Nonia Mausa has a blog

Nonia Mausa, a fellow self-taught economist and occasional Angry Bear contributor and commentator, has got a new blog up and running. I look forward to reading her comments on everything.

Another 15 minutes

The LA Times mentions some awful jokes I wrote about Peak Oil.

I hope Brad Pitt or Johnny Depp reads them and gives me $1 million for being so damn good. Until then I will continue to work as a casual teacher and blog.

AAAAAAAAA

A blog post with every single category marked (I'm doing this for scribefire)

Why the US needs a recession

From the department of radical surgery:

(Copied and pasted from naked capitalism) A while ago I argued in this blog that the US might benefit from a recession, because it was highly unlikely that the fundamental adjustment required in the US economy – a substantial increase in the national saving rate – is achievable without a period of growth below potential. Others have made similar points, and not just the usual European suspects, with post-colonial chips on their shoulders and an excess of Schadenfreude whenever the US trips over a banana peel. In recent contributions to the FT, Chrystia Freeland (Canadian, I believe)and Ricardo Hausmann (Venezuelan, when last I met him) have also made the point that the US needs, or would benefit from, an early serious slowdown in economic activity/recession. As the proud owner of both a US and a UK passport (and the former owner of a Dutch passport), my motives are, of course, beyond suspicion.

No US economist working in the US whose views I have read or heard supports the idea that a recession might be what the US needs right now. I think part of the difference in perspective comes from the fact that Europeans and other non-Americans view the US as an open economy that for decades has been saving too little and has been living beyond its means by borrowing abroad. They believe that the external constraint on the US addiction to current consumption is likely to become binding soon and certain to become binding in due course. Americans still tend to do much of their thinking about the US economy as if it were either the entire world economy, or at any rate a closed economy with just a couple of large holes in it: one through which oil imports pour in and another through which US Treasury bills and bonds disappear, never to be seen again.

...

In the financial field, the speed with which the euro is bridging the gap with the US dollar, once considered unassailable as an international reserve currency, has surprised even the greatest euro optimists. With the US now the world's largest external debtor nation, monetary policy in the US is increasingly constrained by international financial markets. The (to my mind) reckless interest rate cuts by the Fed risk spooking domestic and international holders of US dollar-denominated securities who have many alternative investment opportunities, both low risk sovereign debt instruments and higher-risk/higher-return investments in non-US equities, including those issued by emerging markets. The risk of a sharp sell-off of US dollar -denominated securities and an associated increase in long-term US dollar interest rates could easily turn the US slowdown into a recession, even a prolonged one. A US recession that would be mild with 10-year US Treasury bonds yielding 3.6 percent could become deep with 10-year US Treasury bonds at 6.6 percent.

But even if the US were a closed economy, I would still believe that the kind of sustained increase in the national saving rate - by at least six percent of GDP to give US citizens hope of a dignified retirement (rather more than the three percent of GDP increase in the national saving rate required to restore external sustainability for the US) - cannot in practice be achieved without passing through a material slowdown, and possibly a recession.

Higher saving means lower consumption or higher income without a commensurate increase in consumption. I am sufficiently Keynesian to believe that a planned reduction in consumption will cause a temporary slowdown in activity. The kind of supply-side miracle that would produce an increase in income without a matching increase in private and public consumption is hard to visualise for the US. China has managed just that during the past decade, but the US is hardly China.

For the past couple of decades, the US consumer has been saved from the consequences of his under-saving by wallet-expanding painless capital gains. Unfortunately these capital gains were to a significant extent bubble-born and these bubbles have imploded one after the other. After the tech bubble and bust and the housing boom and bust, I cannot see another asset bubble coming along in time to rescue the improvident US consumer.

...

To get to a higher saving and wealth trajectory, the US economy will first have to pass through the valley of the shadow of deficient effective demand, rising excess capacity and growing unemployment. Postponing the necessary adjustment will just make the pain of the eventual unavoidable correction that much greater.

