Reply to Karl Smith
In a recent post I pointed out that during the 1970s we had normal (3.2%) growth and that 100% of the high inflation was due to NGDP growth being much higher than 5%, indeed about 10.4% on average between 1970 and 1980. So even during the 1970s, inflation would have been only around 1.8% under NGDP targeting. I think Karl Smith accepts that argument. But he also claims:
The 1970s were definitely an era of stagflation
He later defends this statement by pointing to the relatively high levels of unemployment during that decade. I had thought the word ‘stagflation’ meant high inflation plus slow output growth (due to slow growth in AS.) Karl seems to think it means high inflation plus other bad things, like high unemployment.
Rather than arguing over semantics, I’d rather focus on the important issue; what does the 1970s tell us about NGDP targeting? I think Karl and I would both agree that (whether or not there was stagflation during the 1970s) under 5% NGDP targeting there definitely would not have been any stagflation. The 1970s are not a counterexample to my claim that 5% NGDP targeting would produce good results for those variables that central banks can affect.
It’s true that we could have done better on the supply-side with improved public policies during the 1970s, which would have led to more rapid growth. But that’s also true of the 1950s and 1960s, when more lenient immigration laws would have produced faster growth. It’s always true that RGDP is well below the level that would have occurred with better public policies. But I think if the term ‘stagflation’ is going to mean anything useful, it has to refer to a periods where, for any given rise in AD, slower than normal AS growth leads to higher inflation. The 1970s do not meet that definition.
I agree with Karl that changes in the unemployment rate are a better indicator of the business cycle than changes in RGDP. But I hope that we can both agree that slow growth in AS did not cause the high inflation of the 1970s. Yes, the natural rate of unemployment rose by about 2% during the 1970s, but any inflationary impact of that increase was offset by faster than normal growth of the labor force. Hence inflation was completely demand-side.
I agree that oil shocks, considered in isolation, raised the price level during the 1970s. But the impact of higher oil prices was more than offset by the impact of faster than normal labor force growth. Hence the supply-side of the economy did not have any inflationary impact on the economy in the 1970s. Our textbooks are wrong, just as they are wrong when they tell our students that the classical economists believed the AS curve was vertical. Or that Fisher believed velocity was constant. Or . . . but it would take too long to list all the errors.
PS. I do agree the term ‘stagflation’ applies to 1974.
PPS. In the comment section of my earlier post Numeraire makes some points that are similar to those of Karl Smith.
Update: Tim Duy sent me a very good post he did last year that makes some similar points, and includes some graphs comparing the 1970s to the past decade.
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17. June 2012 at 08:09
Seems like I’m right only when “respected” economists agree with me, since it’s “safe” to concede to Karl Smith.
17. June 2012 at 08:17
I think Karl and I would both agree that (whether or not there was stagflation during the 1970s) under 5% NGDP targeting there definitely would not have been any stagflation.
According to the theory that NGDP drives employment, if we look at this chart, we’d have to infer that reducing NGDP growth from these values, down to a constant 5% per year, would have seen employment been even lower than it was.
The blue line (NGDP) would be reduced the entire decade, and thus the red line (employment) would have been correspondingly reduced. That’s what follows from the theory “NGDP drives employment”, a theory that Hayek held as false, and very harmful if acted upon.
17. June 2012 at 08:52
See, the main problem with market monetarism is not its microeconomics, which is more or less satisfactory, it is the fact that it starts on the wrong end of understanding the market, epistemologically speaking. It starts at aggregates, and incorrectly conceives of microeconomic activity as a (partial, or full) effect of aggregate statistics, such as total spending. It doesn’t understand that total spending is actually an effect of microeconomic individual choices to spend. If the aggregate rises or falls, it doesn’t mean microeconomic factors are determined by that rise or fall. What is actually taking place is that the aggregate changes are a result of microeconomic changes. Microeconomic factors are affecting other microeconomic factors. So when you see money and aggregate spending change, and you believe this has an effect on the real economy, what you should be doing is looking to see which microeconomic factors are influencing other microeconomic factors.
