Are you tough minded enough to be with us? Or are you against us?

Someone familiar with Russian totalitarianism once asked how George Orwell understood it so well without ever having experienced it. It was pointed out that Orwell had been to Eton. Paul Krugman asks how could the guardians of economic orthodoxy all suddenly come out in favour not just of fiscal austerity, which was wrong, but also monetary tightening.

It took bad thinking and bad policy by many players to get us into the state we’re in; rarely in the course of human events have so many worked so hard to do so much damage. But if I had to identify the players who really let us down the most, I think I’d point to European institutions that lent totally spurious intellectual credibility to the Pain Caucus. Specifically:

– The OECD, which a year ago demanded both fiscal austerity and a sharp rise in interest rates, because, well, because. Recently the OECD surveyed Britain, concluded that inflation is likely to decline, unemployment to rise, and that the UK should therefore … continue with fiscal austerity and raise rates. As a correspondent wrote, “What planet are they living on? What planet am I living on?”

– The ECB, which bought totally into the doctrine of expansionary austerity, despite overwhelming evidence that it was false, and proceeded to raise rates in the face of a deeply depressed economy — possibly the straw that breaks the euro’s back.

– The BIS, which called for tighter monetary policy just three months ago, to fight a nonexistent inflationary threat. Did I mention that inflation expectations, as measured by the difference between yields on ordinary and index bonds, have been plunging like a stone?

I haven’t developed a full theory of the sociology going on here. But these organizations should be doing some agonized soul-searching, asking how they got it so wrong while posing as high priests of economic expertise.

I don’t have a fully developed one either, but whenever I see this kind of groupthink, especially in economics, I think of years 8-10 at school. You know that time when the opinion of peer group is virtually irresistible. I recall there were codes about how high one wore one’s belt, and the length of your long pants. Too high or too short was death. Now it would have been possible to wear your pants so long or your belt so low as to lapse into parody, but that was pretty easy to judge. So short of that there was a kind of asymmetry. You could be tolerated (at least for your decisions on these things) or decidedly uncool – not really worthy of the normal considerations due to a human being.

And as one might imagine for a species that evolved on the African Savannah where the most important pronouns were ‘us’ and ‘them’ we’re very attuned to who’s in and who’s out. Indeed, as I read today:

[R]esearch has found that if you are wearing a wristband, you are likely to discriminate against someone wearing a different color wristband. But if you are tapping your foot in synch with music, you’re more likely to help a person who is also tapping in the same way.

In economics there’s the same kind of asymmetry – and it’s around all those things like fiscal responsibility, no-pain no gain all that stuff. Now it’s not as if those issues shouldn’t get their due.  Moreover it’s also true that there are some powerful forces pushing against them. Easing is more popular than tightening and that matters in a democracy.  And in normal times these kinds of notions are important. So there’s a role in the eco-system for tough minded no-pain-no-gainedness. But where one needs emergency expansion, as one did in Australia in 2007, or one is in or close to being in a liquidity trap as is much of the developed world, this asymmetry is deadly. It’s horrible to watch the grip on those who are supposed to be trained to be as rational as possible in these situations.

 

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133 Responses to Are you tough minded enough to be with us? Or are you against us?

  1. Paul Frijters says:

    the Europeans panicked. Government debt to GDP was about 85% for the Euro area and increasing fast. The feeling was there was only so much pump-priming the Europeans could do, and the failure to ignite fast growth started to be blamed on a continued banking crisis for which no end was in sight. I am not sure what Krugman had in mind as the alternative.

  2. Nicholas Gruen says:

    Well, it’s true that like most places they had both long and short term issues to deal with which as you know I’ve argued in favour of doing something about institutionally, but Britain managed on well over 100% debt to GDP through much of the 19th Century. If you don’t buy that argument, that still leaves monetary easing.

  3. derida derider says:

    “Government debt to GDP was about 85% for the Euro area and increasing fast. The feeling was there was only so much pump-priming the Europeans could do …” – Paul

    The debt to GDP projections are what is spooking the policymakers, and of course such projections are driven by expectations of falling GDP (and consequent rising deficits). Talk about a self-fulfilling prophecy – for most counties GDP is expected to fall only because of the debt problem, and the debt problem is only a problem because of falling GDP.

    Yes there is only so much pump-priming you can do, but that’s a very different proposition to saying either that we’re at those limits (most of Europe is not, and the bond market is telling us that the US is not remotely near it) or that un-priming the pump will make it better. The latter stance is the one Krugman is particularly objecting to.

  4. KB Keynes says:

    err Paul,

    what does austerity do?

    It reduces economic growth and increases deficit and debt. great plan.

    You cannot reduce debt or deficits by reducing growth.

    It is like the Great Depression never happened. Japan never happened.

    Fiscal consolidation is good policy and works just when Keynes says it does, when the economy is growing and what is more we have strong empirical evidence for this through both the IMF and BIS.

    We have NO evidence whatsoever austerity works when the economy is very weak and so are other economies

  5. Paul Frijters says:

    the GDP debt projections were scary yes, and so was the quite realistic prospect of having to bail out the major banks, which is what notched up the public debt in Ireland.

    I would say the EU is implementing a form of monetary easing. The ECB is buying up bonds from commercial banks and there is a good chance it wont get its money bank. More monetary easing is probably underway.

  6. KB Keynes says:

    No the Europeans panicked because they were told if they did not implement austerity measures bond yields would increase.

    Well they increased anyway so they got pain bit with no gain as Krugman said would happen and anyone else who has studied economics.

    No Ireland never did have to bail out the banks as they did.

    Still having a depression must have been worth it!

  7. Paul Frijters says:

    ps. It is a common trap to think of the European debt crisis as a euro crisis. The euro is doing fine. In fact, it is almost too strong and could with some devaluing.

  8. KB Keynes says:

    Paul floating currencies depreciate only fixed currencies devalue!

  9. Paul Frijters says:

    homer,

    I am just explaining the European position, not defending it. If i were in charge I would have pushed for the ECB to (temporarily) take over the major banks holding so much toxic debt. The way i would have done it was to make a deal with the big governments involved (German, French, etc.) that the ECB could buy the shares at a very low price, whereby those governments in turn would commit on not bailing out their banks independently.

  10. Paul Frijters says:

    Homer,

    nope. The word devaluation is not as constrained as you think. Definitions of it differ. As one website put it, it is simply “a decrease in the spot price of a currency. Often initiated by a government”.

  11. KB Keynes says:

    Paul, Firstly the Europeans only have to turn their heads north to know how successfully deal with toxic bank assets.

    Secondly whilst websites might Universities do not, at least good ones do not.

    A devaluation is a changed from one fixed price to another.

    in a floating exchange rate it is changing all the time. governments do little. Central banks do something, sometime successfully such as the Swiss and mostly not.

  12. KB Keynes says:

    err Pedro,

    the Irish quarterly GDP figures are notoriously volatile.

    All the growth happened because of net exports. Domestic Demand fell again.

    Not a good omen given present events

    GDP is still well below levels in 2008

    If that is good luck leave me well alone from it.

  13. Rex says:

    Love the title of this post. Very droll.

