I'm seriously worried about my Economic perspective

[fairsheet]

Just curious, Fair...what's your preferred model?

Since I'm talking "positive examples", I'll suggest the model practiced by Canada over the last decade or so.

 

[degsme]

LOL!!!! For some reason I'm a glutton for punishment I took the hardest courses in Univ. figuring it was "good for me"... so I had less than a 4.0 GPA. My son did the opposite and graduated Summa.... Hmm who made the right choice... Von Mises and Hayek were the hardest since on almost every page I wanted to scream at them.

 

[degsme]

What's wrong Degs?



You aren't impressed by the "I know you are, but what am I" argument?

I'm frankly depressed by it. The dinners I've had with a circle of French folks hired and moved to the USA by Microsoft are better informed and way more nuanced than almost any of the folks posting here. That foreigners are better informed than citizens is depressing.

 

[trapdoor]

Which is precisely why I'm so frustrated. I cannot find someone on the conservative side that can actually logically address Obama's economic policies or point out the weaknesses in the economic theory I currently hold as operational. And that means that there is a Push-pull that is missing. A push-pull that refines and hones the accuracy of the models.

Well, Degs, you tend to reject entire schools of thought that don't agree with you, and you continuously espouse the notion that we can tax our way into prosperity. There are numerous economic models that might be different from the one you favor -- and still correct -- but if they're offered you reject them as you did above with Mises, Hayek, et alia. There's really no point in making a sound, well-reasoned, cogent, argument with a brick wall.

 

[degsme]

I reject them only after pointing out their inconsistencies with observable and verifiable facts. I'm an empiricist. And this mantra of "espousing we can tax our way into prosperity" may be a good soundbite but it is fundamentally dishonest. It is true that the way our tax system is currently structured, we reward NON-reinvestment in the growth of the economy. And that needs to change. But that's very different than what you are claiming is being said.

And there really are not "numerous economic models that are different from the one I favor" that have anything meaningful in the way of a predictive track record of success. Again, I'm an empiricist. Show me a model that predicts things that are observable and verifiable and you'll get me interested. So far, no one has done that. NO ONE. And that includes pretty high powered economics theorists. The Freshwater school has largely been discredited by the last 10 years (even Greenspan admits this). Hayek and von Mises has holes you could drive the 1st Armored through.

show me a model that has a track record that accommodates the "inconvenient data points" that I have rejected. Then you might have a point.

 

[Woolleybugger]

Here is the fundamental problem with labeling economics as liberal or conservative. Once you politicize it you no longer can claim it is an objective science or discipline. It is like saying there is a liberal math course and a conservative math course. Conservatives went in search of economists to support their ideology sometimes to the chagrin of the economist. I really doubt if Hayek or Milton F were died in the wool conservatives politically, they just happened to support some ideas that political operatives thought would give credibility to their desired agendas. Once the conservative movement had latched on to a few patron saints of economics, they doubled down and then turned them into Gods. Once Hayek, Mizes and Freidman became Gods, there was no room for any other God was there? What is missing from conservatism is pragmatism. They used to be the pragmatic party once.

 

[trapdoor]

I reject them only after pointing out their inconsistencies with observable and verifiable facts. I'm an empiricist. And this mantra of "espousing we can tax our way into prosperity" may be a good soundbite but it is fundamentally dishonest. It is true that the way our tax system is currently structured, we reward NON-reinvestment in the growth of the economy. And that needs to change. But that's very different than what you are claiming is being said.

For the most point, there are no facts with which to be imperical. The theories of Mises and Hayek have never been tried, so we don't know if they'd work or not. What our tax system currently does is penalizes success. Think about it: When we don't want people to smoke, we raise the taxes on tobacco; When we don't want them to drink, we raise the taxes on alcohol. We want them to be successful, but the current desire of the president and his supporters is to increase the taxes on success.

