The Fever Swamps of Ricochet; or, How Not to Talk About Macroeconomics

 

Ricochet is a great place to discuss all sorts of things. Guns, for example. When it comes to firearms, Ricochetti — in contrast to the left-leaning media — know what they are talking about, can cite relevant facts and figures, and discuss the issues calmly and reasonably.

Unfortunately, when it comes to macroeconomics, all too often the roles are reversed. Which is a shame, because leftist approaches to the macroeconomy are disastrous, and we need conservative policies to turn things around. It helps no one when otherwise excellent Ricochet conversation turn to economic matters and begin to resemble the fever swamps that characterize leftist discussion of firearms.

I see three problematic trends in recent Ricochet threads.

1. Ignorance. When a reporter, pundit, or politician can’t distinguish between automatic and semi-automatic weapons, we rightly consider that ignorance disqualifying. If you haven’t bothered to do your homework on basic questions, why should we trust your policy prescriptions? Similarly on economic matters: If you haven’t bothered to learn some basic mechanics of how, say, an inflation index is constructed, and the tradeoffs involved, your other claims won’t be very persuasive — even if they may be right. I’m not saying you should shut up and listen to the experts, but you should be honest — first and foremost with yourself — about the limits of what you know and be willing to learn more.

2. Non-falsifiable claims. One of the challenging things about discussing guns with a lefty is that the evidence doesn’t seem to matter. Do more guns cause less crime? Impossible — that’s counter to my intuition! And if you happen to get through on that point, you often run up against a wall: So what if it’s true — children are dying! Don’t bother me with data. A number of commenters on Ricochet have, sadly, taken such a non-falsifiable approach to macroeconomic matters, especially in support of the idea that inflation is understated by official figures. And worse, some Ricochetti will tell you that the data must not only be faulty, but indeed manufactured to produce “the government’s” desired outcome. Aside from the fact that there are thousands of individuals and dozens of agencies involved in the dissemination of the data, consider: do you trust government statistics on crime and gun ownership? After all, it’s the same government and it has as much incentive to doctor those statistics as the economic ones.

3. Ends justifying means. After the Newtown school shooting, I remarked to a liberal friend that I found it disgusting how gun control advocates were exploiting the tragedy to push unrelated measures, things that never would have prevented the tragedy in the first place. He took umbrage at that. If we don’t take advantage of the fact that people are emotional about the issue now, these measures will never get passed! These are the right things to do, so there’s nothing wrong with leveraging voter ignorance to achieve them. This kind of pandering comes from the same impulse as Dan Rather’s reliance on fraudulent documents in reporting, and the “fake but accurate” defense. That a narrative is consistent with your prejudices — or voter prejudices — doesn’t make it true. Your personal experience is true for you, but that doesn’t mean you’ve perceived it accurately, or understood it in context, or that it reflects a larger reality. Of course, to win political battles, we need to tell stories of how the economy is affecting people. Of course, to win political battles we need to tap into voter perceptions and voter experience, not rely entirely on voter reasoning. But does that mean we should craft all our stories to exploit voter ignorance? To what extent are we supposed to subordinate the evidence to the narrative? As conservatives, let’s make sure that our narratives reinforce the truth rather than contradict it — whether on gun policy, foreign policy, or economic policy. Otherwise, just as Democrats have failed to persuade voters on guns, we will fail to persuade voters on the disasters of leftist economic policy, and on the promise of conservative approaches to make things better for them and their families.

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  1. EThompson Member
    EThompson
    @

    Carol:

    Is this related to Jim P.’s criticism of Amity Schlae’s column on NRO today about inflation? I am no economist but, I am inflamed by those who continue to tell us there is no inflation, because I buy the groceries. They argue that say, electronics and cell phones are cheaper, but I don’t buy flat screen TVs and new laptops once a week. Lower housing prices only help if you are in the market for a house. Better cars, even better fuel economy don’t help when I have to fill up my old car once a week at $3.89. We replaced the gutters in the front of our house 4 years ago due to some drainage issues. Two years later, called the same company for the back of the house, the estimate came, and the price ( same linear feet ) was doubled. This must be a mistake, I say. No, they say – aluminum prices are way up. So, when they say there is no inflation, I hear ” who you gonna believe, me or your lying eyes?”

    I couldn’t agree more with your arguments and I have been making the same ones for five years. Let’s look at what costs us money: housing, college tuition, and even cars; in other words, the three most important expenses in a typical American life.

