You confidently assert that the Fed can control nominal GDP and chose a path below the trend line. Why not just cut out the middle man and say the Fed controls employment and chose a level below that of 2007 ?
Current Fed policy is, by far, the most expansionary in its history. Normally, the Fed works via the Federal Funds rate which is now essentially zero. People like you demanded more, so the Fed did much much more. We are currently nearing the end of QE2 which is a vastly huger series of open market operations than any under any Fed chairman other than Bernanke. I think there is no statistically significant evidence that the gigantic effort had any effect at all on the economy.
Yet you simply assert that future nominal GDP growth is a function of monetary policy. I know you are familiar with the concept of fiscal policy. You criticize Obama, Reid and Pelosi for failing to criticize Bernanke. How about criticizing them for calling for deficit reduction ? Their position on fiscal policy is contractionary. Bernanke is, by far, the most pro inflation prominent public official in the USA (quick pop quiz who's second).
Yet you are sure that he is the problem.
I ask for information (and await an answer) what hypothetical imaginary evidence could possibly convince you that you over-estimate the effectiveness of quantitative easing when the economy is in a liquidity trap. What could conceivably happen which would convince you and which hasn't happened already ?
I assume my complete inability to imagine any evidence reflects only my lack of fantasy. You have an outstanding imagination. Help me.
Here is another one. You believe that QE is an effective approach. You don't believe in so called supply side economics. You have, no doubt, noticed some difference between the approach to data analysis favored by advocates of the two different policies.
I have noticed no difference at all. Please find an example of some absurd special pleading by supply siders which I can't match with an essentially identical example from quantitative easers. posted by Robert
permalink and comments1:09 AM
Friday, April 29, 2011
A Partial Defence of Ben Bernanke
Suddenly, I feel very lonely. Paul Krugman has ceased to defend Ben Bernanke. His partial defence of Bernanke is that Bernanke is lying because he is terrified of Ron Paul. I have the impression that everyone disagrees with me. Also I didn't watch Bernanke's press conference or read the transcript.
The problem is that Bernanke said four things. Unemployment is a terrible problem, inflation is not at all a problem, the Fed can cause higher inflation and lower unemployment, and the Fed should not do so. Which one here is not like the others ?
Krugman and Kash Mansouri agree that Bernanke is terrified of the inflationistas.
I have two slightly different theories. I'm afraid I am going to have to assume that Bernanke was lying (his statements are not logically consistent and he isn't an idiot to put it mildly). But I aim for a slightly more noble lie.
1) The false claim is on point three -- that the Fed can stimulate the economy. I'm not convinced that Bernanke believes that it is true. I'm not even sure that the Fed can stimulate the economy given current legal restrictions on its actions (I don't know the law but I'm sure that actual helicopter drops of money are not allowed).
Krugman's evidence is the following
He could have argued that he lacks the ability to do more, that he and his colleagues no longer have much traction over the economy. But he didn’t. On the contrary, he argued that the Fed’s recent policy of buying long-term bonds, generally referred to as “quantitative easing,” has been effective.
Yes you read that correctly. Krugman draws his inference from the fact that, in a press conference, a public official said that his recent policy had been effective. Oddly, Krugman and many others have recently tried to explain why that policy was disappointing. The claim that it worked fine was rejected without consideration. This is largely because there is no evidence that it worked at all.
But an unsupported claim that the Fed's performance has been good is accepted as sincere and, indeed, as proof that the Fed has the ability to do more.
What was Bernanke supposed to say ?
We have no idea what to do We've tried and tried and have no clue with no alternative we QE2ed it didn't work, so now we're screwed
If his sole aim is to cause high expected inflation, he might rationally claim that the Fed can cause higher inflation any time it wants, and there are good reasons to chose higher inflation, but they won't for some incomprehensible politico-psychological neurosis. The hope that they will come to their senses (stranger things have happened) implies higher expected inflation than corresponds to the facts of the matter which is that they have tried everything they can think of and nothing worked.
Another noble lie. Bernanke is pretending that he is still a Republican (I'm not saying he left the party but the party sure left him). It may be that the Fed can do more (I think it can) but no possible monetary policy would make up for Treasury default or even a government shutdown. Bernanke's main useful role is to convince the Republicans in Congress to refrain from destroying the world economy.
This is close to the Kash Krugman story, but it isn't identical. I'd guess that Bernanke fears Ryan and Cantor and Pence not Paul.
I don't think QE3 would achieve much of anything, but even if I'm wrong, it just isn't important compared the the margin of hope that the last sane Republican has some influence on his party. posted by Robert
permalink and comments5:43 PM
Rigorous codes of conduct allow people to build their character. Changes in behavior change the mind, so small acts of ritual reinforce networks in the brain. A Mormon denying herself coffee may seem like a silly thing, but regular acts of discipline can lay the foundation for extraordinary acts of self-control when it counts the most.
I was once in an AIDS-ravaged village in southern Africa. The vague humanism of the outside do-gooders didn’t do much to get people to alter their risky behavior. The blunt theological talk of the church ladies — right and wrong, salvation and damnation — seemed to have a better effect.
I have excerpted but I promise you that the only empirical evidence on the effect of different religions on behavior is that "seemed." This was not a joke or a parody. This is the real David Brooks. He is contributing to the debate on an empirical question in the human sciences (OK I'd say sociology but sociology is known to be pinko) by attending a broadway musical and discusses how things "seemed" (his word not mine -- those aren't scare quotes -- he typed that word).
"Among the major religious categories considered here, we find that conservative Protestants generally have higher teen pregnancy than other groups."
The other categories are Catholic, no relgion and other. The excluded group is other which would therefore be non-conservative Protestants, Orthodox, Jewish, Muslim, Buddhist, Hindu, and Wiccan (if any). Catholics and others have similar rates of teenage pregnancy. Thos with no religion have high teenage pregnancy when under 17 then almost exactly the same as Catholic and other. Thos raised conservative protestant crank em out in their teens also controlling for race and region.
Thats first google, second hit I clicked (the first was a discussion among non experts who guessed the result). the authors (Powers and Ellison) also find that withing categories the more devout are less likely to get knocked up, but that isn't related to Brooks' claim which is that more demanding denominations have better effects. His claim is contradicted by the first scientific study I found following my first google search.
Other points. He notes that religion in Africa is often very demanding
But it’s worth remembering that the religions that thrive in real-life Africa are not as nice and naïve as the religion in the play. The religions thriving in real-life Africa are often so doctrinaire and so socially conservative that they would make Pat Robertson’s hair stand on end.
I guess that's why Africa is doing so well compared to Scandanavia (where most people identify with no religion at all). This is oddly the opposite of the red state blue state ecological fallacy which he loves so much (he sure isn't going to compare freequency of membership demanding denominations and outcomes by US states).
Dorothy Sayers argues that Christianity’s advantage is that it gives value to evil and suffering. Christianity asserts that “perfection is attained through the active and positive effort to wrench real good out of a real evil.” This is a complicated thought most of us could not come up with (let alone unpack) outside of a rigorous theological tradition.
Why yes that is true. The whole doctrine of returning good for evil had to come out of a rigorous theological tradition -- that is why it is clearly stated by the Socrates character in Plato's Republic. Oh and by a Rabbi crucified for heresy whose teachings are largely focused on treating the Law as a living thing. I mean really, this is not a joke, the defenders of rigorous theological tradition base their case on the insights of two people who were put to death for violating theological tradition.
Even though I am typing about a Brooks column, there is something interesting here. For some reason arguments which are comically bad (honest its in the New York Times not The Onion) are publishable if the conclusion is that religion is good and demanding traditional religion is better. it is just excessively politically incorrect for a member of the coastal elite to subject such claims to any scrutiny at all. posted by Robert
permalink and comments11:58 PM
I am always amused by the utter contempt for the Constitution typical of self proclaimed "constitutional conservatives."
The odd thing is that this assault on the Constitution serves no purpose. It isn't like the constitutional conservatives enthusiasm for undeclared wars, the unitary executive, warrentless wiretaps, detention without trial, and torture.
update: correction corrected.
