BBC Masters of Money: F. A. Hayek

Comments

[McKinney]

Nice! Thanks!

[Greg Ransom]

Note well -- not a word spoken by Sachs or Krugman was true, and much said by Wapshott was blithering idiocy.

Another embarrassment for the BBC, I'm afraid.

The BBC had the worlds leading authority on Hayek -- and they used the blithering idiots Sachs, Krugman & Wapshott instead, men well known for nonsense on Hayek, as pointed out by the leading authorities on the topic of Hayek.

This is political propaganda aimed against Hayek -- and completely unlike the episode on Keynes.

Facts botched by Sachs, Krugman & Wapshott:

Hayek explicitly agreed with Friedman on the cause of the Great Depression -- Fed action creating a massive secondary post bust deflation.

US banks issuing private money in the 19th century were heavily regulated.

Hayek and Keynes got along well -- and were not constantly fighting.

Hayek explicitly said the welfare state would not lead to tyranny.

Hayek rejected 19th century laissez-faire.

And on and on.

Just embarrassing for the leftist BBC & it its well earned reputation as an ideologically partisan propaganda machine.

[Onlooker]

Where does Hayek say that " the welfare state would not lead to tyranny"?

Thanks

[Greg Ransom]

Hayek says it in The Road to Serfdom.

"Where does Hayek say that " the welfare state would not lead to tyranny"?"

[Onlooker]

I'm not sure I understand. I cannot find a quote that is close to what you say he said. A page etc would help. Thanks

Sorry.

[Greg Ransom]

Onlooker -- search my blog Taking Hayek Seriously on this topic for a number of direct quotes.

A reading class might help, as well.

Use the Definitive Edition.

[Onlooker]

I do not have the definitive edition but will get. There is no need to be quite so rude. For now though in the 1976 introduction to the edition I have Professor Hayek says that "socialism has come to mean chiefly the extensive redistribution of incomes through taxation and the institutions of the welfare state. [With this type] of socialism the effects I discuss in this book are brought about more slowly, indirectly, and imperfectly ... [and] the ultimate outcome tends to be very much the same, although the process by which it is brought about is not quite the same as that described in this book."

It looks like the need for a reading skills class is fairly widespread.

[Redmond]

Ugh, Krugman was unbearably smarmy as usual...

[Greg Ransom]

Hayek in 1944 and in 1960 and in 1973,1976 & 1979 says that state run welfare provisions are perfectly compatible with liberty -- what Hayek is talking about in 1976 is something else -- the massive intervention of the state as a mechanism to achieve massive scale redistributive social justice. Hayek again and again focuses principally on the taxation issue, for example in his 1960 and in his 1973-79. Hayek repeatedly ENDORSES the various primary aspects of the welfare, including medical welfare, unemployment insurance, a minimum income, catastrophic aid & insurance, etc., etc. etc.

Read Bruce Caldwell's piece on the welfare state and The Road to Serfdom.

What you will learn in a reading course is something called "the principle of charity" -- an interpretive principle which forces the read to made sense of how texts could be consistent or coherent when the reader wishes to make sure they are understood not to be compatible or not to coherent.

You have to fight against your instinctive desire to read a text with prejudice against the author.

[Greg Ransom]

Onlooker -- what you quote from Hayek - "although the process by which it is brought about is not quite the same as that described in this book" - exactly makes my point against Sachs. Hayek here is explicitly saying that his Road to Serfdom was NOT about the welfare state & did NOT show how the welfare state leads to totalitarian tyranny -- which was exactly Sachs false claim.

Thanks for providing this.

[Methinks]

Greg,

I'm not accustomed to defending Krugman, but I agree with him that the risks the financial institutions were taking were not well understood. It wasn't on the forefront of anyone's mind that they would ever even need a bailout. Hubris prevented such thinking.

Generally, this show is the usual hack job on anyone not romanticizing the coercive power of the the almighty state. I especially loved the guy in the end who said that yeah, yeah we really can't understand how an economy works because it's too complex, but if all joined hands around the world we can fix it. Okaaaaay. I don't really understand how the brain works, but I'm also sure if I gathered a room full of people with a similar lack of understanding we would be able to successfully perform brain surgery on this guy (sorry, I didn't catch his name).

[Greg Ransom]

False. Read for example the papers of William White and his BIS team from the early '00s.

"I'm not accustomed to defending Krugman, but I agree with him that the risks the financial institutions were taking were not well understood. It wasn't on the forefront of anyone's mind that they would ever even need a bailout."

[Methinks]

Will do, Greg. I'm not familiar with White. However, from the economist piece I just found on him, I think we may be talking about different things.