    In addition, labor costs- particularly the undocumented- have become ridiculously high. Illegal workers are all too enfranchised to collect far more than  minimum wage for unskilled labor and no language fluency as they contribute nothing to the economy and send home a high percentage of wages to Mexico while burdening schools, prisons, and ERs with increasingly escalating costs.

    • #31
  2. AIG Inactive
    AIG
    @AIG

    Excellent post Son of Spengler.

    I have not a word to add.

    • #32
  3. Tuck Inactive
    Tuck
    @Tuck

    FloppyDisk90: @26:

     “…the CPI is designed to exclude investment items.”

    But after that post I realized that I was conflating two items: what is included in CPI, and what the Fed uses CPI for.  The Fed controls the money supply, and hence inflation, ultimately.  What’s important about the data is how it’s used.

    • #33
  4. JimGoneWild Coolidge
    JimGoneWild
    @JimGoneWild

    Hmmm!? Was Son of Spengler yelling at us or just on a rant?

    Spengler, can you be a little more specific? I’m confused about what you mean. Are you discussing debate content or debate style? Our lack of knowledge? What do you consider ‘macroeconomics’?

    • #34
  5. user_554634 Member
    user_554634
    @MikeRapkoch

    Okay, wait a minute. There is a world of difference between raising an issue for discussion–and critique–and suggesting that the writer is a conspiracy theorizing, class warring, idiot. I’m a lawyer and have read comments by non-lawyers who, on occasion, are not be familiar with the minutiae of the legal issues raised in a particular case. I also think it safe to say that some commenters may have gotten their information from secondary sources rather than the text of an opinion. Does that mean they have no right to raise questions or challenge the wisdom of the court? I might even argue that unless the commenter has a law degree, years of experience, and is familiar with the caselaw or statutory history upon which a court of law relies, they ought hold their piece. 

    That would be unbridled arrogance on my part.

    When I posted on inflation a few days ago I got clobbered by the experts. I responded with sarcasm, but then dropped it because there was little point in commenting on the response. 

    I raised an issue. I guess I should shut-up. But then I guess the non-lawyers should shut-up too.

    • #35
  6. Midget Faded Rattlesnake Member
    Midget Faded Rattlesnake
    @Midge

    Mike Rapkoch:

    Okay, wait a minute. There is a world of difference between raising an issue for discussion–and critique–and suggesting that the writer is a conspiracy theorizing, class warring, idiot…

    When I posted on inflation a few days ago I got clobbered by the experts. I responded with sarcasm, but then dropped it because there was little point in commenting on the response.

    I raised an issue. I guess I should shut-up…

    Mike, if your OP had just been conspiracy-theorizing, class-warring nuttiness, do you think the editors would have promoted it? Rather, you must have persuasively posed a question that many ordinary people have about inflation.

    The comments (not just your comments, but a lot of people’s comments), got overheated, though, and your sarcastic replies to the “expert clobbering” may have easily been interpreted as unwillingness to listen.

    (You know, incidentally, that if I’m trying to encourage you – or at least un-discourage you – it’s not because I regularly agree with you.)

    • #36
  7. FloppyDisk90 Member
    FloppyDisk90
    @FloppyDisk90

    Tuck:

    FloppyDisk90: @26:

    ”…the CPI is designed to exclude investment items.”

    But after that post I realized that I was conflating two items: what is included in CPI, and what the Fed uses CPI for. The Fed controls the money supply, and hence inflation, ultimately. What’s important about the data is how it’s used.

     Then the issue is not if the CPI is being manipulated with an intent to deceive, it’s that you don’t agree with how the Fed is interpreting the data for the purpose of informing monetary policy.  Based on the evidence you provided I concede the later…it doesn’t bode well.

    • #37
  8. user_554634 Member
    user_554634
    @MikeRapkoch

    MFR:

    I wouldn’t bother with posting–or Ricochet for that matter–if I didn’t want debate or expert insight. I learned a great deal from SoS’s insights, and I appreciate that. But one commenter referred to my post as a “joke.” Now I’m all for spirited debate–actually welcome it–but that sort of reply is less than helpful. The commenter followed this with an analysis of the data, which was great, but the initial ad hominem was hardly necessary. 

    As for my sarcasm, I left things alone afterwards precisely because there was no point in taking the discussion further.. 

    I certainly don’t expect everyone to agree with me, though I appreciate your unencouragement(-:. Actually, I don’t expect anyone to agree with me.

