor Theory of Value. He was also wrong about working stiffs ever seeing themselves as a class whose class interest supersedes all their other interests, and therefore he was finally, horribly, wrong about human nature. Revolution is an illusion, and Lenin, Stalin, etc., are the price we paid for Marx’s errors — which, incidentally, we’ll keep on paying, if we don’t wise up and stick with Keynes all the way.

Meanwhile, Keynesian-in-chief Paul Krugman himself has noticed that technological unemployment is real, and the reserve army of the unemployed and the marginally employed seems to get larger every day. Worse yet, capitalists are no longer as apologetic about their evil machinations as they used to be in the magical 50′s and 60′s. Do they know something we don’t? (They can’t, can they?) Even Matthew Yglesias, of all people, is beginning to have doubts about the social contract he’s been tasked with defending.

Maybe we won’t wind up with a revolution, but the evidence that we can have a permanent economic equilibrium which denies a very large number of people decent living standards, not excepting what we’ve gotten used to thinking of as the middle class of the first world, seems more compelling every day. Defenders of capitalism, as might be expected, assure us that a rising tide continues to lift all boats. Maybe so, but given what I see and read, I have my doubts. I also doubt that the kind of economic equilibrium they’re defending guarantees them — or us — an equivalent political equilibrium. I do think that we haven’t heard the last of this, not by a long shot.

66

Brad DeLong 05.02.13 at 3:02 pm

Re: “William Timberman: Brad DeLong thinks we’re doing fine as we are.”

Where the hell do you get this from? And given that you say things like this, is there any reason why I should not cut you? Continue like this and I WILL ask you to leave, even if you are sober!

67

Steve LaBonne 05.02.13 at 3:08 pm

WTF- DeLong’s psychotic reaction to the very name of Marx is so strong that he thinks he’s commenting on his own blog?

68

Brad DeLong 05.02.13 at 3:09 pm

Steve LaBonne: I really think you should read up on All Internet Traditions again…

69

Steve LaBonne 05.02.13 at 3:11 pm

Perhaps I should- this is clearly one with which I am not familiar.

70

ajay 05.02.13 at 3:27 pm

” I’ve rolled my eyes a couple of times at what Mankiw has blogged. (Obama’s personal finances? Come on, Greg.) Krugman is worse.”

I absolutely agree. See, for example, this post.

I frankly don’t see how anyone can defend Krugman’s blogging after that.

71

Steve LaBonne 05.02.13 at 3:31 pm

By the way, I think that William’s characterization of DeLong’s position is completely accurate. The “everything” he was referring to was the intellectual and policy toolkit of economists like DeLong and Krugman, not the political situation, rightly deplored by them, in which that toolkit is currently being ignored and derided by those in power. What William, and many of us, doubt is that things really would become “fine” if only that toolkit were deployed appropriately. Our problems may be much deeper and more structural than that.

72

Lee A. Arnold 05.02.13 at 3:32 pm

I think Krugman may be shrill and angry because his fellow economists won’t think comprehensively, and won’t stand up to be counted. So he has to deal with the various pundits like Crook instead, who now want respect for having listened to all their buddies in the financial markets say, “Inflation is coming! The central bank is keeping interest rates too low! We suffer from uncertainty!” Then another (real, or presumably real) economist comes by and says, “Well golly, the multiplier may be less than one!” Of course the correct response to this might be, “Why does that matter, in this situation? This is hurting peoples’ lives.” (As JQ intimates, part of the fiscal response might go into deleveraging instead of into the purchase of goods, and, since we didn’t get any quid pro quo on mortgage writedowns from private finance after bailing out the financial system, that would still be a good and useful thing.) But instead, we learn that five years after the crash, 80.9276 % of economists agree to disagree on whether milk should go with cookies. WHAT? If these were the people I had to meet at a convocation, I would be shrill and angry, too.

73

Lee A. Arnold 05.02.13 at 3:37 pm

William Timberman, I think Krugman and DeLong might agree with you, if the evidence remains. To see if it remains, first we have to clear up the “cyclical” part. There is no doubt that there is a structural problem. The fact that we bailed out the entire paper asset structure of the financial subsystem with no quid pro quo on common peoples’ mortgages, yet now we have to hear them whining, through the medium of so many op-ed pundits, that rates are too low and inflation is coming, proves it.

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Barry 05.02.13 at 3:39 pm

Brad DeLong 05.02.13 at 3:02 pm

” Where the hell do you get this from? And given that you say things like this, is there any reason why I should not cut you? Continue like this and I WILL ask you to leave, even if you are sober!”

When you are threatening to eject people from a bar which you don’t own, Brad, I think that *you* are the one who’s had a few too many :)

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William Timberman 05.02.13 at 3:51 pm

Braad DeLong @ 65

No, there’s no reason. Writers, especially those whose work appears on the Internet, don’t get to choose their audiences; it therefore seems only fair that they should have the right to react as they see fit to those who, in their view, mischaracterize or misuse what they write. It would be more comfortable for both of us, I suppose, if we weren’t close enough to each other, virtually speaking, to overhear things we’d rather not hear, but it is what it is — part of the glorious cybernetic future and all that. For the record, I freely admit that the Brad DeLong I’m arguing with isn’t the man himself, but a simulacrum I’ve assembled from the bits of his work that I’ve read. If that’s a misuse of the original, it isn’t an intentional one, but yes, I am responsible for it, and I’ll be judged accordingly — and rightly so.

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William Timberman 05.02.13 at 3:55 pm

Lee A. Arnold @ 73

William Timberman, I think Krugman and DeLong might agree with you, if the evidence remains.

Yes, I think they might. And, if I may say so, I still hope that they’re right and I’m wrong. It’s a glass half-full/half-empty thing, I guess….

77

Steve LaBonne 05.02.13 at 4:07 pm

Yes, I think they might.

I think Krugman might. Not so sure about DeLong, given the way he’s repeatedly freaked out on his own blog about any and all ideas to his left.

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Brad DeLong 05.02.13 at 4:11 pm

Re: “Steve LaBonne 05.02.13 at 3:31 pm: By the way, I think that William’s characterization of DeLong’s position is completely accurate. The ‘everything’ he was referring to was the intellectual and policy toolkit of economists like DeLong and Krugman, not the political situation, rightly deplored by them, in which that toolkit is currently being ignored and derided by those in power. What William, and many of us, doubt is that things really would become ‘fine’ if only that toolkit were deployed appropriately. Our problems may be much deeper and more structural than that.”

Good God, no! NO!!

I do think things would be a lot better if the Keynesian macroeconomic toolkit were being deployed appropriately.

I do not think that things would be “fine” if it were–we do have much deeper and more structural problems that *cannot* be solved by deploying the Keynesian macroeconomic toolkit.

79

William Berry 05.02.13 at 4:12 pm

From the POV of people like Crook and Mankiew, us labor folks are beneath contempt.

I used to read his free-trade screeds in The Atlantic some years back. Where free-trade was concerned, there was no room for anything like what I call “normalization”– regulation of U.S. corps operating abroad, tariffs to encourage improvements in wages, working conditions, and the environment, etc. If you wanted to qualify free trade in any way– a major agenda item for labor– then you were a complete idiot. (MY’s infamous Bangladesh remarks, btw, could have been cribbed straight from one of Crook’s old Atlantic blog posts.) I used to read quotes from people like him at local meetings just to get people stirred up!

When reading William Timberman’s comment, above (with which I agree completely, btw, leaning rather more than most to the “structural” side, from a more-or-less Marxian perspective), as soon as I saw the mention of BdeL, I held the suspense by not skipping ahead, being convinced that as soon as I scrolled down there would be some nasty shit from deL. He didn’t disappoint me.

