tag:blogger.com,1999:blog-4900303239154048192.post95750557227163257..comments2024-03-06T06:34:42.881-05:00Comments on EconoSpeak: Those Pesky Postwar RecessionsUnknownnoreply@blogger.comBlogger34125tag:blogger.com,1999:blog-4900303239154048192.post-39765723624629340762012-04-17T07:40:01.665-04:002012-04-17T07:40:01.665-04:00So good topic really i like any post talking about...So good topic really i like any post talking about <a href="http://www.articles4health.info/" rel="nofollow"> Health Articles </a> but i want to say thing to u *** not that only ... you can see in Health <a href="http://www.articles4health.info/2012/04/components-of-physical-fitness-health.html" rel="nofollow"> Fitness </a> and more , you shall search in Google and Wikipedia about that .... thanks a gain ,,,Anonymoushttps://www.blogger.com/profile/15120637182434548474noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-20700521502846108962011-05-04T19:12:54.281-04:002011-05-04T19:12:54.281-04:00On World War 1: the British left the gold standard...On World War 1: the British left the gold standard during the war so they could run the presses. When they re-established the link after the war, they wrenched the pound back to its prewar value. That's monetary deflation.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-49560033143327709692011-05-04T14:15:23.225-04:002011-05-04T14:15:23.225-04:00Russ,
Sure, the 1945 recession started before the...Russ,<br /><br />Sure, the 1945 recession started before the war ended and ended after the war ended. All commentaries on it identify it with end-of-war cutbacks.Barkley Rosserhttps://www.blogger.com/profile/13114257724762074636noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-25357188548707821492011-05-04T13:25:54.888-04:002011-05-04T13:25:54.888-04:00Repost:
----------------------------------
OK, a...Repost:<br /><br />----------------------------------<br /><br />OK, after losing my last response to the glitches of Blogger, I'll try to re-convey some thoughts again:<br /><br />"In order for the missallocation thesis to work there must be some factor input that is in short supply. By every conceivable way of measuring this (factor numbers, factor prices)there is currently a surplus of factor inputs in the United States."<br /><br />I can't agree with that logic because it completely misses the mark at a conceptual level while being stilted, one-dimensional and overly simplified from my POV. <br />Misallocation doesn't need a factor in "short supply". It means the capital structure is such that factors are misapplied or poorly allocated based on error or bad information. When it happens on a large scale, the massive reallocation is painful and we have a recession. But the problem I have with your view is that it all seems too linear and aggregated and fails to explain what's really happening.<br /><br />To restate, there are not shortages and surpluses of factors, there are bad allocations and distortions. A surplus of factors is conceptually wrong to me. Perhaps there's a surplus of a factor based on a snapshot at some point in time with no context but that doesn't get to the heart of the matter and is not useful nor insightful. A "surplus" implies that there are factors with few uses at a somewhat rigid price that are sitting idle. That's wrong. What I see are factors that no longer have the same value for past uses in an ever different and changing capital structure that no longer applies in the present. Their idleness is a sign that they are not reflecting a market price that allows them to be acquired and reallocated in an ever morphing capital structure. Some would call it "liquidating", I simply call it self-correcting of distortions. <br /><br />When prices freely fluctuate, capital finds uses. It may mean heavy losses for the seller or current holder but real growth and new patterns of trade will emerge and the pain will subside faster. This has not happened.John Vhttps://www.blogger.com/profile/01887847629803262764noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-63601147845399093252011-05-04T13:17:47.465-04:002011-05-04T13:17:47.465-04:00Barkley,
Is there a reason why my comment keeps v...Barkley,<br /><br />Is there a reason why my comment keeps vanishing?John Vhttps://www.blogger.com/profile/01887847629803262764noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-28420707635663906192011-05-04T08:22:56.873-04:002011-05-04T08:22:56.873-04:00Sorry, Eric.