What Rep Bass would have said, were he able to speak Engish, is "remember that budget resolutions are not budget bills which are law." A budget resolution just budget resolutions are not law unless and until they are approved by a majority of Senators who are present and voting and signed into law by the President or approved by a majority of Senators present and voting, vetoed and the approved by two thirds of representatives present and voting and by two thirds of Senators present and voting". Oh hell he could just have said "bills approved by the House are not law -- there are a Senate and a President too." But no he had to equate a vote on a budget bill in the house with a budget (false) and say that budgets aren't law. It's as if he went out of his way to spit on the Constitution. posted by Robert
permalink and comments6:49 PM
Confession Penance and Absolution for Bloggers
Jacob Weisberg confessed and his Shrillness himself has denied him absolution.
I deserved some of the abuse. Though I criticized Ryan for his unsupported rosy assumptions (shame on you, Heritage Foundation hacks), I reacted too quickly and didn’t sort out just how laughable Ryan’s long-term spending projections were.
Look, this is an important debate. If you can’t be bothered to look at the numbers, you shouldn’t weigh in.
Dog bites man, Krugman makes another enemy.
I think that Krugman requires at least an act of repentence. Damn I don't often wish I was raised Catholic but how does it go ?
I Jacob Weisberg convess that I blogged in hast, most bitterly repent my sin and swear, with Google's grace to in the future avoid both haste and the near occasion of haste.
But how the hell does one avoid the near occasion of haste when blogging ?
I Robert Waldmann confess that I have often with perseverance in my sin blogged in haste and wonder how I can avoid the near occasion of haste ?
OK Weisberg has a budget and can hire an editor for his blog (he can still edit the rest of Slate). A disenabler. He could hire some kid and give the kid his password and tell him to make a new password and not tell Weisberg what it is. Then Weisberg submits blog posts which can only be posted by his blog's editor. The deal is the editor is fired if and only if Weisberg has to apologise for hasty blogging again.
It would work but it is not allowed by this blog's budget ( $0 and 00 cents). But there must be some way.
I don't like to wake up in the morning. If I could only blog between 7:00 and 7:05 AM I wouldn't post without sleeping on it. The same works for early risers who have trouble keeping their eyes open till midnight. If blogspot only allows posts between 12:00 and 12:05 AM, the blogger would be struggling to stay awake and wondering "is this really so urgent or can it wait till tomorrow).
Less extreme measures might work a little. As in to post one must hit post twice and the second time after an hour. It would be necessary that no editing be allowed between these clicks on the publish button (else one could edit a post on the weather into hasty praise of Paul Ryan). posted by Robert
permalink and comments5:54 PM
E.J. Dionne and Charles Krauthammer agree on something and they are wrong.
Krauthammer wants the Republicans to run in 2012 the way he thinks they ran in 2010. He predicts a roughly similar outcome. Dionne would like that too, he predicts the opposite outcome.
I note that Krauthammer is, in fact, proposing that they run the opposite of their 2010 campaign and I agree with Dionne that they will be hammered if they do.
According to Dionne's paraphrase Krauthammer "asserts that Republicans would do well to make the 2012 election as much like the 2010 election as possible and focus the campaign on 'the size and reach of government, spending and debt, and, most fundamentally, the nature of the American social contract.'"
"yes, let’s rerun 2010. I am persuaded it will come out quite differently the next time around."
Yes let's rerun 2010. I'm quite convinced it will come out the same way -- the party that votes to cut the Medicare budget will be hammered. I think the winning 2010 slogan was "keep your government hands off my Medicare." that Republicans won partly because the economy was in terrible shape and partly because the Democrats had dared to cut the budget of a very popular single payer governement insurance program.
Your analysis is convincing as far as it goes, but it doesn't go far enough to be consistent with polling data. The Ryan proposals (when briefly described) are indeed rejected by the Democratic party base, but they are also overwhelmingly rejected by the Republican party base.
Quite figuratively, I wonder if there is something in the water in the Washington Post building. Inside that building it is agreed that entitlements must be masively cut. This view is supported by CBO forecasts and is shared by a very small minority of US adults. You have every right to believe what you believe (and I agree Medicare spending growth should be restrained -- as it was by the PPACA for example) but you shouldn't ignore the actual campaign and all polls when interepreting the 2010 election. posted by Robert
permalink and comments5:13 PM
Friday, April 22, 2011
Below I complain that Jon Chait has a Climited* view of possible taxes but this post is brilliant.
He askes why Paul Krugman and David Brooks hate each other. My thought was that, while Krugman ruthlessly criticises Brooks, he ruthlessly criticises almost everyone, so that doesn't show much, and of course Brooks hates Krugman, I sure would.
But I have noticed that Krugman seems to be dumping on Brooks a lot (without naming him as per NY Times rules).
Before moving back to praise, I think Chait's case that Brooks hates Krugman is weak. It depends on assuming that a statement about "most people" is presented as applying to Trump, when Brooks is drawing a contrast between Trump and most people.
But I am convinced that Krugman has it in for Brooks and not just for the reasons he states. Chait found this strange and horrible artifact
I think that Chait is right that the hippy holding the New York Times is meant to be Krugman even though he doesn't look at all like that. The article must give good reasons to ruthlessly criticize Brooks forever, but I fear that, for Krugman, there is one particular of the image which went tooooooooo far. Hippy Krugman is portrayed as balding. Now I have a receding hairline as you see (and a bald spot as you don't) but Krugman doesn't. He is very firm on this point.
In a typically excellent post, Jonathan Chait notes that Jacob Weisberg admits that he was maboozled by Paul Ryan. He also notes that Weisberg backslides immediately saying that, while Ryan's plan is absurd, Ryan is at least honest about some things. Chait quotes Ryan lying about both of those things. Very good.
However, Chait also discusses what we should do with our taxes. He wrote
[Obama] refuses to admit that the level of government he finds necessary would almost certainly require returning tax rates for the middle class, not just the rich, back to Clinton-era levels.
Here Chait simply assumes that tax rates must be either Bush tax rates or Clinton tax rates. Chait's assertion, stated without any wiggle room weasel words or wiggling weasels is that we have to return to Clinton tax rates. If you doubt my claim, re-read the quotation. Evidently, tax rates which are slightly higher than Clinton tax rateswould not pay for the level of government Obama finds necessary.
The quotation is a statement about budgetary arithmetic -- there is no reference to political feasibility. Yet Chait just assumes that rates higher than Clinton rates are impossible. He does not address the question of whether rates on income over $ 250,000 higher than Clinton rates (I'm not talking about absurd confiscatory Reagan-Kemp-Roth rates, just rates higher than Clinton rates) might make it possible to charge rates lower than Clinton rates on middle class incomes.
Here I must stress that I don't consider a family with income 249,999,99 middle class. In fact I don't consider a family with income 150,000 middle class. I think the true political poison is proposing tax increases on people below the 90th percentile whcih is well below $150,000.
One or the other I say. One can discuss budgetary arithmetic or politics, but a mixture in which Obama must commit political suicide by saying he will raise taxes on the middle class, because taxes higher than Clinton taxes on the rich are impossible will not do.
It is a fact that no one has proposed will propose a tax plan which pays for Obama's proposed spending, so the only one out there is the Clinton tax plan (which would eliminate the primary deficit for decades and probably forever given Obama's planshopes wishes for further Medicare spending cuts).
Not giving families with income over 250000 6 thousand in cuts compared to Clinton rates would yield about 20 billion a year (pocket change but every little bit helps). Phasing out the gain compared to clinton on incomes from say 200,000 to 250,000 would help considerably more. Raising the top marginal rate to Reagan-Kemp-Roth level would yield about 800,000 over ten years. Bringing back the Reagan era estate tax would yield a vaguely similar sum. Taxing dividends and capital gains as income (OK phase it in so not if income is under 250,000 and it grows proportional to fraction of income over 250000 uh squared. would do more. Phasing out the deductability of home mortgage interest (as repeatedly proposed by Obama) too.
All this together would give high marginal tax rates (the explicit rates plus the phasing out of this and that). It would be impossible to pay for ObamaGov without increasing taxes on families with income under $250,000, but it certainly wouldn't be necessary to raise them all the way to Clinton levels. It could be done subject to the rule that most people pay 0 or less in income tax or that taxes are cut for 60% of households compared to current taxes (not Clinton current).
The front line of the class war would have to shift a bit, but I am talking budgetary arithmetic and not politics. posted by Robert
permalink and comments7:19 PM
Wednesday, April 20, 2011
Matthew Yglesias writes about a topic about which I know something -- taxes and growth.
