Three cheers for crass consumerism!

by Roger Koppl

Over an Marginal Revolution Tyler Cowen quotes approvingly a new book by Geoffrey Miller.

From my perspective as an evolutionary psychologist, this is how consumerist capitalism really works: it makes us forget our natural adaptations for showing off desirable fitness-related traits. It deludes us into thinking that artificial products work much better than they really do for showing off these traits. It confuses us about the traits we are trying to display by harping on vague terms at the wrong levels of description (wealth, status, taste), and by obfuscating the most stable, heritable, and predictive traits discovered by individual differences research. It hints coyly at the possible status and sexual payoffs for buying and displaying premium products, but refuses to make such claims explicit, lest consumer watchdogs find those claims empirically false, and lest significant others get upset by the personal motives they reveal. The net result could be called the fundamental consumerist delusion — that other people care more about the artificial products you display through consumerist spending than about the natural traits you display through normal conversation, cooperation, and cuddling.

At least one commenter took the  passage as a slam on capitalism. I don’t think we should see it that way. Some of us do think that designer labels will save our souls. That’s bad. But it’s a whole lot better than thinking that, say, the Führer will save your soul, or a crusade against the infidels, or nationalism, or a host of other collective salvations. When the inevitable disappointment from consumerism comes, it’s a private tragedy.  When the inevitable disappointment from a collective salvation comes, it’s a national crisis inviting some new, possibly worse, collective salvation. Until humans learn the wisdom of angels, I will remain a great supporter of crass consumerism and conspicuous consumption.

Keynes Against DeLong: A Comment on the Cowen-DeLong Debate

by Mario Rizzo

 

I am reading with some exasperation Brad DeLong’s comments in his exchange with Tyler Cowen on the efficacy of the stimulus package.

 

Clearly, DeLong is a rigid aggregate demand theorist. He talks about output and employment as if it were some homogeneous thing. In his mind, macroeconomics is just about spending to increase the production of stuff. Yes, there is lip service to the idea that the stuff should have economic value. But that is easy when you assume that the only alternative is value-less idleness. Continue reading

Reflating the Housing Bubble?

by Mario Rizzo

 

In an effort to prevent deflation, the Fed has now decided to do more quantitative easing, that is, to buy with newly created high-powered money various assets aside from short-term Treasury securities. Over the next six months it will buy up to $300 billion in long-term Treasury bonds.

 

It will also purchase additional mortgage-backed securities (MBS) in the amount of $750 billion as well as up to $100 billion in additional securities of Fannie and Freddie (to a total of $200 billion). These are the parts of the new policy that concern me most. They are bad ideas. Continue reading

Tyler Cowen is Right about Stimulus — Niggling or Not.

by Mario Rizzo

From Tyler Cowen at Marginal Revolution:

Note that under standard theory neither monetary nor fiscal policy will set right the basic problems from negative real shocks and indeed the U.S. economy is undergoing a series of massive sectoral shifts.  That includes a move out of construction, a move out of finance, a move out of debt-financed consumption, a move out of luxury goods, the collapse of GM, and a move out of industries which cannot compete with the internet (newspapers, Borders, etc.).

 

I’ve never seen a stimulus proponent deny this point about real shocks but I don’t see them emphasizing it either.  It should be the starting point for any analysis of fiscal policy but so far it is being swept under the proverbial rug.

 

I think that Tyler Cowen is right on this issue. What follows is my congruent take on the issue, without implicating him in the details. Or implicating me in the details of his own view. Continue reading