Nobody is affected by NGDP, and nobody economizes NGDP. People are affected by the microeconomic factors that are responsible for NGDP. Thus, if you see NGDP fall too much, it is not true that raising NGDP back up blindly, by printing and spending money on arbitrary goods, on arbitrary securities like treasuries, can “fix” it.
You can keep thinking crudely of such thought experiments of “if 90% of the money supply and aggregate spending declined, that would have an effect on real activity.” No, that is incorrect. It is incorrect because if the money supply and aggregate spending fell by 90%, then it is because the real economy at the individual level, collectively, changed in such a way that resulted in a 90% drop. You can’t just take a 90% drop as a given, as if it is even possible for 90% of the money supply and spending to disappear catching everyone off-guard.
Aggregate money and spending isn’t a separate, concrete reality that moves up and down apart from the individual actors themselves, after which the individual actors “have to deal with it.” No, these aggregate statistic changes are borne out of individual action. If aggregate money and spending declines, look for the causality from individual actors, who determine all statistics, including aggregate money and spending.
If the money supply shrinks from one moment to the next, without the Fed being a net seller of securities, then that is a result of individual market actors shrinking the money supply, by way of choosing their own individual cash balance waiting times that was in total longer than it was in the indeterminate past. This is not the Fed “failing.” This is the market saying past (longer) waiting times of spending out of cash balances is no longer applicable and no longer desired today.
If aggregate money spending shrinks from one moment to the next, without the Fed being a net cash hoarder, then that is a result of individual market actors shrinking aggregate spending, by way of choosing their own individual spending that was in total less than it was in the indeterminate past. This is not the Fed “failing.” This is the market saying past (higher) spending is no longer applicable and no longer desired today.
Most important lesson of all: It does not follow from the mere existence of a central bank, that all of a sudden economic laws no longer apply, nor does it imply that you are hereby free to set an artificial growth path of money and spending, that is superior to the money and spending that the market process is CONSTANTLY putting “pressure” on, constantly correcting Fed errors, and constantly trying to reassert itself as to the “correct” money supply and volume of spending. Each moment there is a lack of Fed “action”, the market process is already immediately reasserting itself, correcting the economy of the relative over or relative underproduction of money. NO INDIVIDUAL can know what the correct quantity of money and volume of spending should be, EVEN WITH central banking. The only correct quantity of money and volume of spending is the one borne out of free market in money production, holding, and spending.
If the central bank imposes a permanent spending growth path, the market is going to continually put pressure on it to the extent there is a divergence between Federal Reserve System induced money, credit and relative prices, and market induced money, credit, and relative prices.
Moreover, it is wrong to believe that because past productivity tended to be 3%, and price inflation tended to be 2%, that 5% NGDP will be long term neutral. For with 5% NGDP, there is a unique economy associated with it, where real output of 3% is unsustainable because it is founded on discoordinated economic activity.
17. June 2012 at 09:10
I took some “photographs” of the period:
http://thefaintofheart.wordpress.com/2012/06/17/debunking-a-cherished-myth-the-1970%C2%B4s-was-not-the-stagflationary-decade/
17. June 2012 at 09:39
I didn’t mean that to be a criticism of your definition of stagflation, only to further my point that people feel like the labor market is bad when they can’t get a job not when RGDP is growing slowly.
17. June 2012 at 10:18
From Friedman´s 1976 Nobel Lecture:
I conjecture that a modest elaboration of the natural-rate hypothesis is all that is required to account for a positive relation betwe e n inflation and unemployment, though of course such a positive relation may also occur for other reasons. Just as the natural-rate hypothesis explains a negatively sloped Phillips curve over short periods as a temporary phenomenon that will disappear as economic agents adjust their expectations to reality, so a positively sloped Phillips curve over somewhat longer periods may occur as a transitional phenomenon that will disappear as economic agents adjust not only their expectations but their institutional and political arrangements to a new reality. When this is achieved, I believe that – as the natural – rate hypothesis suggests – the rate of unemployment will be largely independent of the average rate of inflation, though the efficiency of utilization of resources may not be.
