Further thoughts on miscommunication
Several commenters after the controversial Kaminska post noted that it was unfortunate the brouhaha had overshadowed some interesting issues in the rest of the post. So today I thought it might be useful to provide examples of what I see as a huge problem: miscommunication.
Brad DeLong mentioned that most people find Izabella Kaminska easy to follow and useful. I think that’s because most people have a more “finance-oriented” view of the world than monetarists, who tend to rigidly separate “credit problems” and “money problems.” Her view is heavily finance-oriented.
In my case the money view is so extreme that I sometimes lose my fellow monetarists. I alluded to a London conference where I felt I had trouble getting other monetarist to see things my way. If I say it all boils down to the supply and demand for base money then other monetarists get frustrated. They think the monetary base is both a poor indicator and poor target for monetary policy. They look at the broader aggregates, and take a Nick Rovian “median of exchange” approach whereas I take a Fama-like “medium of account” view. But here’s the thing, I actually agree that the monetary base is a poor indicator of monetary policy and a poor target. That’s not my point! But it’s hard to get an entirely different “medium of account” approach across in a brief discussion, and they are likely to write me off as a fuddy-duddy who thinks the base is important.
In monetary economics the distinctions are so subtle that meaning is easy to get lost. Do things like “interest on reserves” matter? And if so, how much? The question is almost meaningless without much more context. What are you assuming about the future path of the Wicksellian equilibrium rate? What are you assuming about forward guidance? If the Fed changes IOR do they also change other instruments to keep NGDP on target, or is this a tool (or “signal”, and is there a difference?) that a higher NGDP target is implicitly being adopted? Context matters. (I recall Nick Rowe often makes this point.) But conversation is necessarily sound bites. “I think IOR does blah blah blah,” and you are never able to get across all the background assumptions and worldview to really connect. We all fail in communication, every time we talk with someone else about any issue more complex than; “What is the capital of France?”
Fortunately, failure is almost never as complete as in the unfortunate Kaminska post. We can make incremental progress. But we could make even more progress if we understood the miscommunication problem. And here another human defect comes into the picture, we are all wildly too overconfident about almost everything:
1. Religion.
2. Politics.
3. Whether that holding penalty in the endzone on “our team” was a bad call.
4. Whether the other side of a debate is making sense.
5. Whether we have correctly understood the other side’s point before rejecting it.
6. That language is transparent, like glass.
7. Whether the other side is using fair or unfair techniques.
8. Whether we are using fair or unfair techniques.
9. Whether arguments are ad hominem
Thus not only is communication very difficult, we grossly underestimate how much of our differences are due to failure to communicate.
As always Tyler Cowen was way ahead of me on these perceptions, talking about how you need to try to put the other side’s argument in the best possible light, not the worst possible light.
PS. Bob Murphy wins for best comment on the Kaminska post. He pointed out that something similar occurred in a recent post where I discussed Noah Smith’s God post:
For what it’s worth, Scott, had I not known your personality and style I would’ve assumed you were hitting her pretty hard. Imagine Krugman saying of a Republican economist, “The easy way out would be to assume he doesn’t really care about the welfare of black people, but let’s look at the logic of his case.” That would clearly be a swipe by Krugman, not an affirmation that the guy WASN’T a racist.
You may remember that I totally misunderstood a similar move you made a couple of weeks ago about Noah Smith on the super-God. I thought you were being snarky and criticizing him, when (apparently) you were being serious.
Not sure what the moral is here; maybe too many of us are sarcastic and so we attribute it to everyone? But, I’m surprised that you are surprised at the reaction you’re getting. It reminds me when Landsburg gets into trouble…
Actually in the post about Noah Smith I was making a very narrow point about . . . miscommunication! I was arguing that Noah’s post looked “liberal” at first glance (and may have been intended that way for all I know) but that looking at it from a different angle you could equally well get a conservative message across. So why the miscommunication? I think Bob saw it as obvious Smith was trying to make a liberal point, and that made my post an implied criticism of Smith. I do get that, and even at the time I probably understood some would read it that way. But in that case I didn’t give it much thought, as it was an unimportant point. (Maybe even a plus, another chance to teach “miscommunication!”) I would have cared a lot if I knew how the Kaminska post would be misread.
