CONSERVATIVES: A DIALOGUE (REPLY TO JAMES, PART 2)

James took a lot of time to answer my post on Conservatives and my first comments. It's only just that I reply to his criticisms and I do apologise for the time-lag. Real life issues etc... I also hope that the dialogue will be interesting to others. Please jump in and provide your own thoughts...

James said:

[On] The duplicity of conservative politicians:

WHY STIMULUS HAS FAILED: A CRITIQUE

I don't want to give the impression I am picking on Pr. Raghu Rajan but he has published another article I am going to comment in extensive details.

I blame Tyler Cowen for this :) . He's the one, through his Marginal Revolution blog, who keeps attracting my attention to the Prof. Raja's work.

Tyler Cowen's post is here:
http://marginalrevolution.com/marginalrevolution/2013/01/assorted-links-685.html and Pr Rajan's article is here: http://www.project-syndicate.org/commentary/boosting-demand-impedes-recovery-by-raghuram-rajan#D6TKEF6EzLaHBz8x.99

That being said, supply siders should breathe with a little bit of relief before starting reading - As it happens, I think that Prof. Rajan does have a bit of a point here when it comes to the efficacy of fiscal stimulus.

GUNS, STATISTICS AND AMERICAN EXCEPTIONALISM

INTRODUCTION

This article on guns will represent my first attempt on this blog to write about a non-economical, non-political topic and in reaction to a news event. Still, not only do I feel quite strongly about the issue at hand but, over the years, I have regularly engage in heated discussions with Americans over their firearms legislation and, as my views have evolved on the subject, I felt it might be good to try and structure what I’ve learned and got to say on the issue.

After yet another tragic mass shooting in a school, Americans are predictably engaged in yet another round of ‘national discussion’ on the topic of firearms legislation. It looks, though, as if, this time around, the horror factor has been high enough to lead to some kind of action.

What kind of action might be possible when, in 2008 with its Heller decision, the Supreme Court ruled to interpret the 2^nd Amendment as guaranteeing private gun ownership is open to question. Regardless, I have no doubt that the NRA and co will yell blue murder however mild the ultimate legislation passed might be.

I’d like to structure this post as follow: First, I will give my own personal opinion on what the 2^nd Amendment actually mean. Second, I will review the pros and cons of easy access to guns for a modern, developed society, reviewing the statistics available. And, finally, I will propose what I think are a couple of ‘reasonable’/viable options or paths for the USA out of this gun-related mess.

REFRESHING MACRO-ECONOMICS, PART 2

INTRODUCTION

On Marginal Revolution and its post on Dr. Cochrane, I came across another commenter 'Claudia', aka Claudia R Sahm, an economist working for the Fed. She was discussing the determinants of individual consumption and hinting at very different modeling ideas than the ones traditionally seen behind the DSGE model so beloved by Central Banks.

For non-economists, DSGE stands for Dynamic Stochastic General Equilibrium. You're meant to be impressed, by the way. Those models, especially in their New Keynesian variants, are a fusion of supposedly Keynesian macro-economics ideas with Neo-classic micro-economics (for more details, if you're really interested: http://en.wikipedia.org/wiki/Dynamic_stochastic_general_equilibrium).

Here, Claudia R. Sahm was clearly interested in re-writing macro-models with 'permanent income' and 'expectations' playing key roles.

In her own words, "I think that models which rely on significant interest rate sensitivity by households are going to have a hard time explaining actual consumption (...) I think the permanent income explanation is more plausible (...) The resources available to households took a big hit in the recession, lower net worth, little income gains, high unemployment AND households appear to have projected those conditions forward. The income expectations series in the Michigan survey fell like a rock in the recession"

MUMMY, WHEN WILL WE GROW?

Quick post: Through Tyler Cowen's Marginal Revolution, I got to see John Cochrane's recent discussion on why we're stuck in the mud, economic growth-wise:

http://johnhcochrane.blogspot.com/2013/02/three-views-of-consumption-and-slow.html

And it pissed me off!

CONSERVATIVES: A REPLY TO JAMES' COMMENTS

INTRODUCTION

To my blog post about Conservatives and why I think they ought to be a lot closer to my (liberal) point of views or solutions to our economic woes, James, a conservative friend, replied with a fairly detailed comment (see previous post).

I thought his comments and my replies deserved a post on its own. Again, I don't delude myself about the practical impact this blog or my thoughts can have on the state of the world but, if I can show one conservative (or two) he/they do not have to abandon their worldviews and beliefs to embrace "left wing" solutions (I'd call them pragmatic but that would be showing my own biases, now, would it not?) to our economic issues then this discussion will have been unusually fruitful for me.

James wrote:

TO CONSERVATIVES: CAN'T WE ALL BE FRIENDS?

I have always been somewhat surprised that not everyone thinks like me...

Okay, that's a bit of an exaggeration but I do think that the political differences between conservatives and liberals on things like the economy and deficits and what to do in a few 'typical' macro-economic situations ought to be fairly modest. After all, reality is reality. 

Allow me to develop this thought further...