Obsolete Ideas from Dead Living Economists
In the New York Review of Books, Paul Krugman calls for a "good old Keynesian stimulus." He says we need to mimic Japan, Sweden, and FDR in terms of our strategy for giving new life to dead banks. Krugman, like Laurence Kotlikoff, is horrified that people are starting to save money. Therefore, he says, the next stimulus plan should "focus on sustaining and expanding government spending--sustaining it by providing aid to state and local governments, expanding it with spending on roads, bridges, and other forms of infrastructure." He says Keynes is "more relevant than ever." At the end of his call to Keynesian arms, he states, "I believe that the only important structural obstacles to world prosperity are the obsolete doctrines that clutter the minds of men." Apparently, unworkable Keynesian doctrines don't fall into the "obsolete" or "clutter" category.
Comments (10)
"the next stimulus plan should 'focus on sustaining and expanding government spending--sustaining it by providing aid to state and local governments, expanding it with spending on roads, bridges, and other forms of infrastructure.'"
Has Prof. Krugman never read Henry Hazlitt? If I'm not mistaken, Hazlitt would see this as a misallocation of monies and labor.
Published: November 25, 2008 10:34 AM
William,
even if Krugman had read Hazlitt, he rejects the implications of the broken window fallacy. His world is one of macro aggregates and governmental intervention. He can not be concerned with the micro effects of his blundering proposals. I understand that he was highly influenced by the science fiction of Asimov, particularly the Foundation series of books. The central fictional aspect of these books is the ability of future scientists to gauge the sentiments and intentions of large groups of people and the ability of the scientists to calculate, ex ante, methods to manipulate these large masses of people to act in a particular way.
Obviously, for an aspiring centralist economist, this is mind poison. Krugman bought into this concept hook line and sinker. When dealing with large masses of individuals, one does not need to worry about the fate of a particular individual or a class of individuals who are harmed by these manipulations. Thus Keynesian economics consistently punishes the poor, the middle class, and those on fixed incomes, despite rhetoric that the aim is to maintain full employment (or balance inflation). The reality of their actions through the central bank has consistently been to damage the working class and to reward those closest to the privileged banking sector.
Published: November 25, 2008 11:51 AM
Great. More misallocation. How else can things be made worse without it?
These attacks on savings as an evil is probably the most idiotic part of Keynes' system.If I ever met Krugman, I would challenge him on the spot to spend all his money on cars, tv's, clothes and vacations. After all, saving is a bad thing, right?
Published: November 25, 2008 12:12 PM
"Thus Keynesian economics consistently punishes the poor, the middle class, and those on fixed incomes, despite rhetoric that the aim is to maintain full employment (or balance inflation)."
Stanley, it sounds as if it would be equally as useless to expose Krugman to the writings of Wilhelm Roepke.
Published: November 25, 2008 12:30 PM
Paul Krugman is using his platform (handed to him on a platter by the associates of the unConstitutional coup) of the highly acclaimed award of Nobel Prize for Wackonomics to promulgate and propagate economic fallacies and absurdities. This media-connected propagandist is an opportunist, an institutionalist, an ego-driven interventionist, and a Keynesian indoctrinated materialist.
He will shout from his sleaze-ordained pulpit the pernicious doctrines of the Keynesian ideology and fool himself into thinking that he is something other than a mirage, a wisp of putrified dust on the horizon of history.
Published: November 25, 2008 1:05 PM
Stanley,
It is also important that his policy recommendations be implemented by the 'right' people. If McCain had won and planned to implement the same policy Krugman is now espousing, Krugman would be yelling about McCain (or his economic team) are a bunch of idiots. The purpose of most senior political economists today is to spray economic perfume on the policies his masters want and stank on the policies of his masters' enemies. That's why they use formulas and statistics cause as anybody knows you can find the formula or define the statistics in a way that says what you want.
Published: November 25, 2008 3:27 PM
I am not an economist, so I have an advantage over all those who know about the theories of Krugman, Keynes, Hazlitt, Roepke or, indeed, Michael Mouse esquire. The advantage I have is that I am untrammelled by ideology or theory and can form views based purely on observation.
For example, I know that a cricket ball will swing more in humid conditions than when the air is dry. People in white coats have tested this in labs, applied theories to the proposition and decreed that it is not so. But it is so, generations of cricketers can attest to it. It is a fact established by consistent observation.
No matter how many theories, models and hypotheses support the concept of a "good old Keynesian stimulus" it will remain neither good nor stimulating because it never has been. And to cite Japan in support is simply laughable.
Here endeth the first pontification.
Published: November 25, 2008 8:26 PM
Bigfat,
Most of the readers here might not know the cricket jargon. Swing ball in cricket is equivlent to curve ball in baseball (not a baseball expert). Bernoulli's theorem explains it
Published: November 25, 2008 11:11 PM
Austrians weigh in on this!
http://www.ft.com/whowasright
Published: November 26, 2008 12:18 AM
I also see that Ms. Born is in the American Lawyers Hall of Fame and was given the 2005 Lifetime Achievement Award.
Published: November 26, 2008 12:26 PM