He concedes that it isn't a topic which will be resolved by a blog post, then argues that taxes affect the level but not the growth rate of GDP. His claim is supported by economic theorizing using words not equations. The absence of equations is good, as far as it goes, but it doesn't go far.
It's not a topic which will be resolved by a blog post. Also I think it is clearly not a topic which can be resolved by theory. Here (as once before related to New Jersey) I am upset by what appears to be the illusion that economic theory can tell us something about the real world.
I agree with the conclusion, but I agree because of empirical evidence. Basically no one has managed to demonstrate a bad effect of taxes on growth after considering possible conditional convergence (that's something which is very definitely in the data).
The idea that we can tell a priori about what affects levels and growth rates is a mathematical error. Economists can convert anything which affects a level to something which affects a growth rate using the tricks of endogenous growth theory. Just the most nearly reasonable example is one in which growth is fundamentally based on technology, and technology developes due to costly research and development. Taxing away the profits of the firms which have developed new products (or less costly ways of making old ones) reduces the returns to R&D and, typically in the model, reduces growth.
Look if the problem is "take this level effect and make a growth rate effect" I'm pretty sure I can do it when woken up in the middle of the night, when standing on one leg, and when totally drunk). It takes a bit of effort to make a model in which taxing the profits of firms which have invested in R&D causes faster growth, but it isn't really hard (I can send you a *.pdf with the model and proofs, or look up a related published model
Alessandra Pelloni and Robert Waldmann (2000) "Can Waste Improve Welfare ?" The Journal of Public Economics. vol. 77 pp 45-79.
Also and less eccentrically standard growth models have effects of taxes on growth. In particular, in standard endogenous growth models taxes on capital income cause lower growth rates. This is a well known and very simple mathematical result. In fact (as noted in the paper cited above) the result depends on the assumption that labor supply is exogenous, an assumption which is basically always made in endogenous growth models and which was assumed to be harmless. But I mean I am talking about developments in the theory of taxes and growth which were new in 1986.
Now one might argue that, after a good look a the data, it is reasonable to conclude that all this endogenous growth theory doesn't fit the data as well as the model which was new in 1955
but your post is written on the assumption that endogenous growth theory doesn't exist and can't exist (not just that your claims about what we can tell about the world using economic theory are contradicted by published economic theory but also that there is no model in hyperurania for which your claims are false). posted by Robert
permalink and comments5:34 PM
WWW.washingtonpost.com headline guy (or gal) now with screenshots
A more complete headline would be "Poll Finds Little Support for Debt Remedies Which are Tirelessly Advocated by Washington Post." Debt remedies which We don't advocate don't count.
In the actual article (which carefully buries the lede)
In his speech last week, the president renewed his call to raise tax rates on family income over $250,000, and he appears to hold the high ground politically, according to the poll. At this point, 72 percent support raising taxes along those lines, with 54 percent strongly backing this approach. The proposal enjoys the support of majorities of Democrats (91 percent), independents (68 percent) and Republicans (54 percent). Only among people with annual incomes greater than $100,000 does less than a majority “strongly support” such tax increases.
I think the only fair and balanced headline would be "Public Agrees with Obama not Ryan" with a sub headline. More than half of self identified Republicans support higher taxes on the rich.
The Republican party is so radical that it has lost the support, on the issues, of its base.
Yet for some reason, respondents don't know that they disagree with what Republicans are doing. Republicans agree with Obama and disagree with Republicans in Congress on actual policy proposals, yet " political independents side with the Republicans on tackling the burgeoning debt."
Kevin Drum quotes the same snark as my first quote of the day of yesterday.
He says the point is that the USA is the only country which can project military power globally. I totally let my comment run away with me.
I think you are a bit unfair to Pike (who let us say might be seen to have been asking for it). His criciticism just isn't "Britain and France should have more planes and more bombs. " It is that France and Britain should have fewer planes and more bombs.
The issue isn't global projection of power. Libya is close to France and France and the UK are using NATO bases in Italy. But it also isn't military capacity. It is that they have bought the extremely expensive planes but not a serious number of much cheaper smart bombs.
The "air shows" snear is not only funny. It is a substantive claim that they care about their military as it appears on paper (planes are counted and bombs aren't).
This is relevant to the US military procurement too. The plane NATO wants to deploy but which is not available because only the US has it and Obama doesn't want to endanger the crews is the AC-130 which is basically an armed for attack (hence A) C-130. The C-130 is propeller powered. It was designed in the 50s. It is the favorite plane of NGOs. It is the plane they need (they could also use A-10 warthogs which are newer and jet powered and all but just read that name).
Instead they have air superiority fighters which can bomb. These are planes with extremely impressive performance. They look super cool. They fly super fast. They look great in air shows. They have not been relevant to any war fought since the war in Korea (maybe since WW-II).
They have wasted a lot of money on exceedingly expensive planes, which aren't useful for their purposes (and France at least actually uses its military quite often -- they wre fighting simultaneously in Libya and Ivory Coast). These are the fun hot exiting planes that air forces want, but the point of procurement isn't to please the generals.
The reason this is important to your readers is that the USA has wasted a totally huge amount of money on similar fancy weapons. We can project power all over the world and give the USSR a fight for its money when we get there. But there is no USSR. The F-22 was the classic case and, at least, we've stopped at IIRC 83 (which will probably never be used). The Joint Strike Fighter will be the next huge sink of money (the hugest in military history).
The way we actually fight is to destroy air defences with cruise missiles and then bomb with planes designed in the 50s. The incredibly expensive ultr-fast stealthy planes which can shoot down the MIGs that the Soviet Union didn't last long enough to develop and operate over undestroyed air defences are irrelevant. They are irrelevant in Libya, in Afghanistan, in Kosovo, and in both US wars with Iraq. We spend gigantic sums on them, because the generals love them and because our expense is some defence contractors revenue.
How much do we spend on " heavy lift capacity, ... long-range bombers (that we actually use), ... huge arsenals of cruise missiles, ... [and] fleets of reconnaissance satellites, [and]...bombs" ? (note I didn't include the planes, the carrier groups or the bases -- those cost a lot).
A cruise missile costs about a million. You wouldn't notice the purchase of a thousand cruise missiles in the US defence budget. They clearly are key to our ability to crush adversaries. What is the total US cruise missile budget ? How much do the reconnaissance (and GPS) satellites cost ? How much does the US military spend on bombs ? What have B-1s ever done for us ? What have B2s done which B-52s couldn't have done better ? Why do we need carrier groups to launch cruise missiles ?
The vast majority of the DOD procurement budget has almost nothing to do with fighting the wars we actually fight. posted by Robert
permalink and comments4:04 PM
"It's like a version of The Dark Knight in which the Joker says "I don't understand you, Batman," and Batman says, "I don't think you'll ever understand, Joker," and the Joker slouches off to get drunk at the Ebbitt Grill while Batman smiles at his glistening Batmobile."
Makes me think. There are lots of Randroid politicians in Washington (Alan Greenspan, Rand Paul and Paul Ryan ... heeey has anyone ever seen the two of them at the same time ?).
How many Randroid entrepreneurs have there ever been ? Does the approach of adoring yourself and showering everyone else with contempt really work ? posted by Robert
permalink and comments11:04 PM
I stand corrected. The correctly scored quote of the day (via Think Progress, Balloon Juice, and daily Kos)
Albert Einstein said that a little knowledge would turn your head toward atheism, while a broader knowledge would turn your head toward Christianity.
though [inflation] expectations are now moving in the right direction, they’re still lower than would be optimal. It’d be nice to see expectations pushed all the way up to Reaganesque levels in the 4 or 5 percent range, but even if that’s unrealistic ten year expectations could at least get above two.
I think you are absolutely totally utterly right. Avent is just looking at the sign. The staggered announcement and current implementation of QE2 is associated with a change of inflation expectations in a desirable direction, but the change is tiny compared to a change which would make up for the lack of fiscal stimulus. Amounts matter not just signs.
I'd add that QE2 is also associated with an increase in medium term nominal interest rates including notably 7 year rates (QE2 is the purchase of 7 year Treasury notes so this is the natural interest rate to check). The bottom line is much less association with lower real interest rates than with higher expected inflation. Bummer.
I'm sure part of the problem is, as you suggest, the inflation hawks which make investors fear that the Fed will respond to the menace of inflation in the target range by causing positive short term safe interest rates.
