We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.
Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
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Brown’s nemesis I love the headline on this piece in the Spectator by Matthew Lynn. I don’t think he is talking about our own Brian Micklethwait, but he could be.
Mr Lynn is talking about the risk, now rising, that the UK will have its sovereign debt ratings cut, a fact that means the UK government has to pay higher interest rates to investors wishing to hold UK gilts. I suspect the US could be headed for a similar fate.
Hopey-change!
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Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
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I don’t disagree that the UK should be downgraded, but it’s interesting to see the names of the companies floating the idea. One might reasonably question their recent track record.
A quick question for the financial wizards here.
As two of the world’s great financial centres turn into Harare on Thames and Caracas on the Hudson, where should I invest my fortune?
(That is if my financial investments pay off big in Saturday night’s draw.)
my understanding is the ratings agencies are still pretty good at rating sovereign debt and there is no reason to think otherwise. except maybe the ratings agencies are being pressured into not downgrading certain countries at the moment 🙂 just as there might have been pay-to-play conflicts of interests with the securitized products there might be some conflicts of interests with the rating agencies regulator being the same entity a ratings agency is rating.
Although I often attack the “Economist” magazine it is sometimes useful – or at least half useful.
For example, in this weeks issue it mentions that the Indian government deficit (State and Union) may go up to 11% of G.D.P. this year – a terrible and unsustainable position, and the “Economist” quite correctly calls upon the Indian government to reduce government spending.
Of course the editorial then (only a couple of paragrahps latter) calls upon the Indian government to hire “millions of teachers” for government schools – as the writers do not understand that there support for an ever expanding welfare state (not only government schools rather than the ordinary people in the slums financing their own schools as James Tooley shows they are, but also government income support and redevelopent schemes destroying local communities).
But there we go.
Another story is relevant to this thread.
The Economist rightly points out that the island of Jersey is following a policy of higher government spending (although it forgets to mention that it has been following this policy for some time).
However, there is a similar island near to Jersey – the island of Guernsey.
These two similar islands used to have virtually identical fiscal policies – but in very recent times they have diverged. with (for example) the higher spending ways of Jersey meaning that the government there “needs” a sales tax. Now Jersey is expanding government spending still more.
I am not an empiricist – I do not believe that economics is an empirical (rather than a logical) subject.
However, the “mainstreamers” say economics is empirical – well now they have their lab experiment.
Two similar islands that up to very recently had identical fiscal policies – and now that situation is changing.
Let us observe the results over time.
I think the “mainstreamers” will not be interested in discussion of the results.
For the truth is they are not “empirical” at all – the mainstream “economists” are ideological statists. Not interested in results that might cast doubt on their ideology.
“I am not an empiricist – I do not believe that economics is an empirical (rather than a logical) subject.”
An interesting comment. Perhaps you could elaborate, because it seems wrong to me. In my opinion economics is not logical, or rather, is not entirely logical. Economics is nothing but applied human psychology (which is why the 20th Century fetish of trying to turn it into a completely quantitative “hard” science has been such a dismal failure), and whatever else human psychology may be it isn’t completely logical.
The Jersey/Guernsey experiment seems a wonderful controlled experiment. The results should prove illuminating.
Laird, my $0.02 on this, if I may: economics is applied human psychology, but this fact does not make it illogical, it makes it non-empirical. The logical part does not apply to the human behavior factor, but rather to non-human resources on which economy (as opposed to economics) is based. The most obvious example of this would be the attempt to lend out “money” one does not actually have.
A further thought: it seems that Keynesians and the like mostly concentrate on the human psychological factor while mostly ignoring the physical world, while Austrians deal with the physical resources in much more detail, while still taking into account human psychology. And I have no idea what Chicagoans are up to:-)
Alisa, FWIW, I didn’t say that human psychology is illogical, I said it is not logical (perhaps nonlogical would have been a better term). Otherwise, I agree with the point in your first post.
Not your second one, though: if Keynesians and their ilk were really focused on the psychological aspects of economics they would have abandoned their fundamentally flawed and demonstrably erroneous (i.e., illogical) arguments. Just as with communism, Keynesianism fails, and indeed must fail, because it rests upon a false conception of human psychology. This brings us right back to Paul’s Jersey/Guernsey controlled experiment, which should provide yet another illustration (as if one were really needed) of why Austrianism is correct and Keynesianism is wrong. Of course, as has already been noted, Keynesianism provides cover for the ambitions of politicians, so no one will likely pay much attention to the outcome.
Laird: I could be wrong about Keynesians, but as I understand their approach, they are focused on human psychology as the only force that moves the engine of economy, while ignoring the physical resources issue. This in itself does not at all mean that they get the human psychology right, and apparently they don’t.
As to Marxists and socialists and the like, they seem to be different in that they do deal with physical resources, but they get that part wrong as well.
Alisa.
In spite of the recent book “Animal Spirits” by the academic from Yale and the Academic from UC Berkley, you are being too kind to the Keynesians.
They are not really basing their theories on a view of human psychology. The brutal fact is that their theories are based on nothing much at all – they are just models that assume their own conclusions.
See Henry Hazlitt’s “The Failure of the New Economics” or the book of essays put together (from various writers) called “The Critics of Keynes”.
Of course Mises deals with Keynes as well – but he deals with him a in a few pages.
As F.A. Hayek pointed out – Keynes did not even really understand the economics of Alfred Mashall (the foe of the Austrian School in England) Lord Keynes was not really a proper economist at all.
And yet “modern economics” is based on the absurdities Lord Keynes spread (I say spread – as he did not invent them).
It was impossible for Mises to respect such a man as Keynes – hence spending only a few pages on him.
Paul, I did mention that they got the psychology part wrong, but they do allude to it all the time, discussing things like “consumer confidence” etc. Unless I am mixing things up and these are things do not have to do with Keynesians.