Saturday, December 11, 2010

And with this purchase, I have finished my Christmas shopping!!!

I saved the best for last too:

Why Borrowing Money is NOT the Same as 'Free"

Kindred, you ignorant slut. Of course, I mean that in a loving way, because Mr. Winecoff has given me a chance to explain an objection that many people may have had.

I wrote this piece. Then I tried to explain, using this "joke" that wasn't funny.

Then Kindred had this (updated) response.


Consider three offers to sell a car.

A. You can buy this car for $10,000
B. You can buy this car for a 60% discount, or $4,000
C. You can buy this car for $4,000 down, and finance $6,000

My claim was that the Republican tax cuts pretended to offer us deal B (big free discount), but in fact offered us deal C (borrow part of price). Deal B is WAY better than Deal C, but it was fake. If someone offered you B, but your contract said C, that would be fraud.

Kindred's objection was that many people prefer Deal C (borrow part of price) to Deal A (pay full price). Um...yes. That's why it is, as he rightly notes, very common. But his objection is a non sequitur. (He's a smart guy, and knew this, I'm pretty sure.)

I never said A was better than C. I said it is a lie to offer B, and then get C.

And Kindred, one other thing: when you cite Wimpy on time preference, you really should cite Chapter 10 of my ANALYZING POLICY book. That is the primary source on Wimpy, I'm pretty sure. Check p. 323...


On the surgery: I can see a whole bunch of bubbles, and the giant red/blue disk of detached retina is getting less opaque, though not smaller. I type this looking straight down over my laptop. Can't use regular computer, or do much of anything else. We'll know by Monday if the surgery is going to work....

Whither the Euro?

Dani Rodrik nails the issues and the answer:

"Ireland and the southern European countries must reduce their debt burden and sharply enhance their economies’ competitiveness. It is hard to see how they can achieve both aims while remaining in the eurozone.

The Greek and Irish bailouts are only temporary palliatives: they do nothing to curtail indebtedness, and they have not stopped contagion. Moreover, the fiscal austerity they prescribe delays economic recovery. The idea that structural and labor-market reforms can deliver quick growth is nothing but a mirage. So the need for debt restructuring is an unavoidable reality.

Even if the Germans and other creditors acquiesce in a restructuring – not from 2013 on, as German Chancellor Angel Merkel has asked for, but now – there is the further problem of restoring competitiveness. This problem is shared by all deficit countries, but is acute in Southern Europe. Membership in the same monetary zone as Germany will condemn these countries to years of deflation, high unemployment, and domestic political turmoil. An exit from the eurozone may be at this point the only realistic option for recovery."

The whole article is well worth reading.


Of course, Rodrik's point is that defending the Euro is no longer worth it for the PIIGS, not whether it's worth it for Germany or France.

Friday, December 10, 2010

A Not Funny Joke as an Illustration

So, I came up with a joke to try to illustrate the problem with the "cut taxes, raise deficit" view of policy.

Guy walks onto a used car lot. Guy has a sweater on that says, "I <3 Republicans".*

Salesman sees guy looking at 2006 Ford, marked "$10,000"

Salesman says, "Since you are a Republican, I'll cut the price to $4,000. You'll save $6,000, a 60% cut!"

Republican boy says, "Wow! That's great. Let's do the paperwork."

Salesman writes it up: "$4,000 now, and you owe $6,000, plus accumulated interest, sometime in the future when we feel like charging you."

Buyer starts screaming, "That's not what we agreed on! You said you were cutting the price 60%!"

Salesman says, "Yeah, but somebody has to pay for the car. Besides, I thought you Republicans couldn't tell the difference."


I said it wasn't funny. But why, when we "cut" taxes by X%, adding that amount to the deficit, do we feel like we are getting a benefit from the government, when if a used car company did the same thing we'd have a fit?

Angus put it really well in his post today: We are just moving money around by "cutting" taxes, it is not a tax cut at all. Yet...we are all really happy. The used car salesmen in Washington are right: We DON'T know the difference.

*(For you old people, "<3" is "heart"; look at it)

Angus vs. Angus

I recently posted (and firmly believe) that, without any spending cuts, the proposed set of "tax cuts" are not real, but rather just represent a temporal re-arrangement of when I will be paying taxes.