After years of sometimes vicious combat in the trenches of labor (USW local pres., committeeman, steward, activist, etc., for thirty-five years) I am trying to mellow out these days and be a little more generous in my appraisals of others. Sometimes it’s hard. I’ve never paid much attention to BdeL, as I have no interest in the neo-liberal crap, but have always heard that he is a total jerk. Well, he seems to be trying hard to prove it here. He seldom makes a constructive comment, just letting go with an all-out attack on anyone offering the mildest of criticisms.

80

Steve LaBonne 05.02.13 at 4:14 pm

Good response, Brad. I would- genuinely, no snark- like to hear you summarize your ideas about how we need to go beyond the Keynesian toolkit. Are you, for example, ready to reconsider the standard economic arguments for free trade, which, it seems to many of us, fail to take power relations into account when figuring its costs and benefits?

81

Brad DeLong 05.02.13 at 4:15 pm

Barry: As I said, you need to become aware of All Internet Traditions. If you don’t, your life will remain poorer than it might have been…

And my bad: it’s: “I WILL tell you to leave even if you are sober”

82

Hazel Meade 05.02.13 at 4:24 pm

I will do that when my interlocutor is not a nutjob who thinks government is NEVER the correct vehicle for collective action (except as concerns blowing up brown people who follow the “wrong” religion”.) Unfortunately, this condition nowadays is essentially never met when dealing with anyone on the right.

Nice straw man.
Let’s pretend everyone on the other side is crazy so I can avoid having to engage any of the sane ones.

83

Steve LaBonne 05.02.13 at 4:28 pm

Let’s pretend everyone on the other side is crazy so I can avoid having to engage any of the sane ones.

There used to be sane ones. Where are they now? The crazies have taken over one of our two major parties to the extent that its positions on just about everything are completely out of touch with reality- and yet people with large megaphones are STILL attacking it every day for not being crazy enough yet. In that atmosphere, you are welcome to go have your philosophical debate about the optimal size of government with yourself.

84

mrearl 05.02.13 at 4:44 pm

Let me add my thanks as well, John (@51). The first question is whether the multiplier’s positive.

85

Ben 05.02.13 at 4:47 pm

The Internet Tradition which DeLong was aping, performed by Michael Shannon. As all Internet Traditions should be.

86

Barry 05.02.13 at 4:59 pm

Brad DeLong 05.02.13 at 4:15 pm

” Barry: As I said, you need to become aware of All Internet Traditions. If you don’t, your life will remain poorer than it might have been…”

Brad, I was f-ing there when that happened over at L,G, and M.
Even given that, I can’t figure out what you mean when you say that.

Perhaps you could simply talk like a reasonable person.

87

Lee A. Arnold 05.02.13 at 5:32 pm

I shoot at Brad DeLong with both barrels at his blog when I disagree, and I write all kinds of other lunatic stuff too, and he has never blocked me. (His new reblog of his old Marx essay is lovely, by the way.) Note that I have consistently criticized the entire economics profession for being a whining bunch of losers since I started writing in 2003. The economic crisis confirmed every complaint: They didn’t see it coming, it took them two years to get a handle on it, some of them are still spinning in a dither, and now, they cannot speak with a unified voice on what to do about it, largely over the politics of the size of government. But we do know that 79.033% of them have conversations in elevators. Where it appears that they are angry at Krugman “for becoming selective in what he tells the public”. Bottom line? They are in a complex systems science (some of them apparently without knowing i), prediction is nearly impossible yet it has immediate relevance to public policy — and they are in WAY over their poor little heads.

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Barry 05.02.13 at 6:05 pm

Ben 05.02.13 at 4:47 pm

” The Internet Tradition which DeLong was aping, performed by Michael Shannon. As all Internet Traditions should be.”

Ah. I thought he meant the one one Lawyers, Guns and Money where somebody didn’t understand ‘Shorter X’. (as in the pre-internet NY Post headling ‘Prez to NYC: Drop Dead!’).

89

Barry 05.02.13 at 6:05 pm

Although to be technical that was called ‘I am aware of All Internet Traditions’, because the uncomprehending guy said just that.

90

pjm 05.02.13 at 6:24 pm

@Brad, p.f. funny.

Though in the sky has left, no one seems to have taken the bait on his more substantive claims (and again JQ’s input would be very interesting):

(i) the effects of government spending on GDP;
(ii) the effects of government spending on employment;
(iii) the effects of taxes on innovation;
(iv) fiscal policy at the zero lower bound of interest rates;
(v) the risks/benefits of taking more debt when Europe’s currency is volatile; etc etc
as 6 I would add his point about whether spending is good or bad (comment 14, is this a point echoing J. Sachs?)

points 1,2 and 4 seem to relate to the general Keynesian viewpoint (5? 6 definitely if it is the same Sachs was making). If that’s true, perhaps the relevant question is why Keynesianism is not the “standard hypothesis” anymore . Apparently it wasn’t evidence per se. In other words, most things are uncertain (even consensus viewpoints) but there is big difference between whether one is looking for (strong) evidence in order to reject the existing hypothesis or rather trying to gather evidence to choose among multiple models. So, if Keynesian-ism fell out of favor for poor reasons (especially of the ideological sort) then all the purported uncertainty reads very differently (and perhaps demands different amounts of “even-handedness”).

Economists don’t have to be ideological monsters to have fallen afoul of questionable assumptions that have become woven in to the professional and academic culture, but (as suggested by 43 by QS) maybe their sense of even-handedness or their respect does not matter
so much.

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roger nowosielski 05.02.13 at 8:12 pm

Would someone enlighten me, please?

I’m rather new to CT, so perhaps I’m not aware who is who, but when I look at the list of CT contributors, Delong’s name is not there. Neither is he the OP. Is he a member of a shadow board, perchance?

And if not, what right does he have to ban a CT contributor for any reason, good or bad.
Do tell!

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William Timberman 05.02.13 at 8:17 pm

Roger it was just a (pointed) bit of snark. Do check out the link by Ben @ 85. I’m suitably chastened, but otherwise unharmed.

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William Berry 05.02.13 at 8:42 pm

Yeah, well, finally got around to viewing that video. Shannon is funny as hell, but, then, he’s working with awesome material. The original letter-writer did the heavy lifting.

So, I guess I sort of owe the great man an apology . . . Naahhh, screw that, he’s probably guilty of something!

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roger nowosielski 05.02.13 at 8:45 pm

Thanks.

95

bob mcmanus 05.02.13 at 8:46 pm

If that’s true, perhaps the relevant question is why Keynesianism is not the “standard hypothesis” anymore . Apparently it wasn’t evidence per se.

Nah. I’ll take a stab.

I think it was decided in the 70s and 80s that full-bore Keynesianism was inflationary to the point of wage-price spirals, not merely by the evidence of the 70s but theoretically (Chick, Robinson?), and the only tools to prevent inflation in the Keynes tool-kit were too drastic (income policies, engineered recessions) to be politically viable. IIRC the MMT folks rely on some pretty drastic and implausible tax policies to control wage inflation.

And so to be fair to the critics of Krugman, inflation is always a threat from Keynes models, and Krugman himself if you notice is always crying “only at the zero-bound! Zero-bound only!” IOW, Krugman I think will flip if and when interest rates can be raised to 3-4%. Nipping wage increases in the bud. This why I am not his biggest fan, the New Keynesians do not really have a plan to get back the lost output gap and the 35 years of declining wage share.

