Daniel V


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Upvote for paragraph one, agree for paragraph two.

It's a very narrow (but admittedly compelling) perspective to realize that in particularly bad situations, regulations can compound the badness. But there is plenty of room to debate regulations when it comes to typical cases, and it's probably a better basis on which to evaluate them.

I agree with your comment, but I think the definitional problem is core to the debate rather than something that can simply be discarded. Consumerism is not consumption, but it used to mean consumer protection and empowerment (obviously there is a spectrum there about what constitutes adequate information and the appropriate regulations/interventions to ensure that)...in support of their consumption, which was assumed to be valuable for them. Consumerism has taken on a second, more prominent meaning that itself is a spectrum: sometimes demanding the pricing/regulation of externality-generating production (not all that different in nature from economics, but unique in the externalities that are identified, oftentimes private costs that consumers simply don't attend to), sometimes all the way to value judgments about certain kinds of consumption.

It's such a loaded term I find it best instead to talk about what I actually mean rather than use the term consumerism. Do I want to talk about negative aspects of consumption? Do I want to talk about the consumer information movement? Which one am I about to get into when I say "I'd like to talk about consumerism"?

I also want to add to your bolded comment on substitution, which seems like a really good rule of thumb. But a lot of things cannot be substituted easily because they are timing- or situation-dependent. If I have 15 minutes to kill, it's not obvious that just sitting there with my thoughts is particularly desirable (for some people, sure!), so I'll seek to consume something (not non-consumption) - if the park is 2.5 minutes away, I can consume a 10 minute walk at the park, which might dominate my crappy phone game. If the park is 7.5 minutes away, I can consume a walk to the park, but given that menu of options, maybe my phone game is fine. It also provides optionality for when I'm looking for a low-transportation mode of entertainment in a waiting room. But it can shift from working in these initial use cases to being a prioritized activity in itself - maybe when I have 30 minutes, I'll "default" to that instead of actually evaluating my options. In that case, regret would be a sign that something has gone wrong in my decision-making. It just reinforces the need to use that rule of thumb - be conscious about what you're consuming and the options that are before you!

I strongly agree and wanted to share a similar sentiment.

It is not as simple as "the market says the asset or liability is worth X, so you should too." Businesses are usually going-concerns and it is not really that useful for the company to report itself as merely how things would go down if they were to liquidate today (though obviously considering that possibility is useful, especially if your business could be "runny," and recording the fair value of HTM securities in a note to the financial statements allows readers, like Raging Capital Ventures, to contemplate that). Those liquidation values continue to require subjectivity (e.g., depends on the spreads for the assets and what if the blowup situation we're talking about would spark fear and government intervention that would actually support the assets' values?! [which is exactly what happened with SVB's assets actually]), and of course are not even perfectly reflected by MTM values, so their utility is not as straightforward as it may seem at first blush. 

In fact, the FASB (1993) explicitly stated in explaining its rule-making...

that extremely remote "disaster scenarios" (such as a run on a bank or an insurance company) would not be anticipated by an enterprise in deciding whether it had the positive intent and ability to hold a debt security to maturity.

The managers (evidenced by pursuing more capital) and the market (in reaction to that) obviously started to consider that possibility as much less remote, which became a self-fulfilling prophecy. But "disaster valuation" might not be a great default way to account when your business is generally conducted under non-disaster conditions.

That's wonderful for him. I wish he had translated that knowledge into the post then! The reader shouldn't have to come away from a post titled "the point of trade" with simply a list of reasons why trade might be nice when those reasons can actually be brought together in a unifying explanation, one that is already well-explained in Econ 101, no less.

Here he talks about his understanding of the textbook explanation, and you can judge for yourself whether it conveys comparative advantage or not:
"[sometimes people get different amounts of value from things, so they can get more value by trading them] is the horrible explanation that you sometimes see in economics textbooks because nobody knows how to explain anything ... All right, suppose that all of us liked exactly the same objects exactly the same amount.  This obliterates the poorly-written-textbook's reason for "trade"."

He also explains his thesis: 
"I claim that the reason we have more stuff has something to do with trade. I claim that in an alternate society where everybody likes every object the same amount, they still do lots and lots of trade for this same reason, to increase how much stuff they have."

Of course, that is comparative advantage adjacent, so we'll talk about it right? Wrong, the point of trade is to leverage an assortment of the sources of comparative advantage (but we won't even attempt to link these together in their unifying concept):
"So now let us suppose identical fruit tastes, perfect task-switching, Star Trek transporters, identically cloned genetics, and people can share expertise via Matrix-style downloads which are free.  Have we now gotten rid of the point of trade?"

