## Friday, September 30, 2011

### Homeboy Down

Ron Paul and some more sensible people are exercised over the assassination of terrorist and American Citizen Anwar al-Awlaki.

“Al-Awlaki was born here, he’s an American citizen, he was never tried or charged for any crimes,” Paul said today after a speech in Manchester, New Hampshire, CNN reports. “To start assassinating American citizens without charges - we should think very seriously about this.”

I'm not too sympathetic to this argument, even though al-Awalaki was a homeboy from my home town. The fact is, you don't charge and try a bank robber when you catch him in the act and he resists arrest. Yes, it would be nice if there was a more formal process for charging these guys, but its not like he was about to show up at the embassy to defend himself in court.

### Bullshit

Krugman identifies some:

The good news: After spending a year and a half talking about deficits, deficits, deficits when we should have been talking about jobs, job, jobs we’re finally back to discussing the right issue.

The bad news: Republicans, aided and abetted by many conservative policy intellectuals, are fixated on a view about what’s blocking job creation that fits their prejudices and serves the interests of their wealthy backers, but bears no relationship to reality.

Listen to just about any speech by a Republican presidential hopeful, and you’ll hear assertions that the Obama administration is responsible for weak job growth. How so? The answer, repeated again and again, is that businesses are afraid to expand and create jobs because they fear costly regulations and higher taxes. Nor are politicians the only people saying this. Conservative economists repeat the claim in op-ed articles, and Federal Reserve officials repeat it to justify their opposition to even modest efforts to aid the economy.

The first thing you need to know, then, is that there’s no evidence supporting this claim and a lot of evidence showing that it’s false.

Krugman has details, and this final comment:

But good politics can be very bad policy. The truth is that we’re in this mess because we had too little regulation, not too much. And now one of our two major parties is determined to double down on the mistakes that caused the disaster.

## Thursday, September 29, 2011

### Cosmic Solution

Cosmic inflation is purported to solve many ills that beset big bang cosmology.

C. Fred Bergsten, an assistant Treasury secretary from 1977 to 1981, and director of the Peterson Institute for International Economics, says its Earthly namesake can have similar benificent effects down here below.

BY virtually ignoring trade, President Obama and Congressional Republicans are missing a major opportunity to create jobs. The United States runs an annual trade deficit of about $600 billion, or 4 percent of our entire economy. Eliminating that imbalance would create three million to four million jobs, according to Commerce Department estimates, at no cost to the budget. ... First, the United States must, in effect, weaken the dollar by 10 to 20 percent. This step alone would produce one million to three million jobs. It’s been done before: In 1971, President Richard M. Nixon ended the dollar’s convertibility in gold, and in 1985, Treasury Secretary James A. Baker III reached an agreement with foreign countries to devalue the dollar relative to the yen and the Deutsche mark. Paul Krugman has argued similarly. Obviously, such a strategy is hardly costless. It's a tax on savers, and will immediately raise our borrowing costs as well as the prices of everything we buy from abroad - like oil and Ipad parts. It would also be another stick in the eye for Europe, which is already reeling. China, the principal target, would no doubt be livid. There is also the fact that the resulting trade wars would help feed an incipient World depression. On the other hand, we cannot afford to keep running a huge trade deficit. It's a great employment program for China, but it's killing us. ## Tuesday, September 27, 2011 ### Will The Fat Lady Sing? Big Republican money is getting scared, and they would like to play one more big card: New Jersey Governor Chris Christie. So argues TPMs Benjy Sarlin. There’s a lot of buzz around a Chris Christie run this week, thanks mostly to an all-out effort by big money Republicans to recruit him for a run. Sarlin has names and addresses. For Republican elites skeptical of Mitt Romney or worried his Obamacare baggage is too much to overcome, Christie holds a natural appeal. He’s proudly anti-union and, in private with top donors at least, bluntly demands cuts to Social Security, Medicare, and Medicaid to fix the deficit. ## Sunday, September 25, 2011 ### Stranger and Stranger I am pretty sure that Steven Landsburg has a very high IQ. This does not prevent him from expressing opinions that seem utterly lacking in ordinary judgement. I am sometimes reminded of the opinions of my favorite string theorist - no, not that one - my other favorite (fictional) string theorist, Sheldon Cooper. This disquisition on Keynesian economics is an utter classic. I keep thinking it's intended as satire, but it really doesn't seem to be. I have a very naive question for the Keynesian economists: Why aren’t you thrilled with the current state of the economy? Here’s why I ask: According to what I take to be an orthodox Keynesian view, we are now in a liquidity trap. (My question does not apply to Keynesians, new or old, who believe otherwise.) That means that people want to hold lots and lots of money instead of spending it. Cool! We can provide money at almost zero cost. So it should be easy to make people very happy. What’s the problem? Of course, people are working less, but that makes perfectly good sense in a world where people prefer to consume less. Why spend all day on an assembly line churning out widgets that people prefer not to buy? A quick and obvious answer is that the people who are choosing to accumulate money and the people who are out of work are not the same people. In other words, to put this in slightly more technical language, you can’t address this question in a so-called “representative agent model” — a model that abstracts from interpersonal differences. Still: The theory, as I understand it, is that vast numbers of people are choosing to hold vast amounts of money. Since money can be produced costlessly, this ought to count as a very good thing — which should offset a lot of very bad things, no? OK, at this point I think I might have actually tuned into one of those crazy homeless guys on the street corner. Landsburg's failure to understand that market fear, mass unemployment, idle factories and widespread economic misery is a bad thing is peculiar to the point of being spectacular. Why can't he understand that point? It seems to be that he doesn't find the Keynesian utility functions, or lack thereof, satisfactory. There is more, but I will only include a fragment: After all, when people hold money, they do it for a reason. That reason will vary from one new strain of new Keynesianism to another: Either money contributes directly to people’s utility, or it’s a prerequisite for transacting business. If we’re in a liquidity trap — that is, if people are hoarding money — there’s no problem transacting business, so (as far as I can see) they must be holding money for utility’s sake. In other words, if they’re hoarding, it’s because they like to hoard. Which brings me back to my question: Why, as the stock of money continues to grow, shouldn’t the joy of hoarding eventually compensate for the annoyance of not having food on the table? I think autism spectrum may be more heavily represented in economics than physics. ### Explaining Neutrino Speeding Lubos has a long article outlining one approach to explaining neutrino speeds that doesn't quite collapse standard physics. I won't attempt to summarize, except to say that it involves slow photons, Sieberg, Witten, and non-commutative geometry, and that Lubos notes that it can't quite fit all the experimental data - I think he means the Supernova 1987A data. Clearly, Lubos is still a skeptic about the result, but he and other people are already thinking about the meaning of the experiment turning out to be solid. ## Saturday, September 24, 2011 ### Krugman Barbeques Cowen I’ve noted that Tyler Cowen and others seem, mysteriously, to believe that any uptick in Irish GDP somehow refutes Keynesian analysis; I’ve been seeing a lot of similar stuff about the Baltic nations, whose experience is supposed to prove that austerity works. Some graphs of the Baltic "success" follow. The more crucial point is that those who seem to think that such limited successes somehow challenge Keynesian economics are utterly mistaken - such limited successes are exactly what Keynes predicted, and the justification for more direct action. Again, it’s a stunning indictment of the austerian, anti-Keynesian position that those who hold it have to claim Ireland and Latvia as success stories, and have to invent an imaginary version of Keynesian economics to claim that it has failed. ## Friday, September 23, 2011 ### Alternate Scenario Ten years ago the United States was attacked by terrorists who were predominantly Saudi, in an attack planned and financed by Saudis. George Bush decided to protect his family's business partners and put the family of the mastermind - including one of the attack's alleged financiers - on a jet and sent them back to Saudi. Insurer's are now suing the Saudi government over its role. U.S. investigators, it said, unearthed a list of al-Qaida's financial backers known as the "Golden Chain." "When Osama bin Laden formed al-Quida," the complaint said, "many of these financiers became champions of bin Laden's new mission to wage jihad globally." "[T]he September 11th Attacks were a direct, intended, and foreseeable product of" al-Qaida's "global jihad," it continued. Thus the financial backers "bear primary responsibility for the injuries resulting from the September 11th Attacks" and must pay the costs, it said. Read more: http://www.post-gazette.com/pg/11252/1173372-100.stm#ixzz1Yq30dihS It could be interesting. It would have been even more interesting if George Bush had detained the bin Ladens and asked demanded massive political changes and reparations from the Saudis. ### Cocky Leopard The lion trainer knew he had a problem. When the big cats left the arena for their cages at the end of his act, the leopard developed the habit of reaching up and clawing the lion's leg. The leg was getting infected. While he pondered how to revise his act in the middle of the season, the lion reached down one day, ripped the leopard's head off, and sent it bouncing across the cage. Pakistan, says Bruce Reidel, has become our leopard. The ISI and the generals think we are on the way out in Afghanistan, and have become ever bolder in their efforts to push us out. Admiral Mullen's candid and stunning testimony that directly links Pakistan's intelligence service, ISI, to recent attacks on NATO forces and the U.S. Embassy in Afghanistan puts America and Pakistan on a collision course. Why are the ISI and the Pakistani Army making such risky moves? What is the calculation in the generals’ minds? Short answer is, they believe we are on the run in Afghanistan and they want to push us out faster. Mullen has been Pakistan's strongest advocate inside the White House situation room since President Obama took office in 2009. He prudently argued for patience and tolerance with the ISI's duplicity for years, rightly stressing Pakistan's critical importance on many vital issues like the nuclear-arms race, counterterrorism, and the Afghan war. This makes his remarks linking ISI to the Afghan Taliban's Haqqani network attacks on our forces this month all the more stunning. Mullen labeled the Haqqani Taliban a "veritable arm" and "proxy" of the ISI. Afghan sources have said the Taliban suicide team that attacked our embassy was in constant contact by cell phone with their masters back in Pakistan during the firefight... As long as we are stuck in Afghanistan, it will be hard to rip the leopard's head off. Are their nuclear teeth a threat to the US yet? How hard would it be to pull them? Maybe it's time to stop fighting our imaginary enemies and go after the real ones. ### Faster! Sean Carroll weighs in on the speedy neutrinos. The things you need to know about this result are: It’s enormously interesting if it’s right. It’s probably not right. By the latter point I don’t mean to impugn the abilities or honesty of the experimenters, who are by all accounts top-notch people trying to do something very difficult. It’s just a very difficult experiment, and given that the result is so completely contrary to our expectations, it’s much easier at this point to believe there is a hidden glitch than to take it at face value. All that would instantly change, of course, if it were independently verified by another experiment; at that point the gleeful jumping up and down will justifiably commence. Sean links to the technical paper which has lots more links. ## Thursday, September 22, 2011 ### Stop The Presses Or maybe just run them backwards in time. AP reports that scientists at CERN claim to have clocked neutrinos at superluminal speeds. Everyone is skeptical, but so far no one has been able to discredit the evidence. If true, this is big. Like extra-dimensions big. Or maybe bigger. Scientists at the world's largest physics lab said Thursday they have clocked neutrinos traveling faster than light. That's something that according to Einstein's 1905 special theory of relativity — the famous E (equals) mc2 equation — just doesn't happen. "The feeling that most people have is this can't be right, this can't be real," said James Gillies, a spokesman for the European Organization for Nuclear Research. The organization, known as CERN, hosted part of the experiment, which is unrelated to the massive$10 billion Large Hadron Collider also located at the site.