And there really are not "numerous economic models that are different from the one I favor" that have anything meaningful in the way of a predictive track record of success.

Something that hasn't been tried lacks a track record -- but that doesn't mean it won't work. A track record is by no means predictive, in any case, as the stock market constantly reminds us.

 

[trapdoor]

Here is the fundamental problem with labeling economics as liberal or conservative. Once you politicize it you no longer can claim it is an objective science or discipline. It is like saying there is a liberal math course and a conservative math course. Conservatives went in search of economists to support their ideology sometimes to the chagrin of the economist. I really doubt if Hayek or Milton F were died in the wool conservatives politically, they just happened to support some ideas that political operatives thought would give credibility to their desired agendas. Once the conservative movement had latched on to a few patron saints of economics, they doubled down and then turned them into Gods. Once Hayek, Mizes and Freidman became Gods, there was no room for any other God was there? What is missing from conservatism is pragmatism. They used to be the pragmatic party once.

I couldn't agree more. I know for a fact that John Maynard Keynes would not have supported any number of government programs that have been labeled as "Keynesian." Liberals have merely used him as a support for the interventionist, wealth-redistribution agenda they have favored since roughly the turn of the 20th century. Once liberals latched on to Keynes, they couldn't study apostates from him, could they? And they consider themselves the pragmatic party today.

 

[fairsheet]

Here is the fundamental problem with labeling economics as liberal or conservative. Once you politicize it you no longer can claim it is an objective science or discipline. It is like saying there is a liberal math course and a conservative math course. Conservatives went in search of economists to support their ideology sometimes to the chagrin of the economist. I really doubt if Hayek or Milton F were died in the wool conservatives politically, they just happened to support some ideas that political operatives thought would give credibility to their desired agendas. Once the conservative movement had latched on to a few patron saints of economics, they doubled down and then turned them into Gods. Once Hayek, Mizes and Freidman became Gods, there was no room for any other God was there? What is missing from conservatism is pragmatism. They used to be the pragmatic party once.

Yup, Reagan cut taxes to the degree he and his thought was appropriate. When the data suggested that it was time to raise taxes, he raised taxes, as did his GOPian successor. Of course we may not agree with the extent to which he cut and raised them, but at least he cut AND raised them, in reaction to actual imperical data and conditions. That's what traditional conservatism did. It was driven by reason rather than ideology.

Subsequently though, the ideologues took over the GOP with the "feeling" that lower taxes are ALWAYS better under ALL circumstances. The data doesn't support their feelings, but that doesn't deter them. Where conservatism used to have disdain for ideologues (like liberals), they've now doubled down on an ideology.

Funny thing is....even as current "conservative" ideology is convinced that lower taxes are better in all cases, current liberal ideology absolutely does NOT suggest the opposite - that higher taxes are always better.

 

[jammer]

You would find some way to disagree with it if I did, so I choose not to bite at your bait.

In other words you can't so why bother? Typical winger "I'm rubber, you're glue...." attitude.

 

[degsme]

Oh that's nonsense that there are no facts with which to be empirical. The Von Mises and Hayek models have been tried. mostly in smaller scales and often not intentionally - but the data is there for them. And they do not work.

Nor does our tax system "penalize success" - Both behavioural econ research and basic logic demonstrates that. (and frankly having experienced it I can tell you personally it isn't so).

What you miss in the issue of "sin taxes" is that there is differentiable behavior that trades off benefit vs. cost - whereas in the case of earning more, there is no negative tradeoff. All that there is, is a slightly attenuated ADDITIONAL benefit. The result is two very different outcomes.

For example... if I tell you that

1. • If you drive your car between 3pm-6pm you will pay an additional $10/mo in annual registration,
   • any month you don't drive during those hours you get to keep that $10
   you will logically react and time shift your behavior to reduce that tax

1. If I give you the choice between
   • Earning $50,000 and paying $10k in taxes (net takehome of $40k with a base tax rate of 20% )
     OR
   • Earning $70,000 and paying $17k in taxes (net takehome of $53k for a Base tax rate of 20% below $50k and 33% above $50k)
     you have an $13,000 INCENTIVE to work to earn that $70k.

