Re: bush tax cut and small businesses
From: Robert Vienneau (rvien_at_see.sig.com)
Date: 10/13/04
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Date: Wed, 13 Oct 2004 01:13:39 -0400
In article <XjRad.19733$iC4.7143@fe2.texas.rr.com>, Igor
<jjweatherby@houston.rr.com> wrote:
Consider:
Paul M. Romer, "Endogeneous Technical Change", Journal of Political
Economy. V. 98, N. 5, p. S71-S101.
The first numbered equation in that paper is a production function.
The arguments of this function include heterogeneous capital goods.
These arguments are measured in numeraire units. Because of price
Wicksell effects, this equation (and the remainder of the paper) is
incorrect.
This objection doesn't depend on whether these units are dollars or
some other numeraire.
And wasn't Mr. Weatherby just telling us that Cohen and Harcourt
clearly explain what Wicksell effects are?
What does Mr. Weatherby understand price Wicksell effects to be?
And Mr. Weatherby's explanation of what he means by "capital switching"
is?
Consider:
<http://www.econ.usyd.edu.au/drawingboard/journal/0111/white.pdf>
See, in particular, the fifth footnote and surrounding text in the paper
at the above URL. The paper at the above URL argues that the Cambridge
Capital Controversy has implications for the labor market.
In other words, the following is completely wrong:
> This paper deals with real rigidities. The Analysis is based on Romer
> and Mankiw 1992. It is about labor markets not clearing not an upward
> sloping demand curve.
By the way, I have deliberately not described my analysis as of "an
upward sloping demand curve" in this thread.
And this is completely wrong as well:
> Funny flexible wages and prices are unfounded but are assumed in your
> labor demand PDF. This is not what is said in the paper. It says
> lowering real wages may not increase employment due to rigidities not an
> upward sloping labor demand curve. The viewpoint used is Neo-Keynesian
> not Post-Keynesian.
>
> You are very steeped in ideology to think that just because it mentions
> the CCC it suddenly supports your position. In fact they say that the
> CCC supports no relation between relative wages and relative employment.
> This clearly says your labor demand model is wrong becuase it predicts a
> relationship.
Notice Mr. Weatherby doesn't even attempt to explain what point
Graham White wants to make with the CCC.
I again affirm that the Graham White paper whose URL is given above
does NOT assert that the labor market would approach equilibrium more
quicky if the labor market were more flexible. It fact it asserts such
a belief is unfounded. Graham White draws on the Cambridge Capital
Controversy analysis of competitive (flexible) markets to support his
arguments.
If Mr. Weatherby would ask Graham White about this, I feel sure
he would (1) either ignore Mr. Weatherby as a crank or (2) say
that, of course, I am correct.
Furthermore in Footnote 11 of Sraffa3.pdf, I reference five textbooks
justifying my favorite model. Any one of these textbooks would do.
Sraffa3.pdf is available off a link at the URL in my sig. The link is
labeled "A Critique of Disaggregated Neoclassical Theory."
Notice the cited refereed paper by Samuelson below. It has nothing
to do with "rigdities".
"One cannot match a proof like that of Equation (5) by finding a
valid proof for the stationary state conjecture
d(C/L)/di <= 0. (6)
Why not? Because, as the next section will illustrate with numerical
examples, such a conjecture is simply not true!"
-- Paul Samuelson, "A Modern Post-Mortem on Bohm's Capital
Theory: Its Vital Normative Flaw Shared By Pre-Sraffian
Mainstream Capital Theory". Journal of the History of
Economic Though. V. 23, N. 3. 2001.
Does Display 5 and Theorem 1 in Samuelson's paper say that "a lower
interest rate is associated with a higher real wage"?
Does Samuelson imply in the above quote that a lower interest
rate is not necessarily associated with a less labor-intensive (L/C)
technique?
Consider the point (S sub BC) in Figure 1 in Samuelson's paper. Around
this point, is a higher wage associated with the adoption of a more
labor intensive (higher L/C) technique?
How does this not imply that cost-minimizing firms will hire
more labor around this point at a higher wage, given the technology,
perfect competition, and the level (C) of output?
Consider:
<http://www.dreamscape.com/rvien/Economics/Essays/LaborDemand.pdf>
Mr. Weatherby finally comments, although ignorantly:
> This is one thing I would have to question about your labor PDF. How
> does worker productivity change. Is the high wage actually caused by
> higher worker productivity. If so you are talking about two distinct
> labor deamand curves not one. If you could write and did not skip steps
> I could figure this out.
The only steps that are skipped are ones of calculation, as they
should be in a journal paper. Also, I do not provide a tutorial
on duality theory in linear programming.
Wages, prices, and technology are taken as given in that paper.
Firms learn of no new processes for producing anything. There is
no innovation occuring.
Any differences in productivity firms achieve at different
configurations of the price of a certain good and the wage
result from different choices by firms' managers among the
(known) processes to be used in production.
I see nothing unclear in my paper on this point.
By the way...
How would my CV establish whether I've read any journal articles?
The references in LaborDemand.pdf, Sraffa3.pdf, etc. suggest I have
read journal articles. So do my comments in the post to which Mr.
Weatherby is pretending to respond.
How is it possible for professional academic economists to be as
dishonest as we've seen on sci.econ?
-- Mostly economics: <http://www.dreamscape.com/rvien/#PublicationsForFun> r c v s a Whether strength of body or of mind, or wisdom, or i m p virtue, are found in proportion to the power or wealth e a e of a man is a question fit perhaps to be discussed by n e . slaves in the hearing of their masters, but highly @ r c m unbecoming to reasonable and free men in search of d o the truth. -- Rousseau
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