400 years

Public Service Announcement: I’ve got a new job. Posting will change frequency, but I am unaware whether my heavier workload will reduce posting, or my more regular hours will increase it.

Anyway, have some Bob Marley.

Filed under: Blogging

What would the “failure” of a NGDP targeting central bank look like?

Nominal Gross Domestic Product is depressed, that leads real GDP to be depressed because it is very difficult to accommodate rapid and large deflation so logically it must be lower. It also leads to the quantity of people employed to be depressed because the same is true of aggregate wages.

I don’t fully understand what critics of NGDP targeting mean when they say they suspect the policy would fail. I think the language NGDP targeting is something of a handicap, because once you start thinking in this language you begin to translate people’s statements and in the process they cease to make sense.

Chris Dillow says…

I fear, though, that economists who invoke “expectations” and “credibility” are making the error of mistaking the tidy maps of models for the messy terrain of reality.

Unlearning Economics says…

This is a clear example of confusing correlation and causation. When looking at two correlated variables, a good question to ask is which one moves first – here, the drop in RGDP clearly precedes the drop in NGDP. This suggests that the decline in RGDP is not a result of the decline in NGDP; rather, its the opposite.

So what happened in 2008? Obviously, the conventional story is true: a large drop in asset prices made many households and firms realise they were less wealthy than they thought; this caused firms to lay off workers; real production decreased; nominal income followed; expectations dropped; this created a spiral. The NGDP-driven story doesn’t withstand scrutiny, else we’d expect the NGDP drop to come first.

First of all, I agree with Chris that relying on expectations is a weak lever. But, if you are powerful enough to not have to rely on expectations, the market should anticipate that and you will be able to rely on expectations. To he that hath shall be given, and we hath in abundance. I think a Bank with a fairly doveish reputation with the printing press combined with the supremacy of parliament, the Royal prerogative and a government intent on re-election is more than powerful enough for the above to hold true.

Secondly, I disagree with UE. In 2007/8 asset prices fell because expectations of future NGDP fell which was priced into current asset prices. This lead to a fall in real GDP contemporaneous with a fall in NGDP, but both were caused by fall in expectations of future NGDP as is argued by adherents (cultists?) of NGDP targeting. Asset prices are forward looking and money is an asset, hence you have to look at expectations of future NGDP rather than looking at which moved first by a few months, RGDP or NGDP.

So what I don’t understand is what non-NGDP monomaniacs think will happen were a central bank to adopt a NGDP targeting regime. Say the treasury ask the Bank of England to adopt NGDP targeting and to catch up entirely to trend from 2008. What does failure look like?

1. NGDP does not reach trend because the bank lacks credibility and the policy is abandoned.
2. NGDP fails to reach trend for a long time, and so has little effect on anything important.
3. NGDP reaches trend but nominal growth consists (almost) entirely of price changes.
4. NGDP over shoots target massively and cannot be contained because  inflation expectations become unmorred and accelerate upwards: the price level spirals out of control.
5. NGDP targeting is effective and a la Kalecki capitalists stage some sort of investment strike and must be abandoned for political reasons.
6. NGDP targeting is effective and workers/voters realise it is a way of moderating their wage demands and must be abandoned for political reasons.
7. NGDP targeting is effective and we realise we’ve seen a series of unsustainable booms rather than real growth because of a slow down in innovation and all economic growth ends up accruing to land and rents and must be abandoned for political reasons.
8. NGDP targeting is effective and some combination of 5,6 and 7 occur.
9. Other?

Can anyone fill me in?

Filed under: Blogging, Economics, Chris Dillow, Interfluidity, Kalecki, NGDP, NGDPLT, Nick Rowe, Ricardo, Scott Sumner, Unlearning Economics

Click through!

By far one of the best posts I’ve read in months and I read hundreds of posts a month: The Equality Paradox.

Filed under: Blogging

Better than Fiction

I do sometimes wonder why people write “historical” novels around things that never happened when the real world is so pregnant with possibilities:

So just to re-iterate: a blind man scaled the wall of a compound where he was being detained by something like 100 people and then hobbled 20 kilometres on a broken foot to where a car was waiting for him before going on to cause a medium level diplomatic incident. That’s the dog’s bollocks, that is, to give niubi it’s colloquial British English translation.

Filed under: Blogging, Chen, China

The Government we deserve?