Yet somehow, I find myself invested in the cuts passing. I am almost titillated by the prospect of a 2 percentage point cut in the payroll tax.

How can this be?

1. I am an idiot?

2. Maybe I will die before the day of reckoning arrives?

3. More realistically, maybe I can make it into a lower tax bracket (i.e. retire) before the day of reckoning arrives?

4. Maybe large spending cuts are right around the corner?

People, which is more likely; I get to retire before the tax hammer comes down enough or big spending cuts materialize to prevent the hammer from falling?

If this post makes no sense to you, please to refer to point #1 above.

Broken Window Fallacy

In the Stone Age, unemployment was 0%. For some reason, Paul Krugman wants to go back there. The objective is not full employment, P-Kroog. The objective is prosperity.

(Nod to Craig Depken on DoL)

If you hate taxes, cut spending!

Two articles... Op-ed about "end the DAFT!" in the south Florida Sun-Sentinel today.

Second, my friend Bill Lumaye bridled when I called him a "Keynesian" on air on WPTF Monday for supporting temporary extensions of the Bush tax cuts. Bill, if you won't believe me, maybe you'll believe that lefty Charles Krauthammer. Short-term, uncertain duration "tax cuts" are not tax cuts at all, but deficit-financed spending.

It's just a crackpot Keynesian stimulus policy! Don't be fooled that it's the "Republican Way." To have an effect on economic activity, tax cuts have to be credibly permanent.

As I say in the Sun-Sentinel article: If you hate taxes, cut spending.

Thursday, December 09, 2010


Ken from Popehat on Wikileaks. Sounds right to me.


As part of our continuing series of women attacking their husbands... He wouldn't give up the remote. So she stabbed him seven times. Yes, she did.

(Nod to @Jeanne23)


Governor Bev Perdue is actually doing something about reorganizing state government.

Never would have worked with the old legislature. But with new Repub majorities in NC House AND Senate...something might even happen.

Well done, Madame Gov!

Just the title itself is SO great!

Nigeria Charges Dick Cheney with Corruption.

I know it's Halliburton, and you can't do business in Nigeria without paying substantial bribes to pretty much every government wanker with his hand out. But still....Pot, meet Kettle!

Jonah by a storyteller

This is why the internet was created. Or it should be. Or it is a benefit of the spontaneous order called "the interwebs" that no one could have foreseen. Or something like that.

Quite a little story-teller. So cute.

(Nod to the Blonde, who also tells stories)


Capitalism is Anarchy, says my man Mike S. What do YOU say, folks? Too extreme, or about right?

I Stood Up Like A Pheonix

This whole democracy thing is over-rated.

Kindergarten class votes autistic boy out of class. It was 14-2, so it's all fair and square, right? Story / video.

The mom said she "stood up like a pheonix." Not sure about the fire metaphor there. And she was very blonde three years ago, black hair now.

Still, the point is that the very idea of majorities acting morally is laughable. I laugh.

The Culture that is Sweden

Great amateur video of KPC fave Jen Lekman singing about stalking Kirsten Dunst in his hometown of Gothenburg.

The link is here, couldn't get the embed to work properly, you have to click on "continue reading to get to the video. Its worth it!!!

At one point he sings that, "The VIP lines aren't at the clubs but at health care, apartments and jobs".


Wednesday, December 08, 2010

If you run for office....

If you run for office, then sometimes you will get pictures taken that look like this.
(Photo credit to David Loner, on FB)

Martin Comes Through

KPC friend and sometimes acerbic commenter Martin sends this terrifying video, made for Leavenworth, WA.

And, yes, Germany was just like this. Not.

Free Market Song

Perhaps not soon to be heard on your local radio station.

But for a class project, not half bad.

Except for the dancing at 0:25, and 2:01. That's pretty bad. People from Utah may be the whitest people in the world. Not that THAT's a bad thing, mind you.

(Nod to the Bishop)

Grand Game: Immigration Edition

In this case, the article itself (in WaPo) plays it straight. In fact, this is great, fair journalism.

