@imstellar28

The primary complaint about the Austrian school, and much of Ludwig Von Mises' work, is his utter refusal to quantify anything. I'm familiar with the school, and frankly, it doesn't really address the problem of the business cycle, other than by hoping and wishing for charity by the rich. To be honest, I'm much more impressed with the work of his brother Richard Von Mises, who understood the importance of quantifiable predictions when suggesting a falsifiable theory. Frankly, arguing for "Keynesian economics" isn't what anyone is doing anymore. The monetarists laid that to rest years ago. While granted, modern economics gets much of its inspiration from JMK, the details of the theory have changed drastically since his work. Often I find it's the Austrian schoolers that are unwilling to accept facts (read data) that call their theory into question.

With regards to regulation, the question is not more or less, it's how can we regulate more efficient and effectively. I think there are many serious questions that need to be addressed that have been brought to the fore by this crisis that require an act of congress, or even some international body. Not least among them is "what is money?" From my own reading, I can tell you that money is much closer to something like debt than it is to something like rocks, or metal, and that is as it should be. The value of debt fluctuates with credit, so too should the value of currency with the fiduciary competence of the central bank.

Zakaria makes good points here, but I think he's being too generous to our political parties in suggesting that they actually pick policies based on some sort of economic theory.

Democrats seem afraid to really embrace Keynesian economic theory. If they did, they'd fire back at all this shit about deficits being an urgent problem, and point out that in the short term what we need is a big deficit. They'd also call on the Fed to do everything they can to loosen monetary policy as much as possible. Liberals generally aren't interested in macroeconomics per se. For them, it's more about the moral necessity of promoting a more egalitarian society. That often means setting up public policy that follows Keynesian economic prescriptions, but I don't get the sense that very many Democratic politicians really know much about Keynesian economics, and I can't think of any that call for the government to dogmatically follow it's advice.

Republicans on the other hand clearly don't subscribe to any economic theory in particular. Instead they just latch on to whichever one supports the political maneuver of the day. Republicans may be saying that tax cuts stimulate the economy, but that's only when it's their kind of tax cuts. They claimed the tax cuts in the stimulus wouldn't create jobs because the bulk of them went to poor & middle class people, and because they were temporary. That's primarily a Monetarist view; tax cuts are only stimulative if they're permanent.

Republicans also like to take pages from the Austrian playbook. Much of the fixation on "supply-side" policy requires you make the central Austrian mistake -- believing that supply creates its own demand. Lately we're hearing more and more BS from Republicans about wanting the Fed to tighten up monetary policy, something that's contrary to both Monetarist or Keynesian theories, but fit in just fine with the gold-obsessed Austrian zombies.

Through all of this though, you'll often find Republicans insist we dogmatically adhere to whatever economic principle it is they're parroting at the moment, and it's always fun when a journalist manages to call them out on conflicts between them (e.g. deficits kill jobs, but not when they're from tax cuts?).

>> ^blankfist:

>> ^NetRunner:
I took two full semesters of Econ in college, and the word "Keynesian" never came up. Neither did "Austrian", "Monetarist", "Classical", "Neoclassical", or any other label for different schools of macroeconomic thought.

Probably because they want you to believe it's a free market economy.


Actually, now that I know a lot more about the different schools of economics, I can definitively classify what they taught me in college as Milton Friedman's Monetarist view of macroeconomics.

Which, according to you, isn't "free market" economics at all, because Friedman believed that monetary policy alone could stabilize the economy on a macro scale to the benefit of all.

Mostly though, I think you don't understand that economics is supposed to be a study of the origin and nature of wealth, and not some holy scripture, handed down through the generations intact and unchanged, that tells us what the structure of society must always be.

That's called religion.

>> ^NetRunner:
I took two full semesters of Econ in college, and the word "Keynesian" never came up. Neither did "Austrian", "Monetarist", "Classical", "Neoclassical", or any other label for different schools of macroeconomic thought.


Probably because they want you to believe it's a free market economy.

>> ^ChaosEngine:

Sorry but the level of ignorance being displayed here is not comparable to the level of ignorance displayed by the Tea Partiers.
Most people are not aware of Keynes or his economic theories. That doesn't make them idiots. Economics, and the different schools of economic though, are not common knowledge.
Would it be better if more people did understand? Sure, but it would be better if people were better educated in general.


This.

I took two full semesters of Econ in college, and the word "Keynesian" never came up. Neither did "Austrian", "Monetarist", "Classical", "Neoclassical", or any other label for different schools of macroeconomic thought.

It wasn't until I started having regular contact with pseudo-intellectual right-wingers on here that I became aware that there was a variety of fundamentally different views of economics, including one that they were intent on branding as evil.

I replied generically on the video, but as a reply to anything regarding cap & trade this reasoning doesn't track. Maybe it would sorta be appropriate as a response if what cap & trade consisted of was a flat tax on gasoline.

I'm also for repealing the subsidization of all dirty energy -- and the entire environmental movement would likely agree with me on that (even alleged fraud Al Gore!).

So here's the only real connection. In both cases we're talking about market externalities -- cases where market transactions between two entities cause harm (or benefit) to people not involved in the transaction. This is never desirable; you want prices to reflect the harm or benefit you're causing those other people, otherwise you open yourself up to malinvestment's ugly stepsister, malconsumption (and yes, I made that word up, but it is just like that other made-up Austrian word, only regarding consumption instead of investment).

