What to think about Quantitative Easing (QE2, etc)

I disagree with this analysis by Marshall Auerbach crossposted at naked capitalism.  I posted this reply:


I’m not sure I understand QE, but it seems like many of my favorite progressive economists such as Paul Krugman and Brad DeLong favor it (though might have favored expansionary fiscal policy even more), and would in fact have favored far more aggressive QE. OTOH, it seems most who oppose it are deficit hawks, inflation hawks, and goldbugs, the very people who care far more about inflation or the remote possibility of inflation rather than the 20% underemployment we now suffer from most. On tribal basis, I go with the progressives, and I think left populists are mostly confused
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I think it was well intended but largely ineffective. My solution to the Great Recession is huge new public investment in the development of renewable energy and transportation based on it. The macroeconomic part of that would be even more deficit in the short term. But the cure is not simply in the numbers, but in the DIRECTION. We’ve been leaving the ultimate direction of our economy to the wall street casino for the last 30 years, and it has done no good for most, only for the super rich, and to the long term destruction of everyone. A people’s government needs to set the direction, which ought to be as I just described, toward a renewable energy based sustainable society. Unfortunately, the people are woefully misinformed about peak everything and global warming, the true natures of our present reality. And the government mostly operates in coin operated mode nowadays, which works to make the rich ever richer, everything else be damned.

What are we, anyway

Very interesting discussion at Naked Capitalism:

http://www.nakedcapitalism.com/2011/04/satyajit-das-dead-hand-of-economics.html

And, within that discussion, a great quotation from the book How Darwin's Theory Can Change the Way We Think About Our Lives by David Sloan Wilson:

Instead of minimalistic assumptions such as the utility maximization of rational choice theory or the blank slate of behaviorism and social constructivism, we need to discover a complex psychological architecture that evolved by genetic evolution and that causes small groups to self-organize into coordinated units. Alexis de Tocqueville got it right in 1835 when he wrote, “The village or township is the only association that is so perfectly natural that…it seems to constitute itself,” but modern science has yet to even remotely take his conjecture seriously. Conscious intentional thought is just the tip of an iceberg. The rest of the iceberg operates beneath conscious awareness and must be discovered scientifically, like vision, despite the fact that it takes place within us every moment of the day. Even more strangely, it takes place without us, in our social intercourse in addition to our neuronal interactions. The idea that we play a role in group-level mental processes without any conscious awareness will take some getting used to, especially against the background of individualism, which has dominated the intellectual landscape for the last half century.
As if these layers of ignorance aren’t enough, there is another layer that involves culture rather than genes. Our genetic architecture enables us to create, transmit, and select behavior in roughly the same way that the immune system creates, transmits, and selects antibodies. Part of this process is conscious and intentional. To some extent, we are aware of our problems and actively seek solutions, as I just showed in the previous chapter. To a larger extent, however, the creation, retention, and selection of behaviors take place beneath conscious awareness. We learn the ways of our culture at a very young age, in the same spongelike fashion in which we learn language. As adults we adopt new behaviors and mannerisms unconsciously at least as much as consciously. Many of our current behaviors exist not because someone decided they were useful but because they outsurvived competing behaviors. Human life consists of many inadvertent social experiments. Even when we try to steer the course of events, our efforts interact with those of others in unpredictable ways that might as well have been random. A few social experiments hang together, while the others crumble into the dust.

Also mentioned in the discussion are the great debates (on video!) between Chomsky and Foucault.  I believe the poster is correct when he says that the Structuralist critique is invaluable, but Foucault is too pessimistic.  Chomsky, another structuralist, has a more nuanced and optimistic view that does not destroy all hope of finding our way out of the wilderness.

It can be seen Part 1 here and Part 2 here.


Not entirely related, but just so I don't forget, here is a 5 part critique of Kuhn published in NYTimes.  Apparently it was written by the Photography editor, and spends a lot of time on entertaining personal sillyness, but nevertheless looks worth reading.


http://opinionator.blogs.nytimes.com/tag/incommensurability/

Media falls silent as more Fukushima details emerge

Great post at EconoSpeak:

http://econospeak.blogspot.com/2011/04/fukushima-in-last-9-days.html

Libertarianism in one Lesson

Professor Quiggin nicely deconstructs an extemely popular right wing tract, "Economics in One Lesson," by Henry Hazlitt.


In the ensuing discusson, this comment was made by Ikonoclast (one of my favorite commenters) echoing Jack Strocchi (likewise):

Libertarianism is about legitimising self-interest, aggrandising all wealth and power to specific advantaged individuals whilst allowing all others to be exploited without hindrance. Libertarianism might deny this but it is the inherent truth in the attempt to minimise the legitimacy of democratic government. In practice libertarianism equals oligarchy

the central unscientific claim of Economics

Peter Dorman really nails it at EconoSpeak:

http://econospeak.blogspot.com/2011/04/annals-of-unscientific-economics-is.html

"is consistent with" is a phrase which really means "we must accept this hypothesis or accept some degree of Type 2 error" and does nothing about the Type 1 error which most science deals with.

This is only the beginning, however.  To this unsound methodology, you need to add:

1.  Obviously wrong assumptions and re-definitions of common words.
2.  Special servile relationship with wealth and power for which typical economics serves as propaganda tool, delivering this underlying but usually covert message: accept only the crumbs that fall from the great tables of the great system, since your taking more than that would destroy the greater good which includes you.  The special relationship arises because people of wealth and power take great interest in the dogmas that advance their privileges, and have ways to fund them, thus letting alternative visions such as Marxism or Minskyism or even Keynesianism wither on the vine.
3.  Physics envy.

(1) generally follows (2), and (3) is the magic glue that makes it all seem scientific and respectible.  This is not a new idea, Keynes said essentially the same thing in General Theory.

Interesting Happenings at Bretton Woods

Steve Clement's The Washington Note is one of the nicer political blogs to read.  The political arc of Steve's life is similar to mine, starting as a Nixon republican and heading further left than "serious" Democrats nowadays.

He gives good coverage of INET's Bretton Woods Forum this year.  There are lots of interesting videos there to watch, including Soros, and Lord Adair Turner, who Steve praises as the Lord Keynes of our time.
Turner discusses what an economy should achieve, and that it must be concerned with quality of life and full employment.

Actually much of the conference can be watched online from INET's site.

The high price of nukes compared with efficiency and renewables

One of the most excellent websites, Climate Progress, reports today about a nonsense filled pro-nuke Op-Ed.

The claim was made that it would take half the area of Japan to replace nuclear with wind power.  It turns out that claim is wrong in many ways, starting with the erroneous change from millions to billions.  So it's wrong by a factor of something like 1000x.

And that's counting the total area over which wind is captured.  Most of an actual wind farm is empty land space, and farming and ranching can continue as before.  The actual land required for siting the turbines is a mere 19,000 acres, or 30 square miles.  And the cost would be lower than a comparable construction of new nuclear plants.

A fascinating thing about nuclear power is the negative learning curve in cost efficiency.  Most technologies show a positive learning curve, in which the more some product is produced the more cheaply it can be produced.  But very curiously, nuclear has gone in the opposite direction since the very beginning.  And regardless of what you have heard about the nuclear experience in France, it is actually similar to what has gone elsewhere if you look at the numbers: their costs have gone up too.  And operations costs continue to rise.  Why is this so?  Read the linked article.  It's clear that humanity is not ready for nuclear power.  As someone said recently, we should study nuclear power for another 12,000 years or so.