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10 Economic Truths

ResponsiblyIrresponsible
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6/8/2016 12:50:26 AM
Posted: 6 months ago
In the age of Trump, evidence is no longer the central force governing so-called policy discussions: it's about sensationalism, bigotry, and pandering to people's prejudices. Trump's "experts" are charlatans in the same sense that he's an embarrassingly failed businessman whose economic policies are as simplistically devoid from truth as he is incompetent.

Economists, however, know a few (*laughs* a lot) more things. In fact, there are a whole lot of things that the vast majority of economists actually agree on. Greg Mankiw wrote a piece in the NYT back in 2008 envisaging a world in which politicians pandered to economists rather than, say, the typical soccer moms and rednecks who comprise the "undecided voter" pool.

With that, I give you what I consider to be the 10 most indisputable economic facts.

1. Climate change is real and anthropogenic, a classic, Econ 101 case of a market failure. We cannot possibly rely on markets to "get their sh1t" together because left to their own devices they'll produce far more pollution that is socially optimal -- in other words, there's a disconnect between the marginal PRIVATE benefit and the marginal social benefit, the former of which refers to the incentive structure for private firms and the latter for society as a whole. Therefore, a Pigovian tax on carbon dioxide is the very least we can do.

2. Raising the minimum wage has costs. Economics is about trade-offs, so it also has benefits: some people who retain their jobs will see their incomes rise while others will either lose their jobs, be priced out of the job market, or even see their incomes decline (i.e., firms may reduce the wages of higher paid workers in order to finance employees with lower wages, though this is a bit difficult given the rigidities built into the system). It's also very poorly targeted in the sense that some -- by no means a majority, but a not insubstantial amount -- of MW workers are teenagers, some of affluent families, or earning as much as three times the poverty level. (Obviously the goal is to target workers in poverty). The EITC, however, also is imperfect: it's better targeted toward poor people and doesn't cost jobs, but (a) it is disproportionately beneficial to families with children, (b) the benefit is arguably too small in its current form, (c) employers capture a substantial portion of that small benefit, and (d) there's a phase-out provision that discourages work beyond a certain income level. Therefore, the right strategy is to find the correct balance between the minimum wage and the EITC.

3. Wages have not been stagnant for the past three decades. This is a nonsensical myth put forward by left-wing think tanks whose work isn't worth the paper its written on. After adjusting for productivity mismeasurement (very hard to do, mind you, and probably the largest source of measurement uncertainty to this day), household composition, CPI measurement vis-a-vis the basket of goods and services people actually purchase, the divergence between compensation and hourly wages (i.e., the rise in benefits), etc., the gap almost entirely disappears.

4. Free trade is fundamentally good for the economy, whereas protectionism imposes needless, destructive harms -- deadweight loss, as the Econ 101 models would say -- to long-term capacity. Manufacturing jobs have NOT vanished because of free trade: they became much more productive, which is why output in the manufacturing sector has RISEN relative to employment.

5. Immigration is fundamentally good for the economy in the same way as free trade and does not depress wages, but rather bolsters productivity and thus INCREASES real wages.
Attempting to distinguish between "legal" and "illegal" immigration fundamentally misses the point.

6. Almost a decade ago, Austrian economists predicted that expansionary monetary policy would lead to hyperinflation, skyrocketing interest rates, and asset bubbles. They were wrong on every single point and their ideology as such has been discredited over and over again.

7. With that said, an economy with a central bank targeting inflation in a forward-looking manner has a fiscal multiplier of 0. You may see studies finding evidence of a positive fiscal multiplier, but there are either flaws in methodology or in reporting -- e.g., reporting a positive multiplier within a 68 percent confidence interval (otherwise known as junk science). New Keynesians are a bit less willing to get onboard with this, but their models certainly are: fiscal stimulus has no effect on real variables because it is offset by monetary policy.

8. Taxes likely have a nonlinear effect on growth. There's a diminishing returns with respect to the BENEFITS of tax cuts, i.e., considerably less bang for your buck by reducing marginal rates further (aside from removing needless complexity and cronyism within the current tax code), but considerable potential harm that comes with raising them. That doesn't mean that we shouldn't ever raise any forms of taxes under any circumstances, but that we should be smart in zeroining in on which ones, by how much, over what type of phase-in. The gas tax is a good example of a tax we ought to raise, and that could be offset by a reduction in payroll taxes equal in present value terms to the rise in gas prices. Evidence shows that this tax is much more salient and people are likely to alter their behavior -- buying hybrids, taking public transportation, etc. -- in response to material increases.

9. Wages are sticky in a downward direction and thus monetary policy has real effects. Yes, Krugman, even at the zero lower bound: there is no such thing as a liquidity trap. The Fed could have gained far more traction in 2008 had it been more aggressive and willing to experiment with new tools along the lines of a higher inflation target, a price level target, or a nominal GDP target. Regardless, Lars Svensson's and Mike Woodford's research is the guiding force behind monetary policy at its effective lower bound (notice that I said "effective," not zero: it's negative!).

10. Glassed Steagall had absolutely nothing to do with the subprime crisis. Sanders is correct that regulatory imperfections were to blame -- i.e., the Fed had nothing to do with it, other than keeping policy far too restrictive moving into late 2008 -- but the issue wasn't the *size* of the financial institutions (that is, we're not talking about "big banks," we're talking about shadow banks which are legally exempt from the type of regulatory oversight in place before the crisis, but are largely addressed by the 2010 Dodd Frank Act) as much as it was the degree of interconnectedness. Therefore, reinstating Glassed Steagall and knighting it as some sort of panacea is a disingenuous, fruitless effort.
~ResponsiblyIrresponsible

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ResponsiblyIrresponsible
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6/8/2016 5:55:47 PM
Posted: 6 months ago
As expected, 16k and I are in agreement on all ten of these truths.

Trump supporters, let's see you defend your guy against reality.
~ResponsiblyIrresponsible

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Wylted
Posts: 21,167
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6/8/2016 6:14:52 PM
Posted: 6 months ago
At 6/8/2016 12:50:26 AM, ResponsiblyIrresponsible wrote:
In the age of Trump, evidence is no longer the central force governing so-called policy discussions: it's about sensationalism, bigotry, and pandering to people's prejudices. Trump's "experts" are charlatans in the same sense that he's an embarrassingly failed businessman whose economic policies are as simplistically devoid from truth as he is incompetent.

Economists, however, know a few (*laughs* a lot) more things. In fact, there are a whole lot of things that the vast majority of economists actually agree on. Greg Mankiw wrote a piece in the NYT back in 2008 envisaging a world in which politicians pandered to economists rather than, say, the typical soccer moms and rednecks who comprise the "undecided voter" pool.

With that, I give you what I consider to be the 10 most indisputable economic facts.

1. Climate change is real and anthropogenic, a classic, Econ 101 case of a market failure. We cannot possibly rely on markets to "get their sh1t" together because left to their own devices they'll produce far more pollution that is socially optimal -- in other words, there's a disconnect between the marginal PRIVATE benefit and the marginal social benefit, the former of which refers to the incentive structure for private firms and the latter for society as a whole. Therefore, a Pigovian tax on carbon dioxide is the very least we can do.

A carbon tax creates a sort of prisoner's dilemma with China. It is effective at decreasing America's carbon output, but would likely result in importing more stuff from China who doesn't have the same sort of taxes.


2. Raising the minimum wage has costs. Economics is about trade-offs, so it also has benefits: some people who retain their jobs will see their incomes rise while others will either lose their jobs, be priced out of the job market, or even see their incomes decline (i.e., firms may reduce the wages of higher paid workers in order to finance employees with lower wages, though this is a bit difficult given the rigidities built into the system). It's also very poorly targeted in the sense that some -- by no means a majority, but a not insubstantial amount -- of MW workers are teenagers, some of affluent families, or earning as much as three times the poverty level. (Obviously the goal is to target workers in poverty). The EITC, however, also is imperfect: it's better targeted toward poor people and doesn't cost jobs, but (a) it is disproportionately beneficial to families with children, (b) the benefit is arguably too small in its current form, (c) employers capture a substantial portion of that small benefit, and (d) there's a phase-out provision that discourages work beyond a certain income level. Therefore, the right strategy is to find the correct balance between the minimum wage and the EITC.

We won't go into this now, but suffice it to say they usually only focus on shortbterm gains and losses in their model instead of what the effect would be on a 75 year scale.

3. Wages have not been stagnant for the past three decades. This is a nonsensical myth put forward by left-wing think tanks whose work isn't worth the paper its written on. After adjusting for productivity mismeasurement (very hard to do, mind you, and probably the largest source of measurement uncertainty to this day), household composition, CPI measurement vis-a-vis the basket of goods and services people actually purchase, the divergence between compensation and hourly wages (i.e., the rise in benefits), etc., the gap almost entirely disappears.

I knew that but thought nobody else did, and honestly I am with them on being a little dishonest there. You also factor in how much cheaper it is to produce goods as technology increases and you see some interesting gains.

4. Free trade is fundamentally good for the economy, whereas protectionism imposes needless, destructive harms -- deadweight loss, as the Econ 101 models would say -- to long-term capacity. Manufacturing jobs have NOT vanished because of free trade: they became much more productive, which is why output in the manufacturing sector has RISEN relative to employment.


We agree. I am just more extreme with it.