Gillies told The Associated Press that the readings have so astounded researchers that they are asking others to independently verify the measurements before claiming an actual discovery.

UPDATE: A highly skeptical Lumo has more links and some commentary.

### Calling Mr. Keynes

The Dow is down nearly 800 points in the last 48 hours and the US government can now borrow money for ten years at a profit - at current interest rates (1.77%), investors are paying the government to hold on to their money (inflation adjusted).

### Tyler Cowen Finds A Straw To Grasp

It seems the Irish economy actually had a couple of quarters of growth.

The economy expanded at a faster rate than expected in the second quarter of the year, putting in its strongest quarterly growth performance since the recession began, according to new data published today.

The seasonally adjusted figures estimated that gross domestic product – the widest measure of economic activity - rose by 1.6 per cent between the first and second quarters of 2011. Gross national product, which excludes the profits of multinational firms, increased by 1.1 per cent compared with the first quarter of the year.

Even Cowen's usually rather sychophantic commenters can't swallow this one. Examples:

Gepap.............So with this grand growth, Ireland will return to its pre-crisis GDP when? 2020? 2025? 2030? Yeah, hurrah for austerity!
.....
Benny Lava............“Ireland’s seasonally adjusted unemployment rate rose to 14.2 percent in the second quarter from a slightly revised downward figure of 13.9 percent for January-March"

### Modest Proposal: Fakers

The so-called hurry up offenses are becoming popular in football, speeding the game up to a more or less glacial pace. This puts some pressure on the really big, really fat guys needed to play defense - many defenses get "gassed" and appear to crumble. In response, defenses have started faking injuries. The wise men of football appear helpless to deal with the practice.

Faking still goes on. Even in cases when the intent seems obvious, officials are not in a position to decide whether an injury is real or staged. The league doesn't want them making that determination, especially with the renewed emphasis on player safety. The league cannot take a hard-line stance, other than to say on Page 19 of the rule book: "The Competition Committee deprecates feigning injuries, with subsequent withdrawal, to obtain a timeout without penalty. Coaches are urged to cooperate in discouraging this practice."

My proposal: just force players injured enough to stop play to sit out the rest of the game. This would have the added benefit of discouraging such travesties as Romo's absurd heroics in playing half a game with a broken rib and punctured lung.

### Rent! Rent! Rent! Rent!

If high-frequency and other related strategies work, traders ought to be extracting enormous rents from the recent hypervolatility of world markets.

Are they?

## Wednesday, September 21, 2011

### Size Matters (for Gravitational Waves, too)

Can very large scale gravitational waves explain (apparent) cosmic acceleration and other exotic and funky features of the Cosmos? Edmund R. Schluessel says yes:
http://arxiv.org/abs/1109.4315

Strong long-scale gravitational waves can explain cosmic acceleration within the context of general relativity without resorting to the assumption of exotic forms of matter such as quintessence. The existence of these gravitational waves in sufficient strength to cause observed acceleration can be compatible with the cosmic microwave background under reasonable physical circumstances. An instance of the Bianchi IX cosmology is demonstrated which also explains the alignment of low-order multipoles observed in the CMB. The model requires a closed cosmology but is otherwise not strongly constrained. Recommendations are made for further observations to verify and better constrain the model.

### Dimensions of Diversity

I cribbed the title from the cover story of an upcoming educational conference. Diversity has been, and apparently remains, a major theme in education. Students, it seems, come in a variety of learning styles and from culturally diverse backgrounds. A teacher with a reasonably long and varied career is likely to teach the children of farmers and physicians, professors and crack whores, and each of those children will come with her own problems and idiosyncracies.

So it's a good idea for a teacher to have some idea what they will be dealing with, but I still think that a little more time might be spent reminding teachers that it's not really their job to honor or celebrate that diversity. Their actual job is to teach those diverse little rascals to read, write, calculate, and work harmoniously with others.

## Tuesday, September 20, 2011

### Lisa Randall On Her New Book

Lisa Randall is flacking her new book over in Lumo's Place. I like the idea of authors pushing their books on blogs. I haven't read it, but it's been well reviewed, and she supposedly had help from both Cormac MaCarthy and the Lumonator himself.

Hard core Dylan fans may be disappointed in the subject matter, though.

### Indecent Exposure

Jared Bernstein has a nice graph of bank exposure to the variously Euro vulnerable sovereign debts, by country:

### Krugman on Judt

Paul Krugman on Tony Judt on one of my favorite themes: Doom!

one thing I was sure of was that the next great crisis would be different. It would be environmental, or about resource shortages, or about runaway technologies, or something; it wouldn’t be about a banking crisis and a collapse of aggregate demand, aggravated by bad monetary and fiscal policy. We’d learned to much to repeat that performance — right?

