Tag Archives: Keynes

03.30.2012 | Supreme Court Laughter

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?

Posted by: adminEcon
Tags: Anton Scalia, Hayek, Keynes, Supreme Court humor
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11.01.2011 | Deficit Deal Primer

In 1934, after meeting with John Maynard Keynes, FDR said that he “liked him immensely” but groaned that he talked like a “mathematician.”

Keynes’s advice to FDR? Described by Sylvia Nasar in Grand Pursuit, increase deficit spending from $300 to $400 million a month in order to spike the national income. Not entirely convinced, FDR partially, and just for awhile, implemented a Keynesian approach.

The Economic Lesson

Now, three-quarters of a century later, we remain divided about whether to embrace or abandon Keynesian spending. And this takes us to the Super Committee appointed by President Obama as a part of the August debt ceiling deal. Unrestrained by political realities, the 6 Democratic committee members probably would implement large Keynesian deficits to fight unemployment. On the other side, the 6 Republicans would diminish government spending to fuel growth.

Our purpose right now is not to see how they might compromise but instead to understand what will happen if they do not. We just have to remember 2 things: November 23 and DDMM.

November 23? The deadline. They have to have a deal by then. If they do not, then…
DDMM. Automatic cuts will slice spending for Defense, Discretionary budget items (such as education), Mandatory spending (like agricultural subsidies) and Medicare.

Here is a NY Times graphic that details DDMM.

An Economic Question: How might John Maynard Keynes have responded to the automatic cuts for “DDMM?”

Posted by: adminEcon
Tags: deficit, FDR, Grand Pursuit, Keynes, super committee, Sylvia Nasar
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05.19.2011 | Econ Fun

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)?

Posted by: adminEcon
Tags: "The Fight of the Century", Austrian School, Hayek, Keynes, laissez-faire, stimulus spending
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12.29.2010 | Different Kinds of Capitalism

How much does Chinese capitalism resemble U.S. capitalism?

In a New Yorker article, journalist John Cassidy suggests that China’s combination of authoritarianism and capitalism is somewhat similar to our own history. Reminding us of our government’s economic intervention during the past several centuries, Cassidy cites free trade, Pentagon spending, and the bailout. In 1791, for example, Alexander Hamilton’s “Report on the Subject of Manufactures” recommended protective tariffs and subsidies to encourage domestic industry. As for the bailout, you know about the 2009 Recovery Act and TARP. Cassidy even suggests that “market authoritarianism” might be a transitional state for the Chinese and Russian economies, with democracy not that far behind. There is a good New Yorker podcast on this article.

I have difficulty agreeing with John Cassidy. Yes, we might mislead ourselves if we claim the past was entirely laissez-faire. However, the Heritage Foundation/WSJ’s Index of Economic Freedom and the World Bank’s Doing Business index reveal a huge divide between contemporary China and where a past U.S would have ranked.

Your opinion?

The Economic Lesson

Ever since Hamilton and Jefferson, we have been debating more or less central government. Always though, the decision has not been one or the other. We have had to decide how much. You might look back on this post about David Brooks and Paul Krugman for a perfect recent example of the debate. Also, this Hayek/Keynes rap is excellent.

Posted by: adminEcon
Tags: China, democracy, government intervention, Keynes, regulation, Smith
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08.29.2010 | Spend More or Less?

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.

Posted by: adminEcon
Tags: austerity, Brooks, Germany, Hayek, Keynes, Krugman, recession, stimulus spending, unemployment
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