But the main point (your main point) is that inflation hawks are totally wrong twice. Increased expected inflation is good and expected inflation is barely increasing. When noting the first error, one shouldn't overlook the second. posted by Robert
permalink and comments4:59 PM
Friday, April 15, 2011
Matthew Yglesias has gone too far this time.
He reads a report on the effect on 2 year Treasury yields of public speaches and interviews of Fed Open Market Committee members measured by the change from 15 minutes before the announcement to 2 hours after. It finds effects on the order of one basis point per announcement. The average absolute effect of Bernanke's communications is 1.5 basis points, that is 0.015% on one interest rate definitely lasting at least 2 hours (and maybe forever or growing or something).
Yglesias concludes "I think this highlights the fact that monetary policy works largely through expectations and communications ...". If monetary policy works largely through effects on medium short term interest rates on the order of a basis point, then it doesn't work at all. This is, pretty much, my view of the current situation. I have the radical idea that monetary policy in a liquidity trap is almost ineffective.
The alarming thing is that Matthew Yglesias who is very very very smart, doesn't seem to have noticed the scale of the graph at all. He doesn't distinguish "detectable" from "important." His comment shows no effect at all of quantities.
I feel as if his evil (really innumerate) twin Skippy takes over when he writes about monetary policy. posted by Robert
permalink and comments2:54 PM
He went out of his way to say he isn't worried about financial arson. He taught me something I should have known (I should have read the article and should have thought of it myself). I could unfairly attack him by ignoring his use of the qualifier "could" in a, just to be polite, qualified concession "to be fair" to those with whom he disagrees. I could pretend that he really believes that that which he concedes "could" be true, definitely is true.
So I will.
Fascinating post. Thanks for telling me about the Gorton article.
I do think that Gorton is trying very hard to be as orthodox as possible. Effectively he assumes that the semi strong form efficient markets hypothesis is true. He notes that, even if CDS prices move only in response to valid information, they might cause problems.
In the real world another issue is that asset prices bounce around for no good reason. This means the cost of speculation in liquid assets include those described by Gorton plus many more. The part of the post which doesn't convince me is "In the long-run, the availability of naked CDS and therefore more information about firms could be a good thing that enhances the operation of the economy." This is only true if CDS prices are based on information and not noise, bubbles, panics, fashion and well all the things which really make asset prices bounce around.
CDS played an important role in the economy before the crisis. Firms designing and rating CDOs used the correlation of different CDS prices to estimate the risk of default of tranches of the CDO. This is using information in CDS prices. It didn't work out well. The "information" was noise and it caused a gross underestimate of the probability of joint default of different underlying bonds (of the correlation of the default events). Now the problem was partly that the same firm designed and rated CDOs creating massive conflict of interests. It was largely that the calculations were performed with the absurd assumption that all stochastic variables are jointly normal.
But the fact remains that use of the alleged information in CDS prices, impaired the operation of the economy. Massively.
Gorton's point is that, even if the semi strong form efficient markets hypotheses were valid, new liquid assets can make things worse. This is an impressive result, but there is no reason to take the semi strong form efficient markets hypothesis seriously as it fits the data about as well as the flat earth hypothesis. posted by Robert
permalink and comments3:15 PM
It shows that the Republican Party has this little problem that most US adults and most independents absolutely disagree with them. 59% of US adults overall and 60% of independents want congress to increase taxes on families with incomes over $250,000.
Same old same old. This is a very typical result. That's why Congress hasn't done so since 1993 (when the fraction thinking the rich paid les s than their fair share was around 80%). The Republican proposal to make Bush tax cuts permanent and then slash taxes for the rich a whole lot more does not look popular. 37% of self identified Republicans want to increase taxes on the rich.
Just a little bit of discussion of actual cuts have eliminated the US enthusiasm for cutting domestic spending. US adults split 47% against further significant cuts to 45% in favor. 48% of independents oppose singificant additional cuts (as just proposed by Obama by the way).
13% want a complete overhall of Medicare. 14% of self described Republicans support a complete overhall. Ryan hasn't won over a signficant minority of his own party. The result which amazes even the most jaded Republican moccker is that 33% of Republicans things the governement should "not try to control the costs of Medicare." I admit I am surprised too, but we shouldn't be. The Republicans shellacked the Democrats because their base turned out to punish the Democrats for trying to control Medicare costs.
But the really interesting question is how could a party with a death wish win so many elections. I think the reason is that self identified Democrats don't consider Republicans the enemy and self identified Republicans consider Democrats the enemy. An extremely partisan base is good for a party.
The result I found most interesting was one so tackily horse racy that pollsters rarely ask it. Who won ?
Democrats just won't paly this game with many more calling it a "victory for both" than a victory for just one party. In contrast more Republicans consider the result to be a victory for one party rather than for both.
Democrats are sure that Republicans and Democrats can work together for the common good. 20% of self identified Democrats even think the parties did so in the with the horrible job destroying continuing resolution. Republicans are less likely to think this.
I think that's why the Republican party wins elections even though ordinary Republicans oppose the party's agenda.
I am continuing my posting as an amateur historian of science. This post will be alll from memory -- no links and certainly no references to actual historical evidence.
He had 4 claims the fourth of which is, by far, the most astonishing.
1. Planets (including the Earth) move on ellipses with the Sun at the focus. The Moon moves on an ellipse with the Earth at the focus. This is a very radical claim. All previous Western astronomers worked only with circles. The path of the planets is close to a circle centered on a point near the sun (a not very eccentric ellipse is very close to a circle centered on the point midway between the foci). Only much more measurements (made by/under the supervision of Tycho Brahe) made it possible to show that the path wasn't an off center circle.
It is possible to approximate and ellipse very well with a big circle and an epicycle. This is what Copernicus did. His epicycles were tiny, because the orbits of the planets happen to be ellipses with low eccentricity -- that is very close to circles.
2. Angular momentum is conserved. Take the vector from the sun to a planet. The cross product of that ray and the velocity of the planet is constant. To put it in terms Kepler would understand, the product of the distance to the sun and the planet's motion in the directino perpendicular to the line segment from the sun to the planet is constant. Kepler really only noted this (in a diagram which I remember seeing a photo of it somewhere) for positions near the perihelion and near the apehelion (sp ?). It means that if you make a triangle of the Sun, the planet at time t and the planet at time t+x then the area depends on x but not on t.
This means that the angle swept out per unit of time is not at all constant when viewed from the Sun. It is proportional to the inverse of the square of the distance from the Sun to the Planet. Taking first order approximations (which are very close to accurate since the ellipses have low eccentricity) the angle swept out in a unit of time is almost exactly constant when viewed from the *other* focus of the ellipse. This means that planetary orbits are very nearly circles centered on a point other than the sun (the point midway between the foci) and that angle swept out is very nearly constant when viewed from the point twice as far from the Sun (in the same directin). This means that Ptolemy's system of eccentrics and equants is almost exact. Copernicus's conviction that motion must be constant when viewed from the center (of the circle) has nothing to do with reality.
So far I score it Copernicus 1 Ptolemy 2. On one point of disagreement (does the Earth stand still) Copernicus was right. On two points eccentrics and equants, Ptolemy was ahead of Copernicus. On the point of agreement -- perpetual motion must be circular, they were both wrong.
I am being generous to Copernicus, because I have skipped Brahe. Brahe had a compromise model in which the Sun and the Moon orbit the Earth and the other planets orbit the Sun. Brahe's model can't be distinguished from Copernicus's model by astronomical observations. If he had been a loyal employee/student Kepler could have Braheed his model with the Sun oribiting on an ellipse with the Earth at its center and the other planets oribiting on ellipses with the Sun at the center.
The only reason we are sure such a model is wrong is that it is inconsistent with Newton's theory of gravity which -- well that was a megagigantic huge very large scientific advance and just fits so many facts that the only way to remember them is to remember that Newton's model worked perfectly except for the precession of the parihelion of Mercury.
3. I have to redo the math each time working back from Newton. OK the square of the period of the planet is proportional to the cube of the average distance from the sun to the planet.
Stylized facts 1, 2 and 3 are all implied by Newton's theory of motion and of gravity.
So what is the really amazing fact 4 which is much more impressive than 1-3 and such that it just strains credulity to argue that it is a coincidence ?