Lipstick did nothing for that pig....Sorry, Eric. <br /><br />Lipstick did nothing for that pig.Methinkshttps://www.blogger.com/profile/17278490832490933652noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-6511373875689105412011-05-04T05:23:14.242-04:002011-05-04T05:23:14.242-04:00It is true that there were postwar recessions. How...It is true that there were postwar recessions. However, the important point is that they were remarkably modest compared to the withdrawal of fiscal stimulus. Budgets went from deficits of 25%+ of GDP to suplus (not just reduced deficit)in two years. This is far more extreme than any fiscal retrenchment that is being proposed currently - even for countries like Greece.<br /><br />The crucial issue in the outcome is not fiscal policy, but monetary policy. As long as monetary policy is accomodative and not tied to an overvalued exchange rate, there is no reason why even extreme retrenchment should lead to a long-term downturn.<br /><br />I gave a presentation on this issue last year which included the UK's experience. The UK is significant because of its very different outcome after WWI as a result of a overly restrictive monetary policy designed to effect an "internal devaluation" so as to return to the gold standard at the prewar parity. The result was not a short, sharp recession, but a multi-year depression. <br /><br />The link is:<br /><br />https://www.drivehq.com/file/df.aspx/shareID8440843/fileID700147612/What can history teach us about the sovereign debt crisis.pps<br />(appears to prefer Firefox or Chrome to open)James Macdonaldhttps://www.blogger.com/profile/17356871531956789353noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-29737317716054563702011-05-03T23:38:38.344-04:002011-05-03T23:38:38.344-04:00Russ Roberts,
You wrote
"February 1945 is no...Russ Roberts,<br /><br />You wrote<br />"February 1945 is not "post WWII.""<br /><br />I fail to see the point. <br /><br />Could you be more explicit so those of us who are somewhat slower get it?Mark A. Sadowskihttps://www.blogger.com/profile/08259309059705236763noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-9564927941010428412011-05-03T22:55:05.407-04:002011-05-03T22:55:05.407-04:00Barkley,
February 1945 is not "post WWII.&qu...Barkley,<br /><br />February 1945 is not "post WWII."RussRobertshttps://www.blogger.com/profile/16234286961852563933noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-85887973493973337582011-05-03T21:00:28.034-04:002011-05-03T21:00:28.034-04:00I hope this conversation isn't dead. I'm ...I hope this conversation isn't dead. I'm a graduate student and my dissertation is mainly on the post WWII business cycle and the part of it I've actually written deals directly with Robert Higgs' claims about the immediate post war.<br /><br />Anyway, I disagree with the facts but not the principle Barkley Rosser is asserting.<br /><br />My reply is too long and involved (there is a table) for the comments section here so I posted it to my blog:<br /><br />http://pigphilosophy.blogspot.com/2011/05/devil-is-in-deflator.htmlAndrew Bossiehttps://www.blogger.com/profile/00353842153288646125noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-17537249383961695472011-05-03T17:57:37.418-04:002011-05-03T17:57:37.418-04:00I can't believe I just lost another comment. U...I can't believe I just lost another comment. UGHJohn Vhttps://www.blogger.com/profile/01887847629803262764noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-4909514734415728102011-05-03T17:39:01.717-04:002011-05-03T17:39:01.717-04:00John,
Thanks. I was looking for an early reference...John,<br />Thanks. I was looking for an early reference. My memory was that he didn't start advocating stabilizing nominal income until after WW II.Mark A. Sadowskihttps://www.blogger.com/profile/08259309059705236763noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-32449326637382693162011-05-03T17:30:16.217-04:002011-05-03T17:30:16.217-04:00Nominal income stabilization is not a “late life” ...Nominal income stabilization is not a “late life” Hayek policy. It’s in Prices and Production which was published in 1931. He employed that framework when he wrote this in 1932 in the Times:<br /><br />"It is agreed that hoarding money, whether in cash or in idle balances, is deflationary in its effects. No one thinks that deflation in itself is desirable."<br /><br />http://thinkmarkets.wordpress.com/2010/06/30/keynes-versus-hayek-past-is-prologue/<br /><br />People saying Hayek favored do-nothing monetary policy simply don’t know Hayek.John Papolahttps://www.blogger.com/profile/11186935861240788317noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-57534819203074365192011-05-03T17:27:55.806-04:002011-05-03T17:27:55.806-04:00John V,