5. Immigration is fundamentally good for the economy in the same way as free trade and does not depress wages, but rather bolsters productivity and thus INCREASES real wages.
Attempting to distinguish between "legal" and "illegal" immigration fundamentally misses the point.

I don't think so. If we need 700,000 low skill immigrants a year coming in, I'd prefer to see them come in legally. Why force somebody to fear for the police everytime they walk out of the door rather than making them legal citizens?

6. Almost a decade ago, Austrian economists predicted that expansionary monetary policy would lead to hyperinflation, skyrocketing interest rates, and asset bubbles. They were wrong on every single point and their ideology as such has been discredited over and over again.

More in the next post....

7. With that said, an economy with a central bank targeting inflation in a forward-looking manner has a fiscal multiplier of 0. You may see studies finding evidence of a positive fiscal multiplier, but there are either flaws in methodology or in reporting -- e.g., reporting a positive multiplier within a 68 percent confidence interval (otherwise known as junk science). New Keynesians are a bit less willing to get onboard with this, but their models certainly are: fiscal stimulus has no effect on real variables because it is offset by monetary policy.

8. Taxes likely have a nonlinear effect on growth. There's a diminishing returns with respect to the BENEFITS of tax cuts, i.e., considerably less bang for your buck by reducing marginal rates further (aside from removing needless complexity and cronyism within the current tax code), but considerable potential harm that comes with raising them. That doesn't mean that we shouldn't ever raise any forms of taxes under any circumstances, but that we should be smart in zeroining in on which ones, by how much, over what type of phase-in. The gas tax is a good example of a tax we ought to raise, and that could be offset by a reduction in payroll taxes equal in present value terms to the rise in gas prices. Evidence shows that this tax is much more salient and people are likely to alter their behavior -- buying hybrids, taking public transportation, etc. -- in response to material increases.

9. Wages are sticky in a downward direction and thus monetary policy has real effects. Yes, Krugman, even at the zero lower bound: there is no such thing as a liquidity trap. The Fed could have gained far more traction in 2008 had it been more aggressive and willing to experiment with new tools along the lines of a higher inflation target, a price level target, or a nominal GDP target. Regardless, Lars Svensson's and Mike Woodford's research is the guiding force behind monetary policy at its effective lower bound (notice that I said "effective," not zero: it's negative!).

10. Glassed Steagall had absolutely nothing to do with the subprime crisis. Sanders is correct that regulatory imperfections were to blame -- i.e., the Fed had nothing to do with it, other than keeping policy far too restrictive moving into late 2008 -- but the issue wasn't the *size* of the financial institutions (that is, we're not talking about "big banks," we're talking about shadow banks which are legally exempt from the type of regulatory oversight in place before the crisis, but are largely addressed by the 2010 Dodd Frank Act) as much as it was the degree of interconnectedness. Therefore, reinstating Glassed Steagall and knighting it as some sort of panacea is a disingenuous, fruitless effort.
Wylted
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6/8/2016 6:23:40 PM
Posted: 6 months ago
6. Almost a decade ago, Austrian economists predicted that expansionary monetary policy would lead to hyperinflation, skyrocketing interest rates, and asset bubbles. They were wrong on every single point and their ideology as such has been discredited over and over again.

You should spend the same amount of time studying Austrian economics as you do Meynesian economics. Austrians don't make predictiona like that. They don't say stuff like a rise in minimum wage will increase unemployment. They are very scientific and only focus the science of economics. They know the economy is too large and complicated to micromanage such as Keynesians do by pulling thos leverbor that lever. They say that a rise in minimum wage will result in less employment than their otherwise would have been if the law was not implemented.

It is not a prediction of whether unemploymet will rise or fall, but whether it will be higher or lower than it would have been without interference.

7. With that said, an economy with a central bank targeting inflation in a forward-looking manner has a fiscal multiplier of 0. You may see studies finding evidence of a positive fiscal multiplier, but there are either flaws in methodology or in reporting -- e.g., reporting a positive multiplier within a 68 percent confidence interval (otherwise known as junk science). New Keynesians are a bit less willing to get onboard with this, but their models certainly are: fiscal stimulus has no effect on real variables because it is offset by monetary policy.

You understand that more than I do. No opinion on this

8. Taxes likely have a nonlinear effect on growth. There's a diminishing returns with respect to the BENEFITS of tax cuts, i.e., considerably less bang for your buck by reducing marginal rates further (aside from removing needless complexity and cronyism within the current tax code), but considerable potential harm that comes with raising them. That doesn't mean that we shouldn't ever raise any forms of taxes under any circumstances, but that we should be smart in zeroining in on which ones, by how much, over what type of phase-in. The gas tax is a good example of a tax we ought to raise, and that could be offset by a reduction in payroll taxes equal in present value terms to the rise in gas prices. Evidence shows that this tax is much more salient and people are likely to alter their behavior -- buying hybrids, taking public transportation, etc. -- in response to material increases.

More pulling of levers I'll talk about the problems of a scientific dictatorship later.

9. Wages are sticky in a downward direction and thus monetary policy has real effects. Yes, Krugman, even at the zero lower bound: there is no such thing as a liquidity trap. The Fed could have gained far more traction in 2008 had it been more aggressive and willing to experiment with new tools along the lines of a higher inflation target, a price level target, or a nominal GDP target. Regardless, Lars Svensson's and Mike Woodford's research is the guiding force behind monetary policy at its effective lower bound (notice that I said "effective," not zero: it's negative!).

No opinion

10. Glassed Steagall had absolutely nothing to do with the subprime crisis. Sanders is correct that regulatory imperfections were to blame -- i.e., the Fed had nothing to do with it, other than keeping policy far too restrictive moving into late 2008 -- but the issue wasn't the *size* of the financial institutions (that is, we're not talking about "big banks," we're talking about shadow banks which are legally exempt from the type of regulatory oversight in place before the crisis, but are largely addressed by the 2010 Dodd Frank Act) as much as it was the degree of interconnectedness. Therefore, reinstating Glassed Steagall and knighting it as some sort of panacea is a disingenuous, fruitless effort.

No opinion, but also oppose that policy
ResponsiblyIrresponsible
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6/8/2016 6:24:20 PM
Posted: 6 months ago
At 6/8/2016 6:14:52 PM, Wylted wrote:
A carbon tax creates a sort of prisoner's dilemma with China. It is effective at decreasing America's carbon output, but would likely result in importing more stuff from China who doesn't have the same sort of taxes.

China has actually gotten onboard with limiting emissions, so if anything passing a carbon tax in the US is a signaling mechanism. Not to mention, we're not talking about exportable industries: the costs of literally moving an entire factory to China far outweigh the costs of the carbon tax. I don't see this as an issue.

We won't go into this now, but suffice it to say they usually only focus on shortbterm gains and losses in their model instead of what the effect would be on a 75 year scale.

I agree with this.

I knew that but thought nobody else did, and honestly I am with them on being a little dishonest there.

Why? lol.

You also factor in how much cheaper it is to produce goods as technology increases and you see some interesting gains.

4. Free trade is fundamentally good for the economy, whereas protectionism imposes needless, destructive harms -- deadweight loss, as the Econ 101 models would say -- to long-term capacity. Manufacturing jobs have NOT vanished because of free trade: they became much more productive, which is why output in the manufacturing sector has RISEN relative to employment.

We agree. I am just more extreme with it.

I'm pretty darn extreme on free trade, man. I doubt there's more just disagreement there.

5. Immigration is fundamentally good for the economy in the same way as free trade and does not depress wages, but rather bolsters productivity and thus INCREASES real wages.
Attempting to distinguish between "legal" and "illegal" immigration fundamentally misses the point.

I don't think so. If we need 700,000 low skill immigrants a year coming in, I'd prefer to see them come in legally. Why force somebody to fear for the police everytime they walk out of the door rather than making them legal citizens?

I don't want them fearing for the police -- that's the whole point. I'd open the border and establish a pathway to citizenship for nonviolent immigrants who pass a background check. Criminals get deported, as is still the case under current law. The problem is that the current system makes immigrating here legally incredibly difficult such that immigrants who want to establish a better life for their family and work hard in order to do so aren't actually able to get a work VISA, and thus are required to work under the table for, say, below the minimum wage. If current immigration laws are unjust, we should fix them -- and that forms the crux of my argument.

I guess I am more conservative than you on an issue! I know this issue is often associated with libertarians, who are the real conservatives on economics, but Trump's position shared by many in the GOP is anything BUT conservative: it's protectionist bullcrap.

6. Almost a decade ago, Austrian economists predicted that expansionary monetary policy would lead to hyperinflation, skyrocketing interest rates, and asset bubbles. They were wrong on every single point and their ideology as such has been discredited over and over again.

More in the next post....

Can't wait.

7. With that said, an economy with a central bank targeting inflation in a forward-looking manner has a fiscal multiplier of 0. You may see studies finding evidence of a positive fiscal multiplier, but there are either flaws in methodology or in reporting -- e.g., reporting a positive multiplier within a 68 percent confidence interval (otherwise known as junk science). New Keynesians are a bit less willing to get onboard with this, but their models certainly are: fiscal stimulus has no effect on real variables because it is offset by monetary policy.

