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sell condoms in the Bundestag anymore. The company tried to introduce a new product (five condoms for five euros) but was ultimately shot down by the Bundestagspräsident.

As for Krugman, well who'd have thought that he'd some obscure measurement to obfusciate the argument?

The US doesn't have this and so Clinton had to satisfy himself with a cigar.

Re 1: I'm invoking the Abraham Katz critique here. Construction and manufacturing are the most procyclical sectors, so even if the unemployment situation were entirely caused by a neutral shock, you'd see lots of job losses there. The contribution of reallocation to the current situation is likely pretty low (but nonzero).

Regarding number two, making condoms readily available in the Bundestag would seem to be the responsible thing to do, given how regularly the tax payers get screwed there.

# 4. On DSK, Levy must read today's WP editorial and then explain and judge what his friend DSK did in 2008.

When are we going to retaliatory bomb Paris for raping our women? The French apparently knew this guy was a scumbag yet sent him over here. We should not let them get away with this shit. BOMB FUCKING PARIS!

Condoms in the legislature gives a whole new meaning to the free rider problem.

But condoms in the legislature may help provide a solution for the log rolling dilemma.

That structural post has it all wrong, The observed job losses are consistent with cyclical explanations of the recession, not structural explanations. Notice that many jobs were lost in manufacturing (he divides it up into several types, to make it look smaller than construction). If the problem was a decline in construction, then the dollar should have depreciated and US manufacturing exports should have increased. Instead, manufacturing jobs were lost. There is no mystery as to the lack of job losses in government, health, and education, as those are not particularly cyclical industries--in any recession.

The recession is partly structural, but some of those structural factors are themselves worsened by the decline in aggregate demand (such as government labor market policies--higher real minimum wages, extended UI benefits, etc.) But a huge drop in nominal GDP relative to trend will always cause large increases in cyclical unemployment, whether there are structural problems or not.

People tend to blame structural factors when they wrongly think that monetary policy has been "easy." Once they recognize money was extraordinarily tight (which took almost 30 years after the Great Contraction) then they discard structural explanations in favor of the much more straightforward cyclical explanations.

Let's also keep in mind that the decline in commercial construction is not structural, it's cyclical (i.e. it didn't begin with the fall in the housing market in 2006, but only in late 2008, when AD began falling sharply.) And even a large part of the fall in residential housing is cyclical--a reflection of high unemployment and falling incomes.

There are structural problems, but until we solve the NGDP shortfall we'll never be able to determine how severe they are.

Please tell me. Is the NGDP shortfall an American problem? Or a global-market-economy problem?. If an American problem, do you think that what is going on the global economy can solve it? If a global problem, what difference does it make to U.S. policy? I'm interested in knowing how you integrate the U.S. economy in the global economy.

3. Keeps them off the streets.

2. Keeps them off the streets.


It' refreshing to hear Friedman being quite upbeat about the US economy, deficit and everything notwithstanding. Agreed this was pre-recession but he was a wise man and I'm tempted to believe him in some visceral way. There's enough of doomsday predicting economists and pundits around (Tyler included) and I am glad there's one contrarian.

I guess my optimistic "mood affiliation" stretches so far as to make #6 a #7................

Everything was clicking along until he had to leave and we screwed things up.

Maybe believing that things are too badly screwed up is where the screw up lies.

His comments on India are disappointing. Government control was being abandoned in the mid to late 80s; got a kick in 1991 and by yr 2003 certainly the Indian economy began to take off. (India has had 8% yr on yr growth for the last 6 years or so).

And, he uses an anecdote - an anecdote! - from *50* years ago to support this point of view.

Wow. Especially for a smart guy.

Government control was *not* abandoned in India in the 1980's! You must be kidding. Significant government control exists even today! Sure things are less controlled than in the dismal Nehruvian first 40 years but by American standards still much control is exerted. e.g. Fuel prices on the street are still not free floating. All gas stations have the same government mandated price for diesel gasoline etc. An interesting side effect was last year when crude prices rose too high and the government insisted on keeping diesel prices artificially low. At that point, Reliance shut down all it's gas stations and instead kept using all its refining capacity to sell abroad. Shutting down is always legal but selling above the government prices is not.

Other pricing which is quite controlled is drugs and also edible commodities to a large extent.

Yes, using a 50-year anecdote is irrelevant. But the point he was making is valid. India is surely still behind the cure for economic freedoms.

Ah, and the US is a singular bastion of "free" gasoline prices? And let's not talk about the farm subsidy okay?

yes, I stand by what I said, significant government control was abandoned in India during the 80s and continues. No, I'm not kidding. Although I ought to clarify by saying the control was begun to be abandoned.

I'm getting this from people who worked very hard during that time to lift control - it is hard to imagine the opposition to doing so but it was rather strong. It is remarkable that no one bothers to inquire into that particular process - 1991 was a shock but it wasn't COMPLETELY unanticipated.

Essentially a lot of what Friedman says is not as clear cut as it may come across. Freedom, as someone dead said, is never free.

Why do we have troops in Iraq and Afghanistan and not Paris? Iraq and Afghanistan haven't done anything to us lately, yet a high ranking official in France, the man who would be president of France, has raped one of our women. Are we gonna take that lying down? Bomb France! Locking this dude in jail isn't enough. Also, good excuse to pull out of Iraq and Afghanistan.

I don't understand 5. The authors assert that local governments have to limit population size under Tiebout sorting, but don't clearly state why this is the case. There is some vague statement that increased population size would reduce per-capita property values and limit provision of government services, but this is unlikely to be the case, since agglomeration gains are also largely capitalized in property values. Further, the choice of zoning policy as the instrument is unclear: poll taxes or local income taxes would be a better fit here.

On the debt limit story two points.

The first is that the debt limit dates all the way back to 1917, although up to 1939, it was in several parts, specific limits on different kinds of bonds to be issued, and only became a unified ceiling in 1939, with the first story in this absurd series, indicating what an anachronism the limit actually is.

The second is that this story is only about the US. That is for a good reason, the US is the only nation ever to have had a nominal debt ceiling limit. The EU has an unenforced limit of 60% of GDP. In any case, our debt ceiling is an absurdity that should be abolished, not raised, much less negotiated over.

We go to war with the debt ceiling we have, not the one we wish we had.

the first 30 seconds of the friedman clip do not inspire confidence

@'K': To add to what Rahul said, heavy fertiliser subsidies, procurement prices on most grains, the colossal and inefficient FCI, railways (where freight is used to subsidize passenger fares), and finally Air India and its unions. India is very far from economic freedom. 8% growth a year means nothing. Did you read Tyler's link a few days ago on how mere improvements in resource allocation are enough for inefficient nations to produce seemingly high growth rates?

Please tell me to which Tyler's link you refer in the last part of your comment. Thanks.

Re: #6

'private debt will not kill it'

I know hindsight is 20/20, but still, coming from a Nobel Laureate...

This shows which they last very much lengthier and thus saving you income which could otherwise are actually utilized to purchase new ones.

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