## Monday, September 19, 2011

### Easy-Peasy

Watching a movie that turned out to be stupid, but the heroine, inteviewing for a finance job, was asked this not-quite Fermi-level question: "How many pennies would it take to fill this room."

Her response: "With or without us in it?"

Of course I would have dropped her like a hot potato right then - it's a neglible fraction unless they were in a broom closet - and they weren't - but she was Katie Holmes, so she got the job anyway.

Take a look around the room you are in right now, and figure out your answer. I got a smaller number than I would have guessed. Homage will follow for good answers, even though they are easy....

I decided it was cheating to actually look at a one cent piece - you gotta guess the dimensions...

### Math

The US is a very low tax* industrial country (26.9% of GDP)that spends like a medium low tax industrial country (33%). President Obama wants to raise taxes on the richest Americans - so naturally, some of the richest Americans, beneficiaries of repeated tax cuts and an exploding share of the nations wealth, and their minions scream "class warfare." It is, of course, but it's class warfare they started and have been winning for thirty years. Obama:

"During this past decade, profligate spending in Washington, tax cuts into multi-millionaires and billionaires, and two wars have turned a record surplus into a massive deficit," Obama said. "If we don't act, the debt will eventually crowd out everything else, eventually affecting us from investing in things like education and Medicaid. We need to cut what we can't afford to pay for things we need."

So class warfare it is - but more importantly, it's just math.

*US 26%, Austria 43%, Belgium 46%, Japan 28%, Sweden 48%, Afganistan 6.4%

### In Our Stars?

Default, dear Brutus, is not in our stars but ourselves.................with apologies to WS

How disorderly must Greek default be? Nin-Hai Tseng in Fortune:

The opportunity for debt-troubled Europe to avoid a disaster is shrinking. Fast. Over the weekend, Greek leaders struggled to agree to a set of radical budget cuts as the country approaches an October deadline to qualify for $11 billion in aid without which it will certainly default on its growing debt. As the bailout of Greece spirals into a costly mess, officials have raised the idea of an "orderly default." Germany's economy minister Philipp Roesler publicly introduced the concept and, needless to say, the mere mention of bankruptcy was anything but calming for global investors. ... But for Greece, economists believe austerity measures attached to its rescue package will slow economic growth and weaken the country's competitiveness for years to come. What's more, orderly defaults in industrialized nations are essentially unprecedented, which partly explains why investors are so spooked by what's happening in the eurozone. "One of the founding pillars is this concept that the debt of industrialized countries is risk free," says Jacob Funk Kirkegaard of the Peterson Institute for International Economics. "Markets are asking if it turns out there's risk in Greece maybe there are other countries in the industrialized world that face the same issues." The article points out that orderly defaults are not exactly unprecedented among nations. The question for Europe, of course, is contagion. ### Game On! Is it plausible that computer gamers competing could crack longstanding scientific and other problems? At least one data point says yes: In just three weeks, online gamers deciphered the structure of a retrovirus protein that has stumped scientists for over a decade, and a study out Sunday says their breakthrough opens doors for a new AIDS drug design. The protein, called a protease, plays a critical role in how some viruses, including HIV, multiply. Intensive research has been underway to find AIDS drugs that can deactivate proteases, but scientists were hampered by their inability to crack the enzyme's structure. Looking for a solution, researchers at the University of Washington turned to Foldit, a program created by the university a few years ago that transforms problems of science into competitive computer games, and challenged players to use their three-dimensional problem-solving skills to build accurate models of the protein. With days, the gamers generated models good enough for the researchers to refine into an accurate portrayal of the enzyme's structure. What's more, the scientists identified parts of the molecule that are likely targets for drugs to block the enzyme. "These features provide opportunities for the design of antiretroviral drugs, including anti-HIV drugs," the authors wrote. Humans love games. I really think that computer games have the potential to be harnessed for education and many other purposes. ### Compassion II Let me overcome my instinctive repugnance for http://www.thebigquestions.com/2011/09/19/compassion-play/ long enough to address the actual substance of his argument. He says that economics permits one to replace ordinary compassion with an allegedly "higher compassion" - a sort of hyper-racinated compassion in which every element of ordinary compassion - sympathy for the suffering of a fellow person - is removed and replaced by faith in some kind of theoretical Pareto optimization. What he likes about economics is that it enables him to remove any actual humanity from his considerations of people. This, I think, is the fundamental source of my animosity toward him and his thought. That and the fact that the logical endpoint of his thought is always indulgence of the rich and destitution for everyone else. E His type of economics is based fundamentally on rejection of the idea of a social compact - a responsibility of people for each other. That goes against human nature, but it has an internal logic. In the wider "compassion" he thinks, we should be exactly as eager to help the people of distant countries as our own neighbors and fellow citizens. Humans evolved to have in-group loyalty, compassion and sharing and outgroup competition and war. Can we afford to extend in-group treatment to all, or should we, as Landsburg in effect argues, treat everyone as alien. My answer is that as long as humans breed uncontrollably, we have no choice but to divide the world into us and them. Classical liberalism's ideal of war of all against all leads to societal breakdown and destruction of its members. ### Economics of Lying Economics seems to foster or at least support an unusually bald-faced style of lying. Here is Steve Landsburg, again: One thing I like about the study of economics is that it fosters compassion. When part of your job is to predict human behavior, you quickly learn the value of understanding other people’s problems. When the other part of your job is ferreting out the unseen global consequences of our choices, you’ve taken the first step toward caring about those consequences. For example: Suppose a guy with no health insurance and no assets shows up at a hospital emergency room with an urgent life-threatening condition. Should you let him die? Ordinary compassion says no. The heightened compassion of the economist says, at the very least, maybe. First, a policy of providing emergency health care to everyone is pretty much the same thing as a policy of providing emergency health insurance to everyone. It was specified here that this was a guy who didn’t want health insurance. Landsburg's emphasis. Landsburg specified that the guy in question had no assets, not that he didn't want health insurance. Let's be clear - a large fraction of people who show up in emergency rooms with no assets or insurance can't afford insurance, or aren't eligible to buy insurance - which is nearly opposite to not wanting insurance. So does economics foster facile lying - calling anti-compassion compassion, and calling "can't get" the same as "doesn't want"? I don't think so, but a certain flavor of it attracts those facile liars like flies to s***. ### Myth and Reality Jews who visit Israel are entitled to a propaganda barrage, including the tidbit that Arabs didn't live in Palestine before Zionism. Arun has up a film shot in Palestine in 1896, likely the first film shot there*. Whether or no, it gives a realistic picture of Palestine 115 years ago - one that does not match the propaganda. It's true, of course, that the population of Palestine was much smaller and more rural in those days, but that's true of the rest of the world as well. At no time before 1948 did Jews outnumber Muslims in Palestine, even in the orginal Israel. The war and large scale ethnic cleansing changed that. *So far as I can tell the film is authentic, one of a large number shot around the world by the company of the Lumieres brothers. ## Sunday, September 18, 2011 ### Facts Sat next to a retired oceanographer at dinner last night. Another table companion, on learning his background, asked him if he was interested in participating in the "debates" on global warming in the local paper letters section. He replied that he didn't care to argue with those who didn't care about the data. That, of course, is precisely the problem with trying to argue with a denialist (the subject of their denial - evolution, nicotine addiction, HIV/AIDS, shape of the Earth - is largely irrelevant). They really don't care what the data says. Their's is an ideology based point of view, not a scientific one. I once asked one of our string theorist/climate denialist correspondents what facts would convince him of AGW. His answer was interesting - it would take a sudden temperature increase of magnitude that was completely incompatible with the theory and physics of global warming. If confirmation of the predictions of the theory, and contradiction of the obvious alternatives won't persuade, you don't care about the facts - and you aren't worth arguing with. ### Eric Schmidt on This Week Google CEO Eric Schmidt was on ABC's This Week. Business is sitting on its money, he said, because government is too busy fighting with itself to stimulate demand and justify hiring people. He liked spending on infrastructure like roads and schools. Amanpour asked him if unemployment was just due to technology replacing people with machines, but he said that that's been happening since the start of the industrial revolution. He thought we needed a nationwide German style committment to creating more jobs. ### 3 D Despite all the evidence for three dimensions, big chunks of the world like to stay two dimensional. I could be talking about how much most 3-D movies suck, but I wasn't actually. I was thinking more about computer chips. It turns out to be pretty hard to fully exploit all three dimensions in the design of integrated circuits, and as a result most designs have just a few layers. The human brain is also area intensive - the notoriously wrinkled and crinkled shape is evolution's way of packing more surface area into a reasonable volume. I'm not sure what the biological reasons are restricting more three dimensional designs, but in the case of computer chips, it's heat dissipation and design complexity that rule. Katherine Bourzac, writing in Technology Review, has the story on the latest attempts to take chips 3-D. IBM will work with materials manufacturer 3M to develop the necessary mortar to build much more complex three-dimensional computer chips. The companies announced this week that they will aim to develop microchips made of 100 chip layers stacked on top of each other. Stacking chips in this way could make all sorts of electronics faster and more power-efficient. Three-dimensional chips have already found their way into some niche applications, but they are expensive to make, and can only be stacked about a dozen layers high before they overheat. Three-dimensional chips can handle data more efficiently because data has to travel less distance to reach a different component. Stacked chips with connections running through them vertically like pipes in a skyscraper should be able to process more data faster, and with lower power requirements. The key ingredient needed: a material with mechanical strength that is an excellent heat conductor and an excellent electrical insulator to separate the layers. For the most part, these properties don't like to live together - the article doesn't really tell how well the search is going. ## Friday, September 16, 2011 ### Theory and Practice Andrew Sullivan notes that Republicans insist on selling the idea that private health care would be cheaper than government care. This argument has one slight problem: The trouble with this argument is that while it is indeed doctrinally perfect, and therefore appealing to today's brain-dead GOP base, it is empirically wrong. The private healthcare sector is far more expensive than the public and enormously inefficient - especially compared with more socialized systems abroad. Neither Andrew nor the economics profession in general seems ready to make the leap to concluding that doctrines which give wrong answers might be, er, wrong. ## Thursday, September 15, 2011 ### Medal of Honor Dakota Meyer is the most recent recipient of the Medal of Honor, our nation's highest military honor. Only eleven of these have been awarded post Vietnam and nine of those were posthumous. Meyer had a beer with the President before his ceremony, and asked for some advice. Appearing on "The Early Show" Thursday, Meyer said he took the opportunity to ask the president for advice on how to be successful. "He said, 'You know, first thing, get an education and he said just take it slow and don't try to make any rash decisions,'" he said. It's hard to fault the advice, but it's still a bit ironic, given that the award is only given for actions that are extremely brave and rash - see first link for the details of Meyer's actions. Rash is probably not the right word, though. Meyer's kind of bravery required considered courage - not just for a moment, but over an extended period of time. I sometimes think Obama would be a better President if he would be a bit more rash - or at least more confrontationally brave. ## Wednesday, September 14, 2011 ### Rich College, Poor College (I found this story in the NYT, but since they lacked the ethics to link to the source, I will only link to the original, from which I got my info.) It's probably not a shock that elite private research universities spend more on their students than community colleges. The Delta Project has been assembling the data, and put out a summary graph (see link - I can't copy it). Some key points: the private research U spend about twice as much per student ($37k/yr) as a public research U and 3.5 times as much as a community college. Most students, of course, are in community colleges or public universities.

