I have no personal reservations whatsoever with that image in the article. I removed it because Cirt said so, and he seems to know more about this than I do. Mnation2 (talk) 21:25, 2 November 2009 (UTC)[reply]
Request for arbitration
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Hey! Haven't seen you in a while. Having good luck editing? I noticed you were involved in an arbitration case with a fringe POV editor(of the "technocracy" movement, supposedly). This is my first edit on wikipedia for a while(busy doing the SAT's).
A question though. I see that you are an economist, so can you explain to me the mainstream criticism of the Austrian business cycle theory and its own business cycle theory? I read Krugman's criticism of it(unemployment during crash but not boom), but I would think that the reason unemployment is high during the crash is because the transition happens all at once(while a boom could take over several years). The mainstream theory of the business cycle seems to be just "inherent animal instincts of markets"(to quote Krugman), which seems quite unsatisfactory. Also, what is the mainstream view of credit expansion (when the central bank expands the money supply)? Do they think it is good? The current recession, caused by easy credit from the fed, seems to prove the austrian case.Teeninvestor (talk) 22:04, 5 November 2009 (UTC)[reply]
First about the Austrian business cycle theory, the only explanation of unemployment they have is that it is frictional unemployment. Sectoral shifts in production cause unemployment. If this is correct, quick sectoral shifts (e.g. during the run-up to the internet boom, or the housing bubble) would cause as much unemployment as the shifts out of afterwards. And slow drops in demand, would actually have less unemployment than quick increases in demand. If you look at historical experience, you find that this is not true. Unemployment is always lower on the up-swings in demand, and is in fact even lower the faster is the upswing. This pretty much rules out the Austrian business cycle theory as a correct description of the causes of unemployment.
Second, the heart of Keynesian macroeconomic theory is this:
In the short run prices are sticky, and so economic activity depends on demand, which need not be equal to the full productive capacity of the economy.
To illustrate, suppose you live in a town with one supermarket that sells root-beer at $1 per bottle. If it's a hot day, demand will be high, and they will sell a lot of root-beer, running down their inventory. If it's a cold day, they will sell very little root-beer, and their inventory will pile up. If it's a cold day several days in row, they'll call up the factory and ask them to stop delivering, as their stock room is full. The factory might shutdown for a while and lay-off it's workers. Hence, an economic shock that causes aggregate demand in the economy to fall will reduce economic activity and increase unemployment.
During a financial crisis, households, firms, and banks, want to increase the money they hold for prudential concerns (to maintain a 'safety margin'). Holding on to money implies not spending it. This causes an economy wide slowdown in spending – a drop in aggregate demand, which leads to a recession and high unemployment. Central banks can mitigate the adverse effects of this by injecting more money into the economy during such times.
Hope this helps convince you. But when it comes down to it, you just have to consider that the consensus of people who have studied this matter deeply believe that the Austrian business cycle theory is incorrect. The two competing theories in academia are the Keynesian theory (which I briefly describe above), and the Real Business Cycle theory, which states that real productivity shocks cause the economic cycles we observe (it is rapidly losing adherents during the current slowdown).
Real Business cycle theory seems absurd to me(what are the productivity shocks that lead to the 2002 and 2008 recessions?), but keynesian macroeconomic theory seems to be no better. It says recessions are caused by "shocks" to demand. If that was true, recessions should be very irregular, coming only so and then. However, recessions come in regular cycles(which correlates with the expansion of the money supply by central banks). Take for example the current recession; would you not agree that if the fed had not engaged in a 1% interest policy, the subprime loan market would have never grown to where it was? But under Keynesian theory, that was not the cause; it was only the shock of credit losses that caused a drop in demand which caused the recessions. In addition, I'd like to raise the case of the pre-1929 US recessions, which were short and which the US was able to rapidly recover from(and quite well i say; economic growth during the 19th century averaged something like 5-7% real per capita) without monetary pumping or "stimulus". Unemployment was also relatively low, mostly due to wage flexibility. This seems to be a contradiction of the keynesian position that inflation and stimulus is necessary for recovery and high employment. A counter case is Japan from 1990 to now and the US during the 1930's which failed to recover despite(or perhaps because of) massive stimulus. Although Keynesians tend to think that WWII's raised demand ended the depression, I'd like to point out that American living standards during WWII were even lower than during the depression(it's war), and the recovery could also be explained by the end of the more destructive new deal policies.
To be honest part of my problem with keynesianism is that it doesn't seem sensical. You eat before you've sown, and the government spends and inflates us to prosperity? It would seem to imply that the whole world is a free lunch. In that case, why not stimulate the economy forever? $1 trillion stimulus a year? To quote paul Krugman: "Deficit hawks believe that deficits are bad, but stimulus causes economic growth, which causes more revenues, so they end up increasing revenues and curbing the deficit". Pardon-moi? I never saw a country that balanced its budget with stimulus.
As to the Austrian theory, I think their main point is that the cause of unemployment is the shifting of labor resources from one sector to another. During a boom, such a transition(shifting of workers from one sector to another) would be carried out slowly and would have negligble unemployment, as not only are the firms not benefitting from credit expansion laying off workers but the workers themselves are jumping to the new "hot" sector. Meanwhile, during a crash, all the malinvestments are to be liquidated extremely rapidly and all of the workers are thrown onto the market at the same time, which takes some time to clear(extended unemployment). Thus the reason sectoral shifts of unemployment are greater during a crash is the condensed nature of the crash(crash always much faster than boom). Also, there is also the factor of workers not accepting lower wages(which would had been inflated during the boom) and thus not finding jobs(though this is probably a minor factor).Teeninvestor (talk) 15:12, 7 November 2009 (UTC)[reply]
I'll answer one question, but that's it for me. It seems you've already made up your mind on this. I'm not up for a long debate, as I think neither of us will change our minds.
You ask, 'why don't we just inflate our way to prosperity forever'? The reason is that pumping money into the economy has different effects depending on whether economic activity is below or above productive capacity. During recessions (production is below productive capacity), increasing money supply increases GDP and reduces unemployment, without increasing inflation. During booms (GDP above long run equilibrium), increasing money supply has little effect on GDP and leads to higher inflation.
I just want to point out that theories are a dime a dozen – I can come up with 6 different plausible stories of business cycles before lunch. Instead, we have to look at historical experience. If the ABCT is correct about the main causes of unemployment, quick sectoral shifts like during the run-up to the internet boom, or during the expansion of the housing bubble, would lead to high unemployment – instead, historical experience is that the opposite is true. Also, Paul Krugman has already addressed this issue much better than I can, see his articles here and here. --LK (talk) 16:40, 7 November 2009 (UTC)[reply]
Well, I feel like I'm asking a lot here, so I promise I'll work on all of these articles if you can make the copies. Really can't thank you enough for this:
It is we who owe you, for taking the time and effort to work on those articles! I'll try to get those scanned and sent to you by the middle of the week. LK (talk) 05:15, 8 November 2009 (UTC)[reply]
Excuse me? Don't his emails say that they are free for Wikipedia to use? I quote: "As for my part, it's free." Also, could you try not to be so combative in your messages? It disturbs my equilibrium. --LK (talk) 07:09, 16 November 2009 (UTC)[reply]
I am sorry if you feel I was combative, that was not my intention. His emails are not confirmed, and "it's free" is not the same as being confirmed as one of the various acceptable free use licenses. Either it actually is free, and therefore should be moved to Wikimedia Commons, or it is fair use on Wikipedia, and should not be confusingly misstated as "free", at this site. Cirt (talk) 23:07, 19 November 2009 (UTC)[reply]
Hello, Lawrencekhoo. You have new messages at Nbarth's talk page. You can remove this notice at any time by removing the {{Talkback}} or {{Tb}} template.
Hello, Lawrencekhoo. You have new messages at Nbarth's talk page. You can remove this notice at any time by removing the {{Talkback}} or {{Tb}} template.
(another reply, in 2 parts – busy with holidays now so reply on my part may be delayed)
Hello, Lawrencekhoo. You have new messages at Nbarth's talk page. You can remove this notice at any time by removing the {{Talkback}} or {{Tb}} template.
