Can we please stop saying the S&P 500 is at an all time high?

This is one of two things

From Bloomberg:

Wal-Mart Stores Inc. had the worst sales start to a month in seven years…

It’s either:

1. Worrisome
2. A reverse substitution effect

I’m interested to see which it is.

The Federal Balance Sheet

Matthew Klein at The Economist‘s Free Exchange blog has some interesting ideas on how to view the financial position of the government.

My modest suggestion is that we start calculating the public sector’s “book value” by taking the difference between its actual assets and liabilities. (Since governments have the power to tax their productive citizens, the asset side of the public sector’s balance sheet should be thought of as a share of the country’s total asset holdings.) This approach would probably be more useful than the simple public debt to national income ratio, even if it comes with its own (significant) complications.

He goes on to note:

Under this framework, all government spending could be divided into three basic categories: investment to increase the future standard of living, hedging that reduces the nation’s risk exposure, and resource redistribution.

The post is fairly long and definitely worth reading.

So a lot has happened lately

As you can probably tell life has pulled this blogs writers in many directions as of late.  Hopefully things will settle down enough for us to resume our typical schedule in 2013, but if not we will at least work to keep up occasional posting.

The Return of Nate Silver – Tyler’s AM Reads – December 18, 2012

Nate Silver writes about guns. He says:

More elaborate data-mining techniques, such as logistic regression analysis, suggest that gun ownership is a more powerful predictor of whether a voter is Republican than her gender, whether or not she identifies as gay or lesbian, whether she is Hispanic, or whether she lives in the South, along with many other demographic characteristics

Fed Policy Announced – Tyler’s AM Reads – December 13, 2012

Scott Sumner reacts to the Fed policy announcement.

Adam Ozimek ponder right-to-work.

Timothy Taylor dissects manufacturing productivity.

Fish on Education

Stanley Fish writes about higher education:

The tension between a market model and a Socratic model was nicely captured by two statements Spar made in succession. The first warmed my heart: “We want to teach students things they don’t want to know.” That is, rather than regarding students as consumers (all the rage these days in places like England and Texas), we should regard them as yet-to-be-formed intellects who are often best served by saying no to their desires — as we have traditionally. But then Spar immediately added, “Yet, we can’t be too removed from the marketplace.”

 

Social Science Highlights – Tyler’s AM Reads – December 11, 2012

David Brooks highlights recent social science findings.

The New York Times outlines some new taxes associated with the ACA.

Adam Ozimek wonders what Paul Krugman thinks about open borders.

A quick note on spending and growth

The graph below has been making its rounds (see this post by Tyler Cowen for several links).  Upon first glance it appears to refute any sort of fiscal approach to restoring GDP.  The red (GDP) line is table although the blue (government spending) line decreases.  However the key here is noting that this graph actually shows continued growth in GDP once government spending has hit a relatively stable level.  It becomes much more clear in the graph below that I put together (note red now represents government spending and blue represent GDP).

Obviously this leaves out many other factors that I would consider relevant to the NGDP recovery (tax stimulus, low interest rates, right-sized asset prices, low steady inflation, etc.), but it at least gives an accurate depiction of the spending-growth pattern that emerged after the recession.

Other Impacts of the Recession – Tyler’s AM Reads – December 10, 2012

Robert Samuelson considers some cultural impacts of the recession.

Paul Krugman writes about labor.

The Economist considers labor migration and climate change.