High inflation need not mean either abnormally high or abnormally low unemployment. However, the institutional and political arrangements that accompany it, either as relics of earlier history or as products of the inflation itself, are likely to prove antithetical to the most productive use of employed resources – a special case of the distinction between the state of employment and the productivity of an economy referred to earlier.
17. June 2012 at 10:28
I keep reading you write that textbook economics is wrong, and in every case I either agree with you or find your interpretations fascinating. I know you’re busy with saving the world from inflation targeting and teaching, and I know you don’t like commenters telling you what to do, but how about Lies Economists Told Me? I feel like the profession needs a Sumner textbook.
17. June 2012 at 10:37
Scott, I don’t see how you reconcile your argument with a basic AS/AD model. If the higher NGDP growth is higher aggregate demand, reducing aggregate demand would involve a decrease in both inflation AND output. Thus, I don’t see how you could decouple the 3.2% real growth from the 7.6% inflation.
Looking back on the Fred data, there are exceptionally strong correlations between NGDP and RGDP growth, as well as between changes in NGDP and RGDP growth. I took a look at these correlations in my post here: http://synthenomics.blogspot.com/2012/06/1970s-sumner-time-stagnation.html. While correlation doesn’t imply causation, I’m not too sure what variable I should control for or what mechanism would decouple this correlation.
Thanks in advance!
Yichuan Wang
17. June 2012 at 10:59
The increasing growth rate of nominal GDP in the 70s is what produced the increasing rate of inflation. The volatile growth rate of nominal GDP is what caused the relative high unemployment rate.
17. June 2012 at 11:33
I read Karl as saying the 1970’s were a special time for the economy being OK, except for the fact that women all entered the workforce and caused unemployment.
The 1970’s were no ok, prices went up too much too fast, life isn’t just nominal.
Govt. is WEAKER in relation to the private sector when inflation is stable and low over the long term. Wealth and power can be amassed privately.
Govt. is also weakest when borrowing rates are higher, so we don’t get weirdo moans from DeKrugman types that we ought to borrow MORE when rates are low. We might want to refinance current for the long term, but actually taking on more debt load doesn’t admit tomorrow rates ought to go up, and we’ll have to refinance again.
—-
Karl’s problem is that he doesn’t view Govt. as a parasite that is helpful in small quantities, hard to live with without it at all, must be held at bay, because too much kills the body instantly.
That number is 19% spending of GDP, and that 19% has to pay off $16T as well.
This requires a radical re-sizing of the govt. workforce, and a total rethink of entitlement programs.
The 1970’s was the death throes of private sector unions faced with Asian goods and mobile capital.
Inflation covered some of that up, we should have been able to add women and GROW OUTPUT, instead we suffered unemployment.
Labor is the problem.
Auctioning the Unemployed solves everything because it solves the labor problem once and for all.
17. June 2012 at 11:53
The Greeks BEND!!!
The Greeks BEND!!!
The Greeks BEND!!!
The Greeks BEND!!!
The Greeks BEND!!!
The Greeks BEND!!!
The Greeks BEND!!!
The Greeks BEND!!!
The Greeks BEND!!!
The Greeks BEND!!!
The Greeks BEND!!!
The Greeks BEND!!!
The Greeks BEND!!!
The Greeks BEND!!!
The Greeks BEND!!!
The Greeks BEND!!!
17. June 2012 at 13:14
It does seem to me that Karl is right on this one. What was notable about the 70s was the frustration of Phillips Curve expectations.
The idea was there was a tradeoff between inflation and unemployment. You could get full employment or close to it by accepting higher inflation.