I don't think the banks that were actually writing CDS or securitizing loans or the institutions buying the securities necessarily understood all the risks. I base this on interactions with clients on interest rate derivatives desks in the 00's. Some people understood that they didn't understand all the risks and understood how difficult it is to price tale risk, of course, but the people getting into those positions either didn't think about it or didn't care. How the central bank influenced that mania is another story.

Also, before the crash, William White would have been one opinion and one banks' investors would have them ignore in their quest for returns. If this is what Krugman was talking about, then I agree with that.

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Thanks for sharing!

[Greg Ransom]

Read Michael Lewis, The Big Short, which tells stories about who knew what when -- and Note Well - those who have little ir no financial reason to know something often won't know it.

Let me also recommend Russ Roberts excellent paper on too no to fail and moral hazard during the boom and bust.

Easily googled.

[Greg Ransom]

The people who know their Hayek know that Hayek isn't just about central bank interest rate policy -- Hayek explicitly talks about I endogenous processes of expansion and contraction or money and shadow money & the effects of these on production structures, etc.

There is nothing non-Hayekian about anything you are talking about, Methinks.

I don't want to discuss krugman because that is like tryin to nail jello -- he's massively dishonest, is unconstrained by facts or reality, and changes his story for any old rhetorical purpose.

[Greg Ransom]

Let's distinguish between.

The Welfare State, eg basic provision by the state for those unable to care for themselves.

versus

The co-opting and takeover by Socialist ideologues & party apparatchiks of the notion of the "Welfare State" as a cover for their open-ended statist (and anti-market) agenda and redistributive social justice schemes.

These turn out to be two _very_ different things.

Hayek embraced the Welfare State in the first sense, and repeatedly asserted in offered zero threat to liberty.

[Roger Koppl]

Onlooker: Greg is being rude, I'm afraid. There are at least three positions out there on Hayek and the welfare state.

1) Hayek said that if you let the state help anyone ever, we're all landing straight in hell.

2) Did not! Hayek never said anything like that as anyone who is not a total moron knows perfectly well.

3) Hayek certainly supported "welfare" measures many on the American right condemn, including a minimum income guarantee and social insurance that includes unemployment insurance and health insurance. But he also sometimes made statements expressing concern of Sweden-like system and seeming to view them as rather urgent threats to liberty.

Obviously, I'm setting up 3) as the truth and I think it *is* the truth. The best expose of Hayek's exaggerated concerns on the welfare state is probably the recent article by Farrant, McPhail, and Berger: http://tinyurl.com/d8pc4of

In The Road to Serfdom, Hayek says we can mend our ways. Though on the road, we can turn around. He was really quite explicity about it, I think. In that book I don't recall anything too dire in his warnings. I mean, he made statements shocking to the more or less socialist thinkers of the time -- and that was most of the chattering class. But he did not seem to view measures such as a guaranteed minimum income as putting on the road to serfdom. It was industrial planning, not redistribution, that had him alarmed in that book.

[Greg Ransom]

Roger -- there is no doubt The Road to Serfdom is NOT about the welfare state or the process whereby the welfare state takes one to a totalitarian society.

That is the claim made by Sachs -- and it is the claim refuted by Bruce Caldwell in his article on this topic.

And it is a claim Hayek directly contradicts multiple times, including directly in his original 1944 text of The Road to Serfdom.

This really isn't open to argument.

We are talking about what argument Hayek made in The Road to Serfdom -- and it is not the argument Sachs attributes to Hayek, as Caldwell explains at length, and as Hayek directly asserts again and again and again.

There is no debate on this.

There is only open efforts to spread confusion and to marginalize significant work.

And that is an embarrassment for all concerned -- but the sort of embarrassment that is routine in academia and among intellectuals.

Sadly.

[Greg Ransom]

Roger writes,

"he did not seem to view measures such as a guaranteed minimum income as putting on the road to serfdom. It was industrial planning, not redistribution, that had him alarmed in that book."

Exactly. You make my point.

And this directly contradicts the claims made by Sachs in the BBC show.

[Greg Ransom]

The notion of the "welfare state" is radically different depending on who is describing or creating "welfare state" policies. The so the phrase itself is essentially meaningless until you nail down who's vision and whose purposes and who's understanding are driving the ideal of "the welfare state".

Depending on the notion of the 'welfare state' you have in mind, you could argue that Hayek, rather than exaggerating concerns about the welfare state, understated problems and concerns with the 'welfare state'. Hayek admits he was naive when it came to public choice problems, and certainly the empirical experience of the humanitarian tragedies of inner city pathology and dependence created by the the US welfare state could not have been imagined by Hayek.

But, in any case, this statement about remarks Hayek made outside and after the 1944 Road to Serfdom text was published: "Hayek's exaggerated concerns on the welfare state" -- this statement tells us _nothing_ about the content of the argument contained in Hayek's 1944 book. Which as Roger directly states, does not address at all that topic.

