A few links
Update 10/15/09: I was just interviewed by the PBS station in Denver (KGNU.) I’ll post a link when I get one. If any PBS listeners wander over here and are curious about my letter to Krugman, here is the link.
Update 10/16/09. Here is the PBS interview.
I plan to take a break to recharge my batteries. I know I have been overstressed when I tried to link to Yahoo News this morning, and accidentally stumbled onto a story at The Onion about Obama winning a Nobel Prize. I can’t recall what field, probably chemistry or something similar. And the next story had Somali pirates “mistakenly” attacking a French military flagship. Yeah, I also have trouble distinguishing French naval vessels from tankers. So I need a break. In any case, I thought I should provide some links for those who stumble onto my blog by mistake. I’ll start with one from the AEI’s online magazine, which just appeared this morning:
Here’s my essay at Cato. The links for the subsequent debate with Hamilton, Selgin and Hummel are in the right margin:
Here’s my essay at Vox:
Here’s my debate with Ohanian at CBS Moneywatch:
Here is my debate with John Cochrane:
Here is my bloggingheads.tv debate with Mark Thoma
Here is my piece at Reason magazine:
And finally, a New York Times article on this blog:
Tags:
9. October 2009 at 06:43
You missed the Onion article about NASA attacking the moon.
9. October 2009 at 06:48
A caller to the Dennis Miller Show this morning suggested that Obama also should get the Cy Young Award for having thrown out the first pitch at the All Star Game.
9. October 2009 at 07:10
Try Nobel Peace prize, the butt of the joke of the millennium (2002, 2007, and now 2009!).
9. October 2009 at 07:14
In your AEI piece you wrote:
” In the very unlikely event that all these excess reserves were then hoarded by the public, the Fed could have begun quantitative easing in October 2008. I very much doubt this last step would have been necessary, as demand for base money by the public (in the absence of 1930s-style bank runs), does not change very rapidly. ”
I think there was a 1930s style bank run in August-October 2008, the only difference is that this time bank run was mostly in the wholesale, not retail customer segment. That’s why I think QE was needed in October. Bernanke seems to agree, as original purpose of TARP was junk based QE.
9. October 2009 at 07:27
Blackadder. More and more the real world and The Onion are becoming indistinguishable. I don’t know if that’s good or bad.
Patrick, Obama probably already regrets this. He was going to get it eventually, but he will be ruthlessly mocked for this every time he does something like bombing Iran, or sending more troops to Afghanistan. I suppose the Norwegians think they can influence policy, but that’s never worked in the past with Nobel Peace Prizes.
Byung, Yes, the history of the prize is pretty disgraceful.
123, A 1930s-style bank run is where retail depositors hoard cash. I agree that we have had a bank run, but not a 1930s style bank run. This time is was more at the wholesale level, as you said.
Bernanke certainly did not do QE in the normal sense of trying to boost the money supply. They paid interest in reserves precisely because they didn’t want the monetary aggregates to increase. Instead, they preferred to reduce the money multiplier.
QE would have helped in October, but the first thing the Fed did should have been to cut rates from 2% to 0%. Failing to do so in early October was a very costly error
9. October 2009 at 08:19
‘Patrick, Obama probably already regrets this.’
Oh no, not that with that ego. Did you listen to his pitch for the Olympics, it was all about himself. Maybe the Nobel was a consolation prize.
9. October 2009 at 08:41
I’ve brought up the issue of interest on reserves with several monetary professors. They all reply with the following;
The interest rate being paid is too low to matter that much, and so can be effectively ignored in any analysis. The huge increase in reserves was likely a cautionary response to the sudden increase in uncertainty, made worse by the collapse of Lehman Brothers.
In other words, they’re arguing that 1) the Fed has been trying to be expansionary, 2) the banks have hoarded the new cash for reasons that have nothing to do with monetary policy, and 3) at most, the interest paid on reserves has made the situation only marginally worse.
Everyone I’ve asked is at least somewhat concerned about inflation. If I talk about the low expected inflation, they immediately point to all the talk about inflation in the media.
I should add that as a PhD candidate, everything I know about monetary policy has been learned from this blog, so I’m probably not explaining things properly to my professors.
9. October 2009 at 09:56
As an outsider and a non-American, I am completely flummoxed at the kind of bone-headed commentary out there regarding Obama’s Nobel Peace Prize victory and I can’t believe Scott you, of all people, are participating in it.
Its not like Obama put himself up for nomination or lobbied for that prize. The Noble Committee in their infinite (sic) wisdom decided to award it to him anyway. How is he at fault here? Admittedly he could’ve turned it down politely but it might give him some kind of moral authority to pursue peace where it can be pursued. The idea that it would tie his hands behind his back if it ever comes to having to bomb Iran is pure poppycock and you know it. The President of the United States isn’t going to give a rat’s backside to what anyone thinks when it comes to defending his country — just ask George Bush.
Its really funny to see the fire & brimstone coming out of the Republican/Conservative camp. They seem to think that Obama got the award because the Nobel Committee is heavily politicised and he didn’t deserve it but if the Olympic Committee turns down Chicago its because Obama deserves it for personally lobbying and there is no kind of politicisation involved.
Is this kind of discourse you guys want to have?
9. October 2009 at 09:58
Patrick, Reread the Obama Olympics speech. Then summarize what it was about sans Limbaugh/Anyone else telling you what to think.
Read his statement this morning: He knows this puts him in an awkward spot.
Scott, usually your blog is awesome for understanding and appreciating the gray in the world, and avoiding any overly biased interpretation of the world, (I find Tyler Cowen to have a similar style). The more childish the post, the more your blog has the Dave Henderson of Econlog feel, sarcastic and partisan. Ugly.
9. October 2009 at 10:03
What do you make of this, Dilip:
http://news.yahoo.com/s/ap/20091009/ap_on_go_pr_wh/us_obama_nobel
‘ A beaming President Barack Obama said Friday he was both honored and humbled to win the Nobel Peace Prize and would accept it as a “call to action” to work with other nations to solve the world’s most pressing problems.’
As for:
‘ The President of the United States isn’t going to give a rat’s backside to what anyone thinks when it comes to defending his country “” just ask George Bush.’
Have you noticed that Bush and Obama have slightly different outlooks on life?
9. October 2009 at 10:14
@Patrick
‘ A beaming President Barack Obama said Friday he was both honored and humbled to win the Nobel Peace Prize and would accept it as a “call to action” to work with other nations to solve the world’s most pressing problems.’
So what in the God’s name do you expect him to do? Act all horrified that someone dared to award him the stinkin’ Nobel Peace Prize? Come on…
Have you noticed that Bush and Obama have slightly different outlooks on life?
Would that include not having a cavalier, cowboyish attitude towards working with other nations? That would explain the difference. After all, these are not some school yard brawls where you can say silly things like “You are with me or against me”.
9. October 2009 at 10:51
Scott I quite right to call a spade a spade. This is hilarious. How could an award get more overtly political?
These are the best posts I’ve read about it so far…
http://fountain.blogspot.com/2009/10/exclusive-barack-obama-wins-fhms-worlds.html
http://roissy.wordpress.com/2009/10/09/barack-obamas-petty-peace-prize/
9. October 2009 at 11:26
Dilip, you seem to be missing the point. I expected Obama to do exactly what he did. But, if you do recognize that Bush and Obama are so different, why did you point to Bush as an example of what to expect from Obama?