    I practiced law for 25 years, and in the latter years was called every dirty name in the book–by other lawyers. I didn’t respond and consider myself to have a high threshold for  insult. I just don’t typically get mad.  On the other hand, I am not a wall flower. You and I have had some spirited disagreements, but I’ve never been offended.

    • #38
  9. user_966256 Member
    user_966256
    @BobThompson

    ‘Macroeconomics and macroeconomics policy’ sounds like a big government activity that ‘statists’ would certainly find invigorating. It sounds like it is to a free economic system as gun control policy would be to individual freedom to bear arms. Let’s see, must one be a conspiracy theorist in order to suspect the employment, inflation, poverty numbers are manipulated and should not be accepted as trustworthy? I’ll come back and consider this issue after I regain trust in the IRS, EPA, BLM, State Department, Justice Department …

    • #39
  10. BastiatJunior Member
    BastiatJunior
    @BastiatJunior

    Son of Spengler,

    Just a quick question.  Is questioning the CPI calculation methodology OK?

    • #40
  11. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    I think plenty of the Ricochetoisie question how crime stats are compiled/reported, just as  plenty question how inflation, employment, and other economic statistics are compiled/reported.

    For example, in the recent thread about how the violent crime rate started falling after 1995,  there was much discussion about how the trend lines look different depending on what year you use as your baseline.

    Also, how crimes are defined changes over time, stats based on police records may reflect changes in the rate of crimes being reported rather than the rate of crimes being committed, reporting practices may vary between jurisdictions, etc.

    Furthermore, many “violent crime” stats don’t go much further back than the 1960s. To compensate, researchers often use the homicide rate as a proxy since it goes back to the 19th century. That’s a problem because over time hospitals got better at saving lives, which clearly affects what’s counted as “homicide” vs. “assault” over time.

    My point is simply that I don’t think it’s fair to say that the Ricochetoisie trusts crime stats but dismisses econ stats. Both statistical sets suffer from many of the same problems.

    • #41
  12. J Climacus Member
    J Climacus
    @JClimacus

    Unfalsifiable claims are not the preserve of Fed haters. The main argument of supporters of the Fed is that the situation since 2008 would have been a whole lot worse had the government not bailed out the banks and the Fed spread easy money around. The smug confidence with which this is usually asserted, even though it is entirely unfalsifiable and purely speculative, is among the more irritating features of the discussion. It doesn’t matter how many charts and lectures on inflation indices surround this assertion – it’s still unfalsifiable.

    The inflation rate is also  unfalsifiable, if we take it as a measure of the effect of the Fed’s actions. The CPI says prices have been rising 2% or whatever since 2008. What would they have been without the Fed’s easy money policies? They may very well have declined – deflation rather than inflation. So the baseline isn’t necessarily 0%. For all we know, the Fed may have inflated prices 5 or more percent annually from what they otherwise might have been.

    • #42
  13. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    …cont.

    In the case of econ stats, is it not true that the methodologies used by governments to calculate inflation, poverty, and/or unemployment have changed over time, but that historical stats are still often (usually? always?) compared against modern stats as if they were calculated the same way, thereby exaggerating the health of today’s economy compared to, say, the 1930s?

    • #43
  14. Xennady Member
    Xennady
    @

    1. I hope I’m not being uncivil, but yes you are telling us to shut up and listen to the experts. The government has a blindingly obvious motive to understate inflation. It has the means to do so. It not only has the opportunity, but obviously admits the index has been recalculated. I’m going to believe my lying eyes. 

    2. About those non-falsifiable claims- I’ve asked how the high Carter-era inflation numbers can be correct since they were supposedly calculated using failed methodology, which if used today would produce a much higher number. On the other hand, if the methodology used today was used by the Carter administration the Carter-era inflation would have been much lower. Presumably, everyone owes Carter an apology for believing his term had high inflation. Since you’re an expert please explain this conundrum.

    3. To be honest, I have no idea why I or any other supposed conservative should accept unquestionably anything claimed by the apparatchiks of the regime. The ends certainly justify their means, and I think we should call them on it instead of tamely refusing to question their lies.

    • #44
  15. Valiuth Member
    Valiuth
    @Valiuth

    So what explains the perception of inflation in food and gas prices if inflation is really minimal? Are people just deluded or is there a section of the population that is actually experiencing inflation like effects because of stagnant or reduced income. To me it seems that what matters most is if people are seeing their disposable income shrinking. The fact that technically inflation isn’t the cause seems secondary really. 