8. Taxes likely have a nonlinear effect on growth. There's a diminishing returns with respect to the BENEFITS of tax cuts, i.e., considerably less bang for your buck by reducing marginal rates further (aside from removing needless complexity and cronyism within the current tax code), but considerable potential harm that comes with raising them. That doesn't mean that we shouldn't ever raise any forms of taxes under any circumstances, but that we should be smart in zeroining in on which ones, by how much, over what type of phase-in. The gas tax is a good example of a tax we ought to raise, and that could be offset by a reduction in payroll taxes equal in present value terms to the rise in gas prices. Evidence shows that this tax is much more salient and people are likely to alter their behavior -- buying hybrids, taking public transportation, etc. -- in response to material increases.

9. Wages are sticky in a downward direction and thus monetary policy has real effects. Yes, Krugman, even at the zero lower bound: there is no such thing as a liquidity trap. The Fed could have gained far more traction in 2008 had it been more aggressive and willing to experiment with new tools along the lines of a higher inflation target, a price level target, or a nominal GDP target. Regardless, Lars Svensson's and Mike Woodford's research is the guiding force behind monetary policy at its effective lower bound (notice that I said "effective," not zero: it's negative!).

10. Glassed Steagall had absolutely nothing to do with the subprime crisis. Sanders is correct that regulatory imperfections were to blame -- i.e., the Fed had nothing to do with it, other than keeping policy far too restrictive moving into late 2008 -- but the issue wasn't the *size* of the financial institutions (that is, we're not talking about "big banks," we're talking about shadow banks which are legally exempt from the type of regulatory oversight in place before the crisis, but are largely addressed by the 2010 Dodd Frank Act) as much as it was the degree of interconnectedness. Therefore, reinstating Glassed Steagall and knighting it as some sort of panacea is a disingenuous, fruitless effort.
~ResponsiblyIrresponsible

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Wylted
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6/8/2016 6:27:11 PM
Posted: 6 months ago
At 6/8/2016 5:55:47 PM, ResponsiblyIrresponsible wrote:
As expected, 16k and I are in agreement on all ten of these truths.

Trump supporters, let's see you defend your guy against reality.

I'm against his protectionist policies as well, and we don't know that he would decrease the number of immigrants, only that he would decrease the number of illegals and bring in more legally.

None of that stuff seemed like criticisms of Trump though. He is not a proponent of Austrian Economics for example, though some of the list you gave is relevant.
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6/8/2016 6:30:55 PM
Posted: 6 months ago
I don't hold the typical libertarian view on immigration. There is no doubt it is good and I would like to make it a lot easier to become legal citizens. I am also for border security not only on the Mexican border but the Canadian one as well. At some point immigration may be a bad thing but at the moment it is good for the country.
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6/8/2016 6:31:33 PM
Posted: 6 months ago
At 6/8/2016 6:23:40 PM, Wylted wrote:
You should spend the same amount of time studying Austrian economics as you do Meynesian economics.

There's nothing to study -- there aren't any models, no logic, no science. They don't use data to attempt to explain the world around them. It's nothing but a failed philosophy.

Austrians don't make predictiona like that.

They did, and they were completely wrong in doing so. In their view of the world, this was the result BY DEFINITION of increasing the monetary base. They were wrong. If my worldivew had been proven so egregiously wrong by reality, I'd reevaluate my worldview. Yet their dogmatism remains.

They don't say stuff like a rise in minimum wage will increase unemployment. They are very scientific and only focus the science of economics.

This is just bonkers. They explicitly say that they're UNCONCERNED with the science (read: econometrics) because they think it's disconnected from reality -- they care more for the so-called "logic" of free markets, and when that logic turns out to be wrong.... they keep repeating it again and again, hoping their adherents (read: college students) won't realize just how wrong they've been.

They know the economy is too large and complicated to micromanage such as Keynesians do by pulling thos leverbor that lever.

I don't support micromanaging the economy. I want the Fed to stabilize the target path of nominal GDP and then for Congress to sit back and allow the economy to run organically.

They say that a rise in minimum wage will result in less employment than their otherwise would have been if the law was not implemented.

And that's not necessarily the case, but it's an empirical claim and requires empirical evidence. I can show you that evidence, but they'll never be able to reciprocate.

It is not a prediction of whether unemploymet will rise or fall, but whether it will be higher or lower than it would have been without interference.

Wylted, all you're saying here is that there's a distinction between an outright rise in the unemployment rate and a reduction in the *rate* of hiring, even if that deceleration doesn't actually raise the unemployment rate. Austrians don't make any kind of distinction, even though most of the "job losses" from a MW hike are probably reductions in future hiring. The reason we know this is likely the case is from the empirical literature. Austrians had nothing to do with it so far as I know.

7. With that said, an economy with a central bank targeting inflation in a forward-looking manner has a fiscal multiplier of 0. You may see studies finding evidence of a positive fiscal multiplier, but there are either flaws in methodology or in reporting -- e.g., reporting a positive multiplier within a 68 percent confidence interval (otherwise known as junk science). New Keynesians are a bit less willing to get onboard with this, but their models certainly are: fiscal stimulus has no effect on real variables because it is offset by monetary policy.

You understand that more than I do. No opinion on this

Well, it's true, lol.

8. Taxes likely have a nonlinear effect on growth. There's a diminishing returns with respect to the BENEFITS of tax cuts, i.e., considerably less bang for your buck by reducing marginal rates further (aside from removing needless complexity and cronyism within the current tax code), but considerable potential harm that comes with raising them. That doesn't mean that we shouldn't ever raise any forms of taxes under any circumstances, but that we should be smart in zeroining in on which ones, by how much, over what type of phase-in. The gas tax is a good example of a tax we ought to raise, and that could be offset by a reduction in payroll taxes equal in present value terms to the rise in gas prices. Evidence shows that this tax is much more salient and people are likely to alter their behavior -- buying hybrids, taking public transportation, etc. -- in response to material increases.

More pulling of levers I'll talk about the problems of a scientific dictatorship later.

I'm not advocating for a scientific dictatorship. The argument from Econ 101 -- I thought Austrians LOVED microeconomics -- is that markets left to their own devices sometimes fail and that's grounds for government intervention. Pollution is the #1 textbook example of a market failure.

9. Wages are sticky in a downward direction and thus monetary policy has real effects. Yes, Krugman, even at the zero lower bound: there is no such thing as a liquidity trap. The Fed could have gained far more traction in 2008 had it been more aggressive and willing to experiment with new tools along the lines of a higher inflation target, a price level target, or a nominal GDP target. Regardless, Lars Svensson's and Mike Woodford's research is the guiding force behind monetary policy at its effective lower bound (notice that I said "effective," not zero: it's negative!).

No opinion

Well, it's true.

10. Glassed Steagall had absolutely nothing to do with the subprime crisis. Sanders is correct that regulatory imperfections were to blame -- i.e., the Fed had nothing to do with it, other than keeping policy far too restrictive moving into late 2008 -- but the issue wasn't the *size* of the financial institutions (that is, we're not talking about "big banks," we're talking about shadow banks which are legally exempt from the type of regulatory oversight in place before the crisis, but are largely addressed by the 2010 Dodd Frank Act) as much as it was the degree of interconnectedness. Therefore, reinstating Glassed Steagall and knighting it as some sort of panacea is a disingenuous, fruitless effort.

No opinion, but also oppose that policy

I oppose that policy, too.
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6/8/2016 6:35:09 PM
Posted: 6 months ago
At 6/8/2016 6:27:11 PM, Wylted wrote:
I'm against his protectionist policies as well, and we don't know that he would decrease the number of immigrants, only that he would decrease the number of illegals and bring in more legally.

This is a false dichotomy, because about 40% of "illegals" are people who tried to come in legally but overstayed their visas. Deporting them is throwing the baby out with the bathwater AND it strains our relationship with Mexico.

I mean, the reason you can buy cheap tomatoes, for instance, is because of illegal-immigrant labor. I fully acknowledge that legalizing them such that MW laws were applicable to them would raise the prices of those goods, but I'm confident that productivity increases from encouraging *more* immigrants to enter the US would keep those costs contained. And that's where Mr. Trump and I differ: he lives in the world of right-wing talk radio, while I live in reality.

None of that stuff seemed like criticisms of Trump though. He is not a proponent of Austrian Economics for example, though some of the list you gave is relevant.

Two of the planks were about protectionism (directly applies to Trump), one was on taxes (directly applies to Trump), I think he said some crap about breaking the banks up once, he's clueless on the Fed, he's all over the map on the MW, and so on.
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6/8/2016 6:39:01 PM
Posted: 6 months ago
At 6/8/2016 6:30:55 PM, Wylted wrote:
I don't hold the typical libertarian view on immigration. There is no doubt it is good and I would like to make it a lot easier to become legal citizens. I am also for border security not only on the Mexican border but the Canadian one as well. At some point immigration may be a bad thing but at the moment it is good for the country.

Sure, there's a Malthusian tipping point, but where Trump gets it wrong -- this is an oversimplification because it isn't as though he was right until he hit point X; he was wrong from A to B to X and then over to Z -- is in thinking we're anywhere near it or that the present trajectory of immigration is anything like that unsustainable tipping point. Immigrants, on net, are leaving this country. The biggest structural problem in the US that almost no one, except stupid politicians who love to throw out ridiculous, unrealistic platitudes like "4 percent growth!", is a decline in the structural growth rate to below 2 percent. That's a big deal. A lot of that is caused by demographics. Boosting immigration is a fantastic way to reverse some of that, and it's single-handedly the best argument for open borders.

