WELCOME TO BRAD DELONG’S GRASPING REALITY: My attempt to make my readers—and myself—smarter, while keeping all of you out there in SubStackLand interested and entertained...
Mysuggestin is much less exciting than the others. Derive a monetary rule and practice from the structure of the economy and the exogenous shocks it is subjected. :) [As you can see, I think we already have (but do not apply) the proper fiscal rule.]
Does, “Fiscal Policy in a Depressed Economy" say anything more than make expenditures such that NPV>0 when inputs are evaluated at marginal cost including externalities and discounted at the borrowing rate? In other words, is fiscal policy rule for a depressed economy any different from the rule for a non-depressed economy or is it just parameter values?
Hence the outrageous GDP figures of Luxembourg, a banker’s paradise in Europe. GDP is also easily distorted by taking on debt, as pointed out by Tim Morgan in every one of his articles. Printing money, however, is a poor substitute for making goods and growing food. As he explains:
“Those who understand the critically-important concept of the two economies will recognize this process as a rapid divergence between the “real” economy (of material products and services) and the parallel “financial” economy (of money, transactions and credit).
We’re now very close to the point at which this self-deception ceases to convince. Globally, debt — and government debt in particular — is growing at rates so unsustainable as to lead inexorably to the monetization (“printing”) of debt, and a precipitate slump in the purchasing power of money.
The reality of higher-than-reported inflation has broken through as the “cost of living crisis” which continues to undermine political cohesion around the World.
This inflationary trend is weighted towards the costs of necessities, so has had a particularly adverse effect on people at the lower end of the income scale, who have to spend a large proportion of their incomes on staples.
At the same time, the ultra-low rates necessary to prop up the illusion of continuity have inflated asset prices dramatically, to the disproportionate benefit of an already-wealthy minority.”
Thesis. Economics needs to be expanded with a general theory of non-market organization that describes traits and benefits which are compared and contrasted to market organization. Non-market organization (here called “groups”) subsumes institutions, business firms, kinds of capital, social groups and agglomerations. In particular, institutional economics is given a general set of principles. The method is graphical and qualitative, not quantitative, because “rule sets” are a higher logical type from the transactions they cover, and also are incommensurate with each other.
Just finished: #5 Knowledge.
This video briefly develops a visual representation of the limits to individual cognition, then uses it to show how the “knowledge problem” is solved differently by market and non-market organization:
If you read one economic book this year, read this. By far the best book on economic history to read. Makes you want to go back to school and take his class. Ponder why 2010 is so important. Thanks for posting.
Brad, I suggest you write an article on national wealth. How is it measured? Do all economists agree on how it is (or should be) measured? I read a lot of articles where the author claims the U.S. is the richest nation in the world. (These claims are almost always made as part of a demand by the author that the federal government spend more money on whatever idea or program the author is writing about.)
It seems to me that national wealth should be measured by comparing per capita wealth (or maybe income) to per capita debt. There are various charts on the Internet that do this. They tend to show that the U.S. is barely in the top 10 when it comes to being the wealthiest country. But you can't always believe what you find on the Internet, and I suspect there is a lot of cherry picking in these statistics.
Also on these charts (which I can't find at the moment) small countries like Singapore, Luxemburg, and Dubai tend the show up as wealthy countries. Should the size of a country matter in determining wealth? Sort of like how college sports has their Division 1, Division 2 schools, etc.
Another fact that needs to be considered is the strength of the dollar. The U.S. seems to have the unique ability to print enormous amounts of money and still get nations and investors world wide to view this printed money as valuable. I suppose this fact should also be considered in measuring national wealth.
So overall, I think an article from you on measuring national wealth would be of interest to your readers.
Hi Brad, Have you seen "Buy Now!" on Netflix? It's a great documentary on planned obsolescence and corporate waste. The economics of this subject would make a great topic for "Grasping Reality." I know planned obsolescence goes back at least to the 1960s in regards to automobiles. But in fairness to the U.S. auto companies, the body of a car back then used to rust out after about four years, so they saw no point in making other components last longer.
Also, when I was in college back in the 1970s my history professor told our class that after WWII the navy collected up thousands of bulldozers, tractors, and other construction equipment and drove these vehicles off the edge of aircraft carriers and dumped them into the Pacific Ocean. Apparently this was required by the contracts the manufacturers had signed with the government during the war. The manufacturers were worried they couldn't compete with the government and would be driven out of business if the government could sell sell used equipment after the war. Of course I have no source for this story. The 1970s were long before the Internet.
But anyway the economics of planned obsolescence and deliberate waste would make a good topic for your website.
Mysuggestin is much less exciting than the others. Derive a monetary rule and practice from the structure of the economy and the exogenous shocks it is subjected. :) [As you can see, I think we already have (but do not apply) the proper fiscal rule.]
Does, “Fiscal Policy in a Depressed Economy" say anything more than make expenditures such that NPV>0 when inputs are evaluated at marginal cost including externalities and discounted at the borrowing rate? In other words, is fiscal policy rule for a depressed economy any different from the rule for a non-depressed economy or is it just parameter values?