9. October 2009 at 11:38
‘Patrick, Reread the Obama Olympics speech. Then summarize what it was about sans Limbaugh/Anyone else telling you what to think.’
Unlike some, I’m not in the habit of letting others do my thinking for me, I was thinking of such as this:
————–quote—————–
We’re a nation that has always opened its arms to the citizens of the world — including my own father from the African continent — people who have sought something better; who have dreamed of something bigger.
I know you face a difficult choice among several great cities and nations with impressive bids of their own. So I’ve come here today to urge you to choose Chicago for the same reason I chose Chicago nearly 25 years ago — the reason I fell in love with the city I still call home. And it’s not just because it’s where I met the woman you just heard from — although after getting to know her this week, I know you’ll all agree that she’s a pretty big selling point for the city.
You see, growing up, my family moved around a lot. I was born in Hawaii. I lived in Indonesia for a time. I never really had roots in any one place or culture or ethnic group. And then I came to Chicago. And on those Chicago streets, I worked alongside men and women who were black and white; Latino and Asian; people of every class and nationality and religion. I came to discover that Chicago is that most American of American cities, but one where citizens from more than 130 nations inhabit a rich tapestry of distinctive neighborhoods.
—————endquote—————–
Admittedly, he’s not quite as self-absorbed as the previous speaker at Copenhagen, but there’s a fair amount of information about himself in that brief excerpt. Isn’t there?
9. October 2009 at 11:44
Scott, you said:
“A 1930s-style bank run is where retail depositors hoard cash. I agree that we have had a bank run, but not a 1930s style bank run. This time is was more at the wholesale level, as you said.
Bernanke certainly did not do QE in the normal sense of trying to boost the money supply. They paid interest in reserves precisely because they didn’t want the monetary aggregates to increase. Instead, they preferred to reduce the money multiplier.
QE would have helped in October, but the first thing the Fed did should have been to cut rates from 2% to 0%. Failing to do so in early October was a very costly error”
Wholesale run on banking system leads to as much cash hoarding as a traditional run.
I think that ZIRP and QE were both necessary at the end of last September. If we had NGDP targeting scheme last year, I think both ZIRP and QE would have happened on the last week of September or on the first week of October.
QE and interest rate policy are two separate tools. Each of them influences the natural interest rate. I wonder why did Bernanke choose the QE tool (in the form of early version of TARP) as the primary one last September? Did he think that congress and senate are less hawkish than his fellow FOMC members?
9. October 2009 at 11:51
Scott, enjoy your break. Even if we will miss your blog posts.
9. October 2009 at 12:38
Re: Thoma bloggingheads:
1) The problem was not “risky” behavior on part of the banks, it was risk averse behavior. They used quantitate modeling to try to remove risk, but by doing so they ignored systematic risk that they couldn’t quantify. So by trying to be “low risk” they engaged in “high risk” behaviors.
2) Not one of the traditional banks actually failed. They didn’t meet their reserve requirements and were shut down by the FDIC. The specifics for the regulations for what was required for the reserve requirement were made more strict preceding the start of the crash.
3) I agree about the strangeness of the federal reserve paying interest on reserves. This is the only thing in our current crisis that resembles the cash in mattress hoarding that happened in the 30’s. I agree that this is very odd. I don’t know exactly why they are doing it. Heck, this could be why the money supply seems short… *if* it is, then you could say that the Fed caused the crisis to be as bad as it is.
4) You seemed to be saying that the federal reserve couldn’t actually forcast RGDP growth. I would argue that if they can’t do that, then they are pointless. The NGDP doesn’t matter as much even with some stickiness, because markets take actual inflation into account when making decisions.
Now for my very heretical statement:
NGDP is not terribly useful. Its far too easy to game and its not clear what it really measures. Example, if my friend and are an economy and we trade a dollar bill and an apple, back and forth online 10 million times, we just generated 10 million in NGDP, yet we haven’t really done anything at all.
Quantifying real product in a society on a macro scale is really, really hard. Yet markets can somehow come up This is the role of profit opportunities in society, it signals inefficiency or undersupply, and then causes entrepreneurs to move in to fix the problem. Well, someone might say, “you could then measure profits and have a nominal gross national profit,” but that is also not possible because its almost impossible to tell rents/stealings/frauds/etc from profits in a lot of cases.
I’m not sure what would be a better measurement to replace GDP. Maybe, wage statistics + capital gains + net business receipts? The net business receipts measurement has the same problems as trying to measure profits, but its probably still better than GDP. I don’t know the best answer anyone else have some thoughts?
9. October 2009 at 12:41
@ssumner
The amusing thing is according to the constitution he would need permission of the congress to accept this prize.
“And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State”
Now, I really doubt he will ask congress for permission.
9. October 2009 at 13:08
I was in Norway before the election and couldn’t believe how passionate the Norwegians were about Obama. He seemed to represent Bush’s opposite. I believe the Norwegians feel they awarded the prize to Bush’s Opposite. What has he accomplished? Why he peacefully overthrew the world’s most powerful evil regime! Is that not enough for you?
9. October 2009 at 13:23
Enjoy a well deserved break – I have always been amazed at the pace you kept (detailed posts + detailed responses).
I have to wonder what Obama’s immediate response to the 6 AM phone call was… Probably “Oh %&$#”.
Doc… I’m not sure if the Nobel Committee counts as a King, Prince, or Foreign State. (?)
9. October 2009 at 13:24
Off-topic: A paper arguing that monetary expansion did not cause the recovery during the Great Depression
http://divisionoflabour.com/archives/006408.php
9. October 2009 at 14:08
Interesting point, Doc, since the Peace Prize is given by the Norwegian parliament, which would seem to qualify as “any King, Prince, or foreign State”.
9. October 2009 at 14:23
Dr. Sumner,
Have read/viewed your links, I am very impressed. Of course, I obviously know little about macro theory, but the ideas about NGDP and forward-looking policy not only seem to make a lot of sense, but are even elegant.
This is one of the reasons this is already my favorite economics blog, among many I read.
You’re break is well-deserved.
9. October 2009 at 14:34
That means he can’t accept the money. He can accept the honour though.
9. October 2009 at 14:57
@Current
“Emolument, Office, or Title, of any kind whatever”
I would say that covers a title of “Nobel Laureate.” The language is REALLY broad.
9. October 2009 at 15:25
Teddy Roosevelt accepted a Nobel. I think it’s doubtful that they will interpret the language that broadly.
9. October 2009 at 16:18
If congress allows it, the President can accept it. Did Teddy R (and Woodrow W.) ask permission?
9. October 2009 at 17:23
I just have time for one response tonight, so I’d like to clear up something with Dilip. I didn’t say anything bad about Obama. I agree that he didn’t ask for it, just as he doesn’t ask for his supporters to view him as the messiah. Both of these things make his job harder, not easier, and I certainly want him to succeed in foreign policy. Read what I wrote again; I said it would probably not influence his policy, which is exactly what you said. I don’t think we disagree at all. I was making fun of the Norwegian committee that picked him. He was nominated after being in office for less than 11 days.
But they are known for often giving the award to crooks and mass murderers, so Obama is actually far more deserving than many of the previous recipients. He hasn’t done anything particularly bad in foreign affairs. It is the Norwegians who deserve to be ridiculed. (And I am part Norwegian BTW.) As the Norwegians would say:
Uff Da!
