Who Me?

"Who Me?" I feel like the Alfred E. Newman of the blogosphere. Six comments on yesterday's blog (a new record I believe for Ideas Hatched, though I, the Hatcher, put in one of them), but two commenters made the blogosphere faux pas of questioning my credibility on various and asunder assertions made with the bravado that is usually sufficient to cow all would-be doubters. Let me explain something to you people - the blogosphere is all about the democratization of unsubstantiated opinions. Why should the New York Times have a monopoly on using shoddy or non-existent facts to build castles of logic built on sand? It's a revolution, people! If you don't like my set of facts, make up your own and be on your way!

Still, given that the readership of the New York Times is well into the millions, and mine is about 10, maybe I should distinguish myself from them through being unimpeachably credible. There is a difference between saying that a comment I make goes unsubstantiated versus the contention that it is unsubstantiable (not a word, I know, but it should be). And that I will prove to you now. Though I generally try to restrain from responding to comments, I make this one time exception to establish the fact that you need never doubt the Hatcher again. (Granted, my back-up support is found from googling and looking at other websites that I assume must be credible. And they in turn probably do the same. In the end, every article on the web - conservative or liberal in tone - is probably based on one of two sets of completely made up and contradictory facts.)

Comment #1 (from the ubiquitous anonymous):

At long last we see some numbers (albeit uncited) to support assertions in the blog. Let's see what went unsupported....most countries in western Europe have stagnant economies and high unemployment...Canadian health care has long lines (oh sorry that was yesterday)...the rhetoric about big corporations and govt doesn't ring true for most people...

I actually posted a response to this comment yesterday, but was unable to link in the comment for some reason. So here is the link - it links to an Adobe file - you'll find the key line towards the bottom of the first column, but I'll quote it here:

"The peer-reviewed literature on waiting times has found that Canadians tend to experience some of the logest waiting times in the world. In 2003, Canadian patients waited almost 18 weeks from the time their general practitioner referred them to a specialist for care to the time they actually received treatment."

Now picture the horror of Canadian women waiting 18 weeks for a C-section!

For the moribund nature of the four largest Western European economies, look here. Albeit, the same cited page says that if you remove France, Germany, Spain, and Italy (the four largest economies in Western Europe), the rest of the countries look OK. But don't feel sorry for the unemployed in France, Germany, etc. These guys probably get paid as much for 52 weeks of vacation as the rest of the workers get paid while getting only 12 weeks of vacation. They are the lucky ones.

As for the rhetoric about big corps and govt not ringing true for most people, well, I got nothing. It's an opinion about other people's opinions. To substantiate it I'd have to be a sociologist, but fortunately instead I decided to get educated. Or I'd have to listen to other people's opinions - not going to happen. So I hereby make the following correction: add the words "I don't think ..."

Comment #2 (from Professor Vic):

I like the fact that one of the posters comments on the use of a few data points to support the assertions in the blog. I'll take issue with Hatch's comment, "in the early stages of the Great Depression, we elected FDR, whose policies contributed to the length and severity of the Depression." This statement, as usual, is not supported by any data... (Professor Vic then goes on to provide data regarding GDP growth under Roosevelt, arguing that his performance may have been quite robust.)

I fully realize that this simplistic analysis would indeed be ripped apart by an anonymous referee in an academic journal. So too would a comment like, "in the early stages of the Great Depression, we elected FDR, whose policies contributed to the length and severity of the Depression," without any data to back such a comment up.

Is that so Professor Vic? Not if you ask one of the former stars of the Economics Department intramural basketball team. Sure, his defensive repertoire never involved the Lambier-esque (or should I say Professor Vic Matheson-esque) clotheslining move on the opposition, but he nonetheless was a key player. Here is what he has to say. Not sure if the Minneapolis Fed Quarterly Review is refereed, but I am sure you or I can't get published there. Some quotes from Professor O'Hanian:

"Productivity grew rapidly after 1933. Theory predicts that the economy should have recovered to trend by 1936, with above-trend labor input supporting higher consumption and investment. But hours worked remained 20-25 % below trend until World War II. So why was labor input so low given rapid productivity growth? It wasn't because other shocks were negative - banking panics and deflation ended in 1933, and real interest rates were low."

There must have been a major negative shock to offset the recovery of economic fundamentals and keep the economy depressed. The government adopted some extreme labor and industrial policies (the National Industrial Recovery Act) in 1933 that really distorted markets. These policies suspended the antitrust laws and permitted collusion, provided that the rents were shared with labor... In contrast to the fast recovery predicted by standard theory, our model predicts economic activity remains far below trend after 1933. We concluded that these policies were a key factor behind the persistence of the Depression.

Ironically, President Roosevelt thought that "excessive" competition was responsible for the Depression, and that these policies would bring recovery. He was wrong. My colleague Armen Alchian was a student at Stanford at the time, and told me that his professors thought the policies were crazy - they couldn't understand how promoting monopoly could raise employment. It is unfortunate that Roosevelt didn't listen to these mainstream economists - if he had, the recovery would have been much stronger. These policies were finally weakened during World War II - and employment rose substantially.

There also seemed to be a sentiment to redistribute income during the 1930s. But this policy was a really inefficient method of redistribution. It created a lot of inequality by shutting down employment."

Game Set, and Match to ... the Hatcher!