More on Ineffective Fiscal Policy

This is a companion piece to Steve's AB post from earlier today, where he points out the specious reasoning of  "the likes of Scott Sumner, David Beckworth, Lars Christensen, et al., claiming that fiscal austerity has obviously had no effect on GDP growth."

I wrote Sumner off a few years ago due to a highly unfavorable chaff/wheat ratio.  I've tried really hard to like Beckworth, but these guys simply wallow in confirmation bias.  I've repeatedly criticized Beckworth for cherry picking short-term time series data to make his points.

Comparing 2013 to '12 is an example of time series cherry picking used to justify absolutist dogma.

Back on Feb 10, Beckworth said: "despite this austerity happening at a time of high unemployment and a large output gap, a slowdown in aggregate demand growth has failed to materialize."

And also:  "we should at least see aggregate demand faltering over the past few years while this unfolded. But in fact, we see relatively stable aggregate demand growth, as measured by NGDP"

He does admit in the end that, "the Fed has failed to restore NGDP to its pre-crisis trend." but uses this to get in a dig at the Fed for not following his preferred agenda.

Despite the admission, this is absolutist thinking.  Austerity and demand growth in this view each have an on-off switch.  There is a refusal or unwillingness to recognize matters of degree.  GDP growth is slower than before the crisis, and the slowest of any alleged recovery period ever.  Blaming the Fed willfully ignores the part played by fiscal austerity

My comment, which he also ignored, is as follows. [Graphs added, in place of links.]

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Yes, your graphs all show relative austerity. Except for total government expenditure/GDP - yes falling rapidly, but still higher than any pre-2007 number. And relative is relative. I still think you are considering austerity in absolutist terms.  [Afterthought - total government expenditure as a direct measure is basically flat, not falling over the past three years.  Another example of using a denominator to skew the view.]

We now have the slowest growth in real personal consumption expenditures, % change YoY, of any non-recessionary period in the WW II era. In fact, by that measure, this is the most anemic recovery on record.  [Graph 1]

Graph 1 - Real Personal Consumption Expenditures, YoY % Change

If you prefer GDP growth, this "remarkably stable" measure [% change YoY] has plateaued at or below the level of troughs in the last 8 recessions, going back to 1960. [Graph 2]  So, by that measure, this is the most anemic recovery on record.

Graph 2 - GDP, YoY % Change

Unemployment has fallen, but remains at a level above that of most recessions.[Graph 3]

Graph 3 - Civilian Unemployment Rate

The worst recovery in my life time is pretty dismal success. Plus, wealth and income disparity continue to increase. With sequester looming, I think we're in for a very rough ride.

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There are legions of economists who simply refuse to recognize that fiscal policy can make a difference, and are willing to torture data in an attempt to validate this point of view.

If you want to make a point using time series data, you really need to consider what is a valid context.  Is it this year vs last year, or vs long range historical trends? 

If you need to cherry pick or engage that ol' devil denominator to make your point, then your point has questionable validity.

In Which I disagree with Clive Crook

In this Bloomberg column, Clive Crook criticizes Paul Krugman for 1) smugly being right all the time, and 2) showing insufficient respect for those who are wrong all the time.  Please read it and form your own opinion.

I suppose it's not particularly relevant that PK has been called an idiot, a moron, a communist, a lying political hack, a racist lying hack, and my hands-down favorite, a war monger.  So let's just move along.

To support his point, Crook cites this blog post by PK, and extracts from it this idea:

Krugman was responding to critics who accuse him of seeing everybody who disagrees with him as either a fool or a knave. He says that’s not right: Many of those who disagree with him are sociopaths. 

 “The point is not that I have an uncanny ability to be right; it’s that the other guys have an intense desire to be wrong,” he says. “And they’ve achieved their goal.”

Do you see the problem here?  Crook overstates his case rather dramatically.  PK hasn't called anyone a sociopath, so far as I know, and certainly not in this post.  [Though I have no doubt that a certain congressman, whom PK has criticized loudly and often, qualifies - in spades.]  What he is saying is that they have an agenda, and being wrong means exactly nothing to them, as long as their agenda is promoted.


Crook goes on to say this:

Krugman says his opponents are motivated by politics. “Am I (and others on my side of the issue) that much smarter than everyone else? No. The key to understanding this is that the anti-Keynesian position is, in essence, political. It’s driven by hostility to active government policy and, in many cases, hostility to any intellectual approach that might make room for government policy.” 

 Talk about lack of self-awareness. Does Krugman imagine that he isn’t motivated by politics? 

Crook actually has a point, but not the one he intends.  First off, PK has a valid theoretical and practical basis for his beliefs, while the other side really has been consistently wrong, intellectually nihilistic, and responds by doubling down with more wrong.  More importantly though, if PK had been less polite, and said "rabidly purblind partisan politics motivated by a starkly anti-democratic agenda" he would have been less polite, but far more accurate.  So Crook's quibble with the word "politics" is either a bit vacuuous or the resultant of trying to hard to find something to dispute - an all-too-common feature of PK's would-be critics.

If you've read Krugman's writings from the 90's you know that at that time he was a basically apolitical middle-of-the-road, actually rather conservative writer, making economics accessible to know-nothings like me.  He later became politicized by the persistently willful wrongitude of the Bush administration, which set the stage for the even more wrong and more extreme current Republican party. He doesn't criticize them because of his ideology, he criticizes them for theirs, which is consistently and demonstrably wrong.   And he does this while generally maintaining a high level of politeness.