One highly-regarded way to bring externalities under the auspices of market forces is to use Pigouvian taxes. Sometimes you get some centrally-planned tax rate (like all flat sin taxes), but ideally you want some sort of market-driven mechanism setting the size of the Pigouvian tax -- which is what cap and trade is all about.

Anyways, I'm just leading you to water (100% piss-free!), I don't really have much hope you'll drink.

In reply to this comment by blankfist:
http://videosift.com/video/Penn-Teller-Bullshit-Soft-Drink-Tax

Up the butthole with this one, dear sir!

***

(From the site) What is the human development index (HDI)?

http://hdr.undp.org/en/statistics/faq/question,68,en.html

The HDI – human development index – is a summary composite index that measures a country's average achievements in three basic aspects of human development: health, knowledge, and a decent standard of living. Health is measured by life expectancy at birth; knowledge is measured by a combination of the adult literacy rate and the combined primary, secondary, and tertiary gross enrolment ratio; and standard of living by GDP per capita (PPP US$). For details on how to calculate the HDI, see Technical note 1 HDR 2007/2008 [5,680 KB]and also the interactive HDI calculator and the Excel tool Calculating the indices [61 KB] - interactive tools that help understand the calculation of the HDI.

Website of the UN Human Development Index, Human Development Report 2009 - HDI rankings: http://hdr.undp.org/en/statistics/

***


Invariably it's the democratic socialist countries that are at the very top of the 20 annual UN HDI reports--while Somalia is probably the country closest to a laisse faire, or "Austrian" (failed) state.

Oh snap.

The Swiss and Austrian news outlets provide some excellent coverage so far, no complaints by me.

Oh, and yay! for Bill Nye.

Awesome song but Hamlet is not an Austrian Nobleman...

Amadeus footage would have worked better imho..

>> ^L0cky:

Loves Gary Oldman.


You're a Mozart fan. I love him too. I looooove Mozart! He was Austrian you know?

hahaha the non-dubbed voice is just so great. the acting is horrible, but in the lipsynced audio version at least the voice really is good (at least over here). but the austrian english really is hilarious.

>> ^Kalle:
Austrian actress man.. there's a huge difference....


Oh wow! Could have sworn she was german since she appeared in so many german films.
Guess she was born in Austria though, you are right.

Thanks for spotting that!

Austrian actress man.. there's a huge difference....

BF...Getting a robot vacuum for yer hunny...not sexist. You tend to toss around those "ists" quite a bit, I blame poor education/indoctrination and being in California too long. After all, your state's governor has ties to Nazi Germany-his Austrian father volunteered for the infamous Nazi SA and became a ranking officer, and his wifes' a former news cunt and a Kennedy-clan wench.

I got a 12-pack of Modelo for xmas, external hard drive, a used, working, water-damaged Palm cell fone and a years worth of airtime pre-paid....oh and probably some cool shirts from me muddah, awaiting me new years...

^ Baiting anyone who wants to fight with a very non-controversial statement.

I find it funny that people buy into the shadow statistics website. Why are their numbers more believable than the government's?

For that matter, if TIPS gives a payout based on government-based CPI, doesn't that mean this measure becomes an effective way to gauge whether the market agrees with the officially-published CPI? If the market believes the government consistently under-reports inflation, then wouldn't it bid up the constant-value yields, and make this test show that the market expects high inflation?

It's kinda the beauty of the test -- both yields are set by market forces, but the payout for TIPS will be adjusted by the government-reported CPI, while constant-value won't be. The spread is determined entirely by market-expected worth of the TIPS vs. constant-value.

Now, this isn't a way to measure inflation, it's a way to divine what the market consensus prediction about the 10-year rate of inflation is.

The way I see it, you have four possibilities:

1. The government is lying, and the market knows it.
   
   In this case, the constant value yield gives you an upper bound for the rate of inflation -- the market expects that security to pay back the rate of inflation + market interest of >0%.
   
   
2. The government is not lying, and the market knows it.
   
   The above is true, and the test as described can also be expected to be a reasonable predictor of the 10-year inflation rate.
   
   
3. The government is not lying, but the market thinks it is.
   
   In this case, we would see a high TIPS spread, but real inflation will be less than it predicts.
   
   
4. The government is lying, and the market doesn't know it.
   
   This is the Austrian belief. It means for some reason all the people controlling all the money in the world believe the Government's fraudulent statistics, while shadowstatistics.com, Peter Schiff and Ron Paul play the role of economic Cassandras.
   
   I don't see why smart (and therefore most) money wouldn't bet on their predictions, if they are indeed accurate. They have no new theory, or special information, and certainly aren't keeping what they know to themselves. As a liberal, I don't see why the market not listening to their "correct" ideas doesn't violate the basic premise of why we should surrender our lives to the infallible, prescient markets, but I digress.
   

My judgment is that #4 would indicate not that Paul and Schiff are right, but that Karl Marx is right, and capitalism should be considered a fatally flawed system.

Mostly though, I think the evidence points to reality falling somewhere between #1 and #2. To the degree that the government is lying, the market is aware of it, and adjusting accordingly, with inflation likely to fall between the TIPS spread and the constant-value yield...and neither number is large right now.

I'm more of a free marketeer than Paul and Schiff -- I think if they really had valuable insight, more money would be moving on the basis of their theories and predictions.