You don't want to read this
It's Krugman's lastest manifesto in the NYTMag. It's all here: how economists were in love with capitalism before the Great Depression (?), how Keynes was the only one who saw the failures of laissez-faire (!), how economists fell in love again with markets in recent years (!!), and how the popping bubble has startled them whereas the great Keynesian Krugman knew it all along (??). Oh, and by the way, there is no one who ever existed named Hayek or Mises or Haberler or their students.
The whole thing reads like a big fairytale, and the author is the hero in the end.
Comments (58)
jc butte
I suffered through all of that to find one true (and unrefuted) comment...attributed to Friedman:
"if the Federal Reserve had done its job properly, the Great Depression would not have happened."
Now just substitute "never existed" for "done its job properly" and hit the delete key for the rest of this diatribe of lies.
Do I get a Nobel prize?
Published: September 3, 2009 5:27 PM
Bruce Koerber
Economic Numbskulls
Thursday, September 3, 2009
Paul Krugman Is The Mother Of All Propagandists!
When propagandizing becomes the most lucrative profession then the most skilled liars will weave their tales.
I must apologize for incorrectly labeling Paul Krugman as the Nobel Prize winner for Wackonomics. It is clear that his real distinction is as the Nobel Prize winner of Falsification!
The difference has to do with the perceived intention. Before I thought his intention was economic stupidity and that he was just a charlatan.
But now I see his intention as more sinister. He is trying to become the mother of all propagandists. He is selling his soul to the unConstitutional coup for the crumbs of their ephemeral notoriety by deliberately lying about and distorting history and economic theory.
What a pathetic baffoon!
Published: September 3, 2009 5:54 PM
prettyskin
Krugman's writings are good and should be read by all. Opposing views are healthy and at times points us to any errors in our own views. Provincials are among the loudest, leading the way may just be Paul Krugman.
Published: September 3, 2009 6:05 PM
Deefburger
I have trouble reading Krugman without a slug of Kaopectate and a valium or two.
It amazes me how someone can receive an award, and money, for being so totally out of touch with reality. Why didn't they give the Nobel to Timothy Leary? At least he has an excuse.
Published: September 3, 2009 6:06 PM
Chicago Methods
Krugman irritates me to no end. He blithly aggrogates himself as the prophet of "true" economics. He quickly asserts Behavoral Economics, and their small-scale lab-tests, as the ultimate truth behind his claims. Something must be twisted in his head to think that such small-scale experimental tests could strongly relate to the complex phenomina of a whole nation. He seems to completely ignore the quantitive money theroy in favor of a marxian, free-market is destined into financial collapse idea.
The ironic thing, since all human reason is rational, is that the only thing irrational in all of this is to try and critize someone else's rationality. "Well you see the problem is people are spending too much and, more importantly, not on the right stuff." Well Mr. Krugman, anyone can conclude that you're off your rocker.
Really, the only thing you can get out of this essay is that a complex Mathmatical analysis of the market is deluded at best.
Published: September 3, 2009 6:09 PM
Guillermo Barba
I thought that the Nobel in Economics was dawngraded when Krugman got it. But now that Krugman believes that many other Nobel winners are crap, what is the value of a Nobel?
Published: September 3, 2009 6:23 PM
Aleksander Hansen
As usual Krugman get's it wrong.
Published: September 3, 2009 6:31 PM
Zach BIbeault
Krugman is a comedian, not an economist -- lol
Published: September 3, 2009 7:15 PM
Ohhh Henry
I know it's especially galling to people hanging around this blog because we are interested in economics and Dr. K. is such a poor specimen of economic thought, but have you tried to read almost any newspaper story lately? Especially in the bigger newspapers. I can't pick up a paper and start reading a story without wanting to throw away the paper in disgust.
There is a reason for this. Newspapers are the gatekeepers of the establishment. (I was going to say the self-appointed gatekeepers but that's not really true if you believe all the stories about journalists on the payroll of the CIA and the Pentagram.) The establishment works their wonders mostly through the government. The government are parasites on society. There are no logical reasons for doing anything the way governments do things, that is, as a coercive monopoly. Therefore any institution dedicated to defending the government must defy logic and reason to do so. That is why practically everything in the paper other than in the sports pages (except when discussing steroids and antitrust exemptions) and the funny pages is the same jumble of fallacies and illogical bluster as a Krugman column. Look, here's a problem, obviously the government hasn't been doing enough, the government must do a lot more, fortunately the government is working on a new plan, however some are wondering if the plan is going far enough. That pretty much covers off everything you're going to read in today's, tomorrow's and next week's newspaper whether it's about health, education, crime, business and finance, science, foreign affairs, even the weather (or rather the climate).
