Daniel

I know, readers, sometimes it seems that we at CT are determined to continue discussing Rawls vs Cohen on the requirements of justice until our last reader has been driven into screaming insanity, but have faith – this is empirically relevant stuff.
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I’m a bit bemused by the bemusement. Brad DeLong and Paul Krugman are both running round tearing their hair out about the fact that half of the economics faculty at Chicago appear to be saying demonstrably wrong things about the Obama stimulus policy, and specifically to be reinventing mistakes that everyone thought had been put to rest in the Keynesian debates of the 1940s and 50s. What, O what, would Milton Friedman have said, if he were alive to see this travesty?

Well, call me a cynic, but I am not at all sure that BdeL and PK, two mainstream Keynesians from a different intellectual tradition entirely, can be so sure that they are right and Milton Friedman’s acolytes, former colleagues, former students, close friends and intellectual heirs are wrong about what is the way to carry on Milton Friedman’s intellectual legacy in an environment where a Democratic government is proposing an increase in the federal budget for purposes of fiscal stimulus.

Producing more or less mendacious intellectual smokescreens for policies which favour the interests of very rich men is not an incidental side effect of Chicago School libertarianism. It isn’t some sort of industrial pollution – it’s the product. If and when the Milton Friedman Institute is endowed and operating, it will be people like John Cochrane who staff it, and it will be arguments like this that, when push comes to shove, it produces. The Cossacks work for the Czar. They have always worked for the Czar.

So, should the University of Chicago economics department be razed to the ground and its foundations sowed with salt? Well, Brad at least has recommended this treatment for the Washington Post for what appear to me to be much lesser crimes, but I would be inclined to be more merciful. Taking my cue from Jehovah in the Old Testament, I would be prepared to spare the Chicago School if one innocent man could be found there. So basically, unless and until James Heckman comes out with a stinker on the stimulus package, I say let it survive.

One of the inevitable consequences of any Middle Eastern conflict is the collateral damage caused by the unprovoked and disproportionate attacks which tend to be launched by Michael Walzer on his own credibility (this joke first made on CT here). His latest is a waffly piece of blah in the Even The Liberal New Republic, on the general subject of “proportionality” and collateral damage to civilians.

SPOILER ALERT: don’t click on the “read more” link if you don’t want to find out whether or not he decides that the State of Israel is broadly justified in its latest actions.
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Ahhh, the curse of a title that you like too much to throw away, but not enough to write a relevant post about. Lengthy, multiply footnoted philosophical meanderings, below the fold.

Update: Unaccountably, I forgot to thank “Robotslave” for massive amounts of help provided in this research. Sorry and thanks!
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As part of a minor project aimed at eliminating the cliche “the very real concerns of the white working class” (the latest weaselly codeword for people who want to gain the political benefits[1] of playing anti-immigrant politics while avoiding any of the costs) from British political life through a campaign of sustained mockery and invective, I had an article up on the Guardian blog last week. A digression that I probably should have edited out of it, but in fact liked so much that I not only left it in but am posting it here now, concerned the sunset of what was once an important subsector of the British social work profession in places like Kilburn and Camden Town:
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Budweiser, eh?

I asked the brewmaster, Jean-Marie Rock, which American beer he likes best. He thought for a moment, squinting down his bladelike nose, and narrowed his lips to a point. Then he raised a finger in the air. “Budweiser!” he said. “Tell them that the brewer at Orval likes Budweiser!” He smiled. “I know they detest it, but it is quite good.”

Thanks very much for the heads up to Luis Enrique and Unfogged. Sweet vindication, albeit coming from a guy with pointed lips. Other gems from the article:

“When a brewer says, ‘This has more hops in it than anything you’ve had in your life—are you man enough to drink it?,’ it’s sort of like a chef saying, ‘This stew has more salt in it than anything you’ve ever had—are you man enough to eat it?’ ”

Microbrewers, gahhh.

In the course of an article arguing that a large vote for Obama is not a vote for his policies (and, equally curiously, that the total and utter failure of conservative policies is not in and of itself a reason to try something else), Gerard Baker, who is to Thomas Friedman as Ricky Valance was to Richie Valens, says:

What, in these circumstances, would a scientific model predict as the winning margin for the Democratic presidential candidate: 10, 15, 20 percentage points? In fact, as of yesterday, Mr Obama seemed to have a solid but by no means overwhelming advantage of between 5 and 6 percentage points.

In fact, the Ray Fair model, with default values, predicts four points.

It is actually quite easy to look these things up you know.

It appears to be a commonplace gaining ground every day that the main reason we have a credit crisis (about which I am not writing; this is an essay in recent monetary history) is that bankers created it, and specifically that they created it because they are stupid. Nicholas Taleb (who doesn’t eat foods unless they have a name in Hebrew or Doric Greek, I just bring this up as an interesting fact rather than to suggest that here’s a man who knows stupid when he sees it) has been really quite cutting on the subject, among others. Stupid, stupid stupid. Isn’t it a shame that these stupid people in their stupidity brought this crisis among us? Don’t we need a blue-ribbon commission to make sure that such stupids never have the chance to do so much damage again?