In the 70s both inlfation and unemployment were eleveated-especiatly inflation but unemployment was much hihger too.
17. June 2012 at 13:16
Mike Sax:
In the 70s both inlfation and unemployment were eleveated-especiatly inflation but unemployment was much hihger too.
Mike, I’m sure you’re not making news with that.
17. June 2012 at 13:21
MF I had presumed it wasn’t news turns out it was I guess. I had asssumed Sumner knew that.
17. June 2012 at 13:25
Take it easy Morgan, pace yourself. Typical Republican only happy at someone else’ pain. Actually The Street is worried that it was so close. Even if Syrzia can’t win a majority it will further weaken the will for more austerity.
I guess some people get woodies at the idea that the Greeks have a dismal future with all pain and no gain. It’s all sacrifice now for no payoff later. About the only thin I can reecomend to them if that they try to move.
17. June 2012 at 13:37
wah, wah, wah Saxie my boy. wah! you say.
The Greeks have suffered, and there has been great pretend sacrifice, but now it is time for the real gutting of the public employees.
Everyone knew that finally there would be LESS for the comfy govt. jobs and pensions.
And even after all the machinations the voters still came out (even if the results are not to be believed) and said
WE WANT TO STAY IN EUROPE.
We will BEND.
This is what I mean Saxie, two years ago, we should have seen the Greeks BEND this hard then.
This is the lesson for your side I keep trying to make…
This is a war you lose. Can’t be stopped.
The difference is IF you accept defeat is 100$ for sure, THEN you can focus your efforts on killing the parts of your team that make you weakest – the public employees.
But instead if you insist on fighting each step of the way, on every issue, without first thinking about what you really don’t want to defend, what makes you weak, and what really matters most – then you really do come out with less than you could have optimally played for.
Where is the help the poor by making govt. cheaper caucus int he Democrat party?
17. June 2012 at 13:42
Morgan, Greeks tentatively chose fail slowly over fail quickly. Nothing to invest too much of your emotional identity into, I think.
17. June 2012 at 13:50
Pretend sacrifice? there’s rampant unemployment and recession. See that you’re like Aztec God. There;s never enogh pain for you.
17. June 2012 at 14:45
Marcus, Thanks, You have some good graphs there.
And that’s a good quote from Friedman.
Karl, And I feel the same way, as I tried to indicate at the end when I mentioned that I agree that unemployment is a better variable for certain purposes. I was merely trying to defend my claim that textbooks are misleading when they attribute the high inflation to adverse supply shocks, which I see as the core of the stagflation argument.
Johnny, I’m thinking about it–maybe I need a poll question as to how many would use my book.
Yichuan, You make a strong argument, which I responded to at the end of my next post. I still think I’m approximately right, but I concede that I may have overstated things.
BTW, I see the business cycle as being asymmetrical, with output rising less on positive shocks than it falls with negative shocks. Inflation increased just as much in the 1960s as the 1970s—so output should have been approximately as far above the natural rate on 1970 as in 1980. If I’m right, then the growth from 1970 to 1980 should have been roughly at trend.
Richard, I partly agree, although I think the natural rate of unemployment also rose for somewhat unrelated reasons.
Morgan, I agree that there were some bad government policies (like price controls and rising taxes) which slowed growth in the 1970s–it was far from a perfect decade. But the biggest problem was excessive inflation–from the demand side.
Mike Sax, If they had done the PC with NGDP growth instead of inflation (as they should have) it would have done much better.
OGT, Yes, I doubt that election solves anything.
17. June 2012 at 15:27
It isn’t about a single election, it is about, from right now:
A) The greek public sector, and the regulations and nepotism, and the fraud.
B) The competent private sector entrepreneurs who must lead Greece to become the South Carolina / Florida of Europe.
What we’re talking about is who BENDS, who EATS IT, who calls the tune, and who dances on command.
And what is indefensible is anyone having anything to say UNLESS they have sworn undying allegiance to B.
B is the only way. B or they leave the Euro.