[Greg Ransom]

You can't get around the fact that Sachs and Krugman are bogus authorities when it comes the economics and social political work of Hayek -- interviewing Sachs and Krugman on Hayek its like interviewing plumbers pretending to be a physicist on quantum physics or dentists pretending to be a rocket scientist on the Mars landing. Its a sick joke. And these men if normal would be ashamed to perpetuate such a hoax.

[Anon]

In the program Sachs does not say Hayek's 1944 book was about the welfare state does he? Sachs says Hayek argued it led to tyranny after the 40s. Or did I not hear what he said accurately (which is possible). Hayek did favor a minimum safety net for the destitute. He did not ever favor what the average man in the street (or man in the blogosphere) would view as the welfare state. Hayek's minimum bears scant relation to the 'welfare state' as understood in everyday use.

Overall I thought the show was very good (including Krugman and King etc, though Ron Paul, Schiff, and the private coinage nut would not be missed if they'd been cut from the end product). There should have been far more Bruce Caldwell also (Caldwell was excellent) and less Wapshott.

[Bill Stepp]

It's unfortunate that the BBC did not interview any free market economist regarding PK's ignorant remark about 19th century American monetary history.
And re: the distinction in Hayek about industrial planning vs. income redistribution, any degree of the former must result in some of the latter, as income is shifted from net taxpayers to net tax consuming New Class parasites in furtherance of planning.

[Greg Ransom]

"An extensive system of social services is fully compatible with the preservation of competition."

Just one of many direct quotes from Hayek's 1944 RtoS.

What people make up doesn't alter the direct content of Hayek's actual text.

[Anon]

""An extensive system of social services is fully compatible with the preservation of competition."

I'm glad to see that there is not much difference between President Obama and Hayek on the merits of policy. Any thoughts on what social services Hayek had in mind?

[Greg Ransom]

Obama embraces both the Hayek Hypothesis & the Friedman-Hayek hypothesis in an interview in which Obama claims to be a Hayek reader.

Obama is well known as a master bullshitter, however.

[Methinks]

Thank you for the suggestions, Greg. As a super-fan of Cafe Hayek and Russ Roberts, I long ago got my paws on Russ's paper. I infrequently disagree with Russ, but I have some disagreements. Also, while I've read (and reread - and laughed every time like it's the first time) "Liar's Poker", after working on Wall Street for a while, I realized Michael Lewis thinks he knows more about Wall Street than he actually does (and, like Lewis, I also worked for Salomon Brothers). He did a short stint as a sales assistant and those boys always want to think they know a lot more than they do.

I know that it's emotionally satisfying to think that the bastards all knew what they were getting into and there is a huge culture of risk (as an acquaintance put it: when trading other people's money, short vol is the default position), but I saw no evidence that is was as clear AT THE TIME as everyone thinks it was in hindsight.

Which begs the question: if you can't wrap your mind around the risk you're taking, what the hell are you doing taking it? And that question is relevant whether Krugman was talking about the central bank or the various participants in the credit markets.

[Roger Koppl]

Anon,

I think it's fair to say that Bush 43 and Obama have damaged the rule of law. Dodd-Frank might be the best example of a recent economic policy violating the rule of law. That's a big difference between "President Obama and Hayek on the merits of policy." In general, Hayek would oppose the corporatist economic policies of the last two administrations.

I suspect your comment was at least in part a reaction to the tendency of the right in America today to argue as if redistribution were the only issue and to brand any redistribution as "socialism." I sort of figure you don't like that tendency, and I would quite strongly agree!

[Greg Ransom]

Lewis actually has some very good sources and very good stories in The Big Short -- stories of ignorance and stories of those who got it.

[Rafe Champion]

Hayek had to be very careful what he wrote because he was appealing to the reason and the better instincts of the socialists of the world (practically all the intellectuals) and he couldn't very well say straight up "You guys are leading us to hell!".

Like his colleague in New Zealand he wanted them to change direction in some ways without giving up on helping the poor and the weak. The temporary ANZAC (think of him as a kind of Australian) was a social democrat but he also warned that socialism was not a panacea and every bit of extra power you hand to the state is dangerous. If you go too far that way you lose freedom and then all is lost, including welfare.

It was an open question how far you can safely go in that direction but I think we are starting to test the limit, especially in the EU.

[McKinney]

Greg, I didn't get your take on the program at all. I saw the Sachs and Krugman sound bites as the obligatory insertion of the opposing opinion in the interest of balance. But I thought the presentation of the events surrounding the current crisis proved them wrong. I actually thought the video made Sachs, Krugman and Wapshott look silly. The on-screen personality was clearly not sympathetic to Hayek's critics.