There are only five regular solids: tetrahedron, cube, octahedron, dodecahedron and icosahedron (sp?). This is an easily proven yet still amazing fact in geometry.
There are six planets visible to the naked eye mercury, Venus, Earth (ha ha you looked) Mars, Jupiter and Saturn. If you make spheres including the circles which approximate their orbits (Copernicus's model without the epicycles) then the following amazing fact is true.
The corners of the smallest tetrahedron which includes the sphere of Mercury just touch the sphere of Venus. The corners of the smallest cube which contains the sphere of Venus just touch the sphere of the Earth. The corners of the smallest octahedron which constains the sphere of Earth just touch the sphere of Mars.
you get the picture.
This hints at an explanation of why there are 6 planets, since there are 5 regular solids to be between the orbits of successive planets. It also fits 5 numbers with no free parameters at all.
Any sensible rule of statistics or science or common sense must imply that one has to be a total idiot, insane or very very stubborn to assert that this is just a coincidence which tells us nothing.
The consensus view of basically all living people is that this is just a coincidence. Almost nobody knows the fact. It clearly can't tell us about physics, because it depends on the word "visible." There are other planets. If we had better eyes, then Kepler would never have noted the patter. If we had worse eyes and couldn't see Saturn (or mercury or something) then Kepler would never have noted the pattern
It is an amazing astonishing hard to believe it is a coincidence statement simultaneously about the Solar system and the sensitivity of the human eye.
Maybe it was a weird coincidence.
Another possibility is suggested by the Church of the God with a Sick and Twisted sense of Humor. This weird fact could be explained if He was Messing with Kepler's mind.
Peolemy: Ptolemy wrote down a model which was used to forecast 1350 years out of sample. For some reason, this gigantic scientific triumph is used as an example of bad science. The problem, as everyone thinks they know, is that clinging to the core belief that orbits were made of circles, Ptolemaic astronomers added epicycle after epicycle, pleased that they had reconciled the data with the claim that orbits could be approximated with enough circles and not noticing that any curve can be so approximated. This, first of all, sounds a whole lot like economic reasearch to me and second of all would clearly be bad science. The problem is that there is absolutely no historical evidence that Ptolemy's followers added an additional epicycle to his model.
I learned something recently. I thought they added eccentrics and equants. Now I know that Ptolemy had them in his model, and that they were used long before Ptolemy.
Copernicus: Copernicus was a pro-circle hard liner. His stated aim was to make a model without equants. OK I have to define. In Ptolemy's model something goes around a circle, but the rate at which it goes around is not constant when viewed from the center of the circle but rather from another point called an equant. This was not acceptable to Copernicus. I don't think we can understand why not (we can't read his mind).
The Copernican model had epicycles. It also suggested that they might not be necessary as Copernicus's epicycles were tiny.
What's this about 50 years ? Well for around 50 years after Copernicus published, no one was convinced. Then two things happened. One is that Galileo observed the phases of Venus with a telescope. That mean't he could estimate the angle between the line from the Sun to Venus and from Venus to the Earth. That angle corresponded very closely to the angle predicted by Copernicus and not at all to the angle predicted by Ptolemy. After 1450 data were observed which Ptolemy's model couldn't fit (to the stated precision of around a degree or so).
Second, Kepler published. Kepler's model is heliocentric and it gives predictions which are almost exact. Measurements precise enough to reject Kepler's model weren't available for centuries. Both Ptolemy and Copernicus admitted that their model didn't give exact predictions (which means forecasts errors can be detected with the naked eye).
Copernicus's model had very limited appeal and this makes sense. It gave predictions about as good as Ptolemy's and was about as complicated as Ptolemy's. New data showed it corresponded more closely to reality. Also a new model which we perceive to be similar to Copernicus's model was far superior to the models of Copernicus and of Ptolemy.
OK finally what did Kepler say ?
I've moved it up to before recap of Ptolemy and Copernicus so now it is at the top of the post and probably incomprehensible. posted by Robert
permalink and comments2:20 PM
That seems utterly trivial. But it can be made somewhat less trivial:
“La neige est blanche” is true if and only if snow is white.
Add the element of translation and it looks a little bit less trivial.
He goes on to argue that truth must be conventional
English is a set of social conventions and so is French and so are all the rest ... there will always be some margins at which the distinctions between advancing false claims and misusing words breaks down. When Jonah Goldberg says that liberalism is a species of fascism,
I object "all the rest of what ? Of 'ordinary' languages or of all possible langauges."
Earlier he wrote "And while people can (and do) devise formal languages on their own and by stipulation, ordinary language doesn’t work this way."
So it seems that the nature of truth is determined by the characteristics of "ordinary languages." Why ? Why aren't artificial languages allowed ?
First, before going way to far, I just want to note the problem in the post. Yglesias moves from things which can be in quotations marks -- that is all statements in all possible languages, to "ordinary" languages. What justified the insertion of the word "ordinary" ?
OK I know a bit of the history (based on a philosophy of science course I took which uhm well I won't mention the grade I got but it wasn't high). Rorty is writing after the long sad story of efforts to develop a perfect language. The logical positivists were sure that they could purify language and that this would make something or other much better. Later it was very widely agreed (by among others most of the original logical positivists after they had tried for a while) that this effort was hopeless.
But I think there is truth other than conventional truth if a lesser aim can be achieved. Not all of useful language can be made precise as the logical positivists hoped (mostly by saying that practically everything everyone wanted to say was meaningless). But if some useful language can be made precise, then the truth value of statements in that useful artificial language is a matter of facts (about the world) and explicit rules (defining the language). It isn't based on social norms.
As Yglesias concludes "But there’s no definitive adjudicator of what does and doesn’t constitute an acceptable way to use English words, there’s merely a very large and diffuse community of people who use the language." But there is a definititive adjudicator of what does and doesn't constitute an acceptable way to use Mathematical notation and terms.
So far I have nothing, because mathematics is about a formal system invented by people. It is, and now admits to being, purely conventional. But physics is both precise (there are rules) and used to say things about the real world.
I don't think that Yglesias can find a case of a physicist like Jonah Goldberg.
Hmmm maybe all that I have argued is that the norms and conventions are very strict in the physics profession. There isn't, in fact, disagreement over the meanings of words (although it is agreed that some like "observe" and "particle" can only refer to uh something which is not humanly comprehensible). But this is a difference in degree and not in kind. It is a 100% shared and rigid convention, but still a convention.
I don't know, but I don't think so. I think that problems of definition can and have been resolved in narrow fields forever. In those fields of discussion, the distinction between "advancing false claims and misusing words" doesn't break down. It seems to me that "breaks down" is a statement about something that happens, that has happened or that certainly will happen sooner or later. The claim may be true for all discussions in English and in French, but I don't think it is true of all discussions.
"Ryan has given Obama free rein to grab the upper hand"
which is on the other foot.
I agree that the Republican Octopus has sung its swan song now that the jack boot of convetnional wisdom has been tossed in the melting pot of quantitative analysis. posted by Robert
permalink and comments2:35 AM
Www.washingtonpost.com headline guy totally outdoes "Opinions on Shape of Planet Differ: Both Sides Have a Point" by Paul Krugman
Dear actual readers. I was trying to get some attention from my PhD Supervisor.
After all these years, he still has a way with words including
"leverage," "liquidity," "deflation," and "depression."
Readers are very welcome to comment especially if they manage to use the words "leverage," "liquidity," "deflation," and "depression." Please.
It isn't really any of your business your problem, but it would be a real pleasure if he visited this blog. I'm sorry to waste your time with this model but Google gives me no choice . My goal is optimizing making as good as it can be my Summers attractor. Now I'm off to ride on my bi cycle uh pedal powered personal mobility device.
Oh my oh my my. I just learned that Summers's incorrect claim about Ptolemy and Copernicus was preceded by a "To be fair."
Now to be fair, I have heard it said that if you actually wanted to know where a planet was the Ptolemaic astronomical system did better than the Copernican astronomical system for fifty years after the world moved to Copernicus.
Just to summarize posts below -- in fact the Ptolemaic and Copernican models give predictions of equal quality. Copernicus had almost no influence on anyone for over 50 years. Then Galileo observed the phases of Venus which provided a whole new angle and made it clear that Copernicus was a lot closer to the truth than Ptolemy.
"To be fair, applying maximizing thinking has achieved some major successes even in macroeconomics."