(That’s probably misspelled, but it’s what my grandmother used to say. Does anyone know what it means?)
10. October 2009 at 06:52
Patrick, If he doesn’t regret it, he will soon.
Pedro, You professors may not have taken a close look at the issue. The top people in the field, such as James Hamilton and Robert Hall think it was a big deal. Hamilton says that without it we would have had high inflation. None of the arguments you cite has any bearing on the issue. Indeed your professors don’t seem to understand that reserves and loans are not the only two choices, banks could always buy T-bills. In addition, the interest rate could be negative if necessary.
I hate to say this, but my impression is that most economists, even most macroeconomists, are not well informed about monetary policy. The 1936-37 doubling of reserve requirements, now widely viewed as a huge mistake, also had little impact on interest rates. So if they are talking about interest rates, they are engaging in Joan Robinson monetary economics, the same theory that said easy money couldn’t have caused the German hyperinflation because rates weren’t low.
Joe, Read my reply to Dilip. I agree with you and Dilip; I think you two just misread my post. The difference between me and the conservatives like Rush Limbaugh is that they tend to be partisan, and get indignant about the other side. I think both sides are equally silly, and just see politics as an absurd spectacle that you have to laugh at, otherwise life is too dreary. I started this blog right after Obama took office, and yet have rarely criticized his policies. When I criticized fiscal stimulus I noted that Bush did the same, and that Obama has to rely on economists for advice, and economists on both the left and the right have given him abysmal advice. I’ve also said he seems to be a more competent person that Bush. So I can hardly be accused of Obama-bashing. And certainly not in this post, which was entirely aimed at the Norwegians.
Thanks current.
123 You said;
“Wholesale run on banking system leads to as much cash hoarding as a traditional run.”
I’m not sure what you mean here, very little cash hoarding occurred last year. It was mostly hoarding of ERs, and that occurred because interest was paid on reserves, not because of a wholesale banking crisis.
I’m not sure if zero rates would have been necessary under an NGDP targeting plan. If they had used my proposed futures targeting approach, so that NGDP growth expectations always stayed at 5%, I doubt whether short term rates would have fallen much below 2%. The reason short term rates fell to zero was because NGDP growth expectations went negative. But I freely concede that this is just a guess on my part, and you might be right. I also think it is much more likely that you would be right if the Fed used discretion to target NGDP growth. In that case there would have been less credibility, and I think rates would have had to have been cut more aggressively.
Thanks Lorenzo.
Doc Merlin, Thats a good point about risk but I can’t agree with the following:
“Now for my very heretical statement:
NGDP is not terribly useful. Its far too easy to game and its not clear what it really measures. Example, if my friend and are an economy and we trade a dollar bill and an apple, back and forth online 10 million times, we just generated 10 million in NGDP, yet we haven’t really done anything at all.”
NGDP doesn’t include transactions in the informal economy, it looks only at transactions in the formal, and taxable economy. In that economy transactions represent meaningful actions, as the tax wedge precludes the sort of back and forth that you hypothesize. Of course only final goods count, so shuffling around at the wholesale level doesn’t matter. Another way of making my point is that it measures only value-added.
If your point had been correct, then wages would be equally useless, as wages could simple be paid back and forth.
rob, Well if you put it that way . . .
Statsguy, Yes, I had the same thought about Obama, this actually puts him in an awkward position, especially as it occurred so early on. He would have loved to get it 6 or 7 years from now. (I expect him to be re-elected.)
Thanks Mike.
Thanks TGGP, I’ll take a look at it. But recall that what needs to be explained is not the recovery, which should occur in a few years even if nothing is done, but the fact that the recovery took 8 1/2 years. The real question is what slowed the recovery.
10. October 2009 at 08:19
‘I didn’t say anything bad about Obama. I agree that he didn’t ask for it, just as he doesn’t ask for his supporters to view him as the messiah.’
I think you’re wrong. Obama marketed himself the way he did for a purpose. It is pretty shocking that the Norwegians don’t have any more sophistication than the children we see singing the praises of Obama in videos at You Tube, but it is how Obama conducts himself.
And, when he said he’d accept it, he said he’d try to live up to THEIR opinion of him. He doesn’t realize that his childish world view is pushing America (and what we used to call the free world) down a path to disaster. Possibly an even worse one than Jimmy Carter delivered (remember when Iran was our ally?).
11. October 2009 at 07:39
Patrick, You may be right. I don’t watch TV so I miss a lot of politics. Politics is partly theatre. I suppose he tries to be an inspiring figure, but I guess I just see that as a part of the political game. The fact is that he is really good at what he does. It is sort of like a great athlete. They get idolized because they are so good at what they do. And then people just assume then have other qualities like courage and honesty, which are totally unrelated to sports. Obama’s a good orator. His supporters ought to be proud of that fact, but not assume he is some sort of great man just because he is a good orator. I don’t think he has ever claimed to be a great man. He said he wasn’t sure he even deserved the award.
My only problem with Obama is his health care proposals, his stimulus, his protectionism, his high tax policy. I don’t mind the theatre because I pay no attention. I never watch political speeches.
I think Carter was a lousy president, but I don’t blame him for Iran not being our ally. It was the Iranians who decided to overthrow the Shah, not Carter.
11. October 2009 at 09:55
Scott, you echo my views about Obama — while I dislike his idolisation, I don’t fault him for it. I can’t imagine a plausible way for him to knock down the idolisers without all sorts of unnecessary collateral damage to other important aspects of his agenda. Of course, as you say, his agenda is pretty crappy — but there is no good reason for him to end the delusions of his more fanatical supporters.
On an unrelated note, one thing about Carter is that I often see the right knock his economic policies and the left praise them, both sides apparently completely oblivious to Nixon’s drastic interventionist economics (more egregiously “socialist” than much of Obama’s economics, if you ask me), and to Carter’s kicking off deregulation.
I still have a tinge of some vain hope that Obama will be like Nixon in going to China — using his left-wing political cover to pull a Carter in pushing pro-market policies. It’s almost certainly not going to happen, unfortunately.
11. October 2009 at 13:21
Scott, you said:
“I’m not sure what you mean here, very little cash hoarding occurred last year. It was mostly hoarding of ERs, and that occurred because interest was paid on reserves, not because of a wholesale banking crisis.
I’m not sure if zero rates would have been necessary under an NGDP targeting plan. If they had used my proposed futures targeting approach, so that NGDP growth expectations always stayed at 5%, I doubt whether short term rates would have fallen much below 2%. The reason short term rates fell to zero was because NGDP growth expectations went negative. But I freely concede that this is just a guess on my part, and you might be right. I also think it is much more likely that you would be right if the Fed used discretion to target NGDP growth. In that case there would have been less credibility, and I think rates would have had to have been cut more aggressively.”
30s style hoarding was a huge problem last year. If there was no hoarding then why did 3 month T-bill rate approach zero on September 18 last year? Quantity of ERs is fixed by the size of Fed’s balance sheet and gives no indication of hoarding. On a retail banking level attempts to pay down credit cards have the same macro effect as cash hoarding in the Great Depression.
Delong understands that hoarding is much more important issue than Fed credibility. That’s why he thinks that Bernanke should receive Nobel statue tomorrow in best male actor category for his CBS 60 Minutes role and “green shoots” line.