In order for the missallocation thesis to ...John V,<br />In order for the missallocation thesis to work there must be some factor input that is in short supply. By every conceivable way of measuring this (factor numbers, factor prices)there is currently a surplus of factor inputs in the United States. <br /><br />The majority of the decline in housing prices and the level of residential investment (hitherto)had declined by July 2008 relatively uneventfully. What happened next was purely about a dramatic decline in nominal GDP, nothing to do with the reallocation of factor inputs.<br /><br />I do not agree with efforts to prop up housing prices. They are counterproductive. <br /><br />The late life Hayekian solution would be to stabilize nominal income and let the markets handle the rest.<br /><br />Construction workers are a rather small proportion of the current number of unemployed by my count. And employment is down in sectors accounting for 85% of employment after three years. Doesn't sound like a missallocation at all to me. Sounds like a "general glut".Mark A. Sadowskihttps://www.blogger.com/profile/08259309059705236763noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-61678820761247147702011-05-03T17:00:02.321-04:002011-05-03T17:00:02.321-04:00Couple things, Mark:
I don't see the relevanc...Couple things, Mark:<br /><br />I don't see the relevance of "Sticky prices" here....nor do I see how this is happening right now.<br /><br />I generally don't think in terms of equilibrium. I don't find it very useful in seeing the world. The world is never at equilibrium. I just think about market process. <br /><br />As for general glut, I think that's a non-explanatory and unhelpful way of seeing misallocation of capital. General Glut is good example of why Keynesian thinking strikes me as so inadequate. All it's saying is that there is too much supply and not enough demand. That's superficial and unhelpful. Such things happen for a reason and that's why misallocation of capital and labor is better. <br /><br />Rather than allow that capital to adjust in prices in the face of economic realities (see construction and housing industry) there have been enormous efforts to interfere and preserve home values while attempting to put some of the overstock of construction workers to work via stimulus. All that is interference. That's preventing capital from adjusting in a profit and loss system. It's prolonging the pain.<br /><br />The general glut, AD and stimulus are all tied to way of thinking that ignores the complexity of layers of capital formation. It disregards (or isn't able to) why we are in this state. <br /><br />In a hayekian policy prescription, I would prefer better unemployment benefits coupled with no interference whatsoever in the price system. It's cheaper and allows the market to adjust more quickly.John Vhttps://www.blogger.com/profile/01887847629803262764noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-65755280268397910932011-05-03T16:33:25.938-04:002011-05-03T16:33:25.938-04:00John V,
I have no quarrel with noninterference wit...John V,<br />I have no quarrel with noninterference with prices. I know of few economists who don't love free markets. The problem is there is this phenomenon known as "sticky prices" that means that disequilibria can often last a long time.<br /><br />The current problem is not one of missallocated capital or labor. We're suffering a"general glut". The reallocation following the housing bubble was going just fine until we allowed nominal GDP to implode in late 2008.<br /><br />Yes I'm almost finished my doctorate in economics. And I'm very familiar with Hayek's writings. Although he wrote and said many contradictory things, it comes as a shock to many Austrians that later in life also advocated a policy of stabilizing nominal income.Mark A. Sadowskihttps://www.blogger.com/profile/08259309059705236763noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-74473171183152268042011-05-03T16:18:41.748-04:002011-05-03T16:18:41.748-04:00John P. and Russ,
See my comments in my main post...John P. and Russ,<br /><br />See my comments in my main post. I am coming in here through viewing the changes. I would only add, if this makes it in, that probably Barro needed to be told about Higgs' work, given that somehow he thought that measuring consumption multipliers in WW II, a period of consumption rationing, had anything to say about them in other circumstances.Barkley Rosserhttps://www.blogger.com/profile/13114257724762074636noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-13421497418640958282011-05-03T15:54:48.870-04:002011-05-03T15:54:48.870-04:00Again, Mark,
It's not an interpretation.
