Category: Uncategorized

Paul Krugman endorses Ben Bernanke’s reappointment to a second term as Chairman of the Federal Reserve Board of Governors:

Ben S. Bernanke deserves another term as Federal Reserve Chairman based on his success in battling the financial crisis, said Princeton University Economist Paul Krugman, a winner of the Nobel Prize.

“He’s earned the right to a second term,” Krugman, 56, said yesterday in an interview in Kuala Lumpur. “He turned the Fed into the financial intermediary of last resort. When the banking system failed to deliver capital where it was needed, he put the Fed into the markets.”

Debate over the fate of Bernanke, 55, is intensifying as he nears the end of his four-year term as chairman on Jan. 31. While Krugman and economist Nouriel Roubini have voiced support for the former Princeton economist, others including Anna Schwartz have said a lack of transparency exacerbated the financial crisis.

“I think Bernanke has done a really good job,” Krugman said. “He failed to see this coming and he was behind the curve in early phases. But he’s been really very good in the sense that it’s really very hard to see how anyone could have done more to stem this crisis.”

Krugman’s logic is, as usual, hopelessly hapless. One suggests that it would have been fairly easy to do more to stem this crisis, beginning with seeing it coming and not getting behind the curve in the early phases. And, of course, that’s not even beginning to get into the insane attempt to prevent home loan defaults by giving billions to the holders of mortgage-backed securities. Or cutting interest rates when raising them was required. Or driving total credit market debt to nearly 4x GDP. Or refusing to turn over the hidden records of more than 12.8 trillion in grants and loans given out by the Fed and funded by the public. Undsoweiter….

And on a related note, read this and cringe in terror:

What most readers probably don’t know is the reason Krugman became an economist in the first place. “I went into economics,” he wrote in an e-mail message, “because I read Isaac Asimov’s Foundation novels, in which social scientists save galactic civilization, and that’s what I wanted to be.”

As an Austrian who has read Foundation several times and therefore fully grasps the implications of what drives Krugman’s emotional attachment to Keynesianism, one thought leaps immediately to mind: Sweet St. Darwin of the Galapagos, prega per noi condannati!

UPDATE- Some words were simply made for eating:

So it seems that we aren’t going to have a second Great Depression after all. What saved us? The answer, basically, is Big Government.
– Paul Krugman, August 9, 2009

Krugman’s article is not only likely to blow up in his face over time, it’s simply wrong. “The point is that this time, unlike in the 1930s, the government didn’t take a hands-off attitude while much of the banking system collapsed.” This is hugely misleading. Bank failures as a percentage of total bank deposits in 2008 and 2009 are running at a rate double that of the bank failures of 1930 and 1931. In August, with at least three very large bank failures known to be in the works but not yet counted, it’s already 3.75% in 2008-09 vs 1.99% in 1930-31

In addition to yesterday’s post, I also sent the following email to PZ Myers:

My dear Dr. Myers, since you were previously afraid of a radio debate with me on the evidence for the existence of gods, perhaps you’ll be more willing to engage in a written debate on the scientific evidence for evolution. After all, if the issue is so comprehensively settled in evolution’s favor, it should be no trouble whatsoever to make your case to everyone’s satisfaction, however initially dubious they may have been. And since you have now asserted that there are no Worthy Opponents to be found on this issue, you no longer have any need to hide behind your stated belief in my supposed crackpottery to avoid debate.

If you don’t mind, I suggest that you may wish to explain to some of your more reading-challenged fans that the context in which you were posting about engaging Worthy and Non-worthy Opponents tends to preclude peer-reviewed publication in scientific journals. In any case, I look forward to hearing from you anon.

