Tag Archives: Larry Summers

Happy 4th of July to the world’s second worst economist — Larry Summers

Any scientist who made such massively incorrect explanations and predictions would be laughed out of town. Not so, one of the ‘smartest guys in the room’ and former Harvard President Larry Summers.

Here’s Larry in December 2013 coming up with ‘secular stagnation’ to explain why the recovery from recession was one of the weakest and slowest on record and why this was the way things would be, and we’d better get used to it.

Here’s the link — http://larrysummers.com/2013/12/15/why-stagnation-might-prove-to-be-the-new-normal/

Here’s a direct quote from the beginning of the article

” Is it possible that the US and other major global economies might not return to full employment and strong growth without the help of unconventional policy support? I raised that notion – the old idea of “secular stagnation” – recently in a talk hosted by the International Monetary Fund.

My concern rests on a number of considerations. First, even though financial repair had largely taken place four years ago, recovery has only kept up with population growth and normal productivity growth in the US, and has been worse elsewhere in the industrial world.

Second, manifestly unsustainable bubbles and loosening of credit standards during the middle of the past decade, along with very easy money, were sufficient to drive only moderate economic growth.

Third, short-term interest rates are severely constrained by the zero lower bound: real rates may not be able to fall far enough to spur enough investment to lead to full employment.

Fourth, in such situations falling wages and prices or lower-than-expected are likely to worsen performance by encouraging consumers and investors to delay spending, and to redistribute income and wealth from high-spending debtors to low-spending creditors.”

There’s more but (mercifully) this is enough to give you the gist.

Then we have Larry from May 2017 — here’s the link

What history tells us about Trump’s budget fantasy

Here’s Larry talking about the Trump claim of 3% economic growth “The Trump economic team has not engaged in serious analysis or been in dialogue with those who are capable of it so they have had nothing to say in defense of their forecast except extravagant claims for their policies. Taking their supply-side perspective, do they really believe that through tax cuts and deregulation they are going to accomplish more than Ronald Reagan, who after all reduced the top tax rate from 70 to 28 percent? Between 1981 and 1988, GDP per adult grew by an average of 2.5 percent, distinctly slower than what they are forecasting. Even this figure reflects a substantial cyclical tail wind from the decline in unemployment from 7.6 percent to 5.5 percent (which from Okun’s law implies adding about half a percent to GDP growth) — something unavailable in the present context.”

Now follow the following link to the actual numbers — https://www.statista.com/statistics/188185/percent-chance-from-preceding-period-in-real-gdp-in-the-us/.

At the time Larry was writing in 2nd quarter of 2017, economic growth that quarter would hit 3% right under his nose.

Of the 8 quarters from then through the 1st quarter of 2019 (2nd quarter results not in yet), economic growth was 3% or greater in half, and always over 2.5 in the other half.

OK back to the science in subsequent posts.

For the world’s worst economist  — see https://luysii.wordpress.com/2019/07/03/happy-fourth-of-july-to-the

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Back from band camp for grownups

While at band camp, we heard a fabulously intense performance of a piece which must be witnessed rather than listened to on the radio or on a CD while you’re doing something else.  It was Messiaen’s Quartet for the End of Time. You couldn’t ask for a better audience — 150+ raptly attentive amateur musicians with all cell phones off and no program notes.  The piece takes an hour to play and is full of long silences.  In some parts just one instrument plays while the other players sit stock still staring ahead, so the piece really is part theater.

You can always tell when a string player or a pianist starts to play as something moves and your mind expects a sound.  No so with the many long silences of the clarinet solo.  Parts begin so softly that you can’t even be sure the clarinet is playing, as there is no motion to clue you in.  Then, suddenly you realize you’ve been hearing a sound for a while.   The piece ends with a violinist ascending slowly into the tonal stratosphere while producing a prolonged decrescendo.  She was in tears at the end.

The players (correctly) decided on no descriptive program notes (which were read aloud at the beginning) as they didn’t want to break up the intensity with rustling paper (or the spoken word).  Probably it’s better to hear the piece not knowing the background, but there’s a Wiki page for it which is pretty good if you already know its provenance.

Pianists don’t have to count.  When we get stuck we just stop and then start over.  Even with chamber music we have the score so we always know what the other players should be doing, so we can pretty much fake what we can’t play and keep things going.  Our only problems are the incessant page turns, sometimes with all the other instruments cutting out leaving us alone playing with both hands, turning the page and trying not to miss a beat.  All this was true until I got to play a piece with bassoon, clarinet, oboe, violin and cello by Martinu — https://en.wikipedia.org/wiki/La_revue_de_cuisine, which had only the piano part, and long 9 and 10 measure rests which I was supposed to count.  I thought it would be a total disaster, but the coach conducted it, and shouted out numbers when I was supposed to play. I bought him a beer later that week.  An interesting piece with a tango, and a Charleston in it.

Participants at the camp decided that there would be no talk of politics, just music, and the world did manage to spin on its axis for a week without our help.

I spent 300 miles or so of the 1,100 mile drive back on backroads through the verdant midwest countryside.  I made it a point to pace off a mile or so every now and then in a particularly beautiful stretch of country and then get out and walk it.  Typical of the midwest, each time I did, someone would stop and ask if I needed help.

The many miles of the country I went through on the way back look very good.  The stores and  restaurants and malls were full, the campgrounds crowded, and help wanted signs were everywhere. Much better than the previous trips of the past 5 years.

So then I get back to Massachusetts and the alternate universe of the New York Times.  When the Times talks about the longest bull market in history, they note in the same breath that it is only for rich people, ignoring the fact that all pension plans, IRAs and 401k’s have been beneficiaries.  Also on the front page was a story about a payoff to a porn star, something of minimal consequence to the daily lives of those outside the bubble.

Paul Krugman, Nobel Laureate in economics, appears on the opinion page, despite having declared election night the stock market would never recover, and a few years ago informing us that we were at peak oil production.  At least no articles by Larry Summers (smartest guy in the room and former president of Harvard) about secular stagnation and the impossibility of 3% economic growth.

Linus Pauling was one of the great chemists of the 20th Century — electronegativity, the nature of the chemical bond, the alpha helix etc. etc.  Yet when he said vitamin C could cure colds and cancer, he was proved wrong and his pronouncements on the subject roundly ignored.  No so with political and economic pundits.

The disconnect between the bicoastal mainstream media and the center of the country is profound.  The November elections should be fascinating.  Help stamp our minority employment — vote Democratic.