  14. conrad says:

    “but Britain managed on well over 100% debt to GDP through much of the 19th Century”

    The obvious problem with all of these comparisons to other times in history is that the population of most of Europe is either stagnant or already going into decline (and rapidly aging). Even solutions like Germany implemented like working to 70 are not going to help with that much, since it is hard to see people’s productivity being especially high at that end of their lives, let alone their level of risk taking in terms of setting up new businesses, creating new ideas etc. .

  15. KB Keynes says:

    Actually Conrad OECD research sine the late 90s has your assumption wrong.

    You should become a Manager. They have assumptions based on no evidence to bias them against older people working.

  16. conrad says:

    “Actually Conrad OECD research sine the late 90s has your assumption wrong.”

    Are you saying that the OECD suggests that people over 65 are likely to have high workforce participation rates, high rates of risk taking, and are most likely to do the most creative work of their lives? Good luck to their research.

    If you look at the psychological literature, then what you find is that for things like science, the peak age in terms of the best things you will do depends on your field, but for things like physics, it’s very young (i.e., most people do their best work before 40 — just look at Nobel Prize winners). Given this, I thought it was really no surprise that companies like Apple, Microsoft, Google, and Facebook (and almost every tech company can I think of), were all started by people who were well under 60. Although, perhaps my sample is biased.

  17. David Walker says:

    “As one might imagine for a species that evolved on the African Savannah where the most important pronouns were ‘us’ and ‘them’ …”

    Is it just me, or is this one of the great phrases? And Nick, did you invent it or borrow it?

  18. KB Keynes says:

    Conrad I am saying their productivity is as high as 25 year olds as the OECD found out a long time ago.

    The only reason why they do not have high participation rates is because Managers have ideas similar to you which have no evidence to back them up.

    gee even the Australian Government simce Bronyn Bishop was Minister has been saying this as well given what is happening to the age of the working population here.

  19. conrad says:

    “Conrad I am saying their productivity is as high as 25 year olds as the OECD found out a long time ago.The only reason why they do not have high participation rates is because Managers have ideas similar to you which have no evidence to back them up”

    What countries do people over 65 work in? If you look at Japan, for example, where people do, and where people are also exceptionally healthy thanks to eating good food all their lives, low rates of alcoholism etc., and where there are less cultural stereotypes than here (I believe), then what you find is that older people keep on working but in reduced roles.

    Look, I’m not against older people working at all (I’d like to see more of it), and I’ll believe that for some subset of jobs, the productivity of many older people is not much different to the normal population (probably higher than certain unreliable groups). However, it just isn’t reality to think that the proportion of people that are going to want to work full time at 70 or 75 is going to be the same as less than 65. This is for a number of reasons, some of which I agree are due to cultural stereoptypes, but some which are not, not least of which includes ill health and people not wanting to work once they have enough money to retire. It also isn’t reality to think that these people are going to take the same risks as other groups (which is confirmed by data in numerous domains), because, apart from biological reasons that affect risk taking, I doubt too many 70 year olds want to go broke taking those risks. I certainly wouldn’t.

    Back to the original question, my other real point was that if I have a debt of 150% of GDP, obviously if I think I will have twice the number of people in 30 years time to pay it off, it is going to be much easier to pay off than if I think I will have 20% less.

  20. Nicholas Gruen says:

    Shucks David – that was me.

  21. john walker says:

    Nicholas it is a nice bit of phrasing!

    I think ‘debt’ crisis is not quite the right phrasing; feel that Galbraith’s 1930s phrase, ‘Psychic wealth’ crisis/collapse, is a better metaphor for right now.

  22. Patrick says:

    I think Nick’s insight is completely correct. Like confirmation bias, it is a natural part of being human. Krugman illustrates the latter nicely at the link provided by Pedro.

    He of course illustrates the importance of group adhesion very strongly in every third or so post when he is excoriating the bad faith and immorality of whoever has latest disagreed with him.

    Those things make him a rather bad advocate of the economic point, because Krugman has a vendetta against austerity and would quite possibly rather read Ayn Rand than admit that austerity had or could ever work. This is because you can’t belong in his group unless you believe in bigger socialer-democrater government according to the Krugman version of Keynes.

  23. Nicholas Gruen says:

    Patrick,

    There’s no doubt that Krugman is strongly partisan, though he grew to this from a position of broad bi-partisanship before Bush II’s time in office. But you’re completely wrong to paint him as some crazy expansionist. He understands as well as anyone the importance of fiscal and monetary rectitude in normal circumstances. There’s simply no history of his being particularly lax on these matters in normal times. Indeed, part of his outrage is the uniquely irresponsible approach to conservatism by the American right – with their penchant for starving the beast and leaving the mess to the grown-ups to clean up after they’re gone.

  24. KB Keynes says:

    wot Nick said

    Krugman , unlike his critics, almost always uses evidence to back his analysis.
    This paper quite shows Keynes was right and the classicals bereft of clothes.

    People who criticizes Krugman for saying one thing about Reagan, Bush’s fiscal policies and his stance now merely show their ignorance of when one should use fiscal policy and when one doesn’t.

    In this Krugman is a classical Keynesian.

  25. Patrick says:

    Nick, I would really appreciate your thoughts on Tyler Cowen’s comments on Krugman on Ireland, as set out here (Pedro’s link above). Is Tyler just playing tall poppy , or is Krugman just falling victim to always being right?

    Your comments or those of any of the other numerous people here with more economics in a little finger than I will ever have are very welcome.

  26. Patrick says:

    Oops meant to repeat the link here!

  27. KB Keynes says:

    Patrick, a few things on Ireland,

    Quarterly GSDP figures are notoriously volatile so one should never make a firm statement on them.

    GDP ONLY rose because net exports rose. domestic demand actually fell again.
    given the main countries Ireland export to this scenario is not looking too god

    Even if there are NO revisions GDP is still much lower than in 2008.

    Only way to reduce debt is to introduce a depression which makes both debt and deficits higher. Way to go

  28. Nicholas Gruen says:

    Hi Patrick,

    I’ve always thought that Ireland would do better than most of its PIGS brethren because it’s so small and export oriented. So, with a larger traded sector to GDP its easier for it to deflate and it’s likely to pick up more relatively from each percentage point of cost reduction. (The even more trade exposed Hong Kong and Singapore seem to be able to manage quite substantial internal deflations with short sharp recessions to keep their alignment with the US$.)

    Also a bit like us, Ireland seem to be quite keen on the idea of themselves as an economic success and so prepared to suffer for it to get back there (as we might be prepared to if we were in trouble – though that’s pure speculation and highly dependent on the quality of leadership at the time – which I think we’d both agree hasn’t been too flash of late).

    Since Krugman’s in a public debate it might have been wiser for him to point out what I’ve pointed out above (if he agrees with it). I certainly never took him to be saying anything very different from what he says he meant – that austerity will work eventually.

    Presumably Krugman thinks that austerity was a bad idea for Ireland – that there were better ways out of the crisis for it. I don’t know enough to judge, but I also think that Cowen’s claims have a bit of ‘gotcha’ about them. He has been wise enough to add some weasel words of his own. “No one is calling Ireland a “success,” nor should we be committed to the view that Ireland can survive the coming storm of eurozone defaults.” So he seems to be having a bob each way himself.