So what lessons can I draw:
1. People are tribal. Since I’m seen as being in the conservative “tribe” all my posts will be read that way, to some extent. Since I’m seen as being in the “doesn’t understand Kaminska tribe” all my post mentioning Kaminska will be viewed as anti-Kaminska unless I scream from the mountaintops “DON’T ASSUME THAT JUST BECAUSE YOU CAN’T UNDERSTAND KAMINSKA IT’S HER PROBLEM.”
2. You can be terse. And you can be counterintuitive. And you can use words in a hyper-literal quasi-autistic fashion that is blind to tone. But if you do all three, don’t expect to avoid getting into all sorts of trouble. Unfortunately I’m a fatalist and a determinist and a pessimist, so I expect to have to keep relearning these lessons over and over again. Painfully. But maybe a bit less frequently as I age.
PPS. Miscommunication may serve an evolutionary purpose. And what would dating and romance be without miscommunication? Dry and sterile. Imagine Shakespeare without miscommunication. So it’s not all bad.
Tags:
10. December 2013 at 05:48
Did everyone else already know this? http://research.stlouisfed.org/fred2/series/M2V/
10. December 2013 at 05:54
Hi Scott,
Saw this BI article, with Warren Buffet describing a great GWB quote, thought you’d appreciate it:
“George Bush said, “If money doesn’t loosen up, this sucker will go down” – I believe this was the greatest economic statement of all time.”
link: http://www.businessinsider.com/warren-buffett-on-george-w-bush-2013-12#ixzz2n51FwLZq
10. December 2013 at 06:21
Perhaps the medium of exchange approach is the big compromise, and the medium of account approach is a desire for “normalcy”!
10. December 2013 at 07:03
Yes, we debated IOR a lot. We will get the 2008 transcripts soon, so I guess I will be able to demonstrate that the key decision in September-October 2008 was the decision on the level of fed funds rate. Keeping the fed funds rate decision constant, the combined decision to do higher IOR and higher base was expansionary, as it addressed financial frictions (frictions that Williamson believes are more important than sticky prices).
10. December 2013 at 07:07
Yikes!
Steve Liesman: “Get Ready, Here It Comes: A December Taper”
http://www.cnbc.com/id/101259064#_gus
“It increasingly appears that tapering is coming at the Fed’s meeting next week.
While forecasting the central bank’s moves has been an uncertain proposition for most of the past several months””with the conventional wisdom having it wrong in June and September””several of the Fed’s own financial tests for reducing its asset purchases look to have been met as it heads into the Dec. 17 meeting. Those include confidence in the outlook, an easing of fiscal drag and uncertainty, and what the Fed sees as more appropriate interest rates.”
10. December 2013 at 07:17
Proponents of the shadow banking POV on the past years, seem surprisingly okay with skipping QE.
If there really was a collapse in a meaningful broad aggregate due to a shadow banking imposition, shouldn’t they favor the fed to do more?
Instead we get commentary about the fed depleting the pool of t bills and undermining the shadow banking system with QE–despite operationally the fed was dumping tbills in 2008 and switching to the direct provision of loans and later MBS purchases.
In the end, I couldn’t find substance in those stories, except an unwavering faith that is conspiratorial in tone about the boom and bust of a shadow banking system falling the world economy.
10. December 2013 at 07:19
“Fortunately, failure is almost never as complete as in the unfortunate Kaminska post.”
Scott Sumner calls a Kaminska post a “failure” and “unfortunate.” Whip out the torches and pitchforks!
…The really sad thing is, this isn’t just a parody of the Internet but of political discussion everywhere. Maybe a lot of the miscommunication (in general, not necessarily over Kaminska) is deliberate?
10. December 2013 at 07:45
” They look at the broader aggregates, and take a Nick Rovian “median of exchange” approach whereas I take a Fama-like “medium of account” view.”
The problem is that you all want to drive your points through so hard that you stake out the most extreme either/or positions.
Seems to me that the two views are compatible with each other. Whatever key asset happens to define the unit-of-account sets the economy-wide price level, but changes to that key asset’s marginal usefulness as a medium-of-exchange will cause its value to fluctuate, and therefore the economy-wide price level to rise or fall.
10. December 2013 at 07:46
For my money, the ability to communicate effectively is what sets Friedman apart. So, if you really want to grab that mantle, that’s what you should work on.