(a "thanks" reply)
Marginality
I have no problem with the idea that the passage that you moved from the lede of “Marginal utility”might fit as well or better elsewhere, but it doesn't fit in the section “Marginality”, which is about, well, marginality in general, rather than marginal utility in particular, and is there to allow the reader to see “marginal utility” not simply as an odd name but as a meaningful description. —SlamDiego←T04:42, 7 January 2010 (UTC)[reply]
I have moved the passage in question to the history section. Meanwhile, your defining marginal changes as necessarily small is incorrect. Certainly, in most cases considered changes are small, but even when changes in resource availability are large, it is marginal logic that applies, even if the large change is not divisible into smaller changes. As to whether the passage is otherwise more readable, that isn't clear to me, but neither is clear that it's less readable. —SlamDiego←T04:54, 7 January 2010 (UTC)[reply]
Have you followed the payments for pension fund investments controversy at all? Is this person notable? Should the article be about the issues so as to avoid BLP 1E type derogatory information about a living person concerns? ChildofMidnight (talk) 17:30, 10 January 2010 (UTC)[reply]
Hello, Lawrencekhoo. You have new messages at Headbomb's talk page. You can remove this notice at any time by removing the {{Talkback}} or {{Tb}} template.
Dear editor, I appreciate your edit on the crossbow article, however, there's a long standing consensus to move the non-technical material to history of the crossbow. I would appreciate if you would comply. That there's currently still so much history in the crossbow article is more or less an accident. Wandalstouring (talk) 20:48, 24 January 2010 (UTC)[reply]
I fully support you in this. The history section is overlong. If you have time, please do move the current history section to the history article, and edit appropriately to incorporate the material. Thanks, LK (talk) 10:18, 25 January 2010 (UTC)[reply]
I saw your "Verifiability not Truth" statement on your user page, and thought you might enjoy these pictures. I really do like truth, but the problem is that people have many different views of the "Truth." BTW the truth is probably that the painting served as a model for the Statue of Liberty, but unfortunately, I can't verify this.
Hello, I have added two reputable sources identifying Keynes and Keynesian economics as being closely connected to modern liberalism. You stated in one of your edits that "Keynes was not an important liberal philosopher." The content of the claim seems obvious enough, but I would like to know exactly what you mean by it. The word philosopher, in particular, could be manipulated to suggest several things. For example, it's true that Keynes was not an important liberal philosopher like, say, Thomas Hill Green was. He did not establish the fundamental social and ethical components of modern liberalism, in other words. If that's what you mean when you say that Keynes was not important as a liberal philosopher, then we're in agreement. However, when it comes to modern liberal economic policy in general, Keynes is God, and I don't even feel comfortable telling this to someone who has a PhD in economics. Virtually all social liberal and social democratic parties worldwide endorse Keynesian economic policy. It's essentially the Bible. It doesn't seem like a particularly controversial claim to make, given the innumerable reputable sources that make the connection as well as the obvious elephant in the room: Keynes was a dedicated member of the Liberal Party, which at that time firmly believed in social liberal ideas and policies. Again, I'm pretty sure you know all of this, so what I'm trying to do is to understand exactly what your complaint is regarding the current version of the lead.UberCryxic(talk)23:17, 26 February 2010 (UTC)[reply]
My view is that Keynes contribution was to economics, not to political science or political philosophy. His views are not restricted to modern liberals – most governments whether on the right or on the left subscribe to his views. The only major exception would be some elements of the right-wing in the US, who in recent years have disavowed Keynesian economics. Remember that as late as 2002, G W Bush was advocating tax cuts as a means to mitigate the recession in the early 2000s, a distinctly Keynesian idea, and that Nixon declared that "we are all Keynesians now". LK (talk) 02:03, 27 February 2010 (UTC)[reply]
Yes I agree that his main academic contributions were to economics, but his ideas were so influential that they ultimately had a profound impact on political philosophy as well. Keynes and Beveridge were the architects of the British welfare state, which served as a model for many other countries. And there could not have been a John Rawls without a John Maynard Keynes, in the sense that Keynes inspired liberals to dream about a totally new kind of society. I don't know that I would say "most," but certainly many center-right governments of industrialized nations agree with the fundamental thrust of his ideas, at least in principle. In the US, it's not just "some elements" of the right that disagree, but virtually the entire group. Republican opposition to the stimulus bill was essentially unanimous, both from their elected leaders and from their grass roots supporters. My main point is that Keynes belongs, mostly, to a social liberal tradition that first started in his party in the late 19th century. That's where he saw himself, but more importantly for Wikipedia, I'm pretty sure that's where most scholars see him too.UberCryxic(talk)04:50, 27 February 2010 (UTC)[reply]
I agree with your reasoning. However, per the MOS, the lead should summarize the body of the article; topics should not be introduced into the lead if they are not in the body. Currently, there is nothing in the article about Keynes' impact on modern liberalism. Perhaps you could add write a paragraph or two on this topic? I think adding it to the legacy section would be appropriate. Thanks, LK (talk) 10:58, 8 March 2010 (UTC)[reply]
Hope you’re well – last I heard you’d just been busy with class prep and paper submission (always fun; hope went well). One topic you’d mentioned to me was people excessively pushing idiosyncratic views (e.g., Rothbard), and I recently came across Wikipedia:WikiProject Economics/Reliable sources and weight, which you started and seem the main (constructive) contributor.
and I’d be interested in your thoughts, when you’ve time.
My thoughts seem in line with what you write – not unduly emphasizing minority views or including fringe views, but being inclusive where appropriate – though I flesh it out some (both with recommendations and examples) and draw some distinctions which, while familiar (at least intuitively) to veteran editors, may be unfamiliar to novices.
It looks like WP Econ policy (and the project as a whole) is in the process of being fleshed out; I’d be interested and happy to work on help making this happen!
Please do go ahead if you want to add to and edit WP:ECONRSW. I've just read through what you wrote and it largely looks good to me. I find a few parts jarring, as I fear they will be used by editors to push minority views, but I guess that's just means it's balanced ;-)
I'll try to lend support to any efforts to coming up with new guidelines for Economics, but judging from what happened the last time, I'm not very optimistic. best,
LK (talk) 00:07, 1 March 2010 (UTC)[reply]
Thanks Lawrence – my thoughts were a bit casual, so I’ll work to make them more formal and carefully written in policy.
I’ll write up a draft in user space before making changes (so people can mark it up) and canvass opinion so people can get their 2¢ (preferably by discussion than edit-warring); I see that in the past it’s been a bit acrimonious, so I’ll check history some and what to look out for (if you’ve tips on what to beware, they’re quite welcome; hopefully everyone will acts in and assume good faith).
Good caveat about “pushing minority views” – while policy and guidelines are just tools, not laws, I’ll try to avoid any loopholes that someone can drive a truck through (or conversely passages that could be taken to stifle legitimate contributions) and check with you that I’ve not missed anything too glaring («But Das Kapital is a reliable source!», Tom said, revolted.).
I have become very interested in this subject because of recent events and a long standing interest (fascination or preoccupation or obsession might be a better description) with political economy. I am primary author of the "economic rent" page in wikipedia and have a real interest on taxation and government spending. I am a "fan" of exogenous money in that my own definition of money is "what the king's men will take in lieu of taking your chickens". In my opinion money is and always has been the province of the state. We hope that the state is representative of the interests of all the people and not just the financial few. It would appear that the financial people are dead set on taking over the government of the United States even more than they have already. And no I am not a black helicopter freak. I am going to do some editing of the "endogenous money" article and no offense or disagreement is intended. I will try to keep my politics out of it. Hope we can both contribute.--The Trucker (talk) 19:22, 3 March 2010 (UTC)[reply]
WikiProject Georgism or WikiProject Geoism?
Hi LK,
I posted a message on an LVT discussion group about starting a Georgism WikiProject, and here's one of the responses I got:
I am not much interested in Georgism, which sounds like a personality cult that only concerns itself with Henry George, what he did, what he wrote, what he meant by it, etc. As long as we consent to portray land rent recovery as "Georgism," the opposition will gladly shift the discussion from liberty, justice and truth to Henry George, and portray advocates of land rent recovery as nothing but the Henry George Fan Club. We will NEVER succeed as long as we are content to be called, "Georgists." Take it to the bank.
If you want to start a Wikiproject on geoism, OTOH, I would be in.
