« Political Credit Cycles | Main | Department of I just don't believe this »
Assorted links
1. What is Political Capitalism?
2. Guide to the multiple stimulus debates.
3.Stimulus: the whole is less than the sum of its parts.
4. The Fed is making progress.
5. Football economics and auctions.
Posted by Tyler Cowen on January 30, 2009 at 10:43 AM in Web/Tech | Permalink
Comments
The other signs of Fed progress may be legit, but the rising yield on Treasurys didn't seem so hot to me, since the article also explained that there was a record issue of them. I.e. if the supply had remained constant and the price fell, then yes that would mean demand dropped. But supply increased, so we shouldn't attribute the falling price to investors relaxing.
Posted by: Bob Murphy at Jan 30, 2009 11:02:36 AM
I am very, very confused...how is the commercial paper market falling indicative of IMPROVEMENT?
Apparently it's because more companies have been able to shift their ST debt into LT debt with lower interest rates, but, apparently, the amount of commercial paper being issued is quite a bit below pre-crisis levels:
http://www.bloomberg.com/apps/quote?ticker=FCPOTOTS%3AIND
That last drop there is 80% the Fed saying "okay, we're not buying anymore!" Do companies REALLY not need as much commercial paper as they did BEFORE the crisis? Is that a result of the Investment Banks dying out and a general shrinking of the market?
I don't have as much information as Mr. Crescenzi, but I smell something funny about all this...
Posted by: Robert Olson at Jan 30, 2009 11:35:56 AM
I am very, very confused...how is the commercial paper market falling indicative of IMPROVEMENT?
Apparently it's because more companies have been able to shift their ST debt into LT debt with lower interest rates, but, apparently, the amount of commercial paper being issued is quite a bit below pre-crisis levels:
http://www.bloomberg.com/apps/quote?ticker=FCPOTOTS%3AIND
That last drop there is 80% the Fed saying "okay, we're not buying anymore!" Do companies REALLY not need as much commercial paper as they did BEFORE the crisis? Is that a result of the Investment Banks dying out and a general shrinking of the market?
I don't have as much information as Mr. Crescenzi, but I smell something funny about all this...
Posted by: Robert Olson at Jan 30, 2009 11:37:09 AM
Political capitalism = socialism
If it walks like a duck..
Posted by: jorod at Jan 30, 2009 12:20:17 PM
Political capitalism = socialism
If it walks like a duck..
Posted by: jorod at Jan 30, 2009 12:20:44 PM
The "stimulus" bill contains 20% actual stimulus and 80% pork. That's it, that's enough, I'm sticking my fingers in my ears and singing "la la la" at the top of my lungs.
I know it's the topic du jour and this is an economics blog, but can have a stimulus moratorium? Just put up some more of those quirky "markets in everything" posts, kthxbye.
Posted by: anonymous at Jan 30, 2009 12:26:42 PM
That David Brooks article is quite good.
Posted by: mk at Jan 30, 2009 1:23:27 PM
{A general comment, not especially about this post.}
Does anyone share my feeling that your slogan, “Small steps toward a much better world,” is odd?
First, better than what? I suppose it’s better than the world we have now; but then the “world” of the slogan is not a whole possible world, which would persist throughout time, but rather a temporal segment or slice of a possible world. We don’t now “have” a whole world; what we have is the present time-slice of the world. Or you might say that what we have is the whole past-and-present--the temporal segment of the world from the Beginning to Now; but this would be less suitable for comparison with what you are striving toward, so I will assume that the present time-slice or “state-of-affairs” is the intended standard of comparison.
Then the target is a better (momentary) state-of-affairs rather than a better whole possible world, or a better whole future. Now, the latter, not the former, should be your ultimate or most basic objective; but, admittedly, it might be acceptable tactically to aim at the former. That is, in order to maximize the value of the whole future--which should be the aim--you might aim for “a much better (momentary) state-of-affairs,” to come into being at some point in the future.
And what point might that be; when is the much better state-of-affairs supposed to come into existence? That is being left indefinite (though, presumably, sooner is better than later).
