Monday Highlights

Good morning.

  1. Duh. It doesn’t matter, carbon taxes are an indulgence offering and a way to keep the poor down … the effect on climate is not relevant to its fans.
  2. Looking at spin and Mr Holder.
  3. For y’all who think that government isn’t good at anything, a counterexample.
  4. Ct-thinking about Cthulhu.
  5. From China, here and here.
  6. Bayes theorem and sitting on the can vacillating for half a year.
  7. Death and the blogger.
  8. Yankee independence is apparently not the way to go reading the tea leaves from the state of the onion speech.
  9. No. We don’t say that. We just tiredly remark that “not an Emperor” is a feature not a bug.
  10. Stereotyping.
  11. “Greater” … nope. Greater than one? Probably not.
  12. Drones. Not unrelated.
  13. After Mr Chu.
  14. On guns. Grist for the mill.
  15. Good idea or not?

9 Responses to Monday Highlights

  1. Greater” … nope. Greater than one? Probably not.

    The multiplier is a derivative which means at different points in the cycle it will be different amounts.

    You don’t need it to be greater than one, you just need it to be positive to work.

  2. Boonton,
    If it’s not a multiplier why do you call it a multiplier?

  3. Good point, the multiplier does have to be above 1 to be stimulative. Reading thru it, they say they did not back out tax increases in their calculation which would dampen the multiplier. Also odd is they seemed to use a ‘news’ metric to predict increases in military spending, which seems a highly specialized way to look at multiplier effects.

  4. Did a more technical comment at the bottom of the MR discussion thread.

  5. Boonton,
    I suspect you implicitly assume the multiplier has to be above one. I see know reason why in the medium/long term government borrowing, spending, taxing is not a damper not a stimulus, i.e., there is not a prior reason why the multiplier is less than one.

    Normally we increase value when productive work is done. No work is done in this sort of spending, so wealth does not increase. Why this is a multiplier not a divisor is unclear.

  6. I suspect you implicitly assume the multiplier has to be above one.

    I don’t, in fact it’s almost certainly variable. If it was always greater than 1 you could achieve an infinite GDP since every round of stimulus would just drive GDP higher and higher. At some point it has to fall below 1 and even turn negative.

    Normally we increase value when productive work is done. No work is done in this sort of spending, so wealth does not increase. Why this is a multiplier not a divisor is unclear.

    you’re mixing up a lot of different concepts here.

    1. ‘Productive work’- errr no. Let’s not try to divide the economy into ‘productive’ and ‘nonproductive’ work unless you have a rigerous definition. Some people think spending 40 hours a week designing Facebook games for a company that has no revenue and has been operating at a loss for a year is non-productive. Maybe but in terms of GDP if the programmer is collecting payment it is productive. If goods or services are exchanged for payment, that counts as part of GDP hence shall be deemed ‘productive’.

    2. Absent everything else, a ‘shock’ that increases spending therefore has to increase GDP. For example, a small town’s only factory suddenly wins a surprise order from the Pentagon for some specialized bolts….maybe the normal supplier…a company in Japan or china…has suddenly had to close due to quality problems. Absent everything else GDP in that little zone has gone up as the factory is now exchanging bolts for payment.

    3. The question is what happens to overall GDP? If nothing else happens the multiplier is 1. The factory’s $5M contract increases GDP by $5M. $5M/$5M = 1. If GDP only increases $3M then it’s less than 1, 0.6. But it’s not sufficient to toss up your hands and say ‘ha the multiplier is only 60%!’

    The fact is the factory got $5M of increased GDP. Where is the missing 40%? One possible answer might be that the Japanese factory owner took a lavish vacation to Vegas every year and dropped $2M there. Since his factory is shuttered he skips it this year so the factory’s $5M gain is offset by Vegas Casino’s $2M loss. Or maybe consumers suspect sooner or later there will be a tax increase and as a result set aside $2M today to help pay for that rather than spending it. OK that may work too. But you can’t just toss up your hands and say the multiplier is less than 1. The spending has to go somewhere. Like the pool analogy….if you spend a day with the hose trying to fill the pool and the water level stays the same you can’t just toss up your hands and say adding water to the pool doesn’t increase the water line. Something is happening. Maybe the pool has a leak, maybe someone is stealing the water when you’re not looking, maybe a UFO is shooting a microwave beam at your pool evaporating the water as fast as it is entering….or maybe the rules of physics are changing and water molecules are packing denser in your pool…..something is happening.

    4. I suspect the problem is measuring. If the factory expands $2M before the contract was awarded and $3M when it is but your ‘eye’ only looks at the payments you’ll see just $3M but miss the $2M before. Or even worse you’ll write off the $2M before as ‘expansion that was happening anyway’ rather than expansion that was contingent on the contract. For example, one of their methods is to look at ‘military spending shocks’ by following news reports. But business news is probably publishing stories about new contracts *after* those who win or think they will win already know about it. So if they see a multiplier of, say, 0.70, that becomes a floor rather than ceiling. How much multiplier did they miss because they should have looked a bit before the newsstory broke? That would explain the diverse results from various studies with multipliers sometimes in excess of 2, often above 1 but sometimes below.

  7. No. We don’t say that. We just tiredly remark that “not an Emperor” is a feature not a bug.

    We? Whose this we? The blog post you cited was about a specific person, Mike Savage. Are you saying Savage was being misquoted? Are you saying that Savage speaks for you and some larger subset of people who can be called Republicans or Conservatives or whatnot?

    A while ago you had some link about why it wasn’t right to call Nazis ‘mindless’. I asked you to speculate what the right wing media would say if Obama had actually given that ‘preferred speech’. You claimed it would either be ignored or they would say “Obama gets it”. I think here we see what would happen in real life. Right wing media works not by selling facts but by selling an emotion of righteous indignation. If that can’t be supplied by facts, the facts will be distorted as needed just as a shaddy bar will water down the drinks to keep the bottom line up.

  8. Boonton,
    Well, there is the royal “we” … it’s not that. I’d have to say it’ the “editorial we” … but really my intention was “we reasonable conservatives” of which I don’t consider Savage a member of that tribe. Do you? I suspect Darrel does not either … why he cares about his opinion I won’t hazard a guess.

    The point is (unlike your emotional thing) most conservatives (I linked on the following day) don’t actually do what you said we do.

  9. So Mr. Savage is not a member of the tribe, yet an attack aimed specifically at Mr. Savage promted ‘we’ to issue a defense?

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