Assorted links

The google meta-data errors can be fixed for pennies. OCR the first few pages and extract the publishing date. The criticism is incredibly premature and shortsighted. Remember when internet tied up phone lines… how did we ever get over that?!

“The google meta-data errors can be fixed for pennies.”

Then Google should probably drop a few Lincolns and fix the damn thing, right?

Bill R.,

The latest count in a paper by Dirk Bezemer (google it) on 11 economists who “called it,” (admittedly
with some arbitrary criteria) has been analyzed as follows by one of the ones on the list (Steve Keen):
five Post Keynesians (including Dean Baker, who might not be one), two Austrians (including Peter Schiff),
one mixture of a Post Keynesian and Austrian (yes, they exist), two “mavericks with mainstream backgrounds”
(Robert Shiller, mentioned by Krugman, and Nouriel Roubini, aka “Dr. Doom”), and one indeterminate (Fred
Harrison of the UK). For some curious reason, Krugman also failed to mention the late Hyman Minsky or
the late Charles Kindleberger (author of _Manias, Panics, and Crashes_), both of whom were far more
important in analyzing speculative bubbles and crashes than (hack, cough!), Andrei Shleifer.

Yancey and Cyrus,
First of all, there are lots more economists than are on that list of various stripes (although fewer
of the clearly conventional variety), who “called it” to some extent or other, myself included (and I am
not on that list). You have to go to Bezemer’s paper to get the full criteria, which were ultimately
clearly applied in some arbitrary way. However they included a sufficient degree of publicness, having
some sort of model or more formal argument behind it, and also making some kind of timing prediction that
was not too far off.
That said, regarding the Austrians, some of them have looked like stopped clocks, basically
forecasting imminent doom at any minute for a long time(yes, I have been to the Mises site, and some of
these people look utterly ridiculous), which did not happen, year after year after year. That is the
“stopped clock is right twice a day” syndrome. Actually, it looks to me like Schiff was sort of doing
that, but he got on the list anyway. Also, many of the Misesian-Austrians stressed arguments that seem
to have little to do with what happened (collapse of housing bubble crashing world derivative markets).
Schiff did get that one right.
Regarding Roubini, both he and Baker jumped the gun by about a year, calling a major recession for
2007, based on falling housing construction. At the time they made their forecasts, I was being skeptical
because I saw the low value of the dollar likely to stimulate exports, even though I did expect that
eventually the housing bubble-derivatives market mess would bring us down (I was right and they were wrong).
But I stayed away from timing forecasts, which is at least one reason that I am not on “the list.”
As for those Krugman mentions, he quotes Brad DeLong extensively, but DeLong notoriously did not
call it and long predicted that the housing bubble would not cause a problem. And citing Andrei Shleifer
on being the one who figured out that noise traders could make money, well that was not done initially
in the 1997 paper with Vishny, but earlier in several papers with Summers, DeLong, and Robert Waldmann.
And, like DeLong and Summers, Shleifer did not at all forecast what was going to happen, not at all. I
will give Krugman some credit that he at least warned about the housing bubble pretty early on.

Yancey Ward: The people who run the Cafe Hayek site — Donald Boudreaux and Russell Roberts — are Austrian economists: in all the past several years of their posts, where have they have come even close to predicting either the financial collapse or the deep recession? On the contrary, both are still, to this day, wasting valuable bandwidth posting fairy tales about the “ever increasing wealth” of the average American (see Boudreaux’ latest laugh-riot: http://cafehayek.com/2009/08/americans-are-becoming-richer.html; here’s Roberts’ Feb 2008 embarrassment: http://cafehayek.com/2008/02/the-romance-of.html).

Their “best of all possible worlds” pro-crapitalism B.S. might keep the checks coming in from the Koch Foundation, but it makes them and their ilk no less of laughing stocks.