BTW- the irony that the topic of ‘miscommunication’ itself is such a minefield is not lost on me. Stay away.
10. December 2013 at 08:21
Scott,
Frankly speaking too many macros engage in duplicity and outright dishonesty. They use sophistry to explain away their model failures and always have an excuse to rationalize inconsistent arguments. There is no better example of this than Paul Krugman who says many things as a pundit which are counter to what he has said as a professor. James Taranto of the WSJ provides a representative sample. In the past week Krugman opined that Republicans were mean-spirited, and simply wrong, to suggest that unemployment benefits encouraged unemployment. Yet, as Taranto writes, Krugman makes the same argument the Republicans are making in his 2009 macro textbook!
http://online.wsj.com/news/articles/SB10001424052702303560204579248310814819096#printMode
10. December 2013 at 08:22
Scott,
but wouldn’t it help a lot to communicate market montarism if we had different tools for NGDP targeting (tools which you -for mysterious reasons- don’t like at all)?
Imagine each citizen would have his own account at the central bank (Kenneth Rogoff promotes this to end deposit insurance): to raise the money supply CBs would push money into them, for contracting they would pay interest.
What could be more simple?
All discussion about the zero bound, monetizing the debt, government bailouts, asset price inflation, bailing out banks, cantillon effects etc, etc… would be gone.
Everybody would see immediately the market monetarist’s message: monetary policy has nothing, absolutely nothing to do with banking (or government). Monetary policy is just between you and your central bank.
10. December 2013 at 08:42
To emphasize this: the Keynesian try to convince us that raising AD needs fiscal policy, new debt etc. That’s wrong.
But the market monetarists (you or Nick Rowe) confer the equally wrong impression that raising AD has something to do with CBs buying assets.
That’s not the case, you don’t need to buy assets at all. If you would fight this impression, nobody would talk about asset price inflation, cantillon effects, CBs taking away collateral…
Everybody would see: monetary policy is nothing more than speaking softly (NGDP targeting) and carrying a big stick (helicopter drops).
10. December 2013 at 09:02
“Brad DeLong mentioned that most people find Izabella Kaminska easy to follow and useful. I think that’s because most people have a more “finance-oriented” view of the world than monetarists, who tend to rigidly separate “credit problems” and “money problems.” Her view is heavily finance-oriented.”
I really don’t think finance is the problem.
Nick Rowe made a similar observation about Stephen Williamson. He said the problem was math. I pointed out that my original academic background is in math and it was obvious to me from the very beginning that Williamson’s model made predictions which were contrary to what we observe empirically. The problem with Wiliamson’s model only became widely evident when he was forced out of his comfort zone of formal equations and had to tell a simple story.
I would love for Izabella Kaminska to tell a simple story of how QE causes deflation free of hip keywords because I suspect more people would see just like Williamson she really doesn’t have a coherent story to tell.
10. December 2013 at 09:22
Marcelo, Yes, lots of people are sending that to me. I saw it years ago. Not sure what Bush meant. Easy money or fiscal injections to banks?
123, As I said, the question “How important is IOR?” has no answer. You need much more context. Obviously I strongly disagree with Williamson about frictions.
Travis, It depends what else they do.
JP, No question the views overlap a lot, that’s why it’s almost impossible for us to find a single testable implication that would separate our two views. But that’s a separate issue from my London communication problem.
libertaer, Interesting idea. My idea (or Fama’s) was to make the base 100% currency, and eliminate both reserve requirements and bank deposits at the Fed. One hundred years ago it was 100% currency, and worked fine.
Helicopter drops are welfare. I’m not a fan of welfare.
Mark, Look I also disagree with many of her views, but I was making a different point. Tyler Cowen and Brad DeLong and Paul Krugman are smart people. They aren’t going to say they like Kaminska unless they actually do find her stuff understandable and useful. You and I may not, but we can’t extrapolate to the conclusion that no one can.
But that’s a different issue from whether Kaminska or Williamson’s view hold up well over time under vigorous debate. You may be right on that point.
10. December 2013 at 09:51
Scott,
“Tyler Cowen and Brad DeLong and Paul Krugman are smart people. They aren’t going to say they like Kaminska unless they actually do find her stuff understandable and useful.”