You don't want to read this, indeed.
Published: September 3, 2009 7:35 PM
Jason Gordon
Forget the Nobel, Ohhh Henry is up for the Pulitzer Prize for Explanatory Reporting!
Published: September 3, 2009 9:09 PM
Horst Muhlmann
Paul Krugman can lead us to unprecedented prosperity. But only if he teams up with George Costanza. http://www.youtube.com/watch?v=cKUvKE3bQlY
Published: September 3, 2009 9:56 PM
Horst Muhlmann
Paul Krugman can lead us to unprecedented prosperity. But only if he teams up with George Costanza. http://www.youtube.com/watch?v=cKUvKE3bQlY
Published: September 3, 2009 9:57 PM
mpolzkill
Horst,
Excellent, thanks for the laugh.
Published: September 3, 2009 10:09 PM
Taras
This is why we don't drink the bongwater
Published: September 3, 2009 10:15 PM
mpolzkill
Horst,
Excellent, thanks for the laugh.
Published: September 3, 2009 10:21 PM
Zombiehero
No wonder the NY Time is about to go broke...
Published: September 3, 2009 10:53 PM
Mark Ennis
Is there a Nobel prize for humor? Myopia?
Published: September 3, 2009 11:23 PM
Ron Finch
I love a challenge. So I read it. It reinforces my belief that values are subjective, that people chose thier ideas the same way they choose their friends and dinner. They choose the things they like. And they do not allow little things like facts or logic to dissuade them from cherished ideas. As Jesus said, "The sheep know their master's voice and will not listen to any other."
I enjoyed the cartoon with the caption "Dissenting economists were marginalized." It reminds me of the way Krugman dismisses Libertarian ideas and Free Market economics.
In this VIII part plea for blind faith in government and Keynes, he tries to lay the blame for the current crisis on the Chicago School. As we all know, the breath of fresh air from Chicago was due to F.A. Hayek's presence there. It is telling that Krugman never mentions him.
A note on the casino analogy. Casinos do just fine thank you. It's the 'mark' who bets in hopes of winning who is the fool. In the analogy, the Fed with Wall Street and the US Treasury is the house. The states and the people are the 'marks.'
Krugman quotes Keynes' admission that he does not understand Economics. '“We have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. The result is that our possibilities of wealth may run to waste for a time — perhaps for a long time.” So wrote John Maynard Keynes in an essay titled “The Great Slump of 1930,” in which he tried to explain the catastrophe then overtaking the world.' I take Krugman's decision to quote this as a confession that followers of Keynes do not get it either. (Think Krugman's true purpose is to imply that YOU can never understand Economics no matter how hard you try.)
The baby sitting co-op is a price-control failure. Co-ops are a stupid pseudo-Marxist idea. So I will be truly amazed if co-ops do not make it into the HELLth Care bill in some form.
It is odd that he would quote a favorite author of Rothbard, H. L. Mencken: “There is always an easy solution to every human problem — neat, plausible and wrong.”
I think that Krugman is more familiar with Austrian Economics than he lets on. He goes out of his way to disparage anything that smacks of Freedom. Krugman's master seems to be skepticism. Like Pilate he asks, "What is truth." but does not listen to the answer.
Published: September 4, 2009 12:11 AM
roy
"I think that Krugman is more familiar with Austrian Economics than he lets on."
Sure. He's a regular Ellsworth Toohey.
Published: September 4, 2009 2:33 AM
Aaron
Reading Bubbleboy Krugman's jibberish is becoming an ever more Kafkaesque experience.
Published: September 4, 2009 2:50 AM
Thomas Chamney
I think they will award Krugman the nobel again this year!
Published: September 4, 2009 4:44 AM
Arend
"Oh, and by the way, there is no one who ever existed named Hayek or Mises or Haberler or their students."
Of course not, those were actual economists, that have no place in such a fairy tale story.
Published: September 4, 2009 7:09 AM
Matt Pearl
Krugman wrote an essay about the prevailing theories of economics over time. Since neither Mises nor Hayek ever represented the mainstream of economic thought, it makes perfect sense that they weren't mentioned in the essay.
Sorry guys, but you are still on the Outskirts.
Published: September 4, 2009 8:51 AM
Jeffrey Tucker
Matt, that is just not true. Read ANY conventional history of thought text. The Austrians figure in very strongly through the 20th century. Have a look at the highly conventional book by G. Haberler called Prosperity and Depression, commissioned as a professional overview. The Austrians are more than half the book. Krugman's account here accords with nothing at all but his own imagination. As for your post, I gather that you have no idea what you are talking about. If I'm wrong, please cite a resource in the real Hist of Thought literature that backs your claim.