Well.  Is there a point here?  I guess there is, and it’s this – next time we find ourselves wondering how a nation of nice, congenial citizens such as the United Kingdom can elect a series of vicious, contemptuous, mean-as-fuck governments like the ones we’ve had this last three decades, maybe we should re-evaluate our assumptions.

If our governments are vicious and contemptuous, delighting in cracking down on and exploiting our weaknesses then just maybe, they’re a reflection of ourselves.

Hey, if that’s the case, that would mean that we’d deserve to be ruled by mean-as-fuck snobs who hate our guts.

Now, isn’t that a thought?

More here from the ever excellent Flying Rodent.

Filed under: Blogging

Victorian Lolcats

Awww, via, from the 1870s. I’m in the British Library as we speak. History rocks.

There are more here.

Filed under: Blogging, How do you spell linkbait?

The Occupy Handbook

Via. Coming out in May: Amazon.

Krugman, Graeber, Taibbi, Wolf, Saez, Rajan, Roubini…its kind of a who’s who of whose opinion I want to read on Occupy. I didn’t even read the blurb before ordering it.

Filed under: Blogging, Economics, History, The Occupy Handbook

Charles Murray is a Bullshitter: Wine Edition

The waiter pours him a taster from the bottle of Gavi di Gavi, an Italian white wine. “Mmmm, it’s like a good Montrachet,” Murray says. “I think it’s an excellent choice.” Every minute or so for the next few, Murray declares how excellent the pasta is. “Oh, this is lovely,” he observes mid-mastication. “Yes, really delicious.” I ask him what kind of wine a Gavi di Gavi is. Murray discloses that it is a “varietal”. I nod as though I know what that means. It certainly tastes nice. “Varietal means expensive,” he adds.

Before Felix Salmon gets here… what the fuck? That is from a longer article quoted by Brad DeLong. What follows is irrelevant as anything other than character assassination in certain circles.

Murray is a bullshitter, classically so, someone who doesn’t even care if what they say is true.

So, lets dissect what Murray says about the wine he is drinking.

First of all, we must note, Gavi di Gavi is objectively nothing like Montrachet. If you don’t have an opinion on it, that’s fine, but if you’re pretending to know about wine then this Gavi must be fairly unique.

Gavi di Gavi is from Italy, is made from the grape varietal (I’ll come to that) Cortese. Montrachet is a village in Burgundy making wine from Chardonnay.

Gavi is light-medium bodied should be crisp, with orchard fruits and maybe white peach and unoaked etc. Montrachet is full boded, oaked usually has a lot more stone fruit dominant when young and more nutty, earthy flavours when mature.

“Varietal” means grape variety, it couldn’t be a word any less relevant to cost. Even in context Murray makes no sense, Gavi di Gavi is a geographic region and Cortese is the varietal.

Either Charles Murray is a bullshiter, that article has its tongue firmly in its cheek or the FT copywriters don’t know jack about wine.

Filed under: Blogging

My word!

The biggest-ever experiment in rolling back the state is now known as the Dark Ages.

Hmm… via.

Filed under: Blogging, History

False dichotomy of the day

Complaining about the treatment of women in Iran is pointless unless you are suggesting we invade them to impose our view.

Words fail me.

Filed under: Blogging

How eurocentric is Tyler Cowen?

Chris Brunk, an all-too-loyal MR reader, writes to me:

I developed a thought experiment that I wanted to share with you.  I call it “The Grand Gameshow”.

In this thought experiment you are a contestant on a gameshow.  The host of the gameshow (let’s call him Alex) has a notecard that says whether or not god exists and to what extent he is involved in the affairs of mankind.   You start with $1,000,000 that you must allocate across five possible categories:

• Category 1 – Scriptural literalism.  Bet into this category if you believe that one of the religious texts is precisely accurate.
• Category 2 – God is omnipresent.  Bet into this category if you believe that god is everywhere and intimately involved in our lives.
• Category 3 – God as a guide.  Bet into this category if you believe that god is only there for the major turning points in life and/or when we reach out in prayer.
• Category 4 – God as a watchmaker.  Bet into this category if you believe that god set the universe in motion but is no longer around.
• Category 5 – Atheism.  Bet into this category if you believe that god does not exist.

You can distribute the money however you like (e.g. all $1,000,000 in one category or $200,000 in each).  After you’ve allocated your $1,000,000 Alex flips over the notecard and reveals which of the five categories is correct.  You keep any money that you’ve allocated into the correct category.

