Why Pay with Two-Dollar Bills?

Today I was browsing through one of my favorite economic sites mises.org and I noticed a title that really grabbed my attention - Why I Pay with Two-Dollar Bills. What on earth could this article be about? After reading the article, I would describe it as creative awareness. Briggs Armstrong, a student at Auburn University, devised an ingenious plan to raise awareness for Austrian economics and the maladies of The Fed's monetary policies. I thought I would throw him a keyword anchored link to solidify his plan by helping move his article to the top of Google's search results for the phrase he is telling curious people to look up. If you have a blog or website, I suggest you help Briggs out and do the same. To learn what Briggs is up to, click why pay with two-dollar bills.

The Keynesian Magic Trick

The key to a good magic trick is the art of misdirection. If I can get you to focus on this hand over here, then I can perform something else over here - a sleight of hand, if you will. A clever Keynesian will give you what seems to be a correct premise and then try to pull the wool over your eyes in the conclusion.

This sleight of hand emerges, for instance, when Paul Krugman argues that consumer spending causes the economy to grow. If you read Krugman for very long, you will notice that consumer (or government) spending is his holy grail. Spending is always in the back of his mind. Keynesians begin their argument with the definition of gross domestic product (GDP), which is in the form of an equation:

GDP = Consumption + Investment + Government Expenditures + Net Exports

What is the Keynesian conclusion based on this equation? "If you increase consumer consumption or maybe even government expenditures from an 800 billion dollar spending bill, you will increase GDP." That makes sense, right? If you add to one side of the equation, then the other side must increase equally.

So you are probably thinking that Keynesians have discovered the secret to economic prosperity, right? Not so fast. What if one of the variables on the right side (such as investment) decreased in equal proportion to the increase in spending? The equation would still hold true without an increase in GDP on the left side. Here's another scenario: What if investment decreases more than the other variables increase? Then you have negative growth, and a decrease in GDP. That would be counter-productive.

Maybe one day, even in the mainstream, the Keynesian fallacy will be put to rest for good.

Further Reading:

The Second Coming of Keynes

Anthropomorphic Global Warming Supporters Challenge Conservative Economics

We are not exactly sure how a debate like this gets started on Facebook, but somehow Conservative Economics managed to ruffle the feathers of two AGW supporters. It all started when we posted a joke about global warming:

"Caveman Guide to Global Warming - Great ball of fire in sky heat small rock. Smaller creatures on small rock no heat rock."

Within a few hours, Conservative Economics was slammed with ad hominem attacks insulting all skeptics of Anthropomorphic Global Warming not to mention cavemen:

AGW Supporter #1:
Cavemen are notoriously retarded.

AGW Supporter #2:
Sounds like the mentality of people who don't "believe" in global warming. Caveman is perfectly appropriate.

Conservative Economics:
Surely you can do better than argumentum ad hominem.
http://www.ibdeditorials.com/IBDArticles.aspx?id=330911757213432&kw=warming

AGW Supporter #2:
From an actual scientific article (not a newspaper): "there is a scientific consensus on the reality of anthropogenic climate change. Climate scientists have repeatedly tried to make this clear. It is time for the rest of us to listen."
http://www.sciencemag.org/cgi/content/full/306/5702/1686

It's hardly worth it to argue this point. Refusing to believe in 20 years of research and evidence because of a few funded studies here and there is a perfectly good basis for an ad hominem comment -- because if you still aren't getting it, facts clearly aren't going to change anything.

As for IBD, it is definitely in the best interest of business for climate change to be out of our hands -- then business doesn't have to account for pollution and poor environmental practices.

Conservative Economics:
Yes, let's move the ad hominem to the news source – because clearly a scientific magazine is more able to link to scientific studies than a news magazine. The IPCC report did not conclusively link greenhouse gases to observed temperature rises. The 2007 report says that there is a 90 percent chance that a one-degree increase in temperature during the 20th century was caused by man's greenhouse gas emissions. That is a large uncertainty in scientific terms, since a 95% confidence interval is usually regarded as convincing. Your article correctly states that, "The scientific consensus might, of course, be wrong."

Of course it is hardly worth arguing the point, when you can successfully preempt the debate with rhetoric. It is especially convenient to do so when the "consensus" is reversing direction: http://online.wsj.com/article/SB124597505076157449.html

There is never a good basis for an ad hominem attack, unless you plan to subvert debate using a fallacy that may go unnoticed.

