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Tyler's argument isn't Malthusian or of the Charles Duell variety. It doesn't look like he's making a prediction, just noticing data and speculating on causes. I don't particularly disagree with Falkenstein's central message about liberty, but at the margin, Cowen's ideas are more interesting. If you believe that changes in productivity, income and asset returns are not completely determined by liberty or lack thereof, then Cowen is owed more in a criticism than Charles Duell aspersions and Ayn Randisms.
I'd agree with all of the above, and you've stated it really well. But I wonder about the stationarity of said margin. I don't deign to speak for Falkenstein (or you or Tyler), but I think his post as saying something akin to, why debate the seniority of a particular CMO tranche relative to its immediate peers, if the model is broken to begin with. Crude, yes, but also possibly way more accurate.
One issue with the liberty explanation is that regulation and government have been growing since the turn of the 20th century. You could try to argue that growth rates in fact slowed around, say, 1913, but in any case, I don't think factors like technology and demographics should be thrown out. It seems more dangerous to dismiss them than not.
Jason: You are right. I think one challenge is that its hard to falsify Tyler's thesis, or his colleagues' concerns. One one hand, I see that 'good' regulations (e.g. an exchange mechanism, with good rules, collateral, and enforcement) can fuel growth while 'bad' regulations (e.g. chartering ratings agencies to rate debt, expecting them to get the issuers of said debt to pay them for this regulation, and then requiring counterparties to write contracts on top of these ratings) can kill growth and blow the economy up. So some of this is separating the good from the bad, so we can advocate for the former and reduce the latter.
Tyler's argument isn't Malthusian or of the Charles Duell variety. It doesn't look like he's making a prediction, just noticing data and speculating on causes. I don't particularly disagree with Falkenstein's central message about liberty, but at the margin, Cowen's ideas are more interesting. If you believe that changes in productivity, income and asset returns are not completely determined by liberty or lack thereof, then Cowen is owed more in a criticism than Charles Duell aspersions and Ayn Randisms.
ReplyDeleteI'd agree with all of the above, and you've stated it really well. But I wonder about the stationarity of said margin. I don't deign to speak for Falkenstein (or you or Tyler), but I think his post as saying something akin to, why debate the seniority of a particular CMO tranche relative to its immediate peers, if the model is broken to begin with. Crude, yes, but also possibly way more accurate.
ReplyDeleteOne issue with the liberty explanation is that regulation and government have been growing since the turn of the 20th century. You could try to argue that growth rates in fact slowed around, say, 1913, but in any case, I don't think factors like technology and demographics should be thrown out. It seems more dangerous to dismiss them than not.
ReplyDeleteJason: You are right. I think one challenge is that its hard to falsify Tyler's thesis, or his colleagues' concerns. One one hand, I see that 'good' regulations (e.g. an exchange mechanism, with good rules, collateral, and enforcement) can fuel growth while 'bad' regulations (e.g. chartering ratings agencies to rate debt, expecting them to get the issuers of said debt to pay them for this regulation, and then requiring counterparties to write contracts on top of these ratings) can kill growth and blow the economy up. So some of this is separating the good from the bad, so we can advocate for the former and reduce the latter.
ReplyDelete