Some footnotes.  For the purposes of playing this gameshow assume that your financial situation is that of a farmhand in Mexico.  You earn about $4,000 per year and have no substantial savings or degrees.  I classify simulism as being category 4.

I would be very interested to hear how you’d allocate your funds versus say, Russ Roberts or Robin Hanson.

What about Thor? Or Taoism? Or Buddhism? Or multitheism?

Privileging Judeo-Christian traditions just makes you look silly to me. Any teleology makes you look stupid; one which implies that world religions reached some sort of apogee in one particular messianic jewish cult which happened to be adopted by one particular  medium sized, medium-duration empire of premodern Eurasia makes me just plain sad.

Filed under: Blogging, Society

I, for one, would welcome this technocratic overlord

First, stimulus. Mr Osborne has been boasting of his plans to reduce taxes and spending simultaneously. This is precisely the opposite of what is required at a time of weak aggregate demand, and every bit as foolish as when Gordon Brown increased both taxes and spending in a boom. I will unveil a package of spending on roads, railways, primary schools in oversubscribed areas and social housing. In many cases this will simply mean implementing pre-existing plans, so the building work can start without delay. By utilising spare resources in the economy, this plan will stimulate demand and provide urgently needed infrastructure at a low cost to the wider economy. On the “stitch in time” principle it will also reduce the total need for public spending over the next decade and beyond.

More at the FT from Tim Harford.

Filed under: Blogging

Actual irony spotted in the wild

So there is some land behind where I live which local residents have fought long and hard to keep clear. The council want to put a block of flats there and the local residents don’t want the disruption. Your common and garden variety of NIMBYs.

This afternoon seven caravans (with four pit bulls) of travellers set up camp.

Were I not worried about being that liberal that actually gets mugged, I still wouldn’t have stopped laughing.

Filed under: Blogging, Gypsies, NIMBY, Travellers

Dunning-Krueger with learning for Bloggers

1. You start out as an ignorant blogger and write lots because you have the arrogance to start a blog and assume your opinions are close substitutes for facts.
2. You read more blogs, books and newspapers and live more experiences and you become less ignorant but more informed about just how little you actually know. Your output decreases as you recognise you can write posts better  than before but worse than you would like.
3. You read even more and live more experiences and become even less ignorant but you’re still very aware of how little you know. But, you work out what you know relatively more about and write about that.

A schema in response to a reader I met who said I didn’t post much. I’m somewhere in the (I hope latter) stages of 2.

Filed under: Blogging

Carnival at LSE

No, I don’t know why. No, I don’t think I’ve ever seen Brazilians and Pakistanis dance in perfect harmony before, but I liked it.

Filed under: Blogging, Brazil, Carnival, Dancing, LSE, Pakistan

Daron Acemoglu is Blogging

The guy is basically top of the game in Economic History writing, seventh most cited economist according to Repec. He and James Robinson have started a blog called “Why Nations Fail” to coincide with their new book of the same title.

Summary as lifted from their site:

Is it culture, the weather, geography? Perhaps ignorance of what the right policies are?

Simply, no. None of these factors is either definitive or destiny. Otherwise, how to explain why Botswana has become one of the fastest-growing countries in the world, while other African nations, such as Zimbabwe, the Congo, and Sierra Leone, are mired in poverty and violence?

Daron Acemoglu and James Robinson conclusively show that it is man-made political and economic institutions that underlie economic success (or the lack of it). Korea, to take just one of their fascinating examples, is a remarkably homogeneous nation, yet the people of North Korea are among the poorest on earth while their brothers and sisters in South Korea are among the richest. The south forged a society that created incentives, rewarded innovation, and allowed everyone to participate in economic opportunities. The economic success thus spurred was sustained because the government became accountable and responsive to citizens and the great mass of people. Sadly, the people of the north have endured decades of famine, political repression, and very different economic institutions—with no end in sight. The differences between the Koreas is due to the politics that created these completely different institutional trajectories.

Based on fifteen years of original research, Acemoglu and Robinson marshal extraordinary historical evidence from the Roman Empire, the Mayan city-states, medieval Venice, the Soviet Union, Latin America, England, Europe, the United States, and Africa to build a new theory of political economy with great relevance for the big questions of today, including:

• China has built an authoritarian growth machine. Will it continue to grow at such high speed and overwhelm the West?
• Are America’s best days behind it? Are we moving from a virtuous circle in which efforts by elites to aggrandize power are resisted to a vicious one that enriches and empowers a small minority?
• What is the most effective way to help move billions of people from the rut of poverty to prosperity? More philanthropy from the wealthy nations of the West? Or learning the hard-won lessons of Acemoglu and Robinson’s breakthrough ideas on the interplay between inclusive political and economic institutions?

