Great discussion! The odd thing about healthcare is your GP unlike your auto mechanic does not do much of the work so he could be your agent and shop price for you, but he does not because you pay through insurance and so the zeitgeist is to ignore cost.
I agree! I love Tyler and wonder if he has more respect for Paul after this or less? I rooted for Paul but don't feel like he is the super star tyler has made him out to be..
Cowen's question about conservative Democrats misses the point. Studies show that when a Democrat wins in a red state, or a Republican wins in a blue state, that candidate is CLOSER to their average constituents ideology than a normal politician would be (basically, average ideology tends to be really moderate, as are politicians who can win in states their party usually performs poorly in). The reason they can't often win is that they are successfully tied to how voters feel about the national party. Heitkamp, Donnelly, Bredesen, and McCaskill are all quite moderate and still lost in 2018 (on the flip side, you can talk about Elizabeth Warren beating Scott Brown in Massachusetts in 2012).
Krugman seems to be questioning economics as studied by academics throughout the interview but also doesn't believe in B. Caplan's signaling hypothesis at the public Ivies. Interesting.
Can't agree, Guilherme. Krugman's constantly posing questions that he admits he doesn't have an answer for. "There's always a significant chance that my basic model of how the world works is wrong." Who else says that on-stage and on-camera? Great conversation.
crypto is gonna be very useful in the black market as well as pirating. that is going to be its primary use. Same with smart contracts. criminals are going to be using smart contracts, like hitmen or drug runners
I looks like Paul Krugman got his PhD in 1770 since his understanding of macroeconomics looks like someone who never read anything written since Adam Smith.
@@Capital_Ideas1 I come from earth, and you? Being a PHD student at a top university when I look at the frontier in macroeconomics and theory and then I look at what Krugman says it looks like Krugman doesn't know anything. He is talking about IS-LM for god's sake! His criticisms of economic theory is like someone saying "physics is wrong because real world objects are not points"...
@M. Hfm. Just a wild guess, M.--I don't want to presume to speak for Jose--but he sounds like he's been marinated in supply-side, which has dominated American econ departments for decades. And you can see where it's gotten us as implemented by the likes of Reagan, Clinton, and the Bushes: spiraling inequality, concentration of wealth at the top, erosion of the infrastructure, etc. Krugman, as you can hear here, advocates a return to a demand-driven policy, and I think he's right.
There is seldom a more idiotic conversation when two people get together and argue about which percentage of demand or supply is lacking which is what is presented here. The reasoning is that demand and supply never exist in any economy without a price and particular goods being considered at the same time. Yet there is no consideration in this video of the price mechanism or mention of particular goods which vary in relative scarcity throughout time. They might as well be contemplating if the terms "further" and "closer" have become nearer to each other or are still as far apart as they were ten years ago. They both need a lesson in the real world where demand supply and price are the inseparable components that exist and without any one of them it becomes an argument of total futility like trying to determine the volume of a three dimensional brick by measuring tow dimensions only and ignoring the third dimension.
They know the third dimension. It is called real GDP and the price level. Did real GDP fell because nominal GDP fell or because of supply-side issue, like productivity losses or reduced hours, considering prices more or less stuck at the same level?
Guilherme . Real GDP falls occurred in the recessions since measured outputs from industry fell in real terms. That was as a result in some cases of disruption to the financial side of businesses which often occurs when a no related party or non related economy has losses. All of the world's economies are interrelated since there is almost nowhere that trade does not occur be it financial or real goods and services. Even natural disasters such as loss of fish stocks or mine collapses result in recessions in smaller countries or those with industries that are not diverse enough to cushion the shock. It is the real goods and services that create the wealth, not financial services which are necessary and often a barometer of the wealth of a country. But expansion of finance whether it be government related (money creating sovereign government) or other is alone a problem more than a solution unless there is a corresponding increase in real wealth that matches that increased finance. They don't seem to take due notice of this critical part which in it's absence results in a conversation akin to a dog chasing it's tail.
@@Rob-fx2dw There was a demand shock coming from the financial crisis. Since prices are sticky in the short run, that creates a recession, which has to be tackled by an expansion of the money supply. In addition to that, there are also real effects at place. The end of the housing boom makes the housing market less attractive and you have to move resources to other activities. It demands some time until it adjusts. Asking if the loss in activity is coming from the demand shock or from supply issues is crucial to fixing it.
