Gah, young turks is fucking annoying. “Every sane person thinks that…”
Oh, yeah? You might as well start a sentence “From my perspective, with the limited knowledge I have, I think…”
Great job JJ and Clayton. +1
Yeah that guy is a complete moron. As far as I can tell, he’s never even heard the fact that correlation isn’t causation. The best is his (as far as I can tell, fairly original) theory that tax cuts caused the Great Depression. Not kidding, he’s said this on multiple occasions. Watch how he stumbles around and goes into his “get animated” routine when he spouts this on MSNBC and the (somewhat) sane Dylan Ratigan questions him on correlation/causation.
But this may make you feel a bit better. They’re old, but still.
Which…remember in the video in the post above, Cenk Uygur is praising Hanauer. Hanauer says that businesses don’t create jobs, it’s the demanding consumers that do that. He says that the problem is he doesn’t spend enough of his fortune to generate the demand that would (supposedly, according to him) lead to more jobs. Yet Cenk Uygur in that MSNBC clip at 4:44, claims that businessmen taking out their profits from business for personal consumption is the problem…and the solution is to have tax rates really high so that the business owners will be more inclined to keep reinvesting the profits in their own business.
Seriously? Basically the guy just agrees with anything that says “raise taxes, the rich are too rich, income disparity”, even if it directly contradicts his own reasoning for holding that position.
Correlation/causation is so crucial. Someone needs to do a study on the effect of solar eclipses on economic prosperity (BTW, we had an awesome solar eclipse visible here on the US West Coast today!). I’m willing to bet money there’s some kind of non-random correlation. But so what?
Hanauer begins the speech by drawing an equivalence between geocentrism (a fact about the way the world is) and being opposed to taxing the rich (a position on the way the world ought to be) - a blatant confusion of clearly separate categories. And the rest of the talk is just an unfolding of the confused introduction.
As for how wealthy businessmen can be so confused about why they are wealthy, I think there are three big reasons that account for much of it:
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They have an interest in being “confused”. For example, no one ever considers the possibility that Buffett actually benefits from increased taxation by a greater degree than he loses. Buffett calling for increased taxation is no different than a King or Lord calling for increased taxation. To paint it as some kind of altruistic act of self-sacrifice is exasperatingly absurd.
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They got lucky. A lot of people who get wealthy in the market didn’t so much have any greater skill, diligence, knowledge, discipline or anything else than other people so much as they happened to be the right person at the right place at the right time.
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They’re rent-seekers, not capitalists. Many of the most wealthy “businessmen” work in highly cartelized industries - defense industry, financial industry, law, etc.
This doesn’t explain all of it but I think it explains a great deal of it.
Clayton -
Jevons is 140 years ahead of you:
That was one of Jevons’ early explanations for the business cycle (not exactly solar eclipses, but sunspot activity and their effects on crops).
You beat me to it by two… minutes…
You mean something kind of like this?
Well…not exactly. His comparison was to the refute the claim that “if taxes on the rich go up, job creation will go down.” That’s how he begins the presentation. He says this notion is “an article of faith for Republicans, seldom challenged by Democrats and is indeed shaped much of the economic landscape.”
He goes on…“But sometimes the ideas that we are certain are true, or dead wrong.” That’s where he brings in the geocentrism comparison.
So your characterization here isn’t very accurate.
I understand that completely, but that would imply that they aren’t actually “confused” at all, but rather sly like foxes. I don’t doubt that successful businessmen are sly like foxes, but I seriously doubt they are feigning ignorance here.
Again, I don’t necessarily disagree. I wasn’t really questioning “how” one could be so successful and not understand why, I was more just commenting on the fact that it kind of bugs me when I see examples of it.
Government spending or stimulus creates jobs as well as spending on a credit card makes an individual rich.
The government is like the young step mom coming home from the mall with hands full of bags fulled with stuff that will never be used.
@Aristippus, Old Guy, JJ: Wow! The Jevons study is perfect to my point and the temp graph link is saved… this is precisely the kind of statistical hyperbole that illustrates the ultimate absurdity of randomly searching for correlations in data.
In today’s scientific climate, if you want to prove something for which you can give absolutely no causal mechanism, you start data-mining statistical categories until you find some kind of correlation (e.g. difference in average pay between men and women). Then you publish a statistical study on that correlation, carefully avoiding any claim that there is a causal link but strongly insinuating it. Then you sit back and watch the journalists do their job of butchering any distinction between correlation and causation. Problem solved.
Clayton -
So this moron is gonna be on The Peter Schiff Show today. This ought to be fun.
Tune in at SchiffRadio.com
10am-Noon ET
“Today’s guest is Nick Hanauer, founder of the Seattle-based venture capital firm Second Avenue Partners, on why consumers and not wealthy businessmen create jobs, as argued in his now notorious TED talk.”
I’m listening to it now, it’s just intolerable. I wouldn’t even know where to start refuting him; it is only his very best arguments that are wrong, and the rest are just plain meaningless. He’s one of those guys who, in analyzing an economic problem, will turn to ecology, systems theory, mathematics, trendy game theory, historical pseudo-empiricism–anything but actual economics. And Peter, for all his strengths, simply doesn’t have the strongest grasp of Austrian economic theory and it shows whenever he tries to argue with these kinds of cranks.