Published: September 4, 2009 9:03 AM
Stephen grossman
After I stopped subscribing to the print NYT and stopped reading it online, those mysterious headaches and stomach aches vanished. Correlation or cause? You decide. Now I awaken, yell, "Who is Krugman?!," and bound out of bed, eager for a new day.
Published: September 4, 2009 9:11 AM
pravin
who is G haberler? here it says http://www.newworldencyclopedia.org/entry/Gottfried_Haberler that he was an austrian economic school of thought guy. so what would one expect? ^^@jeff. bad example
Published: September 4, 2009 9:13 AM
endnote
Krugman does mention Austrian economist Schumpeter "and other apologists for the Great Depressionviewing recessions as a good thing, part of the economy’s adjustment to change.", so ...
I largely agree with Matt Pearl: why would Austrian economics warrant a mention?
Published: September 4, 2009 9:46 AM
Michael A. Clem
You're right--I didn't want to read that. There's no way Krugman can get it so wrong without deliberately trying!
Published: September 4, 2009 9:55 AM
Piotrek
I find this blog very sad. You are all guys so sarcastic, but if the Austrian school was soooo fantastic you would have more to show than just two books from 50 years ago. Show me a quantitative apper warning about the crisis. Just saying "every govt intervention is a way to hell2 and then blaming every recession on govt is not science, it is irrefutable, hence it is a religion.
If I am wrong about the Austrian school, please enlighten me, I came to this blog to learn something, and apart from shrill coments I found nothing.
Published: September 4, 2009 9:56 AM
Jeff Nabers
@Plotrek
See http://mises.org/literature.aspx?action=subject&Id=117
There is much more to show than 2 books, and the continued publishing of educational information on Austrian economics hardly ceased 50 years ago.
A genuine question: Have you read any of them?
Published: September 4, 2009 10:13 AM
Richie
Posts about Krugman are rather successful at bringing out the trolls. Hence, Plotrek.
Published: September 4, 2009 10:24 AM
Chicago Methods
Piotrek,
It isn't, "government's are the source of all problems." Governments allow infrastructure to exist. Unlike what most people think, Mises was not an anarchist. In fact, he went out of his way to redicule anarchists. He was a democrat, but a true one: the kind that sides with Adam Smith, John Stewart Mill, David Hume, David Ricardo, and others.
No; the true definition is, "Banks are the source of all business cycles." As stated by David Ricardo and the quantative money theroy.
Where others were siding with Marx with his convoluted, fanatic ideas that business cycles were the cause of the free-market, Mises and others would rather take an economic approach.
It's incredibly wrong, on behalf of the failed (check the 70's) Keynsian view to blame it on "overspending" and describing profit motive as "animal spirits".
The reason why this is the main focus, is because we are in a recession. That should be obvious for you to understand.
Published: September 4, 2009 10:33 AM
Chicago Methods
Of course, I'm sure Pultrek hasn't heard of the money multiplier as well.
Published: September 4, 2009 10:36 AM
Piotrek
Haha, sarcasm seems to be genetic for Austrians.
Thanks for responses, Jeff Nabers and Chicago Methods, some level headed arguments there.
To answer your questions: yes I heard about money multiplier and no, haven't read any of the texts listed.
I am a physics PhD, I am looking for hard math and data to support theses like "central banks are the source of all business cycles", I will try to find the proof in the texts you suggest, if you can point me directly to a paper trying to prove this, I would be very grateful. So far I found eg. The Misesian Case against Keynes by Hans-Hermann Hoppe, which for a physicist looks laughable, no equations! And no numbers, other than page numbers, pretty cool. In physics one wins arguments with numbers, and this is what I am looking for, not some philosophy.
ps. Richie exemplifies substance consistent with most of the blog.
Published: September 4, 2009 11:12 AM
mpolzkill
Piotrek here:
"Haha, sarcasm seems to be genetic for Austrians."
Piotrek elsewhere, an hour ago:
"If Hoover started the Depression then the interventionist policies of FDR must have prolonged it, and the complete abolition of market mechanisms during the WWII must have sent the economy into a death spiral, so that the 50s were the worst period in Amercian history.
wait..."
The habit of projecting ones own unloved traits exclusively on to others seems be genetic for most everyone.
Minus cherry-picking and exaggerating facts, and the resulting ignorance (sounds like someone we know, hhmmm), I can live with sarcasm. (I actually love sarcasm, though it IS a worthless bad habit)
Published: September 4, 2009 11:23 AM
William P
He does say "a priori" once...