I have no objection to either name. AFAIK, there are no substantive differences between Georgism and Geoism. My preference is for Georgism, as the term Geoism is still relatively new and unknown, but going forward, who knows? LK (talk) 01:47, 8 March 2010 (UTC)[reply]
File:Four Great Inventions HK Stamps.jpg listed for deletion
Hello again, Lawrence. I'm glad someone finally (so I hope) removed Conservation econ. from the Econ sidebar. In addition to the reasons you gave, it is of course already included in other listed subjects in the sidebar.
Upon further investigation, I believe you are right. They are different topics. My mistake. I'll revert. Thanks for pointing that out. Regards, LK (talk) 00:05, 7 March 2010 (UTC)[reply]
So, "now" is now, Lawrence. 1st let me say I'm glad that you & other economists are taking a continuting interest in Economics. The deeper the knowledge of the subject, the faster an informed consensus may form for improvement.
On your Econ sidebar Edit 08:25, 27 June 2009 {"Fields and subfields naturally follows from general categories; shouldn't be split by techniques..."§). I do see the point that you made there. I just think that other considerations outweigh it. Let me make that case here. If after discussion we can't reach a consensus, we could always move discussion to the sidebar Talk page.
I think that we're in agreement on the most closely related material being placed close to each other. The question is application of that principle. I believe that "Techniques" follows well the "General classifications" heading. In its own way, "Techniques" is a "general classification" but of a special kind relative to the previous "general classifications." That relationship is arguably brought out better by earlier placement, not after being "filtered" through a lot of more fine-grained fields and subfields. In particular, it is closely related to Methodology (the study of 'method'). All of the "techniques" there are classified in JEL classification codes#Mathematical and quantitative methods JEL: C Subcategories, which follows JEL classification codes#History of economic thought, methodology, and heterodox approaches JEL: B Subcategories. So, it immediately follows Methodology & History of Econ. Thought (including JEL: B23 — History of Economic Thought: Econometrics; Quantitative & Mathematical Studies). The proximity of the "techniques" radiating upward to micro and macro phenomena and downward to fields is another persuasive consideration. More could be said, but I'd appreciate your initial reactions. Obviously no rush on that.
§ I had trouble w the "..." part too, but I realize that you might not [be] alone there, making the Econ sidebar Talk page a more likely venue.
I'm afraid I can't understand the gist of what you are trying to say. However, I'm sure you know what you're doing, so please, go ahead. If I have any concerns, I'll raise them on the template talk page. Regards, LK (talk) 05:15, 9 April 2010 (UTC)[reply]
Hi Lawrence, just wanted to offer a belated thank you for adding an image and some additional info to Crossing sweeper. I've expanded it pretty substantially since you worked on it and the article is now in the queue to appear on the main page via DYK. Obviously feel free to take another look if you're interested, and/or to claim a share of the DYK "credit" so to speak if you're so inclined. Thanks again! --Bigtimepeace | talk | contribs05:17, 15 March 2010 (UTC)[reply]
Hello, Lawrence-- I was recent changes patrolling when I reverted this removal of cited material. I left an edit summary suggesting discussion on the article talk page. (Don't know if that discussion took place.) You then reinstated your own edit with an edit summary about removal of a BLP concern. Subsequently, User:Now wiki sought my opinion on versions of the article on my talk. As I know nothing of the subject or the BLP issues involved, I wanted to let you know about this conversation and hope that a meeting of the minds can take place, either on the article talk or at the BLP notice board if that should become necessary. Cheers, and happy editing. Dlohcierekim 19:40, 25 March 2010 (UTC)[reply]
Thanks for the heads up. I think we should probably keep it all on the article talk page. Although a post on the BLP noticeboard might also be appropriate. I'll post there. thanks, LK (talk) 03:32, 26 March 2010 (UTC)[reply]
Keynes
Lawrence: I see you have edited the Keynes page a lot. I'm fairly new, but I mean well and believe whole-heartedly in what I am saying and the reasoning behind it. Would you please look fully at the discussion about the inclusion of an example of possible antisemitism on that page just as there is an example of possible anti black and anti-Russian sentiment. Thank you for your attention to this.
Best, Bull Market 04:46, 5 April 2010 (UTC)
I'm afraid I have to agree with FeydHuxtable and UberCryxic about this issue. It doesn't matter how well meaning you are, or how whole-heartedly you believe in your additions. What matters is sources and weight. If reliable sources have not discussed this issue, or have only discussed it perfunctorily, it should not have much weight in the article. LK (talk) 05:19, 9 April 2010 (UTC)[reply]
Thanks for all the work you've been doing. I do drop by from time to time to check out the latest goings on here, and to see if anything egregious has happened. In large part, I agree with your efforts to make sure the mainstream viewpoint is adequately represented. However, about the recent issue on ABCT, I think you may be pushing it a bit too far. The lead does note that mainstream economists unequivocally reject ABCT as an adequate explanation for business cycles, and I think that is enough. Since the article does not extensively discuss the methodology of the Austrian school, I believe that it would be inappropriate to put such discussion in the lead.
As for the discussion at Austrian school, I think your edit has it basically right. But I don't really feel very strongly about it. However, I will drop by more often for a while, and watch the page, as it appears that User:Karmaisking is active again. From the language used and arguments made, User:GreenGooIsaGreatActor is almost certainly a Karmaisking sockpuppet. LK (talk) 11:05, 14 April 2010 (UTC)[reply]
Yep... a 3rd opinion agrees that the ABCT edit was a bit overboard, and restructured it. The Austrian School article looks like an open issue; no one has objected to listing the New Keynesians, so that would balance it adequately enough for me. As for KiK .... I figured he would pop up, since his labor of love is finally unlocked after so many months. Thanks for your input! BigK HeX (talk) 16:50, 14 April 2010 (UTC)[reply]
WikiProject Economics census
Hello there. Sorry to bother you, but you are (titularly at least) a member of WP:WikiProject Economics, as defined by this category. If you don't know me, I'm a Wikipedia administrator, but an unqualified economist. I enjoy writing about economics, but I'm not very good at it, which is why I would like to support in any way I can the strong body of economists here on Wikipedia. I'm only bothering you because you are probably one of them. Together, I'd like us to establish the future direction of WikiProject Economics, but first, we need to know who we've got to help.
Whatever your area of expertise or level of qualification, if you're interested in helping with the WikiProject (even if only as part of a larger commitment to this wonderful online encyclopedia of ours), would you mind adding your signature to this page? It only takes a second. Thank you.
Firstly, thank you for signing the census, and an apology if you are one of those editors who dislike posts such as this one for messaging you again in this way. I've now got myself organised and you can opt-out of any future communication at WP:WikiProject Economics/Newsletter. Just remove your name and you won't be bothered again.
Secondly, and most importantly, I would like to invite your comments on the census talk page about the project as a whole. I've given my own personal opinion on a range of topics, but my babbling is essentially worthless without your thoughts - I can't believe for one moment that everyone agrees with me in the slightest! :)
Instead of reverting my entire edit, why do you not try fixing it? I cannot read your mind. But certainly some of what I changed must be an improvement. For example, I added "cash balances are changed from foreign currency to domestic currency" which even you must admit is true. JRSpriggs (talk) 06:08, 26 April 2010 (UTC)[reply]
I've edited it for language and presentation, and stuck to the mainstream economics understanding of what deflation does. I realize you have a different viewpoint about this, but it is the job of an encyclopedia to present first and foremost the mainstream viewpoint on any issue. If you like, I'm open to discussing the economic theory with you, but keep in mind that I teach this for a living, and that there's very little possibility that you'll convince me that the standard textbook view is incorrect. LK (talk) 05:37, 27 April 2010 (UTC)[reply]
I looked at your new version of that list of effects and mainly I disagree with the last two.
"Associated with recessions and unemployment" There may be a correlation, but I contend that these are not effects of deflation. After a bubble (inflationary boom), the economy must correct itself. The recession and entailed unemployment are part of that correction. Sometimes deflation also occurs as part of the correction. Thus they may occur simultaneously. However, there was a long period of deflation in the late 1800s which was also a period of economic growth, not recession.