Harrumph.
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Nate Silver wants to scrap the “squiggly” audience reaction dials during Presidential debates. My instinctive reaction to this is “step away from the bacon, son, leave the bacon out of this. I love the crawler and think that it really helps you understand what’s going on in the debates – in particular, it helps you take one step back from your own prejudices. It’s also just about the only input into debate commentary that comes more or less unmediated; the anonymous “undecided” focus group participants might be dumb or irrational, but they’re at least not pushing an agenda. Raw data is always good to have – although Nate’s sample size points are well made, I actually doubt how much potential there is for practical error to be introduced, given that one doesn’t actually look to the crawler for straightforward yes/no answers to questions, just for an overall impression of how the participants are going over.

My only complaint about the crawler is that CNN removes it from the screen when the debate finishes. I absolutely wish that they continued to show the favourable/unfavourable reactions of the dial-testing focus group to the talking heads on the news afterwards; you’d be able to see the worm plunging every time Wolf Blitzer opened his gob.. I suspect a few uncomfortable home truths would arise out of that one. In general, more new programs should use dial-testing crawlers. And not just news, thinking about it; why doesn’t Big Brother have a crawler, since it’s also basically a popularity contest? Or the Eurovision? Chat shows would be great entertainment if you could see boring or vain starlets bleeding their popularity away in real time. At this precise moment, I can’t think of a single program on TV that wouldn’t be improved by having a dial-test at the bottom of the screen.

And indeed it was – Paul Krugman has won the Nobel Prize for Economics[1].

The citation says he got it “for his analysis of trade patterns and location of economic activity” – ie for new trade theory. Which certainly did pretty much light a bomb under the subject when he published it in the 1980s, but if this is all it’s for, it’s frankly surprising that Krugman got it all to himself; there were plenty of other people who might have felt they deserved a share.

I can’t help thinking that this is actually Krugman’s reward for being the public voice of mainstream sensible Keynesianism for the last fifteen years, starting with the use of the liquidity trap to explain the Japanese slump, going through his prediction of the Asian crises and onward to today. In which case, well done the Nobel[see note 1 again] committee – Krugman’s NYT column has been more use to the public standing of economists than more or less anything published in the journals.

And, of course, congratulations to Prof. Krugman himself, who might very well have believed that he’d done his professional status irreparable harm by taking such an aggressive line against the government of the day; he now gets the double pleasure of receiving the highest reward in economics, just as all of his detractors see their repuations ruined. There is probably some pithy epithet from Keynes or JK Galbraith to be inserted here on the general subject of honesty being the best politics, but I can’t think of it just at this instant.

Update: Hey, have you seen the new Guinness advert?

[1] blah blah blah Sveriges Riksbank. Nobody cares, you know.

Although I am not commenting on the current crisis, I think it would be irresponsible of me not to point out that I not only saw it coming five years ago, I even suggested a number of potential solutions which were similar in shape to the one actually chosen, but decidedly more innovative. If any readers are emailing their congressmen etc, you can quote me if you like. I promise that I am not trying to talk up a massive speculative book of Beanie Babies.

I suppose that I ought to make this clear; I’m not going to be writing anything, on CT or any of my other blogs, about the current global financial markets meltdown. This is basically because of my professional commitments; as you know, I’m a stockbroker by trade, and what with one thing and another, I’m in a more responsible position than I was when I started blogging. Going through my reasons in a numbered list:
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… But this is perhaps taking it a bit too far.

Kieran, would you mind popping down the corridor and telling Councillor Thompson that I’d like a word with him about the changes to residents’ parking at the end of my road? Thanks

(yes yes, I know he doesn’t work there any more, but that would have spoiled the joke, wouldn’t it?)

Following on from my stock-picking post of a couple of days ago, it appears that the people selling Obama into the convention were right in as much as they didn’t expect a post-convention bounce.

However, the Obama WTA contract was offered around 54 when I wrote the post, and remained at that level all day. CT readers who bought on my advice can now close out at 59.8 and make a quick 10% turn. So at least I haven’t cost you money.

Two points (I realise I’m getting sucked back into a debate I had sworn to give up, but there you go). First, there was no convention bounce in the polls but there was in the IEM numbers. So was there a convention bounce? I think the fact that this question doesn’t obviously have an answer rather underlines the fact that the IEM market prices aren’t giving us very much useful additional information over and above the daily tracking polls (which are themselves not incredibly useful). Second, all the action is in the WTA contract; the vote share contracts have hardly moved at all over the last few days.

Update: I’m now seeing reports of an “8-point convention bounce, which would make the IEM action seem more sensible, albeit at the cost of rather demonstrating how pointless this short-term horse race coverage is.