I think "to be fair" should be this weeks "not intended to be a factual statement." To be fair, I am quite sure that Krugman was quite sure his statement was factual and I am quite sure that Summers believed his statement was true (he doesn't have time to waste exploring the history of astronomical thought -- I think he got if from Paul Kedrosky who got it from one of the inventors of the internet).
I'm going to try to keep this brief (that is warning I will fail and go on and on).
First, I'd like to stress that if Obama meant what he said celebrating the continuing resolution then he is confused. Kevin Drum guesses he thinks "You need some way of signalling the market that you're serious about long-term deficit reduction". This makes no sense. The reason such a signal would be useful is that it would reduce long term real interest rates. They are miniscule right now. A benefit from deficit credibility would work through interest rates, but interest rates have a low effect on fixed capital investment when the economy has spare capacity and a miniscule effect on housing investment when the economy has surplus houses and people are sure, just sure, that houses are a bad investment the same way they were sure they were a good investment. Basically, if Obama thinks what you think he things, then he is seeing invisible bond vigilantes -- delusional, hallucinating, out of it.
So I hope that Drum miss-read his mind. I guess (because I want to guess) that he is not stupid so I guess he is lying. Uh I mean "his [speech] was not intended to be a factual statement," It isn't a plain lie, since I claim he is lying about what he believes is good policy. He can be caught only by a mind reader. I'd say he is being intellectually dishonest but not plainly lying in the ordinary sense of the word*.
My guess is that he is influenced not by Austerian economic models but by polls. He knows that the vast majority of people in the US support spending cuts, not because they reject Keynes but because they haven't understood what Keynes said. Now he is willing to go against public opinion in really important matters (see health care reform) but he isn't willing to go against public opinion over 38 billion. He knows what people want to hear and he told us what most of us want to hear. There isn't any reason to think he believes it -- he's a competent politician -- he isn't George McGovern or Barry Goldwater or Jimmy Carter.
* see Yglesias's efforts to understand why people think the "intellectually" isn't redundant -- my view is that lying about what seems most plausible to oneself is a special very common never punished for of dishonesty called "intellectual dishonesty"). Very very often, intellectual honesty is of the form of claiming to agree with a strongly held belief of a powerful group (here a solid majority of the US public) then trying to get from that concession back to the conclusion you wanted. Another form is refusing to admit that the other side has a point. I think that, in the real world, we basically have to choose one of the two forms of intellectual dishonesty -- we are not capable of being fair and objective because we have emotions -- fear and pride -- which pull us to one or the other. posted by Robert
permalink and comments2:50 PM
Sunday, April 10, 2011
More on Ptolemy and Copernicus
It is widely believed that the Ptolemaic research program had become "degenerative" when Copernicus wrote. The claim is that Ptolemaic astronomers kept adding more epicycles. That they were un-knowingly attempting to test the unfalsifiable hypothesis that a curve could be approximated with enough circles.
The author of the Wikipedia article to which I linked yesterday (who seems very very
Epicycles on epicycles According to one school of thought in the history of astronomy, minor imperfections in the original Ptolemaic system were discovered through observations accumulated over time. It was mistakenly believed that more levels of epicycles (circles within circles) were added to the models to match more accurately the observed planetary motions. The multiplication of epicycles is believed to have led to a nearly unworkable system by the 16th century, and that Copernicus created his heliocentric system in order to simplify the Ptolemaic astronomy of his day, thus succeeding in drastically reducing the number of circles.
With better observations additional epicycles and eccentrics were used to represent the newly observed phenomena till in the later Middle Ages the universe became a 'Sphere/With Centric and Eccentric scribbled o'er,/Cycle and Epicycle, Orb in Orb'--  As a measure of complexity, the number of circles is given as 80 for Ptolemy, versus a mere 34 for Copernicus. The highest number appeared in the Encyclopaedia Britannica on Astronomy during the 1960s, in a discussion of King Alfonso X of Castile's interest in astronomy during the 13th century. (Alfonso is credited with commissioning the Alfonsine Tables.)
By this time each planet had been provided with from 40 to 60 epicycles to represent after a fashion its complex movement among the stars. Amazed at the difficulty of the project, Alfonso is credited with the remark that had he been present at the Creation he might have given excellent advice.  As it turns out, a major difficulty with this epicycles-on-epicycles theory is that historians examining books on Ptolemaic astronomy from the Middle Ages and the Renaissance have found absolutely no trace of multiple epicycles being used for each planet. The Alfonsine Tables, for instance, were apparently computed using Ptolemy's original unadorned methods.
16) Owen Gingerich, The Book Nobody Read, Walker, 2004, page 57.
Owen Gingerich does not appear to be a fringe figure in the study of the History of Science
Owen Gingerich is Professor Emeritus of Astronomy and of the History of Science at Harvard University and a senior astronomer emeritus at the Smithsonian Astrophysical Observatory. In 1992-93 he chaired Harvard's History of Science Department.
I n the past decades Professor Gingerich has become a leading authority on the 17th- century German astronomer Johannes Kepler and on Nicholas Copernicus, the 16th- century cosmologist who proposed the heliocentric system. The Harvard-Smithsonian astronomer undertook a three-decade-long personal survey of Copernicus' great book De revolutionibus, examining over 580 sixteenth-century copies in libraries scattered throughout Europe and North America, as well as those in China, Japan, and Australia. His annotated census of these books was published in 2002 as a 434-page monograph. In recognition of these studies he was awarded the Polish government's Order of Merit in 1981, and subsequently an asteroid was named in his honor. An account of his Copernican adventures, The Book Nobody Read, is in fourteen foreign editions.
Professor Gingerich has been vice president of the American Philosophical Society (America's oldest scientific academy) and he has served as chairman of the US National Committee of the International Astronomical Union. He has been a councilor of the American Astronomical Society, and he helped organize its Historical Astronomy Division. In 2000 he won the Division’s Doggett Prize for his contributions to the history of astronomy. The AAS awarded him their Education Prize for 2004. He has also won the most prestigious award of the French Astronomical Society, their Prix Janssen 2006.
. The day before yesterday, I had a totally false belief. I thought that( *after* Ptolemy, later Ptolemaic astronomers introduced cycles which were not centered on the Earth (the planets going on epicycles around those cycles -- I now know that the center of such cycles were called eccentrics) and, more importantly, allowed a rate of motion around that cycle which was not constant either as observed from the earth or from the center of the cycle. Rather it was constant if seen from another point called an "equant"*.
The author of the Wikipedia article (who cites Owen Gingerich) asserts that there is no evidence supporting the claim that Ptolemaic astronemers added epicycles within epicycles in the middle ages and rennaissance. He claims that Ptolomy's model with no modifications was in use at least in the 13th century.
This model was accurate to within about 1 degree when Ptolemy introduced it (IIRC, and who knows if I do, Ptolemy explicitly said that he was aiming to predict to within one diameter of the moon which is, not coincidentally almost exactly one degree (and presumably the reason we measure angles in degrees with just a bit of rounding to the nice 360 degrees per full circle).
Claudius Ptolemy refined the deferent/epicycle concept and introduced the equant as a mechanism for accounting for velocity variations in the motions of the planets. The empirical methodology he developed proved to be extraordinarily accurate for its day and was still in use at the time of Copernicus and Kepler.
Owen Gingerich describes a planetary conjunction that occurred in 1504 that was apparently observed by Copernicus. In notes bound with his copy of the Alfonsine Tables, Copernicus commented that "Mars surpasses the numbers by more than two degrees. Saturn is surpassed by the numbers by one and a half degrees." Using modern computer programs, Gingerich discovered that, at the time of the conjunction, Saturn indeed lagged behind the tables by a degree and a half and Mars led the predictions by nearly two degrees. Moreover, he found that Ptolemy's predictions for Jupiter at the same time were quite accurate. Copernicus and his contemporaries were therefore using Ptolemy's methods and finding them trustworthy well over a thousand years after Ptolemy's original work was published.
Now if economists' problem is that other economists had added fudge factors 1400 years ago, the claim that economics is not dominated by a degenerative research program might be as strong as, but no stronger than, the claim tht Ptolemaic astronomy was not a degenerative research program.