(http://delong.typepad.com/sdj/2009/10/i-would-award-this-years-nobel-prize-in-economics-to-ben-bernanke-and-mark-gertler.html)
11. October 2009 at 16:10
Scott, I once heard Zbig Brezhinski blame Carter for Iran’s fall to Khomeini. On Firing Line, Wm. F. Buckley asked him–given how things turned out–what different advice he wished he’d have given to Carter back in 1979.
Brezhinski immediately responded he’d have given him the same advice he did at the time, ‘Support the Shah while he restores order in his country.’
12. October 2009 at 13:26
Patrick:
The argument you are expressing is the same argument that an endless procession of brutal, anti-democratic, anti-capitalist, anti-libertarian dictators have used to coerce the US government into supporting them. The perception of a necessity in choosing between a corrupt “ally” and an unknown alternative has been the bane of global hegemons for well over 3 centuries. It is a false, and ultimately self destructive, choice.
johnleenk:
“Obama will be like Nixon in going to China “” using his left-wing political cover to pull a Carter in pushing pro-market policies.”
It almost certainly is already happening, except that it is happening in the worst possible domains – financial regulation. Obama has attempted to walk a relatively centrist path throughout (compromising far more than Bush ever did); In doing so, he has alienated his left-leaning base while simultaneously making himself the sucker of the right wing which has continuously withdrawn the carrot every time he took a step in their direction.
The health care debate is a prime example. Right-leaning centrists endorsed the co-op idea, believing that Obama would reject it, yet using it to project the appearance of a real proposal. The moment Obama accepts the idea, they turn against it and declare that he is being ideological and partisan.
You would have a much better chance of seeing Obama move in the direction you want if the Right were to abandon its strategy of opposing everything on moral* grounds.
*in this context, “moral” means “whatever is necessary to score political points”
13. October 2009 at 01:24
I’m surprised you guys are all focusing on the relatively unimportant Peace Prize when the Economics prize was just announced: http://gregmankiw.blogspot.com/2009/10/first-year-grad-student-wins-nobel.html
Unfortunately, he turned it down and they had to give it to the second best choice.
13. October 2009 at 05:45
Stats Guy, are you seriously arguing the world is better off with Iran under the Ayatollahs than under the Shah?
13. October 2009 at 11:17
That particular entry in Mankiw’s blog was childish and petty, and betray’s Mankiw’s true character… which I suppose was never much in doubt anyway.
Yay for Williamson and Ostrom, for a couple reasons:
1) One can hope this marks a return to recognizing the legitimacy of polical economics, rather than politics and economics as separable fields (which presumes that Power and Exchange are distinct phenomena).
2) One can hope this will legitimize the view of markets as socially constructed institutions, instead of markets as some mythical state of nature.
3) One can hope that this may help return the field to a pragmatic concern with reality, in which theories must be empirically grounded rather than merely mathematically elegant.
Interestingly, the effort Mankiw exerted to congratulate Ostrom and Williamson was quite pathetic… Here are some choice quotes that might explain why:
“The fact I have never heard of her reflects badly on me, and it also highlights just how substantial the boundaries between social science disciplines remain,” wrote University of Chicago economics professor Steven Levitt on his New York Times “Freakonomics” blog. “So the short answer is that the economics profession is going to hate the prize going to Ostrom even more than Republicans hated the Peace prize going to Obama. Economists want this to be an economists’ prize.”
And Levitt, btw, is a rather broadly read individual compared to some other members of his department.
13. October 2009 at 11:26
Patrick:
I’m strangely afraid of major counterfactuals. Would the world be better off if the US had not fought a Civil War (which claimed 600,000 lives of men in their prime)? I have no idea. What if the Black Plague had never existed?
Some have given serious thought to this:
http://www.voxeu.org/index.php?q=node/3823
I’m simply pointing out that the logic you present has been used to defend US intervention on behalf of every major dictator we’ve ever worked with, including such cherished allies as Manuel Noriega (until we had to remove him) and Saddam Hussein (until we decided to remove him too).
What I will note is that the US choice between Shah vs. religious extremist Ayatollah was a false choice in this sense – we only faced that choice because of our multi-decade history of intervention. In fact, it was a rather colorful and interesting history.
http://en.wikipedia.org/wiki/Kermit_Roosevelt,_Jr.
14. October 2009 at 01:47
Regarding the Nobel prize…. I haven’t read either of these folks, but many good economists seem happy about it, which is probably a good sign.
See:
http://austrianeconomists.typepad.com/weblog/2009/10/lin-ostrom-political-economist-wins-2009-nobel.html
http://crookedtimber.org/2009/10/12/the-ostrom-nobel/
http://www.forbes.com/2009/10/12/elinor-ostrom-commons-nobel-economics-opinions-contributors-vernon-l-smith.html
I think Statsguy is quite right about this. The choice wasn’t really between Iran under the Ayatollahs and it under the Shah. Because, once the seeds of revolution had been shed the rule of the Shah could never remain the same. Read the histories of European monarchs who successfully fought revolutions, their reign after the revolution was in most cases much more oppressive than before. Similarly, it wasn’t known at the time that the Islamic republic would make it into the long term.
We outside observers do not understand enough about local conditions to be able to intervene into these disputes wisely.
14. October 2009 at 01:58
I have to admit I had never heard of Elinor Ostrom before she won the Nobel, but after doing a quick review of her work, I have to agree she is an excellent choice. Developmental Economics is a vitally important branch for the alleviation of human suffering, and honestly I feel a little guilty spending so much time studying monetary economics. Surely the marginal product of my work in terms of improving the world would be higher focusing on relieving poverty rather than ameliorating business cycles. Perhaps because business cycles undermine confidence in capitalism, it is worth minimizing them just to improve people’s faith in decentralized markets.
14. October 2009 at 03:02
Azymth,
Not only that. Business cycles generally harm the poorest the most. Also, they harm capital formation and encourage investors to take safe choices when allocating capital.
14. October 2009 at 04:54
… I had the good fortune to spend a bit of time with Williamson’s and Ostrom’s work.
Williamson raises some key questions in his work on the boundary of the firm. Begin with Coase’s theorem – in a pure Coasian world, the line where you draw the boundary between market exchange and hierarchical allocation of resources (command and control, or authority) is arbitrary. It doesn’t matter at all. In fact, every conceivable form of social organization is equivalent.
And yet, it’s invariably true that social organization _does_ matter. His next question is quite simple: Why? In particular, in the context of choosing to use a particular form for a particular activity, are horizontal or vertical mechanisms more efficient? When is one better than the other?
The various answers – indeterminacy of long term contracting, risk tolerance and optimal incentive schemes (that mitigate risk while preserving incentives to exert effort), transaction costs, information asymmetries, relational contracting, complexity and institutional knowledge, division of property rights, … and a few others – all point to potential reasons why markets are not always better than vertical structures for executing a particular task.
All of this stands in direct contrast to a childishly simplistic “economies of scale” story. Economies of scale is a false answer, in that it does not explain WHY it’s more efficient to run a big utility company with its own labor under a salary system rather than using a spot contract system or even a labor force of individual contractors working on long term contracts. (And it’s not just the tax system – employment as such existed long before the US tax system.) Likewise, capital could be owned jointly – a large generating plant could be securitized and jointly owned by thousands of individuals. So why is it that we don’t own plant capital jointly, but we do own corporations jointly?