Of course the really good question, as one of our great Presidents asked, is: "Is our children learning." Or more precisely, how much are they learning. I have taught in community colleges and public research U's and of course the students are hardly comparable, and the students at the elite RUs are the most different of all. Still, I would really like to see comprehensive post college testing that would assess how much students are learning at various institutions.

### Another Gloomy Israel Assessment

Andrew Sullivan (again) has some quotes from Tony Judt's last interview:

The characterization that comes to mind is "autistic." Israel behaved in a way that suggests it is no longer fully able to estimate, assess or understand the way other people think about it. Even if you supported the blockade (I don't) this would be an almost exemplary case of shooting oneself in a painful part of the anatomy.
...
In short, this is the action of a country which is fast losing touch with reality.
...
Another perspective, the long one, would be to say that Israel is behaving very much like the annoying little Judean state that the Romans finally dismantled in frustration. This classical analogy may be more relevant than we think. I suspect that in decades to come America (the new Rome) will abandon Israel as annoying, expensive, and a liability.

The thing is, it's hard to be humble when you are sure that you are chosen by God.

The Israel lobby is not fond of Jews who stray so far from the party line. Sullivan adds:

Jeffrey Goldberg doesn't like Judt's thoughts so much. The reflexive bile is staggering:

What comes through, more than anything else, is Tony Judt's contempt for Jews, his blatant dishonesty, and his support for the radical Arab vision of a Judenrein-Middle East.

Yes: Tony Judt was a lying anti-Semite. And a Nazi who wanted a Judenrein Middle East. Feel better after writing that?

### Mo Money

Andrew Sullivan finds a gem in David Graeber's Debt. Graeber is talking about why the Smith-Menger myth of the origin of money matters:

It seems to me because it goes back precisely to this notion of rationality that Adam Smith too embraced: that human beings are rational, calculating exchangers seeking material advantage, and that therefore it is possible to construct a scientific field that studies such behavior. The problem is that the real world seems to contradict this assumption at every turn. Thus we find that in actual villages, rather than thinking only about getting the best deal in swapping one material good for another with their neighbors, people are much more interested in who they love, who they hate, who they want to bail out of difficulties, who they want to embarrass and humiliate, etc.—not to mention the need to head off feuds.

This sort of insight strikes at the heart of much classical liberal economics and rational expectations. It not only explains why those models tend to break but also explains how they conflict with human nature. Humans aren't (only) profit maximizing individuals, they are fundamentally social creatures with powerful cooperative and collective instincts.

## Tuesday, September 13, 2011

### Money, Money, Money: Murphy vs. Graeber

I have previously mentioned here that David Graeber has written a book on the history of debt: Debt, The First 5000 Years. Among many other subjects, he discusses the origins of money. In particular he disses the just so story on the subject concocted by Adam Smith, and the slightly more elaborate version of the same just so story by Carl Menger. It seems, however, that the Menger version (in English here), is one of the sacred texts of the Austrian economic religion, and Robert P. Murphy (an adjunct priest at their high temple) was offended enough to come to Menger's defense. Not by the book, by the way, since he hadn't read it, but by what he extracted from an interview with the author. Unsurprisingly, he significantly misunderstands Graeber's point and consequently constructs a rather wrongheaded critique.

First a summary. Menger's long winded guess at the nature of money reduces to this: participants in a barter economy found it really inconvenient so the most saleable items gradually evolved into a universally barterable commodity that became money. This plausible seeming hypothesis suffers from the fact that there is zero historical evidence to back it, though there are a few examples where people already familiar with money economy have invented a money (cigarettes in prison camps, etc.) Graeber argues instead that money began as a unit of account to keep track of debts. Here there is significant evidence, going back to Sumer.

It certainly doesn't seem to me that these are completely incompatible, but there is an ideological bone to pick. The Austrians want money to have evolved independently of government - that's a religious tenet with them. The problem with this idea is that pre-governmental societies don't use barter except in exception circumstances. On the other hand they nearly universally seem to have "gift economies" which require keeping track of mutual obligations. The relevant chapter of Graeber can be read for free online at Amazon if you are too cheap to buy the whole book or too lazy to read the whole thing.

There is some back and forth among Murphy and Graeber, but it seems clear to me that Murphy fails to understand Graeber and therefore flails at windmills.

An example:

It's one thing to suggest that civilization started as a centrally planned economy, where temple authorities came up with the prices of all goods and services (quoted in terms of a money that they invented from scratch) before anyone had ever engaged in barter.

Yet it is incomparably more implausible to suggest that these merchants — using the money prices invented by central planners, and yet who had never witnessed a single act of barter — then went to "faraway lands" and managed to trade woolen goods for metal, timber, and lapis lazuli. Does Graeber really expect us to believe that these merchants engaged in long-distance loans? Or does he concede that at least here there were spot trades occurring, and at prices dictated by supply and demand, not by the temple authorities back home?