You discuss the consensus, as if "consensus" were the be-all end-all of scientific debate. What exactly is this scientific consensus? Three main points:

1. We have had some global mean warming – approximately 0.6 degrees centigrade.
2. CO2 is a greenhouse gas and its increase should contribute to warming.
3. There is good evidence that man has been responsible for the recent increase in CO2.

Richard S. Lindzen says these are all trivial points in his paper Understanding Common Climate Claims, "While these claims may be contested, they are indeed widely accepted. The only problem is that these claims do not suggest alarm."

http://www.geocraft.com/WVFossils/Reference_Docs/Lindzen_2005_Climate_Claims.pdf

I guess this scientific consensus also means that we should simply ignore the 700 International scientists (and growing) that dissent over man-made global warming claims?

http://epw.senate.gov/public/index.cfm?FuseAction=Minority.Blogs&ContentRecord_id=10fe77b0-802a-23ad-4df1-fc38ed4f85e3

Two issues that I have yet to see addressed are (1) why the earth's temperatures have flat-lined since 2001 and (2) how humans are responsible for big increases in greenhouse gases when they only represent 3.4% of the 3.62% of greenhouse gases that are CO2 as was candidly charted at the end of the IBD article. If these points aren't addressed, then "20 years of research and evidence" doesn't mean much.

Actually, carbon trading stands to be great business for big players like Goldman Sachs. Indeed, the big business lobby is in a great position to gain from government-mandated climate control. I know it is easier to create a vacuum or conspiracy theory like "funded" studies or business "interest", but it doesn't hold any real weight for the debate. The economic reality is that small business and the American people will be losers from the higher costs of government intervention – not to mention all the corruption that is likely to surface.

AGW Supporter #2:
1. 700 scientists? Who are they? Do they study climate change? I'm a scientist. Do I count? Learn to recognize propaganda.

2. Carbon dioxide is one of six greenhouse gases that contribute to global warming. Learn the science.

3. Your original post was insulting and demeaning to the THOUSANDS of scientists world-wide who do believe in climate change, and to people like myself who have read about climate change for years. I am now finished with this discussion.

Conservative Economics:
1. If you weren't emotionally invested in it, you might actually read the report to find out who they are if that concerns you so much. Ever think of the IPCC and EPA being propaganda machines? I mean it is in their "best interest" to have a problem like this to "solve" is it not? This couldn't be why they suppressed the EPA scientist's recent study that had findings contrary to AGW? Regardless, I just assumed they had good intentions and read their findings. By the way, do you know how many scientists participated in the latest IPCC report? 52. Clearly, Tolstoy syndrome has set in fully for the believers. Here are just a few of the comments by skeptical scientists:

“I am a skeptic…Global warming has become a new religion.”
- Nobel Prize Winner for Physics, Ivar Giaever.

“Since I am no longer affiliated with any organization nor receiving any funding, I can speak quite frankly….As a scientist I remain skeptical...The main basis of the claim that man’s release of greenhouse gases is the cause of the warming is based almost entirely upon climate models. We all know the frailty of models concerning the air-surface system.”
- Atmospheric Scientist Dr. Joanne Simpson, the first woman in the world to receive a PhD in meteorology, and formerly of NASA, who has authored more than 190 studies and has been called “among the most preeminent scientists of the last 100 years.”

Warming fears are the “worst scientific scandal in the history…When people come to know what the truth is, they will feel deceived by science and scientists.”
- UN IPCC Japanese Scientist Dr. Kiminori Itoh, an award-winning PhD environmental physical chemist.

You are free to read the rest of the 700+ in the report I linked.

2. Yes, you are right. The EPA says that motor vehicles contribute to 4 out of the 6 including carbon dioxide, methane, nitrous oxide, and hydrofluorocarbons. Since you are the expert on science (and clearly I don't know science), perhaps you can answer for me why there is no correlation between hydrocarbon use (gas, oil, and coal) and temperature? Why does solar irradiance correlate well with temperature? How are the AWG supporting scientists addressing the fact that correlation is not causation in their findings? Why do these scientists focus much more on CO2 than the other greenhouse gases? Good science involves welcoming and answering questions – not avoiding them.

3. Right. So, restating your source and pointing out the uncertainty is insulting, but characterizing skeptics as "cavemen" isn't insulting and demeaning? Give me a break.

I agree with Lindzen's conclusion:

"A question rarely asked, but nonetheless important, is whether the promotion of alarmism is really good for science? The situation may not be so remote from the impact of Lysenkoism on Soviet genetics. However, personally, I think the future will view the response of contemporary society to 'global warming' as simply another example of the appropriateness of the fable of the Emperor’s New Clothes. For the sake of the science, I hope that future arrives soon."