Obviously, if these factors are important for firms (and it must be, since if it was not true then the market would have forced these firms into bankruptcy), then these same factors are at work for governments. In a sense, governments are Really Big Firms. Which then leads into the next big question – when should governments use command and control structures, market based regulation, or no regulation?
The long-trim Friedmanomic answer of the economics field – always use an unregulated market – cannot be accepted as an article of faith (except by the dogmatic faithful). It at least needs to defend itself.
Williamson’s insights have been a major unifying force for integrating the increasingly fragmented social sciences.
Ostrom’s work (Governing the Commons) focuses more on the other direction – how governments can develop and work with more decentralized institutional frameworks. In a sense, it’s the mirror image (and complement) of Williamson’s work. It also represents a growing opinion that the historical march toward advanced capitalism may never have been as undeniable or predetermined as it appeared.
Given this (welcome) suprise from the Nobel committee, I would not be surprised to see the historical institutionalists win a prize in the next 10 to 20 years for their work on the historical development of markets, the escape from Malthusland (one of DeLong’s new favorite topics), etc. Maybe even the Economic Geographers for tracing the origins and impacts of long term trade – a hugely important topic – or the relationship between war/disease/economic development.
14. October 2009 at 07:27
I haven’t read about Williamson’s work, but I have read similar things with similar sorts of concerns.
Now, come on. We on this side of the debate have always given reasons why we advocate policies. It is not about faith and never has been.
I’ve noticed both left-wing and right-wing economists trying to say this prize vindicates them. As the CrookedTimber discussion shows, it doesn’t really.
14. October 2009 at 07:57
‘ What I will note is that the US choice between Shah vs. religious extremist Ayatollah was a false choice in this sense – we only faced that choice because of our multi-decade history of intervention. In fact, it was a rather colorful and interesting history.’
It was not a ‘false choice’, it was the actual reality that faced Carter and his Nat’l Security Adviser. Iow, it was reality, and not to face up to it is to make the perfect the enemy of the good (or not so bad).
Conflict has existed since there has been oxygen on the planet. Which, happened a long time before ‘our multi-decade history of intervention.’ We face these choices because we exist in this vale of tears. Not to face up to that–as Carter would not–is asking for disaster.
14. October 2009 at 08:06
Patrick R. Sullivan: “Not to face up to that-as Carter would not-is asking for disaster.”
I couldn’t disagree more. It’s just hubris to think that intervention can ever help. Even if politicians do have the right motivations to intervene in a foreign country (which is doubtful) it is even more doubtful that they will know enough about the situation to intervene beneficially. It’s all the fallacies of socialism dressed up in a new garb.
Just like we each should keep our noses out of other people affairs, so we should keep our government’s noses out of that of other countries.
14. October 2009 at 12:21
Current:
I generally agree, but then am reminded of Nazi Germany and the US entry into the War (which was likely manipulated). And the prolonged US occupation afterwards.
As any good pragmatist, my response is this: the bar for intervention needs to be very high, because the cost is usually higher than we think.
On the other hand, we have the Kosovo war, which by even a conservative measure was “worth it”.
But Iran in 1980? I can’t possibly predict what the enduring outcome of a largescale US intervention might have been, but I’m skeptical. I think it would have simply kicked the can down the road and made the problem worse in the end. Iran, today, is arguably on a better long term path. If they ultimately achieve some sort of semi-tolerant democracy, it will be because they got there themselves. In 2001, there was a brief moment when Iran was open to real change… then Dubya created the Iranian Axis of Evil in order to perpetuate his domestic policy agenda.
The real Axis of Evil list should have included Saudi Arabia, but that country has deep social ties to the Bush family.
14. October 2009 at 12:34
Current: “Now, come on. We on this side of the debate have always given reasons why we advocate policies. It is not about faith and never has been.”
Which “You”? You as in the Hayeckian crowd? Or “you” as in Eugene Fama?
Mankiw still hasn’t posted a real congratulatory note of his own to Ostrom and Williamson, but at least he linked to Romer’s article on Skyhooks and a nice article by Spence.
BTW, I don’t perceive Ostrom/Williamson award as vindication of liberals. I perceive it as a vindication of pragmatists.
14. October 2009 at 15:17
Though I probably wouldn’t have said this a few years ago, this is my view now. Kosovo was a fluke. And, the US didn’t really have to join WWII, it was to some extent a fluke too. The Nazis wouldn’t have been able to hold the countries they had captured.
Well, I’m don’t know about Eugene Fama.
I don’t think Mankiw is dogmatic about his support for right-wing economics, though he may be.
I think it’s more in praise of local economics.
The emphasis in these prizes isn’t in “better than any statesman or lawgiver can do for him” or the reverse, its “in his local situation”.
14. October 2009 at 15:23
The last week has been spent doing nothing but struggling with computers and pulling my hair out. I’m now on my third computer in less than a week. Should I switch to a Mac next time? My computer seems unable to use my new 32 inch 1080P monitor correctly, and I can’t get sound through my speakers.
Johnleemk, Thanks, I agree with most of what you have to say. However, I don’t know why you think it so unlikely that Obama will push pro-market policies. Can you name any country outside North Korea where left-wing governments have not pursued pro-market policies in recent decades? I can’t think of any. So while I don’t know whether Obama will, it certainly would not surprise me.
123, I meant hoarding of currency, which did not increase much last year. Are you referring to saving, or cash hoarding?
Patrick, I think the US has very little to say about who rules various contries. Indeed I disagree with both those on the left and the right. The debate seems to be about whether it would have been a good idea to stop the revolution, as if we were able to wave a magic wand and determine who was in power. I do not buy historical accounts of the CIA engineering coups in places like Chile and Iran. I just don’t think the CIA is competent enough to do something like that.
Sure, it would have been better if the Shah had not been overthrown, but mostly because the appalling slaughter of the Iran/Iraq war would not have occurred. But I just don’t see the US having any reasonable options there, and I am skeptical about whether it would be wise to try to micro-manage countries even if we could do so. At one time Saddam was viewed as a pro-American dictator. I’m not saying the Shah is as bad as Saddam, but dictators can leave a power vacuum, and so it’s hard to figure out how that plays out in the long run.
azmyth, That was amusing.
Statsguy, I don’t see why people dislike Mankiw. He seems far more polite to me than many other bloggers; probably more polite than me. (He is also very polite in person.) He doesn’t seem to ridicule those he disagrees with, or call them morons. His satire is rather “light,” not dripping with contempt. I’m not saying he is perfect, but compared to other bloggers he seems pretty polite. And I didn’t see any sarcastic comments about the Economics Nobel Prize in his blog. His satire was directed against the Norwegian committee, which everyone seems to agree made a bizarre decision with Obama. And not just this year, they’ve had a whole string of odd choices. I don’t see any problem with satirizing public figures. Unless I’m being satirized of course. 🙂
I’m not saying your are necessarily wrong–I often agree with Mankiw’s views, and we tend to give a pass to those we agree with. BTW, Tyler Cowen linked to a Harvard website that did do just what you accuse Mankiw of doing.
I do strongly agree with your foreign policy views, however.
Current, I wish I knew more about their research. I am shockingly ignorant of economics outside my field. (And often even on subjects I discuss here, like the EMH.) But you are right, people seem to really like these two. I suppose it may reflect an anti-math-geek bias in the blogosphere. Think about the type of economists most likely to become a blogger. Many are interested in political economy, philosophy, institutional economics, etc.