Dear Bob - you really don't have a clue as to what Graeber is arguing. Read the book and see that the words you have put in his mouth are nothing like what he is saying.

### Austerity and Unemployment

Paul Krugman has been waging a fairly lonely war against the notion that austerity is the cure for what ails us. He now has more empirical ammunition, thanks to a comprehnsive review of past episodes of austerity by economists at the IMF.

In the first half of last year a strange delusion swept much of the policy elite on both sides of the Atlantic — the belief that cutting spending in the face of high unemployment would actually create jobs. I went after this stuff early and hard (I suspect that the confidence fairy will be one of my lasting contributions to economic discourse); still, it’s good to have a steadily mounting weight of evidence about just how wrong that view was.

The latest entry is a comprehensive review of past episodes of austerity by economists at the IMF, from which the figure above is taken. Yes, contractionary policy is contractionary. And as the authors point out, it’s probably even more contractionary than usual under current conditions:
The reduction in incomes from fiscal consolidations is even larger if central banks do not or cannot blunt some of the pain through a monetary policy stimulus. The fall in interest rates associated with monetary stimulus supports investment and consumption, and the concomitant depreciation of the currency boosts net exports. Ireland in 1987 and Finland and Italy in 1992 are examples of countries that undertook fiscal consolidations, but where large depreciations of the currency helped provide a boost to net exports.

Unfortunately, these pain relievers are not easy to come by in today’s environment. In many economies, central banks can provide only a limited monetary stimulus because policy interest rates are already near zero (see “Unconventional Behavior” in this issue of F&D)...

Wolfgang and Lee, you wanted evidence - what do you say?

### Unified Field Theory of Pyramids and the Roman Empire

Can Real Business Cycle theory explain the pyramids?

Well, probably not in the original sense, but try this. Agriculture was the biggest (or one of the biggest) technology shocks in human history. The result was an immense concentration of work and leisure. Now most labor could be concentrated in a few months, and subsistence on the proceeds was possible for the rest of the year.

Because food had to be stored, this produced a social instability. Capital and food storage capability became concentrated in a few hands. The result: a few rich and starving masses. The starving masses, left to their own devices, would need to become bandits and pillagers, which turns out to be bad for almost everyone.

Solution: put the masses to work. Pyramids and other building projects have been popular for much of human history. War is another favorite. The Roman empire was won by farmers fighting in the off season. The Aztecs and other meso-Americans pursued both strategies.

A plausible argument could be made that the creation of the European empires was a similar response to technological unemployment.

It should not escape our notice that we seem to have entered another period when technology is displacing a large number of workers.

## Monday, September 12, 2011

### Base Human Nature

The Republican base really is. Andrew Sullivan on one of the debate low points, when the audience cheered someone dying for lack of health insurance.

9.23 pm. I was surprised by the ineptness of Perry's attack on Romneycare. But I am more surprised at the cheering of someone dying because he couldn't afford intensive care. Yes, the GOP is now not only cheering executions; they are cheering people dying because thay cannot afford any health insurance. Cheering death by poverty. "Yeah!" came the cry at the thought of a twentysomething dying because he didn't have insurance. I didn't think I could be more shocked by the instincts of those in the Republican base, but I just was.

They really are pond scum.

### Kevin Drum Saw The Debate So We Didn't Have To

I don't think he was impressed - favorably, anyway:

Sorry for the radio silence about tonight's debate, but I'm still in a state of shock. This was a full-on freak show
...
Jesus, what a depressing experience. Europe is about to implode, there's a pretty good chance that this could be enough to tip our economy back into recession too, and one of those clowns on the stage tonight might end up being president when it happens. Lord help us.

I think by "might end up" he means "probably will be."

### Israel's Future

Benny Morris sees tough challenges ahead.

Israel is under assault. On Sept. 20 the Palestinian Authority plans to unilaterally declare statehood and go to the United Nations for recognition. This is a rejection of all efforts for a peaceful compromise. In its wake will come waves of Palestinian violence. And yet this is just the latest manifestation of an embattled Israel that is being threatened from the outside—by Muslim Arab states and societies, Egyptians storming the Israeli Embassy, a nuclear-arming Iran (with its local sidekicks, Hamas in the Gaza Strip, Hizbullah in Lebanon), and a besieged President Bashar al-Assad in Syria—and from the inside by domestic upheaval that led to the largest mass protests in the country’s history.

More than 50 years ago, Israel’s leaders, headed by David Ben-Gurion, believed and hoped that they were creating a social democracy, with all the requisite egalitarian accoutrements (socialized national health care, progressive income tax, child benefits, subsidized cheap housing). Ben-Gurion, who owned almost nothing and retired to a primitive hut in the Negev Desert, typified the austere lifestyle, and greatness, of the state’s founders.

This is no longer Israel. A profound, internal, existential crisis has arrived. It stems in part from the changing nature of the country, more right wing, more restrictive, far less liberal, and far less egalitarian. Many moderate Israelis fear the country is heading for ruin. Indeed, the country’s ruling class, including Benjamin Netanyahu and his predecessors Ehud Olmert (now on trial for corruption) and Ehud Barak (a former head of the Labor Party and current defense minister), live in opulence, and the feeling is that they are out of touch with reality. In Tel Aviv, where some 350,000 gathered in protest, a widespread chant, set to a popular children’s ditty, was “Bibi has three apartments, which is why we have none.”

Israel's response to these challenges has been to become more arrogant, hostile, and uncompromising. Israel has roughly one friend in the world - the US - and its leader comes here and insults the American President. They kill six Egyptian policement, angering one of the few neighbors at peace with them. Turkey has been driven hostile too.

Until and unless the US gets tired of them though, the external threats present little challenge. The real problems are internal. Read Morris for details.

### And The Trojan Horse You Rode In On...

Or, all your Drachma are belong to us.

(via Marginal Revolution)

It certainly sounds like Germany, et. al are ready to show Greece the Euro Door. European finance ministers are apparently war-gaming the debacle. Der Spiegel International has a long article, in English, talking about the what they are thinking. Bottom line: Greece is hopelessly corrupt, inefficient, and can't reform itself.

The tougher talk is much more than show. The rest of Europe is losing patience with Athens. And after 18 months of crisis in the country, there is still no improvement in sight. Key economic figures are worsening, and there are growing doubts over whether the Greek government truly understands how serious the situation is.