Edit: As I listen more, Hanauer, in addition to being a crank, also seems to be genuinely unintelligent. I think it’s obvious that intelligence and reliable judgement are not at all the same thing; there are many highly intelligent people who use their well-developed abilities in abstract reasoning to continuously deceive and outsmart themselves (Orwell pointed out that doublethink requires a quick and agile mind). Hanauer is not one of those people. He uses name-calling and hysterical shouting; he repeats himself over and over again; he refuses to listen or even appear to listen by waiting his turn to speak; he makes things needlessly personal (telling Peter to move his family out of the country); he talks over Peter more than Peter has ever talked over a guest (and that’s saying something… I’m astonished that Peter hasn’t lost his temper); he “misunderstands” (probably deliberately) simple arguments by, for instance, “confusing” economic growth with the overall state of an economy (as in his response to Peter’s point about the economic growth of the 19th century United States): in short, he is a complete idiot.
Stuff like this makes me think that Bob Roddis is absolutely right: all anti-libertarians and anti-Austrians inevitably have zero understanding of even basic Austrian concepts, and they are extremely intellectually lazy which leads to extreme intellectual dishonesty.
My humble blog has a rebuttal of Hanauer’s speech:
http://smilingdavesblog.blogspot.com/2012/06/is-economy-ecosystem.html
I finally found the Mises quote I was looking for. This one is from Socialism:
That the social life of men resembles the biological process is an observation of ancient date. It lies at the basis of the famous legend of Menenius Agrippa, handed down to us by Livy. Social science did itself little good when, inspired by the triumph of Biology in the nineteenth century, voluminous works developed this analogy to the point of absurdity. What is the use of calling the products of human activity “social intercellular substance”?[2] Who was enlightened when scholars disputed which organ of the social body corresponded to the central nervous system? The best comment on this form of sociological study was the remark of an economist, to the effect that anyone who compared money with blood and the circulation of money with the circulation of blood would be making the same contribution to economics as would be made to biology by a man who compared blood with money and the blood-circulation with the circulation of money. Modern biology has borrowed from social science some of its most important concepts — that of evolution, of the division of labor, and of the struggle for existence. But it has not stopped short at metaphorical phrases and conclusions by analogy; rather has it proceeded to make profitable use of what it had gained. On the other hand biological-sociology did nothing but play a futile word-spinning game with the ideas it borrowed back. The romantic movement, with its “organic” theory of the state has done even less to clear up our knowledge of social interrelations. Because it deliberately cold-shouldered the most important achievement of social science up to that date — the system of classical Political Economy — it was unable to utilize the doctrine of the division of labor, that part of the classical system which must be the starting point of all sociology, as it is of modern biology.[3]
Okay I finally listened to the debate…
“Painful” is a good word. You just have to listen to it.
It’s just remarkable. Two incredibly wealthy guys who could not possibly have more polarized understandings of the world. It’s just incredible.
The only thing that hurts the entertainment value is the way (ironically) Peter’s guest doesn’t stop talking and Peter has a hard time getting a word in to make it a conversation.
(Usually it’s Peter who doesn’t stop talking…especially when he’s a guest. On that note I really think he has a hearing problem that makes it difficult for him to know when the other person is talking when he’s hooked into the sound as a guest on a tv show. The equipment limitations and settings can cause enough problems, but it happens to Schiff so much I have to believe he has a physical issue. There’s no way he could just keep talking like this and not even get flustered. I don’t think he’s that rude in the first place, but even if he was, I don’t see how anyone can just power through their own statements without even flinching while someone else is talking in their ear the entire time. I’m surprised the host didn’t consider that possibility. That was definitely the worst example I’ve seen but it’s quite often he obviously doesn’t know the host is trying to switch gears or ask a question.)
Getting back to this interview…I was definitely right when I mentioned how someone could be (apparently) so good at working within the market process, and create so much wealth, and yet have such a distorted (and ultimately opposite) understanding of how it all happened. This guy is quite possibly insane. Granted there are a couple of times when Peter confronts him logic and he recognizes the fallacy of his position and has to try and dance around it (like when Peter asks if jobs are created by people buying stuff, where did the buyers get the money…and Hanauer has to backtrack to his “feedback loop” thing…which as I said before, directly negates his entire notion of jobs being created by buyers. It’s either a loop, or it’s linear. This moron really thinks he can have it both ways.)
Then he calls says Peter’s comment is “nutty”. I kid you not.
The golden nugget…possibly one of the best lines in this year of radio comes at 6:52 when Nick Hanauer says, and I quote: “Peter, if there was a shred of truth to your argument, then the most prosperous on Earth would be the places with the least government.”
I cannot tell you how I almost hurt myself from the physical laughter reaction that spontaneously occured the second he finished that sentence.
(What’s even more, what Peter was talking about at the time really didn’t even have much to do with government. It’s like Hanauer is the most perceptive idiot on the face of the earth, or he got kind of sideways lucky and accidentally picked up on a point Peter would make.)