This is actually also related to Brad's thoughts on undergraduate teaching. He thinks it is useful to teach the history of thought. My high school physics course involved some of that. The idea is that people remember history mixed with the other subject better than either alone. My post below was written from memory of a high school course I took in 1976 (or maybe a book I read in 1982). I believe I correctly recalled Copernicus's principle objection to Ptolemy correctly, although I thought he had more trouble with eccentrics than he did (I won't read what I wrote so I don't know if I wrote my claim clearly).
As I recalled correctly, Copernicus had no propblem with epicycles (his model had epicycles) but did not accept equants (I also thought he hated eccentrics). Indeed
The equant violated the stricture of perfect circular motion, and this violation bothered thinkers a good deal more. Thus, in De Revolutionibus (see Copernican System), Copernicus tells the reader that it was his aim to rid the models of heavenly motions of this monstrous construction.
Thus Copernicus's explanation of his reason for rejecting the Ptolemaic model is completely different from contemporary explanations. Also, on the point of disagreement which Copernicus considered crucial, modern astronomers more nearly agree with Ptolomy than with Copernicus. He was right about the center of the solar system, but, in a disagreement of Ptolemy and Aristotle Copernicus agreed with Aristotle and modern astronomers agree with Ptolemy.
Modern astronomers believe that the center of the orbit of the planets is not the center of the Sun (the Sun is at a focus, the center of an ellipse is halfway between the foci) *and* that the planet moves faster when near the sun so the degrees of motion per day (or second) are most nearly constant if measured from another point which is further from the Sun than the center of the orbit is). This corresponds almost exactly to an eccentric and an equant as used by Ptolemy. posted by Robert
permalink and comments11:53 PM
I have recently noticed that this claim is sometimes made by economists. The appeal is simple. The fact that decades of effort by macroeconomists have not yielded models which give better predictions than an IS(with accelerator) LM adaptive expectations augmented Phillips curve model is frustrating. If, indeed, the same was true of the Copernican revolution, we can believe that we have made great progress.
I know that the Wikipedia is not edited, but no one has objected to this claim
A serious problem with the claim of fact is that the Copernican model was not improved in the 50 years which followed 1543. In fact, it wasn't improved at all.
Rather it was replaced by Kepler's model (which yields excellent predictions). Also Tycho Brahe noted that one could reconcile the Copernican model with the belief that the Earth stood still by assuming that the sun orbits the Earth and the other planets orbit the Sun. Brahe's model can not be distinguished from Copernicus's model by astronomical observations.
I think I understand the origin of the claim. Galileo obtained evidence which proved that the Ptolomaic model was not close to correct. In 1610 Galileo observed the phases of Venus. This made it possible to determine the angle between the line from the Sun to Venus and the line from Venus to the Earth. That angle corresponded to the angle predicted by Copernicus and not to the angle predicted by any Ptolomaic model.
The change in relative performance was due to the invention of the telescope not due to the relatively rapid improvement of successive models of of a new type.
This does not sound like a reasonable basis for hope for contemporary macroeconomists. It would change nothing if new data were observed which don't correspond at all to the implications of our models (IS-LM included). Many such data are available already. The economist's response to such data is that models are false by definition and the interesting question is whether they help us predict the variables of interest.
Nor is it true that further research based on the set of core assertions made by Copernicus was fruitful. The idea, old in Ptolomy's time (first written down by Plato) was that eternal motion must be circular. A hard core position was that the rate of motion around the circle must be constant and the largest circle (deferent) must be centered at the Earth (the epicycles were centered on that circle). Of course Copernicus put the Sun at the center. But he was a hard line circle guy rejecting off center deferents and insisting that motion around the deferent and epicycles had to be at a constant rate.
As noted by Kepler, the Sun is not at the center of the orbits of the planets (the center of an ellipse is halfway between the foci) but rather at a focus. Also angular momentum is constant so the speed at which planets move is not. In other words, on two of three issues which divided Copernicus from Ptolomaic astronomers, we now believe that the Ptolomaic astronomers were right. On two key points of agreement, that orbits must be made of circles and that there are deferents and epicycles, we disagree with both.
I am actually interested in whether non economists (other than Van Jacobson) make the claim that Ptolomaic predictions were better than Copernican predictions for 50 years. I suspect not. The belief seems to follow from the conviction that we have achieved a scientific revolution combined with the fact that our theories have had no empirical success. posted by Robert
permalink and comments12:52 AM
is a classic Kinsley gaffe. It is well known that politicians, especially Republicans, often make quantitative claims without due or any diligence, that specific statements which can be confronted with accounts are not to be taken literally, and, above all, that 90% does not mean 0.9 at all but just means "a lot".
At least Kyl's office didn't say "He is completely ignorant as usual. Look this is the guy who thought that the old START treaty remained in effect while he was holding up ratification of the latest START treaty. I mean compared to not knowing that we have lost the ability to inspect Russian nuclear armaments an error equal to 87% of Planned Parenthood's budget (which is not the sort of amount that is worth five minutes of a Senators time while we are on the edge of a government shut down over Federal funds for planned Parenthood -- and you know they get "well over 90 %" of their money straight from the Federal Government ("that was not intended to be a factual statement")." Or "come on if you make me comment every time Sen Kyl bullshits I'll just decide to spend more time with my family." Or well lots of other possible Kinsley gaffes.
I am currently interested in the fact that it is quite common for people to say, in effect, that claims of fact are not intended to be factual statements and what's the big deal. That a false claim is not a lie, it is a rhetorical flourish and only ignoramuses or hypocrits fail to recognise this. I am working on my list of Kyl's offices predecessors.
To be balanced (count the l's) I note that Felix Salmon (who has always been nice to me and posted an interview with me about a topic on which I am totally ignorant) did the same thing when it was noted that many of Matt Taibbi's claims of fact are, in fact, false.
That stuff (not the particular stuff challenged by Fernholz) included the absolutely false claim that Obama's economic team had worked in the financial services industry. Taibbi's claim was made without qualification and implies that each and everyone one of them had. In fact one (1) (that is less than 2 (two)) of the top staffers (Larry Summers) had worked on Wall Street part time. Taibbi's claim was a lie or a lunatic delusion. Salmon sees no bitg deal. Taibbi and Salmon consider themselves to be journalists.
Update: Felix Salmon objects in comments
Robert, I have no idea what you're talking about. If you're going to make these claims, please back them up with links and quotes. Where exactly does Taibbi say that (all of) Obama's economic team had worked in the financial services industry? Give the quote. Where do I say that it's no big deal? You might want to look at this: http://blogs.reuters.com/felix-salmon/2009/12/11/fernholz-vs-taibbi/ Where the not-taking-literally bit is clearly in relation to Taibbi's comment about Alan Greenspan being "worshipped by four decades of politicians because he once dated Barbara Walters”. My contention is that (a) Taibbi didn't say what you say he said, and that (b) I didn't say what you say I said. Who's being dishonest here? By Felix on "his remark was not intended to be a factual state... on 4/10/11
I apologise. I will write more later, but for now, I just note that I can't claim the authority to decide what "stuff" Salmon was discussing. In my post, I note that it "includes" stuff other than the stuff which Salmon discussed in his post. Reading Salmon's comment, I feared that I had removed necessary context. I hadn't really (the parenthetical statement including "Fernholz" provides the necessary context). I just ignored the context (which I noted) when interpreting Salmon's statement. An honest error believe it or not (I will explain how it happened). I have to go now, guests just arrived.
update 2: I am going to try to be honest (deep breath) I did not read the post by Salmon to which I linked. This was irresponsible of me, and I have to admit it. I recalled taht Salmon had said that Taibbi wasn't to be "taken literally." This was from a snippet quoted elsewhere on the web. I think I read it more than once, but definitely never in context. I don't remember where I read it, which is just as well, since I don't want to blame someone who, I suspect, quoted Salmon out of context. Of course I am responsible for my distortion of the meaning of Salmon's statement based on admitting I removed context (at least I did admit I was taken the snippet out of context) but then adding new non context and comparing Salmon to Kyl's staff. I apologise again.
Now I will address the question of whether Matt Taibbi said that Obama's economic inner circle is "a group of wall street bankers". The reason I think Taibbi wrote that is that Brad DeLong wrote (more than once) that he wrote that. I will quote DeLong
The Obama economic policy inner circle--Tim Geithner, Gene Sperling, Larry Summers, Christie Romer, Peter Orszag--is not "a group of Wall Street bankers." It is only 5% Wall Street banker--only 1/4 of Larry Summers can possibly count as a Wall Street banker.