  29. Patrick says:

    Thanks Nick, I did get the feeling that Tyler was being a bit ‘gotcha’. But it is a discredit to Krugman that, reading (ok skimming some of) the pieces cited I find it very very likely that he thought that Ireland would be rooted by Austerity and now doesn’t appear to want to say so. of course I am not the fairest judge either.

    Much appreciated!

  30. Nicholas Gruen says:

    In many ways Ireland is a sideshow because it’s driven by open economy effects. You’ll recall that Keynes’ General Theory was set out in a closed economy – for the very good reason that the world at the time was going through the great depression and the world is a closed economy. The fact that small countries get an easier way out is cold comfort given the impossibility of everyone taking the same route. It’s very scary what’s happening and it’s amazing how quickly the mood has changed from expansion in 2008 to contraction now. This is after there was quite good evidence that expansion worked!

    I didn’t always agree with them but I always thought the CIS was a good part of the intellectual ecosystem in Australia – and in many ways the best think tank we had (not saying a lot). But I’ve been very disappointed not so much at their disagreement with standard Keynesian economics, but with their sloganeering against it. They haven’t really engaged with it, and set out a coherent response. They’ve simply rehearsed a small government agenda against such measures. (Which doesn’t address the point that these were temporary expansions of government for very specific and – arguably – well thought out justifications – calling for equally well thought out positions if one was to object to them.)

    Come to think of it, can anyone point me to anything written by a right leaning think tank against expansion that isn’t just a rehearsed bunch of slogans?

  31. Patrick says:

    And Krugman responds, mainly by pointing out that Ireland is far from out of the woods.

    Also, as far as I can see he acknowledges that Ireland had to do austerity and do seem to be making it work, but insisting that they still could have let their banks fall.

    All said he seems to miss the point which is not that Ireland is a golden story yet but that he cited it as a disaster and yet it is doing better than the countries he recommended not follow its example.

  32. Nicholas Gruen says:

    I’m not sure I follow you. You say Ireland is ‘doing better than the countries he recommended not follow its example’ Which countries. One of Krugman’s examples is Iceland which he argues defaulted (largely because its problems were so bad it had no choice) and yet has done comparatively well – given how badly it was hit.

    And I think we all agree that Ireland shouldn’t have guaranteed its banks in the way that it did.

    And I’ll never understand why, when bailouts occur, the shareholders are not liquidated. With the resulting state acquired equity being sold off at some appropriate time. But there you go, it takes all sorts.

  33. Happytalk says:

    Economic science mandates fiscal austerity. Anyone who doesn’t understand that doesn’t understand economics. Nick and Paul. You’ve just got to learn the material. Its not acceptable to be in the industry and to maintain this sort of terminal ignorance.

  34. Dan says:

    Happytalk: that’s a howler saying that Nick Gruen doesn’t understand economics!

    My 2c is that austerity is the macroeconomic equivalent of self-disembowelment. Argentina (and perhaps Iceland?) showed that default actually ended up being a far better option.

    Stiglitz describes the idea that at some point an economy undergoing austerity measures will turn around as betting recovery on the Confidence Fairy. Frankly under most circumstances I’d be disinclined to invest in a country which is running down its infrastructure.

    (Or are you better at economics than Stiglitz too?)

    Look, economics is a very inexact field – as you can see from the range of highly qualified experts saying contradictory things – so if you have a claim to The Absolute Truth you’re an ideologue, not an economist (and thus should probably consider refraining from saying peep when the grown-ups are around).

  35. Dan says:

    Nick @31:

    can anyone point me to anything written by a right leaning think tank against expansion that isn’t just a rehearsed bunch of slogans?

    *tumbleweed, wolf howling in distance*

  36. Happytalk says:

    “Happytalk: that’s a howler saying that Nick Gruen doesn’t understand economics!”

    Its not a howler its a fact. He thinks that the capital destruction of deficits causes economic expansion. He believes in the pure voodoo of the IS-LM curves.

  37. Happytalk says:

    Dan you do know that Nick was part of this “stimulus plan” don’t you? Few peoples economic ignorance has been more publicly displayed. We are talking about people who actually think that Keynes knew what he was talking about.

    That is ignorance.

  38. Dan says:

    I was on the taskforce that audited the BER – I collaborated on the *Economic Stimulus* chapter, based on some work on multipliers done by an independent consultancy. Man, that was a good program that achieved its macro policy goals admirably. Not perfect, of course, but what the heck is?

  39. Happytalk says:

    No it was a program based on economic ignorance. The people involved were all so ignorant they did not know the difference between GDP and business revenues. No-one involved has ever come up with the tiniest evidence for the Keynesian multiplier, and when they think they have done so its always on the basis of confusing GDP with spending. Now you have to learn the material Dan. Or you will continue with your economic vandalism out of pure ignorance.

  40. Happytalk says:

    “….based on some work on multipliers done by an independent consultancy.”

    They used GDP didn’t they? Yes they did. Which meant they produced spurious false positives for deficit government spending leading to increased private spending. Which they would not have done were they not powerfully ignorant. The other problem is that were there shown to be a Keynesian multiplier (which has never been shown), it would be wholly useless information from a public policy standpoint. Since the reality is that we can hit any private sector business revenue target we aim at, by a combination of new cash injection and a reserve asset ratio.

  41. Dan says:

    Yes, what an awful recession we’re in… wait.

    The kicker is, even when people denigrate the good sense of the Australian fiscal stimulus, they often say the Chinese fiscal stimulus made it unnecessary. I don’t believe they’re correct, but ultimately it amounts to an acknowledgement that maintaining aggregate demand, even if it originated in China, was important in keeping the Australian economy afloat. Present company excepted, I’m sure.

    You’re an ideologue who would sooner have seen the Australian construction industry go south, with a whole lot of terrible flow-on effects, than to grant that Keynesianism sometimes provides useful policy prescriptions.

    Do you have anything useful to contribute, or just ahistorical sloganeering?

  42. Dan says:

    “powerfully ignorant” – I like that!

    “wholly useless information from a public policy standpoint” – uh, keeping people employed.

  43. Happytalk says:

    No Dan they didn’t keep people employed. They threw thousands of people out of work. You don’t have the data to show they increased employment, because they didn’t.

    Learn the material. Your ignorance is not helpful.

  44. Happytalk says:

    Deficit spending throws people out of work directly. Your statistics would show this clearly enough if you weren’t mixing up GDP growth with economic activity. Business spending with GDP. Employment growth with GDP growth.

    Here we see the role of ignorance where you can conflate a single metric with a range of matters that are not the same as this metric. You can only do this because you have no idea of the subject at hand.

  45. Dan says:

    Happytalk,

    Isn’t it interesting, then, how we had deficit spending, and far lower than predicted unemployment?

    Not to mention the interviews with the small contractors and subcontractors who worked on the BER program – who said things like, but for the BER, we’d have had to let staff go, or close up shop entirely?

    There’s no serious debate that fiscal multiplier effects do exist and make a difference on the ground.

    That you’re not convinced by Keynesianism is fine – but that you reckon that you know more than everyone else (when in fact you’ve made amply clear that you are being extremely selective about what you think might work and might not at the outset) isn’t “science” – a word you mentioned – at all.