There are two ways to achieve a traverse to a higher saving and financial wealth trajectory without passing through a slump. The first would be for US investment demand to rise by the same amount as consumption demand falls. This, however, would mean that the external imbalance would not be corrected. An increase in domestic capital formation that matches the increase in planned national saving is therefore not part of a sustainable adjustment programme. In addition, it is not easy to see what would motivate such an increase in investment.

...

A major boost to infrastructure investment would be more than welcome to boost the supply-side of the economy. For external balance reasons it would, however, have to be financed by a further increase in public saving. Any US politician running on a programme of higher taxes or lower current spending to pay for better infrastructure would in all likelihood not get elected.

The second way for the US economy to achieve a lasting increase in the saving rate without a temporary slump, would be for net exports to rise by the same amount as planned saving. That’s possible but not likely. The decline in the nominal external value of the US dollar is certainly helping, but the shift of domestic resources from the non-traded sectors (including construction) to the traded sectors (both exporting and import-competing) is unlikely to be accomplished solely through relative price signals. Painful quantity adjustment, including idle labour and capital in the over-expanded non-traded sectors is likely to be necessary.

...

But the ostriches in the Fed, the White House and the Capitol are unmoved by such concepts as unsustainability. The prevailing ethos is myopic at best: let’s just put out this immediate fire, because it threatens today’s comfort level. Postponing adjustment raises the expected cost of the eventual adjustment, but that is then and this is now. Also, something may turn up. Santa Claus could exist after all. We may learn to harness as a source of renewable energy the hot air put out by the Congress.

It is hard to have a rational discussion with those who embody and express the views of a nation that is in denial. The US establishment and political class, and quite possibly much of its electorate, are indeed in denial, and not just about the need for an early traverse to a higher national saving rate. The economic, social and political model of the US has developed serious albeit remediable flaws and needs major surgery. Unfortunately none of those running for office today are likely to be willing or able to wield the scalpel as required.

In short, the only ways America can solve the problem without going into a slump are, essentially, out of the question. Increasing personal saving is the key to solving this problem, but the only way this can be achieved is through higher interest rates which, if applied, will result in a lasting recession. Lowering interest rates puts off the problem until later, and makes it worse. The sooner the better.

Good critique of my abortion post

One Salient Oversight's use of statistic recalls how a drunk uses a lamppost, for support, not illumination.

I have replied to some of his criticisms on the comments post. However I still think the basic thrust of my argument stands. Moreover, CPA does not address these issues:

• Why is it that Germany has such a low abortion rate?


• If the Pro-life movement has been successful, why is it that two-thirds of Americans and Australians do not see abortion as immoral?


• Why does Chile, a nation which has made abortion illegal, have such a high abortion rate (about twice that of the US)?

Worship and Evangelism

Fide-O has an interesting point:

Recently I had was blessed to discuss with some brothers the evangelistic power found in a church that truly worships. In recent decades, seeker-churches had "dumbed-down" their worship services to try to appeal to the world. They even used secular songs, skits and drama, stand-up comedians and so forth to try to communicate the gospel to non-believers who attended their Sunday worship.

The problems with such a worship service are numerous. For one, worship on the Lord's Day should edify the saints not entertain the lost. Christians meet on the Lord's Day to worship not to put on a show or "do" evangelism. Secondly, such tactics actually cloud the truth of the Gospel rather than effectively communicate it. "Worldly" worship services ultimately fail to communicate the transcendence and holiness of God, remove any message of "transformation" from the Gospel, and turn the church into a community just like the world rather than a community of faith.

But with that said, I truly believe that if we lead our churches into true biblical worship then the Gospel will be powerfully communicated to all unbelievers who are present in the congregation. There is nothing more redemptively powerful than a transcendent, holy God meeting with people. We should design our worship services to exalt God and edify His people. And while we worship we should be so gracious as to explain the elements of our worship that all who are in attendance may fully understand the Gospel in our worship. When God's people worship sinners should be converted.

