mustang19:Godwin's law confirmed. Experimental data collection complete. Exiting thread.
Nope, wasn't talking about the Nazis. Just national socialism with lower case letters, i.e. socialism on the national level. Which is what you have been advocating this entire thread.
If the taxpayer has to pay for a bunch of infrastructure so corporations don't, what do you call that other than corporatism?
In the long run, those things would detract from GDP. Anything else?
mustang:It's just hard to support corporate personhood and oppose corporatocracy at the same time.
Well that's a wider legal issue.
My point still stands that Sotomayor was not in the majority for most of the Citizen's United decision.
It's also worth noting that the decision applies to unions as well as corporations.
Yes, actually, two things. (1) How do *you* calculate that "detraction" considering your previous statement
Generalized methods of moments and granger causality testing.
that (2) all infrastructure spending is always beneficial?
It's usually, but not always, beneficial.
Both being *exceptionally* flawed methods themselves for accurately determining any outcomes, one way or the other.
Please explain to me how to conduct a Granger Causality Test.
That's precisely the point isn't it? I'm contending that the Granger Causality Test *cannot* yield answers to the questions I'm posing, meaning that it is fatally flawed as a support for your "argument". In any case, shouldn't you already know how to conduct a GCT? You're the one who cited it as a perfectly adequate solution to the problems I outlined (in tandem with the generalized methods of moments).
Here's a refresher because apparently you need it, unless all you were trying to do was to deflect the attack (but no, you wouldn't do that, would you?):
First, a couple of quick primers:
http://www.uh.edu/~bsorense/gra_caus.pdf
http://monogan.myweb.uga.edu/teaching/ts/13granger.pdf
Next, an example and analysis of it in action (included are many of its grave short-comings in doing what it claims to be able to do):
http://www.jstor.org/discover/10.2307/2554207?uid=3738392&uid=2129&uid=2&uid=70&uid=4&sid=47698941315537
So go ahead, use the GCT and your Generalized Methods of Moments formulae to demonstrate that you CAN *effectively* distinguish between genuine growth and wasteful expenditures AND that you CAN *effectively* counter-calculate the benefits that would have accrued had the money not been taxed away (via direct taxes or monetary inflation) from private citizens effecting their own expenditures/investments AND that the whole flurry of other serious negative consequences provoked by monetary inflation (i.e. the destruction of purchasing power, etc etc) are NOT absolutely ignored in your formulae calculations.
NOT absolutely ignored in your formulae calculations.
Huh? Read the states study, for instance. Financing, inflation and long run returns are incorporated into the model.
What more evidence that "cutting public investment doesn't work" could I provide?
By the way, I logged into JSTOR through my university account and read the linked study. If anything, it discusses the opposite of your point- that Granger testing can be used to prove the effectiveness of policy generation, but failure of GCT is insufficient to disprove the effectiveness of policy measures, due to endogeneity.
From the conclusion:
It is not diffcult to come up with examples in which failure of instruments to Granger-cause endogenous variables coincides with ineffectiveness of the instruments with respect to the endogenous variables. Such findings are, however, merely accidental, like bagging the vicar at a grouse-shoot. Grangercausality tests are tests of "incremental predictive content" (Schwert, 1979). They are one among a number of statistical exogeneity tests (see Engle, Hendry and Richard, 1983) and play an important role in the estimation and testing of data-coherent econometric models. They are not informative as to the presence or absence of structural invariance in general and policy effectiveness in particular. Tests for policy effectiveness require the presence of changes in the generating process of the policy instruments, either in the sample or in the forecast periods, in order to ascertain whether such changes are associated with changes in the distribution functions of the endogenous variables under consideration.
So I'm not sure how it supports your point. But thanks for the paper.
AND that the whole flurry of other serious negative consequences provoked by monetary inflation (i.e. the destruction of purchasing power, etc etc) are NOT absolutely ignored in your formulae calculations.
Huh? Read the states study, for instance. Financing and long run returns are incorporated into the model.