    In a quest for technical precision we risk being able to address peoples problems. Furthermore if we believe that Democrats economic actions are responsible an overly technical and precise answer servers to provide them with rhetorical cover. Cover they will use to launch many less technical and far more disingenuous attacks. I guess among ourselves here we can afford to be as technically precises and convoluted as we wish to be. We have an interested audience that will take the time to carefully read and engage the arguments and evidence. Elections are not such forums (for better or worse). 

    We need a simple truth, and a singular solution with which to engage the Democrats.

    • #45
  16. blank generation member Inactive
    blank generation member
    @blankgenerationmember

    Economics. 

    The science that explains everything and predicts nothing.

    • #46
  17. user_966256 Member
    user_966256
    @BobThompson

    blank generation member: Economics.  The science that explains everything and predicts nothing.

     For anyone here who believes we are talking about a science where the notion of macroeconomics is a practical element, please explain how liberals(leftists) and conservatives invariably have different macroeconomic actions to solve any given macroeconomic problem.

    • #47
  18. Salutary Neglect Member
    Salutary Neglect
    @TheUnLeft

    Mike H:

    I’ve heard that macroeconomics is mostly magic, and no one really understands it, including the economists that study it; they just pretend to. And by magic, I mean everyone is probably wrong.

    My economic history professor only required intermediate microeconomics as a prerequisite.  When asked why, she said, “When the macro-economists figure out what macroeconomics is, I’ll require it then.”  It will be a long wait, I’m afraid.

    • #48
  19. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    Valiuth: To me it seems that what matters most is if people are seeing their disposable income shrinking.

    Well, that depends on whether the shrinkage in “people’s” disposable income is due to inflation or to a reduction in “people’s” productivity.

    • #49
  20. Midget Faded Rattlesnake Member
    Midget Faded Rattlesnake
    @Midge

    Bob Thompson:

    For anyone here who believes we are talking about a science where the notion of macroeconomics is a practical element, please explain how liberals(leftists) and conservatives invariably have different macroeconomic actions to solve any given macroeconomic problem.

    It is not uncommon in the history of science for there to be two (or perhaps more) different schools of thought battling it out with each other, with scientists choosing sides for essentially “unscientific” reasons (such as who mentored them, or other cultural or religious preferences that made one side seem more attractive to them than the other). In noting this, I’m not claiming that economics  is  a hard science, just that the presence of such a split isn’t proof that something  isn’t  a science.

    People doing science aren’t bloodless creatures, devoid of passions or prejudice. It’s not the impartiality of the scientist, but the rigor of the authentication process that makes an activity a science.

    • #50
  21. Valiuth Member
    Valiuth
    @Valiuth

    Misthiocracy:

    Valiuth: To me it seems that what matters most is if people are seeing their disposable income shrinking.

    Well, that depends on whether the shrinkage in “people’s” disposable income is due to inflation or to a reduction in “people’s” productivity.

     The cause of a problem does not change the problem, though it may guide a solution. Do we have a problem with incomes?

    • #51
  22. Idahoklahoman Member
    Idahoklahoman
    @Idahoklahoman

    In part I agree with you about right-wing ignorance of economics. Sometimes. I have yet to find a liberal with even a rudimentary understanding of supply and demand, the role of incentives in large populations, or the distinction between tax rates and tax collections. But I am not willing to acknowledge that concerns of inflation are necessarily fever-swamp material.

    Face it, “quantitative easing” over the past five years has pumped billions of dollars into the hands of the financial institutions, and continues primarily because the official statistics show little inflation. Are they true? We certainly don’t feel like it’s true: our gas bills and grocery bills have gone up while our paychecks have stayed the same. And, in fact, food price indices show significant increases… but we learn that food prices aren’t included in the inflation indices, despite the fact that food is a significant part of the budget for most middle class people. There may be valid reasons for constructing an inflation index in this manner, but it is understandable that people have doubts.

    • #52
  23. Idahoklahoman Member
    Idahoklahoman
    @Idahoklahoman

    Where I get frustrated is with the magical thinking endemic among conservatives regarding tax cuts. Just as liberals seem to believe the pseudo-Keynsian fantasy that government spending magically turns into economic growth, many conservatives believe that all tax cuts magically turn into larger tax receipts. They don’t take into account the differences that may exist at different times in history; slashing marginal rates from 79 percent to 30 percent is likely to have a disproportionately different effect than cutting rates from 36 to 32.