Well, David Andolfatto is a very smart person, and he apparently finds Stephen Williamson’s model understandable and useful. But as much as I respect the views of David Andolfatto, in my opinion he’s wrong about Williamson’s model.
Moreover, Andolfatto at least has an excuse, because in my opinion his views are not really that inconsistent with the claims of Williamson’s model. Do Cowen, DeLong and Krugman have *any* views consistent with the claim that QE causes deflation? I think not. This whole affair seems rather strange to me.
10. December 2013 at 10:21
If only 1/4 of transactions are paid for with cash or “base money” is base money the correct measure for the medium of exchange?
10. December 2013 at 10:54
What do you mean by 6?
Because in my mind the language in this post would mean something different if it was coming from a different author. I have a mental model of your thinking based on the past writings I have read, and estimates of your personality. As well as the context of the brouhaha, and the perspective change you gain from getting high. All of that is in my neurons, wheras your words communicating with another set of neurons would have a different effect. I suppose correcting peoples interpretation of your intent, matters to you, because noah has influence, but thats a guess on my part, just as noah guessed you were insulting kaminska, and that you weren’t self-aware. Usually we don’t make explicit our guesses at peoples motivations/schemas, cause its rude, and requires a lot more information. But usually once we label something (Market Monetarism), we are able to discount it when it switches topics.Political/policy evangelism vs public intellectual/curious person. I also think Noah was engaged in sexism, but that’s another silent hypothesis and rude to say. I prefer to not have all these personalities clogging up my neurons but that is what I suppose marketing is, and humans like to understand humans.
10. December 2013 at 11:03
I just had a physiological response, for calling out people’s motivations publicly, but under an anon name. Was trying to be objective with my own mind but didn’t work.
10. December 2013 at 11:49
What’s in a name anyway?
http://www.sfgate.com/nation/article/Police-not-feeling-the-love-for-snuggle-business-5046929.php
Good thing Scott got out of Wisconsin.
10. December 2013 at 12:07
Do Cowen, DeLong and Krugman have *any* views consistent with the claim that QE causes deflation?
The latter two certainly do. Their core view is that the government should spend more. Then they reason backwards to any argument that supports more government spending, whether it’s liquidity traps, Republican racism, or QE causing deflation.
10. December 2013 at 12:22
There’s miscommunication, but some of it is intentional, and some of it is unintentional. For example, I think just bringing up the “NR and I agree IK is incomprehensible” idea/thread is a bit of a dig, no matter that the point of bringing it up wasn’t to make a dig.
But when NS shows up in the comments and charges SS with incivility, there is some intentional miscommunication there.
Because obviously he read (or could have read) the whole post and understood that the incivility was not the point, but he doesn’t say something like “hey, I know you probably don’t mean it this way, but,” he just says it’s “uncivil” and leaves it at that.
Because when he shows up in the comments and says, “[t]his quasi-apology could have been more self-aware, but the world will take what it can get,” what is his purpose? He wants to reinforce the “you really crossed a line there, pal,” thing. He’s saying, “sorry, your feeble attempts to exculpate yourself are a no go!”
Now just go back to last July and this:
http://noahpinionblog.blogspot.com/search?q=punching
When Noah Smith himself makes an uncivil (and silly) comment, and SS complains, does he defend his comment? No, he can’t come up with a single example of Sumner “hippy-punching.” Does he then apologize? No, he obviously doesn’t believe that one should apologize for an uncivil comment, even if you can’t defend it. His own choice of response is the adoption of a jocular tone.
Remember, NS is not a blogger of the Krugman, DeLong, Rowe, Sumner type who pushes a set of ideas, his own blogging is of a more adjuticative nature, where he responds to the ideas of others. (Not a criticism, it’s not an easy niche to fill and he obviously does it well). Maybe his purpose is to defend Kaminska, and maybe it’s to (as TC likes to say) lower the status of Sumner. And this is not an unfair thing to say, as the example I have adduced above makes clear.
10. December 2013 at 14:15
AGAIN, Kaminski’s not an economist.
Neither am I.
And she understands the stuff I’m talking about, and I understand her… because she’d not doing ECONOMICS any more than I am.
And the econs who “understand her” doesn’t think she’s a economist, they just agree with her preferences.