"Encourages exports and discourages imports" I am not sure, but I think that this is backwards. If foreigners saw the dollar increasing in value and expected that to continue, they would try to get more dollars by restricting their purchases from us (our exports) and increasing their sales to us (our imports). JRSpriggs (talk) 08:47, 27 April 2010 (UTC)[reply]
Well, in the standard Keynesian AD-AS model, recessions are almost always associated with deflation or a slowdown in inflation. This is the standard mainstream model that you'll find in any university economics textbook, and that underlies policy making at the Fed, most Central Banks, the IMF, the Worldbank, etc. Also, deflation exposes a country to the possibility of a liquidity trap, so that the Central Bank of a country cannot use monetary policy to mitigate a recession. Therefore, most mainstream economists favor a positive inflation rate target. (For example the Fed recently announced a 2% target for inflation.) As for exports and imports, that one is easier. The Law of Demand states that demand increases as price decreases and vice versa. Holding exchange rates constant, inflation is a rise in the price of local goods, thus inflation discourages exports, and encourages imports. By the same logic, deflation is a fall in the price of local goods, and so encourages exports and discourages imports. LK (talk) 11:00, 27 April 2010 (UTC)[reply]
Beware of arguments based on simplifying assumptions which may be false. Such as the assumption that exchange rates are and will remain fixed. Or the assumption that demand depends only on the current price level and not on what people expect the price to be in the future. Why did so many people buy houses that they did not need in the recent housing bubble even though the prices were historically high? Because they expected the prices to go still higher.
Actually, I am advocating going into the so-called liquidity trap. We would benefit from having a much larger real money supply and that is the only way to get it. It is absurd to claim that people will accumulate cash forever and never spend it. Eventually, they will feel that they have enough so that they can afford to spend more on their current desires. JRSpriggs (talk) 03:36, 28 April 2010 (UTC)[reply]
Get a copy of Macroeconomics by Mankiw (Amazon Link), look at Chapter 5: The Open Economy; it states very clearly there that an increase in the local price level (inflation) leads to an appreciation of the real exchange rates, which leads to lower exports and higher imports. Next, have a look at the entry on 'liquidity trap' in the New Palgrave Dictionary of Economics. The entry describes a liquidity trap as something to be escaped from, as it corresponds with income and output below productive capacity. It goes on to discuss how unconventional expansionary monetary policy (in the form of a pre-commitment to sustained low interest rates) can allow an economy to escape from a liquidity trap.
Have you ever gotten into a conversation with someone who thinks that chaos theory can prove (or disprove) the existence of god? Or with a hi-fi nut who believes in the directionality of cabling and the importance of oxygen-free copper power cords and power plugs? Well that's how I feel right now. Economics is hard, it constantly astounds me how people don't understand that, and think that a few books and some hours sitting around thinking about an issue qualifies them to challenge basic economic theory. LK (talk) 11:49, 28 April 2010 (UTC)[reply]
I do not doubt that economics is hard, and that I only understand a small part of it. But I find that the usual Keynesian version of economics is focused on the short-run and makes value judgments with which I disagree. John Maynard Keynes said "The long run is a misleading guide to current affairs. In the long run we are all dead.".
I agree that one can expect a higher level of economic activity when there is inflation than when there is not. But that extra activity is not productive for society as a whole. It is merely an attempt to escape from the effects of monetary depreciation by putting one's wealth into a form other than cash. Also people tend to borrow more not because they would really prefer to consume or invest the wealth now rather than later, but just to be short or less long in cash.
Most ordinary people do not have the expertise to make wise investment decisions and they know it. But they do it anyway because holding cash is a fool's game in this inflationary environment.
Ludwig von Mises challenged the extensive use of mathematical formulas in economics. These formulas are always based on assumptions about the behavior of people. And as I indicated above, these assumptions are frequently false which renders the formulas misleading. JRSpriggs (talk) 00:41, 29 April 2010 (UTC)[reply]
I'm tempted to debate Austrian economic theory with you using verbal arguments, as long as you are willing to look at some basic equations. However, that is totally beside the point. Given Wikipedia's goal to be a serious general encyclopedia, it needs to present first and foremost the mainstream view on the topics covered. Even if we don't agree with the mainstream view, it is our job as editors to present it, and not to push any minority views that we favor. LK (talk) 08:54, 29 April 2010 (UTC)[reply]
Oh, when you talk about investment in an 'inflationary environment' you should consider real interest rates and the Fisher equation. It clarifies thinking about this issue considerably, when we realize that with inflation, nominal rates will adjust to keep real rates constant. LK (talk) 09:38, 29 April 2010 (UTC)[reply]
(I should have said this earlier.) It is important to consider how the inflation is produced. In our current system, I can see three methods: (1) the national government spends more money, and the the Fed purchases the resulting U.S. Treasury securities; (2) the Fed buys a lot of over-priced financial assets from the private sector; or (3) restrictions on bank created money are loosened, e.g. the reserve requirement is lowered. In the first two methods at least, the injection of money is accompanied by the waste of real resources consumed by those who first receive and spend the money.
You started by saying one thing (that inflation itself is BAD) and now you've moved on to saying something else, that spending by non-private entities is BAD. This thread reminds me again why I don't like debating without the necessary anchor and clarifying discipline of mathematical models. However, once more unto the breach, dear friends, once more ...
The easiest way to think about inflation is as a tax on the holdings of cash. This tax reduces cash holdings, but does not affect most real variables in the economy as nominal prices and nominal interest rates adjust to take into account the increased inflation rate, keeping those real variables constant. In the above, you seem to be objecting to the fact that seigniorage revenue (tax revenue from money creation) can be used to fund various purchases. In your (1) it is used to fund government spending (which you assume is bad, but I would argue otherwise), and in (2) it is used to fund purchases of financial assets by the central bank (which you again assume is bad, but again, I would argue otherwise). In the case of (3), the additional seigniorage accrues to the private banking system, which I would argue is the worst of the above three cases, as it essentially gives tax revenue away to rich people.
You seem to be arguing above that taxes are bad, as the government can spend it. OK, but none of this has anything to do with the Keynesian observation that deflationary situations are associated with low Aggregate Demand (AD), which leads in the short run to income and production lower than productive capacity, which in turn leads to unemployment. These two are separate issues (which is actually very easy to see from national accounting models of the macroeconomy.)
Above, you linked to AD-AS model. The equations in that article are incomprehensible to me now because there is no explanation of the meaning of the variables or constants in the equations. Please add some explanation.
Regarding the liquidity trap and zero-bound on the interest rate: In User:JRSpriggs/Optimal monetary policy, I suggest a kind of monetary policy which largely disregards interest rates and focuses instead on adjusting the quantity of money so as to achieve the maximum sustainable deflation. The equation (from the New Palgrave Dictionary of Economics) disregards the wealth effect. It needs a another term proportional to (Liquid_Assets × (1 - Risk_of_Loss_of_Asset_value) - Debts).
My disagreements with you are wide and deep. So you cannot expect me to give a full statement of all of them at the outset of our discussion. I was not retracting my opposition to inflation in my last message. I was explaining why I disagree with your argument that inflation has no real effects when fully anticipated. It has real effects because of the mechanisms by which the inflation is caused — those mechanisms destroy wealth. And inflation (like taxes) causes people to take measures to avoid its effects upon themselves individually, but these avoidance measures are harmful collectively.
If there is one premise underlying my position, it is that if individuals are left free to act on their own judgment, the economy will tend to correct its errors by the process of natural selection. No such tendency to self-correction applies to government which is an inherently coercive system (short of revolution or conquest by a foreign power). JRSpriggs (talk) 00:22, 1 May 2010 (UTC)[reply]
What can I say, the article on the AD-AS model is not very well written, is not targeted at the casual reader, and is also incomplete. It's something that the economists here on Wikipedia should fix (which we would have more time to do if we didn't have to fend off attacks on basic economics so often). The article as it stands is not a good way to learn the subject. But then, Wikipedia is not a textbook. If you wish to study macroeconomics, I suggest you pick up a copy of some principles of economics text and/or sit through a year of micro and macro at a local college.
