1. Karl Smith on Russ Roberts on TGS. Karl also has had some excellent posts on IS-LM and related matters, start here but scroll backwards through the blog.
2. When was the phrase “Great Depression” first used? More from the extraordinary Barry Popik.
3. 1982 interview with Thomas Sargent. And the Thomas Sargent academic family tree. And Sargent’s (very short, and very good) graduation speech at Berkeley. An excellent short overview of what economics has to contribute to human understanding. Here is his Dad’s speech, from his Dad’s 90th birthday.
4. Carolyn Sargent’s guide to the art of Florence; she is related to Thomas.
Was this the part of the Sargeant interview that was your point?
“Supply-side economics, which counts on large tax cuts to stimulate investment, which in turn is supposed to boost productivity and lower inflation, “isn’t trickery. It’s wishful thinking,” Sargent said. “
I forgot the rest of the quoted article:
“While it is true that taxes “distort incentives,”[ per Sargeant] it doesn’t necessarily follow that lowering taxes will boost productivity and lower inflation, especially if tax cuts create a deficit. “
Milton Friedman said the exact same thing. Because of rational expectations what matters is spending, not current tax rates.
So, when we spend 68% of federal discretionary spending on security we’d better be sure that it gives us something of value.
Same for any federal spending.
That’s just exchanging taxes now for taxes later. No net change in taxes.
Anyway, I am sure most here are all in favor of cutting defense spending (i.e. pork).
Wow! Sargent’s Berkeley speech was incredibly short. It reads like a manifesto against bright-eyed grads who want to make a difference in the world. Sargent’s implicit message: you can’t, so don’t even try. Better off just looking after number 1. It’s unbelievably dismal and actually quite dehumanizing. There’s absolutely no love or hope conveyed at all. I mean, this sort of classical economic analysis is obviously true in some sense. We can’t have it all of course. But, seriously, being human consists of much more than looking after yourself and unceasingly questioning the motives of others. This only leads to misunderstanding and, I’m afraid, violence. One thing I’ve been thinking about recently is how to integrate economics within my Christian worldview. This type of radical individualism is surely anti-Christian. Yet it puzzles me as to why this sort of message resonates with a lot of US Christians. It certainly doesn’t resonate with Christians elsewhere. Methinks that US Christians, with their radically individualistic Puritan roots, are probably reading their own ideologies into Holy Writ (which is another part of the problem their very staunch sola scriptura stance. Anybody can interpret Scripture anyway you like… but that’s another discussion). I think N.T. Wright summed up these sort of sentiments well when he said:
“I know, and such people often know in their bones, that wealth isn’t a zero-sum game, but reading the collected works of F.A. Hayek in a comfortable chair in North America simply doesn’t address the moral questions of the twenty-first century”
Point 6 of Sargent’s speech: but the IMF … a “well meaning outsider” … compelled Indian policy makers to adopt privatization and trade liberalization, something the Indian government may not have done at that point in time (1991) had the nation not required a IMF loan. Libertarians applaud this shift in Indian policy. Is this a big exception to Sargent’s proposition that outsiders, including “well meaning ” ones, cannot change things better or for worse?
“6. In an equilibrium of a game or an economy, people are satisfied with their choices. That is why it is difficult for well meaning outsiders to change things for better or worse.”
The Nobel Laureate has never heard of a Prisoner’s Dilemma? The defectors are hardly satisfied. They have made a choice based on what they anticipate others will do. But both (all) would prefer to choose otherwise. They are surely not satisfied with their choices if we mean by that the outcome of their choices. And they are likely not satisfied with their choices if we mean by that the range of choices available.
I prefer the earlier laureate Schelling who is quite clear that to identify an equilibrium is not the same as identifying a “good” outcome. And while it may be “difficult” to change an outcome, it may be worth trying for it need not be impossible
This address is a pretty good example why many folks equate economists with smugness. Sorry..
I agree, a graduation speech is really no place for the typical undeserved smugness of an economist. The only thing good about that speech is it was short.
I suppose if revenge is a dish best served cold, smugness is one best provided in modest portions. Whether the charge of smugness is deserved or not is an empirical question. This talk is a nice exhibit for the prosecution.
You’re an idiot — defection is not an equilibrium, therefore the comment does not apply to them. Try being less smug yourself.
Sargent’s graduation speech would be nice for the economics department reception, but not for actual graduation. Anyone who did not take econ 101 (and they exist!) would be very confused and then the speech ends abruptly. Economists are not nearly romantic enough to give graduation speeches.
That was a terrible speech. Interesting in and of itself, but awful as a graduation speech.
I liked the speech but I am an economist. On a personal level I was very happy that Sargent won the prize. I knew him when I was a graduate student and even though I wasn’t one of his students he was always extremely nice to me and interested in knowing what I was working on. He even invited me and some of my fellow graduate students over for dinner and drinks on occasion. He was very different from many of the other professors in my program.
Karl Smith has issues with there/their/they’re…
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