What is so annoying is the number of liberals in the US who reflexively want A as a proxy for the US situation.
No one in the US political spectrum should be rooting for a country that still runs a current account deficit to do anything else than SHAPE UP.
Greece today is a testament to the worst possible liberal world and we all know it… and only the worst possible liberals don’t admit it.
When the system is structured to not let the free market winners rule the roost, you end up low productivity and high graft and fraud.
17. June 2012 at 16:43
Hey Morgan,
I don’t think that austerity in Greece will ever make them solvent enough to keep the euro. And I doubt the Germans will bail them out. (Too bad they could not just inflate their currency.)
I do admire you optimism anyway.
I think your celebration is misplaced. You may regret that “your side” won.
Personally, I like the fact that the conservatives and “moderates” will be in charge of prolonging an agonizing and hopeless situation. It will leave the liberals politically clean. It may seem cruel… no it is cruel…but for some folks that is the only way they will learn.
Of course some cons will never learn. They will never admit that the impending failure was unavoidable and the pain was needlessly deep and prolonged because of conservative austerity polices that were more about morality than rationality.
They will say it was because the policies did not go far enough to the right….They will say the policies were not given enough time…they will say the policies were not “pure” enough.
I wonder how much higher the cons think Greek unemployment has to get before it increases the declining collection of tax euros ? Will 30% do it? 35%?
17. June 2012 at 19:35
Bill says:
“Of course some cons will never learn. They will never admit that the impending failure was unavoidable and the pain was needlessly deep and prolonged because of conservative austerity polices that were more about morality than rationality.”
Got that, Morgan? It is the CONSERVATIVE’S fault . . . those cruel, cruel austerity types, taking away Greek trombone players’ right to retire at age 50. Not decades of debt and subsidizing laziness. Nope. It’s the conservatives, imposing austerity just for the hell of it.
Everyone got it?
17. June 2012 at 20:09
Cedric.
Read a bit closer. I did not blame the cons for the Greeks fundamental problems. I called it a hopeless situation.
Sure the Greek’s bad behavior put them in the hopeless situation. Once the world’s economy was pushed over the edge… it was game over for the Greek’s remaining in the EU. The Cons “solution”, austerity, never offered any hope. The Cons “solution”,did make people suffer needlessly. I blame the cons for the needless suffering, not the greek economy being vulnerable to an economic shock. I hope you see the difference.
The cons “solution” is based on faith in their morality , not economics.
Morgan said it…He thinks the Greek’s need to lean a lesson. That this harsh treatment will make them wise to the ways of entrepreneurs and turn them into the “South Carolina” of Europe. That is parenting, not economics.
I think that a society as old and traditional as the Greek’s will not be transformed by a few years of economic punishment…or decades.
What I said about how some Cons will never learn and why…it goes for some libs too…And some Greeks.
It always does. The persistence of culture is an incredibly powerful force. A force that people who think they have and can impose “the answer” always underestimate.
You aren’t one of those people who believe …”if people just knew what I knew then we would all agree”…are you ? More often that is a Lib’s affliction.
17. June 2012 at 20:13
Nice one there Cedric… not many people know that Greeks invented the trombone.
Bill,
All debt is forgivable, what matters is current account deficits – if a country can live on revenues, debt can be forgiven.
But that’s a pretty brutal life.
Except, wait – no it isn’t, most US states do it. And many Blue State send more to DC then they get back.
So HYPOTHETICALLY, it is imaginable, if progressives support devolving power and money back home, they might be able t prove to Taxes and Florida that their safety net mindset is the winning way. It’s definitely not for sure, and still I’ll say the states rights is the only real play left for progressives.
Either way, a Greece without a strong public sector is the fastest possible sustainable long term growth strategy they have.