In European capitals and at the European Commission, some are beginning to wonder whether the efforts of the last year-and-a-half were in vain. The partner countries have already provided Greece with €110 billion ($152 billion), and a second bailout has already been agreed upon. But Europeans are now beginning to realize that they have spent a lot of money for nothing. The disappointment runs particularly deep in Berlin, where the government's crisis-management policy has clearly been going around in circles. In the beginning, the chancellor said that the Greeks ought to help themselves out of their own crisis. Then came the first and subsequently the second aid package. The new approach, the government said, was to rescue Greece so that the other debtor nations would be spared. Now the Germans have come full circle, and the prevailing emotion is fear of a never-ending debacle in Athens. "Enough is enough," says one senior government official, adding that Berlin has lost patience with the Greeks. With a mixture of resignation and fatalism, Merkel and Schäuble are facing up to the inevitable and thinking the previously unthinkable: Greece is going bankrupt, and not even its withdrawal from the monetary union can be ruled out anymore. Contagion So can the damage be prevented from spreading and enveloping all of Europe? Der Spiegel is optimistic, citing encouraging signs in Ireland and Portugal. Perhaps, if Greece exits, the thinking seems to be, the resulting carnage will at least serve the salutary effect of serving as a negative examples for others. ### Let's Stipulate That I Am Paranoid The supercomputer doctor is in. Watson, the sophisticated IBM Q-and-A computing system that is best-known for kicking 'Jeopardy' champion Ken Jennings' butt at the game show in February, has been assigned to help WellPoint health insurance company to treat patients beginning in 2012, IBM and WellPoint announced Monday. Exact terms of the deal weren't disclosed, but WellPoint is paying "some up front and some over time" to use the technology, an IBM executive told The Wall Street Journal. Improve patient care or do a better job of chiselling patients out of their benefits? ### Beans and Nothingness Wolfgang, presumably having been driven over some edge by our interminable debates over Keynesianism, is talking about qualia and invisible pink unicorns today. Now I've never seen an invisible pink unicorn, though of course their sign is all over the place, but I'd think them dangerous to hunt, since there is always the danger that your buddy will hear one, swing and fire, hitting a companion by mistake. Specially if he has been drinking. I did use to hunt qualia though, with my pal Dick C, or Dixie as we called him for short. It was pretty cool. Of course we didn't really want to have to hunt for these damn qualia - they are hard to describe - so we'd go to this ranch where the employees would stuff some of the pen raised little rascals into bushes (LOL!) and then when we wandered about give the bush a little kick (double LOL!) causing them to take off. Blam! Blam! Blam! That kind of hunting really recaptures the frontier experience - without some of the messy trouble. Oops! Somebody just pointed out that I seemed to be talking about quail rather than qualia. Never mind. I actually don't know beans about qualia. I don't think they are even good to eat. ## Sunday, September 11, 2011 ### Fundamental Theorem As far as I can tell, it seems to be a fundamental theorem of anti-Keynesianism that the way corporations chose to allocate resources is, in effect, the best of all possible ways, not only for them, but for the national (or international economy as well). So exactly how are we to understand how they individually and collectively projected themselves and the West into financial collapse and bankruptcy? WARNING! I will probably puke if somebody drags out that discredited crap attributing it to a Barney Franks conspiracy. ### ST Junkie I seem to have accumulated a lot of books on the general subject of string theory over the years. I have the classic texts of Green, Schwarz, and Witten (2 vols); Polchinski (2 vols); and Becker, Becker, and Schwarz as well as efforts by Kirtsis; Kaku (2 vols); and the classic elementary text by Zwiebach, not to mention a dozen or two more. I mention this because I've started noticing my eye drawn to a few newer books. Lisa Randall and Brian Greene seem to have well regarded new books, and there are new entries by Steve Gubser and Richard Szabo. Should I read any of these? Bear in mind that I've already proven to be too dumb or lazy to get very far through any of the classics except Zwiebach. ## Saturday, September 10, 2011 ### Doom, Doom, Doom, Doom Kevin Drum beats the drum of Euro doom. I keep thinking that, when Greek default, cascading bank failures, or dissolution of the eurozone — or all three — appear truly imminent, European leaders will finally buckle down and do what needs to be done. But the last couple of weeks haven't done much for my confidence on this score. If anything, Europe seems to be drifting ever further toward lifeboat ethics. The bad kind, that is. The every-man-for-himself kind. And we finally seem to be genuinely close to a point of no return. Once the financial markets decide to attack — either a country or a banking system — they can't be bought off with half measures. It's either a full-scale, damn-the-torpedoes rescue or else it's catastrophe. And right now a full-scale rescue isn't looking very likely. Instead, "austerity" is the order of the day, which is sort of like thinking that maybe the steerage decks are really the best place to ride out the sinking of the Titanic. But hey, that's just Europe, right? It's not going to affect us, is it? Why, just a few days ago, Ben Bernanke said that our financial exposure to European problems was "manageable." So there's nothing to worry about. But then again, this is the same guy who said in 2007 that "the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained." So maybe it's time to stock up on canned goods after all. Are there any Euro optimists left in the house? ### Nasar on Schumpeter and Keynes Via Paul Krugman, Sylvia Nasar on Schumpeter and Keynes in 1919. They were on the same side, economically: “Starvation means Bolshevism,” a British general warned. The word in Paris was that Vienna, flanked by two Red capitals, would be the next to succumb. In April, thousands of gaunt and ragged men -- unemployed factory workers, paid agitators, demobbed soldiers, many with missing limbs -- descended on Vienna’s Ringstrasse, setting the Parliament building ablaze and attacking the police. The militia finally restored order, but not before a horse was shot out from under a policeman. As the animal lay dead in the street, a hungry mob tore it to pieces and carried off hunks of bloody meat. For ordinary Viennese, who adored the emperor’s white show horses the way Americans loved boxing champions, the incident was a sign that civilization was reverting inexorably to barbarism. While the street battle raged a mile away, the bankrupt government of a dismembered Austrian Republic -- surrounded by hostile states, threatened by revolution, awaiting the Allied peace terms being decided in Paris -- met in the freezing chancellery. Its youngest member was the new finance minister, Joseph Schumpeter. The urbane, clever, ambitious Wunderkind of the defunct Austro-Hungarian Empire had opposed the war, avoided the draft and advised the now-exiled emperor to make a separate peace with the Allies. The war's victors wanted revenge and reparations. Schumpeter and Keynes wanted restoration of trade and the economies. Naturally, their advice was largely ignored. In the terrible years immediately after the war, Germany and Austria succumbed to economic chaos, hyperinflation and a catastrophic loss of faith in democracy by their middle classes. The victorious Allies too suffered disillusioning economic setbacks -- not exactly the heroes’ welcome that returning troops were promised. Bruised from their losing battles, eager for success on new fronts, Schumpeter became a banker and Keynes went to work in the City, London’s Wall Street. For Schumpeter, the most creative part of his career was over. For Keynes, the rush of inspiration that led to his “economics of the whole” -- rooted in his experiences in the aftermath of the Great War -- still lay ahead. ### Prophetic? They say that if you are thrown from a horse, it is really important that the first thing you do is get right back on. Having just had my ears soundly boxed on the subject of Krugmania, here is another Krugman semi-prediction. First Paul K get depressed by reading Paul de Grauwe. He rises to the occasion with a SF reference and: The key point, which I’ve finally taken fully on board, is that in addition to the huge problems of adjustment created by a rigid exchange rate in the aftermath of a bubble, the fact that European nations no longer have their own currencies leaves them vulnerable to self-fulfilling debt crises – in effect bank runs on governments rather than banks (although those too). To head off this risk, somebody – the EFSF, the ECB, whatever – has to be ready to act as lender of last resort; Eurobonds would have served much the same purpose. By resigning from the ECB, Juergen Stark has conveyed, deliberately or not, the message that there will be no such lender of last resort, that there isn’t enough political cohesion in the eurozone to stand behind countries under market attack. And this translates directly into soaring spreads for Spain and Italy; the self-fulfilling crisis is on. ## Friday, September 09, 2011 ### TBBT Johnny Galecki (Dr. Leonard Hofstadter in The Big Bang Theory) is in Rio de Janeiro but can't leave his hotel because of the crowds outside shouting "Big Bang Theory! Big Bang Theory!" I guess Lumo and I can't be the only fans - they got five Emmy nominations this year. Of course we may be among the few that want more physics in the show. ### Labor Intensive Suicide bombing remains a labor intensive business. Tyler Cowen, looking at the economics of the improvised bomb, finds that the most expensive component is the bomber. Another potential opening, unfortunately, for the modern industrial robot. Of course I'm sure that our own robot bombs are a lot dearer. ### Why Argue, If Not to Persuade? I guess I'm the last believer in Socratic dialogue - argument as a tool to learn and clarify. Anyway, I was having this interesting discussion in comments about Keynesian economics when one of the major protagonists expressed fatigue (or was it disgust), and took his football and went home. So, in hope of attracting a wider audience, here is his last and most penetrating point: "The whole point is that if before the ozone regulation a particular CEO has good reason to hold lots of cash this does not change after the regulation. The money she has to invest due to the new regulation will therefore have to come largely from other investments she would have made - thus no net benefit." This point seems pretty far from self-evident to me. I'm not a corporation, and I'm not rich, but I have some modest savings, and some of it is currently parked in highly liquid form. At the moment, I have no plans to spend it. Suppose, though, that the government decided that the public health required that all cars on the road need to be equipped with flubberhausers, at a cost of$2500 each. I would spend it in a minute, since I can (a)afford it (b)need my car to get to work. It's unlikely that that expenditure would affect my near future expenditures very much - though ultimately it might provide my heirs with a smaller beer party - one point of Keynesian economics being to transfer expenditures from the future to the present - to speed up the velocity of money.

Corporations have slightly different logic, but I don't see enough difference to matter.