Is that telly true
Still miss the world's funniest dog and its overweight owner. Also the posts by his wife and son.
Hi Brad. Here's another idea for a column:
Hence the outrageous GDP figures of Luxembourg, a banker’s paradise in Europe. GDP is also easily distorted by taking on debt, as pointed out by Tim Morgan in every one of his articles. Printing money, however, is a poor substitute for making goods and growing food. As he explains:
“Those who understand the critically-important concept of the two economies will recognize this process as a rapid divergence between the “real” economy (of material products and services) and the parallel “financial” economy (of money, transactions and credit).
We’re now very close to the point at which this self-deception ceases to convince. Globally, debt — and government debt in particular — is growing at rates so unsustainable as to lead inexorably to the monetization (“printing”) of debt, and a precipitate slump in the purchasing power of money.
The reality of higher-than-reported inflation has broken through as the “cost of living crisis” which continues to undermine political cohesion around the World.
This inflationary trend is weighted towards the costs of necessities, so has had a particularly adverse effect on people at the lower end of the income scale, who have to spend a large proportion of their incomes on staples.
At the same time, the ultra-low rates necessary to prop up the illusion of continuity have inflated asset prices dramatically, to the disproportionate benefit of an already-wealthy minority.”
You may enjoy a new series.
“New Addition to Economic Theory and Method”
(New playlist, of work in progress :)
https://www.youtube.com/@ecolanguage
Thesis. Economics needs to be expanded with a general theory of non-market organization that describes traits and benefits which are compared and contrasted to market organization. Non-market organization (here called “groups”) subsumes institutions, business firms, kinds of capital, social groups and agglomerations. In particular, institutional economics is given a general set of principles. The method is graphical and qualitative, not quantitative, because “rule sets” are a higher logical type from the transactions they cover, and also are incommensurate with each other.
Just finished: #5 Knowledge.
This video briefly develops a visual representation of the limits to individual cognition, then uses it to show how the “knowledge problem” is solved differently by market and non-market organization:
https://www.youtube.com/watch?v=ZEaPv1k3BTk
Thx... -B.
From your latest: "This is the economy—& the chaos-monkey government—that a majority of the Americans who bothered to vote chose for all of us"
Plurality please NOT majority! Unless the numbers have changed since I last saw them more voters voted against Trump than for him!
touché...
If you read one economic book this year, read this. By far the best book on economic history to read. Makes you want to go back to school and take his class. Ponder why 2010 is so important. Thanks for posting.
Is that really true
Brad, I suggest you write an article on national wealth. How is it measured? Do all economists agree on how it is (or should be) measured? I read a lot of articles where the author claims the U.S. is the richest nation in the world. (These claims are almost always made as part of a demand by the author that the federal government spend more money on whatever idea or program the author is writing about.)
It seems to me that national wealth should be measured by comparing per capita wealth (or maybe income) to per capita debt. There are various charts on the Internet that do this. They tend to show that the U.S. is barely in the top 10 when it comes to being the wealthiest country. But you can't always believe what you find on the Internet, and I suspect there is a lot of cherry picking in these statistics.
Also on these charts (which I can't find at the moment) small countries like Singapore, Luxemburg, and Dubai tend the show up as wealthy countries. Should the size of a country matter in determining wealth? Sort of like how college sports has their Division 1, Division 2 schools, etc.
Another fact that needs to be considered is the strength of the dollar. The U.S. seems to have the unique ability to print enormous amounts of money and still get nations and investors world wide to view this printed money as valuable. I suppose this fact should also be considered in measuring national wealth.
So overall, I think an article from you on measuring national wealth would be of interest to your readers.
This is such an important book
"Say it, Don't Show it" is exactly the kind of "I never thought of that" idea that makes "Grasping Reality" worth the above average subscription cost.
Thanks! Or, rather, than Neal Stephenson! - B.
Dear Brad,
Here is an interesting idea for you to write about on your blog:
https://engelsbergideas.com/essays/the-end-of-pax-britannica/
Hi Brad, Have you seen "Buy Now!" on Netflix? It's a great documentary on planned obsolescence and corporate waste. The economics of this subject would make a great topic for "Grasping Reality." I know planned obsolescence goes back at least to the 1960s in regards to automobiles. But in fairness to the U.S. auto companies, the body of a car back then used to rust out after about four years, so they saw no point in making other components last longer.
Also, when I was in college back in the 1970s my history professor told our class that after WWII the navy collected up thousands of bulldozers, tractors, and other construction equipment and drove these vehicles off the edge of aircraft carriers and dumped them into the Pacific Ocean. Apparently this was required by the contracts the manufacturers had signed with the government during the war. The manufacturers were worried they couldn't compete with the government and would be driven out of business if the government could sell sell used equipment after the war. Of course I have no source for this story. The 1970s were long before the Internet.
But anyway the economics of planned obsolescence and deliberate waste would make a good topic for your website.
• An Open Letter to Trump Voters •
The True Cost of Your Ignorance and Idolatry
https://open.substack.com/pub/patricemersault/p/an-open-letter-to-trump-voters?r=4d7sow&utm_medium=ios
:-) Brad