    It appears you think that obfuscation and abstraction more important than what’s happening in the real world.

    Have a read of this: http://michael-hudson.com/1999/09/the-use-and-abuse-of-mathematical-economics-2/

    I don’t suppose I’m going to change your opinion, but if you considered the possibility that you don’t have a monopoly on The Answers – especially given that what you’re saying has SFA empirical support – that would be nice.

  46. Happytalk says:

    “Isn’t it interesting, then, how we had deficit spending, and far lower than predicted unemployment?”

    No you are just being willfully idiotic. All you have to do to get less unemployment than predicted, is to predict high unemployment. Clearly you were not the person to be auditing such a gargantuan failure and orgy of wealth destruction as the BER.

    Once again, they threw thousands of people out of work, and your statistics would show this if you weren’t totally ignorant of the subject. On the other hand your stats, cannot show that they created jobs. Because they didn’t.

  47. Nicholas Gruen says:

    Dan,

    Austerity will always work (to some – often considerable extent – for small open economies). Providing their austerity outstrips others they can grab a larger share of the world market. This is more painful if the small open economy can’t devalue its currency easily against its trading partners, but can still be effected by reducing costs and prices (competitive deflation).

    But austerity can be a pretty ugly story in a closed economy – which is what the world is – at least where there are powerful endemic forces of contraction. Presumably we could have liquidated our way out of the Great Depression. But how long would it have taken and at what cost.

    Throw in politics and you’ve got a really nasty situation. My understanding is that the Great Depression helped some nasty things get going in Germany.

  48. Dan says:

    Yeah. Treasury just picked an unemployment projection out of thin air. Just made it up! Those crazy kids.

    Of *course* unemployment went up. It was a global economist downturn for Chrissakes. It didn’t go up by all that much, and it would have gone up by a whole heap more but for deficit spending, which is a) what Stiglitz said and b) the experience of countries that weren’t in a position to undertake fiscal stimulus.

    This is pointless. But I commend the Hudson paper to you.

  49. Happytalk says:

    “Yeah. Treasury just picked an unemployment projection out of thin air. Just made it up! Those crazy kids.”

    Yes that is what they did Dan. Now attempt not to be a moron. Clearly you were not competent to audit this failure.

    The way you get “less unemployment than predicted” is very easy. You start off be predicting high unemployment. Now the fact of the matter is your statistics don’t back up the lie that the stimulus program created employment. Because it threw people out of work.

  50. Dan says:

    Nick,

    Thanks for your contribution. I’m not sure that we could have liquidated our way out of the Great Depression, or at least, it’s frighteningly unclear where the bottom might have been (which is I think what you’re saying).

    I also have misgivings about this “larger share of the world market” thing. How? Why? Is anyone investing in or going to Greece at the moment?

    In any event, it’s a race to the bottom, and that’s bad public and social policy.

  51. Dan says:

    [email protected] – you’re just flogging the same stuff over and over. I think you have some components missing. Can you provide any reputable economic analysis which backs up your extraordianry claim that government spending directly unemploys people?

    Re: Treasury “just making up” their unemployment projection – I like to give people the benefit of the doubt, but that’s an extraordinary claim, and until you have someone senior at Treasury saying, “Yeah, we just rolled dice over morning tea”, I’m going to treat it as a straight-up lie.

    Are you going to read the Hudson paper?

  52. JC says:

    Dan seriously. How do YOU imagine that the treasury made those predictions. Clearly there is one way and one way only to get lower than predicted unemployment. The way to do this is to predict high unemployment. How do you expect they made such a prediction?

  53. Dan says:

    I’m not sure what the modelling would have entailed, but it *definitely, definitely* wouldn’t have just been made up. Far too much potential for egg on face. No DepSec is going to put their reputation or credibility on the line like that.

    I can ask around, if you want me to get back to you.

  54. JC says:

    Not only can you not be sure of that. You ought to know for a fact that the “prediction” was simply made up. How else do you imagine that they would have done it? Making something up and calling it a “prediction” is in no way the same as an actual prediction. But it appears to have caught some people unawares.

  55. Dan says:

    Economic forecasting is not an exact science (we can certainly see that with the benefit of hindsight) but to say that Dr Henry stood on a stage and quoted a figure to Parliament, the Australian people and the world, that was *just made up* – come onnnn, that’s ridiculous. It fails the laugh test, and I don’t think either of you could or would say it to his face.

    I’ll see what I can dig up about how that forecast was constructed but I promise you, it’ll have been constructed, not guessed.

    JC: just because your line of work is all about guesswork and skulduggery doesn’t mean everyone else’s is :P

  56. Nicholas Gruen says:

    Dan @51, agreed. Greece is undergoing austerity and if it had its own currency, and if it had undergone the same amount of pain, it would probably be doing a fair bit better even now. Fixed exchange rates make life much harder. But when there’s a wider downturn, this kind of ‘competitive devaluation’ is kind of cheating – getting your activity up by capturing activity in other markets (and so exporting one’s unemployment.) But there’s no doubt it can be done – and in fact is the recipe behind a lot of export led development – which works OK for small countries and in a global environment of growth. Those things are disappearing and China ain’t no small country – yet it’s pursued this course steadfastly since the Asian Financial Crisis.

    Intriguingly just as its surpluses bullied the US and the Fed to run loose policy to avoid recession, so the Great Recession in 2008 bullied the Chineses into expanding their own economy lest they end up with sub-par growth. Let’s hope it happens again.

    We could use this opportunity to establish the kind of financial architecture which Keynes tried to establish at Bretton Woods. But the likelihood of that is not too flash. Sigh . . .

  57. JC says:

    Of course Ken Henry made it up. There was no other way to do it. There was no capacity to tell how the central banks were going to react to the panic. So there was nothing else to do but to make up some assumptions, and window dress it with a few activities on the computer.

    You would assume that commodity prices would come down and there would be less exports. And that is about the sum total of it. So you try and figure out how much less hiring there would be on the basis of less exports. But essentially there is no question that the assumptions are purely made up. But treasury could not be expected to make this all up in good faith. They clearly made it all up in such a way as to cover themselves. So that after they had created unemployment then they were able to say that they had created employment.

  58. KB Keynes says:

    Birdy,

    It is absurd in the extreme to say Nick doesn’t understand economics. He knows more about the subject than most who write comment here including you.
    Of course his bro might know a bit more though….

    It is equally absurd to say Treasury made their prediction up. Access economics said similar things. most models did as well.

    Dan, really interesting paper. also interesting to know Chile include all economic schools that didn’t incorporate their ‘thinking’.

  59. JC says:

    “It is equally absurd to say Treasury made their prediction up.”

    Of course they made it up. They had absolutely no other way to do it. Plus they made it up with the intention of not getting the prediction right. You are supposed to get predictions right. But their very intention was not to get the prediction right. If the figures had been made up by a number of entirely independent parties, then one might be able to make some sort of statistical case out of it. But the treasury’s task was to prove themselves wrong. Hardly a sound basis for a prediction. i

  60. KB Keynes says:

    yes every modeller made it up.

