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Tag Archives: Hayek

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Using transcripts that say (Laughter) when some levity enters the proceedings, one legal scholar has concluded that the Supreme Court averaged 1.027 laughs per oral argument. The funniest justice is Anton Scalia who holds the record with a total of 77 “laughter episodes” during one year.

On Wednesday, he added to this year’s total. When one attorney suggested that the Court could decide which sections of the Affordable Care Act would survive if the individual mandate were eliminated, Justice Scalia responded, “…what happened to the Eighth Amendment? You really want us to go through these 2700 pages? (Laughter)…Or do expect us to give this function to our law clerks?…” (the Eighth Amendment prohibits cruel and unusual punishment.)

Another example of Scalia humor:

Soon after a light bulb went out with a loud pop during a 2005 oral argument, Justice Scalia said, “We’re even more in the dark now than before.”

Behind Scalia, Justice Breyer has been a close second and Justice Roberts is #3. Meanwhile, Alito and Ginsburg are far behind and, rarely speaking, Justice Thomas is 0 on the humor scale. Here are graphs of the “number of laughing episodes” per justice and “laughing episodes per argument.”

Recent appointees Kagan and Sotomayor have not yet been judged but Kagan is said to have considerable potential. As Solicitor General, Kagan mistakenly referred to Justice Scalia as Mr. Chief but within seconds corrected herself with, “excuse me, Justice Scalia–I didn’t mean to promote you so quickly.”

The Economic Lesson

Analysis that sums up Supreme Court sentiment on the serious side emphasizes the split between the liberal and conservative justices. Perhaps Nicholas Wapshott’s “The Clash That Defined Modern Economics“ conveys not only the conflict between the ideas of John Maynard Keynes and Friedrich Hayek” but also the conflict within the Supreme Court. Each supporting the survival of modern capitalism, Keynes believed that state intervention was necessary for the market’s health while Hayek said government constrained the market’s ability to create wealth.

Summarizing each man’s outlook, this rap video introduces Keynes and Hayek.

An Economic Question:  Does Keynes or Hayek represent your idealogical tendency?

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The second Keynes/Hayek rap video, “The Fight of the Century” just arrived. Like the first one, it focuses on the never ending debate between economists who want more government and those who believe in less. In this Econtalk discussion, the writers discuss their content decisions. And here, during a Marketplace segment, a briefer background description of the video is presented.

Also, you might enjoy looking at Merle Hazard’s songs which now include “The Greek Debt Song” and “Inflation or Deflation.”

Explaining interest rates in the U.S., this Paul Solman PBS report takes us to Zimbabwe, Japan and Merle Hazard.

Finally, here is the Freakonomics movie trailer with several economic insights.

The Economic Lesson

Perhaps economics need not be the dismal science as described by Thomas Carlyle in 1849. 

An Economic Question: In “The Fight of the Century,” Hayek says, “We brought out the shovels and we’re still in a ditch… still digging, don’t you think it’s time for a switch…”

Saying the Great Recession ended in 2009, Keynes replies, ” I deserve credit. Things could have been worse. All the estimates prove it-I’ll quote chapter and verse.

Your economic policy preference? Bottom up (Hayek) or top down (Keynes)? 

 

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It was perfect. On the left side of the NY Times Op-Ed page, David Brooks defended the austerity approach. On the right was Paul Krugman saying spend more. Those are the alternatives. Maybe now it will be easier to choose one?

Using Germany as his model, David Brooks presented the facts. He quoted economist Gary Becker saying that, “…the Americans borrowed an amount equal to 6 percent of G.D.P. in an attempy to stimulate growth. The Germans spent about 1.5 percent of G.D.P. on their stimulus.” Now, the American economy remains sluggish while Germany has 9 percent growth and unemployment at “precrisis” levels. Brooks’s conclusion is that the U.S. needs to pay attention to the fundamentals. Fundamentally, we are very good at innovation. Our political institutions, however, are leading us in an unproductive direction.

Krugman meanwhile says that we have to focus on unemployment. And focusing on unemployment takes us, inescapably, to the fact that we are in the midst of a recession. Why? Stimulus spending has been inadequate.  On the fiscal side, more spending is the answer; on the monetary side, the Fed has to inject more money into the economy.

A summary? Brooks says less is more. Krugman says more is more.

The Economic Lesson

The two economic thinkers we can turn to are F.A. Hayek and John Maynard Keynes. A wonderful rap from econstories.com summarizes each man’s perspectve.

 

 

 

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One problem with macroeconomic policy is the inability to confirm that it does or does not work. With variables constantly in motion, an entire economy as your lab, and no way to keep anything constant, how to know if you are doing the right thing? 

This takes me to a Pew Research Center survey. A Pew questionnaire sent to 1001 adults confirmed that we all agree that state spending is a big problem. It also confirmed that we can solve the problem by cutting spending on highways, health services, public safety, and school funding. Or, we can raise taxes.

Yes? Not quite. For every solution, more than 50% voted “no”. Furthermore, with the possibility of a double dip, some say now is the worst time to implement “austerity”. Others say “austerity” is the only solution.

Decisions about state spending parallel federal dilemmas. Do we need more stimulus spending or has government spent too much already? We have no definitive empirical data to provide guidance.

The Economic Lesson

Since our nation began, we have disagreed about economic policy. George Washington had to cope with the ongoing feud between Secretary of the Treasury Hamilton and Secretary of State Jefferson. Hamilton was for a more interventionist government to spur economic development. Jefferson, by contrast, wanted less. And yet Hamilton’s goals are the same as today’s non government/market advocates.

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On Economics:

Economics is “the study of mankind in the ordinary business of life.”   Alfred Marshall, 1842-1924 (U.K. economist).

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” Friedrich von Hayek, 1899-1992 (Austrian-born, U.K. citizen economist).

“…persons, with big wigs many of them and austere aspect, whom I take to be Professors of the Dismal Science.”  Thomas Carlyle, 1795-1881 (Scot. teacher, writer, satirist), on the (sometimes) dreary character of economics.

On economists:

“In the long run we are all dead.”  John Maynard Keynes, 1883-1946 (U.K. economist), referring to economists’ emphasis on the future impact of their ideas. 

“Give me a one-handed economist. All my economists say, “On the one-hand; on the other.” Harry Truman, 1884-1972 (U.S. president).

The Economic Lesson

Economics books say that economics is a social science that explores how we produce and distribute scarce resources (land, labor, capital).

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