Tyrone called it.

http://www.marginalrevolution.com/marginalrevolution/2005/01/if_i_believed_i.html

Maybe that’s why we haven’t heard from him a while. He’s covered his shorts and is sipping margaritas on some beach somewhere.

Robert Fogel’s article is really terrific and Paul Krugman’s overview is excellent. Both of them should be read by everyone.

Robert Fogel’s article argues that there is no need to suppress the demand for healthcare.

I want to point out that this could be used to argue for single-payer too, not to mention a public insurance choice or “public option.” I agree with most of his particulars.

Fogel argues that the demand for healthcare is completely predictable and that there is no need to reduce it. To put it crudely the demand is some kind of constant, plus the rate of biotechnology innovation, and it has stabilized historically at an income elasticity of demand of around 1.6, due to the productivity growth in other necessary commodities.

Demand is not the same thing as the cost of healthcare, which will go up or down depending upon other factors, and he discusses the big ones. He is careful to include reasons for downward pressure on costs: (1) “the likely downward trend in age-specific prevalence rates of chronic diseases and disabilities” and (2) that biotechnology sometimes reduces the cost of treatment and may become increasingly effective.

I think you could use this to argue for single-payer. It would be a monopsony but not the textbook kind: in this particular monopsony the true demand is growing at a constant rate, and this is not going to change.

The reason the rate of growth of demand will not change is expressed in Friedrich Hayek’s argument IN FAVOR of government intervention into health insurance:

“Where, as in the case of sickness and accident, NEITHER THE DESIRE TO AVOID such calamities NOR THE EFFORTS TO OVERCOME their consequences ARE as a rule WEAKENED BY the provision of ASSISTANCE — where, in short, we deal with genuinely insurable risks — the case for the state’s helping to organize a comprehensive system of social insurance is very strong.” [my caps] Friedrich Hayek, The Road to Serfdom, pp. 120-121.

“Neither the desire to avoid, nor the efforts to overcome, are weakened by assistance.”

In other words, the will of the individual is not changed in these types of cases; the intentionality does not change.

Therefore making healthcare available for all, will not change the demand for healthcare: although some of the demand is presently not fulfilled, so there is a one-time growing pain.

That’s the buyer side of the monopsony. On the seller side, the firms aren’t perfect substitutes for each other, or in perfect competition, as the textbook-case monopsony requires. They are either dominant in a local geography (such as hospitals) or they are actually monopolistic competitors (such as pharmaceuticals.) They aren’t interchangeable and so they don’t suffer a big demand restriction. In reality Big Pharma does well in socialized medicine countries.

So it would not be a monopsony, actually more like a bilateral monopoly — in which the demand is constant, and the supply cannot be done without.

This is a system which is not going to run out of control — and it is not a system in which price controls must lead to rationing, or to restrictions upon innovations.

I can’t believe some of you insist that the “credit crisis” was caused by malinvestment and the derivatives market.

Ask yourself: If the Federal Reserve is flooding the world with cheap money, what do you think people will invest in? What “should” they invest in?

The obvious answer is that they will invest in more of whatever they want to. This is what drives up the percentage of bad investments and increases the risk for insolvency.

NOTE!!! It is increasing the money supply that does this, not “dumb investors.” The ability Keynesians and others have to blame all things on consumer irrationality, ignorance, stupidity, in the face of consistently bad monetary policy is truly staggering.

How many more times am I going to hear from you people that the policy was good but the consumers are idiots? That is the most disgusting display of “passing the buck” (literally) I have ever seen the economics profession do. In the 30s, Keynesians used to try to promote their ideas under the assumption that consumers were normal people. It is clear now that the underlying assumption here is that Keynesians are the only ones who know what the markets “should” look like, and the rest of us are just stupid or irrational or both.

There has to be more than just 11 economists that “predicted” this crash. I wish I could remember this one I saw this past month from a blog post that I believe I found when googling a name from here. In that post he listed Peter Schiff and Ron Paul among others.