And to pretend that our system does not offer this ADDITIONAL incentive to succeed is simply to pretend that something is true that is factually false. Unless you raise the tax rate ABOVE 100%, there simply NEVER IS A PENALTY FOR SUCCESS.

But what we EMPIRICALLY KNOW about taxes - what the DATA TELLS US is that when US individual taxes fall below tax rates of higher benefit nations - what happens is a DISINVESTMENT from the US economy. People take their profits in the USA and spend them in nicer places.


As for not having a track record - sure there is one. You can build a computer model based on any system you want, and predict outcomes with it from known inputs. And there are different economies around the world that you can use as inputs and look at the outputs. And that HAS BEEN DONE with both Hayek and Von Mises..... AND THEY BOTH FAIL TO CORRECTLY PREDICT ECONOMIC OUTCOMES

 

[Woolleybugger]

I think Keynesian economics is also misdiagnosed. You cannot be a supply sider and a Keynesian at the same time. What everyone keeps forgetting about econ is that it is more behavioral than anything else once you get past the math. The math just attempts to model human behavior and depends upon some controllable variables like money supply, interest rates and unemployment. The true defining modifier is the human being. No one can model a human being yet.

 

[Woolleybugger]

Exactly. I cannot believe I am saying that Reagan was pragmatic but lets face it, compared to this generation of madmen he was most definitely pragmatic. The defining moment for the GOP was Papa Bush and his pledge which he broke because he was pragmatic too. You cannot break one of the commandments can you?

 

[Woolleybugger]

actually, isn't the main complaint about the Austrians is that they eschew data completely? They think data is immaterial to their argument. That is why Hayek was basically thrown aside a long time ago along with the rest of the Austrians. it was all intuition, supposition, philosophy, logic and so on. Data? Who needs data when we have logic! But what if your logic depends upon a false notion? Impossible!

 

[fairsheet]

I think Keynesian economics is also misdiagnosed. You cannot be a supply sider and a Keynesian at the same time. What everyone keeps forgetting about econ is that it is more behavioral than anything else once you get past the math. The math just attempts to model human behavior and depends upon some controllable variables like money supply, interest rates and unemployment. The true defining modifier is the human being. No one can model a human being yet.

On a somewhat parallel note, those who're continuing to advocate for supply side, even as the evidence thus far suggests it's a failed approach, (almost) always revert to pretty much the same
redoubt. They tell us that the only reason it's always failed to this point, is because it has yet to be tried properly and/or sufficiently.

But as a student of political economy, I would suggest that the FACT that it's not been tried to the extent they feel it should be tried, is proof that it's failed. We can posit theories to our heart's content, but they won't work if "the people" prove themselves unwilling to engage them.

 

[degsme]

Welll and that's why "Austrians" keep making the claim that their system has "never been tried" - basically because their system pretends that you should not measure what happens to the economy when you put their philosophy in practice. Except that when you point to systems where the lack of governmental intervention in the market have actually taken place and the resulting failures (the Somalias, the Russias, the Nigerias ) they claim that somehow the running off the tracks of these economies into "might makes right" is somehow a failure to implement Austrian economics rather than a direct failure of those economics.

Also they conveniently leave out this part of The Road to Serfdom

There is no reason why, in a society which has reached the general level of wealth ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision​

​

​

 

[degsme]

I couldn't agree more. I know for a fact that John Maynard Keynes would not have supported any number of government programs that have been labeled as "Keynesian."

Depends on which of these programs you "call" Keynesian. and given that Keynes is not alive and you never knew him - you don't know that "for a fact" in anyway.