I'm afraid I'm not particularly interested in your own theory of what central banks should do. I'ld like you to reflect on your position in this debate. Without formal study at a university, or even studying the mainstream texts from the academic field of Economics, you have decided through your own reflection and research that the mainstream theories are wrong. You now wish to edit Wikipedia to correct those mistakes. How does this make you different from people who have decided from their own introspection that the theory of relativity is mistaken, and that the speed of light is not a constant, and now wish to correct the pages on General Relativity and speed of light? LK (talk) 00:48, 1 May 2010 (UTC)[reply]
Rereading the above, it now seems over condescending, and for that I do apologize. You seem like an intelligent person, and you have a natural skill for understanding economic arguments (which is why I am willing to engage in this discussion). However, you must know from your own studies that the best way to learn a field of study (in your case, set theory?) is to actually attend university courses on that subject, and to read the standard textbooks on the subject. Reading the blogosphere on chaos theory, together with some non-standard advanced texts, accompanied by deep introspection on the issue, is likely to produce some serious misconceptions (about chaos theory). LK (talk) 01:37, 1 May 2010 (UTC)[reply]
Also, how do you get from "the process of natural selection" to "if individuals are left free to act on their own judgment, the economy will tend to correct its errors". Does "the process of natural selection" tend to correct human activity in other areas? Does it prevent mental illness, suicides, war, genocides, epidemics, racism, bigotry, tribalism, traffic accidents, etc? How exactly is economics different? LK (talk) 01:04, 1 May 2010 (UTC)[reply]
I do not read "the blogosphere on chaos theory". Chaos theory applies to mechanistic systems (where physics and engineering are most applicable) when conditions are such that at least one of the Lyapunov exponents is positive. The economy is not understandable as a mechanistic system; because it contains living beings (people), it must be understood in terms of biology and ecology. The Keynesian formula-based approach ignores this fact and treats the economy as an engineering problem which it is not.
I was not saying that you read 'the blogosphere on chaos theory', rather, I was using it as an illustration of how someone who gets their information on a subject from non-traditional sources can often end up with mistaken ideas, and large holes in their knowledge, leading them to reinvent old discredited fallacies. LK (talk) 14:04, 3 May 2010 (UTC)[reply]
Evidently you do not understand evolution. Darwin did not say that natural selection would ever achieve perfection, certainly not in a short period of time. Let me take traffic accidents as the example since modern automobiles were invented within recent history and thus homeostasis has not yet arrived. If one controls for external variables, the rate of fatal accidents has been declining. This is due to drivers selecting safer vehicles and exercising defensive driving. This change is caused by the self-destruction of those drivers who fail to take these measures (i.e. natural selection). However, perfection cannot be expected because of random mutations and exogenous changes to the circumstances under which driving occurs (e.g. distraction by cell-phones). JRSpriggs (talk) 07:16, 3 May 2010 (UTC)[reply]
Are you seriously claiming that technology and the state of the economy is so static that 'homeostasis has arrived', and that natural selection has ensured that the economy has corrected its errors? OK, sure....
Look, the fact is, I can't disprove your theories from pure argumentation. But that is not to say that they are right. Give me an hour, and I can come up with a dozen different theories on economic phenomena that can't be disproved thru pure argumentation either. That is why serious economists look at data. Theories are tested by comparing how well they fit with what actually happens out there.
Let me give an example: In the 1980's, the Federal Reserve severely tightened monetary policy (reducing the growth rate of money from about +15% per year to about 0% per year from 1980 to 1982). This caused, a) a sharp increase in nominal interest rates, b) a severe recession between 1980-1982, c) a debt crisis in about a third of the countries around the world as interest rates went up, and the USD appreciated sharply as well at the same time. And finally in the longer term after 3 to 5 years, d) nominal interest rates decreased below what they were in 1980.
If you can explain how your ideas of inflation and the economy can explain all of these consequences, then maybe we have something to seriously discuss. I have one model (ONE!) that would have predicted and can explain all of these phenomena. It's the standard open-economy Keynesian model called the Mundell-Flemming model, and consists of only 5 equations in its simplest form. (Its in the Mankiw textbook if you are interested.)
BTW, you still haven't explained how you are different from some pseudoscience warrior who wants to edit speed of light to say that it is not constant to the observer. --LK (talk) 14:04, 3 May 2010 (UTC)[reply]
No. Certainly homeostasis has not arrived for the economy as a whole nor for many of its parts. I did not say that "the economy has corrected its errors". I said that under a certain condition, it tends to correct its errors, that is, there is a natural restoring force (like the spring in a harmonic oscillator). I was contrasting that to the government which has no such tendency to restore rationality.
Of your other counter-examples, war and genocide clearly fail to satisfy the condition I imposed. Mental illness, suicide, epidemic disease, racism, bigotry, and tribalism when viewed in isolation are probably sufficiently insensitive to technology that they have reached homeostasis. That is, to the extent that they are irrational, they are maintained by forces which are beyond our ability to control.
The events of the early 1980s are just what I would expect. After about a decade of high inflation, inflationary expectations were high. When Paul Volcker stopped the expansion of the money supply, those individuals, firms, and governments who had borrowed large amounts (expecting easy money to help them repay their debts) were disappointed. They had to either pay more interest to borrow or tighten their budgets (sell more and buy less) or go into default. As the supply of dollars stopped increasing and the demand continued to increase, the value of the dollar went up (at least relative to other currencies). Once debt crisis passed, interest rates fell because the inflation premium went down since the inflationary expectations were largely broken.
Your asking me to explain why I am not a crank makes about as much sense as if I asked you to explain why you are not merely a "career scientist" selling propaganda that the politicians want to buy regardless of its truth rather than a real scientist. JRSpriggs (talk) 08:17, 4 May 2010 (UTC)[reply]
The answer to your question is simple. My paycheck does not depend on 'selling propaganda that the politicians want to buy'. Instead, it depends on producing research that other researchers find credible and interesting, and being able to teach and answer questions about the subject of economics in a way that makes sense, that my students find informative and enlightening. LK (talk) 08:28, 4 May 2010 (UTC)[reply]
On the question of the 1980's disinflationary experience, I realise now that it's a mistake to provide the 'answer' along with a question, as it is easy to construct a post-hoc narrative around events that have already happened – the difficulty lies in predicting what will happen beforehand. As an example, your recent addition to the deflation article [2] is flawed. (It's also uncited, uses POV language and is OR, which is why I have removed it, but that's beside the point here). It predicts that hyperinflation in one country causes deflation in another country if people move their savings there. IMO, (and more importantly, mainstream economics) this claim is incorrect. If this claim is true, you should be able to point to one country where this has happened. LK (talk) 15:32, 4 May 2010 (UTC)[reply]
Does policy require a mainstream view?
Only saw this flash by on my watchlist LK. It is not the job of editors to present a mainstream view, but to heedfully source a neutral view following WP:V and as needed, WP:UNDUE. Whether or not an editor thinks the outcome of this yields a "mainstream" outlook is up to them, but the word mainstream doesn't even show up on the policy page WP:NPOV and so far as I know has nothing to do with the content policies of this website. Gwen Gale (talk) 10:05, 29 April 2010 (UTC)[reply]
That merely confirms your anti-mainstream bias Gwen. WP:FRINGE, WP:UNDUE, and various arbcom cases use the term 'majority view' and 'mainstream', and have confirmed that these views should be presented first and foremost. BTW, interesting to see that I'm on your watchlist, given that we have no active conversations going on. LK (talk) 10:12, 29 April 2010 (UTC)[reply]
I have hundreds of user talk pages on my watchlist and skim the edit summaries way, way fast, please don't think I'm paying you much heed, I'm not. By the way, WP:FRINGE is not policy and as I said, the term mainstream isn't carried in WP:NPOV at all. As for arbcom's use of the term now and then, it's sloppy shorthand for getting to the pith of WP:UNDUE, following arbcom worries having to do with behaviour, not editorial content as such. Gwen Gale (talk) 15:02, 29 April 2010 (UTC)[reply]
Only since you put it that way, you take it wrong. Guidelines on en.WP are gathered "best practices," which are spun up from policy in the hope of helping users find ways to abide by policy. They can be quite helpful a lot of the time, but don't always fit,[3] which is why they're not policy. Gwen Gale (talk) 15:20, 29 April 2010 (UTC)[reply]
Effects of deflation (part 2)
I made two predictions in the section which you deleted: (1) "When hyperinflation is destroying one currency, people will rush to move their savings into other currencies which may cause deflation in those other currencies."; and (2) "Alternatively, if the policies causing the hyperinflation are suddenly reversed, then a brief deflation may occur as people re-gain confidence in the currency.". As a very poor lay-person, it is difficult for me to find statistics. However, I did find a paper among the references of our article on hyperinflation which could be regarded as evidence for my predictions. It is "On the Measurement of Zimbabwe’s Hyperinflation" by Steve H. Hanke and Alex K. F. Kwok. After the hyperinflation annihilated the Zimbabwe dollar, the economy spontaneously switched to the United States dollar which rendered the Zimbabwe government incapable of continuing its inflationary monetary policy. At the end of the paper Hanke indicates that the inflation rate (in Zimbabwe) in U.S. dollars was negative, saying "Within weeks the entire economy spontaneously “dollarized” and prices stabilized. Indeed, since the reporting of official inflation statistics was reinstated, the monthly inflation rates for January, February, March, April, and May 2009 were –2.3, –3.1, –3.0, –1.1, and –1.0 percent, respectively (Central Statistical Office 2009, Zulu 2009).". JRSpriggs (talk) 20:39, 5 May 2010 (UTC)[reply]
As I noted above, I deleted the section you added as it was uncited, used POV language and was original research. You're an intelligent person, can you still not see that what you are doing (editing wikipedia to reflect theories that you have developed on your own, and then looking for references to back it up) is exactly what WP:OR is designed to prevent?