Please very clearly point out where the destruction of purchasing power caused by monetary inflation is accounted for by these formulae and that they are simultaneously capable of effectively discerning between genuine growth and wasteful expenditures in a way that doesn't contradict your previous point that infrastructure spending is always (sorry, almost always now, right?) beneficial. Because so far you haven't done so, and you keep ignoring points (1) and (2)...funny that.
Well, some would be a nice start. You haven't provided any evidence that isn't based on *extremely* flawed formulae that leave out some of the most important qualitative variables: the ability to demonstrate that wasteful spending is *effectively* accounted for and rooted out by your formulae.
As for the article. Yes I'm aware that it purports to uphold the GTM, but I was calling attention to the horde of assumptions and fatal premises required to have the formulae arrive at their product--a process that clearly (at least to an Austrian) irradiates their conclusions.
Seeing as you have previously admitted that infrastructure is
usually, but not always, beneficial
then by extension you HAVE TO admit that cutting public investment DOES WORK IF you can cut the infrastructure that you concede is, from time to time, NOT BENEFICIAL. Your problem is that you can't calculate which is which.
So again, you've implicitly conceded the argument, AGAIN.
First you post a paper crafting an elegant proof of the utility of these techniques in relation to endogenous policy changes, the topic of the thread and provided studies. Your second post caused me greater inconvenience insofar as you continued down this course in total unawareness, causing me to defecate into my pantaloons. Upon regaining my composure, I decided against pursuing further argument. That is a sort of accomplishment, sir. You deserve a CS:S teamflash achievement on Steam. It's been an invigorating discussion, and I wish you all the best in your (hopefully non-intermediate-statistics-requiring) future endeavours.
causing me to defecate into my pantaloons
I don't imagine that defecating in your pants is out of the ordinary for you. Call it a hunch.
Please very clearly point out where the destruction of purchasing power caused by monetary inflation is accounted for by these formulae
You can read the instrumental variables specification yourself, which includes inflation.
Yeahhh no.
Saying that "sometimes infrastructure is bad, therefore we can't have any" is like saying "never drive a car because there's a 1/1000000th chance you're going to run over a bunny".
If you're not going to present a serious argument, I'm done.
mustang19: Saying that "sometimes infrastructure is bad, therefore we can't have any" is like saying "never drive a car because there's a 1/1000000th chance you're going to run over a bunny".
Straw man and false dichotomy. No here is has argued that there be no infrastructure. When you're on a roll, you're on a roll.
mustang19: If you're not going to present a serious argument, I'm done.
We are actually waiting for you to stop using logical fallacies.
No public infrastructure. Context clues.
No one here believes that there should not be infrastructure available to a community or nation or whatever. That's the straw man. The false dichotomy is that you claim the infrastructure must be publicly funded or nonexistent. Learn to logic.
That's the straw man. The false dichotomy is that you claim the infrastructure must be publicly funded or nonexistent. Learn to logic.
Not nonexistent, just undersupplied.
Already been addressed in your first post ITT.
Right, so ALL INFRASTRUCTURE SPENDING IS ALWAYS BENEFICIAL...so that $10 trillion road network, escalators to nowhere, or the White Sea-Baltic Sea Canal all register unerringly as double-plus-good GDP growth. The Soviet Apparatchiks over at Gosplan would have *loved* you (except when it came time to prevent the USSR from collapsing).
This is the thread that never ends... it goes on and on my friends...
Ah yes, everything is absolutely crystal clear now:
(1) your methodology is laughably flawed
(2) your conclusions do not follow if you recognize those flaws
(3) if you gloss over or ignore those flaws: welcome to the Keynesian School of Economics!
And now the long-awaited 3-point-pseudo-witty-counter-bullet-point-retort from Mustang in 3...2...
(Am I ruining it pre-emptively by writing this? Only time will tell...)
Take a statistics course. It'll broaden your horizons.
@mustang19
Take a logic course. It'll broaden your horizons.
Like MTH 557? Don't need to retake it. Already got my A.
I don't believe you. Not at the rate you use logical fallacies.
wow got an A? An we wonder if kids are really learning anything in school...