I mean, let's say the growth rate is 1.75% into the future. Acknowledge that it could even be as low as 1.2% or something scary like that. That's scary, and anyone -- I don't care if they subscribe to libertarian dogma -- should want to fix that. Here's the best solution practically served up on a silver platter.
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6/8/2016 6:47:32 PM
Posted: 6 months ago
At 6/8/2016 6:35:09 PM, ResponsiblyIrresponsible wrote:
At 6/8/2016 6:27:11 PM, Wylted wrote:
I'm against his protectionist policies as well, and we don't know that he would decrease the number of immigrants, only that he would decrease the number of illegals and bring in more legally.

This is a false dichotomy, because about 40% of "illegals" are people who tried to come in legally but overstayed their visas. Deporting them is throwing the baby out with the bathwater AND it strains our relationship with Mexico.

This is going tobsoumd weird from somebody who supports building a wall, but we should legalize most of the ones here, and I don't think Trump is serious about deportation. It is nust such a stupid ideal and nobody on either side of the aisle will go for it. As farbas abstrained relationship with Mexico, I don't care. Those ignorant people need to do a better job at fixing their corruption. It is unacceptable and would like to see a better government there.

I mean, the reason you can buy cheap tomatoes, for instance, is because of illegal-immigrant labor. I fully acknowledge that legalizing them such that MW laws were applicable to them would raise the prices of those goods, but I'm confident that productivity increases from encouraging *more* immigrants to enter the US would keep those costs contained. And that's where Mr. Trump and I differ: he lives in the world of right-wing talk radio, while I live in reality.

I'm cool with prices being raised. Maybe we can start importing tomatoes from Mecico so these people can actually get a job in their own country. Plus I think the over reliance on cheap labor has caused Anerica's agricultural industry to fall behind technologically.

None of that stuff seemed like criticisms of Trump though. He is not a proponent of Austrian Economics for example, though some of the list you gave is relevant.

Two of the planks were about protectionism (directly applies to Trump), one was on taxes (directly applies to Trump), I think he said some crap about breaking the banks up once, he's clueless on the Fed, he's all over the map on the MW, and so on.

I think he wants to increase MW, but has to deny it now that he is running as a Republican. I also think he really is for a single payer system, but again he needs Republican support so he has to shut up about it.

He really does not fit neatly into either side of the political spectrum. He is playing Republicans as idiots and pandering to them on some issues he is not sincere about. I'm fine with that. I think if people actually paid attention to what Hillary and Trump actually support instead of the rhetoric, each aould split the Republican and Democrat vote.

Fvck the guy has always been pro choice also but now that he is running as a Republican pretends to be pro life, lol.

Dude is like FDR with his broad appeal to both parties, but unfortunately he sucks at rhetoric and he isn't careful with his words so nobody realizes his cross appeal.

I promise Democrats will not be disappointed with his supreme court nomination of a bunch of moderates.
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6/8/2016 6:50:55 PM
Posted: 6 months ago
At 6/8/2016 6:39:01 PM, ResponsiblyIrresponsible wrote:
At 6/8/2016 6:30:55 PM, Wylted wrote:
I don't hold the typical libertarian view on immigration. There is no doubt it is good and I would like to make it a lot easier to become legal citizens. I am also for border security not only on the Mexican border but the Canadian one as well. At some point immigration may be a bad thing but at the moment it is good for the country.

Sure, there's a Malthusian tipping point, but where Trump gets it wrong -- this is an oversimplification because it isn't as though he was right until he hit point X; he was wrong from A to B to X and then over to Z -- is in thinking we're anywhere near it or that the present trajectory of immigration is anything like that unsustainable tipping point. Immigrants, on net, are leaving this country. The biggest structural problem in the US that almost no one, except stupid politicians who love to throw out ridiculous, unrealistic platitudes like "4 percent growth!", is a decline in the structural growth rate to below 2 percent. That's a big deal. A lot of that is caused by demographics. Boosting immigration is a fantastic way to reverse some of that, and it's single-handedly the best argument for open borders.

I mean, let's say the growth rate is 1.75% into the future. Acknowledge that it could even be as low as 1.2% or something scary like that. That's scary, and anyone -- I don't care if they subscribe to libertarian dogma -- should want to fix that. Here's the best solution practically served up on a silver platter.

Shouldn't we have an economic model that does not depend on growth. How can we actually fix environmental problems of we have an economic model that requires continually consuming more things?
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6/8/2016 7:01:26 PM
Posted: 6 months ago
At 6/8/2016 6:47:32 PM, Wylted wrote:
This is going tobsoumd weird from somebody who supports building a wall, but we should legalize most of the ones here,

I don't think that sounds weird. That was Reagan's logic. It was sound then and it's sound now.

Hell, I think 16k wants to build a wall for national-security reasons. I'm the one who's hesitant. If that were the compromise -- building a wall in exchange for legalizing the people here, assuming they pass a background check -- I would take it in a second. Then I'd come back for a pathway for people who enter thereafter.

and I don't think Trump is serious about deportation. It is nust such a stupid ideal and nobody on either side of the aisle will go for it.As farbas abstrained relationship with Mexico, I don't care. Those ignorant people need to do a better job at fixing their corruption. It is unacceptable and would like to see a better government there.

You'd be surprised.... a lot of people actually agree with him. I think policy proposals at this point are less important then principles -- in air quotes for Trump -- they articulate as being important to them. Trump might not be able to DEPORT 11 million people, so he sure as hell won't legalize the people here or do anything at all to expand immigration.

I mean, the reason you can buy cheap tomatoes, for instance, is because of illegal-immigrant labor. I fully acknowledge that legalizing them such that MW laws were applicable to them would raise the prices of those goods, but I'm confident that productivity increases from encouraging *more* immigrants to enter the US would keep those costs contained. And that's where Mr. Trump and I differ: he lives in the world of right-wing talk radio, while I live in reality.

I'm cool with prices being raised. Maybe we can start importing tomatoes from Mecico so these people can actually get a job in their own country. Plus I think the over reliance on cheap labor has caused Anerica's agricultural industry to fall behind technologically.

I think cheap labor is in large part a byproduct of mechanization -- Econ 101 capital-labor substitution. If you're arguing EWH here, it's time for me to call *you* a pinko, lol.

None of that stuff seemed like criticisms of Trump though. He is not a proponent of Austrian Economics for example, though some of the list you gave is relevant.

Two of the planks were about protectionism (directly applies to Trump), one was on taxes (directly applies to Trump), I think he said some crap about breaking the banks up once, he's clueless on the Fed, he's all over the map on the MW, and so on.

I think he wants to increase MW, but has to deny it now that he is running as a Republican. I also think he really is for a single payer system, but again he needs Republican support so he has to shut up about it.

He said he wants people to earn more and suggested that the MW is a means to that end -- it really isn't, unless in very small, incrementalist ways -- but wants states to set it. So he gets the best (or worst, really) of both worlds: support it personally, but abolish the federal MW. Single-payer is another story.

He really does not fit neatly into either side of the political spectrum. He is playing Republicans as idiots and pandering to them on some issues he is not sincere about.

Totally agree here.

I'm fine with that.

This is where I disagree.

I think if people actually paid attention to what Hillary and Trump actually support instead of the rhetoric, each aould split the Republican and Democrat vote.

I can't think of any reason other than protectionism to support Trump as a Democrat -- and most Democrats support free trade. Frankly, most Republicans do, too. That's because there are three protectionists left in a 21st century America.

Fvck the guy has always been pro choice also but now that he is running as a Republican pretends to be pro life, lol.

He came out as "pro life" somewhat sooner -- back in 2011, or something -- but is back and forth on it, probably because he knows Republicans talk a big game on abortion, but will never actually be able to overturn Roe.

Dude is like FDR with his broad appeal to both parties, but unfortunately he sucks at rhetoric and he isn't careful with his words so nobody realizes his cross appeal.

I wouldn't compare him to FDR at all, lolol.

I promise Democrats will not be disappointed with his supreme court nomination of a bunch of moderates.

Have you seen his list of appointees?!? *shivers at the prospect*
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6/8/2016 7:03:42 PM
Posted: 6 months ago
At 6/8/2016 6:50:55 PM, Wylted wrote:
At 6/8/2016 6:39:01 PM, ResponsiblyIrresponsible wrote:
At 6/8/2016 6:30:55 PM, Wylted wrote:
I don't hold the typical libertarian view on immigration. There is no doubt it is good and I would like to make it a lot easier to become legal citizens. I am also for border security not only on the Mexican border but the Canadian one as well. At some point immigration may be a bad thing but at the moment it is good for the country.

Sure, there's a Malthusian tipping point, but where Trump gets it wrong -- this is an oversimplification because it isn't as though he was right until he hit point X; he was wrong from A to B to X and then over to Z -- is in thinking we're anywhere near it or that the present trajectory of immigration is anything like that unsustainable tipping point. Immigrants, on net, are leaving this country. The biggest structural problem in the US that almost no one, except stupid politicians who love to throw out ridiculous, unrealistic platitudes like "4 percent growth!", is a decline in the structural growth rate to below 2 percent. That's a big deal. A lot of that is caused by demographics. Boosting immigration is a fantastic way to reverse some of that, and it's single-handedly the best argument for open borders.