On the citation you reference, note that it refers to a deflation in terms of prices in US dollars in Zimbabwe, which is very different from your contention, which in this case would be equivalent to 1) deflation in the US caused by hyperinflation in Zimbabwe, and 2) deflation in Zimbabwean dollar prices in Zimbabwe, following a stabilization of the currency.
Contention 2) is indeed possible, as during hyperinflation prices and money holdings are very unstable and noisy, and almost anything can happen once a hyper-inflationary regime is broken. However, it is just as likely that there is low moderate inflation afterwards, or that the prices remain stable afterwards. Historical experience seems to indicate that hyperinflations usually end with a clean break, followed by fairly stable prices afterwards.
Contention 1) on the other hand is not a likely outcome in modern monetary systems. You have to understand that in the modern world, physical money doesn't actually travel between countries. (Except for US dollars which are the currency and savings of choice for the underground economy around the world, but lets ignore that for now.) Transactions in foreign exchange markets must net out. That is, the amount of Japanese Yen sold in a day, must equal the amount of Yen bought in that day in foreign exchange markets, as Yen never actually leave or enter Japan from the rest of the world. Therefore, a desire of people outside a country to move their savings (or investment funds) into a country doesn't actually change money supply in a country. Hence the long run inflation rate, which depends on long run money supply growth (minus GDP real growth but lets ignore that for now), remains unchanged. Instead, there is an exchange rate adjustment instead, when there is an increase in the desire of people to hold assets in a particular country. This exchange rate adjustment causes the trade balance to change in such a way so as to net out the change in capital flows.
What I'm describing here is a straightforward consequence of the standard mainstream open-economy macroeconomic model. It may sound like ad-hoc reasoning, but there is a serious, rigorous, mathematical model behind it. This model prevents logical errors, and illuminates consequences that may be difficult to see otherwise. It's like the story of Schrodinger's cat. The story of the cat in the box illustrates ideas of quantum mechanics, but it is not the science itself. Performing research in physics is about mathematical modeling, and testing those models. It is not about trying to tell better stories about cats in boxes. The trouble with economics as found on the internet is that people hear these stories from economists trying to explain things to laymen, and they assume that that is all there is, that economics is about telling stories. They start telling their own stories as well, but that's like arguing about physics by telling stories about cats.
OK, I see that my first contention was not sufficiently clear. When describing reactive deflation, I meant that the deflation of the other currency (U.S. dollar) would occur within the country (Zimbabwe) where the hyperinflation was occurring. Only in an extreme case where that country was large and closely tied to the other country (U.S.) would there be any possibility of a spill-over of deflation to the other country.
The fact that the USD was used increasingly but illegally in Zimbabwe before the ZD was annihilated is evidence of my first contention.
After ZD was annihilated, USD became the defacto currency of Zimbabwe. So the continuing reactive deflation in USD shows that the people of Zimbabwe were realizing that they could now rely on the currency and they became more willing to hold cash which caused this deflation. Aside from the change in the identity of the currency, this is essentially the phenomenon which I was predicting in my second contention.
You said "It predicts that hyperinflation in one country causes deflation in another country if people move their savings there. IMO, (and more importantly, mainstream economics) this claim is incorrect.". I was going to say that this had been disproved by my example. However, I now see that you were basing your conclusion on a mistaken interpretation of my first contention.
You said "...it is just as likely that there is low moderate inflation afterwards, or that the prices remain stable afterwards.". Indeed, that is why in both my contentions, I said "may" to indicate that this was just a possibility. Whether it actually does occur depends on the details of the situation.
I agree that the wordy or story-like version of economics which I am using is less definite in its predictions, and that confusion can occur. However, in creating a system of equations you are not gaining accuracy, merely being more precise about making a prediction which will frequently be wrong. Precision is not accuracy. JRSpriggs (talk) 05:10, 6 May 2010 (UTC)[reply]
I hope you realize that you've just changed your position, which is why telling stories is not a good way of doing economics. BTW, 'may' is a weasel word, as almost anything 'may' happen. The fact is, deflation in one country is very unlikely to happen as a consequence of hyperinflation in another country, unless something else weird is going on, which is why there is not one known case of deflation caused in this way. Kindly explain why you want to add as a cause of deflation something which has never happened before, and which standard economic models says does not happen? LK (talk) 05:22, 6 May 2010 (UTC)[reply]
I did not change my position. I merely did not express it with sufficient clarity. I never said that the deflation would occur in the other country. I said in the other currency. It is not reasonable to try to hold me to something which I never said and did not mean. JRSpriggs (talk) 05:46, 6 May 2010 (UTC)[reply]
So, your contention now is that what you originally had in mind when you introduced this edit, is that that hyperinflation in one currency can cause deflation in another currency, all of which is happening in the country where the hyperinflation occurs. Alright, we're done here.
From now on, I'm going to answer with policy. Any original research introduced will be removed. LK (talk) 06:15, 6 May 2010 (UTC)[reply]
OK. So we play by the rules from now on. In that case, I will put {{cn}} templates on anything which I think is mistaken, unless it already has a reference.
A real scientific test requires that we take positions before the event. To be a test between us, we would have to take opposite sides on the question. Economist John Williams was recently interviewed by the Gold Report at "A Hyper-Inflationary Great Depression Is Coming". I am inclined to agree with John in general. And I think our government has been doing all the wrong things to fix the problems resulting from the recent housing bubble. So I am willing to predict that the real GDP of the United States will contract in 2010. To be more concrete, the real GDP of all 2010 will be less than the real GDP of all 2009. If you take the other side of this bet, then we will have a test. OK? JRSpriggs (talk) 08:54, 7 May 2010 (UTC)[reply]
Many mainstream economists believe that this may be a 'double dip' recession – there's nothing unusual about a prediction that GDP may be lower this year compared to last year. The fringe belief (which you apparently subscribe to) is that there will be a 'Hyper-Inflationary Great Depression' coming. If in 2 years time, there is still no hyperinflation in the US (usually defined as >50% inflation per month, for at least 2 months in a row, or more than 13,000% annualized), are you going to recant and accept standard economics? I think not.
Let's make it easier, if within 2 years time, the US has > 20% monthly inflation in any 2 consecutive monthly periods, I'll publicly recant Keynesian economics. But if it doesn't, will you accept that mainstream economists know what they are talking about and accept that the standard theories are correct, and start studying standard textbooks? If you do, I may regain some respect for your intellectual honesty. Why don't you come back and let us know?