The amazing stuff is the content of the article. I'm not sure the author, Andrew Becker, was going for this. But each successive revelation about how ICE "broke" the record is more preposterous and outrageous. Have we completely lost respect for the basic rule of law? And then to have these bureaucrats just LIE....Wow. I mean, the guy who outed the administration's fibs is the head of their own union. The admin lied about changing the rules, and artificially decreed that the year would be longer, on both ends. Good lord.

WaPo is hardly some right wing blogger. There actually appears to be something moving, where fair-minded people on the left are sick and tired of the Obama shenanigans.

Anyway... your favorite parts, highlighted in comments. Go!

(Nod to Anonyman)

From the bathroom of Procrustes

Here's an aphorism way better than any that came from his bedroom:

You complete me!

In one of the funniest Wikileaks so far, a US diplomat labeled Daniel Ortega as Hugo Chavez's "mini-me".

Chavez should get to call Ortega anything he wants, after all he's given Danny around a billion dollars.

Tuesday, December 07, 2010

A Day Without Social Science....

A day without social science is like a day without sunshine. Which we call "night"

So David Brooks believes social science is night

(Nod to TS)

I wonder if alcohol was involved in some way....

What the heck? Christmas carols?

Woman bites off husbands tongue, and then other things happened.

(Nod to the Blonde)

Oh Dear!

Leader, that is. Thanks to @hallsmansm for pointing me to this most excellent blog.

Here are a couple of examples:

The Jacket Speaks

Nick "The Jacket" Gillespie and KPC friend Veronique de Rugy have a plan to balance the budget. It does not involve tax increases, but it does involve spending cuts. Here it is...

I do want to be clear on my opposition to "The Deal" out of Washington. It's fine with me to extend/preserve the tax cuts. But since we have a growing deficit, that just means we are failing to pay for our spending.

And as Angus said this morning, the total spending cuts in "The Deal" are....negative! The Deal increases spending.

Any deal that does not involve spending cuts is no deal at all. DAFT!

Dance band on the Titanic

So President O and the Congressional Republicans have displayed their latest arrangement of the deck chairs on the USS Titanic.

There's something for everyone. No rise in income tax rates, lower payroll taxes, re-extended unemployment benefits, a compromise on the inheritance tax (35% on estates over $5 million) and a bunch of other directed tax breaks.

The two year "cost" is around $900 Billion

Number of spending cuts included in the plan? Around $0.00.

As my co-blogger has so forcefully stated recently: Deficits are future taxes.

Without spending cuts, all we are doing is shuffling the deck on the timing.

As for "stimulus", well the economy will turn around on its own at some point, perhaps soon, so these cuts may be lucky enough to be enacted at an opportunistic point in time whereby they will get the "credit".

And so it continues.

People, the search for grown-ups in government is not going well.

Grand Game: Poinsettias

The Grand Game, Xmas plant edition.

Here is the article. The internal bookmarks aren't set up right, so go here, and then go forward to pages (page 14, mnscrpt page 12) to the article on poinsettias.

The economic argument in the paper made me want to know more about Dr. Godfrey Ejimakor. If you share that want, go here.

Now, perhaps there are disagreements in Ag Econ I don't know about. But is the history of grower marketing agreements in Africa and here in the U.S. really so attractive?

Monday, December 06, 2010

Mel Hinich: In Memoriam

The "In Memoriam" article for Mel Hinich was just published in PUBLIC CHOICE.


It starts bad. But then....the SONG.

End the DAFT!

Our policy is daft. DAFT! Because *D*eficits *A*re *F*uture "T*axes. The DAFT Republicans want to borrow money to pay for tax cuts. And the DAFT Democrats want to borrow money to pay for unemployment benefit extension. It's DAFT! Deficits Are Future Taxes!

I'm going to get t-shirts made: "End the DAFT!"

It's easy....

Instead of "Hell no, I won't go!" we can try, "Like Hell I say, I won't pay!"

Monday's Child is full of links

Anon is angry. (Nod to Alex, who KNOWS from Angry)

It's a temptation that, as we've seen from the class of '94, some of them can't withstand." EWWWW! Stop him before he schtoops again. (Nod to Kevin Lewis)

Joe Scarborough's Class of 2010 Survival Guide.