[Greg Ransom]

Falsehoods and smears are not 'balance'.

Documentaries should not contain a preponderance of false content.

[Methinks]

Greg, there are always people who "get it". But they aren't usually the ones who get into severe trouble. There are enough who are either responding to perverted incentives or perfectly normal incentives who do - even if they "get it". And, in fact, even very prudent firms can blow up because a risk they couldn't have accounted for takes them down. The only way to deal with that is to let them go down.

What you can't do is provide huge incentives to take uncompensated risk by pushing people further out on the curve, protect them from competition with heaps of regulation (which allows them to then grow far larger than they otherwise would) and then expect them to exercise self-restraint.

[Greg Ransom]

Hayek ALWAYS considered economics to be science -- and spent much of his energies showing exactly why and how it was a science -- a sound & powerful causal explanatory theoretical science.

But the BBC show even ends on a falsehood:

"Hayek came to see the great crises of capitalism as the result of politicians mistaking economics for a science."

That is NOT AT ALL what Hayek argued or believed -- much of Hayek's life was devoted to distiguishing between good science, sound science -- and bad science, unsound science.

To miss that -- as the BBC documentary missed so much at the core of Hayek -- is to miss the heart of Hayek's engagement with economic science and the economics profession itself.

[Allan Walstad]

About financial market actors irresponsibly taking on too much risk: There is a wide range of risk-taking proclivity from extreme caution to recklessness. There is some sort of margin between those who would pursue a certain risky course at any given time and those who would not. What happens when the central bank is artificially expanding credit and blowing a bubble? It shifts the margin. This is elementary economics.

I increasingly wonder if we are not seeing RTS play out in our time. Government intervention is not limited to providing a safety net of social services, but has become a completely unsustainable combination of Ponzi schemes like social security, empire maintenance, and irresponsible monetary expansion. Democratic processes appear incapable of heading off disaster. The government has for some time now been constructing tools of total control --"Patriot Act", NDAA, etc. All we need is for people to embrace a charismatic strong man. All we need is for Caesar to show up.

[Roger Koppl]

Greg,

The word "science" has so many meanings. Somewhere in, I think, the '67 Studies volume (or maybe in the New Studies volume) Hayek denies that economics studies a "causal system." (Goin' by memory here, so . . . ) He was making a complexity point, I think, but it could easily seem like he is denying economic laws. There is a sense, actually, in which he absolutely does deny that there are economic laws. But one might easily think that's saying economics is not science. And Hayek *did* deny that economics is a "science" in a common, if non-Hayekian, sense of the word. So I just don't see where we can, like, vilify or excoriate somebody who is talking to the BBC, trying to put a point across deftly, and does not first spend 17 minutes clarifying what the word "science" should mean. You might say, "Oh, unfortunate way of putting it" or "Oh, that might mislead" or whatever. But blasting the "falsehood"? Nah. Cut 'em some slack, dude.

[Greg Ransom]

He doesn't say that, Roger.

Hayek is pointing out that complex systems have multiple cuasation and functionally open-ended causal categories -- eg learning in economics or adaptive function in biology (see my paper "Insuperable Limits on Reduction in Biology or the papers written after I wrote that by Alex Rosenberg on the same topic.)

Hayek simple is rejecting the the two variable "law" version of Hume's constan conjuction model of "causation" .

[Greg Ransom]

The "nomological law" model of science is in complete tatters, Roger.

And efforts to stuff Darwinian biology into the nomological law model by Ruse and others was a complete failure.

Kuhn, Hanson, Hayek & Toulmin were among those who first offered an alternative to the nomological law model.

The 1950s "received view" philosophers of science model of "science" ain't science.

[Greg Ransom]

This is wha you are proposing is hunky-dory, Roger:

A broadcast on the cognitive science, neuro science & global brain science of Edelman, Hebb, Chomsky & Fuster etc and its challenge to behaviorism in which behaviorism is identified as 'science' and that rival of cognitive science / global brain science is characterized as a rejection of science.

There are all sorts of reasons this is unacceptable -- including the most basic one that it radically misleads abd misinforms the audience.

[Greg Ransom]

A bogus picture of 'science' was a disaster for psychology/cognitive science and it has been a disaster for economics and humanity.

That argument is at the core of much Hayek's work -- at the core of his Nobel Prize lecture and his case against Keynes / Fisher / Friedman / macroeconometrics.

Hayek thought this argument important enough to bring Popper around the globe to the LSE and to publish Popper's work showing how the desteuctive ideology of Marxism was based on a false model of 'science'.