But for now, I don't have to play that game with you – cause I'm editing to reflect widely accepted textbook economics (and can simply cite widely used university textbooks), and you're editing according to your own theories and original research. (Anyways, I'm busy enough trying to get published in journals to play games with POV warriors on Wikipedia.) So, slap 'cn' wherever you think appropriate, but do be even handed about it. If you put 'cn' based on 'I don't agree with this', you're doing it wrong. Using the 'citation needed' template to make a point or push a position is against policy. If you start acting like a tendentious editor pushing a POV, then WIkipedia will start treating you like one. LK (talk) 09:07, 7 May 2010 (UTC)[reply]
Hi, you are receiving this message because you are currently in WikiProject Malaysia's member list. The project is currently undergoing revamping and we would like to find out who the current active members are. If you still would like to remain in the project(we hope you do!), please add your name to the list here. Also, we are collecting ideas as to the direction of this project and we would love to hear your suggestions and feedback. Please visit this page to leave your comments. Thank you and happy editing! On behalf of the WikiProject Malaysia, BejinhanTalk11:46, 27 April 2010 (UTC)[reply]
I undid your revision to the policy page but solely on style grounds. I think we should use quotation marks when actually quoting, among other things. And I did not see your point. Would you mind explaining it on the talk page, and then we can better judge whether your version is a real improvement or not, or whether we can come up with something better? My understanding is current revisions are largely about making the polciy page more concise, not actually changing the policy. If you disagree, your views are worth explaining on the talk page so we can see the real issue. Slrubenstein | Talk10:23, 29 April 2010 (UTC)[reply]
Exactly. The old version was simply too long. Following Slim Virgin's condensing, there have been quite extensive detailed discussions to tidy up any loose ends. You may wish to read some of these to give you some background as you join in the debate. Stephen B Streater (talk) 11:20, 29 April 2010 (UTC)[reply]
RfC
If you want the result of your RfC to be valid, you have to make sure it's neutrally worded, and that people realize what they're commenting on. You have to let people know you're proposing that NPOV violate SYN, and let them choose freely. Otherwise the result will be meaningless and a waste of time. SlimVirgintalkcontribs16:04, 29 April 2010 (UTC)[reply]
You are assuming your desired answer, that WP:UNDUE violates WP:SYN. I argue that it does not. I've simplified the title, removing any preconceptions from it. Anyway, from the comments there, its clear that people understand exactly what they are voting on. LK (talk) 16:07, 29 April 2010 (UTC)[reply]
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Skysmith has posted an updated list of missing economics topics. Most will need redirecting or new articles written to blueify them, so, if you can lend a hand with the effort, please do. There are some from virtually all areas of economics and hence to suit all tastes.
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Given his behavior, I'm guessing that he's unemployed, lonely and friendless. Who else would i) hang around a project where he's obviously unwanted, ii) spend so much time writing stuff that doesn't 'stick', as it's always reverted, iii) keep on doing the same thing over and over without result. I feel a bit sorry for the guy, but he needs to understand that the community here doesn't want him editing. LK (talk) 02:35, 10 May 2010 (UTC)[reply]
Kagan pay
We don't have info for her other pay. Feel free to add it or something if you find it, but this is pretty relevant. Can you respond on the talk page of the article?Faceless Enemy (talk) 10:05, 10 May 2010 (UTC)[reply]
Let's keep discussion of an article on the article talk page. There is already an on-going discussion there. LK (talk) 10:08, 10 May 2010 (UTC)[reply]
"The fringe belief ... is that there will be a 'Hyper-Inflationary Great Depression' coming."
My friends have been expecting a catastrophe-any-day-now for 39 years since Nixon took us off the last vestige of the gold standard, but it has not happened yet. Perhaps this is a little like expecting another nuclear war. Eventually it must happen. But somehow people keep pulling back from the brink in the nick of time. So I believe that it will happen someday (unless the nature of our government changes fundamentally), but I am not about to predict precisely when. Actually, Richard Rahn of the Institute for Global Economic Growth is closer to my beliefs than John Williams.
"But if it doesn't, will you accept that mainstream economists know what they are talking about and accept that the standard theories are correct, ..."
Sorry, but a promise like that would be incompatible with intellectual integrity. Even if I turn out to be wrong, that is not sufficient evidence that you are correct. And even if you are correct, just accepting what you say on your say-so (rather than understanding it myself) would be incompatible with rational thought. By the way, I have read "The theory of prices" (which got me started on all this), Samuelson's book (although it has been so long now that I cannot remember what it said) and many newspaper articles on economics in the Washington Post in addition to several books on Austrian economics. I am willing to look at your five equations (the Mundell-Fleming model), if you will answer questions about them.
Regarding the article on Deflation and the citation needed templates: Before the third parties confused the issue with about 37 additional tags, I was hoping that you or someone else would look at the seven which I added and for each of them either (1) provide a reference, (2) remove the text, or (3) revise the text. Failing that, after a suitable waiting period, I intended to remove the offending texts. Since that may no longer be feasible, how would you like to proceed now? JRSpriggs (talk) 00:40, 13 May 2010 (UTC)[reply]
I don't have much time for editing these days, so I'm afraid I can't get involved with deflation. Feel free to reverse Pennyseven's sock edits as you see fit.
One last thing about our theoretical discussion. I believe in evidence based knowledge. In standard Keynesian economics, inflation does not accelerate unless aggregate demand exceeds productive capacity. Hence, I was serious about renouncing Keynesian economics if very high inflation did occur in the US in the next few years, as an increase in money supply will not increase inflation if the country remains in recession. I view last year's events as a strong vindication of Keynesian economics, as standard Keynesian prescriptions have managed to keep us out of a depression in the face of a financial crisis as deep as the one in 1929, and have (perhaps) even managed to start a recovery this year. And, the recession was even shorter in countries that pursued even more drastic Keynesian policies (e.g. Australia, China, Israel.)
I'ld like you to consider two questions. What evidence do you have for the economic theories that you hold? And, are there any real world events, that if they occurred, could cause you to renounce those theories?
(1) Why was the recovery from the Depression of 1920–21 so much faster than the recovery from the Great Depression even though they were of comparable depth? According to economist Thomas Woods, it was because in the first case the government retrenched, cutting spending and allowed events to take their natural course while in the second case, the government kept intervening in ways which prevented recovery. This shows the failure of the Keynesian methods.
(2) How do you explain the 1973–75 recession with its stagflation? Supposedly this should have been impossible according to Keynesian economics.
Falsifiability:
We would have to first agree on a pair of hypotheses (one for you and one for me) which make mutually exclusive predictions, and then see what really happens. Ideally, I would like to see two similar nations apply our policy suggestions for at least a decade and see which one is more successful. Although I have not looked into it in detail, the people I read claim that countries with greater economic freedom grow more. (Here I assume that economic freedom is more consistent with my policy prescriptions than yours.) JRSpriggs (talk) 13:45, 16 May 2010 (UTC)[reply]
USA annual real GDP from 1910–60, with the years of the Great Depression (1929–1939) highlighted.Unemployment rate in the US 1910–1960, with the years of the Great Depression (1929–1939) highlighted.
Really? You base your economics beliefs on the writings of a historian (Thomas Woods does not have any formal economics training) whose only academic position was at the Suffolk County Community College? When I say I believe in evidence based science, I mean 'theories should be created based on observation, and then accepted if they consistently hold up against tests that can falsify them'. I do not mean 'adopt a theory based on my own prejudices, and then look for evidence to support it'.
It takes only a modicum of effort to refute his thesis. Have a look at these graphs of GDP and unemployment from the Great Depression article. Do you see any evidence of the 'Depression of 1920–21' (name not withstanding) being comparable in depth to the beginning of the Great Depression in 1930-31? All I see is a tiny blip near 1920, comparable in size to most ordinary recessions.
As for stagflation in the 1970's, this issue is treated in depth in most undergraduate economics textbooks (which you would do well to read if you want to discuss economics). What Keynesian theory predicts is that inflation accelerates when demand exceeds productive capacity (economic booms), and decelerates when demand falls below productive capacity (during periods of high unemployment, recessions). This pattern held during the 70's – inflation accelerated during booms, and decelerated during recessions. Stagflation (high inflation and high unemployment at the same time) occurred for two reasons, i) overly-expansionary monetary policy in the 1960's and 1970's was used to keep unemployment too low for too long, leading to an increasing average rate of inflation, and ii) the 1970's oil price shocks reduced productive capacity and caused 'imported inflation' in 1973 and again in 1979. Except for during the two oil shock events, inflation behaved exactly as predicted by the current mainstream 'New Keynesian' model. Krugman writes about this better than I can, have a look at his article on this issue.
Now, please excuse me, but I grow tired of this conversation. I'ld prefer not to carry on a discussion with someone who essentially has a religious belief about economics – a person who is unwilling to read the basic texts before debating a subject, who is not open to changing his opinion based on overwhelming evidence, and who can only repeat the same tired old arguments from the religious leaders of the movement (i.e. the von Mises Institute).
