A lot of you may remember my criticism of mainstream economics, that they become so detached from what is meant by a “good economy”, that they advocate things that are positively destructive in this original, down-to-earth sense.
Scott Sumner, I find to be particularly guilty of this. His sound economic reasoning has led him to believe that what the economy vitally needs right now is for banks to make bad (or at least wasteful) loans, just to get money circulating and prop up nominal GDP—a measure known to be meaningless because it’s an artifact of the money supply and has to be adjusted for interpretation.
Fed up with him saying this kind of thing, I sarcastically posted this remark:
Yes, the economy will definitely collapse if the Fed doesn’t print up more money to make shoddy loans for purchases people don’t want, and it’s a shame that folks at the Fed are stopping Bernanke from such a wise action.
And in his immediately following comment, he said,
You did actually paraphrase his position, so his agreement is a sign of self consistency even when things are not presented with his preferred framing. This much at least is a positive in my book.
As for the position itself… it is idiotic. What is the phrase? “Lost Purpose”?
Yeah, I’m thinking of writing an article on this issue with the title “Lost Economy”, both a play on that Yudkowsky article, and having the meaning “lost ability to economize”.
A blogger I read made a point that I will incorporate: that people of a certain ideology were screaming bloody murder at how destructive it is to nationalize of this or that part of the economy, but also believe “the economy” will “recover” in just a few years. This blogger remarked that, “um, guys, if you can nationalize sectors of the economy and only cause a few years of pain, then what the hell were we fighting for this whole time? The worst that can come from doing the opposite of what we want is four years of sub-par growth? I thought the consequences would be worse than that …”
As for Sumner’s position: I just don’t see by what standard “lots of shoddy loans to prop up fake numbers” constitutes a “good economy”.
Indeed. While I find the general arguments about market efficiency persuasive, there’s a big blind spot in the view that “The economy will always operate efficiently despite interference, unless that interference is by something we call a ‘government’”.
Sure, you’d need to be able to replace the symbol (government) with the substance of what causal mechanisms you believe are responsible for damage to the economy, and why they’re associated with the government.
Just to clarify, though, I wasn’t criticizing a particular anti-government view, just a particular combination of views. I can understand if someone says, “Nationalization isn’t that bad, the economy won’t be hurt much by it.”
Or if someone said, “Nationalization is devastating, and it will take ages for the economy to recover from one, if it ever does!”
But I see a big problem with someone who wants to believe both that nationalization is devastating, and that “the economy” will recover after one in just a few years. No, if it really is devastating, your definition of “the economy” and its “goodness” need to reflect that somehow.
Another economics WTF:
A lot of you may remember my criticism of mainstream economics, that they become so detached from what is meant by a “good economy”, that they advocate things that are positively destructive in this original, down-to-earth sense.
Scott Sumner, I find to be particularly guilty of this. His sound economic reasoning has led him to believe that what the economy vitally needs right now is for banks to make bad (or at least wasteful) loans, just to get money circulating and prop up nominal GDP—a measure known to be meaningless because it’s an artifact of the money supply and has to be adjusted for interpretation.
Fed up with him saying this kind of thing, I sarcastically posted this remark:
And in his immediately following comment, he said,
Huh?
You did actually paraphrase his position, so his agreement is a sign of self consistency even when things are not presented with his preferred framing. This much at least is a positive in my book.
As for the position itself… it is idiotic. What is the phrase? “Lost Purpose”?
Yeah, I’m thinking of writing an article on this issue with the title “Lost Economy”, both a play on that Yudkowsky article, and having the meaning “lost ability to economize”.
A blogger I read made a point that I will incorporate: that people of a certain ideology were screaming bloody murder at how destructive it is to nationalize of this or that part of the economy, but also believe “the economy” will “recover” in just a few years. This blogger remarked that, “um, guys, if you can nationalize sectors of the economy and only cause a few years of pain, then what the hell were we fighting for this whole time? The worst that can come from doing the opposite of what we want is four years of sub-par growth? I thought the consequences would be worse than that …”
As for Sumner’s position: I just don’t see by what standard “lots of shoddy loans to prop up fake numbers” constitutes a “good economy”.
Indeed. While I find the general arguments about market efficiency persuasive, there’s a big blind spot in the view that “The economy will always operate efficiently despite interference, unless that interference is by something we call a ‘government’”.
Sure, you’d need to be able to replace the symbol (government) with the substance of what causal mechanisms you believe are responsible for damage to the economy, and why they’re associated with the government.
Just to clarify, though, I wasn’t criticizing a particular anti-government view, just a particular combination of views. I can understand if someone says, “Nationalization isn’t that bad, the economy won’t be hurt much by it.”
Or if someone said, “Nationalization is devastating, and it will take ages for the economy to recover from one, if it ever does!”
But I see a big problem with someone who wants to believe both that nationalization is devastating, and that “the economy” will recover after one in just a few years. No, if it really is devastating, your definition of “the economy” and its “goodness” need to reflect that somehow.