However, real true Keynesianism, not polluted and corrupted by Friedmanism and Lucasitis, as detailed in the last chapter of Hyman Minsky’s 1976 book on Keynes, based on JMK’s postwar plans, does have the answer.

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roger nowosielski 05.02.13 at 8:52 pm

btw, I do regard you and Bruce Wilder as some of the down-to-earth commenters on CT. I do wish, however, that Bruce’s comments were more concise. It’s difficult to be responding to dissertations, But perhaps this in unavoidable here, since this site is full of academics.

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Bruce Wilder 05.02.13 at 9:55 pm

mreal: “The first question is whether the multiplier’s positive.”

I’m going to quibble a bit with Dr. Quiggin on this point. The (quantitative) multiplier is pretty much always positive. And, if it really were negative, the finer points of economic policy would not be a paramount concern. If you want to see what a negative multiplier looks like, you only have to look to Assad’s Syria. Assad’s incremental spending has a negative multiplier, because his incremental expenditures involve killing people and blowing things up, which is no way to grow GDP. A positive multiplier is not much a threshold, ordinarily.

A positive multiplier of less than one is a kind of normal circumstance, in which the government should probably evaluate the costs and benefits of any proposed expenditure in the “normal” way, taking the prices and expenses involved as good indicators of the costs. A positive multiplier of less than one is an indication that monetary policy has traction, and fiscal policy isn’t going to be independently potent, in any case.

A positive multiplier of much more than one is an indication that something has gone seriously wrong with money.

A positive multiplier significantly greater than one is nearly equivalent to saying that increments to government expenditures are costless. Completely useless make-work jobs, where the product — the public good that the government was buying — was largely worthless, nevertheless, might be worth doing, because it would result in increased (and genuinely valuable) output and employment, which would not otherwise occur. The prices paid by the government are not costs! That can only happen, if the money system is seriously out of whack.

Money is how we keep score. In our decentralized economy, calculation and contingencies scored in money terms is how we make deals and coordinate activity. Demand, as in aggregate demand, is only effective to the extent that it is backed by money. Dysfunctions in the money system can show up as involuntary unemployment of resources and reduced levels of economic activity. We cannot coordinate the deals with each other, which we need to make, to get what we want, because the language of money is lying to us. Money is broken; the economy is broken.

In the standard Keynes plus IS/LM model circa 1940, the multiplier moves the IS curve around. IS is the balance of investment against savings, while LM is demand and supply of money. IS and LM form a Marshall Cross, with the intersection “the” interest rate. In normal circumstances, the interest rate balances supply and demand for money and investment spending and savings, simultaneously, but a liquidity trap is conceivable in this framework, in which people are scared and want to accumulate cash. Savings flows into idle cash holding, but not into investment spending, creating the conditions for a high multiplier on government spending: low interest rates and high unemployment of resources. Fiscal policy — stimulus spending — moves the IS curve back into the range in which savings flows to investment spending, and the interest rate again balances investment spending and savings, and the multiplier goes back to “normal” (roughly, positive but less than 1).

Again, the profound and dispositive policy questions are whether money (and I am thinking of the whole complex system of currency, sovereign debt, banking and finance, when I say, “money”) is functioning well enough that (market) prices can be relied upon to guide and coordinate decentralized decision-making. The thresholds that matter are the threshold into a liquidity trap, or the threshold of the corridor of macro fluctuation within which monetary policy remains effective.

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Bruce Wilder 05.02.13 at 10:32 pm

William Timberman: the question of whether the current immiseration of labor is cyclical or structural.

Is market price and quantity a function of Supply or Demand? The correct answer is: Supply and Demand. The key meta term is the conjunction. And, price and quantity are overdetermined.

The economy has a business cycle because of its structure, because activity at the margin is driven by money and by investment spending, and because capitalist investment tends to be sunk cost investment. There’s no “or”. It’s all cyclical and structural.

I can’t get excited about “technological unemployment”. If we can produce more goods with less labor, I’m fine with that, and think, then, that “the” problem is income distribution. I look at our economic situation, today, and I am more acutely concerned about resource limits — peak oil, congestion of the commons, ecological collapse.

I think the size of the labor force is being restricted in the developed world in response to resource limits. High unemployment and falling wages for the bottom 50% are an effective way to curtail energy consumption. The immiseration isn’t Marxian, it’s Malthusian.

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roger nowosielski 05.02.13 at 11:05 pm

@97

I share the view that “technological unemployment” need not be any particular cause for concern (in the ideal world, that is), only when added to the aggregate unemployment picture.

Which brings up the question of “income distribution.” By virtue of what — and to the masses that are chronically unemployable?

How do you conceive such a project getting off the ground in the present political and socioeconomic system?

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William Timberman 05.02.13 at 11:17 pm

If we can produce more goods with less labor, I’m fine with that, and think, then, that “the” problem is income distribution.

Indeed. The current idiocy of Western politics in general, and U.S. politics in particular notwithstanding, doesn’t that fact alone imply a fundamental rethink of markets, the labor/capital relationship, resource utilization, in short capitalism itself — lock, stock and barrel? Even if the political environment were entirely benevolent, it doesn’t seem to me that something like a UBI would get us much further than first base, and given that the political environment is anything but benevolent, just imagine the shock and awe that’d be visited on us if we got anywhere near a democratic decision point on that one factor alone.

And yes, Malthusian. Absolutely yes. While the technocrats are chewing on that one, the rest of us should look further afield, to how a suitably holistic societal response, not just an economic one, might evolve from the ferment just now beginning. As always, the path from dream to idea to movement to conventional wisdom is occluded. Best to begin at the beginning. We’re not gonna live long enough to get much farther than that anyway.

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pjm 05.02.13 at 11:27 pm

@Bob 94. Though my understanding of it (in part thanks to JQ’s zombie book) is that what took a hit in the 70s was the notion of relatively “easy” macroeconomic management trading via monetary policy (i.e. balancing unemployment and inflation via the Phillips curve). And even there there, the still seems to be contention over whether the oil shocks were the primary cause of intractable as oppose to the inherent contradictions of the policy.
But in any case, the core ideas of Keynes (which also to some extent is the practical lessons of the 30′s) as how to handle a “demand shock” economic crisis were not (or should not) have been implicated.
The Lucas stuff seems to be largely based on a felt need to be more reductionist (i.e. base macro on micro), which my limited reading of philosophy of science is a problematic impulse however common.
I don’t know if the Friedman critiques, iirc, which relate again to inflation and the Phillips curve based strategy, really anyway corrupt the “core”.

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erichwwk 05.02.13 at 11:53 pm

Clive Crook:

Interesting logic. If we stumble on good policy, one should trade some of that for bad policy. And if one is stuck in bad policy, not trying to improve it gives one stability, and makes a bad policy good.

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erichwwk 05.02.13 at 11:55 pm

(grr…Wish there was a preview)

Clive Cook: “First, good policy involves trade-offs. … Second, good policy requires stability”

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P O'Neill 05.03.13 at 12:14 am

We have some Wingernomics to debunk: Veronique de Rugy at The Corner

First, on the question of whether government spending can stimulate the economy, the academic debate is far from over. To get a resolution, economists would have to agree on the size of the spending multiplier, and it would have to be higher than 1 (meaning that government spending actually creates more economic activity than the dollar spent by the government). But they don’t agree. No one knows for sure what the impact of government spending will be on the economy. Some economists say the multipler could be as big as 3, others argue that it is below 1, and some even argue that it’s negative.

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Bruce Wilder 05.03.13 at 1:29 am

William Timberman: ” . . . doesn’t that fact alone imply a fundamental rethink of markets, the labor/capital relationship, resource utilization, in short capitalism itself — lock, stock and barrel?”