Your chart of real GDP makes 1920-1921 seem negligible. However, according to our article, "The recession of 1920–21 was characterized by extreme deflation — the largest one-year percentage decline in around 140 years of data.". Thus the decline in nominal GDP must have been significant. My point here is that it was because the deflation was allowed to proceed without opposition by the government that the real effects were relatively mild. If prices and wages had been held up by effective minimums (as in the Great Depression), then real GDP would have contracted more and the jump in unemployment would have been greater and more prolonged.
OK, I should have given you credit for abandoning the simple Phillips curve. However, merely looking at the rate-of-change of inflation instead of inflation is not enough. One needs to look at the difference between the current price level and the expected future price level. While bearing in mind that the price expectations are not just a linear function but a more complex and subjective phenomenon.
Your claim that I am not open to changing my beliefs amounts to a demand that I abandon my common sense and my understanding of human psychology and biology. This is not a reasonable request.
Mikhail Bakunin (not a conservative) opposed both religion and the state, saying "[The State] shatters the universal solidarity of all men on the earth, and brings some of them into association only for the purpose of destroying, conquering, and enslaving all the rest." and saw a parallel between worship of God and worship of the State. Indeed, those who worship the State are treating it as if it were a god. JRSpriggs (talk) 02:49, 18 May 2010 (UTC)[reply]
Look, I'll make it clearer, I don't want to continue a discussion with the equivalent of a religious zealot. Your 'side' (I assume you identify with the right-wing/libertarian think-tanks, cause you use the word 'our') essentially spends it's time using bad logic and jumping from one argument to another to attack mainstream science. It's tiring and pointless to argue with, and there's no end to it.
I will just observe one last thing, according to you the Great Depression was caused by the government preventing prices from falling, unlike this 'great deflation' that you claim occurred in 1920 (btw, price statistics from that period are notoriously unreliable). Since the greatest fall in GDP occurred in 1930, I guess this all happened because of something conservative Republican President Herbert Hoover (who was also Secretary of Commerce in 1921) did in 1930. Herbert Hoover – price fixer & union crusader. Oh, and I guess the the large drop in GDP in late-2008/early-2009 in our Great Recession also happened because of price fixing and government support of unions under President George W. Bush.
Thanks. From the CU results, that's a pretty large sock drawer that he has. What happens now? Should I do something, or will the wheels of justice take their own course? LK (talk) 00:17, 14 May 2010 (UTC)[reply]
"Ignorance"
Hello. I would appreciate if you would try to let your PC oversensitiveness come less in the way history actually evolved. The Mughal example was a clear case of ignorance (= plain disinterest). If you don't like it, fine, but don't blame the messenger, blame the Mughals. Thanks. Gun Powder Ma (talk) 19:51, 15 May 2010 (UTC)[reply]
Suppose I have a historian that says that the Greeks were conquered by the Ottomans because they were quarrelsome ignorant homosexuals. Do I then write in the article that bad temperament, ignorance and homosexuality caused the Greeks states to fall to the Ottoman empire? Wikipedia is not here to repeat racial slurs as fact. LK (talk) 00:26, 16 May 2010 (UTC)[reply]
Personally, I'm a bubble man myself. But you surely know that most freshwater school economists hold to a dubious view about bubbles (and behavioral economics & finance more generally), and many would claim that bubbles don't exist in any economically meaningful way. The point I was objecting to though, was the insertion of the statement that 'recessions are preceded by inflationary bubbles'. This is only true sometimes, as recessions are varied and have many different causes; in any case, there's no need for such an assertion in the article on deflation. LK (talk) 09:36, 19 May 2010 (UTC)[reply]
I'm with you on pulling that bit out; I was just surprised by the comment you attached. Nope, I wasn't aware of that there was widespread doubting of bubbles. I thought the only significant argument was whether or not there's any hope of recognizing a bubble pre-burst. Wow. CRETOG8(t/c) 16:11, 19 May 2010 (UTC)[reply]
It all comes down to how you define a 'bubble'. It's not enough to say that a bubble exists when asset prices deviate from fundamental values, since in an uncertain 'probabilistic' world, asset prices will always deviate from their fundamental values. The question is, how do they deviate from their fundamental value. If they deviate randomly, in an unpredictable way, then such deviations are just 'noise', and are consistent with rational expectations and the efficient market hypothesis. A reasonable way to define bubbles is, an economic bubble exists when asset price deviations from fundamental value are not random, and hence future price changes are predictable. Therefore, during a bubble, price movements are inconsistent with the efficient market hypothesis. So, in a fundamental way, an economic bubble exists only if you can identify a bubble while it is still ongoing. Given this interpretation, anyone who holds to the efficient market hypothesis would, by definition, disbelieve in the existence of bubbles. LK (talk) 17:09, 19 May 2010 (UTC)[reply]
Could one define a bubble as a period when the uncertainty of future prices increases above the normal level, due to not knowing when the bubble will burst? So some people might keep on buying houses planning to flip them as prices continue upward while others get out of the housing market because they fear a crash. JRSpriggs (talk) 19:27, 19 May 2010 (UTC)[reply]
It is problematic to define a bubble as a period when the uncertainty about future prices is higher (but when the efficient market hypothesis still holds). Given such a definition, we can identify bubbles by studying price movements in insurance markets, options markets, and prices for 'risky' assets, as insurance and options increase in value when uncertainly (or randomness) increases.
It's been widely observed that during booms, insurance becomes easier to obtain, the 'discount' for risky assets fall, and options prices fall, implying that the market believes that uncertainly has fallen. After a market crash, there is a 'flight to safety', and the price of insurance, options and risk rises, indicating that the market believes that, compared to pre-crash, there has been an increase in uncertainty.
Therefore, if we define economic bubbles as periods when uncertainty is especially high, and we believe that the market estimates uncertainty correctly (efficient market hypothesis holds), the boom period pre-crash would not be a bubble, whereas the period post-crash would be a bubble.
I reworded the RfC at [4] in an attempt to make it clearer. (I must admit I was a little confused by the "agree with revert/disagree with revert" framing myself.) I hope that's all right with you; I thought it made sense to change it before many more drive-by opinions came in. If you prefer the new phrasing, it might be worth rewording your response as well. Rvcx (talk) 13:04, 19 May 2010 (UTC)[reply]
I've transcluded the new members list to the prior existing members list. There's a redirect on the new members list page to the actual members list.
I've compiled the list of feedback given here and placed them on a plan page. Please do go and take a look at them. For the suggestions to be carried out, we need volunteers. At the bottom of the plan page, there is a Volunteer section. Please add your name and include which area you would like to volunteer in.
No worries. As for the books, I would have to say no, unfortunately. Three manuscripts were destroyed back in the late '90s when my apartment flooded. All that's been published at this point are short stories. I will leave it to you to decide whether you might have come across any of them. Cheers! ---RepublicanJacobiteThe'FortyFive'05:30, 31 May 2010 (UTC)[reply]
Re: Blind Willie Johnson, you are welcome. He is quite astonishing. You might also be interested in knowing that his "Dark Was the Night, Cold Was the Ground" is the opening music, and a recurring theme, in the sci-fi stage show I am writing. Look for its premiere some time in 2012. ---RepublicanJacobiteThe'FortyFive'13:55, 31 May 2010 (UTC)[reply]
First, you have the details wrong. The link is to heterodox, yes. The term being used in the text, via a pipe, is "non-mainstream", which is inaccurate. The school was once mainstream. I removed it because the article is about Peter Schiff, not about the Austrian School. An adjective about the Austrian School simply doesn't belong in the lead of this article, because it is off-topic. It belongs in the article about the Austrian School, where it is, and where the reader can click through and read all about it. Yworo (talk) 12:45, 7 June 2010 (UTC)[reply]
I'm going to self-revert due to 3RR issues. Your edit would probably get destroyed in the process. Just letting you know, as I don't really know how best to re-integrate your edit after the self-revert. BigK HeX (talk) 00:57, 17 June 2010 (UTC)[reply]
Hi, LK, could you comment on the minimum wage talk page? The issue at hand is whether it is valid to broadly classify external links as "supporting" or "opposed" to the minimum wage. Thanks. Academic38 (talk) 02:52, 21 June 2010 (UTC)[reply]