Why Nations Fail will change the way you look at—and understand—the world.

Follow the blog, you will become a more fulfilled human being if you get off on learning interesting things.

____

Update: Whoa, whoa, whoa, they don’t allow comments! Minus points. Bad Acemoglu and Robinson!

Filed under: Blogging, Daron Acemoglu, James Robinson, Why Nations Fail

Quite

It’s called an argumentum ad hominem, which means ‘argument against the person’. It’s got a Latin name because we’ve known it’s bullshit for thousands of fucking years.

*

Filed under: Blogging

I just wrote “The reason unemployment makes people unhappy is two fold”…

…instead of writing “There are two reasons unemployment makes people unhappy.”

Writing academic essays hasn’t done anything for my writing style.

Filed under: Blogging

No, not really

…a substantial proportion of us still think of the monarchy as an embarrassment at best, and at worst, to quote Cooke, “dangerous to the liberty, safety and public interest of the people”…

I don’t think seeking analogies between Charles I and Elizabeth the II is the best way to gain support for the republican cause. At least not with the historically literate. I believe that Andrew Marr’s The Diamond Queen must have been terrible watching for a republican, but that is no excuse to play fast and loose with history.

In the seventeenth century there was an ever-present danger of expropriation, a collision of landed and merchant interests and religious persecution; all of which often pursued to the point of death.

This meant the royal family really were  ”dangerous to the liberty, safety and public interest of the people.” But not, of course, the sort of “freedom from want” liberty Laurie subscribes to, but a bourgeois liberty for capitalists to operate without interference. Today, the soon to be Charles III has been mean about some architects…

 Although lines like this from our Laurie do make one titter:

Instead, we are served a twee little panegyric to the many unlikely hats of Elizabeth Windsor. 

Filed under: Blogging, History, English Civil War, Laurie Penny, Religion

I’ve been Threatened with Legal Action (CC: @Unity_MOT and @bloggerheads)

As of Friday 3rd February, my main worry for this site was that I had not been blogging frequently enough. You know how it is, work gets on top of you, you move house, you decorate, you get to know the local area (Hackney, since you ask, lovely) and on top of all that I have a Masters to study for: blogging just slipped down my priorities list.

That all changed, briefly, on Friday. A past commenter - who, out of undeserved politeness, I will allow to remain anonymous for the purposes of this discussion - e-mailed to ask me to remove a comment from an old post. To maintain my erstwhile commenter’s anonymity I cannot link to the post or the comment, but I will say it was a post mocking one of the stupidest things I’ve ever seen and the comment in question was written in support of this “dumber than a bag of hammers” event.

I informed my commenter that I more of less only remove comments which are libelous (which I don’t believe I’ve had to thus far) or abusive etc (which has occurred here) and that I considered the matter over with. Anyway, I told him helpfully, his comments were in the cache anyway, so there is no way he can completely erase his internet trail. If you think you might regret saying something really stupid, the last thing you should do is write it down on the internet where it will stay forever.

Next came the boring part, a blogger was issued with a vague legal threat. My commenter was applying for a government job and doesn’t want anyone to be able to find out he holds ludicrously silly beliefs so get his own way he has taken to bullying people on the internet. Pfft, I thought, but held fire just in case. I e-mailed Tim Ireland and Unity for advice and in short was recommended to respond with a brief “fuck off.” All’s well that ends well as they say, crisis over.

My goodbye e-mail was along similar lines to those suggested but a little more verbose:

Hello [Redacted],

 

Please forgive my late response.

 

First of all, may I say that I do not respond well to bullying. Threatening to pursue “legal remedy” is just that, bullying, and there is now zero chance of my helping you.

 

Sadly (for you) and happily (for me), after seeking advice with regard to your legal threat, I am now confident that it was completely specious, empty and vexation and, as such, your comment will be staying put.

 

Please consider this email a request that you cease and desist any further attempt to contact me about this matter; I will regard any further attempt to intimidate me as harassment under the Protection from Harassment Act 1997.

 

In short, I refer you to the reply given in the case Arkell vs Pressdram.

 

Yours Sincerely,

 

LO

Filed under: Blogging, Arkell vs Pressdram, Cunts, litigation, morons, Tim Ireland, Unity