Wednesday, March 6, 2013

Comic of the day

Greg Mankiw posted this lovely "comic of the day." He called it "not completely fair." I'm not sure what he meant.

Perhaps it's in need of a better caption. To be fair to Keynesian economics, perhaps the caption should continue,

"When you're done, another half a box will magically appear on the wall." 

Maybe this is a good time for a cartoon caption contest!

28 comments:

  1. Isn't a fundamental assumption of theoretical Keynesian busywork that you get *paid* for it? If there was money in the box, then it would be closer. It would also probably be a useful service for the cyclically unemployed.

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    1. >>>It would also probably be a useful service for the cyclically unemployed.

      If you're so worried about the "cyclically unemployed," then just GIVE them the money in the box and don't bother breaking the glass and sweeping it up, which produces nothing and wastes everyone time.

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  2. I just hope it isn't the cobbler's kid again. His rap sheet is long enough.

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    1. That joke made my day.

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  3. This comment has been removed by the author.

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  4. I'd keep the caption the same, but put the broom on the chain outside the box, and the hammer inside the box. After all, it's more effective at creating work if the tools are inappropriate.

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  5. Cochrane's box might read: "In case of fire, there is no fire just rational autoarsonists."
    Mankiw's might read: "In case of Democratic administration, do nothing (and especially don't read the Economic Report of the President 2004-2005)."

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  6. I think the caption should be, "In case of nothing to do, break glass and then use some capital that would probably more productive elsewhere to pay someone to clean it up and replace it. Repeat as necessary." To long?

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  7. "In case of nothing to do, break glass, sweep up glass, apply for Buy American Silica To Improve Affluence Today (BASTIAT) tax-credit to purchase new glass, put it all back in the box and cover"

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  8. I'd say it's unfair to Keynesianism once you accept that Keynesianism is a just an inefficient way of implementing monetarism, since (like many economic models) the cartoon contains no money.

    This is somewhat off-topic, but I recall our host scoffing at the notion that central banks can make credible promises. What does he think of the recent upticks in the anticipated inflation of the yen? Seems to be roughly in line with the BOJ's newly announced inflation targets. And this in a currency that seemed impervious to large increases in M0 and/or government deficits. Jawboning seems rather effective.

    Pemakin, that is a great acronym.

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  9. In 2008 Mankiw wrote the following in the NYT:

    In 1936, Keynes wrote, “Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slave of some defunct economist.” In 2008, no defunct economist is more prominent than Keynes himself.

    And he thinks the cartoon is unfair?

    Anyway, I would just replace "nothing to do" with "low aggregate demand".

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    1. "In 2008, no defunct economist is more prominent than Keynes himself"

      Uh? Karl Marx was also very popular one day

      The greeks had mythology and we have keynesianism

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    2. Amazing stuff

      Before taking after Keynes people ought to actually read what he wrote.

      He did not believe that deficits would help a country with large current account deficits like the United States. In the 1930s he advocated that the US, with large current account surpluses, run deficits. Today, he would advocate that deficits should be run by China. M. Pettis covered this in several posts several years ago. We have, for the last six years, been proving Keynes correct. Spending money on imports from China is not going to create jobs here!! All China has been doing is buying our debt. That is not investing in the United States. Such a policy may be making cheaper goods be available on credit, but it has done nothing about jobs, jobs, jobs.

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    3. Why did we ship American jobs overseas? Wages, wages, wages.

      It's not about investing in the US...it's about benefiting the consumer. As Bastiat said, "Treat all economic questions from the viewpoint of the consumer, for the interests of the consumer are the interests of the human race."

      Regarding the comic of the day...why not replace the broom and dustpan with a gun? Then the caption could say, "In case of nothing to do, break glass and then shoot yourself in the foot". I mean, it's pretty much a war...and wars, just like hurricanes, stimulate the economy...right?

      Or you could put money in the case..."In case of nothing to do, break glass and then spend other people's money". I'm sure Friedman and Bastiat would have appreciated some good legal plunder jokes. Spending other people's money definitely stimulates the economy.

      Hmmm...what would work for the preference revelation problem? You could put a juicy T-bone steak in there..."If you're a vegetarian...break glass and then eat this steak."

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    4. Bastiat was wrong. First, see events leading to the present Lesser Depression which were all about putting the consumer first. See China, which has grown by putting the consumer last. We grew the United States through mercantilism that put consumers last. Give us an example of a successful economy built on consumer first. Does German put consumers first?

      Second, which comes first, being a wage earner or a consumer?

      Third, but for shrinking imports, how do we create jobs here?

      Fourth, since we are paying for our China imports with gov't debt, how is that not spending other people's money?

      Nor did you read my comment. The entire point of my comment is that Keynes would not advocate deficit spending in the United States, today. (He would advocate deficit spending by China, until it eliminated its current account surplus). I don't either. I advocate what does work, has been proven by history to work, strong mercantilism.

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    5. Bastiat was wrong? The only thing Bastiat got wrong was the preference revelation problem. Something tells me that you know as much about the preference revelation problem as you do about China's history. Read about the Great Leap Forward...and then read about Deng Xiaoping... and then try again. Actually, before you try again, make sure that you know exactly what J.S. Mill said about China.

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    6. Bastiat was wrong?

      Yes, as shown by the fact that successful economies today are not putting the consumer first.

      Today, does China put consumers first? No. Germany? No.

      To raise our exports we need to let the dollar fall, which will increase the price of imports and hurt consumers. But such will be better overall, as American made products become relatively more affordable and production (and employment) rises here.

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  10. You left out the part, "If the floor is still not clean, what is needed is more broken glass."

