>> ^pyloricvalve:

Thanks for the reply. There were things I really didn't understand about Krugman's Hangover Theory article, especially that very point that you quote. In fact I tried to ask in a post above about this but maybe you missed it. To me it seems only natural that there is no unemployment in the boom and there is some in the bust. Both are big reorganisations of labour, it is true. However, to start with the boom is much slower and longer so adaptation is easier. Also the booming industry can afford to pay slightly above average wages so will easily attract unemployed or 'loose' labour. As it is paying above average, there will be little resistance to people changing work to it. The boom is persistent enough that people will train and invest to enter the work created by it. The information for entering the boom industry is clear and the pay rise makes the work change smooth. I see no reason for unemployment.
The bust however is short and sudden. There is no other obvious work to return to. That information of what the worker should do is much less clear. The answer may involve taking a small pay cut or on giving up things in which people have invested time and money. Many people wait and resist doing this. They may well not know what to do or try to wait for opportunities to return. Thus there is plenty of reason for unemployment to be generated by the bust.
If I hire 100 people it can probably be done in a month or two. If I fire 100 people it may be a long time before they are all employed again. For me this difference seems so obvious I have a real trouble to understand Krugman's point. I know he's a very smart guy but I can't make head nor tail of his argument here. Can you explain it to me?


I'm trying to think how to connect what you're saying to the point Krugman's making (at least as I understand it).

At a minimum, he're Caplan making the same point in less space:

The Austrian theory also suffers from serious internal inconsistencies. If, as in the Austrian theory, initial consumption/investment preferences "re-assert themselves," why don't the consumption goods industries enjoy a huge boom during depressions? After all, if the prices of the capital goods factors are too high, are not the prices of the consumption goods factors too low? Wage workers in capital goods industries are unhappy when old time preferences re-assert themselves. But wage workers in consumer goods industries should be overjoyed. The Austrian theory predicts a decline in employment in some sectors, but an increase in others; thus, it does nothing to explain why unemployment is high during the "bust" and low during the "boom."

Krugman saying the same thing in more accessible language:

Here's the problem: As a matter of simple arithmetic, total spending in the economy is necessarily equal to total income (every sale is also a purchase, and vice versa). So if people decide to spend less on investment goods, doesn't that mean that they must be deciding to spend more on consumption goods—implying that an investment slump should always be accompanied by a corresponding consumption boom? And if so why should there be a rise in unemployment?

And as a bonus, here's Brad DeLong making a similar case.

My real handicap here is that I'm not familiar enough with the fine details of the Austrian theory to say with authority what they believe. So if I misrepresent their position, it's out of ignorance.

What I gather is that ultimately the Austrian theory of boom and bust is that central banks are messing with the "natural" balance of investment and consumption goods, with a boom happening when investment is being artificially stimulated (by low interest rates), and a bust happens when interest rates eventually go back up (due to inflation, or expectations thereof).

The response from people like Caplan and Krugman is to point out that since aggregate income has to equal aggregate expenditure (because everyone's income is someone else's expenditure, and vice versa), a fall in investment should mean a rise in consumption, and a rise in investment should mean a fall in consumption. Which means we should never see an overall boom or an overall bust, just periods of transition from a rise in consumer goods and a fall in investment, to a fall in consumer goods and a rise in investment. We should never see a situation where they both fall at the same time.

But we do see a fall in both during the bust. Why?

Keynes's answer was that it happens because people are hoarding cash. Either people are themselves stuffing mattresses with it, or more likely, banks start sitting on reserves and refusing to lend out, either out of a fear of their own solvency (Great Depression), or because a deflationary cycle with high unemployment makes sitting on cash look like a good, safe investment for them (Great Depression, and now). Put simply, depressions are the result of an excess demand for money. And since money is an arbitrary thing, it doesn't have to be a scarce resource, we can always just make more...

This video has been declared a duplicate by the original submitter; transferring votes to the original video and killing this dupe - dupeof declared by eric3579.

