Blogjam at the PJ Corral

I participated in a blogjam yesterday hosted by Pajamas Media. What’s a blogjam, you ask?

Well, a blogjam is where a bunch of people all sit at their computers typing about the same topic at the same time and interacting with each other’s statements in a slightly chaotic way. In this case, the bunch consisted of Paul Hoffmeister of Polyconomics, Russ Roberts of Cafe Hayek, and Andrew Roth of Club for Growth, with Larry Kudlow of Money Politics seeking to direct the discussion. I seemed to be the token “liberal” in the group.

The pre-jam instructions we received read as follows:

Exact title of the BlogJam TBD, but in a nutshell, you’ll be discussing Economics. …You may wish to prepare some initial thoughts on the topic.

So I dutifully attempted to think diligently about the topic of economics for the two days prior to jam-time. But no matter how hard you study up, it’s a difficult experience to prepare for.

Jamming began (synchronize your watches) at 10:00 a.m. PST– 3,2,1, everybody type! I found that by the time I hit the “submit” button on my entry, the pack had always moved on to a new topic, so that my little gems of wisdom always seemed to show up three comments later than they were supposed to.

Still, it was really a lot of fun. If you’re ever invited to a blogjam party, by all means, go.

And yes, you can show up in your pajamas.

20 thoughts on “Blogjam at the PJ Corral

  1. ben

    Wow, that was entertaining. I consider you to be sort of a centrist, to the right, say, of Delong. But compared to this crowd you’re a flaming communist. You tried to make a few points, but basically the conversation was “tax cuts, tax cuts, tax cuts, tax cuts, supply-side, supply-side, tax cuts, tax cuts, lalalalalala I can’t hear you.” If these are the people influencing economic policy in the Whitehouse we are really screwed.

  2. odograph

    Man, I read the thing before scaning down to ben and dryfly’s comments. I guess my reaction is similar.
    There were some strange positions there made as bald statements, without rationale or support.

  3. Adam Sacarny

    I think for anyone who knows the slightest bit about economics, you came off as the only one who had a clue. You can write out the whole supply side economic model in a few pages, but you can only believe it by keeping your head in the sand. Your citing the gold standard’s complicity in the depression was a much appreciated return to sanity.
    (FWIW, Russ did seem a lot more clued than the rest of them)

  4. Movie Guy

    Appreciate the read.
    I find it interesting that no one mentioned one word about (1) current account deficit, (2) trade deficit, (3) offshoring trends vs. domestic investments in industries, or (4) currency imbalances (if such exist). That’s almost laughable considering the economic implications.
    You came close by mentioning your concerns regading the U.S. auto industry. Of course, none of the other posters touched the auto industry, or the next major wave of offshoring which should result from the Delphi Effect.
    This reminds me, have you found time to read any of the auto manufacturers’ web site links that I posted under the following thread?
    December 02, 2005 – November auto sales
    Although those links didn’t generate any apparent interest on your blog, I have a few economist and industry friends who specialize in transportation and other areas of logistics who are actively working with me to address issues and concerns that extend beyond those that you expressed in your opening remarks of that post. One economist spent today reading the sales data by manufacturer, and we are in agreement that we’re observing more than a mere anti-SUV pattern.
    Again, thanks for the blogjam heads up.
    Good show.

  5. Michael H.

    Interesting read, I would have liked to learn more detail about what you were saying about investment being the driving force, not just a tax cut.
    It was a fun idea but so all over the place and brief that you couldn’t get a lot out of it. I think that next time maybe if the conversation were more focused it would be better, like what about tax cuts and what kind of tax cuts could help the economy, and then go from there in depth on the issues raised.
    Still, although I agree with the other comments it was an interesting read.

  6. Grzegorz

    Tax cuts are great, and the latest information in “Investor’s Business Daily” seems to confirm the increase in revenues after the statutory tax rate on capital and income has been reduced (Bruce Bartlett has also addressed this issue recently).
    Anyway, increasing revenue only to see it egregiously spent by Congress means we’re increasing debt in the future.
    Who’s fooling whom?
    Usually I can tolerate Kudlow, but he shied away from you (JDH) in favor of another PJer who echoed the merits of the ‘Laffer Curve’.
    Fiscal discipline anyone?

  7. dilbert dogbert

    Yikes! This is so 1990’s. I remember the kids doing this kind of thing on the computer. It was interesting as there was no flow control and there were multiple conversations going on. I was just passing by and could not figure out how the kids knew who was responding to who or why. Back to the future.