I don’t know about “capitalism” — I’m skeptical about reifications, which try to assign a unifying character to a great variety of political arrangements. I know that economists and people in general have a tendency to mistake the stability imparted by the inertia of forward momentum for structural stability. Accelerating through a tight turn can impart a reassuring sense of control to the driver of a sports car, but I don’t recommend suddenly applying the brakes in such a turn. What we call, “capitalism” is a misnomer for the industrial revolution, a highly dynamic period of accelerated economic growth. We are at the end of every driver of the industrial revolution, except the advancement of science and technology, and I do not imagine the deceleration ahead will feel reassuring. Attempts so far, to rethink the assumptions of linear growth, have not been that successful, even as the problems of climate change, peak oil, overpopulation, and ecological collapse loom larger and larger on the horizon.

At bottom, I suppose the fundamental problems of a house constructed of adobe is the adobe, and the fundamental problems of an economy assembled from human beings, are the human beings, but when your political program depends on inventing a New Man as a solution, I think you might as well give up. (I may be too pessimistic about that. Somewhere in the not-too-distant past, ten thousand years ago, something changed in human sociability that permitted societies with more than a dozen, more than 50, members to form; the U.S. has a population of over 300 million!) It is hard to select and control human elites effectively. Many humans — including those who most desperately want the job — make lousy bosses. It is, at best, an imperfectly solvable political problem. Still, abolishing bosses is not really a feasible alternative. (Anarchists tend to be abrasively unpleasant people, as well as deluded; funny how that works.)

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William Timberman 05.03.13 at 2:53 am

Well, I probably shouldn’t risk any wistfulness in the company of so many genuine savants, but I do sorta think that a New Human Being is what it’s ultimately gonna take. I don’t flatter myself, though, that I’m qualified to take any part in writing the final specifications….

107

Bruce Wilder 05.03.13 at 2:57 am

How do you conceive such a project getting off the ground in the present political and socioeconomic system?

I don’t. We’re doomed.

(Our best hope — or “hope” — is that the system will fail in a way that opens up possibilities in re-construction. But, we have to be ready to accept the consequences of the failure, and resist being stampeded by political panic into preservationist patch-jobs that make the system even worse.)

108

john c. halasz 05.03.13 at 3:13 am

As to the notion of the “multiplier”, it embeds an implicit comparison. Private “markets” are assumed to be be efficient, optimizing productive output and its absorption, where as government expenditures are assumed to reduce efficiency, to be mere consumption expenditure. That private markets can miscarry and that government expenditures can be productive are under-weighted in the implied burden of proof. (That there can be functional equivalent solutions to systemic problems, which can be more-or-less exhaustively compared, is all too often left implicit in economic discourse, even as such suppressed claims are drawn on. But then how can differing complexes of counter-factuals be substantiated?). At any rate, the issue isn’t to be resolved simply by assuming the existence of a “full employment” equilibrium, regardless of the contents and distributions of various forms of spending and despite any issue of structural imbalances or dis-coordinations, such that it merely comes down to an argument over a “liquidity trap” or how soon the status quo ante can be restored. The conflictual stakes are “higher” and more diverse than such a technocratic abstraction can allow.

@98:

” High unemployment and falling wages for the bottom 50% are an effective way to curtail energy consumption. The immiseration isn’t Marxian, it’s Malthusian.”

Umm, no. High unemployment/low wages and thus a stagnant or declining economy is not an effective way of curtailing natural resource consumption, except for the very short-term, immediate effect, since the economic resources for replacing inefficient wasteful capital stocks are precisely thereby curtailed. And Malthusian misanthropy merely underplays and rationalizes the way in which the North/South divide is manipulated in the interests of maintaining lucrative corporate rents.

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Peter T 05.03.13 at 4:41 am

“Somewhere in the not-too-distant past, ten thousand years ago, something changed in human sociability that permitted societies with more than a dozen, more than 50, members to form..”

First, minor point is that while humans generally lived in small groups, these small groups usually seem to have been part of a larger group – at least a 1000 or so connected through shared language, ritual and a cycle of gatherings.

Second is that to see the change as a change in humans is to miss a crucial point. It was a change in social technologies, with a long set of antecedents and a long development time. And the continued development of these technologies has brought us to where, as BW says, the US polity can encompass 300 million with no more friction than happened on a bad day in, say, Ur III, with its few hundred thousand.

But these technologies rest on beliefs, and many of the beliefs only stay that way because they are not examined too closely. It is as if engineers could make skyscrapers stay up by thinking they could – with bad consequences when someone asks “why?”. If you believe “divinity doth hedge a king” you will avoid a lot of mess that comes with having continual free-for-alls over the top spot. But you will have a bigger mess when this or some other critical belief cracks.

Hence the continued hysteria over Marx, who offers a kind of analysis that threatens to strip away many of the beliefs that hold the whole thing together. But events are undermining the whole thing anyway. We need a new set of beliefs fast.

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john c. halasz 05.03.13 at 4:44 am

@115:

Nope. I don’t think capitalism can be reduced simply to a matter of industrial technology and organization, whatever the historical association of their mutual emergence. “Capitalism” is not difficult to define: it is an economic system of production and exchanged characterized by the predominantly private ownership of the means-of-production, such that the developmental dynamics of the system are driven by the “imperative” to maintain the value of the invested capital via maintaining or increasing the rate-of-profit. One can abstract on a meta level, to outline basic functional requirements that any system of industrial production and exchange must fulfill, but that does not amount to any claim that a capitalist system is necessarily optimal or sustainable, in terms of social welfare or environmental sustainability, in any adequate system of social cost or natural resource accounting, especially since the criteria of selection for technical innovation and development will be determined by the need to maintain profits, rather than any optimization of productive surpluses.

The core contradiction of existing capitalism boils down its “need” to perpetuate artificial “scarcity”: over-consumption for the sake of over-production. When you consider, for example, that in the near future land transport will have to be almost entirely electrified and that is best accomplished by development of mass transit systems in the place of private automobiles, (for obvious thermodynamic and resource reasons), then it’s clear that the “value” of much existing capital will have to be destroyed, even as massive new coordinated investments and innovations are required. (And the problem isn’t exactly “peak oil”, but rather increased oil demand with more expensive oil supplies, which would tend toward substitution from oil anyway, even ignoring the environmental implications). It’s doubtful that could be accomplished under the prevailing system, but precisely not because of some sort of physical or logical impossibility. So one can indulge in some sort of catastrophism and a despair of ease, or one can think and study harder.

As to new human beings, such can not be made, simply because “human nature” is not a given entity, but something socio-culturally structured and, though not infinitely malleable, historically variant, such that one can’t simply replace one given nature with another. What can be done is changing the material conditions and structural constraints under which human beings operate. So, yes, beware the improvers of mankind, but because such improvers tend almost invariably to focus on the wrong object.

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Matt 05.03.13 at 5:45 am

The core contradiction of existing capitalism boils down its “need” to perpetuate artificial “scarcity”: over-consumption for the sake of over-production. When you consider, for example, that in the near future land transport will have to be almost entirely electrified and that is best accomplished by development of mass transit systems in the place of private automobiles, (for obvious thermodynamic and resource reasons), then it’s clear that the “value” of much existing capital will have to be destroyed, even as massive new coordinated investments and innovations are required. (And the problem isn’t exactly “peak oil”, but rather increased oil demand with more expensive oil supplies, which would tend toward substitution from oil anyway, even ignoring the environmental implications). It’s doubtful that could be accomplished under the prevailing system, but precisely not because of some sort of physical or logical impossibility. So one can indulge in some sort of catastrophism and a despair of ease, or one can think and study harder.