Throwing around obscure econometric terms does not constitute a coherent and powerful argument. Any professor that tells you otherwise is not a logician; he's a fraud and you should demand a refund from your university and ask them to apologize for wasting your time.
Either way, we've already explained why the GDP figure fails as an accurate measure of economic performance (does not distinguish between investment and malinvestment; arbitrarily rewards regimes which pursue expansionary/inflationary, bubble-inducing, unstable growth patterns; can be arbitrarily elevated at will by political authorities; etc) and you have chosen to ignore our arguments entirely. Additionally, you have failed to demonstrate how taking from A and giving to B (which is not bound by any checks on inefficiency and is held captive by special interests) in order to help C yields any sort of net social benefit.
Thus, at this point, it's rather unclear where you would like this "argument" to go. You refuse to respond to our positions, and you refuse to formulate your own.
[edit] I also find it very funny how Mustang continuously ignores Bloom's very specific questions regarding the actual content of the papers cited in the OP.
"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."
(Esuric)Either way, we've already explained why the GDP figure fails as an accurate measure of economic performance (does not distinguish between investment and malinvestment; arbitrarily rewards regimes which pursue expansionary/inflationary, bubble-inducing, unstable growth patterns; can be arbitrarily elevated at will by political authorities; etc)
There's little evidence that any of those things result from public infrastructure that reduces purchasing power and product choice on the net. For instance, a main effect of public infrastructure found in the studies is to decrease product costs- it's actually deflationary.
(Esuric)Additionally, you have failed to demonstrate how taking from A and giving to B (which is not bound by any checks on inefficiency and is held captive by special interests) in order to help C yields any sort of net social benefit.
Already been discussed. For instance:
Otherwise, people aren't excited about getting rid of public infrastructure because doing so would simply make virtually everyone poorer.
http://ideas.repec.org/p/chb/bcchwp/270.html
This paper provides an empirical evaluation of the impact of infrastructure development on economic growth and income distribution using a large panel data set encompassing over 100 countries and spanning the years 1960-2000. The empirical strategy involves the estimation of simple equations for GDP growth and conventional inequality measures, augmented to include among the regressors infrastructure quantity and quality indicators in addition to standard controls. To account for the potential endogeneity of infrastructure (as well as that of other regressors), we use a variety of GMM estimators based on both internal and external instruments, and report results using both disaggregated and synthetic measures of infrastructure quantity and quality. The two robust results are: (i) growth is positively affected by the stock of infrastructure assets, and (ii) income inequality declines with higher infrastructure quantity and quality. A variety of specification tests suggest that these results do capture the causal impact of the exogenous component of infrastructure quantity and quality on growth and inequality. These two results combined suggest that infrastructure development can be highly effective to combat poverty. Furthermore, illustrative simulations for Latin American countries suggest that these impacts are economically quite significant, and highlight the growth acceleration and inequality reduction that would result from increased availability and quality of infrastructure.
Bloom, I apologize for missing your previous request to cite the claim that returns on public capital exceed returns on private capital. I'll fix that.
http://www.bostonfed.org/economic/conf/conf34/conf34d.pdf
It is one thing to demonstrate that capital spending has declined. It is another to prove it is also too low. Is public capital undersupplied? Recent approaches to this question have emphasized the role of infrastructure as an intermediate good contributing to private production. In a series of studies, Aschauer has argued that public capital enters strongly into the private sector’s production function, raising the productivity of both private capital and labor. His findings imply rates of return to infrastructure investment as high as 50 to 60 percent. Insofar as these returns vastly exceed those available to private investment, they imply that, yes, public infrastructure capital is undersupplied... The first is Aschauer’s finding that public capital has a very high rate of return, perhaps as high as 50 to 60 percent. Here I would like to underscore an important point that Peterson makes, but does not emphasize. Many of the most important benefits from public infrastructure do not accrue to businesses and/or are not counted in the GNP. If I spend less time waiting at airports, I am happier; but the improvement in my well-being does not appear in GNP. If my car and my back absorb fewer shocks from potholes, I am surely better off; but GNP may even decline as a result of fewer car repairs and doctors’ bills. The only benefits from public infrastructure that get into Aschauer’s calculations are the ones that add to GNP.