THIS isn’t a communication problem. And I can prove it:
DIzzy’s WHOLE THING is towards a leisure society.
She STARTS THERE.
Keynes promised that technology would make it so people got to “work” 15 hours a week, and she wants it like my pittie wants to be human.
SO DOES FRANCES.
Spitting out the optimal GI plan had nothing to do with econ – it was just all off the shelf tech components built by profit taking companies so they could survive.
So speaking from the tech side, here’s a news flash:
Tech KNOWS that everybody isn’t going to get to work 15 hours a week.
WE KNOW THIS because we work 24/7 and we want the bottom 80% to do sh*t for us. When we finally replace the nanny with a robot, TRUST ME, we got other things the nanny can do.
The bottom 80% are the support staff for the top 20%. The top 20% works 60 hours a week, and the lucky duck bottom 80% get GI / CYB and have to deliver a nominal amount of value relative to other in the private market.
i use $40 a wk as m guess.
Some lucky ducks like Frances will be able to get $40 being a blogger, and some luck ducks are gong to have to do a full 40 hour a week.
WHY? Because the top 1/3 that spend time in the top 20% make the friggin rules. (and NGDPLT normalize the economy, so the hegemony doesn’t have wild weird Obama FDR moments).
Now seriously, if when Izabella / Frances read this they KNOW EXACTLY what I am saying.
(frankly, I think everyone knows what I’m saying)
But this isn’t a miscommunication problem, because THEY DO NOT want to argue about their base assumption:
YES people have to work for other private buyers. Period. The end.
I am ALWAYS trying to publicly call them out and make them defend their preferences, and they are going to hide out as long as possible.
Look, the basic question:
DOES EVERYONE HAVE TO WORK?
gets to the basic premise of conservative morality (Haidt) Fairness means not taking advantage of charity.
And it’s a great BASIC ECON 101 rule…
And its a moral question that is encoded into economics.
Because in real econ – there is no safety net. there is no minimum wage. There is no govt. regulatory body. There is want and need and talent and skill and trade and force (property rights).
BUT, Krugman? DeLong?
If either of them dared to say Look Izzy, Look Frances – everyone is going to have to trade their talent and skill with other people to survive.
It’ll be a bloodbath.
What kind of person claims to do econ assuming that people don’t have to work for others to survive?
Izzy and Frances.
10. December 2013 at 14:17
“Obviously I strongly disagree with Williamson about frictions.”
Williamson argues sticky price and sticky wage frictions are no longer important, while financial frictions remain. The actual situation is exactly the opposite (although financial frictions may be reintroduced by tapering).
” the question “How important is IOR?” has no answer. You need much more context ”
So far the context always was that the fed funds rate is the target. When IOR is changed, other tools are changed too so fed funds rate stays on the target.
10. December 2013 at 14:21
Mark, I think we are still talking past each other. On the “quality of ideas” metric you may be right, but my interest was more on intelligibility. They must find it easier to read than you and I do. That’s a different issue.
Again, I’m not saying her ideas must be correct because famous people like her, I disagree with famous people on all sorts of monetary issues.
Doug, No, it’s not.
Edeast. There’s an irony in your comment, as I had trouble following the meaning! In any case, some of what you say makes sense, but try being a bit less terse and elliptical, I’m a bit slow.
Tall Dave, No, I don’t recall them saying QE is deflationary.
anon/portly, You are right that the link was a mistake, and that’s what Kaminska objected to. I thought I needed to have a link so people would understand what I meant when I said a bunch of monetarists couldn’t follow her. But I should have realized the link would have been viewed as an implicit endorsement of the overall comment section, which was pretty impolite to her (although not my comment.) Especially when I said it was “amusing.” I meant the coincidence was amusing, not the tone of the comments. So lots of little mistakes on my part that added up.
But you are also right that the rest of the post made the point that one should not jump to conclusions just because you have trouble understanding someone’s argument, which was my real point.
10. December 2013 at 14:27
Patrick, Only in America . . . And Saudi Arabia.
anon/portly, Is that the right link, I didn’t see him talk about me.
123, Holding the ff target constant is ambiguous, and the price level is then unanchored. You need much more.
10. December 2013 at 14:45
Scott, for short periods between FOMC meetings, it is not ambiguous.