The...Again, Mark,<br /><br />It's not an interpretation.<br /><br />The argument I always hear has to do with allowing the market to adjustment, reallocate and recover quickly. And this involves not interfering with prices and, by extension, the price signals for capital and labor redeployment. It's really not an interpretation of mine. It's what they say...including in the quotes you cite. Those simply have even more info to contrast with fiscal stimulus. <br /><br />I am not interested in what some with a narrow tax cut agenda are saying upon reading what these guys write. We are talking about the economists. And I know what their arguments on are when it comes to recessions.<br /><br />#1: Don't interfere with price mechanism.<br /><br />#2: (extension of #1) Allow misallocated capital and labor to be reconfigured in sustainable ways.<br /><br />That's a pretty standard Austrian argument in terms of what the government should do. <br /><br />Beyond that, if they are throwing in a call for fiscal discipline and/or austerity, that's simply more on top of the main argument. <br /><br />BTW, if you in grad school for economics, I would hope that you were introduced these arguments. They are hardly unique to the economists you cite. It traces back to Hayek and even further.John Vhttps://www.blogger.com/profile/01887847629803262764noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-10116102157500822722011-05-03T15:12:10.601-04:002011-05-03T15:12:10.601-04:00John V,
Well everyone's entitled to their own ...John V,<br />Well everyone's entitled to their own interpretation I guess (after all, opinions on the shape of the planet do differ). But it seems pretty clear to me that at least Powell and Woods are explicitly claiming that tax cuts were a major reason for the recovery from the 1920-21 recession. Moreover, legions of their followers are making the same claim in comment sections all across the econ blogdom as we speak.<br /><br />And of course there was a stimulus, it just wasn't fiscal (it was monetary).Mark A. Sadowskihttps://www.blogger.com/profile/08259309059705236763noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-8418217075829301182011-05-03T14:59:42.221-04:002011-05-03T14:59:42.221-04:00Let's try again but in briefer form:
Mark:
A...Let's try again but in briefer form:<br /><br />Mark:<br /><br />All those quotes basically confirm what I had always heard: that Harding didn't do anything of a countercyclical nature to combat the contraction/adjustment of capital and labor.<br /><br />Now, beyond that, I wasn't aware that he also slashed spending and taxes while cutting the national debt by one third...all during a recession! (Sounds like a pipe dream in the modern context). <br /><br />But the way that you present it above is that these Austrians were pushing some tax-cuts lead to prosperity schtick. But that is neither what they said nor how I read it nor how it should be read. Reading their quotes, I see what I expected plus more. The point of their arguments is not the tax cuts. The point is there was neither stimulus nor any attempt to prop up prices nor interfere with capital reallocation. THAT is the point they were making...a point I have seen many times. <br /><br />Much like Barkley on the video, I think you are overemphasizing and misconstruing small bits of info while ignoring the larger point.John Vhttps://www.blogger.com/profile/01887847629803262764noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-68075812099281760622011-05-03T14:49:06.827-04:002011-05-03T14:49:06.827-04:00Damn. My last comment was lost. How frustrating.Damn. My last comment was lost. How frustrating.John Vhttps://www.blogger.com/profile/01887847629803262764noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-48063720584141918272011-05-03T14:39:14.644-04:002011-05-03T14:39:14.644-04:00John V.,
Here's what Jim Powell has claimed:
...John V.,<br />Here's what Jim Powell has claimed:<br /><br />"With Harding’s tax and spending cuts and relatively non-interventionist economic policy, GNP rebounded to $74.1 billion in 1922. The number of unemployed fell to 2.8 million — a reported 6.7 percent of the labor force — in 1922. So, just a year and a half after Harding became president, the Roaring 20s were underway."<br /><br />http://www.nationalreview.com/articles/226645/not-so-great-depression/jim-powell?page=1<br /><br />Robert Murphy wrote this:<br /><br />http://www.thefreemanonline.org/featured/the-depression-youve-never-heard-of-1920-1921/<br /><br />Murphy does not specifically address the tax cut aspect of this argument. But his article repeats the same themes and is similarly missleading.Mark A. Sadowskihttps://www.blogger.com/profile/08259309059705236763noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-83350670174571284372011-05-03T13:58:15.401-04:002011-05-03T13:58:15.401-04:00Barkley, for some reason, the last part of my repl...Barkley, for some reason, the last part of my reply kept getting bumped. Here it is…<br /><br /><br />Maybe I'm just confused because I'm a member of the "pointless pain caucus" (not your words, I know). So far, I don't know where to look for the policy that actually avoid pain in reality.<br /><br />Lastly, everyone (especially David Frum) needs to come to grips with the fact that F. A. Hayek's actual policy norm called for the maintenance of nominal spending by way of momentary policy to accommodate excess demands for money. As Scott Sumner has repeated proclaimed, his approach is very similar to Hayek's. So the claim that monetary policy post WWII helped to ease the transition probably has merit, but it surely doesn't counter Hayek nor favor Keynes over Hayek (or Friedman). <br /><br />What made Keynes different from Hayek was his insistence that interest rates didn't coordinate saving with investment, that "liquidity preference" defined the interest rate, and that monetary policy would become stuck in a "liquidity trap", hence the need for Fiscal policy.<br /><br />I turn your attention to this article:<br />http://online.wsj.com/article/SB10001424052748704738404575347300609199056.html<br /><br />“It is agreed that hoarding money, whether in cash or in idle balances, is deflationary in its effects. No one thinks that deflation in itself is desirable.” - 1932.<br />Now hear this. F. A. Hayek and Lionel Robbins were proclaiming in 1932 in the pages of the Times that "NO ONE THINKS THAT DEFLATION IN ITSELF IS DESIRABLE".<br /><br />Money is a specific good. Creating more of it to meet demand is a very different kind of economic process than treating "goods in general" as some blob which can have a "glut". So I do not see monetary policy to maintain NGDP as being similar to keynesian fiscal stimulus. But that's for another time…John Papolahttps://www.blogger.com/profile/11186935861240788317noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-16231508473870253962011-05-03T13:54:09.016-04:002011-05-03T13:54:09.016-04:00John V,
Yes, sorry about that. One my perks as a d...John V,<br />Yes, sorry about that. One my perks as a doctoral candidate/adjunct is that I have free access.<br /><br />Here's what Thomas Woods has said for example:<br /><br />"Instead of “fiscal stimulus,” Harding cut the government’s budget nearly in half between 1920 and 1922. The rest of Harding’s approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third. The Federal Reserve’s activity, moreover, was hardly noticeable."<br /> http://www.firstprinciplesjournal.com/articles.aspx?article=1322&theme=home&loc=b<br /><br />Glenn Beck parroted these claims on air as recently as April 2010. But like I've said, the tax cut meme is everywhere and has multiple sources.Mark A. Sadowskihttps://www.blogger.com/profile/08259309059705236763noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-43475479580803154212011-05-03T13:24:34.275-04:002011-05-03T13:24:34.275-04:00Mark,
That link to springerlink is to an intro......Mark,<br /><br />That link to springerlink is to an intro...which says nothing about tax cuts. I'm not paying $34 to read it either.<br /><br />I read Murphy now and then and have never seen such a claim. But that's not a denial that he made that argument. I just haven't seen it.John Vhttps://www.blogger.com/profile/01887847629803262764noreply@blogger.com