In other words, sinners are more likely to hear about Christ and the Gospel from a regular "Biblical" church service than from a special outreach service. The reason is obvious - regular "Biblical" public worship will always present the Gospel in the context of the church body and is able to balance out the needs of the individual and the needs of the group, while the evangelistic service removes the importance of the church and focuses solely upon the individual. Moreover, the evangelistic service is essentially a "throwback" of 19th century revivalism whereby the church service is replaced by a revival meeting.

It is the Gospel that saves, and it is the power of the Holy Spirit working through the preaching of the Gospel that makes us persevere. The Gospel should always be central in public worship: it should be explicit in every single Biblical sermon that is preached since the Bible's message is ultimately about Christ; it should be explicitly present in the songs we sing since we sing praise to the God who has saved us; it should be explicitly present in our public prayers because it is only because God has saved us that God can listen to us.

Yet the irony is that if a church service simply becomes a revivalist meeting, the Gospel message ends up being distorted or misunderstood since it is not proclaimed in the context of the Gospel's natural result - the church.

It's not that I'm against evangelistic meetings. I think they're fine if they're useful. But have them on a Friday night or some other time. Churches should not get into a situation in which they replace public worship with evangelistic meetings.

Tim Blair continues to be an idiot

I just read this piece of tripe from Tim Blair:

The day after 9/11 a friend went to dinner with some Australian publishing types. He still works with these muppets, so I won’t identify him, but I will record his description of their mood that night.

They were happy. Not dance-about-the-room Hamas happy, but satisfied happy. America had been taught a lesson. These folk would imagine themselves to be educated, sensitive, intellectual, creative ... yet their response to the murder of nearly 3,000 innocent people by fascist maniacs was to voice a smug contentment; at last, the US got what was coming to it.

Contrast their post-9/11 views to those of Formula One drivers preparing to compete in the 2001 Italian Grand Prix, as reported by Matt Bishop in the May 2007 edition of F1 Racing (no link available):

It’s barely 100 hours since we all watched what would be known simply as ‘9/11’ play out, live, on our TV screens. Like you, like me, like everyone, F1’s biggest stars are still shell-shocked ...

They’re shrugging, grimacing, and muttering words like “bastards” or “bâtards” or “bastardos” or “bastardi” or, in Kimi Raikkonen’s case, and I overhear him utter the word in exactly the context I’m describing, to a Finnish journalist, “äpärä”.

These guys drive cars for a living. Most have no university education. Which might explain why they’re so morally advanced compared to Australian bookniks.

So, what do we learn from Blair here?

1. Since Blair is a member of New Limited, the "Pubilshing types" he speaks of are essentially non-Murdoch. Thus non-Murdoch media hate America and like it when people die.
2. That intellectuals like people dying.
3. It's okay to make broad insults against people you don't like without providing any evidence whatsoever.

What can I say except that it is typical of this guy's lack of intellect that he would come up with such tripe. If this is the guy who edits the Letters to the Daily Telegraph - a publication that seeks to dumb down ordinary Australians - then there is no wonder that people are so confused about important issues like the Iraq War and Global Warming.

To me, Blair has no credibility. Moreover, those who admire him lose credibility of their own.

Economics is Bull$%!#

This is from Angry Bear. It's so good I'm pasting the whole thing:

My father is a physcist. But when I decided to study economics, he started paying a bit of attention to the field so we'd have something to talk about. At one point, he told me: "Economics now is where Physics was before Galileo."

I've been thinking about that, and I'd like to expand on the theme. Right now, Economics is bull$%!#. Plain and simple. And it is bull$%!# for the same reason physics was bull$%!#... because people prefer to believe in myth than reality, and so many institutions crop up to defend those myths so strongly that a) even those people who would prefer to believe in reality never get exposed to it under the relentless weight of "experts" telling them what reality really is and b) those that manage to figure out what reality is usually find it best to keep their mouth shut.

And, just as before (and in the centuries after) Galileo, the acceptable "physics" myths varied by location, our acceptable economics (and I'm not putting economics in quotes the way I put physics in quotes - we know what physics really is, but I don't think any of us know what real economics might really look like)... in some countries, prices can be frozen or set by government fiat, in others, (such as our own) cutting taxes and shrinking government always produces more growth.