    It is unfortunate you really have no idea of how ignorant you are.

  61. Dan says:

    JC:

    Despite your continued casting of aspersions on the integrity and intellectual precision of an outstanding public servant, now we’re getting a little bit more sense out of you. Treasury *didn’t* pick their number out of the air, they forecast it using a methodology. No shit.

    (I wonder if now Unhappytalk will admit the bleeding obvious, now that his fellow traveler has).

    Yes, with economic modelling there are assumptions. We all knew that; that’s what the Hudson paper is about.

    Were the assumptions reasonable? Well, if independent sources such as Access Economics are arriving at a similar conclusion, the onus would be on the critic to show they weren’t.

    As for whether the stimulus supported jobs during the downturn: find me a reputable economist who says it didn’t.

  62. JC says:

    Of course they made it up Homer. They had absolutely no other way to come up with the figures. Can you tell me that they knew how all the central banks of our trading partners were going to behave? Of course not. So there was no basis for a prediction.

    Without a basis for their prediction they were always going to predict high unemployment. That way when they destroy jobs, they can say they’ve created jobs.

    What the mystery is, is how anyone can be taken in by this most prosaic of treasury behavior. What do you think they were going to do? Predict that unemployment would fall? And then go right ahead and run a massive stimulus program?

    No that is not what they were going to do. They were going to cover their ass by making a prediction that they intended from the start to be wrong about.

  63. JC says:

    “Were the assumptions reasonable? Well, if independent sources such as Access Economics are arriving at a similar conclusion, the onus would be on the critic to show they weren’t.”

    Who were access economics hired by? So why call them independent? Do you imagine that in such a small country as Australia, in such a tiny city as Canberra, the economists aren’t going to know eachother?

    They made it up, because there was no other way to do it.

  64. JC says:

    “As for whether the stimulus supported jobs during the downturn: find me a reputable economist who says it didn’t.”

    “reputable”?

    Dan if you understood economics, you would know that it was a science. And real science isn’t public service science. Real science is to do with evidence, logic, and reason. Its not about who the public service imagines, in its ignorance, is “reputable.” Your logic is so unsound you cannot see the circular reason in what you are saying.

    Employment is a business expense. Deficit spending takes spending away from business spending (ie business expenses) and puts that spending into “G”. It therefore boosts GDP and throws people out of work AT THE SAME TIME.

    This is what your statistics show you. Once the stimulus started, unemployment grew, as did GDP.

  65. Dan says:

    Re: JC’s claims:

    I have to say that’s just not how business is done in the Commonwealth Public Service. There’s a genuine dedication to Getting It Right.

    It may have been that, ex-stimulus, unemployment wouldn’t have reached Treasury’s 8.5%. That’s a very different thing from saying Treasury deliberately fudged the figures to deliver a preordained outcome, after which it would be pats on the back for all.

    When you look at the (il)logic, it’s completely ludicrous:
    -Treasury provided the government with a forecast that they knew was too high, followed by advice that cognoscenti like Happytalk knew would make things worse.
    -Government destroyed a bunch of jobs by spending billions of dollars on employing people, but wait!
    -They’d thought about how to justify this in advance, and were able to point to the earlier economic forecast (which coincidentally others had independently arrived at), as being evidence that they hadn’t destroyed jobs at all; rather they’d mitigated the effects of the GFC using textbook countercyclic economic policy.

    Diabolical! Who knew our elected representatives and senior officials were so bent on ruining us?

    *strokes white fluffy cat in underground bunker*

  66. JC says:

    “It may have been that, ex-stimulus, unemployment wouldn’t have reached Treasury’s 8.5%. ”

    Unemployment went up as the deficit spending took off. That is what we know. That is what economic science would have predicted. You cannot wish that away with bogus predictions, based on nothing at all, that the treasury knew with aforethought, that they had better get wrong. That is to say made up figures, that are not even predictions as such, cannot obscure the reality that unemployment went up with the stimulus and came down with it. As any rational analysis would expect it to.

  67. Dan says:

    “Dan if you understood economics, you would know that it was a science”

    There’s the problem right there. See, my economics is okay and getting better (the masters isn’t hurting), but orthodox economics as a “science” has thoroughly embarrassed and discredited itself over the past few years (and before that too).

    Only a small proportion of economists – many of them heterodox – saw the GFC coming, for Heaven’s sake! What sort of a science is that!? A mockery of a science, is what.

    Add to which many economists going out of their way, especially now, to point out that the map is not the territory.

  68. JC says:

    “Diabolical! Who knew our elected representatives and senior officials were so bent on ruining us?”

    Public servants are bent on stealing off taxpayers. Thats a fact. And so bad economics, like Keynesianism, is always promoted by public servants. That way when the ordinary bloke is hurting from banker and taxeater parasitism, the parasites can turn around and advocate yet more parasitism as the answer to the problem they have created.

  69. JC says:

    “but orthodox economics as a “science” has thoroughly embarrassed and discredited itself over the past few years (and before that too)….”

    Orthodox economics is Keynesian rubbish. So of course its not going to distinguish itself as a science. Its nonsense. Its the irrational and ignorant nonsense that you are relying on.

    The fact is that unemployment went up with the stimulus, as any rational analysis would expect it to.

  70. Dan says:

    [email protected] – This is twaddle. Disagree with Krugman, Stiglitz, et al. as much as you like, but to simply say that the economics profession knows better, anyone who says otherwise is irrational, and it sure is a good thing that you’re out here representing is not just patronising but wrong. What you’ve got there is an ideological position which you’re backing up with selective use of data. It’s not convincing me and it’s not going to convince anyone else.

    Plenty of economists supported the stimulus.

  71. Dan says:

    “Public servants are bent on stealing off taxpayers. Thats a fact.”

    That’s an assertion. I could say the same about Wall Street, with considerable recent historical evidence in favour of my case. Bailout followed by bonusmania as usual – disgusting.

  72. Dan says:

    “Orthodox economics is Keynesian rubbish”

    The *neoclassicists* are Keynesian!? Could have fooled me.

  73. Dan says:

    Okay, I’m done – need to go and work on a group presentation.

  74. JC says:

    Look Dan its not complicated. If you take spending away from business expenses, and re-route it to Government and Consumer spending, you will both increase GDP and unemployment AT THE SAME TIME. This could not be more clear. Because employment is a business expense. And GDP = C + (net)I + G + X – M.

    Its not about me disagreeing with anyone. Keynesianism is not economic science. Its ignorant nonsense. Thats the reality. If thats what you are getting your Masters in you are not learning anything real or useful.

  75. JC says:

    “The *neoclassicists* are Keynesian!? Could have fooled me.”

    Basically they are in this country. So yes you were fooled. Learn the material Dan. Then you won’t need to be making idiotic calls, like the claim that the BER was a success and not a wealth-destroying disaster.

  76. KB Keynes says:

    Yes JC without reading anything into BER only you could make such a silly statement.

    Treasury, Access etc had Asutralia facing the worst downturn since WW2. Hence Unemployment would rise. Sinclair Davidson, who would never make anything up said the recession had already arrived!!