It doesn't escape my attention that there is a redistributionist element to this - the government would in effect being forcing industries to spend other than in the way they would prefer. Going from that fact to "it couldn't possibly affect money velocity" is the part that seems nuts to me.

In the case of ozone restrictions, this is something companies have seen coming from ten thousand miles away, so if they were putting money in their piggy banks, paying for ozone reduction was probably on their list.

Of course they would prefer to pay later, for all sorts of reasons, including their performance bonuses for the next few quarters. Best of all would be electing Bachman or Perry or somebody else who didn't give a crap about pollution.

It seems to me, that to make a persuasive anti Keynesian argument in this case, you have to argue that deferring the regulation is going to cause them to spend the same amount of money, right now, on other things. I haven't seen that argument.

Anybody? Bueller?

## Thursday, September 08, 2011

### The Speech

I may be easy, but I thought he hit it out of the park.

I think Andrew Sullivan agrees:.

He's rocking it.

Josh Marshall, not so much:

So far I'd say the President got off to a slow, rocky start. A skeptical audience not only on the Republican side, which is obvious, but weirdly from the Democrats too. But it's picked up steam and momentum over the last half hour, hitting a few key themes over and over. The speech and delivery have urgency without seeming desperate.

### Broken Windows Blah Blah Blah

Bastiat's broken windows return to haunt us, this time in the form a colloquy among Krugman and a bunch of the usual rascals. As usual, I think the Austrian economists - in this case Murphy, Tabbarok, Cowen, and I presume Landsburg display their usual impossible thickheadedness when asked to try to reason beyond their simple minded parable.

The precipitating events here were Obama's decision to suspend ozone regulations and Paul Krugman's angry objection.

As some of us keep trying to point out, the United States is in a liquidity trap: private spending is inadequate to achieve full employment, and with short-term interest rates close to zero, conventional monetary policy is exhausted.

This puts us in a world of topsy-turvy, in which many of the usual rules of economics cease to hold. Thrift leads to lower investment; wage cuts reduce employment; even higher productivity can be a bad thing. And the broken windows fallacy ceases to be a fallacy: something that forces firms to replace capital, even if that something seemingly makes them poorer, can stimulate spending and raise employment. Indeed, in the absence of effective policy, that’s how recovery eventually happens: as Keynes put it, a slump goes on until “the shortage of capital through use, decay and obsolescence” gets firms spending again to replace their plant and equipment.

And now you can see why tighter ozone regulation would actually have created jobs: it would have forced firms to spend on upgrading or replacing equipment, helping to boost demand. Yes, it would have cost money — but that’s the point! And with corporations sitting on lots of idle cash, the money spent would not, to any significant extent, come at the expense of other investment.

Murphy starts with rhetorical nonsense, noting that Krugman:

...didn’t focus on kids suffering from asthma or other environmental issues, but instead looked at it from a liquidity trap perspective.

I mean holy crap - is it really too much for Professor Murphy to fit into his head the distinction between primary motivation and ancillary effects?

Eventually he gets to the core of his critique:

So it seems Dr. Krugman has forgotten a principle from basic economics. The new investment spending flowing from tighter ozone regulations would have largely come from cutbacks in spending in other areas, and only partially out of cash reserves. (The crucial point here is that cash reserves aren’t “idle”; they serve a function to the entity holding them.)

If that seems somewhat persuasive, it's only because it assumes the issue in question - begs the question in the classical sense of the expression.

Part of the point of the liquidity trap is that you get oversaving because everybody else is saving. If the economy really is in such a state, as overwhelming evidence suggests, the whole idea is to change the parameters to a state where spending is more desireable or necessary. Murphy assumes that what looks like excessive saving by corporations is motivated not by economic stagnation but by some deep endogenous plan. Yes ozone regulations will distort industry spending patterns in addition to saving us from the noxious effects of ozone, but, says Krugman, that's good too in current circumstances. Of course those with a purely religious faith in the market can't accept that, but they at least acknowledge that their objection is religious rather than logical.

Alex Tabbarok and Tyler Cowen further muddy the water with the usual inane prattle about broken windows - nobody is actually suggesting that we break windows, OK. I don't recall even Keynes or Friedman recommending it.

I probably shouldn't dismiss Cowen (or Tabbarok) quite so cavalierly, but the thing is that all their objection essentially boil down to assuming that there is no failure of demand, that there are no unused resources or employable workers, and that such a thing as a liquidity trap can't exist. I repeat - this is religion, not science, and a religion which is grossly abused by the facts.

### Flat Earth Society

Most crackpot denialists are generalists, rather than specialists - polyidiotes, if I may coin a term. Rick Perry and Michelle Bachman are not exceptional in this respect: Global warming, evolution, economics, the actuarial status of Social Security all fit neatly on their plates of denial.

Not sure if anyone has asked them about the shape of the Earth.

### Gold in Them Thar'....

...Meteorites?

Karen Hopkin in Scientific American:

Because it appears that a rain of meteors nearly 4 billion years ago peppered the Earth’s exterior with precious metals. So says a study in the journal Nature. [Matthias Willbold, Tim Elliott and Stephen Moorbath, "The tungsten isotopic composition of the Earth’s mantle before the terminal bombardment"]

When Earth was forming, molten iron sank to its center, creating the planet’s core. That iron carried with it a slew of iron-loving metals, including gold and platinum. In fact, the Earth’s core is packed with enough precious metals to cover the entire planet four meters deep.

But not all that glitters is down at the planet’s center. Today there’s enough gold in the Earth’s rocky shell to please prospectors—and to puzzle planetary scientists: why is that gold not down in the core, too?

The answer, it seems, is that it wasn’t even on the Earth until after the core formed. Isotope concentrations in rock samples of different ages indicate that the composition of the Earth’s mantle changed after the planet was blasted with meteors 3.9 billion years ago. That bombardment coated our home with a thin veneer of riches. Which means that the gold in them thar hills is older than the hills.

So maybe if we go back to the gold standard, space exploration will take care of itself? At least it should be a bit easier than Tom Swift's drilling down to the core itself.

## Wednesday, September 07, 2011

### Debate

Andrew Sullivan rounds up the reactions of the punditocracy. One of my favorites:

E.D. Kain:

[W]hen Perry is asked about the two-hundred and thirty some people he’s executed on death row during his governorship, the audience bursts into applause. Torture, war, and death, and this is the “pro-life” party. I submit to you that this moment is perhaps the most telling since George W. Bush left office; that the modern Republican party is not only intellectually bankrupt, but morally bankrupt as well.

I have a hard time believing that Perry's anti Social Security rhetoric has much future - at least in the general election.

### Axis of ...

Is our Cosmos asymmetric? A new study of supernovae accelerations says yes.

Rong-Gen Cai and Zhong-Liang Tuo at the Key Laboratory of Frontiers in Theoretical Physics at the Chinese Academy of Sciences in Beijing have re-examined the data from 557 supernovas throughout the Universe and recrunched the numbers.

Today, they confirm that the preferred axis is real. According to their calculations, the direction of greatest acceleration is in the constellation of Vulpecula in the Northern hemisphere. That's consistent with other analyses and also with other evidence such as other data showing a preferred axis in the cosmic microwave background.

That will force cosmologists to an uncomfortable conclusion: the cosmological principle must be wrong.

However, this line from the abstract caught my eye:

We find that ... the anisotropy is more prominent when only low redshift data ($z\leq0.2$) are used.

Sounds a bit suspicious to me.

## Tuesday, September 06, 2011

### Biblical Stimulus

Deuteronomy 15 has a dynamic stimulus plan:

Deu 15:1 ¶ At the end of [every] seven years thou shalt make a release.

Deu 15:2 And this [is] the manner of the release: Every creditor that lendeth [ought] unto his neighbour shall release [it]; he shall not exact [it] of his neighbour, or of his brother; because it is called the LORD'S release... KJV

Debt forgiveness can be a powerful stimulus. If, for example, you have some cash in the bank, you can think of that as a loan from you to the bank. Better go spend it. Should make everybody's CDS pretty expensive.

God also has some advice (NIV this time):

However, there need be no poor people among you, for in the land the LORD your God is giving you to possess as your inheritance, he will richly bless you, 5 if only you fully obey the LORD your God and are careful to follow all these commands I am giving you today. 6 For the LORD your God will bless you as he has promised, and you will lend to many nations but will borrow from none. You will rule over many nations but none will rule over you.