17. June 2012 at 20:22
Right on cue, DeKrugman coughs up this hairball:
“So, about those Greek failings: Greece does indeed have a lot of corruption and a lot of tax evasion, and the Greek government has had a habit of living beyond its means. Beyond that, Greek labor productivity is low by European standards “” about 25 percent below the European Union average. It’s worth noting, however, that labor productivity in, say, Mississippi is similarly low by American standards “” and by about the same margin.”
http://www.nytimes.com/2012/06/18/opinion/krugman-greece-as-victim.html?_r=1
And the IDIOT doesn’t even think to say:
“ALL RIGHT!!!! Greece just has to be Mississippi – and that’sAWESOME for Greeks!”
And that is the problem.
The fact that Greece gets to live as well as Mississipi is great news.
Whats wrong with liberals?
17. June 2012 at 21:22
Bill,
“I did not blame the cons for the Greeks fundamental problems. I called it a hopeless situation.”
It was a hopeless situation because of state pensions and other anti-market policies. It was a hopeless situation because of socialism.
“The Cons “solution”, austerity, never offered any hope. The Cons “solution”,did make people suffer needlessly.”
Market capitalism offers hope; that’s it. ‘Austerity’ is whatever get us there. Sure, it would be great to keep living large — heck I’d love to retire at 50 too — but sooner or later, you’ll run out of credit or victims or both.
“The cons “solution” is based on faith in their morality , not economics.”
Pretty hilarious for you, Bill Ellis — THE MAN WHO DESTROYED GREECE — to be so philosophical now. Morality? Morality is exactly what Greece needs. Like you said — it’s their bad behavior that got them here.
“That is parenting, not economics.”
Nope, that’s markets. You wanna retire at 50? Fine, save. Don’t vote yourself a free pension funded by your grandkids.
“I think that a society as old and traditional as the Greek’s will not be transformed by a few years of economic punishment…or decades.”
What, Greece? The country that was ruled by its military as recently as 1974? Ok.
Of course culture matters. I don’t think Greek tax evasion will be solved overnight. But adults who want to spend a third of their lives on vacation? That can be solved lickety split. People want to be wealthy, but people define wealth in different ways. I don’t judge someone who wants to live easy — I just don’t want to pay for it.
“You aren’t one of those people who believe …”if people just knew what I knew then we would all agree”…are you ?”
I’m not sure how to answer that. Seems like Krugman, Friedman, Margaret Thatcher, and high school me (and tons of other people, including you probably) knew that a monetary union without a political union was a terrible idea. My solution — leave the Euro, inflate, default on everything, stiff granny, ban the Nazis and Commimes from running for election, and make the whole country an Urban Enterprise Zone. Morgan, you’re with me, right?
18. June 2012 at 01:45
Yichuan,
“Looking back on the Fred data, there are exceptionally strong correlations between NGDP and RGDP growth”
Another way of saying inflation was stable during the period you are looking at. Take a look at the correlation between NGDP and RGDP in Zimbabwe in the few years prior to 2009.
18. June 2012 at 05:08
ssumner:
“I still think I am approximately right.” – Scott Sumner.
In other words, you were wrong and you just can’t admit it, so you instead say “I overstated things.”
Here you are saying for years that NGDP drives employment, that NGDP is correlated with employment, and yet you’re saying if the Fed engaged in 5% NGDP during the 1970s, which would have resulted in the entire decade to have a reduction in NGDP, that there would have been no stagflation?
If NGDP theory is right, if it were true that NGDP drives employment, then a decade of lower NGDP would have brought about even lower employment than what took place here.
But let’s all believe “there would have been no stagflation” is “approximately right” anyway.
Yichuan:
“Looking back on the Fred data, there are exceptionally strong correlations between NGDP and RGDP growth, as well as between changes in NGDP and RGDP growth.”
“While correlation doesn’t imply causation, I’m not too sure what variable I should control for or what mechanism would decouple this correlation.”
You aren’t going to need to control for any variables if you want to know what will get your arguments accepted by market monetarists, since market monetarist economists don’t even get past the “correlation doesn’t imply causation” stage themselves.
