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Karl Smith: Apostle to teh Ignoramuses - Grasping Reality with Both Hands

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10/21/10 7:53 PM

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Grasping Reality with Both Hands The Semi-Daily Journal of Economist J. Bradford DeLong: Fair, Balanced, RealityBased, and Even-Handed Department of Economics, U.C. Berkeley #3880, Berkeley, CA 94720-3880; 925 708 0467; delong@econ.berkeley.edu.

Economics 210a Weblog Archives DeLong Hot on Google DeLong Hot on Google Blogsearch September 15, 2010

Karl Smith: Apostle to teh Ignoramuses Karl Smith appears to be hanging out with some economists who have trained themselves into being incapable of seeing what is going on around them. Their idea of why the employment-to-population ratio is so low right now is something like this: At the end of 2008, for some reason or another, an extraordinary mismatch suddenly developed between the skills of American workers and the requirements of industry. Thus the employment-to-population ratio fell by five percentage points. And nothing government can do can make the situation better. When you ask them why this structural mismatch emerged at the end of 2008 rather than, say, in 2006 and 2007--when the recognition that America was overbuilt because MBS could not possibly be as riskless as their originators were claiming took hold? Why did the employment-to-population ratio stay high for a full extra year and a half before starting the sudden fall to its current level? Ask that question, and you are met with inky, squid-like clouds of obfuscatory word salad. Yes, he is the Apostle to teh Ignoramuses. Better him than me. He is a very patient man. He does a good job: Unanticipated Changes in Inflation: Small Business http://delong.typepad.com/sdj/2010/09/karl-smith-apostle-to-teh-ignoramuses.html

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Karl Smith: Apostle to teh Ignoramuses - Grasping Reality with Both Hands

10/21/10 7:53 PM

Edition: The chart... shows the percentage of small businesses raising or lowering prices. It comes from the NFIB Small Business Economic Trends Report. One of these periods is not like the others. Can you spot it? To be fair, the current period isn’t completely different from all the others. We can see mini-versions in 2002 and in 92. What did those periods have in common with today? Sharp dives in the number of businesses raising prices is coincident with rising unemployment. In particular a large gap between what is really happening and what business say they are planning is also associated with increases in unemployment.... Here is the thing that really stays with me. All of this is survey data. We are asking people. People lie. People are biased. People don’t understand the question. All of these are inherently noisy indicators of what is going on, but they tell a consistent story: tight credit leads to higher unemployment and lower pricing power. Where’s the mismatch?

Brad DeLong on September 15, 2010 at 08:27 PM in Economics, Economics: Macro, Utter Stupidity | Permalink Favorite

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Comments christofay said...

http://delong.typepad.com/sdj/2010/09/karl-smith-apostle-to-teh-ignoramuses.html

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Karl Smith: Apostle to teh Ignoramuses - Grasping Reality with Both Hands

10/21/10 7:53 PM

Practitioners of American Economicism run the scale from Ignoramuses to Rubinista Surrender Monkeys To be a good economist you pretty much have to ignore by the Washington Consensus Which means dump Give-Away-the-Treasury Secretary Tim Geithner and appoint Elizabeth Warren to Treas Secretary And send Summers to that super serious Southeast Iowa School of Economics Reply September 15, 2010 at 11:31 PM christofay said... Architects of destruction, between Rubins, Summers and Geithner they blew up the American financial system, Harvard, Citibank, but I repeat myself, and at present destroying from within the Obama Administration Surely worthy of a Presidential Medal of Honor just like that guy at CIA that allowed the Arabs to launch missiles at the Trade Towers Mission Accomplished! Reply September 15, 2010 at 11:40 PM kharris said... Same survey, as noted elsewhere, shows that small firms are having no more trouble finding qualified workers, or paying them, now than in most other times. If a mismatch were the problem, it would have to be either in pay offers vs pay demands, or in skills. (Geography doesn't serve as an explanation in this case, because it would show up in the other factors.) This is, of course, just independent businesses. I assume they employ fewer highenergy particle researchers than big firms like WalMart. But it's a start, right? Reply September 16, 2010 at 05:01 AM save_the_rustbelt said... The structural mismatch has been growing for 20 years, and has manifested itself more in chronic underemployment than in unemployment. The unemployment problem just gives us an opportunity for conversation. Reply September 16, 2010 at 06:25 AM Comments on this post are closed.

http://delong.typepad.com/sdj/2010/09/karl-smith-apostle-to-teh-ignoramuses.html

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Karl Smith: Apostle to teh Ignoramuses - Grasping Reality with Both Hands

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First, Kill all the Pensions

economics DeLong

Me:

The Atlantic (blog) - Oct 19, 2010 She may or may not have been the first major economics blogger, depending on whether we are allowed to throw outlying variables such as Brad Delong out of ... Related Articles » « Previous Next »

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http://delong.typepad.com/sdj/2010/09/karl-smith-apostle-to-teh-ignoramuses.html

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Karl Smith: Apostle to teh Ignoramuses - Grasping Reality with Both Hands

http://delong.typepad.com/sdj/2010/09/karl-smith-apostle-to-teh-ignoramuses.html

10/21/10 7:53 PM

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Karl Smith: Apostle to teh Ignoramuses - Grasping Reality with Both Hands

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10/21/10 7:53 PM

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Apostle to teh Ignoramuses - Grasping Reality with Both Hands  

Economics 210a Weblog Archives DeLong Hot on Google DeLong Hot on Google Blogsearch September 15, 2010 The Semi-Daily Journal of Economist J...

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