Oops.

## Monday, September 05, 2011

### End State

Via Tyler Cowen, by a somewhat labyrhinthine link chain, this quote from Keynes:

We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come--namely, technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.

We seem to be approaching a tipping point in technology where robots will be replacing human workers in an increasing range of occupations. The numbers of the potentially unemployed are staggering. The logical outcome of such an economy is a situation wherein virtually all the wealth flows to the owners of capital - the robots - and a tiny cadre of experts still needed to ensure their functionality.

It's not implausible that a significant part of the current unemployment has exactly that character - that's a logical corollary of Cowen's ZMP idea. The problem, in that case, is not that we can't find new uses for labor, it's that such uses that are actually in the capacity of the average worker might no longer exist.

### The Job Creators

Fox News and similar outfits like to remind us about once a millisecond that the rich are "the job creators" and as such, ought to be exempt from taxes of any kind.  The following is addressed to them:

Dear Job Creators,

Your job, as I understand it, is to create jobs.  In case you haven't noticed, you have been doing a piss poor job of it.  In order to inspire you to do better, I propose we tax the crap out of you until you figure out how to improve your performance.

Yours, sincerely,

CIP

### U.S.E.?

Louise Story and Mathew Saltmarsh, writing in the New York Times, see signs of inching toward a European fiscal union - in effect, a United States of Europe.  The motivation is obvious - the apparent instability of the Euro zone as currently constituted - but the obstacles are enormous.  I don't expect it to happen, at least not until the Euro sheds a few of the weaker members, but the implications would obviously be huge.

One problem is that the situation is evolving rapidly, and politics moves with glacial speed.  The other problem is the question of who gets what.  So far the bankers having been driving this train, and I would be very surprised if European citizenry would be willing to give up so much to save a bunch of bankers who got into this problem mostly through their own stupidity.

At some point, I think, the insolvent banks need to be annihilated or reorganized.  And how about requiring adequate reserves for credit default swaps and other insurance catastrophes in waiting.

### Not the Only One

It seems that I'm not the only one to get all John Lennon over the prospect that the Higgs might just not be there.  Peter Woit has also been similarly inspired, and he has some actual substance as to the implications.

If the SM Higgs is found, there will be rejoicing at first at CERN and within the physics community, and an appropriately proud announcement to the public. Debate will begin on who gets the Nobel: experimentalists? which of the 6000+ people at LHC/CMS/ATLAS? or theorists? Anderson/Higgs/Englert/Brout/Guralnik/Hagen/Kibble, or ? I gather Brout is no longer with us, maybe this will have to wait until the list gets down to three by attrition. Probably the best case would be for Weinberg/Salam, but they already were rewarded for the SM. Maybe the Swedes could make Weinberg’s a double. The LHC experimentalists would have an active research program for many years trying to measure the Higgs properties. Theorists though would face the gloomy prospect that these would just agree with the SM. We’d be stuck pretty much where we have been for thirty years: no clues as to how to do better than the SM.

What though if the SM Higgs gets ruled out? CERN may consider this an embarassment, but it’s actually a far more exciting result, one even more worthy of the Nobel than finding the long-sought particle. SUSY enthusiasts will claim this means it’s a SUSY Higgs, and model builders will get to work on constructing more complicated models designed to explain the result by making the Higgs even harder to see (Matt Strassler is starting to write about such models here). My guess would be though that no Higgs means the argument from esthetics was right, so adding in more scalar fields in some complex pattern isn’t a very plausible explanation of the null result.

A commenter here pointed out that this possibility was discussed during the debate over the SSC, when it was argued that, in the case of no Higgs, you would need a 40 TeV machine to look at W/Z scattering, to get information about what was really going on. The LHC should be capable of quite high luminosity, which may compensate for its lower energy in such searches, see a recent discussion here.

My own very vague favorite idea has always been that, non-perturbatively, there’s something important we’re missing in our understanding of gauge symmetry in chiral gauge theories and that this may hold the secret to the mystery of electroweak symmetry breaking. While this idea has been a motivation for research I’ve been pursuing in recent years, I can’t claim to have made any progress on it. My second real blog posting here was about this, back in 2004, leading to a torrent of abuse. Maybe if there’s no Higgs, SUSY and extra dimensions are gone, this could become a legitimate question in the eyes of mainstream theorists.

## Sunday, September 04, 2011

### Do Governments Invent New Technologies?

From Tyler Cowen, of all people.

Despite what conservatives routinely sell, the government is often the source of productive new technology.  In the age of internet and web, that seems obvious, but it happened before as well.  Few ideas are more crucial to the industrial revolution than that of interchangeable parts:

The symbolic kingpin of interchangeable parts production fell in 1960 when Robert S. Woodbury published his essay “The Legend of Eli Whitney and Interchangeable Parts”…Woodbury convincingly argued that the parts of Whitney’s guns were not in fact constructed with interchangeable parts…

With Eli Whitney reinterpreted as a promoter rather than as a pioneer of machine-made interchangeable parts manufacture, it remained for Merritt Roe Smith to identify conclusively the personnel and the circumstances of this fundamental step in the development of mass production. Smith demonstrated that the United States Ordnance Department was the prime mover in bringing about machine-made interchangeable parts production of small arms. The national armory at Springfield, Massachusetts, played a major role in this process, especially in its efforts to coordinate its operations with those of the Harpers Ferry Armory and John Hall’s experimental rifle factory, also at Harpers Ferry.

## Saturday, September 03, 2011

### Galaxy of Lies

A favorite constellation in the right-wing galaxy of lies is the notion that government spending has exploded in the Obama years.  Paul Krugman takes a look at the facts.

Do the dismal economic numbers really reflect the turn to fiscal austerity? I keep hearing people say no, because austerity hasn’t actually happened yet in America. But they’re wrong.
The fact is that the fading out of the stimulus, and in particular of aid to state and local governments, is already and noticeably leading to substantial withdrawal of government demand. Look, in particular, at actual government purchases of goods and services — governments at all levels buying stuff — which is what standard macroeconomics says should have the highest multiplier, since unlike transfers and tax cuts it is by definition spent rather than saved. Here’s the picture, showing changes in real spending over the previous year:

Krugman estimates that cuts in government expenditures have take a per cent or more out of the economic growth.

## Friday, September 02, 2011

My recent comments section stopped working when Echo / JS-Kit / Haloscan changed something or other.  Anybody know how to fix or adequately replace it?

## Thursday, September 01, 2011

### Debt and Debt Peonage: Sumerian Style

More from David Graeber: Debt, The First 5000 Years.

Debt was invented in ancient Mesopotania, and ditto consumer debt.  A persistent problem with consumer debt was that one bad harvest could ruin a huge fraction of the farmers, with bankers seizing their homes, farms, families, and persons.  Farm and village was abandoned as endangered farmers fled, often to become bandits.

Kings countered this vast social disruption with occasional consumer debt cancellations.  Eventually, it became common for a new king to do this kind of debt forgiveness at his ascension to the throne.  I expect that loans got harder to get when the King got old.

This is the kind of drastic medicine that neither Europe nor the US has the stomach for - but might be preferable to the kind of slow death by bankruptcy that we see before us.

### Notice Me! Reprise.

Steve Landburg is a frequent and frequently vituperative critic of Paul Krugman.  Rarely has Krugman deigned to answer is his less distinguished colleague, but on the subject of House Republican Majority Leader Eric Cantor's decision to hold Hurricane Irene disaster relief hostage, he does.  The result is surprisingly instructive, though (in my view) most of the instruction comes from Krugman and the commenters on Landsburg's blog.

The argument, and yes, you do have to click thru to follow it:-)

Krugman

Landsburg

Krugman

And even Steve is happy about it.

What I like about people in academics is that when we disagree, we actually care about figuring out who’s right — and therefore we have a tendency to reach consensus, though it can take a while.

It can be more important that people acknowledge our points than agree with them.  Of course Steve has decided not to notice mine.  Which calls for this truly lame video (but I still like the song):