For longer periods, implementing IOR + larger monetary base raises the equilibrium fed funds rate.
10. December 2013 at 16:10
“anon/portly, Is that the right link, I didn’t see him talk about me.”
Yes, sorry.
http://noahpinionblog.blogspot.com/2013/07/how-normal-people-see-macroeconomics.html
Money quote: “Because of this, monetarists like Scott Sumner often spend a lot of time “punching hippies” on every issue other than monetary policy, trying to avoid being tarred as hippies themselves for their lack of fear of inflation.”
10. December 2013 at 16:32
I can’t; it takes too much work, to organize my thoughts, and write narratives, I have too many tangents.
I was asking about 6. Language is transparent.
Just been reading Howard’s The Owner’s Manual for the Brain, and playing with Dennet’s http://edge.org/conversation/normal-well-tempered-mind where unicellular organism’s : to multicellular, all neurons have same dna. Cancer is when cells start to live for themselves pschyso is the neuronal equivalent.
I actually tried relationships with the factual communication you mention and it is from that experience I am trying to recover. How can I say one thing then do another, crazy emotions, and religous imagery. Its not just communication it is internal inconsistency.
Humans as bags of neurons, (this being jeff hawkins type neocortex pattern matching) are looking for the highest entropy information, or the motivation the reason why something happens. If we’ve got a box, or a stable concept, market monetarist, when the person context switches or at least tries to, into above the fray mode or meta communication analysis, after a contentious qe debate, some people might not make the jump, unless they have a better more nuanced mental model of the communicator. And so lots of people werent’ offended some were, I mentioned the drugs, cause they help triangulate the self in the brain, and can aid the attempt at self objectivity. Then I pointed out my new data point being hmm, felt need to respond to noah. At least I feel the need to understand people’s motivations. So that’s why I think Noah thought you weren’t self aware. And I just pointed out the sympathetic response (adrenaline)I had to my comment about people’s motivations showing that it isn’t just my neocortex involved with understanding motivations, but the lower parts which acknowledge Noah and you as human, and expecting a confrontation.
10. December 2013 at 16:47
By the way, note that when NS said “it’s pretty clear Scott is calling Izabella a phony,” I would strongly disagree. In a paragraph that associates calling her a phony with “lazy” and reading her with “smart,” I don’t see how NS can justify that “pretty clear” language.
But in any case it is completely clear that NS, back in July, was accusing SS of a form of insincerity of phoniness. When SS objected he didn’t apologize or defend his statement, which suggests that either (1) he didn’t think it was uncivil to accuse someone of phoniness, but has since changed his view; or (2) he didn’t think incivility required an apology, but has since changed his view.
Perhaps NS would say that his claim (that SS is a phony) was accurate but either not worth defending or not even needing defending, while SS’s claims about IK were inaccurate? But then he hasn’t challenged SS on accuracy, only on incivility. Oh well….
10. December 2013 at 17:02
Being a generally left of center guy I still rarely put your posts in the conservative pile like I do with Mankiw or the like.
Sometimes you have spells where you get extra snarky and grumpy and the conservative viewpoint comes out and I think obscures your contribution, but that is the exception not the rule.
Mostly I place you in a classification all your own. I do the same with Cowen although I find Alex Tarrabok to be combative and arrogant. Mostly I feel that the best people to read are those who come to seemingly logical conclusions based on their own strong priors and life experiences.
I think I would have likely ended up more libertarian if I hadn’t been born into a family surrounded by highly intelligent and extremely competent government workers. This gave me an implicit trust of the Federal government and its underpaid executives. Since entering the private sector I have come to a conclusion that all large institutions have faults and the faults of government are caused more be the demands of politicians than what most people assume is incompetence.
Of course things are getting worse as the federal government productivity is becoming constrained as salaries have not adjusted with the private sector divergence between the lowest paid and highest paid workers.
10. December 2013 at 17:43
123, This will be hard to resolve. Suppose the Fed tapers next week. I say if the Fed tapered and cut IOR by 5 basis points it would be less contractionary than a taper alone. What do you think?
anon, Thanks for digging that up. Yes there is an element of “Phony” in his attack. I don’t want to overplay the victim here, as Noah’s attack on me seems half serious and half joking, whereas my “attack” (which wasn’t really one as you say) was perceived as 100% serious. But it does show that people often have an easier time see slights against them or their friends, than when they do something to others. It’s human nature.