He responded via email, curt but civil. I did not obtain permission to post his missive, so to summarize, it simply stated that I am not a Worthy Opponent as he errantly believed I assume myself to be, and informed me that I am not merely a crackpot, but a superlative example of the species. I replied thusly:

Yes, I understood that is your contention. It was rather obvious, especially considering that you stated outright: “There is no one in the green box.” Unlike many of your readers, my reading comprehension is in good working order. Of course, the entire point of your post was that because there are no Worthy Opponents, it is therefore necessary to engage Unworthy Opponents lest you lose the public. Which is quite true, and is also why it makes sense for you to engage in debate with various Opponents you deem Unworthy, such as myself. Even so, there’s nothing preventing you from running away again… and that’s clearly what most of the readers at both Vox Popoli and Pharyngula expect. I must confess that my favorite of the various excuses your readers prepared for you was the one related to peer-reviewed science. Great stuff!

Last time, your excuse was the potentially hostile environment and fears of a Gish Gallop. I’m sure we’re all interested in knowing what it will be this time.

It’s too soon to say for certain, but I’m afraid it appears as if the intrepid cracker-killer is on the verge of once more beating a very brave retreat. But, let’s not forget that Myers has surprised us before. I, for one, never dreamed he’d have the steel to carry through with the threatened cracker-killing.

Obama and the ‘B’ Ark Economy

The remarkable thing about the “wildly popular” scheme to encourage American consumers to purchase more automobiles is not, as a few conservative commentators have wryly remarked, that the mainstream media finds it surprising that people enjoy federal largesse. It is, rather, that so many commentators have recognized that the program is merely designed to encourage tomorrow’s consumption today. This is remarkable because most of them had not hitherto been able to recognize a similar pattern that has been at work in the American economy since 1983.

From a May paper entitled “U.S. Household Deleveraging and Future Consumption Growth” by the Federal Reserve Bank of San Francisco:

Since the start of the U.S. recession in December 2007, household leverage has declined. It currently stands at about 130% of disposable income…. The Japanese stock market bubble burst in late 1989, followed soon after by the bursting of the real estate bubble in early 1991. Nearly 20 years later, stock and commercial real estate prices remain more than 70% below their peaks, while residential land prices
are more than 40% below their peak. In both countries, leverage ratios rose rapidly in the years before the peak. After Japan’s bubbles burst, private nonfinancial firms undertook a massive deleveraging, reducing their collective debt-to-GDP ratio from 125% in 1991 to 95% in 2001. By reducing spending on investment, the firms changed from being net borrowers to net savers. If U.S. households were to undertake a similar deleveraging, their collective debt-to-income ratio would need to drop to around 100% by year-end
2018, returning to the level that prevailed in 2002.

This has very, very bad implications for the most important component of GDP, Personal Consumption Expenditures, which hit a historic high of 71.2 percent in the first quarter of 2009. Translation: the stock market is no better an indicator of future economic growth now than it was when it was hitting historic nominal highs in 2008.

On the basis of their deleveraging calculations, the FRBSF calculates a US savings rate of 10% by the end of 2018. One has to presume Paul Krugman hasn’t read this paper or he would have stroked out already.

I wonder what excuse PZ will produce for ducking this challenge? Or is it possible that he might surprise us all and actually put his reputation where his mouth is?

Non-crackpot arguments are more challenging and require more thought, and are ultimately more satisfying. However, there is a problem when the focus is on an issue rather than an individual. Some issues, and I would put evolution in this category, don’t match this model well. While the issue is real and red-hot in the culture, the Green Zone of Worthy Opponents is unfortunately rather underpopulated. There is no one in the green box. So what should we do? Simply ignore the mobs of people populating the red box?

I posted the following at his blog: “Well, my dear Dr. Myers, since you were previously afraid of a radio debate with me on the evidence for the existence of gods, perhaps you’ll be more willing to engage in a written debate on the scientific evidence for evolution. After all, if the issue is so comprehensively settled in evolution’s favor, it should be no trouble whatsoever to make your case to everyone’s satisfaction, however initially dubious they may have been. And since you have now asserted that there are no Worthy Opponents, you no longer have any need to hide behind your stated belief in my supposed crackpottery.”