Am I the only one who expects suburban America to more-or-less muddle through peak oil? Electric mass transit is the best solution if you have high population density and an empowered benevolent planner, but most of the USA doesn’t have either. The single-family detached home has the highest roof-area-to-occupant ratio of any housing option, and lowest conflict of interests for solar installation, and the USA has decent insolation on average. The “fuel” cost of rooftop photovoltaics charging an electric vehicle is already cheaper than putting gasoline in an internal combustion engine vehicle in most locales. Personal electric vehicles are less thermodynamically efficient than mass transit serving dense populations but don’t pose nearly the same collective action problem.

Are there any pre-existing patterns for reconciling the capabilities of the industrial age with the limits of natural systems? I might be missing some, but I think not. Before the USSR dissolved the Communist bloc produced for the sake of production even without capitalism or marketing — though it was heavy industrial output more than consumer trinkets. If everyone behaved like the average Soviet citizen circa 1980, the climate catastrophe would be postponed only modestly relative to everyone behaving like the average American citizen circa 1980. Overpopulation and overconsumption are just two different ways of framing the problem of overtaxing natural resources. You can sustainably consume a lot per capita with a low population density, or a little with a high population density. Today few nations have a sufficiently low product of population and consumption to maintain Business as Usual for the next century and beyond.

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John Quiggin 05.03.13 at 5:56 am

As far as individual Americans are concerned, Peak Oil (that is, the peak in consumption per person) happened a generation ago, in 1979 IIRC. Gasoline consumption per person peaked in the 1990s.

Global extractions look as if they are peaking around now, but that fact is of interest primarily to producers, not consumers. Of course, as far as the environment is concerned, the sooner the peak is reached, the better.

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john c. halasz 05.03.13 at 6:21 am

@111:

Yes, which is why it was never a good idea to build houses on converted farmland in Stockton, CA. Over the course of the next generation, there will have to be increasing urbanization, (since suburban/ex-urban sprawl was a feature of the cheap oil economy), which is just another instance of the way that current distributions of economic “value” will have to be destroyed.

But mind, pay attention to full resource accounting: about half the energy consumed by automobiles is consumed in their manufacture, not in their use, which amounts to only 75-90 minutes a day. And private electric vehicles await new battery technologies, and the extraction of further resources. Whereas electric motors are 3 times as thermodynamically efficient as internal combustion engines, it’s an old technology, and there is nothing to prevent a highly personalized, computer optimized mass transit system from being developed “off the shelf” now.

Which is to say that I don’t think American exceptionalism is something particularly worth preserving. And the problem with the over-population thesis is not that it’s entirely untrue, but that it’s always those other people who are over-populating.

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Matt 05.03.13 at 6:37 am

JQ is right. Both oil consumption per capita and energy consumption per capita peaked for Americans in 1978 or 1979. The American population has increased slightly faster than per-capita consumption has fallen since then, so the USA is still collectively consuming oil faster than in 1980. Though slower than in the mid-2000s. Absolute US consumption of crude oil and petroleum products peaked in 2005, according to the EIA. The US total fertility rate has also recently fallen below replacement rate, though it is unclear whether this is a temporary economy-linked dip like in the 1970s.

On Google Books you can find UN population projections for the year 2050. You can find not only current but old projections, dating back to the early 1970s. The “medium” variant projection has fallen considerably over time, from (IIRC) over 13 billion in the earliest projections to about 9 billion now.

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Matt 05.03.13 at 6:48 am

@113: Right, there are different (though related) problems of oil production, GHG emissions, and energy consumption. In my mind GHG emissions are the most serious problem because the physical constraints of production are not nearly enough to forestall serious climate and ocean-chemistry problems. Peak oil is second because fast decline could trigger spasms of violence rather than manifesting as Austerity++. Absolute energy consumption is the least serious; everyone could consume abstract energy (megajoules!) like Americans if every energy source had the low emissions and high EROI of wind power. So the embedded vs. operating energy expenditures of ICE and electric cars is interesting but not so much as the oil and climate ramifications.

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dax 05.03.13 at 9:07 am

As near as I can tell Krugman was wrong about the euro. “Greece must and will leave the euro.” Hasn’t happened has it?

His defense is that he was wrong about the politics, not the economics. Since leaving the euro is as much a political decision as an economics one, that sounds like he simply doesn’t understand what his limitations are.

My own prediction is: European economies will suck for the foreseeable future. You don’t have to be a Keynesian to make that predicition, and you don’t have to believe that Keynesian stimulus, or a euro break-up, will improve the situation.

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John Quiggin 05.03.13 at 10:11 am

@jch “about half the energy consumed by automobiles is consumed in their manufacture, not in their use,”

I’ve seen this factoid before, but I believe it to be incorrect. A car with a lifetime distance travelled of 200 000km and efficiency of 10l/100km would use 20 000 litres of fuel or about 5000 gallons, costing pretty much the price of a car. So, unless a car is pure energy, or there are radical differences in energy costs, the claim doesn’t stack up.

Here are links to some more systematic calculations

http://answers.google.com/answers/threadview?id=433981

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Barry 05.03.13 at 1:06 pm

dax 05.03.13 at 9:07 am

” As near as I can tell Krugman was wrong about the euro. “Greece must and will leave the euro.” Hasn’t happened has it? “

OTOH, look how long it took to leave the gold standard during the Great Depression, for some countries.

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smartalek 05.03.13 at 1:39 pm

Indeed.
If one didn’t know better, one might think that Mr Crook (was he given his name by Charles Dickens?) was being just a tad disingenuous.
Not to mention engaging in both of the national sports of the conservatoid / Publican / TeaParty movement: projection and hypocrisy.
And for the umpteen millionth time, it’s necessary to ask, can these people possibly really believe their own assertions?
I truly do not get how anyone other than clinical sociopaths or pathological liars could routinely spout such blatant and obvious nonsense if they have any reality contact whatsoever.
But perhaps that’s the explanation; maybe the real world is to the Fox”News” / Limbaugh / Murdoch / Koch Bros universe as a black hole is to ours:
nothing at all, including information, can leak out once it’s past the event horizon.
Then again, credit where it’s due: Mr Crook at least recognizes that many of Obama’s policies are actually “centrist,” as opposed to the “radical ultra-leftist Marxist Alinskyite anti-American Muslim-Brotherhood” stances that most of his tribe claim them to be.
Heck, by current Publican standards, of course, that would make Mr Cook a traitor, and a loony-lib himself.
.
Mods: a near-dupe of this comment is attached to the cross-post of the OP at WaMo. If that’s a no-no here, pls accept my apologies and feel free to delete.

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dax 05.03.13 at 1:52 pm

@Barry: From the context I think Krugman meant Greece would leave in 2012. But timing is everything with predictions. “I predict that a major earthquake will strike in the San Francisco area between now and t” is very probably true if t is 2500, incredibily bold if t is tomorrow.

How long are Krugman’s predictions for low inflation ? Over the next year? Well, I think most people would take that bet too. For 10 years? He’s certainly has never said clearly he expects inflation to stay low over that time frame.

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Niall McAuley 05.03.13 at 1:54 pm

JQ writes: A car with a lifetime distance travelled of 200 000km and efficiency of 10l/100km would use 20 000 litres of fuel or about 5000 gallons, costing pretty much the price of a car.

I don’t know about world averages, but around here a car that does 200,000 km at 10 l/100 km would be a very rare beast.

120,000 at 7.5 looks more reasonable, so 9000 litres. Of course, 9000 litres here would cost maybe €14,000, the new price of a cheap car, but you’d need a lot of calculating to remove all the taxes and get near the energy costs of each.