  8. TI

    “Negative personal savings rates are not a reason for concern when Americans are wealthy (household balance sheets are strong). Low savings rates are a sign of economic vitality.” (Paul Hoffmeister)
    “$12 trillion in new wealth with $4 trillion in new shareholder wealth. Those are amazing numbers.” (Andrew Roth)
    “We won the genetic lottery, folks. We live in the best country in the world at the best time in history. The only problem with the present is that it’s as close as we can ever get to the future.
    It’s a brave new world out there and I love every bit of it.” (Andrew Roth)

    Amazing! A brave new world, indeed. Reading those posts I understood that Roth has probably right – this is the best time, ever. But I don’t think that I will love every bit of what is coming… And neither will Roth. May be the Americans did not win in the lottery, after all. I remember well the time when people in my country started to repeat a similar phrase about winning in the lottery. It didn’t last long before we had the worst recession in our history. This kind of complacency is typical for the last phase of a bubbling boom.

  9. pgl

    TI – you focused on what bothered me as well. Dr. Hamilton was correct about low savings – and yet Roth et al. were trying to say how wealth was soaring. Over at Angrybear, we make two simple points: (1) saving = the increase in wealth; and (2) when measured in real terms, wealth per capita today is lower than where it was at the end of 1999. We – and others – having been making this point over and over to Kudlow and the National Review crowd, and yet he refuses to listen.

  10. pgl

    Adam – I’m not sure about Mr. Roth but Lawrence Kudlow has been caught in several episodes of stupity and/or mendacity by Brad DeLong. I’m betting that Kudlow reads DeLong but Kudlow keeps repeating himself when his argument has been thoroughly devastated. It is indeed shameless.

  11. TI

    In standard economic theory savings and investments are connected. And investments mean productive investments, meaning producing something that shows in GDP. Household wealth growth is not economic growth (as measured by GDP). It can generate growth through increasing propensity for consumption – the wealth effect. But still there is no such thing as pure consumption-led growth without investments.
    Even if rising consumption is the driving force, standard macroeconomics (Solow – and not only he) expects that more should be produced and investments (and saving) are needed for this. Even productivity boost needs new investments. Negative savings rate is more a sign of negative investments – not of a healthy economy. It is quite natural that this kind of economy becomes more and more indebted. Growing consumption demand is met by imports, not growing domestic production. OK, I thought this was something which every economist knows – but it seems not to be so.
    I cannot still see any “new economy”, but only “new economics”. I cannot understand the talk about the success of the “supply-side” economics – there is not much new domestic supply in the US – the supply comes from China and elsewhere. There is no evidence of capital tax cuts increasing investments.
    Yes, Adam and others, it is right to ask if those people really believe in what they are saying. May be they try to believe. I mean, they see that those “traditional” economists that have been warning about imbalances and hard landings have missed. In fact everything is just fine – for now. We can say: just wait. But how long? My experience is that when you start hearing that kind of “new” ideas at this level, it is a sign that those “old” ideas have problems, too. This is the challenge.

  12. JohnDewey

    Is it possible that the personal savings rate is not accurate or not that relevant? As I understand the calculation, it is a simple difference between personal income and personal spending. Some problems I’ve read about:
    1. Only retirement contributions and not retirement benefits are included on the income side. When defined benefit retirement plans become overfunded, generally through increases in equity valuations, retirement contributions will be halted. But retirees continue spending their retirement benefits.
    2. Capital gain income is not included on the income side. But capital gains taxes and expenditures following realized capital gains are included on the expense side.
    3. Reinvested earnings of corporations should be considered additional savings. I suspect these reinvested earnings have fueled economic growth more than new personal investment. As far as I can tell, reinvested earnings are not considered in the calculation of the personal savings rate.
    I think the combined net savings by households and business has grown the past five years. As I understand it, gross domestic savings has not because negative government savings offset all that growth.
    It seems to me that the risk to the economy is government spending, not lack of personal savings. But I’m just an amateur economist, so I’d appreciate insights from a real economist.

  13. spencer

    JohnDewey — you are right about corporate savings, but your ratios are much too low.
    Virtually all of investment comes from the corporate side. Only 11% of nonresidential fixed investment is by households and others subject to the individual income tax. So the tax cut on individuals has to have a very big bank for it to make much difference to the economy.
    The claims that cutting individual taxes leads to greater savings and investment may apply to an economy structured like the US economy of 1850, but it does not apply to the current economy.

  14. dryfly

    The claims that cutting individual taxes leads to greater savings and investment may apply to an economy structured like the US economy of 1850, but it does not apply to the current economy.
    But if your goal is to return to a society structured similar to the one of the 1850s… then maybe it does apply.

  15. JohnDewey

    I’m not sure what ratios you are attributing to me.
    I wasn’t meaning to offer an opinion about the impact of tax cuts – at least not here. I was just questioning Professor Hamilton’s remark about the personal savings rate. Because of the problems I listed, I’m wondering whether the personal savings rate tells us much.

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