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  11. First you need a regulatory warning on the cover that a permit, with proof of payment of the permit fee, is needed prior to using the emergency kit and that the application form may be found at emergencypermits.gov. Additionally, you need a can of dirt to throw on the floor prior to commencing any clean up. EPA certification of the dirt as qualified 'clean dirt' is required and qualification procedures may be found at epa/emergency permits/cleandirtpermitting process.gov. Lastly, be aware that Department of Labor standards will apply to all personnel and procedures who use or may use said emergency kit. DoL standards have yet to be finalized and you may find updates on the status of these required regulations at DOL/evolvingbutasyetunknownstandards/wouldyouliketomakeacampaigncontribution/gov.

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    1. Brown you statement is a deliberate distortion of safety regulation by OSHA.

      Here is a more accurate account of how criminal businesses are and why we need constant vigilance on work place safety:

      New York Contractor Faces Criminal Penalties for Role in Illegal Asbestos Removal

      On November 20, a Rochester, New York jury convicted Keith Gordon-Smith, the owner of a Rochester-based asbestos abatement company, Gordon-Smith Contracting, Inc. (GSCI), on eight separate charges for knowingly violating provisions of the Clean Air Act regarding handling asbestos in the workplace.

      The jury also concluded that Gordon-Smith had lied and falsified evidence in order to hide the asbestos violations, notably at a demolition site in Rochester – a decision which Ignacia S. Moreno, Assistant Attorney General (Environment and Natural Resources Division, U.S. Department of Justice, or DOJ) said was meant to send a “strong message” to potential future violators in the asbestos remediation industry that the DOJ has zero tolerance.

      The charges include two counts of forcing GSCI workers to breach established asbestos remediation rules – violations occurring between January of 2007 and May of 2007, when GSCI workers were ordered to tear out copper, scrap metal and ceiling tiles from the six-story west wing of Genesee Hospital, documented as containing more than 70,000 square feet of asbestos.

      The tear-outs were ordered because Gordon-Smith reportedly had a written agreement with the site owner that returned him (Gordon-Smith) half of the salvage value of the metals recovered.

      As a result, GSCI workers were so heavily exposed to the asbestos on and around the pipes and other metal that it “fell on them like snow”, according to testimony before the jurors. Worse yet, the workers were not provided with any protective clothing and often wore their asbestos-contaminated work clothing home, exposing yet another entire segment of the population to asbestos’ dangers and possible futures as mesothelioma sufferers.

      Asbestos is the leading cause of asbestosis, a progressive respiratory disease like emphysema that is generally acquired after long-term, extensive exposure to asbestos, as in a mine or a factory setting where asbestos is manufactured into other products.

      Asbestos is the only known cause of mesothelioma, a cancer of mesothelial tissues that can lie dormant for up to five decades before exploding into a highly aggressive, incurable cancers that usually claim patients’ lives within a year of diagnosis.

      The jury convicted GSCI and its owner of lying to an inspector from the Occupational Safety and Health Administration (OSHA), a division of the U.S. Department of Labor. This inspector reportedly visited the remediation site three times in September and October of 2007, in response to worker’s complaints, and on each occasion Gordon-Smith told the inspector that workers had not removed any copper pipe or other materials.

      Look at the trillions in damages caused by businesses having knowing exposed workers to asbestos, alone.

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    2. Agree completely. That's why we need certification of the dirt as qualified 'clean dirt' before it can be operational dirt.

      Delete
  12. "In case of nothing to do, break glass, sweep it up, then spend the next six years reading Krugman columns twice a week about why you should break it again."

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  13. You all know that Keynes's story about burying money in holes then selling leases to allow people to dig it up was actually just part of an argument against the gold standard, right?

    Keynes was saying that, instead of people labouring to dig up gold for money, one could simply bury money and get people to dig it up (alleviating unemployment) or indeed it is more preferable to get people to do useful work (build roads, hospitals etc.) and pay them for that instead.

    He never seriously advocated burying money for the sake of digging it up, this was just part of his sensible argument against gold standard.

    That's why the cartoon is unfair.

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    1. >>> this was just part of his sensible argument against gold standard.

      Except that it's a stupid argument against the gold standard, not a sensible one. To first REMOVE wealth from the economy (by burying it), only to RESTORE it to the economy (by digging it up) is a waste of resources (the labor and capital extinguished in the burying and the unburying) that could have been (and would have been) more productively used in creating new wealth. Additionally, burying gold removes it from the many non-monetary uses it has in electronics, pharmaceuticals, dentistry, etc.

      If I may say so: as usual with Keynes, his nonsense about burying gold for the sake of unburying it is an example of *Economic Masturbation.*

      That Keynes has found so many people to endorse this sort of onanism enthusiastically would be hilarious if it weren't so embarrassing.

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    2. I think you misunderstand the argument. Your criticisms include the very reasons why Keynes was arguing in favour of coming off the gold standard, printing money and employing people to do useful work (build roads, railways, schools, etc.) rather than relying on miners digging up gold in order to be able to expand the money supply.

      That it is ridiculous to bury money and dig it up is the point. Keynes used this analogy to show that having to dig up gold in order to increase money supply is similarly ridiculous (which says nothing about other uses of gold).

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  14. Build glass factories and people will break more glass.

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  15. Caption: In case of crisis, break glass and sweep up broken glass. It won't do much, but it will make you feel better, and you can tell people that you did what you could regarding the crisis.

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  16. Ohio LibertarianMarch 9, 2013 at 9:22 AM

    "In case of economic downturn, a government official will break glass, then publicly announce government has created more business opportunities for glaziers...."

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