Saturday, November 20, 2010

Truer words...

From the Minority Report of the Joint Committee on the Economic Report of the President, Economic Report of the President, January 1949 pgs 4-5:

The report abounds in statements that the Government must take "proper" action, make "wise" and "needed" economic adjustments...such statements beg the questions with which we are concerned and do not help us to any clear solution. They presuppose easy "right" answers, upon which, of course, everyone is supposed to agree...If such words admitted they are only an expression of hopes, there would be no harm, but experience in other countries, as well as our own, teaches that such words often have a propganda purpose in the hands of those who use them, designed to discredit anyone who may disagree. The only "wise" decisions are those which the speaker makes. The only "proper" action, the only "adequate" steps, are those which the proponent himself takes without even suggesting or admitting that there is any other remedy. Adjustments "needed" and the order of priority assigned to them, are inevitably limited to the desires and vision of their advocates.
Emphases mine. I found this gem in a long-forgotten textbook of economic readings* and thought it might be more widely quoted. A Google search indicates that it is not.

*Basic economics; a book of readings. Editors: Arthur D. Gayer, C. Lowell Harriss & Milton H. Spencer.

Wednesday, November 17, 2010

Book Review (#15 and #16 of 2010)

The Worldly Philosophers: The Lives, Times and Ideas of the Great Economic Thinkers by Robert L. Heilbroner (7th edition). (original version was 1953).


Ideas of the Great Economists by George Soule (9th printing, 1952)

The Heilbroner text is considered "seminal" and is standard reading at universities. It's part of Harvard's freshman economics seminar. The Soule text is apparently long-forgotten, I discovered it at a local used book store. I read them both together since they cover roughly the same economists and chronology.

Hands down, the Soule text is better. He covers more economists and does a much better job giving context to ideas in a much smaller space. Heilbroner is verbose and leaves out important context. For example, Soule rightly credits the monetarists and Wicksell for the development of many of J.M. Keynes' ideas. Heilbroner doesn't bother to mention them. Soule was director of the NBER and ends the book with insight into the economist that got it started, something important for the present day.

Their treatment of the subject matter is roughly the same, Heilbroner gives a bit more detail. But there is only so much I need to know about Thorstein Veblen's personal life. Why Heilbroner's text was never updated to include more modern developments is beyond me. He quotes from events in the 1990s but ignores any relevant developments.

I enjoyed reading Soule because he's writing at a time when some of the great thinkers were still alive. He addresses concerns that Von Mises and Hayek have about planning, illustrating that the debate was pretty clear in 1952. What his book lacks is a proper bibliography.

I give Heilbroner's book 3 stars. It's required reading for a reason, it's just not great.
I give Soule's book 4 stars. It's a gem, and you can purchase it for $0.01 used.

For more modern updates you have to go to New Ideas from Dead Economists (my review). And you'll not find much about Austrians in any of the above.

Tuesday, November 16, 2010

Opinion of the day

I'm with David Beckworth. The "conservatives'" open letter to Bernanke is a shame. Respectable conservatives shouldn't echo talking points from Sarah Palin, who just regurgitates Glenn Beck's nonsense. Milton Friedman would have favored Fed operations in the face of falling inflation expectations and in the worse drop in NGDP since the Great Depression. He would have supported QE two years ago, would have said the Fed is playing "catch up" today.

Reading John Taylor's blog, I think if the FOMC had announced a specific target-- NGDP target, price level target, inflation target, etc.-- he and others would not have signed that letter. They want to see coherent policy rule, and Bernanke hasn't clearly communicated that at all.

I've mentioned before that I believe in something called aggregate demand. Milton Friedman believed in it, too. But talking about "stimulating aggregate demand" gets you labeled a "Keynesian" in the current political climate.

Friday, November 12, 2010

A letter to Elias (about Elias)

You are almost 2.5.
I do 85% of your morning wake-up and breakfast times. You always respond to my entering your room with a "Hi!" usually followed by a "How are you?" but sometimes punctuated with a quote from something you were thinking about.

You still call me "Captain D's" as a nickname. We don't know how that got started, I think it shows how clever you are because I call you nicknames like "Tiny B."

You eat more than I do which is pretty amazing. They've been telling us for a year that you'll be slowing down your eating and I think you did--for a couple days. You love to eat fish and shrimp and we're never afraid to give you snails or whatever else we're eating-- you like most of it.

You tower over your classmates in the nursery. You find ways to amuse us with your coolness.
Your favorite thing to do with me is to "go faster!" which involves me holding you while I run around. You also like to "swing!" which involves me swinging you and you also now ask me to carry you on my shoulders often.

You love to read. We have read books like Baby's First Bible and Tell Me What God Made pretty much your whole life. Most of our books feature animals or are Thomas-related books. You have most of them memorized. You know your alphabet and how to count in English and French and somewhat in Spanish. You're starting to spell every word you see on signs. Thanks, Alpha Pig!
I also do about 95% of your bath times. Much of these times lately have been spent watching you re-enact scenes from Go Diego Go that involve swimming.

You do a lot of that re-enacting, whether it's Mr. Perkins entering the room or simply reciting entire episodes of Thomas. Whatever relates to what we're doing at the time.

And you love to sing. It's great to see you try hard to hit the right notes. You do a great job.

Your dad is proud of you, and he looks forward every day to coming home to your adventures.

What Paul Krugman really means to say.

Krugman tends to repeat himself in his op-eds and blog posts about how fiscal stimulus wasn't big enough and didn't really happen. This quote could have been written by Krugman but wasn't:

There were two reasons why the cure did not work better. First, the program of government spending was never carried out to the full extent that would have been necessary to bring the economy up to full employment... such all-out spending was quite impossible; indeed, even a modest program of government expenditure soon brought murmurs that federal power was overstepping its traditional bounds. To make matters worse, the Federal Reserve Board was more concerned about inflation (at the bottom of a depression!) than of unemployment, so that policies were established to discourage bank lending... government spending was meant as a helping hand for business. It was interpreted by business as a threatening gesture.. Hence, every effort of the government to undertake a program of sufficient magnitude to mop up all the unemployed...was assailed as further evidence of Socialist design.
(emphasis the author's) Originally written by Robert L. Heilbroner in this book in 1953! (talking about the Great Depression). The more things change.