This isn't a side issue for either Hayek, economics, or monetary economics -- Hayek certainly didn't think so and I'd suggest anyone very competent in Hayek's unified yet cross-disciplinary efforts on explanation / macro / epistemology / money etc could hardly think so. Hayek repeatedly flagged the central importance of this issue -- indeed he tells us the centrality of the issue re-oriented his whole explanatory project at the height and great turning point of his scientific effort.

[Roger Koppl]

So I say, "He was making a complexity point."

And Greg says, "He doesn't say that, Roger. Hayek is pointing out that complex systems have multiple cuasation and functionally open-ended causal categories."

Um, sure, Greg, thanks for that correction . . .

[Greg Ransom]

Roger,

Imagine the BBC running a documentary on Charles Darwin stuffed with false statements about Darwin's work & views coming from biochemists who'd never studied nor read any Darwin or Darwinian biology, or from a Fleet Street journalist who specialized in fast and loose celebrity biographies featuring Hollywood & political personalities.

The BBC would be _crucified_.

And they should be crucified for doing this to Hayek, one of the most significant scientists of the ages.

I liken many Austrian economists to the 1 out of every 4 hostages dominated by their captors who exhibit what the FBI calls the "Stockholm syndrome" -- 1 out of 4 Austrians has internalized and has come to sympathize with the criteria of "science" and "scientific achievement" which is built into the fraudulent picture of "science" and the various and equally pathological formal metrics of "good" enforced by the top journals which is part & parcel of the the whole cluster of practices and criteria which together make up mainstream economic "science".

[Greg Ransom]

In a documentary on Charles Darwin we should only be happy if 10 out of 10 facts in a BBC documentary about Darwin and Darwinian biology are correct.

We should be absolutely outraged if 1 out of 3 or 2 out of every 3 facts about Darwin and Darwinian biology are mistaken and botched.

Only a victim of the Stockholm syndrome would be content, even happy, with less for Hayek or Mises or Menger.

John Wooden wouldn't let a basketball player on the court who couldn't tie his shows right. We should insist that government science broadcasters get their damn shoes tied straight before going about "informing" the public with clusters of falsehoods and non-sense.

[Greg Ransom]

Roger, you are completely wrong when you write, "Hayek denies that economics studies a 'causal system'."

No.

Hayek says repeatedly and endlessly that economics does study a causal system, and provides a causal mechanism explaining that causal system.

It's non-sense to say that a complex system is not a causal system, and Hayek asserts repeatedly that biology, neuroscience, economics, etc study complex causal systems.

What Hayek argues is that bogus philosophers picture of "causation" and "science" has repeatedly blocked understanding of the various special sciences of complex causal systems.

This was part of Hayek's refutation of Popper's "falsifiability" criterion of science, and part of Hayek's decisive move away from the deductive idea of Carnap, Mill, Hempel, Popper, Nagel and the rest.

[Roger Koppl]

Greg,

Yeah, Hayek probably did not use the phrase "causal system," at least in anything like the way I said. Hey, I said I was going from memory . . .

But in the "Postscript" to "The Theory of Complex Phenomena" he does have language that seems to challenge the ideas of law and causality in economics. For example: "to say that such a statement describes, like an ordinary law, a relation between cause and effect would be highly misleading." And that's all I was getting at. I wasn't trying to make any substantive claim about Hayek's thought. I was just pointing out that you do have such passages in Hayek and that, as I said, "it could easily seem like he is denying economic laws."

Now, I suppose, you will make eight or nine long posts in a row showing how totally bogus my remarks really are. But I'm sticking with my rather modest point that the comment about "mistaking economics for a science," while perhaps misleading or unfortunate, was not some blatant "falsehood" we should moralize over. I would also make the (obvious?) remark that there is no margin in blaming your interlocutors for not understanding your intellectual heroes. It is up to "us" to put the point across. Moralizing about "their" errors does no good. Indeed, it tends to make one's own position look absurd.

[J Oxman]

I realize I'm a little late to the game here, but I want to weigh in on the "what Wall Street knew" debate between Greg Ransom and Methinks.

The problem with the securities of importance, like the CDSs, the MBSs, and so forth, is that there is very little price history available to calibrate a pricing model. So we might start off assuming returns are normally distributed, and then when that doesn't fit the data, move to one where they follow a t-distribution, or a Gamma distribution or something. My point is that without sufficient historical data, the particular model that correctly describes the behavior of the security will remain elusive. So the cats on Wall Street can't know the distribution. They can just try to make a best guess.

Second, and more importantly during a crisis period, is that correlations among security returns are exceptionally difficult to measure. Those of us in academic finance pretty much agree that linear correlations are poor descriptors of the relationships among security returns, especially during crises. There are boatloads of tools available to measure correlations, but the hottest right now are copulas. Copulas allow non-linear correlations. But, again, they are new, difficult to estimate, and often highly unstable. So what can be 'known' in such a context? Actually very little. And if new products are introduced in a calm period no one will know how the prices will react in a crisis.