The link in that post by DeLong gives a 404 error at Rolling Stone so I don't yet know if Brad's accusation is accurate. The quoted passage "a group of wall street bankers" does not appear in an article written by Taibbi and posted on www.rollingstone.com. However, Taibbi wrote that phrase. Through the obscure approach of googling Taibbi "a group of wall street bankers." I found the following passage which commondreams ascribes to Matt Taibbi
That was the day the jubilant Obama campaign announced its transition team. Though many of the names were familiar - former Bill Clinton chief of staff John Podesta, long-time Obama confidante Valerie Jarrett - the list was most notable for who was not on it, especially on the economic side. Austan Goolsbee, a University of Chicago economist who had served as one of Obama's chief advisers during the campaign, didn't make the cut. Neither did Karen Kornbluh, who had served as Obama's policy director and was instrumental in crafting the Democratic Party's platform. Both had emphasized populist themes during the campaign: Kornbluh was known for pushing Democrats to focus on the plight of the poor and middle class, while Goolsbee was an aggressive critic of Wall Street, declaring that AIG executives should receive "a Nobel Prize - for evil."
But come November 5th, both were banished from Obama's inner circle - and replaced with a group of Wall Street bankers. Leading the search for the president's new economic team was his close friend and Harvard Law classmate Michael Froman, , a high-ranking executive at Citigroup.
I think that link (as demanded by Salmon) proves that Brad's paraphrase of Taibbi was entirely fair. Given the rules of English grammer, the word "bankers" can't refer to Froman who is only one person. Brad went on to claim that Froman "staffed" the search which means he did not replace an economic advisor (currently chairman of the council of economic advisors and a policy director. In any case, Froman is a person not a group.
The only interpretation of Taibbi's statement which is consistent with English grammer is that he asserts that Obama's economic team was a group of Wall Street Bankers. This claim is false. I'd add that Taibbi should have mentioned that Goolsbee was a member of the council of economic advisors when Taibbi wrote his post. Not a top job like chairman (Romer) but still part of the team. Also Taibbi doesn't say whether Froman was working for the administration when he wrote his post(althought that is pretty clear from the fact that he is described as holding a staff position).
Taibbi asserted that Obama replaced his campaignes chief economic advisor and its policy director with a "group of Wall Street Bankers" He did not say, there or elsewhere that this shift was ever reversed. Taibbi's claim may be technically true except for the s in BankerS and the word "group," but it is wildly exaggerated and grossly deceptive.
I stand by my (and Brad's) characterisation of Taibbi's reliability. I also note, while I didn't do my hobby properly when I tore a snippet of text written by Salmon totally out of context, I don't think that Salmon did his job properly when he was mystefied by Taibbi AND "group of wall street bankers." The quote was just a google away. Salmon has repeatedly defended Taibbi against the accusation that his claims of fact are unreliable. I am in no position to criticize anyone, but I don't think that Salmon performed due diligence.
To focus, I challenge Salmon, Taibbi or anyone else to name the members of the "group of wall street bankers." It isn't just that one banker isn't bankers. It isn't even just that a group which includes just one banker isn't a group of bankers. It is that a group which includes bankers (plural as stated without any supporting eviedence by Taibbi) and non bankers is not a group of bankers. That is just what the phrase means. To assert that Taibbi's claim is not false, one must find a group of bankers only and argue that those people and no non bankers replaced the Obama campaigns chief economic advisor *and* its policy director. DeLong is too charitable to Taibbi when he reduces the claim to only replacing an economic advisor (who was one of Obama's economic advisors at the time Taibbi typed his claim and who is now chairman of the council of economic advisors). In fact, Taibbi also asserted that the people holding positions which fill the role of "policy director" are all wall street bankers. That must include at least the domestic policy advisor -- a non banker (I assume) not on Brad's list.
Taibbi's most specific and definite assertions are not to be taken as "factual statemetns." I would guess that, in his heart, he is convinced that he is stating essential truths, but he doesn't bother with facts-
Now I make mistakes too. I just ripped a snippet of text written by Salmon out of context totally changing its meaning. But, first, I admit it when my errors are pointed out, and second I am blogging as a hobby and do not claim to be a journalist.
Even the members of Obama’s economic team who have spent most of their lives in public office have managed to make small fortunes on Wall Street. The president’s economic czar, Larry Summers,
I note that Larry Summers has not spent most of his life in public office. in 2009 he had spent less than 1 year with the Obama administration, 8 years with the Clinton administration and less than 3 years at the World Bank (he was appointed by Bush Sr). He was not 55 not 24 at the time. OK to be serious he had spent less than half of his adult life in public service. He had spent less than half of his working life in public service -- the latest arguable start date for his working life is September 1983 26 years before Taibbi characterised less than 12 years as placing him in the group of people who had "spent most of their lives in public office."
I admit I had to go allll the way to the Wikipedia entry on Larry Summers to prove that Taibbi's claim of fact is false. I think journalists should be held to higher standards. Taibbi, while writing for Rolling Stone, seems to assume that people are either in public office or making money on Wall street or both.
Of course that was not the quote I sought. Taibbi also wrote
The point is that an economic team made up exclusively of callous millionaire-assholes has absolutely zero interest in reforming the gamed system that made them rich in the first place.
Note exclusively. Every single member of the economic team is a millionaire who was made rich by the gamed system whose reform was being debated -- that is finance. Romer may be a millionaire, but if she is, she was born rich or made rich by the gamed system of textbook publishing (the books written by her husband) which was not the gamed system whose reform was under discussion. Geithner may be rich for all I know, but I am quite sure he didn't make money on Wall Street. I'm not expert, but I am certain that Federal Reserve Bank staff are not allowed to play the market (any market) at all. This is certainly true of Treasury employees. I'm not as sure about restrictions on IMF staff (I'd guess they are tight but I don't know -- well I don't know about Federal Reserve Bank staff either really).
I am now completely mystefied by Salmon's comment. I mean I understand why he is angry that I totally misrepresented something he wrote by removing necessary context (I apologise again). I am a bit surprised that he reads this blog at all, but I guess he followed my link to his blog back (I do that with all the few links I get). But I just can't imagine what makes him think I was unfair to Taibbi. It seems to me that the snip of text I quoted was fairly put in a reasonable paraphrase of its original context by Brad DeLong and by me. Taibbi has made more extreme claims.
Does Salmon assert that Obama's Dec 14 economic team
Taibbi definitely wrote that each and every member of the Obama economic team as of Dec 14 2009 was
"an economic team made up exclusively of callous millionaire-assholes ... [that had] absolutely zero interest in reforming the gamed system that made them rich in the first place." ?
This is an important claim of fact. If Obama taken economic advice only to people who had been made rich by "the gamed system" of Wall Street, then he would have made a terrible mistake casting serious doubt on the wisdom of reelecting him. The claim is of the very greatest importance. It is also false. I conclude that Matt Taibbi should be (figuratively) cast into the outer darkness. Literally, I mean that no one should pay any attention to anything he asserts unless it is independently confirmed. At that point it is redundant. I think the national debate would be improved if no one ever read anything Matt Taibbi wrote ever again. I consider him a journalist with the same professional standing as Rush Limbaugh and Bill O'Reilly and just marginally more able to pretend to be in contact with reality than Glenn Beck.
I know that, even if Salmon reads all of these updates I won't convince him. But I can't imagine what possibly could. I haven't read much written by Matt Taibbi, yet I find false claim of fact after false claim of fact after false claim of fact. What does it take to convince Salmon that one is not a journalist. I mean aside from writing "I am not a journalist" as I have already written in this post. I'm not a journalist and neither is Matt Taibbi.
My list below includes the words "Megan McArdle." The example is really her claim that Pharmaceutical companies make 80% of their profits on sales in the USA which lead to
I like to play with hypotheticals too. As in what would happen if Megan McArdle became an honest journalist.
Another example was Gonzales's description of Bush's claim that, under Bush, wires were only tapped if such taps were approved by judicial warrants. Gonzales claimed that the problem is that Bush isn't a lawyer -- in other words he wasn't skilled enough to deceive without lying. The possibility that one might expect the President to deceive the public about whether he is committing felonies didn't occur to Gonzales, but, of course, the President is allowed to break the law and can't be expected to confess. posted by Robert
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