    Unemployment rises with a lag. the Stimulus worked so Unemployment didn’t rise as much as most people thought.

    you are not taking spending away from business. People are. They stopped spending. The government moved in to supplement this so Aggregate Demand wouldn’t fall as much as it could have.

    If you had studied econmics you would realise this.

    your view of the world does not exist.
    It never has.

  77. JC says:

    “Treasury, Access etc had Asutralia facing the worst downturn since WW2.”

    Yes yes of course they did. On the basis of pure make-believe. But the reality is that unemployment went up with the stimulus, and down with the stimulus, as any rational analysis would have predicted.

  78. KB Keynes says:

    I said Unemployment rises with a lag. This means it also falls with a lag.
    This again is something you would learn if you ever attempt to study economics.

    Pure make belief. Domestic demand was tanking. GDP per capita fell for some time.

    you really should examine some statistics before making such a goose of yourself.

  79. JC says:

    No unemployment doesn’t rise with a lag. You have no evidence for this, since you are basing economic activity on the metric of GDP. But GDP is not a good measure of economic activity. Whereas business revenues in total is obviously an excellent measure of economic activity, and you do not have the data to contend that unemployment rises and falls with much of a lag in relation to business revenues.

  80. JC says:

    Aggregate demand is not increased by increasing government expenditure. You don’t have the data to make this obviously fallacious claim. The claim is made by the simple expedient of conflating GDP with aggregate demand. But GDP is NOT aggregate demand. So it is irrational to substitute aggregate demand with GDP and not come to an awareness that this is what you are doing.

  81. Dan says:

    ABS make no bones about describing unemployment as a lagging indicator.

    My masters is in political economy.

  82. JC says:

    Look Dan. Can you get your act together? I just explained why you don’t have the data to make such a claim. The ABS doesn’t have the data. I’ve just explained that to you why that is.

    GDP is NOT aggregate demand. Did you get it this time? Now if do not have the capacity to understand that, it doesn’t matter if you get a Masters, a Phd, and a Nobel’s. You still won’t understand economics.

    Now admit to me, that you don’t know that unemployment is a lagging indicator, because you don’t have the figures for total business revenues.

  83. KB Keynes says:

    JC do yourself a favour and look at STATISTICS before making a baseless claim.

    employment and unemployment rise and fall with economic activity.

    This isn’t hard to do. the Stats from the ABS are free. you can put the data on a spreadsheet.

    GDP is not a good metric of economic activity?

  84. JC says:

    No Homer you don’t have the data for that. You don’t. You are substituting GDP for economic activity.

    Look here is a list of things that the GDP metric is not:

    THE GDP METRIC IS NOT:

    1. Economic activity.

    2. Aggregate Demand

    3. Total spending.

    GDP was none of these yesterday, its not these now, and its not going to be any of these tomorrow. Its not a valid proxy for any of them either.

    Now stop lying and pretending you have the data to make those claims. You don’t have the data for aggregate demand because the ABS does not compile the data for all spending in the economy and neither does anyone else.

  85. JC says:

    “GDP is not a good metric of economic activity?”

    Its a ghastly metric. Its terrible metric. Its a particularly bad metric for quarterly comparisons. Total business revenues is a much closer metric for economic activity. And if they compiled GDR, we would see that unemployment barely lagged at all. But they are too hopeless to compile Gross Domestic Revenue, and this is because the people who ought to be compiling GDR are fundamentally ignorant of economics.

  86. KB Keynes says:

    really.

    It is a lagging indicator.

    businesses don’t automatically get rid of workers or put more on. They wait until they can see what is happening as we observe in hours working.

    businesses then either reduce their workforce or enlarge them.
    If you worked in a company you would know that.

  87. Dehne Taylor says:

    Could make quite a lot of comments here about this thread.

    But will make just two; the first being that Treasury does not make up forecasts (and if you sincerely believe this to be the case, then I suggest you seek some sort of psychiatric help and, in the meantime, refrain from making any decisions in your day jobs that impact on your fellow human beings).

    Second comment is: why do so many of you weak ba$%^ds continue to hide behind pseudonyms while slagging off all and sundry? Try outing yourselves – I dare you to!

  88. Yobbo says:

    Second comment is: why do so many of you weak ba$%^ds continue to hide behind pseudonyms while slagging off all and sundry? Try outing yourselves – I dare you to!

    Welcome to the internet, dipshit.

  89. Dan says:

    Dehne: I’ll take that bet. My name’s Dan Nahum, I’m in my late 20s, I have a BSc Psych (Hons) 2004 and, worked at the ABS for five years, now working in government accountability and policy evaluation in another department. I’m also doing a masters in political economy, and I play drums in metal bands.

    JC’s set a high bar for himself. Essentially he’s said that the correlation between unemployment and business revenue is strongly negative (-0.8? -0.7?) and furthermore that correlation has no lag, ie. it only gets weaker if you offset the time periods of the variables. Big call! I don’t reckon he can back it up.

  90. JC says:

    “But will make just two; the first being that Treasury does not make up forecasts ….”

    What? Not only did they make it up but they made it a failed forecast ON PURPOSE. They had no basis to make a prediction, since they had no basis upon which to predict the behavior of foreign central banks and governments. So they had to had to make it up. The logic of the problem they faced, was such that they had to pluck unemployment figures from the air.

  91. JC says:

    “JC’s set a high bar for himself. Essentially he’s said that the correlation between unemployment and business revenue is strongly negative (-0.8? -0.7?) ”

    Yes in the short term the correlation between total business revenues and employment will be strongly positive with a very short lag. But we aren’t going to find out this, because the dummies aren’t going to compile total business revenues. They will resist meaningful statistics with all the deviousness that they can muster.

    We know that this will be the case, simply by our understanding of business income statements.

  92. Dan says:

    So there’s no statistical agency, anywhere in the world, that can take you from Unsubstantiated Assertion to Statistical Miracle? Convenient, that.

    Note that another corollary of what you’ve said is that state planning = infinitely high unemployment. I think this might be news to Comrade Stalin et al.

  93. Dan says:

    (What’s this “in the short term” rider? What sort of a bulletproof scientific model is that, if it only works some of the time?)

  94. JC says:

    “really.

    It is a lagging indicator.”

    businesses don’t automatically get rid of workers or put more on. They wait until they can see what is happening as we observe in hours working.”

    Yes you have a point. But its a purely logical point you are making here Homer. You have to recognise that its not backed up by empirical data, since everything is being based around the GDP metric, which is not economic activity, not total spending, not business revenues, nor any reasonable proxy for any of these.

    So while the logic of what you say would make us assume that there will be a slight lag, the understanding that people have of unemployment as a lagging indicator is completely misunderstood as to the length of the alleged lag. Because this big lag assumption is based around the incorrect use of the GDP metric.

  95. JC says:

    “So there’s no statistical agency, anywhere in the world, that can take you from Unsubstantiated Assertion to Statistical Miracle? Convenient, that.”

    No thats no problem. When they do the work they get the results. No problem there. I’ll find a study using Gross Domestic Revenue. You will see that you get radically different results, when you use a reasonable proxy for economic activity rather than an irrational one.