*dupeof=http://videosift.com/video/Above-Average-Skateboard-Video

http://videosift.com/video/Above-Average-Skateboard-Video

@NetRunner
Thanks for the reply. There were things I really didn't understand about Krugman's Hangover Theory article, especially that very point that you quote. In fact I tried to ask in a post above about this but maybe you missed it. To me it seems only natural that there is no unemployment in the boom and there is some in the bust. Both are big reorganisations of labour, it is true. However, to start with the boom is much slower and longer so adaptation is easier. Also the booming industry can afford to pay slightly above average wages so will easily attract unemployed or 'loose' labour. As it is paying above average, there will be little resistance to people changing work to it. The boom is persistent enough that people will train and invest to enter the work created by it. The information for entering the boom industry is clear and the pay rise makes the work change smooth. I see no reason for unemployment.

The bust however is short and sudden. There is no other obvious work to return to. That information of what the worker should do is much less clear. The answer may involve taking a small pay cut or on giving up things in which people have invested time and money. Many people wait and resist doing this. They may well not know what to do or try to wait for opportunities to return. Thus there is plenty of reason for unemployment to be generated by the bust.

If I hire 100 people it can probably be done in a month or two. If I fire 100 people it may be a long time before they are all employed again. For me this difference seems so obvious I have a real trouble to understand Krugman's point. I know he's a very smart guy but I can't make head nor tail of his argument here. Can you explain it to me?

Aren't we overvaluing college education?

For most career paths, those that don't require heavily specialised and intensive training, further education buys you little more than the right to present prospective employers with an 'above average' result on a gigantically expensive, wasteful and noisy general aptitude test.

>> ^sadicious:

>> ^Sagemind:
Since the average is always made up from 100%
Half of the schools will always be 50% (or depending on the numbers, very close).
And the "Better" the schools are doing, the margin gets slimmer that it could be less than 50%
Some schools would have to be doing VERY bad indeed if you wanted to say "60% of the schools are ABOVE average."

I could have 99 students in a class getting 90% and 1 student getting 89%, and I can say that almost all (but not all) students are above class average. The same could also be said if the two percentages I used were 10% and 9% respectively.


There are three kinds of average: mean, median, and mode.
If he means median or assumes a normal distribution, he's fine.

>> ^Sagemind:

Since the average is always made up from 100%
Half of the schools will always be 50% (or depending on the numbers, very close).
And the "Better" the schools are doing, the margin gets slimmer that it could be less than 50%
Some schools would have to be doing VERY bad indeed if you wanted to say "60% of the schools are ABOVE average."


I could have 99 students in a class getting 90% and 1 student getting 89%, and I can say that almost all (but not all) students are above class average. The same could also be said if the two percentages I used were 10% and 9% respectively.

Since the average is always made up from 100%
Half of the schools will always be 50% (or depending on the numbers, very close).

And the "Better" the schools are doing, the margin gets slimmer that it could be less than 50%

Some schools would have to be doing VERY bad indeed if you wanted to say "60% of the schools are ABOVE average."

>> ^jmzero:

Suppose you have 5 schools, and their "average tests scores" are (40%,40%,40%,90%,90%). In this case, the "average school" would have a score of 60% and 3 of the 5 schools are, thus, below average.


I heart statistics. Superintendent Chalmers would sandbag one school in the district so that all the other schools are above average.

Yes, yes. Any school with famous liberals who graduated are now completely invalid as educational institutions. That's how you get around that one. Harvard Law is a crap school. So here are the conservative graduates who also don't have a valid degree according to you:

Chief Justice John Roberts
Former Chief Justice William Rehnquist
Justice Antonin Scalia
George W. Bush
William Bennett
Henry Paulson
Bill Frist
Ted "Series of Tubes" Stevens
Mitt Romney
Alan Keyes
Lou Dobbs
Bill O'Reilly

Man... too bad they must all be idiots... and they clearly don't have a grasp on being "American".

