The Ambrosini Critique

This is. And this has the potential to be even cooler.

This editorial argues the lesson from the depression is not that intervention is good thing and laissez-faire is a bad thing. This guy’s love for all things Roosevelt blinds him to this simple point.

Basically, my take on the depression is that Hoover massively screwed the pooch by intervening where he shouldn’t have and not intervening where he should have. Much of the damage was done by the time Roosevelt came into office, but he too made mistakes that prolonged the depression. One can make a reasonable argument that things were so screwed for so many people by the time Roosevelt came to office that policies to help those people, even if they increased unemployment or decreased GDP, were necessary. After trying to point this out a couple times in the comment thread, I’m accused of bad motives and spreading lies:

I’m going to be charitable and assume that this is because you’ve written before you’ve thought carefully about what you wanted to say, and I’m not going to assume you’re ignorant or lying.

But the Daniel Davies dictum applies here: good arguments don’t need lots of untrue things said about them.

By just suggesting Roosevelt made some mistakes and he did things to prolong the depression, I’m branded an idiot and its suggested that I’m ignorant or lying. I was going to write this reply, but it got to be too long:

Professor, we can fight about what is the proper counterfactual, but your appeal to them works in reverse. What counterfactual do you assume that puts the observed time-series below (in the case of unemployment) where they would have been sans New Deal policies? You’re such a fan of C. Romer… she says there was no moderation of macro time-series after the depression/war. If she’s to be believed, 1930’s unemployment, well into the Roosevelt administration, was much above historic levels (before or since). This seems to be a pretty good counterfactual. Why was unemployment so high in that decade? A legacy of Hoover policy and continuing poor macro policy by Roosevelt perhaps?

BTW, I buy Romer’s argument about Roosevelt’s monetary policy at the end of the decade got us back to a good equilibrium, but that’s not to say he didn’t make poor choices before that. But as you seem to misinterpreting me easily (and making frustratingly quick swipes at my motives), I’ll repeat that I don’t blame him as he was exploring uncharted territory in terms of macro policy.

In any case, you conceded the point that sometimes economic efficiency (unemployment) has to be traded off for policy that alleviates economic deprivation. This is the same as conceding Roosevelt’s policies to help the poor had the effect of extending the depression. Its an open question whether or not Roosevelt’s trade-offs were a bad thing.

Also, I’ve said that Roosevelt, given the state of economic science at the time, performed much better than Hoover and that Hoover’s interventions (in labor markets and with tariffs) made a probably-bad recession into a depression. That’s not the margin I’m arguing on, that’s not the argument the WSJ editorial (subtitled “Herbert Hoover was no proponent of laissez-faire.”) was addressing and yet you keep coming back to that. Its weird, really.

(PS – your appeal to Davies’ dictum is cute, but I never said anything that was false. The agriculture tariffs in 1930 had little effect on the 1938 unemployment rates in that sector by the argument I made above. I’ll admit my first two comments weren’t 100% clear as to what time periods I was talking about, but that’s why I clarified in a later post. Also, I made a case for using ba476 and you haven’t rebutted any of my arguments. Finally, I never mis-characterized what is being measured by that series as I made an argument for why we shouldn’t use “emergency” workers that, again, you didn’t respond to. But the data issue is moot. Unemployment was extraordinarily high under Hoover and then Roosevelt no matter which series you use.)

Clearly, its a mistake to stand in the way of love.

UPDATE: Later on, he wrote “Please go away, and don’t come back.” Cool. Never been banned from anybody’s comments before. Its funny that this is coming from an expert on the Great Depression. You’d think academic experts would be open different ideas about their area of expertise.

Prof. Peri spoke at GMU today about immigration. There’s an economic argument against immigration that says because most immigrants are unskilled, they reduce the wages of native unskilled workers. These are the most economically vulnerable members of society, so we should care about the effect immigration has on these folks.

Well, one solution would be to tax immigrants and give the proceeds to native unskilled workers. This would make everyone better off because the natives would be compensated for lost wages and the immigrants would get to work in America where their wages are much higher than in their sending country. Besides being a little perverse, this policy would be hard to implement. You’d have to figure out who exactly is “low-skill” and you’d need to spend money to collect taxes from the immigrants. Plus, you’d get some inefficiency from the fact that people would switch from “high-skilled” to “low-skilled” jobs so they could get in on the action.

Apparently, Prof. Peri offered another solution in today’s talk. (GMU is suppose to be all internet friendly… where’s the video feed?!) Let more high skilled workers into the country. Open the flood gates. These engineers from India would compete with high-skill native Americans, thus increasing the (relative) wage of low-skill workers. Problem solved!

So you would think the prospect of a black man winning the presidency would leave no opportunity for anything but optimisim about the progress of our nation, right? Its evidence that someone talented enough can attain the most powerful office in the land whatever the color of their skin, right? RIGHT?

Don’t worry, the esteemed Cornell West helps us back down from that sense of progress, to understand what’s really going on:

“The empire is in decline, the culture is in decay, the democracy is in trouble, financial markets near collapse,” said Princeton professor Cornel West. “It’s almost Biblical. And you can imagine what the black brothers and sisters in the barbershops and beauty salons say: ‘Right when the thing is about to go under, they hand it over to the black man.’”

Asshole.