The organizing/umbrella concept (comparative advantage) is still absent at the end of this. Maybe concrete examples like these, delineating specific sources by which comparative advantage can arise, are a useful didactic tool. But I don't think the point was to illuminate a key concept (indeed, it was never named or really all that gestured at), the point apparently was to generate an exhaustive list of things that enable trade to increase production:
"Note:  While contemplating this afterwards, I realized that we hadn't quite gotten rid of all the points of trade, and there should have been two more rounds of dialogue; there are two more magical powers a society needs, in order to produce a high-tech quantity of stuff with zero trade.  The missing sections are left as an exercise for the reader."

I wish by the end of it that he had fully reinvented comparative advantage. Great that he knew about it all along though...

Confounders - This post took some vivid examples and turned them into solid recommendations, even referring to the concept that already exists outside the post. But it mints new laws where none are needed, not really addressing other things that contribute to the internal validity of experiments or the inferences from full programs of research that might counteract the call to measure every single thing you possibly can; in my estimation, it led to a minor weakness in the post. It's not an egregious reinvention because it has the intellectual humility to interact with previous scholarship, one cannot expect any individual post to cover all the pieces of what can be a broad domain, and the point seemed to be more of presenting preferred operating procedures rather than (re)introducing a concept.

Goodharting - on the other side of things, LessWrong also has posts like this that are designed to review rather than reinvent ideas. There is value in explaining old ideas in new ways or finding previously-unconsidered applications for old ideas.

Comparative advantage - and even worse, EY didn't even fully reinvent it. He just lined up a bundle of things that fall under the umbrella and called it a job well done. This particular instance also checks the boxes for arrogance and lack of rigor. That post was a fun read, but the embedded disdain for economics textbooks was particularly galling since economics textbooks handle the concept just fine.

As you said, it doesn't really change the point, but I'm here to say it's not an alternative bond structure, just that the bond happens to be trading at a discount already at the initial conditions. It will trade at a steeper discount as interest rates rise. It would be even less intuitive, but you could also do this analysis with bonds that are trading at a premium (trading at a smaller premium, or even hitting par or switching to a discount, as interest rates rise).

Matt Levine at Bloomberg also has good comments on this - basically it was a boring bank run/collapse. With it being primarily a duration issue (rather than an impaired assets issue) and a large amount of deposits, I also suspect we'll see an acquisition.

Check the date on this too.

Further illustrating Eliezer's misplaced confidence, Sumner's view is about NGDP targeting, so the success of the BOJ's policy should be based on delivering NGDP growth, not real economic variables like RGDP growth or employment rate as Eliezer implies. They were in fact successful at this (RGDP growth + Inflation = NGDP growth; with RGDP growth continuing on trend and Inflation bucking the downtrend, that's a new NGDP trajectory, baby!). Here, with 100=March 2013 as Kuroda ascended, you can see the shift in CPI trend even before the VAT impact in April 2014. Sumner was bullish on the new BOJ policy by September 2013.

So, Eliezer, you think you have identified which econbloggers, like Scott Sumner, know better than the Bank of Japan, do you? Eliezer did identify Sumner successfully, but he got lucky. His belief in Sumner was based on a misread of Sumner's position, one that led him to wrongly believe real economic variables would supply evidence for the veracity of the theory. Further compounding the issue, while employment rate might have been readable as supportive, as Matthew Barnett points out, RGDP was not. He is overconfident and should be more humble about his approach.

Ironically, Eliezer's mistake actually more strongly makes his key point. The demand for humility Eliezer was writing about stemmed from the belief that even a very good reasoner oughtn't be able to outperform "the experts." And yet, here we have a mistaken reasoner outperforming "the experts" (at least, outperforming the hawkish experts, before they were replaced by the dovish experts who implemented the new monetary policy at the BOJ). Perhaps the case for humility is not so strong after all: "it is perfectly plausible for an econblogger to write up a good analysis of what the Bank of Japan is doing wrong, and for a sophisticated reader to reasonably agree that the analysis seems decisive, without a deep agonizing episode of Dunning-Kruger-inspired self-doubt playing any important role in the analysis." I suppose one might need to decide how interchangeable "humility" and "agonizing self-doubt" are...

Eliezer is driving an intellectual racecar when many are driving intellectual horse-and-buggies. Still needs to be vacuumed out from time to time though.

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