One might say that this smacks of too much reliance on mathematical modeling, but without our models we'd have even less information than we do.

My overall point - Wall Street simply cannot have known what would happen to some of these securities during a crisis, because knowledge wasn't available. They can make guesses and stress test models, sure. But the models don't incorporate a lot of the institutional problems or market reactions that actually happened in the crisis. They can't - it's too complex.

[J Oxman]

Wow, didn't mean to bold the whole thing like that. My mistake! Not yelling!

[Greg Ransom]

The point is the "law" model of SCIENCE is BOGUS.

Sorry, the bold type seems necessary.

Darwinian biology CANNOT be formulated in the 'received view' philosopher's nomological 'law' model of 'science' developed by Mill and Carnap and Hempel.

And 'causation' does not fit Hume's boguc pseudo-scientific phenomenolists/associationist model either.

Hayek was CLEAR -- science does NOT equal 'laws', Darwinian biology is a science, economics is a science, and these sciences are NOT made up of 'laws'.

THAT is Hayek's point.

This is not complicated.

But it is a major misunderstanding and misrepresentation of a CORE aspect of Hayek's work to report this contrary to fact.

Roger writes,

But in the "Postscript" to "The Theory of Complex Phenomena" he does have language that seems to challenge the ideas of law and causality in economics. For example: "to say that such a statement describes, like an ordinary law, a relation between cause and effect would be highly misleading." And that's all I was getting at. I wasn't trying to make any substantive claim about Hayek's thought. I was just pointing out that you do have such passages in Hayek and that, as I said, "it could easily seem like he is denying economic laws."

[Greg Ransom]

Mistaking "laws" for _science_ is huge.

[W. Peden]

The documentary was lazy and far more balanced than the documentary on Keynes (in which a guy from the IEA got about 10 seconds to say he thought that Keynes was wrong and no time to put forward his reasons) but slightly better researched than the documentary on Keynes.

In the documentary on Keynes, they said that Hoover had a "do nothing" approach, before showing the Hoover Dam as a Keynesian New Deal initiative! Most people in the UK won't know that the Hoover Dam was named after President Hoover. The emphasis that people now put on uncertainty in Keynes's work was also dubious: there is some stuff on uncertainty in the GT, but there's no real place for it in IS/LM or Functional Finance and Keynes explictly endorsed those frameworks as accurate representations of his work, so he clearly didn't think that uncertainty was very important. Keynes's work was suitably sporadic and changeable that an inventive interpreter can find almost any contemporary concept in there, and if not they can just invent them, like Roy Harrod-

"I have searched through his writings very carefully, not long ago - for the purpose of discovering anything he had to say about what we call "cost-push inflation". I could find only one short passage in Keynes, just a couple of sentences... You can find those words if you search; I ought to give you chapter and verse, but I have not put down the page reference; they are there all right."

In contrast, if one is working on Hayek, his opinions can always be found after careful research. So there's no good excuse for the "Hayek said that social welfare would lead to totalitarianism" meme getting into a professional documentary.

[Roger Koppl]

Heh heh. Now Greg, didya read the part where I said, "I wasn't trying to make any substantive claim about Hayek's thought"? Should I now excoriate the "falsehoods" you are spreading about me? After all, my point "is not complicated." Okay, well I'm going to try to resist the temptation make any further reply to you, Greg, so you can have the last word if you wish.

Oxman, I'm not following the discussion too closely, so please forgive me if I'm off point, but if I may be so *bold* as to say (HA HA HA HA HA! :-/ ) . . . If the system is sufficiently complex, no algorithm will guide you through it. So it's always true that any individual forecaster is at risk of error. I'm not sure how much that point helps us work the counterfactual. Market values, including risk pricing, are worked out through the market process, not by any one forecaster. But if everyone is playing with other people's money, privatizing profits and socializing losses, then the system is rather obviously skewed one way. Add in the bad incentives on the rating agencies and some you may have a crisis waiting to happen. (I should be working up the role of loose money here, but hey, it's a longish comment already!)

[Greg Ransom]

Hayek endlessly identifies economics as _science_.

Hayek endlessly identifies economics a a causal explanatory science offering a contingent causal explanatory mechanism.

Hayek wrote several papers defending the scientific status if economics.

The purpose of the paper Roger cites is to vindicate the scientific status if economic science.

Roger's linguistic confusions about the force of Hayek's arguments against false pictures if "science" add nohing to the conversation.

