People are Stupid: June 2008 Archives
Wow. He's getting so stupid that he's endanger of defying a different law of economics, namely that People Aren't THAT Stupid.
Witness, from Bloomberg, via hat tip to Greg Mankiw:
OK, first. If you say shit like "The issue of economics is not something I've understood as well as I should" all the time, then maybe you should either a) shut the hell up about economics or b) check your facts really hard before you go spouting bullshit about the subject.
Second, and this is a little related to the first point about being able to check your facts if you don't STFU, As it happens, John's statement is simply false. There are several very prominent economists that did indeed predict the housing crisis we're in, among them Dean Baker, who is, understandably, endlessly frustrated by all the idiots in the press and politics who keep saying that no one could have seen this coming, and Paul Krugman, whose predictions were not as dire as Dean's but definitely forbode some bad times for homeowners. Furthermore, there were a ton of economists, hell, there were a ton of journalists, who saw the dot-com meltdown coming. I mean, they didn't know exactly when, but they sure as hell knew that companies with negative net income were not worth $5 billion valuations.
And last, as Greg points out, let's be clear, John, that there is no magical other group of people who predicted all these things perfectly. But nice straw man attempt.
Oh, yeah, and WTF at the Bloomberg article NOT POINTING ANY OF THIS OUT AS BULLSHIT. It ends with the above quote as if this were some nugget of maverick wisdom. Seriously, when are the press going to do their jobs and ask the man some hard questions. On second thought, how about some questions that any competent college grad could answer?
Witness, from Bloomberg, via hat tip to Greg Mankiw:
[Senator McCain] has shown increasing disdain for any economist who questions his policy prescriptions. Earlier this month, he lashed out at critics of his proposal for a summer gas-tax holiday.Where to start. So much stupidity. Make him stop.
"You know the economists?'' McCain said June 12 at Federal Hall, near the New York Stock Exchange. "They're the same ones that didn't predict this housing crisis we're in. They're the same ones that didn't predict the dot-com meltdown. They're the same ones that didn't predict the inflation that's staring us in the face today.''
OK, first. If you say shit like "The issue of economics is not something I've understood as well as I should" all the time, then maybe you should either a) shut the hell up about economics or b) check your facts really hard before you go spouting bullshit about the subject.
Second, and this is a little related to the first point about being able to check your facts if you don't STFU, As it happens, John's statement is simply false. There are several very prominent economists that did indeed predict the housing crisis we're in, among them Dean Baker, who is, understandably, endlessly frustrated by all the idiots in the press and politics who keep saying that no one could have seen this coming, and Paul Krugman, whose predictions were not as dire as Dean's but definitely forbode some bad times for homeowners. Furthermore, there were a ton of economists, hell, there were a ton of journalists, who saw the dot-com meltdown coming. I mean, they didn't know exactly when, but they sure as hell knew that companies with negative net income were not worth $5 billion valuations.
And last, as Greg points out, let's be clear, John, that there is no magical other group of people who predicted all these things perfectly. But nice straw man attempt.
Oh, yeah, and WTF at the Bloomberg article NOT POINTING ANY OF THIS OUT AS BULLSHIT. It ends with the above quote as if this were some nugget of maverick wisdom. Seriously, when are the press going to do their jobs and ask the man some hard questions. On second thought, how about some questions that any competent college grad could answer?
I imagine good ol' John will become a recurring character in the people are stupid series, because, wow is that man dumb.
Recently John decided to demonstrates how much he cares about the environment by offering a $300 million dollar prize for anyone that invents a better car battery.
Newsflash, idiot: anyone that invents a better car battery is set him/herself up for a shitload more than $300 million for it.
As Tom Lee points out, via hat tip to Ezra Klein, it's not as if car companies are sitting around yelling at their R&D departments to stop working on battery improvements. Seriously, John, I know you are older than polyester, but I know a lot of smart old guys, so I'm going to have to come to the conclusion that you aren't ignorant of economics 101 simply because you went to college before Economics existed, but rather because you are just plain old stupid.
You want to help vs. global warming? Offer a billion dollar prize to somebody who can figure out how to reverse the damage done to the ozone layer. Because last time I checked, there is no huge market for that particular development, which means that anyone smart enough to do it isn't going to "waste their time" on that particular project.