    • #53
  24. blank generation member Inactive
    blank generation member
    @blankgenerationmember

    I think this thread got started by the inflation talk.  Is everyone talking about the same thing when they say inflation?

    For example there is the CPI put out by authoritative sources which has been pretty flat.  I believe that they are taking supply and demand into the equation and overall it looks 1-2%.

    But when I go buy beer, eggs, butter, and milk, it’s not 2% since last year.  Is that inflation or competition from other sources for the same stuff?

    Is inflation a leading or lagging indicator, in economic parlance?

    • #54
  25. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    blank generation member: I think this thread got started by the inflation talk.  Is everyone talking about the same thing when they say inflation?

    “Inflation” and “deflation” refer to an increase or decrease in the total money supply.

    The Consumer Price Index is not, strictly speaking, a measure of inflation. Inflation is one cause for fluctuations in the prices of consumer goods, but not the only cause.

    For example, weather influences the price of food, and conflict influences the price of oil, even if there is no change in the money supply.

    The CPI is used as a proxy for inflation because it’s easier to look around and calculate how much things cost than it is to independently verify a government’s accounting for how many dollars actually exist at any given time.

    If you don’t trust the way a government calculates the consumer price index there are private alternatives for the information. There isn’t really a similar alternative for information about the total money supply.

    http://www.fgmr.com/us-dollar-money-supply-is-underreported.html

    • #55
  26. user_1030767 Inactive
    user_1030767
    @TheQuestion

    I don’t know much about economics.  That’s how I managed to stay a progressive for so long.

    I try to stick to debunking left-wing arguments that are so mathematically preposterous that even someone as ignorant in economics as I am can see through them.  My left-wing Facebook friend used to constantly post about the multi-million dollar salaries of CEOs and how ridiculous it was that they claimed they could give their employees a measly $7 dollar per hour raise.  Anyone proficient in grade school math can figure out that $20 million/year is  a trivial amount of money when paying the salaries for a couple million employees.  I would explain the silly math every time, and I think he’s learned not to share those posts anymore.

    • #56
  27. user_358258 Inactive
    user_358258
    @RandyWebster

    I wouldn’t trust the government if it told me the sun rises in the east.

    • #57
  28. user_358258 Inactive
    user_358258
    @RandyWebster

    So, if economics is a science (which I doubt), which branch should have been able to predict the dot.com bubble, or the housing bubble?  Both?  Either?  Neither?

    Did one?

    • #58
  29. Tuck Inactive
    Tuck
    @Tuck

    FloppyDisk90:

    Tuck:

    FloppyDisk90: @26:

    ”…the CPI is designed to exclude investment items.”

    But after that post I realized that I was conflating two items: what is included in CPI, and what the Fed uses CPI for. The Fed controls the money supply, and hence inflation, ultimately. What’s important about the data is how it’s used.

    Then the issue is not if the CPI is being manipulated with an intent to deceive, it’s that you don’t agree with how the Fed is interpreting the data for the purpose of informing monetary policy. Based on the evidence you provided I concede the later…it doesn’t bode well.

     Yes.  Very well put, and nicely done.  I do also think the CPI is not really indicative of the true rate of inflation as calculated, but I don’t think it’s malicious or being done with bad faith.  Apparently CPI was originally designed to help with cost-of-living adjustments, which is why it’s calculated the way it is with regards to investments and housing.

    “Housing Bubble? Don’t Rely on CPI to Tell You, CD Howe Says”

    “Mr. Bergevin calls on Statistics Canada to develop a separate inflation indicator using the so-called net-purchases approach, which measures changes in market prices for houses, and is therefore more sensitive to booms and busts.”
    http://blogs.wsj.com/canadarealtime/2012/09/12/housing-bubble-dont-rely-on-cpi-to-tell-you-cd-howe-says/

    The paper’s here:

    “Housing bubbles and the Consumer Price Index: A Proposal for a Better Inflation Indicator”

    http://www.cdhowe.org/pdf/Commentary_362.pdf

    • #59
  30. Nick Stuart Inactive
    Nick Stuart
    @NickStuart

    Ricochet is like a cocktail party. People gather in groups discussing this and that. The topics and quality of the discussion vary depending on who’s in the group. My knowledge of economics macro and micro is limited to what I remember from college econ classes 30 years ago.

    Distill it down to the words of wisdom I received from a commercial real estate broker some time back:  “More is better than less, sooner is better than later.”

    • #60
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