The first is Aschauer’s finding that public capital has a very high rate of return, perhaps as high as 50 to 60 percent. Here I would like to underscore an important point that Peterson makes, but does not emphasize. Many of the most important benefits from public infrastructure do not accrue to businesses and/or are not counted in the GNP. If I spend less time waiting at airports, I am happier; but the improvement in my well-being does not appear in GNP. If my car and my back absorb fewer shocks from potholes, I am surely better off; but GNP may even decline as a result of fewer car repairs and doctors’ bills. The only benefits from public infrastructure that get into Aschauer’s calculations are the ones that add to GNP.
http://epi.3cdn.net/2b3f77046b614d1cde_ikm6b41nb.pdf
Apologies for the PDF formatting.
The report presents an economic model showing that if the average levell of public infrastructure investment (relative to GNP) between 1950 and 1970 had been maintained for the succeeding twenty years: - the rate of return to private capital would havee averaged 9.6 percent instead of its actual value of 7.9 percent;
mustang19:Not nonexistent, just undersupplied.
This implies that there's an objective standard for "economic optimality", which you earlier conceded does not exist. If you expect to be the "last man standing" in this thread, guess again.
The keyboard is mightier than the gun.
Non parit potestas ipsius auctoritatem.
Voluntaryism Forum
I think that in light of this paper your statement about the value of public investment in infrastructure becomes more clear to me.
Peterson seems to be saying that public investment in infrastructure can lead to increases in private productivity that similar private investments would not lead to primarily because the infrastructure investments are being paid for by the sale of bonds and tax revenue.
In other words, the private parties are benefitting from getting to use something they haven't had to actually build or finance by themselves. In this case, the paper seems to focus mostly on roads and highways but also things like land development and telecommunications projects.
There is no question in my mind that private businesses can absolutely benefit from government aid whether it be infrastructure spending or whatever. Businesses are in it to make money first and foremost after all.
"The jurisdictions that have achieved the most dramatic turnarounds
Now I'm not saying I'm not on your side on this, I am. But let's not imagine this to be about left wing/right wing whatever. This is about money and power.
Unfortunately, this is how politics works. Pretty much every public investment project could be considered what Paul supporters call "corporate welfare" if it helps private companies in some way. It's always a matter of choosing the less bad alternative. At least in many developing countries, public health and infrastructure investments have done a lot to reduce severe poverty, even when enacted by parties that have the specific goal of sabotaging development.
But let's not be too cynical. It's a sunny day outside. Finals are almost over. Usher just released a new album.
Editing to continue with the last discussion:
Well that's a wider legal issue. My point still stands that Sotomayor was not in the majority for most of the Citizen's United decision. It's also worth noting that the decision applies to unions as well as corporations.
As a Democrat, I can't say that lifting the union restriction was a bad thing. Lifting bans on corporate contributions, though, was a lot more significant, with corporate PACs putting up five times as much money as labor.
The Citizen's United ruling might follow the letter of the law. In the spirit of the law, freedom of speech probably wasn't meant to ensure that elections were decided by the plaform attracting the most campaign contributions. I'll trade union contribution bans for no corporate personhood any day.
Nevermind... redundancy.
mustang19:There's little evidence that any of those things result from public infrastructure that reduces purchasing power and product choice on the net. For instance, a main effect of public infrastructure found in the studies is to decrease product costs- it's actually deflationary.
That some expense of resources is a net benefit does not imply that there arent other uses that are even more beneficial. Thats what economists call opportunity cost - the thing you cant have because you got the thing you got. Your national roads may be deflationary, but that is not enough to justify building them. Whatever the market would have done with those resources would be even even more deflationary, and therefore national roads are waste of scarce resources.
You know this from your private life. Spending your time reading a book might be beneficial, and surfing the web may be beneficial as well, but the question is which is better. There is always more than one project that could be realized with a certain set of resources that would be a net benefit. The question is not which project is beneficial, but which project is the most beneficial. But for some reason people think that when it comes to state spending, mere net benefit is enough. Why dont the same rules apply to private spending?