I think it’s nice to see a political scientist get the award. We in economics are viewed as being imperialists, jumping into fields we know little about. The field would be healthier if it wasn’t even called economics, but rather social science. The Nobel Prize in Economics should actually go to the best research in business/economics/finance/polysci/sociology, and often does.
azmyth#2, I completely agree about the importance of development economics. It used to be really bad. I’m not saying they should agree with me, but check out some old development textbooks–you’d think free markets played zero role in economic development. But it is getting better.
Statsguy; Thanks for that insightful summary of their work. Are you surprised by how enthusiastic all the libertarian-types seem by Ostrom’s work? I don’t know enough about it to comment, but you suggest that it challenged some of their views. And some of the libertarians seem extremely knowledgeable about Ostrom’s research.
I’ll skip over the rest of the Iran debate, as I certainly have no great insights there.
Statsguy, regarding your last reply, I partly agree. I am also a pragmatist, so I am pleased to see the award go that way. And your views are always from a sensible, pragmatic perspective–so even if I disagree, I always sense that they are honest opinions. But I am not sure the comments about Hayek and Fama are completely fair. Hasn’t Fama done some research that shows markets are not completely efficient? (Perhaps my memory is faulty.) I was under the impression that he didn’t think the EMH literally true, but rather a useful approximation of reality. BTW, That’s my view.
And Hayek supported government programs like welfare for the poor, so I also think he had a pragmatic side.
14. October 2009 at 16:31
Current, I agree with some of your points, but WWII is something I think we had to fight. Especially after Pearl Harbor was attacked. BTW, Germany declared war on us, before we declared war on them.
The whole period from 1914 to 1945 was a really bad period of time from almost every perspective. Even the “good guys” often behavior dispicably. We turned away Jewish refugees, we bombed civilian targets of dubious military value, etc. (And I’m not referring to the A-bomb here, just conventional bombing.) War makes people behave in a more brutal and repressive fashion than they would otherwise. One could argue there are no lessons from WW2 for the modern world, as there will never again be anything like WW2. (There might be something worse, but it will be totally unlike WW2.) So in that sense I suppose I partly agree with you, WWII doesn’t often much reason for you to abandon a dovish stance on foreign policy right now. But we probably had to fight that war.
14. October 2009 at 19:14
Your writings here have inspired me to learn a bit about monetary/macro economics. Can you suggest a textbook? Math is not an obstacle.
15. October 2009 at 03:39
Certainly the US had to defend itself against Japan. But it didn’t really have to join in the war in Europe.
15. October 2009 at 04:34
I am not super technical savy. But I know with some of those advanced monitors, only certain video cards work. If you tell someone at Best Buy or wherever you go to get your computer, what kind of monitor you have, they should be able to help. (In the case you already did that, all hope is lost). Also, make sure your are using the correct cable (sometimes they come with a couple), I have done that before and it was very embarassing.
15. October 2009 at 05:14
Scott. Post exactly what you are trying to do with your monitor, I’ll see if I can help.
15. October 2009 at 07:45
‘ Sure, it would have been better if the Shah had not been overthrown, but mostly because the appalling slaughter of the Iran/Iraq war would not have occurred. But I just don’t see the US having any reasonable options there, and I am skeptical about whether it would be wise to try to micro-manage countries even if we could do so. At one time Saddam was viewed as a pro-American dictator.’
With all due respect, Scott, that is just crazy. First, Saddam was a Soviet client armed with MIGs, T-series tanks and AK-47s. His model was Stalin.
The only time Saddam looked to us was when he was about to lose his war with Iran. All we did was provide him with satellite intelligence about Iranian troop movements, along with a few old helicopters.
It wasn’t a good option for Carter to take the advice of his own Nat’l Security Adviser and ‘support the Shah while he restored order in his country’?
15. October 2009 at 09:16
jsalvati: For monetary, Scott would likely recommend Mishkin’s textbook. Though I am not familiar with much else, having used it as an undergrad and as an instructor, it seemed good.
On Ostrom: Great choice. The stuff of hers I’ve read is excellent – the bottom-up decentralized emergence of successful collective action solutions is exactly what we need to understand better to allow for the betterment of life on this planet.
On U.S. military interventionism: This is something I am extremely ambivalent on. I see good points from those who examine geopolitical situations and argue that military intervention is/has been warranted to avoid greater harm – on a situation-by-situation basis looking over the short- to medium- term timeframes.
However, it seems clear to me that a credible less interventionist policy/stance would be better over the long run (both domestically and internationally), and would very likely reduce the occurrence of situations where it was in our short-term interest to intervene. The trick is how to move from being trapped on the path of constant “short-term justified” interventions which lead to further interventions. I see no clear way.
I will say I think Wilson’s entry into WWI was very bad, but what else might one expect from a Nobel Peace Prize-winning racist segregationist?
Scott: you’ve made me wonder if I shouldn’t try to recreate the big screen theater experience in my home (big TV screen, dark room, etc…) in order to try to appreciate Vertigo. But perhaps it would be lost on me; despite having a similar appreciation for Lynch as well as some of the excellent foreign films out there, I’ve never been wowed by Hitchcock, and I still feel that Joe vs. the Volcano is the best film ever.
15. October 2009 at 11:00
On Ostrom:
I was somewhat surprised that libertarians embraced Ostrom’s award. I understand – in retrospect – but would not have expected it. Part of her work relates to the capability of institutions to form (almost spontaneously) from social networks to govern the commons, which is really just a specific example of addressing common interests. I can see how someone might read her and arrive at a libertarian interpretation, but Ostrom’s work was actually quite a bit more nuanced. Part of her conclusion is that governments cannot work effectively without social ties, due to legitimacy, practical matters of implementation, and information extraction. In a sense, it rejects the pure administrative state (in which the state is separate/insulated from social pressures to avoid risk of capture/corruption), but it really does not reject state activity altogether. She introduces the notion that private institutional arrangements are complementary, and sometimes even necessary, to effective state intervention or management.
In a sense, Ostrom is Civic Society’s response to Mancur Olson. Olson, for instance, takes his observations on the Logic of Collective Action to an extreme in his Rise and Fall of Nations – arguing that over time dense networks of (oligopolistic) institutions emerge that suffocate the economy. Ostrom would argue that these dense networks are generally good, in that they allow actors to overcome the inherent incentives to anti-collective good behavior.
But Ostrom never argues the purely libertarian view that compulsion or the use of force is never useful/necessary… or that the best response is to privatize everything. What she does seem to argue is that government is most effective (and efficient) when it provides support to local interest/resource users and transparently/legitimately co-opts/incents them to help monitor/regulate the use of the resource.
Ostrom’s work has had huge impact in the policy fields – the term “stakeholder” has become ubiquitous, and her ideas were more or less deliberately implemented in realms like management of the national parks. Under Gore (who basically ran the operational aspects of the executive branch under Clinton), her ideas were adopted enthusiastically. Not everywhere were they successful – for example, the history of fishery management. In Alaska, there are very large private oligopolistic fisheries, and they have done a much better job at managing their fishing grounds. In the northeast, by contrast, which is dominated by small boat owners, the fishery council proved unable to manage its catch until the cod and other populations collapsed, leaving the federal government no choice but to ban fishing altogether. But Ostrom’s ideas about predictors of success for collective action institutions more or less line up with this story.