  96. JC says:

    Here’s an example of GDR in use. I would have thought that people would start using GDR all the time after that. But the taxeaters simply aren’t up to it.

    http://mises.org/journals/scholar/Johnsson2.pdf

  97. Dan says:

    The paper seemed like it started at the end for me, but thanks anyway.

    I’m not saying this facetiously, but if you really think this is important, useful stuff, you should petition the ABS to produce these figures.

    Alternatively, construct them yourself – may be a good commercial proposition.

  98. JC says:

    My experience with trying to petition people with this sort of thing is that you get blocked. I would have been blocked twice already but for it being the long weekend.

  99. Dehne Taylor says:

    Thanks, Dan. Good to see that you don’t have a problem putting your name to your views.

    Hey Yobbo – once saw a funny youtube by Yobbo slagging of air hostesses – if that was you, it wasn’t hard to estimate your age. If that was you I can now say I’ve been hanging around the internet a lot longer than you Dipshit!

    JC – Unfortunately for the rubbish you sprout, amongst the many tasks I have performed is forecasting for Treasury. So look forward to meeting with you some day to discuss how you arrived at your considered views.
    Also notice that you haven’t identified yourself – perhaps you’re a bit shy?

  100. Pedro says:

    NG at 57, the Great Depression is not exactly an argument against liquidationism given the horrible result of the policy stumbles that actually happened, but I understand the best think that happened was the big monetary easing that lead to a recovery that then tanked with the NIRA.

  101. Dan says:

    Yobbo’s handle reminds me of part of the prologue of *The Big Lebowski*:

    “Now, Dude – that’s a name no one would self-apply where I come from…”

  102. JC says:

    “JC – Unfortunately for the rubbish you sprout, amongst the many tasks I have performed is forecasting for Treasury.”

    This is just public sector trash-talk. Look. Listen to me. It doesn’t matter who your Momma is. Doesn’t matter what you’ve done in the past. What your qualifications are. Or any other appeals to authority.

    The reality is that they had no way of knowing how exports would be affected. So they had no basis for a prediction of how unemployment would go. So there was no statistical significance of a figure, plucked purely from the air. Least of all a prediction from a know-nothing like Ken Henry who by his own admission has fallen for the global warming fraud, and is in any case a Keynesian.

    Now during the 1997 crisis in our region our exports were likewise affected, the AUD fell to just above 50c against the USD, and nothing at all happened to employment. We road it out just fine. So stop your silly taxeater trash-talk, because its an anti-reason attempt to win by recourse to the argument from authority.

    There is no doubt that they plucked it out of the air. Nor was it a proper good-faith prediction. Nor can it be used to make the point Dan was attempting to make. It is a figure without any statistical significance whatsoever. And it is reminiscent of the global warming fraud where taxeaters are constantly claiming that the world is heating up “faster than predicted” even if we are cooling.

  103. Yobbo says:

    I guess it’s no surprise that a public servant’s first words on discovering blogdom are “I know where you some of you live, and am in process of stalking the rest of you”.

  104. Dan says:

    [email protected] – Oh gosh. AGW denier? Science-wise, that’s a knock-down case. I though you showed a pretty shaky grasp on the scientific method when we were talking economics, but you’ve really just shown your hand.

    No, I do not want to discuss it.

  105. Dehne Taylor says:

    Love this stuff – truth be known I only only respond to this site after a few bevies!

    Love to hear from those who are incapable of making a difference on public policy but think ‘blogdom’ (whatever that is Yobbo!) makes them important.

    By the way (or, Yobbo, should I use your ‘blogdom’s cutesy BTW) it’s not hard to trace identities on the net. I was just fishing (or should I use the official ‘blogdom’ word ‘trolling’, Yobbo?) to see how many of you had balls. Naturally you didn’t disappoint.

    By the way, (BTW for Yobbo) I don’t work in the public sector.

  106. JC says:

    “No, I do not want to discuss it.”

    This is because you are an idiot. There is nothing in science you have gotten right so far. You have fallen for the Keynesian multiplier, and now by your own admission the global warming fraud. There is a one to one correlation between those who have fallen for both. Its just uncanny. The same sought of lack of capacity for analysis sets the person up as a sucker for both.

  107. Dan says:

    I thought we had moved beyond ad homs. I’ll refrain from sinking to your level.

    If I’m an idiot, then so are 99.8% of climate scientists. Your training in climate science is…?

  108. JC says:

    You are lying about the 99.8$ and once again you are back to the argument from authority. You are never going to learn economics that way. You have to learn how to analyse the logic of things. If you cannot do that you will still be duped by the Keynesian multiplier and the global warming fraud ten years from now.

  109. JC says:

    You can see the way that people tend to fall for bad theory across subjects. Notice how all of you tend to judge things by recourse to “reputable” authority and by trying to stick your finger in the air and see what the other taxeaters think. There is such a thing as logic and reason. There is you know.

    The only point made against me on this thread with any validity was when Homer talked about the logic of why employment ought to be a lagging indicator. Which of course forced me to nuance what I was saying. Well that was a good point from Homer, but this sort of thing is pretty foreign to the taxeater mind.

  110. Dan says:

    Hottest ten years on record (from records going back to 1880):

    2005, 2010, 1998, 2003, 2002, 2006, 2009, 2007, 2004, 2001. (2008 is number 11).

    And to think you have the temerity and intellectual dishonesty to claim the world is cooling.

    Not to mention the tipping points associated with the melting of the Siberian Tundra and the stupendous methane emissions associated with that.

    If you’re going to start getting personal, does your daughter believe that climate change is a hoax; that people who believe in it are idiots? It’ll affect her more than it’ll affect you.

    To the extent that there is any reason to your thought processes, it is a myopic, selfish, and amoral sort of short-termism.

    I think you should read: http://www.oup.com/us/catalog/general/subject/HistoryOther/EnvironmentalHistory/?view=usa&ci=9780195379440

  111. KB Keynes says:

    Pedro,

    In the great Depression the Fed increased the monetary base but m3 tanked.

    Way to go. don’t let facts get in the way of a theory.

    1997 was completely different to the GFC.

    the RBA allowed the $A to depreciate and that was that.

    in 2008 even Sinclair Davidson was forecasting a recession indeed he said it was a certainty after the September GDP figures.
    moreover Monetary policy wasn’t impaired at all. Banks here could borrow overseas even with a government guarantee until well after the GFC passed.

    the typical interest rate sectors rise pretty much together. This time it was only the First home buyers sector that rose.

    JC still cannot give any evidence Treasury made it up nor how virtual every other forecaster did too.

  112. Dan says:

    I made 99.8% up. A quick Google later: turns out it varies between surveys, from 90% to 100%, with the meta-analysis showing 97-98%.

  113. Dan says:

    JC: I don’t know if you consider yourself a libertarian, but in any event: *every other libertarian I know* believes in AGW. You’re on the wrong side of the debate here mate, factually and morally.

  114. Dehne Taylor says:

    JC said:

    The only point made against me on this thread with any validity was when Homer talked about the logic of why employment ought to be a lagging indicator. Which of course forced me to nuance what I was saying.

    Yes you’re correct JC everyone is an idiot – especially those fools in Treasury who go around making up numbers – in particular, they argue for days and days about the best number that would upset JC. I know, because I was there (but please don’t tell anyone).