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Ronan(rf) 05.03.13 at 1:58 pm

There’s really no way to predict what’s going to happen with the Euro, and *guessing * correctly doesnt really say anything (I’d imagine his ‘prediction’ was more an offhand remark than something he was willing to bet his reputation on, but do you have a link?)
What counts more, imho, is arguing something along the lines of the Euro isnt viable, before it was implemented..which he did, afaik
Not that I have strong feelings on K-man one way or the other, but you’re being a little ungenerous

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dax 05.03.13 at 2:03 pm

It was a BBC interview. You can Google.

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Ronan(rf) 05.03.13 at 2:09 pm

I’ll take your word for it

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Barry 05.03.13 at 2:12 pm

dax 05.03.13 at 1:52 pm

” @Barry: From the context I think Krugman meant Greece would leave in 2012. But timing is everything with predictions. “I predict that a major earthquake will strike in the San Francisco area between now and t” is very probably true if t is 2500, incredibily bold if t is tomorrow.”

I’d also accept that Krugman is wrong on just how much for how long the elites in any country can force the overwhelming majority of the population to eat sh*t.

” How long are Krugman’s predictions for low inflation ? Over the next year? Well, I think most people would take that bet too. “

I think that most would now take that bet, since we’ve seen four years of ‘inflation is just around the corner’ people get burned.

“For 10 years? He’s certainly has never said clearly he expects inflation to stay low over that time frame.”"

Krugman’s point is that the markets are pricing in very low inflation for the forseeable future. With (to my mind) the point being that long before inflation is a problem, it’ll be a visibly oncoming item with plenty of time to alter policy accordingly.

Which is the key fact, and the reason that R&R had to fraudulently come up with a ‘cliff’ regarding debt ratios. If you go over a ‘cliff’, it’s too late to make changes. If the ground slopes noticeably downward, you can alter course.

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dax 05.03.13 at 2:26 pm

As to viability, the European playbook was always to introduce the euro first, which would then be followed by closer political integration. Officials may have said publicly differently, but I don’t think many European leaders in private thought the euro was viable with the political apparatus of 1992 (and even less so that of today).

What intervened between 1992 and today was American pressure to extend the EU to the east, which made the EU (even more) ungovernable, and a failed constitution. If the UK leaves the EU, then closer integration becomes easier.

I do find it a bit ironic you use the word “ungenerous” to describe my take of Krugman, when it’s pretty clear that Krugman rarely tries to understand with generosity himself.

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Barry 05.03.13 at 3:47 pm

dax: “I do find it a bit ironic you use the word “ungenerous” to describe my take of Krugman, when it’s pretty clear that Krugman rarely tries to understand with generosity himself.”

GFY. Krugman spent years dealing with far more generosity that he received, and far more than the recipients deserved.

“What intervened between 1992 and today was American pressure to extend the EU to the east, which made the EU (even more) ungovernable, and a failed constitution. If the UK leaves the EU, then closer integration becomes easier.”

I’m fascinated at how the USA did this, because I never heard a single allegation of that by anybody up until you, right now. Also, I notice that EU governance has failed miserably for Ireland, Spain, Portugal, Italy, Cyprus and Greece, despite those countries not being in the ‘east’.

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mpower69 05.03.13 at 4:53 pm

Look up Krugman’s track record, i.e. what he’s been right/wrong about over the past 8-10 years… see, in mathematically-influenced social sciences like economics, one can judge positions after-the-fact using raw data and statistics.

PK’s “side of the story” has been dead wrong over 80% of the time… he’s a political hack, not a proper economist.

Read some Nassim Taleb (not an economist) to find a better understanding of our economic path and future…

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Nine 05.03.13 at 5:47 pm

dax@120 – “How long are Krugman’s predictions for low inflation ? Over the next year? Well, I think most people would take that bet too. For 10 years? He’s certainly has never said clearly he expects inflation to stay low over that time frame.”

IIRC, “most people” failed take the bet when he first made the prediction back in 2009 or thereabouts & some of those “most people” are resorting to pretty fantastic explanations to defend that failure in retrospect. In any case, Krugman’s predictions are based on reasonably a specific model and parameters ie IS-LM, monetary/fiscal policy at the ZLB etc. That’s a lot clearer & falsifiable than predictions of inflation “for 10 years” because of debased currency and the like.

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Jeffrey Davis 05.03.13 at 6:01 pm

re: 128

Apparently, you can ask Krugman critics for examples that illustrate their complaints, but you can’t make them provide any.

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Bruce Wilder 05.03.13 at 6:23 pm

john c. halasz @ 108

What I referred to as the concept of the quantitative multiplier involves no weighted-by-mythos comparison. Consumer spending and private investment spending have pretty much the same (range of) multiplier(s) as government spending in any particular circumstance. The economy works this way because so much production is structured around sunk-cost investments with increasing returns; high multipliers just indicate a high potential to set off a positive inventory cycle.

There are many legitimate criticisms with which Krugman (and Krugman’s Keynes)could be confronted, and such dialectics might actually inform a democratic electorate, which was prepared to digest them. Crook’s faux-moderate schtick serves both to legitimate reprehensible complacency cum nihilism (To the sky‘s supercilious “nobody knows anything for sure!” playing a supporting role, of course), and to rally an otherwise disorganized and desultory Left to loyal support of the actually neoliberal Krugman, in much the same way the mindless Fox News partisanship against Obama, rallies Democrats to support the neoliberal Obama. Kool-Aid, in the team colors, sweetened with stevia (so there’s no nutrition at all, not even sugar), and just a tiny bit of arsenic. Political ideology as brand management.

jch: Malthusian misanthropy merely underplays and rationalizes . . . rents.

Yes, it does. It is the 21st century equivalent of letting a million Irish peasants starve to death.

The mythos of Hayekian / Friedmanite / Randian / Public Choice market capitalism is of Galtian rationality unleashed and virtue rewarded. Business corporations are profit-maximizing firms, rewarded for all the good they do in the world! Governments, corrupted by power and palsied by irrational political conflict, are the root of all evil. They’ve built up a remarkable set of moral narratives and hypnotic trance inductions, with slogans that have a lot of emotional resonance for many people, and they are not above borrowing every liberal idea left lying around, just as the fascists of the 1920s borrowed every aristocratic, authoritarian, socialist and anarchist trope dormant in the popular mind, whipping them into an airy, peaked meringue.

My quip about Malthus v Marx did the work I intended with Timberman, but it was still off-the-mark, as you understood. At the most basic level, Malthus and Marx were both classical economists working from a shared framework. I think Marx would have grasped the essence of capitalism circa 2013 immediately, though it would have upended his millennial “optimism”.

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Stephen 05.03.13 at 7:19 pm

BW@131: Whatever your opinion about the Irish disaster of the late 1840s, I don’t see how you can criticise a current position by saying
“It is the 21st century equivalent of letting a million Irish peasants starve to death”
and simultaneously disagree with the statement that
“Governments, corrupted by power and palsied by irrational political conflict, are the root of all evil”.
Maybe your position is that there are other roots of evil than governments. True enough. But as applied to the second stage of the Irish famine – after Peel’s government, which prevented people from starving, had fallen, and before Russell’s government had come to their senses – your second phase does seem fairly accurate.

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William Timberman 05.03.13 at 7:21 pm

jch @ 110

What can be done is changing the material conditions and structural constraints under which human beings operate.