I want to focus on the myths we believe in here in the US... we have fewer excuses than folks elsewhere. After all, supposedly we are free to open our mouth and make up our own minds, so we should be the most free to arrive at some form of economics that is "right." And we worship technology enough to have made the data easily available.... its all there, at the BEA, the OMB, the BLS, the IRS, and so forth. And we all have access to computers and spreadsheets (no need for fancy statistics, just as there really was no need for fancy Latin prayers to determine whether you can transmute lead into gold) when Galileo was running around.

As I noted the other day... perhaps the most important question in economics, as it stands now, is what leads to faster growth... in particular, what is the optimal size of government, or what are the tax rates that lead to the fastest possible growth. And in fact, there are a lot of very well funded organizations and think tanks and universities that produce carefully worded studies that address these topics. But they generally find... we have to cut taxes more, and decrease the size of government.

Now I'm no academic (despite the 5 years adjuncting), and I'm certainly not angling for a position in academia, but I think what would happen to someone in any of the think tanks who pointed out that growth rates are higher at much, much higher tax rates than we observe now, and tax cuts have not usually led to faster growth rates than tax hikes. No theorizing, just pointing out the data. Because we all know that tax cuts and smaller government lead to faster growth (aren't Republicans supposed to be better for the economy?), even though we have over a hundred years of experience watching Alabama and Massachusetts.

But a lot of people know what the data shows... but they don't say a word. Anyone think the Dean of the business school and the Harvard Professor that advised the current president on the economy and are now advising the front runner on the Republican side don't know what the data shows?

In the end... the reason economics is bull$%!# is because the practitioners have allowed it to remain bull$%!#. And this is a problem... how many people died because physics remained bull$%!# for so long? And chemistry? And biology? How much further along would we be if things had changed centuries earlier? And the same is true of economics. How much farther along would we be if every president since WW2 had achieve JFK/LBJ's growth rates? Or failing that, Clinton's?

Put another way... this is not a game. Any movement toward and not away from the optimal tax rates and optimal size of government makes us better off, and movements away from the optima hurt us. The people who choose to perpetuate the myths and the bull$%!# are harming the country. What does that say about the ones that are smart enough to know they are perpetuating myths and the bull$%!#?

The Arminian Doctrine of God and the Minneapolis Bridge Collapse

Here's a really interesting theological piece from Solus Christus. This is a copy and paste of the entire article:

After the recent bridge collapse in Minneapolis, John Piper responded as pastor of Bethlehem Baptist Church. Bethlehem is located only a mile away from where the bridge fell. Pastor John interpreted the bridge collapse according to a Calvinist doctrine of God. Here's an excerpt:

The meaning of the collapse of this bridge is that John Piper is a sinner and should repent or forfeit his life forever. That means I should turn from the silly preoccupations of my life and focus my mind’s attention and my heart’s affection on God and embrace Jesus Christ as my only hope for the forgiveness of my sins and for the hope of eternal life. That is God’s message in the collapse of this bridge. That is his most merciful message: there is still time to turn from sin and unbelief and destruction for those of us who live. If we could see the eternal calamity from which he is offering escape we would hear this as the most precious message in the world.

We prayed during our family devotions. Talitha (11 years old) and Noel and I prayed earnestly for the families affected by the calamity and for the others in our city. Talitha prayed “Please don’t let anyone blame God for this but give thanks that they were saved.” When I sat on her bed and tucked her in and blessed her and sang over her a few minutes ago, I said, “You know, Talitha, that was a good prayer, because when people ‘blame’ God for something, they are angry with him, and they are saying that he has done something wrong. That’s what “blame” means: accuse somebody of wrongdoing. But you and I know that God did not do anything wrong. God always does what is wise. And you and I know that God could have held up that bridge with one hand.” Talitha said, “With his pinky.” “Yes,” I said, “with his pinky. Which means that God had a purpose for not holding up that bridge, knowing all that would happen, and he is infinitely wise in all that he wills.”