By the way, it completely stuns me that the mainstream press let's John McCain get away with saying really, really genuinely stupid things all the time, particularly on things like economics, a subject in which he has already admitted to having no expertise whatsoever, without just once (one ****ing time!) calling him out for it. I mean, Hillary got more than her share of shit for supporting the gas tax holiday (which was a very stupid idea), but John, who came up with it in the first place, didn't have to face one single reporter asking him "Can you name any economists who support this proposal?". Not one journalist. Seriously?
Recently John decided to demonstrates how much he cares about the environment by offering a $300 million dollar prize for anyone that invents a better car battery.
Newsflash, idiot: anyone that invents a better car battery is set him/herself up for a shitload more than $300 million for it.
As Tom Lee points out, via hat tip to Ezra Klein, it's not as if car companies are sitting around yelling at their R&D departments to stop working on battery improvements. Seriously, John, I know you are older than polyester, but I know a lot of smart old guys, so I'm going to have to come to the conclusion that you aren't ignorant of economics 101 simply because you went to college before Economics existed, but rather because you are just plain old stupid.
You want to help vs. global warming? Offer a billion dollar prize to somebody who can figure out how to reverse the damage done to the ozone layer. Because last time I checked, there is no huge market for that particular development, which means that anyone smart enough to do it isn't going to "waste their time" on that particular project.
By the way, it completely stuns me that the mainstream press let's John McCain get away with saying really, really genuinely stupid things all the time, particularly on things like economics, a subject in which he has already admitted to having no expertise whatsoever, without just once (one ****ing time!) calling him out for it. I mean, Hillary got more than her share of shit for supporting the gas tax holiday (which was a very stupid idea), but John, who came up with it in the first place, didn't have to face one single reporter asking him "Can you name any economists who support this proposal?". Not one journalist. Seriously?
Wait...WHAT?
I never anticipated applying the Bizarro-World version of the fourth principle of economics to Greg Mankiw himself.
But today, Greg references the WSJ in his blog, in a manner that I can only presume means he agrees with the contents:
I know Greg is a smart guy (I'm not so sure about Steve), but this is...well...brain dead.
Seriously, by consuming more, you "grab a larger share of the consumption pie". Who invents this drivel?
Let me clue Steve and Greg in a little suttin'. When Jon Edwards "consumes" a $400 haircut, he may receive some emotional value, but his pie does not get any bigger (in fact, from an investment perspective this is a pretty fucking terrible deal for the former senator). When Paris Hilton buys a $5.9 Million house, sure, her pie gets bigger. But so does the pie of her real estate broker. And the construction firm that built that house, and all the contractors that work for him, and all the laborers that work for the contractor. When a wealthy person buys a Porsche, his "pie" does not get bigger (again, the re-sale value on that brand new Bentley? Not so high).
You want to know the easiest way to grab the biggest piece of the pie? Live way below your means and invest your capital in positive net-present-value investments instead of "wasting" it on consumption. Things you consume don't earn compound interest, most of the things you consume aren't assets at all, and the assets you do acquire through consumption can rarely be re-sold at book value. And yes, this is all true even after you account for capital gains taxes. Seriously, we learn this shit in Finance 101, Steve. And you work at the Journal.
News flash: for those of us who aren't rich, it is in our best interests that richer people save, since that consumption drives the economy. We like the fact that wealthier people have incentives to eat at outrageously expensive restaurants and get very expensive haircuts and get very expensive cars/boats/houses. Because most of the people who waiter or cook at expensive restaurants aren't rich, most of the stylists at expensive salons aren't rich, and most of the laborers at Porsche or BMW aren't very rich, and their lives would sort of suck if the demand for their products dried up. And Steve's implication that I would be richer because there are more Porsches to go around (or, relatedly, because Porsches get cheaper because there is less demand) if all the rich people stopped consuming is more than laughable.