[J Oxman]

Roger Koppl,

Yes, I agree with you as far as that goes. The trick with most of the securities that need to be modeled is that market prices are very back guides because the markets for the securities is completely illiquid. This happens with ordinary corporate bonds often - there isn't a market price, so they are priced according to a 'matrix' which matches the bond to other similar ones and uses that price as a proxy.

I completely agree the system is quite badly skewed. Those institutional details should have been (and were, for some people) sufficient to tell us a crisis would happen sometime.

[McKinney]

J Oxman, in addition to the issues you mention, don't you think some of the problem was the belief that real estate crises were always regional?

After all, the securities didn't go bad until real estate collapsed. Some people saw a mild pull back in real estate, but few saw the major collapse.

[J Oxman]

McKinney,

Funny you should mention that. One of the topics real estate academics were starting to work in in 2004 - 2006 was the correlation of defaults/prepayments and trying to bring spacial relationships into the models. Those elements weren't (and still aren't) in the models.

[Methinks]

(hello, J Oxman!)

Oh, I'll throw this in and put some blame back on WS since the conversation picked up in that direction a touch:

We take many risks we don't fully understand and can't fully understand (Wall Street is not unique in that respect, let's not forget). But, as a most basic risk management step, we can reduce position size and leverage. They didn't do that. The size and leverage implied a much less risky asset.

I have no idea if Real Estate has always been a regional issue, but it was apparently taken as an axiom. What we began to observe is a nationwide real estate party. At that point, a practitioner should question this regional axiom, for if prices can rise nationwide, they must be able to fall nationwide. Yet, nobody did (except maybe John Paulson, but I can't tell if that's just timing or genius).

Although it's tempting to scream "OPM!" as the catch-all reason, it's just not good enough.

The risks weren't well understood, red flags were ignored and there was plenty of over-trading. I expect this to happen repeatedly until our sun expires.

[liberty]

Caldwell deals with the science issue early on -- i think viewers paying attention will understand Hayek's view.

[Ahmad]

Several things.1. Water moenvmet and pooling if you have areas that are more wet, look for plants that prefer wet soil.2. Sun obviously know what type of light the plant likes.3. pH. Plants that like a higher pH soil are happier next to the house in most soils. Typically, the foundation of a house is concrete which leaks lime into the soil.4. Roots most trees should be 10 feet from the house. Be careful with Silver Maple, Cherry and Redwood. Trees like these can actually push in the walls of a submerged basement, tear up sidewalks and wreak havoc.5. Compatibility. Some plants are toxic to other plants. Black Walnut will kill just about everything around it.6. Size at maturity. People buy cute shrubs because they like the flowers or color. 10 years later, they're living in Sleeping Beauty's castle, surrounded by a jungle.7. Color arrangement. Consider different layers light greens, white, reds, etc. Don't just use monotone green. Contrast the color of the house with a shrub, then put another contrast in front of that. If you have room 3 layers is very luxurious looking.8. Maintenance. If you don't want to trim or divide, look for things that grow more slowly. In 10b, you probably use Bermuda grass? Consider putting in solid flowerbed edging to stop or severely deter invasive runners. If you have Fescue, you don't have to worry as much.9. Flowers. Leave limited space for annuals if you want some really amazing color. Otherwise, look at some perennials. Note, however, that Perennials get bigger and bigger each year.10. Fire. This is more an issue in dry climates. Consider rock against the house rather than mulch. Mulch is very VERY flamable in hot dry weather. Even in the moderate areas of the Northeast, it's not uncommon for catastrophic fires to start in flowerbeds when someone flips a burning cigarette into someone's yard and it lands in the mulch.11. Shade put deciduous trees around the south and west sides. The leaves will reduce your power bills in the summer. But they will drop their leaves in the winter allowing that sun to warm the house. Of course in 10b, this might not matter! Go with Palm Trees!12. Go Native. Look for plants that are native to your area. They're more likely to survive weather cycles. Imported plants are most prone to escape and cause environmental problems. Look at Honeysuckle in the Northeast, Kudzu in the South, etc.

[Tina]

Thanks for the great information I just ctreead my own page for this. This will be the NEXT moved from Google to going more and more social. Still need more features to be added in this brand page, hope google again come up with many more new features.

[Jusuf]

Thank you John for taking the time to upatde us. I know I'm not the only one who checks daily (sometimes hourly) for an upatde. We continue to pray for you guys as you walk through this and trust that God is in control and if Molly believes she is supposed to rest then by golly she is supposed to REST. As we all know she has a pretty direct line with the King of Kings.I'm with Betsy. It was so wonderful to see Molly on Sunday evening. Can we do it again this Sunday??? I was so moved by the scene of people gathering so quietly and gently praising God on Molly's behalf. I found myself smiling at the continual witness you all are for all those watching perhaps from a house right next door.Love to each of you.Donna (and Rich)

[Sanae]

It would seem, some people have a need to see Molly, BUT, she hasnt the need to see them. This is a time to rely on Gods tnemiig, and be content with Molly's wishes. He is in charge. God, give us the serenty to accept the things we cannot chage, and not resent them, courage to change the things we can, and the wisdom to know the difference ! I am at peace because I do not resent the things as they are.!!