This Tuesday Roger Olson, professor of theology at George W. Truett Theological Seminary at Baylor College offered an interpretation of that same event from the perspective of an Arminian doctrine of God. Here's an excerpt:

In this world, because of our ignorance and sinfulness, really bad things sometimes happen and people do really evil and wicked things. Not because God secretly plans and prods them, but because God has said to fallen, sinful people, "OK, not my will then, but thine be done -- for now."

And God says, "Pray because sometimes I can intervene to stop innocent suffering when people pray; that's one of my self-limitations. I don't want to do it all myself; I want your involvement and partnership in making this a better world."

It's a different picture of God than most conservative Christians grew up with, but it's the only one (so far as I can tell) that relieves God of responsibility for sin and evil and disaster and calamity.

The God of Calvinism scares me; I'm not sure how to distinguish him from the devil. If you've come under the influence of Calvinism, think about its ramifications for the character of God. God is great but also good. In light of all the evil and innocent suffering in the world, he must have limited himself.

I admit I wholeheartedly embrace and relish the Calvinistic doctrine of God. I find it difficult to imagine life apart from it. I also find the interpretation of evil offered by it personally satisfying. But when I delve deeply into this issue (which I am all for by the way), I encounter difficulties that seem to be insurmountable for fallen human understanding. Those are the places, in the hard work of loving God with all my mind, that I fall to my knees in awe and offer up sacrifices of praise to my infinitely beautiful God.

As the two excerpts above demonstrate, the contrast between the views is striking. There are basically two ways of interpreting the evil in this world with respect to the doctrine of God. Fundamentally, we must either admit a limitation in God (i.e. the autonomy of his moral creatures) or a limitation in ourselves (i.e. extreme difficulty in reconciling a paradox in God's revelation). Notwithstanding what I view as the clear testimony of Holy Scripture, I am much more comfortable with the latter. The English Puritan Stephen Charnock has put it, rather wisely, like this:

But what if the foreknowledge of God, and the liberty of the will, cannot be fully reconciled by man? Shall we therefore deny the perfection in God to support a liberty in ourselves? Shall we rather fasten ignorance upon God, and accuse him of blindness to maintain our liberty?

The Arminian says: Rather than blaming God for evil, let's blame him for ignorance instead.

The Calvinist says: Rather than blaming God for ignorance, let's blame ourselves for ignorance instead.

Dying with unconfessed sin

Michael Spencer discusses major problems in the modern evangelical church - namely the belief that we "add" to our salvation, or that if we die without confessing a major sin then we go to hell.

Dave's a blogger now

I heartily recommend you visit Dave's blogsite where he talks about the world, theology and Peak Oil.

Signposts is now closing

That's really annoying.

An Ebay solution to illegal immigration

I don't usually link to right-wing blogs, but Wile E. Coyote, a guest blogger at Carol Platt Liebau's blog, has proposed that US citizenship be able to be bought and sold - on the proviso that the sellers leave the country. I'll let him explain:

I propose that natural-born Americans be allowed to sell their citizenship on eBay, on condition they quit the country forever. Buyers would have to pass a background and medical check, and would receive a green card convertible into citizenship in 10 years.

Sellers will probably clear at least $100,000. Assuming 5% interest, they will enjoy an annual income of $5,000, which should suffice to live comfortably in Panama, Costa Rica, or West Africa.

Companies will no longer have to worry about getting H1-B visas for key foreign staff from an uncaring bureaucracy. The reparations crowd will get what it wants. The American tired and poor will become the rested and middle class of their new domiciles. And the country will get a fresh injection of the successful and ambitious; in fact, I expect banks to lend green-card-purchase money to these people in the same way banks offer automatic school loans to entrants at top business schools.

Sound like a crazy idea? What's wrong with a trial run of 10,000 transactions?

Liberal Christians

In many ways you could describe me as a "Liberal" - that is, I believe in a progressive society that is continually questioning its own attitudes and bias and is trying to improve itself over time.