Noah’s very smart and quick to jump to conclusions, but if you look at my response back then I think it’s pretty effective. The hippie punching thing was weak—I agree with Yglesias on lots of issues, for instance.
errorr, Thanks for those comments and I do get grumpy at times, especially April 15. Tyler is of course an exceptional person, but I think you underestimate Alex. Whenever judging someone with the opposite ideology, even on politeness, add ten points for bias. And subtract ten from people on your own side.
In other words, I probably think Krugman is a bit ruder than he actually is, whereas I think Alex seems pretty polite.
Come to think of it, you must subtract 10 from my previous praise of Alex. 🙂
10. December 2013 at 19:57
This old interview about smart people communicating badly is fun. A sample:
10. December 2013 at 21:14
errorr,
WRONG
Compared to Federal govt… We have punished the private sector.
You need to tell your parents to apologize. 🙂
YOY for 33 years the private sector has handed down 3-4% productivity gains.
YOY the Federal govt. in under 1%.
NEWSFLASH: Productivity gains is THE ONLY WAY you fund wage increases over inflation. BAUMOL is a joke.
Meanwhile compared to private sector, Federal govt. employees have RAPED the American consumer.
MASSIVE wage increases for no productivity gains.
Ok RAPED is a strong word.
Let’s say that the Federal employees robbed the American consumer.
I have a hard time paying a TSA employees at all.
If we are going to have TSA, I have a hard time paying them more than 7-11 employees.
7-11 employees KNOW THEY HAVE TO SMILE.
11. December 2013 at 01:14
Scott:
“This will be hard to resolve. Suppose the Fed tapers next week. I say if the Fed tapered and cut IOR by 5 basis points it would be less contractionary than a taper alone. What do you think?”
Yes of course, but this description is misleading. The condition of constant fed funds rate is not preserved. The Fed will cut IOR by 5bps because they will cut the upper range of fed funds rates by 5bps to 20bps.
11. December 2013 at 05:36
bababooey, That’s a good one.
123, OK, I see your point. But would you agree that it’s like saying “changes in the FF rate don’t matter holding the base constant?” After all, the base must be adjusted to change the FF rate.
So in 2008 if it was a given that massive reserves injections were going to occur, then the Fed had to do IOR to keep rates from falling to zero. Suppose Congress doesn’t give the authority? Do they still do the liquidity injections and let rates fall below target, or not?
11. December 2013 at 06:44
“changes in the FF rate don’t matter holding the base constant”
It all comes down to decision making procedures of the Fed. One assumption correspinds to their decision making process, the other – not.
When they had no authority to do IOR, they were asking treasury to sterilize reserves.
If they did injections without treasury sterilization support, they would have stressed the temporary character of injections or more likely start offering deposits/reverse repos to sterilize reserves.
11. December 2013 at 10:00
“Helicopter drops are welfare. I’m not a fan of welfare.”
Neither am I. That’s why I’m opposed to a basic income (including Morgan’s version) or wage subsidies, which you are favoring. I’m here much more “pure” libertarian than you, whatever that’s worth.
While a basic income or a wage subsidy is really redistribution, NGDP targeting by threatening helicopter drops is no more redistributive than NGDP targeting done by asset purchases.
When CBs buy bonds, it’s not welfare for the government! CBs are just keeping NGDP on trend, one effect being that interest rates take the level which markets wants them to take if there wouldn’t be a disequilibrium caused by an excess demand for money. The same goes for asset prices. QE isn’t welfare for rich asset owners, rising asset prices are just an effect of NGDP going back to trend.
Isn’t calling NGDP targeting done by helicopter drops welfare just like Geoff (or any other Austrian) complaining about cantillon effects or accusing the ECB for fighting deflation of “state financing by the printing press”?
Another point, everytime helicopter drops are discussed you seem to forget one of your main points that monetary policy is all about expectations. It’s about the target not the tools (be it helicopter drops or asset purchases). Since heli drops are the most potent tool, they would be used the least. Just showing them, is enough. NGDP would be on trend without anybody receiving much money, it could even be that you immediately have to contract. And in normal times the monetary base is rising just 6% each year. So it’s totally off track to call that welfare. Ok, maybe Dicken’s “bowl of gruel”-welfare 🙂
Wage subsidies are welfare.