Your comment about "wealth-redistribution" demonstrates a profound lack of understanding of how economies work. The Fundamental Function of an Economy Is Wealth Redistribution That you don't seem to get this basically eviscerates pretty much everything else you conclude about economics

 

[degsme]

Well its more than that. The PREDICTIONS that Supply Siders have made based on various policies, have not only been off within the margin of variance - ie not precise but in the right general direction - They have been COMPLETELY and CATASTROPHICALLY OFF.

 

[degsme]

I disagree about Reagan's pragmatism. Under his watch the fiscal policy of "Starve the Beast" was conceived. The main reason for running up the deficits was so that the public could be acclimatized to dramatically lower tax rates (making it unfeasible politically to raise them for a very long time in any significant manner) while leaving the heavy political lifting of cutting services to some future administration faced with an enormous debt load and large deficits.

Given that this policy recognized the political heavy lift of addressing most of the programs that Reagan and his supply siders wanted to cut, I guess you could argue he was "pragmatic" for not taking those issues head on. But frankly that's not what I describe as pragmatic governance. That to me is the most cynical manipulation of long term economics driven by ideology. An ideology that says society will be better off without the government spending, but that as with the "dictatorship of the proletariat" under communism - we cannot get to this ideologically idealized state without a period of transition.

Its cynical. It is - as Hayek wrongly accused central planning of - profoundly undemocratic since it does not openly put the social programs to the test of a democratic vote. (one of the other places Hayek went off the rails was his equation of $1 == 1 Vote as being "democracy" a notion that Franklin and other "Founding Fathers" explicitly rejected and yet somehow did not descend into totalitarianism but instead MOVED SLOWLY AWAY from it - the totalitarianism of slavery that is)

 

[trapdoor]

Oh that's nonsense that there are no facts with which to be empirical. The Von Mises and Hayek models have been tried. mostly in smaller scales and often not intentionally - but the data is there for them. And they do not work.

Show an example -- surely that wouldn't be beyond you. The simple fact is that the theories have not been tried, as a matter of policy, ever, so the statement "they do not work" is unproven.

Nor does our tax system "penalize success" - Both behavioural econ research and basic logic demonstrates that. (and frankly having experienced it I can tell you personally it isn't so).

I'm not certain I said it penalized success, here in this thread in any case. I merely pointed out that we as a society have a tradition of raising taxes on things we want people to have less of, such as alcohol or tobacco. What does that say about what we want people to be when we raise taxes on their financial success?



For example... if I tell you that

[*]

• If you drive your car between 3pm-6pm you will pay an additional $10/mo in annual registration,
• any month you don't drive during those hours you get to keep that $10

you will logically react and time shift your behavior to reduce that tax

Or I may say, "I don't have any alternative if I want to report to work on time, and it's only ten bucks. (I used to work the 3-11 shift as a truckstop cook).

1. If I give you the choice between
   • Earning $50,000 and paying $10k in taxes (net takehome of $40k with a base tax rate of 20% )
     OR
   • Earning $70,000 and paying $17k in taxes (net takehome of $53k for a Base tax rate of 20% below $50k and 33% above $50k)
     you have an $13,000 INCENTIVE to work to earn that $70k.

1. • 
     
     But the incentive is reduced compared to me making the $70,000 and not giving away $13,000 of it.
     
     
     
     
     

     As for not having a track record - sure there is one. You can build a computer model based on any system you want, and predict outcomes with it from known inputs. And there are different economies around the world that you can use as inputs and look at the outputs. And that HAS BEEN DONE with both Hayek and Von Mises..... AND THEY BOTH FAIL TO CORRECTLY PREDICT ECONOMIC OUTCOMES

     A computer model is simply a model, Degs. It displays whatever the programmer desires, in the same way a clay model reflects the desires of a sculpture. As such, it is not the real world. In the real world those alternate theories you reject out of hand have not been tried, and you are misrepresenting yourself when you claim to have empirical knowledge of how they would work.