So, will PZ dare to enter the Red Box? Given that this is the area of his scientific and academic expertise and I am, according to him, “a pathetic little twerp with delusions of grandeur”, there’s absolutely no reason he should not… unless, of course, he’s afraid he can’t present a sufficiently convincing case for Darwin’s dangerous idea.

UPDATE: Wow, the Pharyngulans are already hurling metaphorical feces, providing excuses for PZ to run away, and trying to change the subject to religion. I find their lack of faith… amusing.

JB plunges once more into the breach:

In his 2nd response to me, Vox gives two criticisms. First, Vox states “one need only find a few extant remaining DNSP ecosystems” to falsify. From his original links I understand what he means: places where the guppies are getting bigger, or are pressured to. I expect we will find many such ecosystems. That is not what I meant by DNSP.

Perhaps I was not clear when I defined it as “gentle pressure to develop a trait.” My DNSP is really Potentially Speciating DNSP, or PS-DNSP. I don’t care about the kind of DNSP that sterilely bounces species between hereditarily predefined poles. Obviously, demonstrating an ecosystem is PS-DNSP is MUCH harder than simply observing DNSP. But I suspect DNSP is common, and PS-DNSP may be too. There are other reasons besides rarity why abundant PS-DNSP may fail to speciate.

This brings us to Vox’s second criticism. I contend PS-DNSP could conceivably stop or slow to a crawl for long periods of global stasis, as often and frustratingly happened in Sim Earth. Meanwhile DNSP would still be constantly arbitrating inter and intra species wars. This is especially possible during competitive late stage ossification, where advanced adaptable species mop up all available ecological space. Vox scoffs at this possibility; I suggest he play Sim Earth. The ecological space and environment needed to foster the next wave of transitional forms can’t be taken for granted, even when you have a planetful of pondscum bubbling for revolution.

Tangentially, VD finds it very hard to believe all species, “including the ancient ones,” have reached stasis. But ancient species are hopelessly bypassed on the tech tree. One should expect nothing from them, and everything from the latest, still freshly malleable models, e.g. humans.

Going back to Vox’s first reply, I find I would respond differently. Vox says there’s no evidence EVERY extant ecosystem has the capacity to exert DNSP. No evidence is good for my unfalsifiability. But perhaps some ecosystems have always lacked the capacity to exert DNSP, and don’t living fossils support this? To answer: In general, I suspect HS-DNSP is ubiquitous while PS-DNSP is a special confluence of factors that can touch one species in an ecosystem and leave unaltered the one beside it. The idea of a major ecosystem without HS-DNSP is absurdly unlikely, and it follows that PS-DNSP should also be evenly distributed among them, yet could leave some fossils untouched.

FODOR TANGENT
As for Fodor’s attack on evolution, I evade the dilemma by failing to adhere to either adaptationism or the opposite. His point is a contentless Zeno’s paradox, which I will demonstrate by exploding the example given.

In the first example of the field experiment controlled test, the conclusion is wrong. TENS predicts brownness wins on brown snow. If brown loses, well, TENS doesn’t GUARANTEE the fittest will arrive, survive, or thrive, much less outbreed. It simply claims to be the only force promoting speciation. More accurately, natural selection eliminates the vast majority of potential speciation.

The non-vacuous formulation of natural selection is that the phenotype best adapted to the ecology is also the most sexually successful. But if a better design comes along and the bear girls refuse to sleep with it, no kids for Mr. Fittest. Darwin can predict phenotypic improvements well but much of the rest is up to “chance,” i.e. everything we don’t know about evolutionary ways and means. A weak force is not the same as “no predictive ability.” Dilemma solved.

I’ll restrict myself to addressing JB’s reply to Fodor as I’m content leaving him with his retreat to Sim Earth and speciation-related natural selection to preserve his concept’s unfalsifiability. It boils down to rarity and great quantities of time, as evolution defenses so often do. If the non-science needs to hide in that corner, then let it hide, I say.