I mean, let's say the growth rate is 1.75% into the future. Acknowledge that it could even be as low as 1.2% or something scary like that. That's scary, and anyone -- I don't care if they subscribe to libertarian dogma -- should want to fix that. Here's the best solution practically served up on a silver platter.

Shouldn't we have an economic model that does not depend on growth. How can we actually fix environmental problems of we have an economic model that requires continually consuming more things?

That's precisely why we need a model that depends on growth -- we'll risk throwing out the baby with the bathwater. Environmental initiatives are expensive as all hell, and even the most hardline pro-environment people only want equal weight placed on environmental concerns versus growth concerns. Without growth, the entire equation falls apart. We can't have, for instance, a 100% carbon tax. We can't ban pollution entirely. No one wants to, frankly. That's why the growth part of the equation is so essential.

I mean, what else would the model focus on? Gumdrops and rainbows and beautiful trees? Sorry, Jill Stein: that isn't going to work.
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6/8/2016 7:11:13 PM
Posted: 6 months ago
I think cheap labor is in large part a byproduct of mechanization -- Econ 101 capital-labor substitution. If you're arguing EWH here, it's time for me to call *you* a pinko, lol.

I don't often admit this but I am a transhumanist first and foremost. I think we will be able to pursue more noble things in the future. Machines can do the work while we pursue creative things. There is two theories on what will happen, we will just start making money by befriending people and selling them our creative projects such as books or a videogame we created., but I don't want to rely on that.

I would like to create a basic minimum income now instead of waiting until after the machines take over. If it is inevitable let's put the system in place. Plus what is technology for if not to make our lives easier.

So I guess I would like a Libertarian society with a few socialist exceptions.

None of that stuff seemed like criticisms of Trump though. He is not a proponent of Austrian Economics for example, though some of the list you gave is relevant.

Two of the planks were about protectionism (directly applies to Trump), one was on taxes (directly applies to Trump), I think he said some crap about breaking the banks up once, he's clueless on the Fed, he's all over the map on the MW, and so on.

I think he wants to increase MW, but has to deny it now that he is running as a Republican. I also think he really is for a single payer system, but again he needs Republican support so he has to shut up about it.

He said he wants people to earn more and suggested that the MW is a means to that end -- it really isn't, unless in very small, incrementalist ways -- but wants states to set it. So he gets the best (or worst, really) of both worlds: support it personally, but abolish the federal MW. Single-payer is another story.

He really does not fit neatly into either side of the political spectrum. He is playing Republicans as idiots and pandering to them on some issues he is not sincere about.

Totally agree here.

I'm fine with that.

This is where I disagree.

I think if people actually paid attention to what Hillary and Trump actually support instead of the rhetoric, each aould split the Republican and Democrat vote.

I can't think of any reason other than protectionism to support Trump as a Democrat -- and most Democrats support free trade. Frankly, most Republicans do, too. That's because there are three protectionists left in a 21st century America.

Fvck the guy has always been pro choice also but now that he is running as a Republican pretends to be pro life, lol.

He came out as "pro life" somewhat sooner -- back in 2011, or something -- but is back and forth on it, probably because he knows Republicans talk a big game on abortion, but will never actually be able to overturn Roe.

Dude is like FDR with his broad appeal to both parties, but unfortunately he sucks at rhetoric and he isn't careful with his words so nobody realizes his cross appeal.

I wouldn't compare him to FDR at all, lolol.

I promise Democrats will not be disappointed with his supreme court nomination of a bunch of moderates.

Have you seen his list of appointees?!? *shivers at the prospect*

No I have not. I would like to see even scarier ones no doubt, like ron Paul or Judge Napolitano. Though they may be liberal enough where it counts to make Democrats happy
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6/8/2016 7:14:37 PM
Posted: 6 months ago
At 6/8/2016 7:11:13 PM, Wylted wrote:
I think cheap labor is in large part a byproduct of mechanization -- Econ 101 capital-labor substitution. If you're arguing EWH here, it's time for me to call *you* a pinko, lol.

I don't often admit this but I am a transhumanist first and foremost. I think we will be able to pursue more noble things in the future. Machines can do the work while we pursue creative things. There is two theories on what will happen, we will just start making money by befriending people and selling them our creative projects such as books or a videogame we created., but I don't want to rely on that.

After a 10-second google search on transhumanism, this really doesn't sound all that bad, though I'm more optimistic that there will be at least *some* jobs left over, even if machines were to overtake most of the stuff we're doing now.

I would like to create a basic minimum income now instead of waiting until after the machines take over. If it is inevitable let's put the system in place. Plus what is technology for if not to make our lives easier.

Now that's.... something I'm to the right of you on, again. 16k agrees with you, but I'm extremely hesitant both of the cost and of the discinentives it creates for working -- which even a phased-out wage subsidy wouldn't completely ameliorate. Not to mention the upward distribution of income that comes with replacing every single social-welfare program in existence, most of which (with the notable exception of SS and Medicare) are targeted toward the poor.

So I guess I would like a Libertarian society with a few socialist exceptions.

None of that stuff seemed like criticisms of Trump though. He is not a proponent of Austrian Economics for example, though some of the list you gave is relevant.

Two of the planks were about protectionism (directly applies to Trump), one was on taxes (directly applies to Trump), I think he said some crap about breaking the banks up once, he's clueless on the Fed, he's all over the map on the MW, and so on.

I think he wants to increase MW, but has to deny it now that he is running as a Republican. I also think he really is for a single payer system, but again he needs Republican support so he has to shut up about it.

He said he wants people to earn more and suggested that the MW is a means to that end -- it really isn't, unless in very small, incrementalist ways -- but wants states to set it. So he gets the best (or worst, really) of both worlds: support it personally, but abolish the federal MW. Single-payer is another story.

He really does not fit neatly into either side of the political spectrum. He is playing Republicans as idiots and pandering to them on some issues he is not sincere about.

Totally agree here.

I'm fine with that.

This is where I disagree.

I think if people actually paid attention to what Hillary and Trump actually support instead of the rhetoric, each aould split the Republican and Democrat vote.

I can't think of any reason other than protectionism to support Trump as a Democrat -- and most Democrats support free trade. Frankly, most Republicans do, too. That's because there are three protectionists left in a 21st century America.

Fvck the guy has always been pro choice also but now that he is running as a Republican pretends to be pro life, lol.

He came out as "pro life" somewhat sooner -- back in 2011, or something -- but is back and forth on it, probably because he knows Republicans talk a big game on abortion, but will never actually be able to overturn Roe.

Dude is like FDR with his broad appeal to both parties, but unfortunately he sucks at rhetoric and he isn't careful with his words so nobody realizes his cross appeal.

I wouldn't compare him to FDR at all, lolol.

I promise Democrats will not be disappointed with his supreme court nomination of a bunch of moderates.

Have you seen his list of appointees?!? *shivers at the prospect*

No I have not. I would like to see even scarier ones no doubt, like ron Paul or Judge Napolitano. Though they may be liberal enough where it counts to make Democrats happy

Napolitano is on the list, lollol.
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Wylted
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6/8/2016 7:24:21 PM
Posted: 6 months ago
After a 10-second google search on transhumanism, this really doesn't sound all that bad, though I'm more optimistic that there will be at least *some* jobs left over, even if machines were to overtake most of the stuff we're doing now.

Yeah if we assume no advanced AI, then plenty will be left, and even with human level AI, jobs like lawyer or cop which has a lot of political pull will stick around for a while.

I foresee more of a Kurzwelian merger than an extreme advancement of AI though. The merger is more us becoming part machine. Hell you can even see it now with our I-phones veing an extension to our brain.
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6/8/2016 7:28:29 PM
Posted: 6 months ago
I am not sure what school of economics he is a part of, but one professor of economics by the name of James D. Miller talks a lot about transhumanism/singularity.

You might be interested in what he has to say, though I will warn you is that he is a conservative.

Ge is actually what gave me the thought that China would take advantage of the American carbon tax because he views them as more willing to do extremely unethical things.
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6/8/2016 7:30:26 PM
Posted: 6 months ago
At 6/8/2016 7:24:21 PM, Wylted wrote:
After a 10-second google search on transhumanism, this really doesn't sound all that bad, though I'm more optimistic that there will be at least *some* jobs left over, even if machines were to overtake most of the stuff we're doing now.

Yeah if we assume no advanced AI, then plenty will be left, and even with human level AI, jobs like lawyer or cop which has a lot of political pull will stick around for a while.

I foresee more of a Kurzwelian merger than an extreme advancement of AI though. The merger is more us becoming part machine. Hell you can even see it now with our I-phones veing an extension to our brain.

Lol, now that.... is a bit harder to believe.
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6/8/2016 7:33:36 PM
Posted: 6 months ago
At 6/8/2016 7:28:29 PM, Wylted wrote:
I am not sure what school of economics he is a part of, but one professor of economics by the name of James D. Miller talks a lot about transhumanism/singularity.

You might be interested in what he has to say, though I will warn you is that he is a conservative.

I'll take a look. I read plenty of conservatives on a daily basis -- I'm not some hardline left-winger, lol.

Ge is actually what gave me the thought that China would take advantage of the American carbon tax because he views them as more willing to do extremely unethical things.

I'd have to see the argument in more depth, but I just don't buy it, especially if China is actually willing to get onboard with climate-change initiatives.