But, on the other hand, I am also a "Conservative" in that I believe in Sola Scriptura, which means that certain beliefs of mine are determined by the Bible and are thus in harmony with the so called "judeo-christian belief".

Of course, the primary source of authority is the Bible - hence Sola Scriptura. Any time "liberal" or "progressive" beliefs come into conflict with the revealed word of God, I always side with God's word (the Bible).

There is, however, much that the Bible does not talk about, and this implies that Christians can still have varying opinions on things. As a "social liberal", I obviously think that greater government spending on welfare and higher taxes to pay for it is not a belief that is against the Bible. But, then again, nor is the idea that governments should be small and tax minimally either.

I'm saying this because Ali has a posting entitled "Social Liberals: Do they know what they are doing?" which is an interesting read. Check this out:

So what do I mean by the title of this post? Am I anti-liberal? No. In fact, I don’t believe a biblical Christian can afford to adopt a conservative or liberal label too strictly because biblical teaching overlaps on both sides and yet remains distinct. However, much of liberal thought has at its base the idea that humans are good and that people just want to get along.

It's good stuff. Go read it.

Tom Hinkle throws tomatoes

And they're very good ones too:

Our American society is quickly going the way of Europe when it comes to Christianity, and the "blame" for the increasing secularization of the American people can be placed directly at the feet of people like Bush and his Christian apologists, who mouth religious platitudes and then callously send our troops to a misguided war, without ever being able to admit that this was a grievous error.

Buy or sell at the BHT

Michael Spencer (iMonk) at the BHT has asked the members of the BHT to respond to five points he has put forward. The questions he asks are:

Buy = I agree/ this is good
Sell = I disagree/ not good

1. The Calvinistic resurgence in Southern Baptist life has filled SBC seminaries with young Calvinists in a denomination that has less than 10% Calvinistic churches. The result will be overwhelmingly negative for the denomination.

2. Daniel Radcliffe’s 10 minutes of on-stage nudity and simulated sex will not result in any real lasting controversies to affect his Harry Potter film role.

3. “Lost” will be canceled before the end of this season.

4. If you surveyed the average Sunday morning class of young adults (married or single/18-25) in the average Protestant church, you would find almost no one (less than 10%) who could explain the Gospel in a distinctly Biblical form.

5. There will never again be a Christian focused, major studio theatrical movie that will do anywhere close to the business of “The Passion of the Christ.”

Here are my opinions (below the fold)

1. Sell. My position is that Calvinism being injected into the SBC will improve it markedly, especially in reference to the 4th question. Michael's experiences of Calvinists have been overwhelmingly negative and I think that he fears an invasion of intolerant "TR's". I don't think this will happen. The Calvinists I see from the SBC and that I interact with occasionally are centred around the Founders Ministries' Blog and I have the utmost respect for most of them.

2. Buy. I agree with imonk that Daniel Radcliffe's nudity won't result in much at all. I fear that he will be a washed up actor addicted to prescription drugs by the time he is 24 while other actors from the film will become mainstream Hollywood actors. By the time he's 35 he will appear in a successful arthouse film by a quirky director and his career will flourish again.

3. Buy. I only watched half an episode of Lost. I think everyone has been drawn into the strange storyline in the same way as the X-Files and Twin Peaks... but have realised (like watchers of X-files and Twin Peaks) that the creators have even less an idea of what is going on than they do.

4. Buy. 10% is probably a realistic figure but it is shocking. There needs to be a generation of new pastors and preachers who go into these churches and begin to fearlessly preach the Word and preach the Gospel. That is why the Calvinistic "resurgence" will be so important to the life of American evangelicalism. Imagine all those churches full of starving believers finally getting a steady diet of expository preaching and exposure to the doctrines of grace.

5. Buy. "The Passion" was over-rated by Christians anyway. The fact that modern-day evangelicals have a movie that they can call "theirs" is disturbing considering the creator's status as an unbeliever. Mind you, Charles Finney is still a major influence on evangelical thinking, and he wasn't a believer either.

iMonk gets it right again

I don't need to say anything. Just read it.