So, yes, PK is motivated by politics, but it's a politics that strives to reach the truth and promote the common good, rather than some ideological predetermined end point that favors an already privileged overclass. 

Here is Crook's thesis:

Meanwhile, for the side that thinks it has the better arguments, naked contempt for dissenters is plain bad tactics. That isn’t how you change people’s minds.

But there's a problem here, too.  And it's one I understand, since the same criticism has been leveled at me.  There's a truth contained there, it's pure Dale Carnegie, and it would be spot on - if we were contending with rational well-intentioned people.  But there's a deeper truth that Crook reluctantly acknowledges in his final paragraph.

It’s true that the modern Republican Party includes a growing number of extremists who have no interest in the kind of discussion I’m recommending. In their case, attempts at outreach would be so much wasted breath.

That's the reality.  The suggestion that PK needs to get out more is fatuous in the extreme. When you are dealing with liars, the best and most appropriate response is to refute the lies and reveal these fools, knaves and sociopaths for what they are.

Big Illegal Alien Tax Derp

A friend sent me the link to this vid.  It's so full of po' white angst and big scary numbers.




My comment:

Without condoning any kind of tax fraud or other crime, I have to say I'm a lot less troubled about this money going to [what I assume to be] poor people in whatever country than I am about the even greater number of billions of dollars handed LEGALLY as tax rebates to filthy-rich, resource-polluting trans-national mega-corporations in the petroleum industry, and the huge number of other highly profitable corporations that pay little tax, or none at all - in part because of off-shore tax havens.

In all seriousness, 4.2 billion is a big scary number, but if you look at the problems that ought to be addressed by the U.S. in priority order, this probably wouldn't make the top 100.

And I have to suspect that the pasty-faced, oh-so-patriotic southern Indiana news hawks who put this together are more than a little bit influenced by the brownish skin of those who benefit from this situation.  Sorry, that's just ugly reality.   Meanwhile, too-big-to-fail lily-white bankers on Wall Street are robbing us blind every day.

When's the last time you saw a 6 minute news report video on that subject?
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April in the D

The Red Wings finished off a lack-luster season with a few strong games and slouched into the playoffs, garnering the no. 7 seed on the strength of defense, Jimmy Howard's goal-tending, and a few weak opponents.  They lost the first playoff game to the Ducks last night, after going into the 3rd period tied 1-1.  But that was after midnight, my time, and no longer in April, so I'm not going to talk about it.

Meanwhile, the Pistons ended a lack-luster season with a few lack-luster games and have the rest of the Summer off.

Which brings us to the  boys of Summer.

The Tigers have been - and I'll be polite here - a bit erratic.  They fell apart completely on a mid-month road trip, going from 9-5 to 9-9 and then 10-10.  Since coming home, they've had 1 rain out followed by 5 mostly impressive wins, and finished the month at 15-10.

Strengths - starting pitching, scoring early and often.  Starters have routinely gone through 6 innings, and occasionally beyond.  Scoring has been prolific, especially in innings 4 and 5, when the batters are seeing the opposing starter for the 2nd or 3rd time.

Weaknesses - relief pitching, inability to score late.  Valverde has been more than adequate in his three 9th inning appearances, with 2 saves, 1 hold and no runs allowed.  But bringing him back at all smacks of desperation - and rightly so.  The biggest scoring innings for the opponents have been 3rd, 7th, and 8th.  Tigers inability to score late is troublesome.

These differences are stark.  In the first 25 games the Tigers have scored only 20 of their 126 runs (15.9%) in innings 7 and beyond - on average, less than 1 run per game in these frames.  The opponents have scored 40 of their 98 runs (40.8%) in innings 7 and beyond.  

Here it is graphically, where 10 is a proxy for all extra inning.

Graph 1 - Tigers runs scored per inning, accumulated over 25 games

Graph 2 - Tigers runs scored per game in April

Blue line is runs per game, green line is an average to date from the first game, yellow line is average over the last 5 games.  Offense was sadly deficient in games 14-18 against the Mariners and Angels.

Tigers runs allowed per inning, accumulated over 25 games

Here are the win-lose results.




Baseball is a streaky game.  A win streak is a wonderful thing.  A losing streak is abject misery.

Data from the Tigers sortable schedule at this mlb web page.

Quotes of the Day - Pseudo-centrist Hackery and BHO Leadership Nonsense

Wingnut: "2 + 2 is 5!"

Krgthulu: "No, 2 + 2 is 4!"

Brooks: "This is a competition between partial truths, and the True Path to Wisdom, as always and everywhere, is to find the proper balance between them. Therefore, I discern the Deep Truth that 2 + 2 is 4.5."

Krgthulu: "No, you're both wrong, 2 + 2 is neither 5 nor 4.5, it's just 4 and that's all there is to it."

Brooks: "See? See? He's just a partisan!"

------ Slimhazard, commenting on Johnathan Chaits's article

Chait speaks to the role of opinion journalism.  He goes on to point out some guidelines for opinion journalists that are worthwhile for anyone who wants to engage in rational discourse, itemized below.  See the link for elaboration.

1)  Be intellectually consistent.
2)  Don't debate straw men.
3)  Guard against more than one kind of bias.
4)  If you’re going to write something that’s completely self-aggrandizing, you should probably own up to it.

H/T to Scott Lemieux at LGM, who also quotes Charlie Pierce giving MoDo the FJM treatment.

My favorite snippet from that brilliant snark-fest:

From the available evidence (again), and for all the relevance her insights have on what's actually going on in American politics, Dowd once again seems to be writing from an assisted-living facility on the far side of a world Beyond The Planet Of The Ultra-Vixens.