Guilherme Z You say prices are 'sticky in the short term' and it creates a recession. So if prices are "sticky" as you say then why is there not a recession every day and forever. Your assertion is wrong since prices are not sticky and the evidence is because if they were the opposite effect would end a recession. Yet no recognition of this is given. The reality is prices may be sticky in some minds but when someone is a believer in that "sticky" principle why don't they include money prices themselves. Recessions occur largely because of outside influences and imbalances of demand supply and prices in a market. Such recessions sort themselves out rather quickly and such influences include government interferences in the flow or quantity of money or goods and services for what ever motive. Why do you or someone have to create more money at a certain time when the adjusting mechanism for demand and supply changes is price variations. To say that government knows what prices should be is just totally unsupported by any reliable evidence or reasoned logic but is disproved by the understanding of what outside market forces can create. Where is the evidence that government knows what prices 'should be' rather than what they actually are at any time other than the private market itself? When someone outside the non government economy being government itself enters to influence the market it creates a situation of imbalance itself for the very reason that nobody knows what prices ideally "should" be.
@@Rob-fx2dw the evidence for sticky prices are overwhelming. You can search on the web to find papers on the matters. We dont see a recession everytime because the government manages the money supply just well enough so it delivers the right amount of demand. When you face a demand shock, if prices were flexible, there would be no recession. The fact that we have is evidence for the fact that prices are not flexible enough. A good way to see that is to look for situations where the central bank deliberately push for a hard policy. Look for the disinflation episodes. The Volcker one. The one in Brazil in 2016. The hard money did not led to imediate lower prices and stable output, but to a recession in the short run.
Great discussion!
The odd thing about healthcare is your GP unlike your auto mechanic does not do much of the work so he could be your agent and shop price for you, but he does not because you pay through insurance and so the zeitgeist is to ignore cost.
"the next recession will have no one big cause" lol
It hasn’t yet.
He was wrong - covid😃
These two should sit down together more
I agree! I love Tyler and wonder if he has more respect for Paul after this or less? I rooted for Paul but don't feel like he is the super star tyler has made him out to be..
Cowen's question about conservative Democrats misses the point. Studies show that when a Democrat wins in a red state, or a Republican wins in a blue state, that candidate is CLOSER to their average constituents ideology than a normal politician would be (basically, average ideology tends to be really moderate, as are politicians who can win in states their party usually performs poorly in). The reason they can't often win is that they are successfully tied to how voters feel about the national party. Heitkamp, Donnelly, Bredesen, and McCaskill are all quite moderate and still lost in 2018 (on the flip side, you can talk about Elizabeth Warren beating Scott Brown in Massachusetts in 2012).
Those pictures may be a tad out of date...
Krugman seems to be questioning economics as studied by academics throughout the interview but also doesn't believe in B. Caplan's signaling hypothesis at the public Ivies. Interesting.
You have it exactly wrong. Krugman said he thinks it applies to schools like Princeton.
‘badge of social class’ = signaling theory of higher education
"We don't know very much" - At least Krugman is self-aware.
The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. - Hayek
Brexit mentioned!!
...But you have to wait for it up until the end: 56:46.
I like krugman, but sometimes he sounds way too condescending. Cowen is such a nice guy.
Can't agree, Guilherme. Krugman's constantly posing questions that he admits he doesn't have an answer for. "There's always a significant chance that my basic model of how the world works is wrong." Who else says that on-stage and on-camera? Great conversation.
@@lawsonj39 It is a great conversation... but sometimes he sounds a bit dismissive of others' opinions. But maybe it was just my impression.
@Guilherme Z -- I agree. I like Krugman too, but he sounds a bit condescending/dismissive.
The body language tells everything.
Krugman, it has been suggested that you start checking your 6, 5X5.
crypto is gonna be very useful in the black market as well as pirating. that is going to be its primary use. Same with smart contracts. criminals are going to be using smart contracts, like hitmen or drug runners
dummy
@@tuckerbugeater ?
I looks like Paul Krugman got his PhD in 1770 since his understanding of macroeconomics looks like someone who never read anything written since Adam Smith.
You mean, except for new trade theory, which he developed, his work on monetary theory at the ZLB, etc.? What planet do you come from?
@@Capital_Ideas1 I come from earth, and you?
Being a PHD student at a top university when I look at the frontier in macroeconomics and theory and then I look at what Krugman says it looks like Krugman doesn't know anything. He is talking about IS-LM for god's sake!