Watever the Soviet Union did with its resources may have been beneficial, but it was not the most beneficial thing they could have done with them, hence the miserable economic performance. Maybe national grocery stores would be a net benefit as well, but that does not mean we should nationalize them. Because private grocery stores are even more beneficial. The same applies to infrastructure.
That some expense of resources is a net benefit does not imply that there arent other uses that are even more beneficial.
Yes, which is why we do empirical research to see how marginal changes in public investment cause changes in output. The investment return is not just calculated as an opportunity cost.
I'd just like to point out a couple of very relevant things:
I read-through the provided article "The Effects of Infrastructure Development on Growth and Income Distribution" and noticed that both the authors and the works they reference therein are MUCH more tentative in their findings than Mustang would have us believe.
A few examples:
"That infrastructure accumulation MAY promote growth is hardly news for...policy-makers", and "In the macroeconomic literature, a number of studies have found empirical support for a positive impact of infrastructure on aggregate output".
Note the "have found empirical support" which simply means "we have SOME evidence to believe that..."
The author goes on to list the findings of other studies in his review of recent literature (which is usually likewise worded) then states:
"On the basis of those ESTIMATES, we CONJECTURE that a major portion of the per-capita output gap that opened between Latin America and East Asia over the 1980s and 1990s can be traced to the slowdown in Latin America’s infrastructure accumulation in those years".
We CONJECTURE...meaning "a proposition that is unproven but is thought to be true and has not been disproven".
Then the authors note:
"Finally, and perhaps most importantly, the conclusion that infrastructure both raises growth and lowers income inequality IMPLIES that infrastructure development MAY be a key win-win ingredient for poverty reduction".
That all seems very heavily tentative, no?
Now again, this isn't to replace the very serious arguments that we've raised here already regarding the impossibility of the econometric enterprise in measuring certain crucial phenomena (which I think are far more important arguments than this point). However, it's important to note that the aggressive conclusions trumpeted by Mustang are not reflected in the literature he is citing. We're not arguing with Mustang-defending-these-studies-on-their-own-merits, but rather arguing with a defensive-Mustang-misrepresenting-these-studies-to-justify-HIS-conclusions-that-are-far-too-absolute-in-relation-to-these-studies.
Granted, the Aschauer study (1990) is far more strongly worded, but clearly the much more recent article by Calderon and Servin (2004, and who cite Aschauer) and many subsequent articles cited therein did not find Aschauer's use of strong conclusive language convincing considering their frequent respective use of conditional, tentative language. So I’m not sure why you’re so upset about our having concerns of our own.
If you were thrown on the defensive we're sorry that that happened, but your posts from the beginning were very spry. Forum topics are often posted by rival economic schools on Mises.org from people looking to stir up the hornet's nest without ever having a genuine intention of taking counter-arguments seriously. We are all enriched by taking counter-arguments very seriously and challenging our own perceptions/understanding, so we look forward to a good genuine exchange, if that is your aim.
We are all enriched by taking counter-arguments very seriously and challenging our own perceptions/understanding, so we look forward to a good genuine exchange, if that is your aim.
I appreciate you saying that.
Empirical conclusions are often tentative, but there's still much less econometric support for the idea that getting rid of all public infrastructure outlays is a good idea.
"That infrastructure accumulation may promote growth is hardly news for...policy-makers".
That's how I read that quote. I'm not sure whether it sounds tentative.
mustang19: Empirical conclusions are often tentative, but there's still much less econometric support for the idea that getting rid of all public infrastructure is a good idea.
Empirical conclusions are often tentative, but there's still much less econometric support for the idea that getting rid of all public infrastructure is a good idea.
As an observer of this thread, no one has said that 'getting rid' of all infrastructure is a good idea. Continuing to say so, as you have, is patently dishonest. As if once there ceases to be plans for expanding public infrastructure, all infrastructure disappears...
The Anarch is to the Anarchist what the Monarch is to the Monarchist. -Ernst Jünger
Welcome to the thread, Jargon, and thanks for bringing that up once more.