Class 2010 rapidly putting money in their g-strings
. (Nod to Lord Kent)

Breaking up: easier some times than other times. (Nod to Kevin Lewis)

Partisan filters. (Nod to Kevin Lewis)

Good? Or good enough... (Nod to Kevin Lewis)

You're So Unbelievable

Dear Fed:

You are so unbelievable.

Nothing the "greedy" banks are doing is irrational. It makes perfect to gamble with house money.

The question is why the "house" puts up with it. And the answer is that the "house" (meaning the Fed) is playing with taxpayer money. Nobody who is deciding anything has any skin in the game.

Lordy. Lordy pie.

(Nod to Anonyman)

In defense of Greg Oden?

Over at MR, Tyler asks if we should value economists who are like Ronald Coase or those who are more like Nolan Ryan. (I am not making this up!). This is an instant classic Tyler post containing the sentence "Nobody calls him (Greg Oden) the Ronald Coase of rebounding."

I think he's asking if we should value people with a high "home run" percentage in their output or those with a lot of output.

I think there is an easy way out of this and that is to look at citations, not raw output. After all a rebound is a rebound is a rebound, but not all articles are created equal!

It's possible to have a very long vita without making any discernible impact on the profession and (this should go without saying, but sometimes doesn't) a very short vita is not necessarily a sign of high quality.

So on the citation front, it's no contest. According to Google Scholar, Ronald Coase has over 31,000 cites to his two classic articles. Nolan Ryan only has 9!!

A more serious comparison might be to someone like Alberto Alesina. When I look at the first four pages (40 articles) of his cited articles in Google Scholar, I count roughly 27,000 cites, while his two most cited articles ring up a total of around 4900 cites.

I am somewhat already agreeing with Tyler in that I'm using total citations rather than citations per author here (i.e. not penalizing Alberto for having a lot of co-authored articles).

Who's better?

Hard to say really in this case, but I think total citations are the metric to compare scholars with different vita lengths.

Sunday, December 05, 2010

Why Bruce Bartlett is hopeless

I'm not sure what to make of this post from Bruce Bartlett, called "Why fixing the budget is hopeless"

He cites a survey where 848 Americans think 25% of the Federal budget is spent on foreign aid and 10% is given as the ideal amount.

He then points out that official bilateral foreign aid in 2009 was less than 1% of the Federal budget.

First, taking everything at face value, I am not sure why this means fixing the budget is hopeless.

Second, there is a hell of a lot more to foreign aid that "bilateral foreign aid". There's US contributions to multilateral aid agencies, then there's NATO, there's our military presence in Japan, South Korea, etc., there's whatever the heck we're still doing in Iraq after a second president has said "mission accomplished". I'm not saying it's 25%, but it's way way way more than 0.6%.

Why take a question where the definition of aid is not given and could easily be construed broadly and match the answer to a very distinct, narrow definition of aid?

Unless of course, you're hopeless!

Bang a gong

One of the only changes I've made to Mrs. Angus in our 16 years together was to institute a "no bangs" policy for her.

I'm not a fan of bangs for women. Chad, however, is a big bangs fan and he schooled me on the origin of the look.

People, bangs were invented in the 8th century by an Iraqi socialite nicknamed Ziryab or Blackbird!

It must be true, it says so right here in the Wikipedia.

He got kicked out of Baghdad for singing too good, so he moved to Spain.

Once there, he did NOT rest on his laurels though.

He put more strings on the oud. He opened up a chain of beauty parlors. He invented toothpaste. And, just to top it all off, he invented the three course meal.

He was the Marc Bolan of 8th century Andalucia!

Why didn't I think of that?

In today's NY Times, Christy Romer solves our economic problems:

"The Federal Reserve, Congress and the president need to reaffirm that they will do whatever it takes to restore the economy to full health... They should follow up with powerful fiscal and monetary actions to create jobs — coupled with a concrete plan for tackling our long-run budget problems."

Look, I know the Times only pays $1,000 per column, but this has got to be a joke, right?

What exactly are these mysterious "powerful" policy actions and why didn't the government try them when Dr. Romer was head of the CEA?

Good grief!