    It’s good to see you nuanced what you were saying to admit “the logic of why employment ought to be a lagging indicator”. I don’t know how to break this to you gently, but …………………… try ……. reality.

  115. Yobbo says:

    By the way (or, Yobbo, should I use your ‘blogdom’s cutesy BTW) it’s not hard to trace identities on the net.

    Obviously you are finding it pretty hard, despite the fact that none of our identities are secret. Yobbo is not a pseudonym, it’s a brand. Everyone here except you knows my real name.

  116. Dehne Taylor says:

    Yobbo is not a pseudonym, it’s a brand.

    Is this some sort of existentialism Gen X crap? I am not a number, I am a brand!
    Nice to talk to you, brand.

  117. Yobbo says:

    You know, like “Sting” or “Bono”.

  118. Dehne Taylor says:

    Bozo’s music (or Bono as he is commonly called) is the epitome of Gen X music, so don’t try and shift that genre onto other generations. Didn’t you attempt to dance to that funereal/dirge style at ECU?

  119. JC says:

    “Hottest ten years on record (from records going back to 1880):

    2005, 2010, 1998, 2003, 2002, 2006, 2009, 2007, 2004, 2001. (2008 is number 11).”

    Thats all nonsense. The 2000,s were a very cold decade. We are talking about rigged figures. Its never okay to use rigged datasets. Any dataset that doesn’t show the 1930’s to be the hottest decade is a rigged dataset. Here is an unrigged dataset to see how the picture looks. But here we have to assume that the relative hotness of the 1930’s is understated, because of the urban heat island effect and because of the criminal unwillingness to cut out inappropriate measuring stations.

    http://jennifermarohasy.com//wp-content/uploads/2009/06/hammer-graph-5-us-temps.jpg

  120. JC says:

    “Yes you’re correct JC everyone is an idiot – especially those fools in Treasury who go around making up numbers”

    There is no question that Treasury is full of idiots. The evidence for this is overwhelming and not something that one could ever run dry of. These were people who thought that Australia didn’t need manufacturing, and whose understanding of comparative advantage was so inverted, they thought we were losing our manufacturing thanks to comparative advantage. These are people who claimed in a recent report that the Labor party had shown great budgetary discipline. As discussed there is no doubt they plucked unemployment figures clean out of the air, and you fell for it. As discussed they were headed up by a loony-toon who has fallen for both the Keynesian multiplier and the global warming fraud. You would expect them to fall for any bad science.

  121. jc says:

    Ummm that isn’t me.. The regular JC.

  122. jc says:

    Judging the language used it seems like bird has stolen my id and is furiously disproving agw and einstein.

    This seems a new low bird, even for you.

    I know you wanna be me, but it just isn’t gunn a happen unless you switch bodies.

  123. Dan says:

    Real jc: I should have known @76: “Learn the material”, heh.

    I thought you seemed more abusive and irrational this time, heh. Good to know it wasn’t actually you. My sincerest apologies for striking *you* below the belt on account of a dysfunctional sock puppet.

    I won’t bother posting on this thread any more, it’s covered in troll spit.

  124. KB Keynes says:

    Greece provides more evidence that Austerity works

  125. Pedro says:

    Homer, Greece hasn’t had any austerity, it’s only had talking about austerity. If you think that the Greece problem is evidence for increased govt spending then you’ve clearly hit a new low in pig-headed polemics.

  126. JC says:

    Giuseppe, Giuseppe, Giuseppe. What have I done to deserve this disrespect?

    “This seems a new low bird, even for you.”

    Giuseppe Alphonse Cambria. Do you really imagine you have the copywrite on the initials “JC”? Good Lord man. It would seem that Julius Ceasar has pre-empted your alleged claim. Jimmy Carter. John Cleese. And other notables I would have thought.

    What is unethical is you letting Dan get away and bury the new understanding that GDP is being used to justify bad theory. Thats where the ethical deficit lies. I can call myself any name, but people will recognise me immediately. Whereas someone over at the ABC is adopting my full name and working hard to brand me as an anti-semite.

  127. JC says:

    I want to put forward some support for Homer, who has been abused constantly over the last few years, even though his citation of concrete facts, and his understanding of Keynesian theory, is always reliable.

    Because he is an outsider, he is abused and swarmed by people who jealously guard their insider status. He is pilloried for merely explaining clearly the Keynesian viewpoint …. (although he tends to think of the Keynesian viewpoint as manifestly correct).

    Homer also has noted the seemingly miraculous economic turnaround in the German economy from 1933-1936. He has his concrete facts straight on the matter, better than me. I have a different interpretation of course. But there is no doubt about his reliability as to concrete facts. And yet I’ve seen him abused and swarmed for the last five years. They use Homers expertise on the Germany in the early 30’s to claim that he has fascist leanings. I’ve never once seen anything to justify such aspersions. But the point I’m trying to make is the extremist resistance Australian economists have to learning anything new.

    “Pedro,

    In the great Depression the Fed increased the monetary base but m3 tanked.”

    Once again Homer is entirely reliable as to concrete facts. Gold started moving into Fort Knox from all corners of the world, and yet monetary conditions stayed harsh. I have differences with Homer over interpretation of these concrete facts of course. But after five years, yesterday was the first time I was able to explain to him, to even a slight degree, why I disagree with his interpretation of the apparent short-run increases to GDP that deficit spending often has.

    Thats a very effective iron curtain of stupid, that has prevented me from explaining basic differences in interpretation to the very reliable Homer.

  128. KB Keynes says:

    Pedro,

    right again as usual.

    You cannot reduce debt or deficits by bringing on a depression.

    you probably don’t know but Austerity types believe that these policies increase growth not decrease them because of the confidence fairy.
    They simply do not have any evidence to back these claims up.

  129. jtfsoon says:

    This thread is a hoot what with the identity theft and the camaraderie between Homer and Bird. Blair’s law at work again.

    My navel gazing comment couldn’t send it off tangent any further.

    As you were.

  130. KB Keynes says:

    Really Soony.

    Just where do I share with my comrade?

    you have Bolted yourselg again

  131. Pedro says:

    Homer, let’s use the man’s own words:

    “To be fair, Ireland is doing a bit better than feared; it’s achieving a significant amount of “internal devaluation” via deflation, which is leading investors to mark up the possibility that it might actually avoid default. I should also make clear that given the commitment to the euro, Ireland had to engage in some kind of austerity program, although it wouldn’t have been as draconian if not for the decision to socialize all the of the banks’ debt.

    But the idea that Irish experience is vindicating the demands for austerity, because real income, which bottomed out 18.4% below the previous peak, is now only 15.7% below that peak.”

    So austerity is bad because, Ireland had to do it anyway, and yes things are better than expected, but … look over there, a keynesian multiplier.

    Bird, Homer wasn’t swarmed over the Tooze claims. He just made the mistake of assuming nobody would read the thing and then said some stuff that was downright awful (as compared to contrary and pig-headed).

  132. KB Keynes says:

    Pedro,
    do you understand what the word I means? I can tell you definitely it DOESN’T mean Bird.

    Do you now say Greece has actually put in place Austerity measures ( which naturally reduced economic growth and made their deficit and debt figures worse.)

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