They see the correlation we all see, and that’s good enough for them to move forward as if NGDP and RGDP are causally related.
And what’s even more amusing, even if you did control for a variable or two or three, and you no longer saw a positive correlation, the method you are using would still prevent you from concluding that there is no causality between NGDP and RGDP, since then you might have omitted a variable or two or three.
In other words, the method you were taught to use by central planning minded economists (who in this age are unfortunately for us all the dominant group) doesn’t actually allow you to make any apodictic propositions, no matter what the result of your theory-collect past data-test-outcome method. There is no apodictic verification or refutation available in positivism. There is only ever tentative suppositions, which are always subject to being falsified.
And yet, public policymakers such as central banks are called upon to use their incredible amount of power and influence to “help the economy”, based on this dubious, uncertain foundation, as if the economy should be treated as a laboratory.
And people wonder why business cycles, widespread unemployment, and stagnating real wage growth since 1971 have taken place.
Market monetarism is empty of economic calculation, of capital theory, of individual action, and of the market process. It isn’t even economics. It’s central planner strategizing that has the unintentional sole purpose of proposing a new way to prolong and postpone central banking for as long as possible, thus securing the power to print money in the monopolist’s hands for just a little bit longer, until the monopolists are dead, after which a new flavor of the month is proposed.
For all the railing against monopolies, mainstream economists are finding it easy to set a double standard when it comes to money production. Monopoly in insurance = bad. Monopoly in money production = good.
18. June 2012 at 06:15
Major, out of curiosity, why don’t you have your own blog?
18. June 2012 at 06:25
Ben J:
Major, out of curiosity, why don’t you have your own blog?
How do you know I don’t? 🙂 Googled my username and that’s it?
I’ll just say this: Batman doesn’t have a bank account.
18. June 2012 at 06:42
Cedric said…
My solution “” leave the Euro, inflate, default on everything, stiff granny, ban the Nazis and Commimes from running for election, and make the whole country an Urban Enterprise Zone. Morgan, you’re with me, right?
My solution is close. Leave the Euro and inflate…and probably default on everything. But I don’t think you have to exactly stiff Granny. Paying her in inflated drachmas is stiffing her enough, but still pay her all the drachmas she has coming to her. Inflating the new Drachma is Austerity enough…the rest was just needless punishment waiting of the inevitable to happen.
Election reform…sure. Banning Nazis and Commies. no
Make the whole county an enterprise zone ? Only If the greeks want it. If they want to live the way they live, and take what ever kind of economic hit for it, like paying higher rates, that is up to them. Some folks value other things.
18. June 2012 at 07:48
Cedric, said…
Pretty hilarious for you, Bill Ellis “” THE MAN WHO DESTROYED GREECE “” to be so philosophical now.
Zoom…Right over my head. Google does not help.
What are you taking about ? If I destroyed Greece I think I would remember…
And I have always been pretty philosophical.
18. June 2012 at 08:28
MF, I wasn’t wrong. When I’m wrong I say so.
18. June 2012 at 09:38
I think Greece agrees to set a maximum pension payment for all retirees $40K US at the high end, payable in Euros.
After three years, of proof that none of the public sector retirees have received more than that payment, 20% the countries debt is written off, after 5 years, another 20% is written off.
Simultaneously, Greece must ends business taxes, but taxes property owners heavily and goes after consumption.
For another 20% reduction, they PROVE that anyone can open any kind of business legally without a bribe in 90 days for at least 3 years. Meaning if someone can’t easily do it, and documents it, they get a reward the problem gets executed, and Greece still owes the debt.
They agree to end any kind of forced union participation, and get rid of a minimum wage.
This buys the rest of their debt relief.
My goal he is that we can ERASE DEBT, but we ought to structure it over a near term timeline where Greece has to make serious but SIMPLE changes tot heir system from the ground up.
But they can see a 5 year horizon where they are literally debt free.