Oh, it is entirely clear why Mr. Mankiw and Mr. Stevens want savings to be tax-free -- they are probably savvy with their money and do more saving than consuming (because they know that saving and investing leads to wealth, and consuming doesn't). And it is true that for the average american, who has way too much debt, saving more and consuming less would be very wise, and the government might do well to encourage that behavior among some income groups. But saying "Hey, that's unfair, look, the incentives for rich people is to buy lots of stuff and we all know that buying lots of stuff makes you even richer!" is, well, I'd say disingenuous but, are you kidding me? Steve, you're either being stupid or you are running a con job.
If you want to be progressive, incentivize the poor to save and the rich to spend. And don't give me any bullshit about how the markets need capital. The incentive scheme would have to be very perverse before wealthy investors would "spending their money on goodies" a better positive net-present-value investment than the stock market.
I never anticipated applying the Bizarro-World version of the fourth principle of economics to Greg Mankiw himself.
But today, Greg references the WSJ in his blog, in a manner that I can only presume means he agrees with the contents:
Steve in the WSJ:At this point I have to say...what the hell?
Like philanthropy, saving is an act of self-denial that enriches your neighbors (by leaving more goods available for them to consume). But unlike philanthropy, saving is punished by the tax system (via the taxes on interest, dividends, capital gains and inheritance). That's nuts. When you tax saving, you encourage people - wealthy people in particular - to spend more and grab a larger share of the consumption pie. "More consumption by the rich" should not be among the primary objectives of the tax code.
The alternative is to tax consumption....you can easily implement a consumption tax with a Form 1040 that says: "How much did you earn this year? How much did you save? Now pay tax on the difference." And you can make that tax as progressive as you like.
I know Greg is a smart guy (I'm not so sure about Steve), but this is...well...brain dead.
Seriously, by consuming more, you "grab a larger share of the consumption pie". Who invents this drivel?
Let me clue Steve and Greg in a little suttin'. When Jon Edwards "consumes" a $400 haircut, he may receive some emotional value, but his pie does not get any bigger (in fact, from an investment perspective this is a pretty fucking terrible deal for the former senator). When Paris Hilton buys a $5.9 Million house, sure, her pie gets bigger. But so does the pie of her real estate broker. And the construction firm that built that house, and all the contractors that work for him, and all the laborers that work for the contractor. When a wealthy person buys a Porsche, his "pie" does not get bigger (again, the re-sale value on that brand new Bentley? Not so high).
You want to know the easiest way to grab the biggest piece of the pie? Live way below your means and invest your capital in positive net-present-value investments instead of "wasting" it on consumption. Things you consume don't earn compound interest, most of the things you consume aren't assets at all, and the assets you do acquire through consumption can rarely be re-sold at book value. And yes, this is all true even after you account for capital gains taxes. Seriously, we learn this shit in Finance 101, Steve. And you work at the Journal.
News flash: for those of us who aren't rich, it is in our best interests that richer people save, since that consumption drives the economy. We like the fact that wealthier people have incentives to eat at outrageously expensive restaurants and get very expensive haircuts and get very expensive cars/boats/houses. Because most of the people who waiter or cook at expensive restaurants aren't rich, most of the stylists at expensive salons aren't rich, and most of the laborers at Porsche or BMW aren't very rich, and their lives would sort of suck if the demand for their products dried up. And Steve's implication that I would be richer because there are more Porsches to go around (or, relatedly, because Porsches get cheaper because there is less demand) if all the rich people stopped consuming is more than laughable.
Oh, it is entirely clear why Mr. Mankiw and Mr. Stevens want savings to be tax-free -- they are probably savvy with their money and do more saving than consuming (because they know that saving and investing leads to wealth, and consuming doesn't). And it is true that for the average american, who has way too much debt, saving more and consuming less would be very wise, and the government might do well to encourage that behavior among some income groups. But saying "Hey, that's unfair, look, the incentives for rich people is to buy lots of stuff and we all know that buying lots of stuff makes you even richer!" is, well, I'd say disingenuous but, are you kidding me? Steve, you're either being stupid or you are running a con job.
If you want to be progressive, incentivize the poor to save and the rich to spend. And don't give me any bullshit about how the markets need capital. The incentive scheme would have to be very perverse before wealthy investors would "spending their money on goodies" a better positive net-present-value investment than the stock market.