To quote a trope much used/abused in CT comments, the can in that sentence is doing an awful lot work — which incidentally makes BW’s ironic observations on Malthusian-inspired immiseration even more delicious. Marx’s whole career was born in despairing of that can, probably because Manchester in the 1840′s had convinced him that before we could make proper use of it, we’d have to first defeat the custodians of you-can’t-because-we-won’t.

In actual fact, making new human beings and changing the material conditions/structural constraints under which we earlier models operate, are, in any fundamental way at least, a single Gestalt, a single process. The duality that a politics of the will makes of them is an illusion.

BW says he thinks doom is our destiny, although — slippery devil that he is — I can never tell precisely when he’s pulling my leg and when he isn’t. Whatever the case here, he may be right, but only because making new men and changing old conditions is such a damned collective and evolutionary process, and technological gadgetry hasn’t helped speed it up by much when compared to the concrete horrors that are coming.

134

John Quiggin 05.03.13 at 7:23 pm

@Niall “round here” isn’t actually a useful description on the Internet, but I infer from the euro sign in your comment that you are in the eurozone. The obvious way to estimate lifecycle distance travelled is to look at a ratio of km travelled to cars sold (assuming this roughly equals cars scrapped). This wiki answer claims to have done that and gives (in miles): US 160000 Australia 145000 UK 125000 Canada & France 115000 Rest of Europe 105000 Japan 70000

which, converting to km, suggests that my number was actually about right for the UK, and conservative for Oz (where I am) and the US (where I assume jch is). Only Japan, which strongly encourages early scrapping, comes close to 120 000km.

http://wiki.answers.com/Q/What_is_the_average_car%27s_lifetime_mileage

For fuel economy, I used a US number, corresponding to about 24 mpg. Europe would certainly be better.

To come at the analysis another way, the “half of all costs in manufacturing” line has been touted by Bjorn Lomborg and AEI, which is strong prima facie evidence that it’s a lie.

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Bruce Wilder 05.03.13 at 7:59 pm

john c. halasz @ 110

the “imperative” to maintain the value of the invested capital via maintaining or increasing the rate-of-profit. . . . a capitalist system is [not] necessarily optimal or sustainable, in terms of social welfare or environmental sustainability, in any adequate system of social cost or natural resource accounting, especially since the criteria of selection for technical innovation and development will be determined by the need to maintain profits, rather than any optimization of productive surpluses.


The core contradiction of existing capitalism boils down its “need” to perpetuate artificial “scarcity”: over-consumption for the sake of over-production.

I’m not sure Marx’s terms help with this, even when they can be applied to good effect. “Rate of profit” is wrong, or at least fatally confuses economic profit and interest on financial capital with economic rent. Hegelian contradictions are a dubious way to identify the paradoxes that reveal how far, and why and how, a decentralized market economy deviates from an ideal of just and rational organization. And, over-production is, at worst a peripheral symptom of pathological dysfunction — and an easy symptom to treat, by the way, as Keynes and Krugman would instruct us — not the core.

The key contradiction is the tension between public and private, the individual and the whole people and state, between private wealth and common wealth, the good of the dominus and the general good. Capitalism brings this contradiction into high relief, because, in contrast to preceding feudalism, capitalism offers the possibility that the dominating elite might serve a productive purpose, and be something more than the corrosive deadweight of violent drones extracting a paltry surplus to be spun into chainmail and trinkets.

In the Friedman mythos, based on the neoclassical economics of the marginal revolution, the market delivers justice, by paying every resource, its marginal product, delivers to the sovereign consumer, marginal value exactly equal to price, plus consumer surplus. In the more realistic classical economics, most progress tended to flow away into unearned economic rent. In the most optimistic scenario, the rentiers, rather than drones, became Adam Smith’s improving landlords, practicing an enlightened self-interest in augmenting the common wealth of their nation: the Duke of Bridgewater and his eponymous canal triggering the industrial revolution by cutting the price of coal at Manchester or the dissenting gentry of the Lunar Society nurturing Birmingham, or the recusant Duke of Norfolk underwriting Sheffield.

Friedman’s marginal product fairy tale doesn’t really work, because marginal product is conditioned on a sunk cost investment of capital claiming a quasi-rent residual, and it simply isn’t possible for many businesses, absent a considerable infrastructure of public goods — including effective, detailed regulation — to sustain themselves in a competitive marketplace. You cannot build a railroad and expect to make a profit on operating the railroad, selling transportation services. The benefits of the railroad will flow to adjacent business and property owners, so unless the railroad owns a lot of the adjacent land and businesses, it won’t sustain itself; so much for decentralized market capitalism. If you follow the logic out, the only way to capture all the benefits of innovation and use them to finance worthwhile investment rationally is to form a totalitarian state that owns everything and receives all rents, internalizes all externalities, but such a hierarchy of power is a disaster for other reasons, and an informational impossibility. Second-best is a mixed economy state that heavily taxes economic rents, and uses those taxes to finance investment in public goods, and compels capitalists to take risks with their capital.

Capitalism works reasonably well when there’s a balance of Schumpeterian entrepreneurs using creative destruction to steal the old guard’s rents to feed their own ambition, the threat of world war and global communism to motivate public spiritedness in the elite, and some mass-membership organization to oppose and divide the elites. Otherwise, not so much.

In relation to resource limits, preserving rents motivates one part of the rentier elite to champion a past best dead and buried, while finance capitalism seeks rents from parasitism of usury and Ponzi schemes. The key pathology, though, is, paradoxically, the unregulated capitalist impulse to externalize risk and cost, to split economic rents into good and bad tranches, and visit the bad tranches on people with no risk-bearing capacity or power to resist. So, better and cheaper to adapt to global warming than to stop it; if Bangladesh drowns, well, the poor can’t afford to adapt — their bad, the losers. Welcome to neo-feudalism.

The record of capitalism in extinction events and the exhaustion of depletable resources is not encouraging, but the folks, who think reputation effects can save us from frauds and food poisoning will no doubt have rationales. Otherwise, what’s a Tim Worstall for?

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Bruce Wilder 05.03.13 at 8:08 pm

Stephen @ 132

Forgive me for thinking that the Protestant Ascendancy and absentee landlords, who stiffened Conservative opposition in Parliament to do anything to help the people they had sunk into famine, might be blamed for anything.

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Ronan(rf) 05.03.13 at 8:19 pm

“I do find it a bit ironic you use the word “ungenerous” to describe my take of Krugman, when it’s pretty clear that Krugman rarely tries to understand with generosity himself”

Yeah sure, fair enough. I’m really not carrying Krugman’s water on this, I just don’t think an offhand comment on Greece leaving the Euro is a particularly convincing argument against him

138

john c. halasz 05.03.13 at 8:27 pm

JQ: 117:

Well, the factoid was conveyed to me by a professor of physics, albeit a lefty red/green type. I neglected to ask for sourcing or a laying out of the accounting. And I’m not going to insist on the exact figure, since these sorts of aggregate figures tend to have a wide range of variation, depending on data sources and assumptions about inclusions and comparisons. (Extra GHG emissions from tar sands oil, for example, is estimated at between 8% and 38%, so taking the mid point 20-25%, which is where the EU puts its figure at 23%).

Still, this doesn’t quite make sense:

“A car with a lifetime distance travelled of 200 000km and efficiency of 10l/100km would use 20 000 litres of fuel or about 5000 gallons, costing pretty much the price of a car. So, unless a car is pure energy, or there are radical differences in energy costs, the claim doesn’t stack up.”

Fuel costs are post-purchase and have nothing to do with prior embedded energy content. And accepting your rough calculation at U.S. local prices, 5000 gallons = $18,000 or roughly 60% of the price of a new car.