And we trusts the structural changes to actually matter, and shoick the Greeks into becoming Estonians.
18. June 2012 at 18:18
[…] Smith, Scott Sumner, and Yichuan Wang have been discussing whether the experience of the 1970s qualifies as […]
18. June 2012 at 23:37
ssumner:
MF, I wasn’t wrong. When I’m wrong I say so.
Clearly not.
18. June 2012 at 23:47
Why am I not surprised that Major Freedom thinks he’s Batman…
18. June 2012 at 23:52
Johnny, he doesn’t think textbook economics is (mostly) wrong. See the About section, where he shows that Mishkin’s bestselling textbook explains everything. Although, the latest edition isn’t quite so good…
Scott, I would not only lobby to have your textbook used at the UWA, I would stick a poster-sized version of the cover on my wall. And if you sold a T-shirt…
19. June 2012 at 00:06
Saturos:
Why am I not surprised that Major Freedom thinks he’s Batman…
I don’t think I’m Batman. I’m just emulating one of Batman’s strategies, because I think it is effective. The maker of Batman thought the same thing, which is why he made it one of Batman’s key actions that represents his hero status.
There’s nothing wrong with valuing the philosophy and ideas behind superheroes. I think it is healthy. It’s why superheroes are popular in the first place.
19. June 2012 at 00:08
Saturos:
Scott, I would not only lobby to have your textbook used at the UWA, I would stick a poster-sized version of the cover on my wall.
You can accomplish the same thing with a monkey, a lot of bananas, and a lot of patience.
19. June 2012 at 10:07
Bill Ellis,
You destroyed Greece because you’re a lefty. Leftyism destroyed Greece, and fanatical Warstlerian anti-statism is the only way out. The first order of which will be to cut Mike Sax’s sweet, sweet Medicaid*.
*I know Sax isn’t on Medicaid, but he’s a big government guy. If “fanatical Warstlerian anti-statism” becomes the first Money Illusion meme, then “cutting Mike Sax’s sweet, sweet Medicaid” should be the second. From henceforth, any notion regarding fiscal austerity should be expressed in terms of cutting Mike Sax’s Medicaid. It is decided.
19. June 2012 at 21:35
Major Freedom, I presume you watched the Dark Knight (one of my favorite movies btw), in which we found out what happens to people who “emulate” Batman.
What kind of delusional quest do you think you’re on? Are you protecting your girlfriend by hiding your true identity? Or safeguarding the stock price of the corporation you direct? While you go out to do battle against supervillains like Scott Sumner?
What is it with libertarians and vigilantism? Don’t tell me, I know…
20. June 2012 at 05:58
Saturos, Is that the University of Washington?
20. June 2012 at 23:53
Saturos:
Major Freedom, I presume you watched the Dark Knight (one of my favorite movies btw), in which we found out what happens to people who “emulate” Batman.
I am not emulating Batman. I am emulating one thing that Batman does.
What kind of delusional quest do you think you’re on?
None.
Are you protecting your girlfriend by hiding your true identity?
No.
Or safeguarding the stock price of the corporation you direct?
No.
While you go out to do battle against supervillains like Scott Sumner?
Those who support, apologize for, advocate, and/or assist communist institutions like central banks, are the plague of society. Yes, they are villains, to peaceful people who want personal liberty.
What is it with libertarians and vigilantism? Don’t tell me, I know…
You know? Out of curiosity, what do you think it is?
What is it with statists and state vigilantism?
26. February 2017 at 02:03
‘ Sumner himself points out that he is changing the definition:
“I think if the term ‘stagflation’ is going to mean anything useful, it has to refer to a periods where, for any given rise in AD, slower than normal AS growth leads to higher inflation. The 1970s do not meet that definition.”
Sumner re-defines stagflation to suit his agenda, and suddenly the world is different. You have been bullshitted. ‘
http://newarthurianeconomics.blogspot.co.uk/2017/02/how-economist-thinks.html