Mike Konczal and Robert Waldmann don’t seem to know what “year-over-year” graphs mean
Robert Waldmann quotes from a Mike Konczal post that has already been discredited. Even Paul Krugman has the good sense to avoid adopting Konczal’s losing argument. So it looks like I’ll have to shoot it down one more time.
When you have growth rates expressed as quarterly year-over-year changes, it shows a lagged growth rate. Thus the 2013:1 y-o-y growth rate is actually the economic growth from 2012:1 to 2013:1. That means it is basically showing growth that occurred in 2012. To be more specific, roughly 5/6th of the y-o-y growth for 2013:1 occurred in calendar 2012.
Now let’s suppose we are going to look at the effects of the big tax increases of 2013, including an extra 2% on payroll taxes that Krugman insisted was very important, as well as the spring of 2013 sequester and other cuts. What does 2013:1 y-o-y growth tell you? Almost nothing. The ideal would be to average 2013:4 and 2014:1, to get a point estimate of end of 2013 GDP. Then do the same for an estimate of end of 2012 data. Then compute the rate of change. We don’t even have the data yet to do that, and won’t until late April. But the data we do have suggests that the market monetarist model was almost certainly supported by 2013 data.
Mike Konczal seems to think it is important that David Beckworth used a year-over-year graph for a completely different purpose, and that I endorsed this graph. So what? Unlike Konczal, Beckworth was looking at multiyear changes, where a y-o-y approach is much more valid. And even if he had misused the graph, what possible difference would that make for the 2013 test of MM?
Waldmann notes:
I can’t help thinking of whether Konczal’s criticisms amount to a credible accusation of impropriety.
I’m seeing impropriety all over the blogosphere, but people like Robert Waldmann and Noah Smith don’t seem to know how to recognize it.
PS. Waldmann also criticizes Beckworth’s graph for not including 2013 data, but as Mark Sadowski points out in the comments, the graph was posted before the release of 2013:1 GDP data.
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20. January 2014 at 11:56
The few times that Konczal has shown up here (assuming it wasn’t someone impersonating him) his remarks have mostly been significant for their…brevity.
20. January 2014 at 12:22
Patrick, I’m very disappointed that he’s still pushing that silly year over year data for the 2013 fiscal experiment. But at least Mike is much more polite than Waldmann.
20. January 2014 at 12:43
Dear Commenters,
See Warren Buffett’s analysis of interest rates here:
https://twitter.com/Kevin_Holloway/status/425015692677873664
Does it actually make sense?
20. January 2014 at 16:57
Travis, Not to me.
20. January 2014 at 17:18
“Even Paul Krugman has the good sense to avoid adopting Konczal’s losing argument.”
Scott as a great President once said ‘There you go again.’ You’re trying to give the illusion that there is any argument that’s a bigger loser than yours. Only you and your MM friends think you have one anything. Here you go misleading about Krugman’s arguments again:
“Now let’s suppose we are going to look at the effects of the big tax increases of 2013, including an extra 2% on payroll taxes that Krugman insisted was very important”
He never said it was really important to let the payroll tax expire. Rather it was that the Republicans refused to agree to a deal that allowed the payroll tax cut to continue. It’s not true as you’ve suggested in previous posts as well that liberals support all tax hikes and oppose all tax cuts just some kinds. Conservatives-or ‘neoliberals’ if you prefer-are the same. The latter likes to cut taxes for the rich-i,e ‘supply side tax cuts’ while they don’t like tax cuts like the payroll tax cut for workers. You yourself show this in supporting the PR tax cut only for employers not workers.
At the end of the day unless you want to argue that we’ve had a optimum recovery-that it was ideal in terms of speed and the rate of growth has been ideal then there’s nothing for MMers to brag about. I know all you want to talk about is two quotes by Krugman or Konczal last year. MY point has always been that you haven’t shown that there was full monetary offset just because growth in 2013 is about the same as in 2012.
I predict you wont try to answer this point head on-your answer will be some version of ‘but Krugman said this. He said it was a test. Now he won’t admit it. I won! I won.’
Which hardly makes you sound terribly mature but I guess you don’t realize this.
21. January 2014 at 02:40
We would still have had a faster recovery with less fiscal austerity. You like to compare the U.S. to the EU. However, while what we’ve had is better than what they had-the had monetary and fiscal austerity we only had fiscal austerity-we would have still been better off with no fiscal austerity either.
21. January 2014 at 05:45
Mike, You claim Krugman never said the payroll increase was important? Then you are wrong again.
21. January 2014 at 09:07
This is kind of funny. When I click on that link I get this warning. Looks like Trend Micro OfficeScan takes misleading y/y charts seriously.
The URL that you are attempting to access is a potential security risk. Trend Micro OfficeScan has blocked this URL in keeping with network security policy.
URL: http://angrybearblog.com/2014/01/mike-konczal-vs-market-monetarists.html
Risk Level: Dangerous
Details: Verified fraud page or threat source
21. January 2014 at 19:57
You say Krugman wanted to payroll tax to expire or that he said letting it expire would be a mistake?
22. January 2014 at 17:55
Mike, He viewed letting the payroll tax CUT expire as a mistake, and a significant factor in 2013’s austerity.