Open Thread June 2010, Part 3

Kevin

This thread is for the discussion of Less Wrong topics that have not appeared in recent posts. If a discussion gets unwieldy, celebrate by turning it into a top-level post.

The thrilling conclusion of what is likely to be an inaccurately named trilogy of June Open Threads.

This thread is for the discussion of Less Wrong topics that have not appeared in recent posts. If a discussion gets unwieldy, celebrate by turning it into a top-level post.

The thrilling conclusion of what is likely to be an inaccurately named trilogy of June Open Threads.

I don't understand where you acquired this view of economists. I am an economist and I assure you economists don't ascribe to the "measured GDP is everything" view you attribute to them.

This absurdity reveals itself when you see economists scratching their heads, thinking how we can get people to spend more than they want to, in order to help the economy. Unpack those terms: they want people to hurt themselves, in order to hurt less.

This is not an accurate portrayal of what Keynesians believe. The Keynesian theory of depressions and recessions is that excessive pessimism leads people to avoid investing or starting businesses, which lowers economic activity further, which promotes more pessimism, and so on.

The goal of stimulus is effectively to trick people into thinking the economy is better than it is, which then becomes a self-fulfilling prophesy; low quality spending by government drives high quality spending by the private sector.

If you wish to be sceptical of this story (I'm fairly dubious about it myself), then fine, but Keynesians aren't arguing what you think they're arguing.

James_K:

I am an economist and I assure you economists don't ascribe to the "measured GDP is everything" view you attribute to them.

Aside from the standard arguments about the shortcomings of GDP, my principal objection to the way economists use it is the fact that only the nominal GDP figures are a well-defined variable. To make sensible comparisons between the GDP figures for different times and places, you must convert them to "real" figures using price indexes. These indexes, however, are impossible to define meaningfully. They ... (read more)

8SilasBarta16y

No, that's precisely what I assumed they're arguing, and I believe my points were completely responsive. I will address the position you describe in the context of the criticism in my rant. [...] Now, unpack the meaning of all of those terms, back to the fundamentals we really care about, and what is all that actually saying? Well, first of all, have you played rationalist taboo with this and tried to phrase everything without economics jargon, so as to fully break down exactly what all the above means at the layperson level? To me, economists seem to talk as if they have not done so. I would like for you to tell me whether you have done so in the past, and write up the phrasing you get before reading further. You've already tabooed a lot, but I think you need to go further, and remove the terms: recession, depression, stimulus, excessive, pessimism, invest, and economic activity. (What's left? Terms like prefer, satisfaction, wants, market exchange, resources, working, changing actions.) Now, here's what I get: (bracketed phrases indicate a substitution of standard economic jargon) "People [believe that future market interactions with others will be less capable of satisfyng their wants], which leads them to [allocate resources so as to anticipate lower gains from such activity]. As people do this, the combined effect of their actions is to make this suspicion true, [increasing the relative benefit of non-market exchanges or unmeasured market exchanges]. "The government should therefore [purchase things on the market] in order to produce a [false signal of the relative merit of selling certain goods], and facilitate production of [goods people don't want at current prices or that they previously couldn't justify asking their government to provide]. This, then, becomes a self-fulfilling prophecy: once people [sell unwanted goods due to this government action], it actually becomes beneficial for others to sell goods people do want on the market, [preventing a d

1NancyLebovitz16y

I've heard that the trick works less well each time it's used (perhaps within a limited time period). Is this plausible?

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Open Thread June 2010, Part 3

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Open Thread June 2010, Part 3

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