This is a good start, though: we both believe in climate change, lol. Usually, "conservatives" (even phony "anti establishment" people like Trump) question -- or ignore.. most likely ignore -- the science behind it. The debate should be on what the heck we do about it after acknowledging that it's real. So this is good.
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6/8/2016 7:36:11 PM
Posted: 6 months ago
At 6/8/2016 7:33:36 PM, ResponsiblyIrresponsible wrote:
At 6/8/2016 7:28:29 PM, Wylted wrote:
I am not sure what school of economics he is a part of, but one professor of economics by the name of James D. Miller talks a lot about transhumanism/singularity.

You might be interested in what he has to say, though I will warn you is that he is a conservative.

I'll take a look. I read plenty of conservatives on a daily basis -- I'm not some hardline left-winger, lol.

Ge is actually what gave me the thought that China would take advantage of the American carbon tax because he views them as more willing to do extremely unethical things.

I'd have to see the argument in more depth, but I just don't buy it, especially if China is actually willing to get onboard with climate-change initiatives.

This is a good start, though: we both believe in climate change, lol. Usually, "conservatives" (even phony "anti establishment" people like Trump) question -- or ignore.. most likely ignore -- the science behind it. The debate should be on what the heck we do about it after acknowledging that it's real. So this is good.

I like Daniel Tosh's plan. Stop having kids and let ourselves die off so it really doesn't matter how much we fvck up the planet.
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6/8/2016 7:37:43 PM
Posted: 6 months ago
At 6/8/2016 7:36:11 PM, Wylted wrote:
At 6/8/2016 7:33:36 PM, ResponsiblyIrresponsible wrote:
At 6/8/2016 7:28:29 PM, Wylted wrote:
I am not sure what school of economics he is a part of, but one professor of economics by the name of James D. Miller talks a lot about transhumanism/singularity.

You might be interested in what he has to say, though I will warn you is that he is a conservative.

I'll take a look. I read plenty of conservatives on a daily basis -- I'm not some hardline left-winger, lol.

Ge is actually what gave me the thought that China would take advantage of the American carbon tax because he views them as more willing to do extremely unethical things.

I'd have to see the argument in more depth, but I just don't buy it, especially if China is actually willing to get onboard with climate-change initiatives.

This is a good start, though: we both believe in climate change, lol. Usually, "conservatives" (even phony "anti establishment" people like Trump) question -- or ignore.. most likely ignore -- the science behind it. The debate should be on what the heck we do about it after acknowledging that it's real. So this is good.

I like Daniel Tosh's plan. Stop having kids and let ourselves die off so it really doesn't matter how much we fvck up the planet.

That.... I don't like at all.
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6/8/2016 10:28:54 PM
Posted: 6 months ago
At 6/8/2016 12:50:26 AM, ResponsiblyIrresponsible wrote:
In the age of Trump, evidence is no longer the central force governing so-called policy discussions: it's about sensationalism, bigotry, and pandering to people's prejudices. Trump's "experts" are charlatans in the same sense that he's an embarrassingly failed businessman whose economic policies are as simplistically devoid from truth as he is incompetent.

Economists, however, know a few (*laughs* a lot) more things. In fact, there are a whole lot of things that the vast majority of economists actually agree on. Greg Mankiw wrote a piece in the NYT back in 2008 envisaging a world in which politicians pandered to economists rather than, say, the typical soccer moms and rednecks who comprise the "undecided voter" pool.

With that, I give you what I consider to be the 10 most indisputable economic facts.

1. Climate change is real and anthropogenic, a classic, Econ 101 case of a market failure. We cannot possibly rely on markets to "get their sh1t" together because left to their own devices they'll produce far more pollution that is socially optimal -- in other words, there's a disconnect between the marginal PRIVATE benefit and the marginal social benefit, the former of which refers to the incentive structure for private firms and the latter for society as a whole. Therefore, a Pigovian tax on carbon dioxide is the very least we can do.


If society wants a clean environment, society will continue down the path of eco-consciousness. To keep up business must meet the demands of their customers.
Pollution as you mentioned in another comment, you believe to be a market failure.
it is not a failure of the market structure, it is a failure of society itself, our choices, our demands. It is a failure of complacency or ignorance, but as we become more aware of our environment, I assume we will continue to reverse some damage in our own self interest. This includes buying products that are created in a environmentally responsible way. If there is a demand for these products, business will provide them or lose. no need for tax, just for government to step out of the way.

2. Raising the minimum wage has costs. Economics is about trade-offs, so it also has benefits: some people who retain their jobs will see their incomes rise while others will either lose their jobs, be priced out of the job market, or even see their incomes decline (i.e., firms may reduce the wages of higher paid workers in order to finance employees with lower wages, though this is a bit difficult given the rigidities built into the system). It's also very poorly targeted in the sense that some -- by no means a majority, but a not insubstantial amount -- of MW workers are teenagers, some of affluent families, or earning as much as three times the poverty level. (Obviously the goal is to target workers in poverty). The EITC, however, also is imperfect: it's better targeted toward poor people and doesn't cost jobs, but (a) it is disproportionately beneficial to families with children, (b) the benefit is arguably too small in its current form, (c) employers capture a substantial portion of that small benefit, and (d) there's a phase-out provision that discourages work beyond a certain income level. Therefore, the right strategy is to find the correct balance between the minimum wage and the EITC.


I agree with the first part but EITC is doing the same thing minimum wage does to the demand for low skilled jobs. It is incentive to be unproductive, doing the things society has less of a demand for.

3. Wages have not been stagnant for the past three decades. This is a nonsensical myth put forward by left-wing think tanks whose work isn't worth the paper its written on. After adjusting for productivity mismeasurement (very hard to do, mind you, and probably the largest source of measurement uncertainty to this day), household composition, CPI measurement vis-a-vis the basket of goods and services people actually purchase, the divergence between compensation and hourly wages (i.e., the rise in benefits), etc., the gap almost entirely disappears.


Just a comment on CPI: If this basket of goods and services is by the nature of market competition actually being made much more efficient the prices should be going lower. Prices are dropping- but they're not- it is in this respect misleading about inflation. Also the quality of goods and services isn't taken into account, which again makes it inaccurate in my opinion

4. Free trade is fundamentally good for the economy, whereas protectionism imposes needless, destructive harms -- deadweight loss, as the Econ 101 models would say -- to long-term capacity. Manufacturing jobs have NOT vanished because of free trade: they became much more productive, which is why output in the manufacturing sector has RISEN relative to employment.


I agree with your first sentence exactly. I agree partly with the second but would say that the lack of free trade (tax, regulation, subsidy, labor laws) has created the demand for overseas jobs and has hurt US manufacturing immensely. I am not a protectionist at all Bastiat's, "Candle makers Petition" is great in showing the fault in protectionist theory. But there is a larger issue with the support of oppressive regimes and their contribution to cheap labor.

5. Immigration is fundamentally good for the economy in the same way as free trade and does not depress wages, but rather bolsters productivity and thus INCREASES real wages.
Attempting to distinguish between "legal" and "illegal" immigration fundamentally misses the point.


The last sentence is true except for the purposes of taxes and benefits.
The way I see immigration's effect on the economy is, there are many without skills, this lowers the demand for unskilled labor lowering wages. Also many immigrants will work for less for many reasons. All driving down the price for unskilled labor. It's not necessarily bad but it sort of a shock to the economy.
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6/8/2016 10:46:59 PM
Posted: 6 months ago
At 6/8/2016 10:28:54 PM, BillSPrestonEsq wrote:
If society wants a clean environment, society will continue down the path of eco-consciousness. To keep up business must meet the demands of their customers.
Pollution as you mentioned in another comment, you believe to be a market failure.
it is not a failure of the market structure, it is a failure of society itself, our choices, our demands. It is a failure of complacency or ignorance, but as we become more aware of our environment, I assume we will continue to reverse some damage in our own self interest. This includes buying products that are created in a environmentally responsible way. If there is a demand for these products, business will provide them or lose. no need for tax, just for government to step out of the way.

It's a textbook market failure because the inherently quantitative cost-benefit analyses used by benefits exclude these qualitative factors you've described above. Once we bring those into the equation we build the case for government intervention, without which things will change far too slowly, if at all, to make a tangible impact in ameliorating the threat of climate change.

I agree with the first part but EITC is doing the same thing minimum wage does to the demand for low skilled jobs. It is incentive to be unproductive, doing the things society has less of a demand for.

No, it isn't. Being unproductive is sitting on your couch doing nothing. The EITC gives people who otherwise couldn't find higher-paying jobs an incentive to work more -- or, in some cases, at all -- which usually pays dividends in terms of productivity. It's also great for reducing inequality. In no way is it similar to the minimum wage, which *discentivizes* higher lower-skilled laborers. The EITC is an equalizer in the equation.

3. Wages have not been stagnant for the past three decades. This is a nonsensical myth put forward by left-wing think tanks whose work isn't worth the paper its written on. After adjusting for productivity mismeasurement (very hard to do, mind you, and probably the largest source of measurement uncertainty to this day), household composition, CPI measurement vis-a-vis the basket of goods and services people actually purchase, the divergence between compensation and hourly wages (i.e., the rise in benefits), etc., the gap almost entirely disappears.

Just a comment on CPI: If this basket of goods and services is by the nature of market competition actually being made much more efficient the prices should be going lower. Prices are dropping- but they're not- it is in this respect misleading about inflation.