But I must point out that the Fodor dilemma is not so easily ducked, because JB has misunderstood the definition of fitness. TENS not only guarantees that the most fit will outbreed the less fit, it declares the most fit MUST outbreed the less fit for what should be the obvious reason that fitness is defined as the most successful production of progeny. However, JB has pointed to the weakest point in the logic – not science – that presently serves as the foundation of TENS. To slightly adapt his terminology: is the phenotype best adapted to the ecology also the most sexually successful?

Darwinians answer yes, on balance. They have little choice, since this is the foundation of their entire theory. But they don’t actually have much, if any science on their side to date, as the Penn State scientists performing natural selection studies have readily admitted. It seems strange to have to point out to scientists and science fetishists that logic is not science, especially considering that many of them consider the Enlightenment triumph of science over logic to be one of the seminal points of human history. And if any Darwinians are unwilling to accept the implications of a hypothetical failure of science to demonstrate natural selection, then the only rational conclusion is that their faith is in Darwin, not science.

This was a decent chapter from a historical perspective, but I felt that it lacked an awful lot regarding any actual, you know, economics. Of course, this is a problem that can be safely expected of any economics-related history written by a non-economist. Quite possibly the biggest flaw, however, was the author’s failure to demonstrate the leftism of the very concept of the modern corporation given that it is intrinsically a creation of the state. This isn’t a knock on Jonah Goldberg, it’s just interesting to see how different the non-economists’ perspective on economics can be.

But honestly, an entire chapter on economics without a single chart, formula, table, or folksy analogical tale? What sort of strange beast is this?

However, Goldberg also overlooked the easiest way to demonstrate how corporations and corporatism cannot possibly be considered inherently right-wing. It is a little-recognized fact that Communist governments have owned and controlled a number of the world’s largest corporations. In fact, until recently, one of the largest “capitalists” in the world as measured by the revenues of the many corporations it owned, was the People’s Liberation Army of China.

Next week’s reading is Chapter Nine, “Brave New Village: Hillary Clinton and the Meaning of Liberal Fascism”. The quiz for it will be posted on Saturday, August 15th.

Salt sends an email informing us that North Carolina has raised the bar:

§ 14-454. Accessing computers.
(a) It is unlawful to willfully, directly or indirectly, access or cause to be accessed any computer, computer program, computer system, computer network, or any part
thereof, for the purpose of:

(1) Devising or executing any scheme or artifice to defraud, unless the object of the scheme or artifice is to obtain educational testing material, a false educational testing score, or a false academic or vocational grade, or
(2) Obtaining property or services other than educational testing material, a false educational testing score, or a false academic or vocational grade for a person, by means of false or fraudulent pretenses, representations or promises.

A violation of this subsection is a Class G felony if the fraudulent scheme or artifice results in damage of more than one thousand dollars ($1,000), or if the property or services obtained are worth more than one thousand dollars ($1,000). Any other violation of this subsection is a Class 1 misdemeanor.

Rumor has it that the White House is putting pressure on Hawaii to consider similar legislation regarding birth records….

He explains why more government involvement isn’t going to make anything cheaper:

I believe that Econ textbooks say that price controls haven’t worked from Diocletian on. Wrong. They work splendidly. Ask Bausch & Lomb. If you could make over twenty-two bucks on a dime’s worth of salt water, wouldn’t you be in favor of governmental interference in the economy?

Let me explain medicine briefly. It’s an unholy scam. Here in Mexico my wife occasionally gets ear infections. At any pharmacy, we pick up Amoxicillin, 250mg three times a day for ten days. Six bucks.

Recently we were staying in Maryland with friends, and she got an ear ache. Amoxicillin is by prescription only in the US, which means that doctors have a monopoly on ear aches. It was Friday evening. It was either agony until Monday or go to one of those mall-based walk-in clinics, which wanted $150 for the appointment and prescribed $78 in medicines. It’s a scam, pure and simple. Above the level of county government, the US is as corrupt as Mexico could ever be, and it’s mostly legal.

The problem boils down to this: focused interest groups will always have more influence with national politicians than the public. And the more centralized the industry, the easier it is for those interest groups to wield their influence. It is, as Fred describes it, government by looters.