The Unbroken Window

Third,we have provided substantial evidence that state and local governments have used part of ARRA aid in a way not explicitly intended by Congress and the President … The paper is here. You should appreciate their honesty in their conclusion.

Read Full Post »

If anyone wants a real slice of Keynes at his best, you can do no better than read his Economic Consequences of the Peace. Here is an electronic version from Liberty Fund. Written in 1919, it was incredibly prescient about how much damage the post-war “solutions” for Europe was going to do. I’ve been thinking [...]

Read Full Post »

It is well known in economics that it does not matter how governments choose to finance their spending. Suppose the government budget is $3.6 trillion. Whether they raise $3.6 trillion in taxes today and borrow none, or raise $2.3 trillion in taxes today and borrow $1.3 trillion or whether they raise no taxes today and [...]

Read Full Post »

Not likely. First, a brief summary of the idea. Right now the Chinese Central Bank buys and sells US Dollars with the aim of keeping the Chinese RMB, the Yuan, pegged at a rate of 6.56RMB to the dollar. In other words, each yuan is worth 15.2 cents. I’d remind readers that the Chinese simply [...]

Read Full Post »

Earlier this week I said something that might have surprised some readers. The context had to do with orthodox Keynesian policy prescriptions. The elevator version of Keynesianism is this: run government deficits during recessions and run surpluses during boom times. If we ignore tax policy, this would mean government spending should increase during recessions and [...]

Read Full Post »

Later down in the comments on Russ’s last post, John Papola (the director of Fear the Boom and Bust) wrote brilliantly: If keynesians REALLY believed their framework, they would be the most outspoken enemies of everything which makes prices and wages more rigid. They don’t. I’ve never seen it. The degree of wage stickiness is [...]

Read Full Post »

In a response to this Russ Roberts post, Tim Worstall argues: “My eleven year-old understands that spending on rebuilding means less spending on something else.” Now introduce savings into your 11 year old’s model. Either that people will do less saving because they are rebuilding or that they will draw down their savings to rebuild. [...]

Read Full Post »

It is easy, even for the best economists, to get stuck thinking about only one side of a market, or on only one margin of adjustment, when discussing policy. For example, opponents of the minimum wage seem to unilaterally focus on the possibility that raising wages will cause less employment. This is undoubtedly the case. [...]

Read Full Post »

If you subscribe to the New (and old) Keynesian orthodoxy, you would tend to consider people that increase their demand for money balances (i.e. “hoarders”) to be somewhat akin to economic villains. The simplest version of the story is this: if people irrationally stop spending money on consumption goods and services (things that are produced) [...]

Read Full Post »

The headline to this article is irritating: Census estimates show 1 in 4 counties is “dying.” This is ridiculous. We belabor the point here that counties and corporations and states and countries and churches, etc. are not living, breathing entities. And the continual anthropormophizing of such structures is not just a harmless verbal tendency. By [...]

Read Full Post »