I don't know what you mean by "more efficient." If there's competition in the markets for those same goods and services -- and, say, the BLS is tracking x brand when y brand is better and cheaper -- then, sure, there are issues with overstating inflation. That's the main issue: there's a substitution effect at play that the BLS doesn't always capture because there are much less frequent changes to the market basket, so it tends to overstate the actual rate of inflation to the tune of 30 to 50 basis points.

Also the quality of goods and services isn't taken into account, which again makes it inaccurate in my opinion

This is true as well. There are a number of biases, and that results on balance with the reported rate of CPI inflation being higher than the actual basket (PCE) of things people purchase. So my point was that the "real wages have been stagnant" hypothesis uses the CPI to deflate nominal wages, but with a lower actual rate of inflation, real wages have been much higher.

4. Free trade is fundamentally good for the economy, whereas protectionism imposes needless, destructive harms -- deadweight loss, as the Econ 101 models would say -- to long-term capacity. Manufacturing jobs have NOT vanished because of free trade: they became much more productive, which is why output in the manufacturing sector has RISEN relative to employment.


I agree with your first sentence exactly. I agree partly with the second but would say that the lack of free trade (tax, regulation, subsidy, labor laws) has created the demand for overseas jobs and has hurt US manufacturing immensely.

Regulations might have had something to do with it, sure. On labor laws I'm more hesitant because while it's true that wages might tip the balance toward offshoring, it's also often a function -- or in some cases a cause -- of higher productivity. The question of course is whether higher wages are caused by, say, MW laws or from higher organic productivity. That said, I'm not in favor of a laissez-faire approach to labor in the same way I oppose a race to the bottom with Bangladesh.

I am not a protectionist at all Bastiat's, "Candle makers Petition" is great in showing the fault in protectionist theory. But there is a larger issue with the support of oppressive regimes and their contribution to cheap labor.

This is true.

5. Immigration is fundamentally good for the economy in the same way as free trade and does not depress wages, but rather bolsters productivity and thus INCREASES real wages.
Attempting to distinguish between "legal" and "illegal" immigration fundamentally misses the point.


The last sentence is true except for the purposes of taxes and benefits.

Yes, but the distinction that is often made is an argument for why "legal," but not "illegal" immigration, is supposedly good for the economy -- and I suppose not having to pay benefits to undocumented immigrants is "good" for the economy (if morally questionable) since it lets us buy cheap stuff, but they pay more taxes than they receive in benefits from the government -- heck, they'd pay even more taxes if we legalized them, and that's not only because they'd have much higher incomes.

The way I see immigration's effect on the economy is, there are many without skills, this lowers the demand for unskilled labor lowering wages.

Wages in those sectors are already "too low," which is why Americans usually don't take them on so we end up with labor shortages. Immigrants, on the other hand, are actually willing to work at those wages -- so while it might "lower wages," arguably the shortage already pushed them up.

Also many immigrants will work for less for many reasons.

True -- one of them being their undocumented status.

All driving down the price for unskilled labor. It's not necessarily bad but it sort of a shock to the economy.

I disagree with this; most of the evidence suggests that immigrant labor does not produce a broad-based decline in wages for low-skill labor. To the contrary, low-skill wages are low -- frankly, wage gains are tepid almost across the board -- because of slowing productivity growth, which is something immigrant labor surely offsets.
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BillSPrestonEsq
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6/9/2016 12:02:14 AM
Posted: 6 months ago
At 6/8/2016 12:50:26 AM, ResponsiblyIrresponsible wrote:


6. Almost a decade ago, Austrian economists predicted that expansionary monetary policy would lead to hyperinflation, skyrocketing interest rates, and asset bubbles. They were wrong on every single point and their ideology as such has been discredited over and over again.

Not sure what predictions you are talking about specifically. I will say that if you are referring to predictions made over quantitative easing and other fed action in dealing with 2008, there really hasn't been enough time for those things to happen. All other things being the same expansionary policy will create inflation. I can't imagine an Austrian economist that would attempt to make such a claim that goes beyond that.
Of course there are many other variables involved, that's what makes economic predictions so unpredictable. Look at what was done in the eighties, you don't think that history could repeat itself? Isn't common knowledge that major hikes in interest rates were in the interest of slowing inflation caused by 'loose' monetary policy the years prior?

7. With that said, an economy with a central bank targeting inflation in a forward-looking manner has a fiscal multiplier of 0. You may see studies finding evidence of a positive fiscal multiplier, but there are either flaws in methodology or in reporting -- e.g., reporting a positive multiplier within a 68 percent confidence interval (otherwise known as junk science). New Keynesians are a bit less willing to get onboard with this, but their models certainly are: fiscal stimulus has no effect on real variables because it is offset by monetary policy.

8. Taxes likely have a nonlinear effect on growth. There's a diminishing returns with respect to the BENEFITS of tax cuts, i.e., considerably less bang for your buck by reducing marginal rates further (aside from removing needless complexity and cronyism within the current tax code), but considerable potential harm that comes with raising them. That doesn't mean that we shouldn't ever raise any forms of taxes under any circumstances, but that we should be smart in zeroining in on which ones, by how much, over what type of phase-in. The gas tax is a good example of a tax we ought to raise, and that could be offset by a reduction in payroll taxes equal in present value terms to the rise in gas prices. Evidence shows that this tax is much more salient and people are likely to alter their behavior -- buying hybrids, taking public transportation, etc. -- in response to material increases.


I would imagine they would be linear-ish anyways. If state projects like Trump's 'great wall' are taking from private investment, where the money is at least more likely to create growth, the possibility of growth is at least lowered. Whether it is linear or not I think would depend the ways in which taxes are lowered. If all taxes are equally lowered by 30% to 60% to 90% I think we would see a linear rise in growth in relation to lowered taxes. I think loosening regulations or abolishing them entirely would have a similar effect. Raising gas tax to lower the demand of gas and seems crazy as long as we are subsidizing the same oil companies, I'd imagine you'd agree. I would rather leave it alone regardless. I would just abolish all government regulation in the market and the same with taxes myself, that would do better to spark competition in the car market and most likely lead to more efficient, better vehicles.

9. Wages are sticky in a downward direction and thus monetary policy has real effects. Yes, Krugman, even at the zero lower bound: there is no such thing as a liquidity trap. The Fed could have gained far more traction in 2008 had it been more aggressive and willing to experiment with new tools along the lines of a higher inflation target, a price level target, or a nominal GDP target. Regardless, Lars Svensson's and Mike Woodford's research is the guiding force behind monetary policy at its effective lower bound (notice that I said "effective," not zero: it's negative!).

10. Glassed Steagall had absolutely nothing to do with the subprime crisis. Sanders is correct that regulatory imperfections were to blame -- i.e., the Fed had nothing to do with it, other than keeping policy far too restrictive moving into late 2008 -- but the issue wasn't the *size* of the financial institutions (that is, we're not talking about "big banks," we're talking about shadow banks which are legally exempt from the type of regulatory oversight in place before the crisis, but are largely addressed by the 2010 Dodd Frank Act) as much as it was the degree of interconnectedness. Therefore, reinstating Glassed Steagall and knighting it as some sort of panacea is a disingenuous, fruitless effort.

I agree it had nothing to do with it, it's more the entire system that has been built around law. The fed, FDIC, reserve requirements, and other major structural elements of force in the system. If banks had been allowed to compete instead of the FDIC coming to the rescue the too big to fail institutions would never exist because the consumer would not prefer it. Banks would have had to prove confidence and many solutions to these early banking problems would have been solved by the market. At least in my opinion.
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6/9/2016 12:23:13 AM
Posted: 6 months ago
At 6/9/2016 12:02:14 AM, BillSPrestonEsq wrote:
Not sure what predictions you are talking about specifically.

I listed them above: hyperinflation, asset bubbles, and skyrocketing interest rates because of heightened inflation and default risk.

I will say that if you are referring to predictions made over quantitative easing and other fed action in dealing with 2008, there really hasn't been enough time for those things to happen.

That isn't true at all..... quantitative easing began back in 2008. QE3 ended in October 2014. Monetary policy operates with a one-to-two-year lag, and we know from plenty of empirical work as well as the response in asset prices that it had a tangible effect on employment and inflation. Heck, even research suggesting a DELAYED lagged due in part to signaling inefficiencies pushed the realization of those effects to early 2016.

But, please, show me the research you're aware of demonstrating that QE will lead to hyperinflation more than 7 years down the road. Further, show me some research finding that financial-market-implied breakeven inflation rate -- inflation expectations -- over even a 10 year horizon which are BELOW 2 percent at the moment are not only wrong, but off by a factor of 10 or so percentage points. Then find me some evidence of default risk priced into longer-term Treasuries. Last I checked, people are willing to lend money to the government over a 30-year horizon at historically low real interest rates.

All other things being the same expansionary policy will create inflation. I can't imagine an Austrian economist that would attempt to make such a claim that goes beyond that.

There have been plenty, including Peter Schiff, Marc Faber, Bob Murphy, etc etc. Heck, Republicans back in 2010 wrote a letter to Ben Bernanke warning that QE would lead to hyperinflation.

Of course there are many other variables involved, that's what makes economic predictions so unpredictable. Look at what was done in the eighties, you don't think that history could repeat itself?

