Good morning. Well, the laptop reload is just about done. Blogging should return to normal as I stop futzing and start programming and starting, you know, doing stuff.
- On progressives and civil liberties … (blogger was down when I linked this but that should be temporary).
- And the Keynsians are plugging for more and bigger stimuli. Reconsidering their hypothesis, is not an option apparently.
- One bike in Le Tour … and a 40s style gal.
- A judge and jury and healthcare.
- I think he’s wrong too. You tell how much “more religious” a person is by how much of their time and self they devote to the same.
- Obama, walking circles in Moscow … where Mr Obama rings the Quayle-o-meter … and not the usual reception?
- A call for “clear alternative visions”, something oddly enough the left never did during the Bush tenure.
- Gay culture and Ms Palin.
- Some history of usury.
- Unfortunate slip of Mr Krugman’s.
- What passes for standards in the beltway.
- The fantastic in film for the remainder of 2009.
- We can hope.
A call for “clear alternative visions”, something oddly enough the left never did during the Bush tenure.
Which is why Obama was not only able to defeat the GOP but also route the Democratic establishment.
And the Keynsians are plugging for more and bigger stimuli. Reconsidering their hypothesis, is not an option apparently.
If you have cause to reconsider it please present it, so far it hasn’t been done. As I pointed out with the forecasting issue, the stimulus hasn’t really been tarnished as a theory…only the ability to accurately forecast….but that is hardly news. This link likewise shows that there’s been little increase in public and commerical construction relative to the massive decrease in private housing construction. But several very important points to keep in mind:
1. Private housing was in a massive bubble. It’s collapse is going to look very dramatic and will steal a lot of attention in a graph. The fact that non-housing construction remained relatively constant for the last 4 months may not seem like much but it actually is. With a massive contraction it’s kind of surprising that there hasn’t been such a collapse.
2. Actually the fact that non-housing construction didn’t shoot up to take the place of housing’s peak is a good sign IMO. If the stimulus doesn’t work for reasons that its critics claim, its spending would just feed a replacement bubble in the economy eventually resulting in inflation. That doesn’t seem to be happening, though.
3. The traditional Keynsian analysis of stimuli recognizes two big problems. Timing (even a very rapid gov’t policy change will take months to actually be felt) and potency (different types of stimulus have different multipliers because some generate a lot of new spending quickly while others loose new spending to savings). Construction spending happens to have a relatively high multiplier (I believe between 1.5 and 2.0) compared to tax cuts (closer to 1.0) but takes longer to get off the ground. If you wanted to make an honest evaluation of the stimulus package, then, why would you concentrate on the one small area that is already known will not have much impact until next year at best? Why not look at the payroll tax cut, house buying tax cut and extension of unemployment/food stamps benefits that were implemented immediately?
Boonton,
Wow. That’s very funny.
You credit the inability of the Democratic opposition with coming up with a clear coherent response in all of 8 years for Obama’s victory. Wow. So, you should be in fear now, we are following (by your lights) in that formula for victory. Whine for 8 years with no coherent response. Put up a lightweight with a talent for oratory and the needed ability to make a incoherent message attractive (hope/change anyone).
My cause to reconsider is that it seems pretty clear that very much of economic theory depends heavily on linear analysis applied to a non-linear system. There’s been a lot of recent (since the late 80s) work in non-linear systems … which post-dates these economic notions by quite a bit. I happen to think that these economists are working with a framework which is fundamentally flawed … which seems quite problematic to me.
Oddly enough the (I think) non-Keynesian economist I link to occasionally has been bruting about the non-collapse of the not-housing construction trends … but De Long (who you had pointed to me) has not.
Pseudo-Polymath, I’m not really a christian, I’m not really right of center, but I did use to cycle a lot (former bike messenger, even). So I’m not quite sure what we have in common that leads you to occasionally link to m Positive Liberty posts. But every time you do it makes my day. Thanks!
You credit the inability of the Democratic opposition with coming up with a clear coherent response in all of 8 years for Obama’s victory.
Actually yes.
So, you should be in fear now, we are following (by your lights) in that formula for victory. Whine for 8 years with no coherent response. Put up a lightweight with a talent for oratory and the needed ability to make a incoherent message attractive (hope/change anyone).
Actually I don’t think Obama has any great talent for oratory but level headed thinking, common sense and a good eye for strategy. Additionally his patience is almost superhuman. As for oratory, Obama is ok but nothing especially great. As many have liked to point out, he is given to gaffes and often requires a teleprompter. Note I’m not saying he is a bad public speaker. Normally one would expect a person who makes it as far as he has in politics to be able to perform somewhat well in public speaking….but we don’t live in normal times as witnessed by the inexplicable careers of Bush and Palin.
My cause to reconsider is that it seems pretty clear that very much of economic theory depends heavily on linear analysis applied to a non-linear system.
Errr no it doesn’t.
Boonton,
So … let me get this straight.
1. Obama’s victory and the shift of Congress to the left is due to the lack of a coherent response to the Bush policies.
2. You feel the right has no coherent response to Obama.
3. Yet, this is misguided.
Is that because you think a coherent response would be harmful to the right therefore it is to be encouraged?
Do you have evidence of non-linear modelling in current economic models?
#1. Actually Congress’s lack of a coherent response to Bush left the field open to Obama. The point I’ve been making is that Obama swept aside the Democratic establishment in the primaries as much as he defeated the Republicans in the general election.