[Jhunbhe]

Your images are wodnurfel! We host many weddings at Hilton LBK, and I must say that I am very excited to see your capture of our venue, and of course Lauren & Ransom. I would like to speak to you about obtaining a photo release from you so that we may share your beautiful work with the world. Would you be so kind as to contact me?Jessica at Hilton941.552.1402Thank you for sharing your work.

[Gustavo]

Have any of you thought of frmiong a new "corporatism", whereby you set you a new set of ground rules for any starting corporation, to limit their power, much in the same way as we did for limiting the power of government with the Declaration of Independence? I'm just off the cuff, but what if, when starting a company, we had a shell set up the founder had to put in writing things like, a company pay structure . CEO can make 40% more than the janitor I don't know but some kind of sliding scale to limit pay by spreading it to the workers, but still rewarding the initiative. Someone out there should be able to figure this out. Have it in writing that the corporation will not use it's money to lobby for anything . that can be done by the individual on the individual dime. There has to be some sort of basic tenets to support, what essentially grow to be the people in charge of our country right now! Take the power out of government and out of the corporation, keep it with We the People.

[Diana]

He doesn't get it.People do get a vote' in capitalism. But its not thru ecetled officials, its thru who you buy stuff from.Also, the majority has NOT asked for public-option health care. And he doesn't understand that just because someone want something from the government, that its right for the government to take from others to give it.

[Andrew]

I love that book. Though you should delitinefy make sure your acidity is right strawberries generally need some lemon juice to bring them to a safe canning ph.Also, if you like a savory-ish application, I highly suggest stirring in some finely chopped basil and just a little black pepper when you take the jam off the heat. And you can sub in honey for sugar. It'll be a little runnier, but I like my jam to be mushier rather than firm. Generally I'll use old honey thats been crystalizing on the shelf a while. It seems to make a slightly firmer end product.

[Sathiya]

What about rhuberry!? We made that too and it tunred out best!Shel: I didn't delete! We debated whether we wanted jelly' (with surejel) or jam // preserves' and opted for the second. That's all

[Pajar]

you have never meet this girl before and you sent her 3000 euros? are you the last aaericmn sweetheart or dumb?do you know anything about where you are going? i would rather meet a person face to face to get a feel of the vibe they are sendind off;go with your instinct if it dont feel right let it go!still be a sweetie but dont send no more money!!!

[Ahmed]

first off go some nuts and secondly that kind of stuff only haeppns in the movies but dont think shes all bad cuz shes busy and he phone dosent work it haeppns to everybody but first think about wether or not this chicks is really worth goin after!

[Philipe]

1. I am expecting to learn about eloecrtnic delivery systems in this course.2. I am looking forward to learning about WordPress blogging and social networking that I can incorporate into my classroom. I am also looking forward to becoming an effective teacher while using technology.3. I am anxious about how difficult this new information will be to learn and use. I have struggled with the other courses because I feel I am not savvy with technology. It is like a new language to learn as the courses go forward, the technology gets more difficult. Thus leading back to wanting to be an effective teacher to my students using technology at the highest capacity and usefulness.4. I am excited about learning information about Facebook and Cyber Bullying. There have been a few instances where Cyber Bullying has taken place in my school and I have seen the ramifications it has on a young adult.5. I hope that I learn information in this course that will be useful in creating lesson plans that are using technology and also hitting my course objectives.

[Fouthfive]

I am looking fwarrod to this class and learning hoe to use technology further in my classroom. I am eager to learn how to create a classroom website that is easy to use and manage in the classroom. I hope to be able to create material that I will be able to use in the classroom to help my students and I grow. Too often we create items in graduate courses that we never use in the classroom. I would like to take away from this class additional knowledge about delivery systems that I have not used yet. I hope to have support and guidance as needed as we go through the course to be confident in my level of work. I am enjoying the first night so far and look fwarrod to learning a lot of valuable information in this class.

[Chapit]

I want to learn more practical ways of using web based prmgraos to deliver instruction in my classroom. I particularly want to encourage on-line discussions where students from different class periods can connect on-line.Although I am always a bit anxious about the time needed to complete assignments well, I think the material in this course will have enough practical application to make it worth the input.I am excited to get some more website creation experience. I want to make better use of my website this year, and I feel this course will help me to do that.