His criticisms of economic theory is like someone saying "physics is wrong because real world objects are not points"...
@M. Hfm. Just a wild guess, M.--I don't want to presume to speak for Jose--but he sounds like he's been marinated in supply-side, which has dominated American econ departments for decades. And you can see where it's gotten us as implemented by the likes of Reagan, Clinton, and the Bushes: spiraling inequality, concentration of wealth at the top, erosion of the infrastructure, etc. Krugman, as you can hear here, advocates a return to a demand-driven policy, and I think he's right.
@@Giorno. 😂😂...is rbc, nkdsge, ayagari, etc gonna save the world?
There is seldom a more idiotic conversation when two people get together and argue about which percentage of demand or supply is lacking which is what is presented here.
The reasoning is that demand and supply never exist in any economy without a price and particular goods being considered at the same time.
Yet there is no consideration in this video of the price mechanism or mention of particular goods which vary in relative scarcity throughout time.
They might as well be contemplating if the terms "further" and "closer" have become nearer to each other or are still as far apart as they were ten years ago.
They both need a lesson in the real world where demand supply and price are the inseparable components that exist and without any one of them it becomes an argument of total futility like trying to determine the volume of a three dimensional brick by measuring tow dimensions only and ignoring the third dimension.
They know the third dimension. It is called real GDP and the price level. Did real GDP fell because nominal GDP fell or because of supply-side issue, like productivity losses or reduced hours, considering prices more or less stuck at the same level?
Guilherme . Real GDP falls occurred in the recessions since measured outputs from industry fell in real terms. That was as a result in some cases of disruption to the financial side of businesses which often occurs when a no related party or non related economy has losses. All of the world's economies are interrelated since there is almost nowhere that trade does not occur be it financial or real goods and services. Even natural disasters such as loss of fish stocks or mine collapses result in recessions in smaller countries or those with industries that are not diverse enough to cushion the shock.
It is the real goods and services that create the wealth, not financial services which are necessary and often a barometer of the wealth of a country. But expansion of finance whether it be government related (money creating sovereign government) or other is alone a problem more than a solution unless there is a corresponding increase in real wealth that matches that increased finance. They don't seem to take due notice of this critical part which in it's absence results in a conversation akin to a dog chasing it's tail.
@@Rob-fx2dw There was a demand shock coming from the financial crisis. Since prices are sticky in the short run, that creates a recession, which has to be tackled by an expansion of the money supply.
In addition to that, there are also real effects at place. The end of the housing boom makes the housing market less attractive and you have to move resources to other activities. It demands some time until it adjusts.
Asking if the loss in activity is coming from the demand shock or from supply issues is crucial to fixing it.
Guilherme Z You say prices are 'sticky in the short term' and it creates a recession. So if prices are "sticky" as you say then why is there not a recession every day and forever.
Your assertion is wrong since prices are not sticky and the evidence is because if they were the opposite effect would end a recession. Yet no recognition of this is given. The reality is prices may be sticky in some minds but when someone is a believer in that "sticky" principle why don't they include money prices themselves.
Recessions occur largely because of outside influences and imbalances of demand supply and prices in a market. Such recessions sort themselves out rather quickly and such influences include government interferences in the flow or quantity of money or goods and services for what ever motive.
Why do you or someone have to create more money at a certain time when the adjusting mechanism for demand and supply changes is price variations. To say that government knows what prices should be is just totally unsupported by any reliable evidence or reasoned logic but is disproved by the understanding of what outside market forces can create.
Where is the evidence that government knows what prices 'should be' rather than what they actually are at any time other than the private market itself? When someone outside the non government economy being government itself enters to influence the market it creates a situation of imbalance itself for the very reason that nobody knows what prices ideally "should" be.
@@Rob-fx2dw the evidence for sticky prices are overwhelming. You can search on the web to find papers on the matters.
We dont see a recession everytime because the government manages the money supply just well enough so it delivers the right amount of demand. When you face a demand shock, if prices were flexible, there would be no recession. The fact that we have is evidence for the fact that prices are not flexible enough.
A good way to see that is to look for situations where the central bank deliberately push for a hard policy. Look for the disinflation episodes. The Volcker one. The one in Brazil in 2016. The hard money did not led to imediate lower prices and stable output, but to a recession in the short run.