#2. Yes to date I’ve yet to hear much in the way of a coherent response. Technically this does leave the field open for a relatively unknown Republican with a good mind to swept in and brush aside the current Republican leadership. But you can’t count on that. A team of losers might mean that the unknown player might suddenly shine. Or it could just mean you have a team of losers who will keep losing.
Linear-v-non-linear: Could you define what you mean by non-linear and remember you’re speaking to someone whose math education ended with calculus, stats and a tiny sliver of linear algebra. Those going beyond a BA in economics require much more serious math training (though I know from my days of tutoring I have more math than maybe 3/4 of the population or more).
I would say that economics happens on two levels. The academic level is very math heavy and almost incomprehensible to those who aren’t well versed in the jargon and math. On the popular level it is conducted by bloggers, writers, financial press commentators and others. Some of these approach it from the basics up (building on their 4 year training), others approach it from the top down (taking the high level wonkish stuff and trying to translate it into easy to understand copy for the popular audience).
A similar dynamic happens with math and science but I think there’s an important difference. With math and science the popularizers are just translating the difficult stuff for a lay audience. With economics sometimes the simpler stuff yields new insights while the highly complicated stuff is just garbage in garbage out showboating.
Boonton,
Differential equations are used to describe dynamic situations. A differential equation in brief differs from say a simple quadratic algebraic equation in that the solution isn’t a value for a variable but a function (often depending on more than one variable) that satisfies the equation. Additional inputs (boundary conditions) would then further specify the answer. Does the wiki article help or is it too technical?
Non-linear dynamical systems sometimes exhibit chaos.
Differential equations near equlibrium can be approximated by “Taylor series” expansions, which is basically saying that they are solvable “close” to equilibria because they can be approximated by a linear set of equations. When things are out of equilibria this approximation doesn’t hold and in fact the heuristics and your intuitions developed in equilibrium conditions may be wrong. The Navier-Stokes equation noted in the Wiki article describes fluid flow. Yet, your intuitions of how fluid behave in laminar conditions may steer your wrong (literally if you’re in the water) when trying to swim in highly turbulent flow.
A Mathematician I knew once quipped that comparing linear to non-linear differential equations was not like comparing apples and oranges. More like apples and orangutangs.
Have you read any Mises? I thought this book Ludwig Von Mises: The Man and His Economics
(and most of the books in the ISI series) interesting. In part the book Black Swans seems more tune with Mises rejection of much casual mathematical analysis applied to economics.
Analogies from non-linear dynamics would indicate that the first step to take in a crises like today’s in which we seem to be far from equilibria would not be to apply gross large correctives, instead to do those things which return us first to a stable “laminar” situation, in which our linear predictive models might have more reliability and that large correctives even then cannot be applied because they would take us out of the linear regime.
This notion aligns somewhat with the final (speculative) ideas Hacket Fisher presented in The Great Wave which was that perhaps the most important thing a government might do economically (and socially) would be to try to stabilize and smooth disruptions in essential commodity pricing.
My understanding of chaos theory began with a simple analysis of the tumbling of one of the moons of Jupiter or Saturn. What I took away from the popular explanation was that rounding made the situation impossible to calculate. Each iteration of the standard equations required calculations involving things like the square root of 2, pi, e, and so on. Unlike what happens in low level math texts, these difficult numbers didn’t magically cancel each other out. Because the solution to one iteration became the input to the next one, even going out many decimal places is not sufficient. At some point if one is seeking to actually calculate what the system will do they have to work with real numbers and that would require rounding off and as soon as you do that you introduce errors that grow rapidly and unpredictabily…….
But you may want to check out http://www.google.com/search?hl=en&q=nonlinear+economics&aq=f&oq=&aqi= ….if you were thinking of going to grad school and wowing the econ professors with your application of non-linear math to the field…..sorry others have already had the idea. Please don’t use my poor understanding of it as evidence for the actualy state of the field….
Analogies from non-linear dynamics would indicate that the first step to take in a crises like today’s in which we seem to be far from equilibria would not be to apply gross large correctives, instead to do those things which return us first to a stable “laminar” situation, in which our linear predictive models might have more reliability and that large correctives even then cannot be applied because they would take us out of the linear regime.
I’m not exactly sure we are ‘far from equilibria’ as opposed to we have shifted to another equilibria. Equilibrium means basically a balance, it doesn’t mean you’ve arrived at a happy place. Since we can’t speak to each other at the same level of mathematical understanding, perhaps I can work with some rough analogies. I’m sure non-linear systems have plenty of applications in aircraft dynamics. Nonetheless, should an airplane suddenly find itself in an unhappy place, say a window blows out very high up, the pilot will apply a large corrective (i.e. descending quickly to a safe altitude).
In response to the last 10 months or so, a large number of actions have happened in response to the financial crises including a drastic easing of monetary policy, a huge drop in interest rates, emergancy bailouts for banks and financial firms and a stimulus package that…in proportion…is actually somewhat on the small size. While we can argue about the details of each of these things, the bulk of economics says without them we would have set off another Great Depression. While I appreciate the contribution Austrian economists have made in reminding us that intervention probably cannot microtarget the economy so such transitions are painless (the pilot may save the passengers by bringing the plane down quickly, but there’s no way to avoid spilling anyone’s drinks), I don’t think the case has been made for radically shifting our paradign.