Re: Fama and Hayek – I never ment to imply Hayek lacks a pragmatic side (the work I’ve read seems highly pragmatic). Fama… Perhaps I’m reacting more to how Fama’s work gets used rather than Fama himself, and if so am being unfair.
15. October 2009 at 11:29
Mankiw…
Snarky is the word.
Although often insightful, has a tendency to come off as overconfident and snarky. In that, he and Krugman share a lot in common.
15. October 2009 at 11:52
Hey, Scott, three observations. The first one is a tie in with finance and interesting result of the money illusion. The second one is my feelings that the money illusion will begin to vanish in the near future as computer tools get better. The third is about government workers.
1) Ok, This only works in an inflationary environment. In a normal inflationary environment, stocks increase in dollar value even if their value remains the same. So, companies can pay high stock options to their employees and management, without people getting upset, because in an inflationary environment it won’t affect the currency denominated price of the stock.
2) Tools are starting to rise now that translate from inflated to non-inflated prices. Also, people will see when their employer doesn’t give them a CPI adjustment to their paycheck as a pay-cut instead of as not getting a bonus.
3) Government workers get an automatic CPI adjustment but only if its positive so over the last decade, government pay has become much more competitive with private sector pay, and in some cases surpassing it. I’m not entirely sure what this distortion is going to do to job markets.
15. October 2009 at 15:34
Perfect demonstration of the implications of Ostrom’s work from a sitcom:
http://www.eatmedaily.com/2009/10/larry-david-teaches-christian-slater-the-unwritten-rules-of-hors-doeuvres-consumption-video/#more-29804
But, also a demonstration that it’s strictly limited in application.
15. October 2009 at 16:27
I liked your article on the http://www.american.com/archive/2009/october/have-we-misdiagnosed-the-crisis American Enterprise blog. I have been astounded that the Fed has not went into negative interest rate territory, especially given the mortgage resets tied to prime.
I was unaware the Fed began paying interest rates on reserves. I don’t understand why that’s smart. I also don’t understand why in light of the failures, I haven’t seen suggested legislation that would discount wholesale inter-bank loans in liquid capital calculations. It leverages already too greatly leveraged Balance Sheets.
15. October 2009 at 16:36
Scott
The letter to krugman link is broken. How did Denver PBS get to you?
16. October 2009 at 06:34
An open letter to Mr. Krugman. That link should work, but if it doesn’t it was posted originally on March 1 2009.
16. October 2009 at 13:04
Scott- Have thoroughly enjoyed your blog the past several months. Having just read the Cato piece, I am hoping you or another reader may clear something up for me. I apologize if this is a silly & obvious question, but I am not an economist by trade….
If a policy of level NGDP targeting is used as you have defined it, what is the suggested course if some technological advances enable real GDP growth that exceeds the NGDP target? Would it then be advisable to explicitly pursue deflationary policies or would a revision of the target be justified? I guess my question is whether deflation is always viewed as bad, or is it simply unexpected deflation that is bad? Maybe I am answering my own question.
16. October 2009 at 14:55
Scott, here’s an example of falling prices for the next time you’re asked:
http://seattletimes.nwsource.com/html/nationworld/2010078267_apeugermanygreenbrothel.html
————quote———–
Part of Berlin’s red-light scene is going green.
One bordello, hoping to stave off falling demand in the economic crisis, has begun offering discounts to customers who pedal bicycles to the door.
“It’s very difficult to find parking around here, and this option is better for our environment,” said Thomas Goetz, who owns the brothel Maison d’Envie, or House of Desire.———————-endquote————-
17. October 2009 at 02:28
I’m sorry, but I take issue with the notion that if one supposes President Obama has done very little to merit the Nobel Peace Prize they are nothing more than partisan hacks.
First, I find it inappropriate for a sitting president, a public servant of the highest order, to accept any kind of monetary award even if he/she has achieved results that merit such. It is even more dubious when there is nothing obvious to which to point that demonstrates merit. Has he facilitated the settlement of the Israeli/Palestinian issue? Has he gotten Iran to drop its nuclear ambitions?And what about his reactions to the matter in Honduras? The lack of patience and specificity on the part of the Nobel Committee alone leaves much to question about the intent where I believe results should be quite obvious in order to achieve public support of Obama being bestowed with the honor.
In a broader sense, I disagree with idea that Obama is good at what he does. His presidency is probably more on par with the Buchanan Administration because he fails to recognize that when one is president, one is everyone’s president, not just for those who voted a certain way when the results did not indicate an absolute mandate. It is part of his task to unite the general public once the election is over and he has not, from my point of view, attempted to be conciliatory toward the center-right in any obvious way. When uncontrollable economic events have had a somewhat destabilizing effect and the public mood resembles something like mob mentality, it is probably more beneficial to the nation as whole for the national leader to make political unity and order a priority than it is to use a crisis to push an agenda. He has surrounded himself with extra-legal radical’s radicals and has attempted to ram items through congress that have been on the left’s agenda for decades when many of us are worried about basic things like where tomorrow’s coffee and cakes will come from; hence, Tea Parties and health reform shout-downs, protests on a scale we have not seen for at least 30 years.
Even on the subject of oratory he falls short when it comes to explaining why his agenda matters to the issues average people are dealing with every day. If he had been able to do this the opposition would be largely marginalized. Pragmatics is key here, but I just don’t think he understands this. In addition, finger pointing and name calling by his supporters and some policymakers in the face of failure to sell the public on their ideas does nothing to help them achieve their goals, but achieves exactly the opposite of inflaming even moderate sensibilities and making activists out of otherwise ordinary people.
These are only some of the similarities, so far, between Obama’s presidency and that of Buchanan with some Andrew Jackson peppered in, which is probably more of a political toxic mix when it comes to peace and stability given the economic environment we find ourselves in than anything deserved of the Nobel Peace Prize. If he really wants to change the world he needs to realize that peace and political reconciliation needs to start at home, otherwise what he and his party actually achieve might be completely different than what they intend.
17. October 2009 at 05:42
jsalvati, My approach is a bit different from most textbooks, but either Greg Mankiw’s macro text, or the new Cowen and Tabbarok macro text would be fine. If you use Mankiw, be sure to start with his introductory text, he also has an intermediate text.
I use Frederic Mishkin’s “The Economics of Money, Banking, and Financial Markets.” It’s a good money text.
Current, It depends what you mean by “had to join”. We also could have also avoided war with Japan, even after Pearl Harbor. But would that have been a wise decision? When a country like Germany has declred war on you, and is sinking your ships, I think it is unwise to ignore it.
Paul, Thanks for the advice. I started with a VGA cable, then switched to HDMI. You also said:
“If you tell someone at Best Buy or wherever you go to get your computer, what kind of monitor you have, they should be able to help.”
Let’s just say that I have had a different experience with their employees, indeed with almost all experts in computers. When I got home with my latest computer, I had to talk to 4 experts before I could figure out how to get the computer on. The problem was simply that the input on the monitor hadn’t been switched to HDMI. But I am clueless about trouble-shooting. I do appreciate the advice, and will keep trying.
Current; I bought a 1080P monitor (actually TV), which was much more expensive. So I naturally thought it should be set at a resolution of 1080×1920. But when I do so the picture is so enlarged that everything on the edges of the screen disappears. The big problem of course is that the horizontal bars on the top and bottom, which contain all the key icons, disappear “over the horizon.” I’m sure that’s not the right technical term, but the point is that the cursor is then useless, there are no icons to click on, just a screeen showing the background I choose. It’s as if the computer thinks my 32 inch monitor is 42 inches. So to get everything onto the screen, I have to step down to a lower resolution, like 900X1600.