11. December 2013 at 10:16
… and of course, if IOR was not possible, reserve injections would not be as massive, and they would come later…
11. December 2013 at 11:15
“The hippie punching thing was weak….”
When commenters at left-wing sites accuse Brad Delong of hippy-punching, which they often or occasionally do (I don’t read them enough to know which), they have hippies in mind. And the hippies are definitely covered with bruises. Here’s what Brad sucker-punched Gunter! Here’s where he backed over Noam with his Prius! Here’s where he caved in Fidel’s skull with a stack of Chez Panisse cookbooks!
Try making the point to Delong that you have a principled left-wing rationale to abstain from voting, rather than voting for the Democrat. He’ll be only too happy to punch you and punch you and punch you again.
Now, the idea that Delong is “hippy-punching,” i.e. is saying these things for strategic (and therefore phony) reasons, is just lame. It’s the age-old “attacking motives is so much easier and more soothing than addressing arguments” thing.
But when Noah Smith charges hippy-punching, where are the hippies? He doesn’t have any, no hippies, no bruises. Who could he cite? Krugman? The Sumner take on Krugman would make a card-carrying Krugman-hater happy? Yeah, surrre. Or that you could put forward the set of ideas you want to put forward without addressing Krugman’s highly prominent alternative take on those same ideas.
If NS had something concrete in mind with that comment, he has never revealed it, so (Occam’s Razor time) I would assume he didn’t really have anything concrete in mind. Similarly with the “it’s pretty clear” comment – that’s either a Read Fail or else it’s just Noah acting badly. And I know that one often get commenters who Read Fail, and then try to claim it’s the blogger’s fault for being unclear, as though that exculpates them from making an untenable reading. It doesn’t.
11. December 2013 at 19:03
123, Yes, but stressing their temporary nature doesn’t stop rates from immediately falling to zero.
libertaer, No I usually discuss the expectations angle when I talk about helicopter drops. That’s why I distinguish the with or without “Quotes” versions. I agree that expectations are hugely important.
It’s pretty hard to avoid redistribution. Patent and copyright laws are redistribution, for instance.
For me “welfare” is money for not working.
anon, I agree that was a weak post.
12. December 2013 at 01:05
“Yes, but stressing their temporary nature doesn’t stop rates from immediately falling to zero.”
It doesn’t, but it leads markets to expect much tighter policy immediately after the credit crunch.
12. December 2013 at 03:35
“It’s pretty hard to avoid redistribution. Patent and copyright laws are redistribution, for instance.”
Yes, that’s why we need less of them.
“For me “welfare” is money for not working.”
UI is money for not working. At best NGDP targeting by heli drops would be money with or without working. But since we are talking (in normal times) about 20$ per month, I don’t see how anyone can retire on that. If some people would work less because of 20$, that would raise inflation, immediately ending the heli drop.
And the beauty of it all, no asset purchasing, neither treasuries nor private assets. You could cut all connections to banking and public debt. The central bank would give everybody a base money account (100% money), paying interest to contract the money supply and lowering rates or heli dropping to expand the supply. No more deposit insurance on any other account. The finance industry would be on its own just like any other business. Really, what’s not to like?
12. December 2013 at 06:39
Libetaer, I agree that UI is welfare, and indeed it’s not really insurance at all.
12. December 2013 at 07:02
I’m retired and get money for not working via an annuity funded by an employer. Am I on welfare? I suppose you’d argue this is deferred compensation for past work. But, how does getting paid from funds set aside by an employer when I voluntarily stop working differ from getting paid from funds set aside when I involuntarily stop working? Perhaps you might argue that my retirement funds come from the private sector rather than government, but isn’t the vast majority of UI funding from the payroll taxes rather than general revenues? Were it not for that tax, wouldn’t my prior wages been higher?
While there is a cap on unemployment benefits for high earners, the ratio of UI benefits to past wages is pretty uniform. Or are you arguing that “some” are on welfare, depending on whether the prior contributions to the UI fund were sufficient to cover their current UI benefits? If I’m a high earner and collect less UI benefits than the UI premiums set aside to the fund by my prior employer, am I still on welfare?