Totally different case. Monetary policy was unsustainable loose, the Fed wasn't a credible inflation fighter so expectations weren't anchored, and we suffered several vicious positive supply shocks. Now, monetary policy has been too tight, the Fed has proven its excellent at bringing down inflation BECAUSE of Paul Volcker's actions in the 1980s and as a result financial markets increasingly believe the Fed will continue to undershoot, and oil prices have been plummeting, only beginning to rebound and stabilize now.

Isn't common knowledge that major hikes in interest rates were in the interest of slowing inflation caused by 'loose' monetary policy the years prior?

Sure. But (a) that's not the case now, (b) that has nothing to do with QE or the claims of Austrians, and (c) we're not talking hyperinflation. Time-based guidance in the mid 2000s created some problems in attempting to restrain inflation because markets believed the Fed would only hike 25 bps every meeting, but we're under no such guidance at the moment -- we could lift 50 bps every other meeting if the Fed thought it necessary, but there's no indication that is or will be a problem.

I would imagine they would be linear-ish anyways.

The empirical evidence contradicts your imagination, then.

If state projects like Trump's 'great wall' are taking from private investment, where the money is at least more likely to create growth, the possibility of growth is at least lowered.

I don't know what Trump's wall has to do with anything. That's moving the goalposts to what is DONE with the money, which is separable from the actual direct effects of taxes. That's what I was speaking to.

Whether it is linear or not I think would depend the ways in which taxes are lowered. If all taxes are equally lowered by 30% to 60% to 90% I think we would see a linear rise in growth in relation to lowered taxes.

So reducing taxes from 90% to 80% would have the same effect as reducing taxes from 50% to 40%?

That's what would happen with a linear relationship, and it's just total hogwash. Micro 101 textbooks disprove it: it's called the law of diminishing returns.

I think loosening regulations or abolishing them entirely would have a similar effect.

That introduces more variation because of the size and scope of the regulations, which is far broader than that of taxes.

Raising gas tax to lower the demand of gas and seems crazy as long as we are subsidizing the same oil companies, I'd imagine you'd agree.

Subsidizing oil is crazy itself. I'd stop doing that.

I would rather leave it alone regardless. I would just abolish all government regulation in the market and the same with taxes myself, that would do better to spark competition in the car market and most likely lead to more efficient, better vehicles.

And... now we're back to crazy land.

I agree it had nothing to do with it, it's more the entire system that has been built around law. The fed, FDIC, reserve requirements, and other major structural elements of force in the system. If banks had been allowed to compete instead of the FDIC coming to the rescue the too big to fail institutions would never exist because the consumer would not prefer it. Banks would have had to prove confidence and many solutions to these early banking problems would have been solved by the market. At least in my opinion.

This isn't true, either. Too-big-to-fail was NOT the proximal cause of the crisis of 2008. The whole point was that shadow banks were exempt from the types of regulations you think precipitated it -- they operated entirely independently of the federal government (i.e., the same system you right now are advocating). The Fed, again, had nothing to do with it other than keeping monetary policy far too tight.
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ResponsiblyIrresponsible
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6/9/2016 3:58:49 AM
Posted: 6 months ago
A few more:

1. Low interests do not mean easy money -- they indicate that money was previously incredibly tight, such that a shallow path of interest rates is merited. The only way interest rates can conceivably be used to measure the stance of monetary policy is by comparing them to the time-varying value of the equilibrium real interest rate, otherwise known as the Wicksellian rate.

2. The gender wage gap is a myth. The "77 cents on the dollar" statistic compares the median earnings of men and women without adjusting for *anything* -- education, occupation, hours, experience, etc etc etc. After adjusting for these these things, the gap virtually evaporates.

3. No one believes in running deficits forever; eventually, it's necessary to reign in spending for several reasons: (a) the possibility of a crowding out scenario during more "normal" situations, (b) the threat of fiscal dominance, (c) risk of default risk, and (d) reductions in total national savings reduce trend growth.

4. With that said, at no point in time must we PAY BACK $18 trillion; we roll over debt as payments come due, and because foreigners trust that the US economy is resilient enough to generate sufficient revenue to pay back that debt (and that we can borrow, if necessary, to pay off creditors), we're able to do so at very low interest rates: in fact, financial markets are pricing in absolutely 0 default risk. People who scream about default risk and inflation usually trust that markets are efficient: well, they should look at market indicators then! Below-target inflation over a 10 year horizon and 0 default risk.

5. This means, by the way, that -- I'll say it again -- our ability to pay back our debts IN FULL is the reason in large part we can service the debt we have. If Trump tries to ask bondholders to take a haircut, he is threatening to default on our debt: yes, that would send interest rates rocketing, which would undermine any "deal" he was able to make. The man has no clue what he's doing. The US government isn't one of his failed businesses.
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Greyparrot
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6/9/2016 4:21:40 PM
Posted: 6 months ago
At 6/8/2016 12:50:26 AM, ResponsiblyIrresponsible wrote:

1. Climate change is real and anthropogenic, a classic, Econ 101 case of a market failure. We cannot possibly rely on markets to "get their sh1t" together because left to their own devices they'll produce far more pollution that is socially optimal -- in other words, there's a disconnect between the marginal PRIVATE benefit and the marginal social benefit, the former of which refers to the incentive structure for private firms and the latter for society as a whole. Therefore, a Pigovian tax on carbon dioxide is the very least we can do.


There is no consensus on what is "optimal" for the environment.

I think governments and scientists are in a far worse position to decide the most optimal economical environment over invested resource owners.

Environmental doomsday predictions are constantly being rewritten by scientists and politicians. Investors know better than to make a business plan based on them.

I remember reading an article about possible technology to aerosol the atmosphere and cool parts of the globe. The discussions between politicians of different global regions about what would be the optimal temperature for them (if they were able to choose) were astoundingly diverse!

Heck, you can't get 30 students in a classroom without half of them complaining that it is too hot or too cold. This should not be an issue decided by politicians and scientists. If the results of global warming or pollution truly destroys resources, the resource owners will always be in the best position to innovate and lobby for real solutions.
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6/9/2016 4:32:42 PM
Posted: 6 months ago
At 6/9/2016 4:21:40 PM, Greyparrot wrote:
There is no consensus on what is "optimal" for the environment.

This isn't completely true. There's pretty much consensus on a carbon tax, but there isn't consensus on whether that's *sufficient* or even whether it would have the desired effects on the climate. But, aside from hardline, ideologically-charged Austrians, you probably won't find an economist who opposes a carbon tax. Some of the most right-wing economists I know are fully in favor. It's the most econ 101 solution there is.

I think governments and scientists are in a far worse position to decide the most optimal economical environment over invested resource owners.

Environmental doomsday predictions are constantly being rewritten by scientists and politicians. Investors know better than to make a business plan based on them.

Investors in whom? The oil companies which stand to lose with the implementation of a carbon tax and thus have an incentive to make sure their competitors, solar and wind, categorically fail to protect their de-facto monopoly?

And that's also not true: regardless of whether you believe the "by X year, we'll reach Y parts per million!" -- which is scary, and it should be scary, and I don't think it's been rewritten time and again -- there isn't any reason to not do SOMETHING about this because we know for a fact that it's real and that these consequences are not the least bit unheard of.

I remember reading an article about possible technology to aerosol the atmosphere and cool parts of the globe. The discussions between politicians of different global regions about what would be the optimal temperature for them (if they were able to choose) were astoundingly diverse!

This is interesting... but underscores why politicians are uniquely unqualified to actually weigh in on science, lol. I'd love to leave science to the experts, not the political opportunists.

Heck, you can't get 30 students in a classroom without half of them complaining that it is too hot or too cold.

But that's not climate change..... that's not what we're talking about, and I know that you know this, lol. Like, if brontoraptor typed the above, my reaction would be a whole lot different (a facepalm, rather than a smirk), but I have reason to think that you know the above is facetious at best, ridiculous at worst.

This should not be an issue decided by politicians and scientists. If the results of global warming or pollution truly destroys resources, the resource owners will always be in the best position to innovate and lobby for real solutions.

By the time the effects of climate change are tangible, it's too late for us to do anything about it. It's already caused permanent damage, and certainly people in third-world countries whose crops have been destroyed have grievances (though they're not exactly... the type of people able to lobby, especially when they're competing with big oil).

The problem is, what you're advocating is effectively the Coase theorem: settle this stuff in private arbitration! If there weren't symmetries of power and transaction costs, this would work -- but, alas, they are, and thus it won't.
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Greyparrot
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6/9/2016 4:42:11 PM
Posted: 6 months ago
At 6/9/2016 4:32:42 PM, ResponsiblyIrresponsible wrote:
At 6/9/2016 4:21:40 PM, Greyparrot wrote:
There is no consensus on what is "optimal" for the environment.

This isn't completely true. There's pretty much consensus on a carbon tax, but there isn't consensus on whether that's *sufficient* or even whether it would have the desired effects on the climate. But, aside from hardline, ideologically-charged Austrians, you probably won't find an economist who opposes a carbon tax. Some of the most right-wing economists I know are fully in favor. It's the most econ 101 solution there is.

Missing the point. There is no consensus on what the optimal global temperature increase is, and at what point net resources will be destroyed, (some resources could grow with rising temperatures, hence "net") and by how much value. People who own land on the coast (like Trump) are in a far better position to predict actual destruction of resources than a uninvested politician or a unmotivated scientist in D.C.