While insisting importantly on the point that energy costs are not the only natural resource cost to be accounted for, but not insisting on an exact figure here, I’ll grant the good professor that by “manufacturing” cost, he probably meant total life-cycle non-fuel-burning cost, (including, e.g., disposal or recycling costs). The aggregate estimate one derives depends on what one includes or how narrowly one draws the boundaries. So, non-fuel operating costs might be included. Or, trivially, the cost of raising food to feed workers. Or, non-trivially, the cost of building and maintaining the road system that automobiles depend on. (Cement manufacturing alone is a major source of GHG emissions, though I’m not suggesting returning to adobe). So the overall energy and resource utilization of the automobile complex is proportionally large and not simply reducible to the relative inefficiency of ICE, (which is greater for diesel, but that not used much here for personal vehicles), or improved fuel efficiency.

20 years ago I read a relatively short paper by Nicolae Georgescu-Roegen laying out the matrices and tables for full natural resources accounting. (The paper was already 10 years old or so, since it was partly criticizing the fallacies of short-circuited energy accounting from the Carter era). The basic lesson of that paper has stuck with me ever since and especially the point that resource accounting is not simply reducible to monetary cost accounting.

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John Quiggin 05.03.13 at 10:47 pm

Fuel costs are post-purchase and have nothing to do with prior embedded energy content.

The point is that, if you spend an amount equal to the entire purchase cost of the car on energy to run it, then the only way the energy content of the car can be of equal value is for the car to consist solely of energy. Of course, as I and others mentioned, the price of energy may differ between motor fuel and manufacturing, but this calculation is a good indication that the original claim is problematic.

But it would be better to go to the linked studies which claim a definitive refutation.

140

Niall McAuley 05.03.13 at 11:16 pm

JQ writes: if you spend an amount equal to the entire purchase cost of the car on energy to run it, then the only way the energy content of the car can be of equal value is for the car to consist solely of energy.

I do believe that the factoid you are fighting is wrong, but you are talking complete nonsense.

Here in Ireland: Most of the cost of a car is tax. Most of the cost of fuel is tax. The energy used to make the car and the energy used to fuel it are only loosely related to the cost of either: the relationship depends on VAT, VRT, income tax rates, bands and allowances, excise duty, PRSI, and a list of other taxes, rules and government regulations.

The Google Answers (god help us) page suggests the factoid is wrong. But saying that the fuel costs more than the car therefore the factoid is wrong is baloney, and undermines your case.

141

Bruce Wilder 05.04.13 at 12:59 am

For little it is worth, the first time I heard the claim about energy costs, the cost of maintaining highways was included. The opposing claim concerned the enormous energy costs of building heavy rail, which has comparatively low energy demands in operation.

I know nothing about these claims, which seem preposterous to me in their sweep.

142

john c. halasz 05.04.13 at 1:40 am

JQ @ 139:

I did read through the provided link, though not the detailed sub-links- ( time constraint). (There were already some obvious errors, such as saingy hydro-electric entailed no GHG emissions; a similar claim was mooted recently on these boards claiming the same for nuclear. Not nearly.)

But I’m still not getting the point or assumptions of your attempted reductio. AFAICT it amounts to the notion that if there were not productive surpluses involved, such that outputs exceed inputs, (or, perhaps any consumer surplus involved, such that no one would purchase such vehicles), then the entire automobile complex couldn’t exist. But I fail to see how that logically confutes the claim that a large proportion of the embedded energy expenditure of the automobile complex, (perhaps as much as 50%), isn’t expended directly in propelling person-miles or some such unit. No one denies that energy expenditure, as much, if not more, than labor expenditure, is behind the realization of production and thus consumption surpluses. The issue isn’t the existence of production and consumption surpluses, but the relative underlying resource costs and distributions of those surpluses. So,- (thanks again Google),- in the U.S. the average cost of an automobile is $30,000, the average annual consumer expenditure, (cost, maintenance, fuel, etc.) is $8000, and, as stipulated, 10 years and 5000 gallons, the direct fuel expense is $18,000 vs. $80,000 in expenses and $30,000 in initial costs, leaving $62,000 in expenditures to be somehow allocated, of which only 3/8 is direct manufacturing and also leaving aside non-private social costs. The only question is where the additional income comes from to meet that expenditure, (and what the underlying resource base is), not that cost must be entirely reduced to energy or resource expenditure.

It should be fairly obvious why resource accounting is not reducible to current monetary cost accounting, even leaving aside any monetary distortions. There is the replacement cost for resources, the disposal or recycling costs, the dim opportunity costs of environmental and ecological damage, etc. The question is, as my late mother used to say sing-song, “Und vir villt das bezahlen?,- and who will pay for it?

Currently there are over 1 billion automobiles world-wide. The median projection is that by 2050 there will be 2.5 billion. Is that sustainable? I.e. possible and desirable. (It resembles BP’s recent report on global oil production, which blithely admitted its GHG implications).

So have I bitten off more than I can chew here? Surely. But so have you, especially in responding so narrowly to the basic point and using crude empiricism to obviate the conceptual claim, at once an “argument from authority” and an “argument from incredulity”.

The claim was that the long-run technological and institutional transformations that will be required to preserve and promulgate the benefits of industrial “civilization” are immense, diverse and complex. And beyond the means of currently existing capitalism to accomplish.

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jb 05.04.13 at 3:30 am

Bruce Wilder @136

You won’t be able to convince Stephen of this.

144

purple 05.04.13 at 9:12 pm

The Scandinavian model: awful, just awful. That truly would be a terrible world.

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John Quiggin 05.04.13 at 10:49 pm

Probably a mistake to try to argue this in a comments thread, but the technological challenge of eliminating all use of fossil fuels, while immense, is well within the means of currently existing capitalism to accomplish.

Here’s a report on a study recently undertaken by the Australian Energy Market Operator (not a green group by any means) on the feasibility of running the Australian electricity system entirely on renewables (with a substantial role for electric vehicles). The estimated investment cost of $300 billion is about 20 per cent of Australia’s GDP, but would be incurred over 10-20 years.

http://www.businessspectator.com.au/article/2013/4/29/renewable-energy/100-renewables-feasible-aemo

That’s not a complete solution but it’s the most difficult bit – once you have a zero-emissions electricity system the remaining problem is one of electrification, which can be done for just about any form of energy se.

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john c. halasz 05.05.13 at 7:08 am

@145:
Well, while not disagreeing that the technical means are, if not readily apparent, nonetheless near to hand, the changes and transitions required would involve, aside from the destruction of the “value” of much current capital, both as physical infrastructure and as the financial asset claims laid on top of it, (and thus of the power of incumbent interests), much public investment and publicly guided indicative planning. YMMV, but I would consider that a significant departure from actually existing capitalism.

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Stephen 05.07.13 at 6:52 pm

Bruce Wilder@136
Re the Irish disaster of the 1840s: you write of “Conservative opposition in Parliament to do anything to help the people they had sunk into famine”.

You do know that the Conservatives, in Parliament, spent a great deal of UK taxpayers’ money on providing very effective relief for the famine, don’t you?

Or if you don’t, why don’t you?

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john c. halasz 05.07.13 at 7:45 pm

BTW searching further, I came across an Aussie pdf. of the life-cycle energy cost of roads, which put the manufacturing embodied energy of automobiles at 270 billion joules. (5000 gallons of gasoline would be 660 billion joules).

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Ronan(rf) 05.07.13 at 8:17 pm

“You won’t be able to convince Stephen of this.”

Nicely predicted!

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Bruce Wilder 05.07.13 at 10:11 pm

Stephen @ 147

I don’t know it, because it did not happen. Believe what you will, if it entertains you.

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