I interpret “steps toward a (particular) state-of-affairs” as actions (perhaps mere “speech acts”) that make that state-of-affairs more probable. But these actions may also have other effects that ought to be considered, such as making some other state-of-affairs--perhaps quite a bad one--more probable. This points up a serious deficiency: the slogan is blind to risk, failing to incorporate hedging. The circumstance that a certain step that is “toward” a better state-of-affairs (i.e., that makes it more probable) is at the same time also “toward” a worse one should dampen your enthusiasm for taking the step; this is not reflected in the slogan.
There are probably infinitely many possible states-of-affairs, but for expository purposes let me pretend that the number is finite--say, a million. Let us rank these by value. The best will be S1, the worst S1,000,000 (I’ll ignore ties); the actual present state-of-affairs is somewhere in between--say, S100,000. There is, for each of these possible states-of-affairs, some probability that it will eventually become actual, given what we have now. The slogan endorses actions that will increase the probability of one of these states-of-affairs--call it ‘Sn’. But this favored possible state-of-affairs is not specified as S1, the best of them. Indeed, I assume n ≠ 1, since the slogan says “much better” rather than “best.” Since Sn is to be better than S100,000, we have 1 < n < 100,000, and since it is much better it must be closer to 1 than to 100,000; let us say 1 < n < 30,000. But beyond this it is completely obscure what n is or how it was selected. If n is, say, 10,189, you are aiming to make the eventual occurrence of S10,189 more probable. But the motivation for doing precisely this is hardly evident.
Finally, the “small steps” phrase is, presumably, intended as an expression of modesty. But why limit yourself to small steps? If you can take big steps to improve matters, do it! On the other hand, why restrict yourself to optimism? If you can make the world better, of course, do it; but maybe things appear likely to get worse, no matter what you do. You might even find yourself in a situation where there are no steps you can take “toward” Sn for any n < 100,000, perhaps because Prob (Sn/A) = 0, for any n < 100,000 and any possible action A (given that we are in S100,000). It would be well to cover this possibility, too, by presenting yourself as stepping toward the best (in this case, least bad) possible future.
My proposal for reform, then, is simply to advertise yourselves as intending to act in ways that promote maximum expected value throughout the future; in short: “Acting to maximize expected future value.” (If that’s not your intention, why not?)
Posted by: Philo at Jan 30, 2009 2:17:52 PM
Jorod,
I take it you did not look at the post itself. The author uses the term political capitalism to describe what we have now: businesses are able to successfully lobby governments for interventions that are favorable to them. Sometimes that means supporting free markets (e.g. free trade in other countries) and sometimes not (e.g. protectionism here). The post is not just yet another attempt to sugar coat socialism.
Posted by: D. Watson at Jan 30, 2009 2:51:16 PM
How is "political capitalism" not recycled mercantilism?
Posted by: Russell Nelson at Jan 31, 2009 2:46:32 AM
"Political capitalism" is yet another far-right think tank spawned pile of crap. Every few years, the right needs new, less boring clubs with which to beat their opponents. We've seen a number of them in the past: trickle down, Laffer curve, etc. Austrianism is required to believe in this one, according to the author.
You need only look at the biography of the author to see just how pathetic this is. His PhD was under Murray Rothbard at the now-defunct International College in Los Angeles, and pretty much all of his work has been based on Austrianism.
Posted by: Mike Huben at Jan 31, 2009 6:43:50 AM
Ahhh, Mike Huben. I love you, Mike, but you will go to your grave being wrong.
Posted by: Russell Nelson at Jan 31, 2009 9:56:36 AM
Mike,
Can you elaborate? Are you for corporate welfare, or you're just saying you don't believe Bradley when he claims to be against it? (Disclaimer: Bradley hired me for the Institute for Energy Research.)
Posted by: Bob Murphy at Jan 31, 2009 11:10:46 AM
Sorry to see that one participant has turned the discussion into argument against the person.
Two comments: One, a review of my dissertation, published as Oil, Gas, and Government: The U.S. Experience, was published in the Southern Economic Journal by Tyler Cowen.
Two, a major endorsement of my "political capitalism" theme comes from Gabriel Kolko, a New Left historian out of the Marxist tradition, who stated on the back cover of my new book, Capitalism at Work: "Fascinating, comprehensive ... far surpassing my own history of political capitalism done in the 1960s."
Posted by: Rob Bradley at Jan 31, 2009 11:36:47 AM