Do you ever stop and think before you say things like that?

You don't get to invalidate someone's academic achievement because you politically disagree with them... Well, you can, but it just makes you look incredibly stupid. There's something horribly wrong with people who look down on someone's intelligence despite graduating from one of the elite colleges in the US because they disagree with them. Ridiculous...

Sarah Palin can really galvanize and lead, eh?

http://politicalticker.blogs.cnn.com/2011/04/07/palin-unfavorable-rating-reaches-new-high/

What, are all polls now liberally biased, too?!

And nice try attempting to make this about how well Obama has done as President. That wasn't the debate. You said Palin is just as smart, if not smarter, than Obama. She's not. Period. You can't even sanely argue that she is. She's of average to above average intelligence overall, but sorely lacks knowledge of the economy, foreign policy, and other crucial topics needed to be a good president. Plain and simple. Your political leanings shouldn't cloud that assessment. There are plenty of right wingers who also can accept Palin just isn't smart, and Obama is.

Bonus: The only person who brought up Al Gore is you. This isn't a liberal vs conservative thing. This is you saying idiotic things flying in the face of simple facts.

>> ^quantumushroom:

Did you seriously just say Obama's intellect is comparable to Palin's?!
Palin has a far better grasp on what it means to be an American than a bitter leftist who sat in a hate-Whitey church for 20-plus years. His Earness is endlessly promoted by His media lackeys, so a fair comparison is not possible.
SERIOUSLY?!?!?!? Look, gaffes aside, Obama graduated from Harvard Law School with a JD magna cum laude. Palin took six years to get a bachelor's degree in communications bouncing around from school to school to get it!
You might have had a point when Harvard wasn't a politically-correct degree mill. Speaking of kollij, we will never see Obama's kollij papers to know his genius even then. Community organizer? Do you even need higher education to become a rabble-rousing 'activist'?
Dude, if the conservative/libertarian ideology concluded the world is flat, would you spout that crap, too?! In fact, your beloved Ron Paul wouldn't tell Obama he's not smart enough to be president.
I don't need any labels to denounce His Earness. I merely observe the results of his incompetence (or genius, for those promoting the one-world illuminati worldview). His results are indefensible by any metric you care to name.
Just ridiculous. I get you don't like Obama, but that doesn't mean you should ignore basic fact. And I'm sorry, but she's simply not smart enough to be president. This has nothing to do with her ideology. Plenty of conservative politicians are out there who have the intellectual capacity to be president, but she's not one of them.
Due to an unfortunate media-created outbreak of Palin Derangement Syndrome, your observation cannot be quantified. Anyone here think Joe Biden is smart enough to operate a doorknob much less be President?
BONUS NO. 2 -- "Who are these people?" -- mid-90s Vice President and supergenius Al Gore, referring to the busts of Jefferson, Washington and Franklin during a tour of Monticello, home of Thomas Jefferson.

>> ^Reefie:

>> ^westy:
not that good but not bad ether would expect more from a business i have seen better work from start up companies and students.

Aww, you just need a hug!


well the video says this in its comment "A seriously amazing abstract art piece"

granted it might be amazing to some , but if you watch allot of animation or work in that field then you will probably come to the conclusion that this is not amazing but just slightly above average and could certainly have been done better.

lol qm thinks that there is an 'average man' and that he 'has something' to lose. shouldn't we then be worried about the above average only, by definition they're mo' betta'

This needs to go in *lies

He'd need to eat 30,000 turnips a day for his entire life to eat a billion over an above average life-span. I don't think that's going to happen.

He's NOT going to run.

This guy would never subject himself to the kind of scrutiny/criticism that comes with a run for the presidency. No fucking way.

This is TOTALLY a ploy to garner ratings for his show. Period.

I don't think the guy is anything above average with respect to intelligence/talent. But he is off the charts with respect to his narcissism and delusions of grandeur.