Patrick, I don’t know what you mean by “support the Shah” What specifically does that mean? If 100,000s of people are revolting againt him in the streets, what can a few US CIA agents, or a bit fo foreign aid really do?
BIl A, and Patrick, I should add that I haven’t had the best track record in foreign policy. I usually favor avoiding foreign interevention. But the one time I supported it didn’t go well, and some I opposed did go well.
Bil A, I’ve never even seen Joe and the Volcano, is it really your favorite film? If so, I’ll try to check it out sometime. If you get the home theatre, start with rear Window–it is more accessible. Then try The Man Who Knew Too Much, North by Northwest and Psycho. If you enjoy what you see then check out Vertigo. Because Hitchcock is such a strong visual stylist, his films look much better on the big screen.
Statsguy, Thanks for the very knowledgeable summary of Ostrom’s views. You said:
“But Ostrom never argues the purely libertarian view that compulsion or the use of force is never useful/necessary… or that the best response is to privatize everything. What she does seem to argue is that government is most effective (and efficient) when it provides support to local interest/resource users and transparently/legitimately co-opts/incents them to help monitor/regulate the use of the resource.”
Because I am a pragmatic libertarian, who believes the government cam play a positive role in a few areas, I don’t really have any problem with this.
Just thinking out loud I wonder how her work ties in to studies of “civic virtue” in places like Denmark. It sounds like those Alaska fishermen lacked that perspective. And one thing I find about civic virtue is that it transcends ideology. Both the left and right see value in civic virtue. Right-wingers like me like how it reduces selfish rent-seeking, and allows for local groups to solve problems in a decentralized way. Leftists like the communitarian, egalitarian, idealistic spirit. It also explains why people on both the left and right often have very similar views of the real world. For instance, almost all American intellectuals think the Danish system is much better that the Russian system. It is clear then, that they aren’t simply looking at how “left wing” or “right wing” the model is in each country.
17. October 2009 at 06:38
Patrick, Thanks. One can learn a lot of economics from sitcoms.
Thanks Jim. I don’t know much about capital requirements. I wonder if when they were drawn up the interbank loan market was considered safe enough not to worry about? Regulations are often like the generals who are always fighting the last war.
Thank Dilip, I think I fixed it. I was confused because within my blog’s control panel it looked fine, but it didn’t show up externally.
I’m not sure how they got my name, but I think the host had seen the Krugman post that reacted to me back in March.
Thanks happyjuggler0.
DKN, That’s a very good question. If you believe as I do that wage stickiness is more of a problem that price stickiness, then there is no problem with having mild deflation in a very fast growing country like China.
But here’s where it gets more complicated. When China has experienced mild deflation (like the late 1990s) its real growth has slowed. This could be because my assumption is wrong, but more likely it is because the slowdown was temporary and unexpected. I am talking about optimal long term trends. And I think China could adjust to a situation where they had mild deflation, as long as NGDP and wages still had a strong upward trend. This is what your final sentence alludes to.
Unfortunately, the US won’t face this ‘problem’ anytime soon, as our trend rate of RGDP growth may slow to closer to 2%.
Patrick, Thanks for that tip. But even now that I know of this example, I would be reluctant to use it in class, or in interviews. There’s always that nagging doubt in the listeners mind: “how does he know this stuff?”
However your example does suggest that with all the “deflation” we see around us, the Fed does need to provide another shot of Viagra.
Bonnie, I certainly agree that is was fair to critize the award, and that doesn’t make one a partisan hack. I also criticized the award.
At the risk of sounding indecisive, I can see both sides of the Obama debate. I certainly oppose his economic policies, and I can see some personal failings, which you have done a good job in listing. But I also think we expect too much of our leaders. Everyone has flaws. They just vary from one President to the next. The Presidency really magnifies these flaws. It’s also possible that the qualities that makes one a good candidate are different from what makes one a good President. But even that is hard to say. I tend to favor the parliamentary system, but the UK’s Prime Ministers have had their own personal flaws.
I think Obama’s biggest problems are that he has the wrong economic model. But that doesn’t mean he’s not smart, he has smart advisors like Austan Goolsbee who have similar views on economics. So I still think his biggest problems have little to do with his personal qualities, or lack thereof. I’m still hoping his economic policies move to the center as he recognizes the flaws in his initial proposals.
17. October 2009 at 12:03
Scott, you said:
” I meant hoarding of currency, which did not increase much last year. Are you referring to saving, or cash hoarding?”
One man’s saving is another man’s hoarding. What is important is that in september – october last year there was a big change in preferences – T-bills, deposits below FDIC limit, unused credit card limits became much more valuable. This all means that QE was urgently needed to prevent NGDP crash.
17. October 2009 at 15:01
Ostrom surely loves Swiss Cantons…
18. October 2009 at 10:00
123, You said;
“One man’s saving is another man’s hoarding.”
Fair point. But keep in mind that when I say hoarding I mean currency hoarding—an increase in the amount of currency (in real terms) in circulation. But no point is squabbling over terms, I agree with you that the factors you cite lowered velocity, and called for a more expansionary monetary policy.
Statsguy. You said;
“Ostrom surely loves Swiss Cantons…”
After all the grief I took for my Switzerland post, that’s music to my ears.
19. October 2009 at 05:25
Perhaps 1920×1080 isn’t a supported resolution. If you search the web for the model of your monitor, or look in the manual, it will give a table of supported resolutions.
“1080p” monitors often support 1920×1200 as the highest resolution.
I’ve had lots of problems with this myself at work.
19. October 2009 at 07:23
On Ostrom + Switzerland:
If I recall correctly, one of the interesting points in Ostrom’s work on the successful collective ownership/management of the Alpine highlands was that new residents were excluded from having a stake in (or the use of) the collective property. Which, going back to the previous post on Switzerland along with my (possibly mistaken) understanding that it is quite difficult to obtain citizenship, suggests that excluding newcomers from having a say might explain some of the Swiss success?
On Joe vs. the Volcano:
I am horrible at dissecting art that I really like, but yes it is my favorite; though I don’t expect many others will share my appreciation. The cinematography has some less-than-stellar moments to be sure, and the whole thing is so very over-the-top and absurd that many people miss the quality that is there. I think it flopped because most viewers were expecting a romantic comedy, when it is actually more of an existential/absurdist film. The recent Meryl Streep and Philip Seymour Hoffman film “Doubt” is the only other film both written and directed by the same writer/director John Patrick Shanley, if that means anything.
20. October 2009 at 04:29
Thanks Current. My computer doesn’t have 1920X1200 as an option, maybe that’s the problem.
Bil A, I’d want to know more about the distinction between old and new residents. They may be restricting the political power of those who simply have vacation homes, which are popular in the mountains.
Thanks for the film info, I did’t see “Doubt” either.
21. October 2009 at 02:48
Try 1600×1200 and 1680×1050 too.
I think it’s likely you have a GFX card which doesn’t support the right resolution for your TV. This isn’t uncommon since the LCD and GFX card vendors have chosen to support odd resolutions recently, this increases the chance of incompatibility.
21. October 2009 at 17:02
Thanks current.