Published: September 4, 2009 11:36 AM
mpolzkill
Piotrek said:
"I am a physics PhD, I am looking for hard math and data to support theses like "central banks are the source of all business cycles", I will try to find the proof in the texts you suggest, if you can point me directly to a paper trying to prove this, I would be very grateful. So far I found eg. The Misesian Case against Keynes by Hans-Hermann Hoppe, which for a physicist looks laughable, no equations! And no numbers, other than page numbers, pretty cool. In physics one wins arguments with numbers, and this is what I am looking for, not some philosophy."
This MUST be a joke! If not, if you're not a misguided free market prankster, if you want to quantify all human action: back to the drawing board, physics PhD, and bring a LOT of chalk.
You're a little late if you want to be part of the big win. Your envious cousins, the economist technocrats who agree with you that the rigours of science must be imported to human "sciences", already won some time ago, and are still firmly in control. We are living in the results.
(Which were predicted by these "philosophers" and they are making the public aware of what results they can further expect. And why DO you sully yourself speaking to a bunch of lowly philosophers, may I ask?)
"ps. Richie exemplifies substance consistent with most of the blog."
His one aside exemplifies what you set out to look for so as to dismiss "Austrians". Weak stuff, "Piotrek".
Published: September 4, 2009 11:47 AM
William P
Piotrek,
Mathematics only enters economic analysis because of the human tendency to quantify the magnitude of desired satisfaction. Thus, I can obtain an apple for the cost $0.50 and a banana for the cost of $1.00. Numbers serve an ordinal purpose, and are subject to each person's individual whims. Mathematical economics, what I would hesitantly label finance, is used for speculative business purposes, for assisting in prediction. Ultimately, however, it is all speculation. To assert that mathematical models can predict with accuracy the future economy is tantamount to claiming to predict the future of human affairs.
Are you willing to come out as a determinist with such predictive capabilities? Furthermore, "math" is not a substitute for sound philosophy, built upon logical axioms. I think you need a refresher course in basic logic.
Published: September 4, 2009 11:48 AM
filc
Piotrek.
Explain to us with all of your infinite PHD wisdom what in the hell mathematics has to do with praxeology?
Math is no more relevant in economics than it is in the culinary arts.
If you can't see the flaw in your argument then I advise you to stop writing xyz thesis and actually read a book.
This one in particular.
http://mises.org/resources/3250
Published: September 4, 2009 12:11 PM
fundamentalist
Piotrek, Try these:
http://mises.org/journals/qjae/pdf/qjae9_2_4.pdf
http://www.gmu.edu/rae/archives/VOL14_4_2001/5_keeler.pdf
Keep in mind that you won’t find any math models proving Keynes or the neo-classical model. You may find a few that assume Keynesian or neo-classical econ and then describe the way the economy should work if those assumptions are true. But every one of those models will leave capital out as a variable, which makes them very unrealistic.
You might be interested in this quote from Hayek on physics and economics from his “The Counter-Revolution in Science”, available in pdf under literature on this site.
“The physicist who wishes to understand the problems of the social
sciences with the help of an analogy from his own field would have
to imagine a world in which he knew by direct observation the inside
of the atoms and had neither the possibility of making experiments
with lumps of matter nor opportunity to observe more than the interactions
of a comparatively few atoms during a limited period.
“From his knowledge of the different kinds of atoms he could build
up models of all the various ways in which they could combine into
larger units and make these models more and more closely reproduce
all the features of the few instances in which he was able to observe
more complex phenomena. But the laws of the macrocosm which he
could derive from his knowledge of the microcosm would always remain
"deductive"; they would, because of his limited knowledge of
the data of the complex situation, scarcely ever enable him to predict
the precise outcome of a particular situation; and he could never
confirm them by controlled experiment although they might be disproved
by the observation of events which according to his theory
are impossible.
“In a sense some problems of theoretical astronomy are more similar
to those of the social sciences than those of any of the experimental
sciences. Yet there remain important differences. While the
astronomer aims at knowing all the elements of which his universe
is composed, the student of social phenomena cannot hope to know
more than the types of elements from which his universe is made up.
He will scarcely ever know even of all the elements of which it consists
and he will certainly never know all the relevant properties of
each of them. The inevitable imperfection of the human mind becomes
here not only a basic datum about the object of explanation
but, since it applies no less to the observer, also a limitation on what
he can hope to accomplish in his attempt to explain the observed
facts. The number of separate variables which in any particular
social phenomenon will determine the result of a given change will
as a rule be far too large for any human mind to master and manipulate
them effectively.
“In consequence our knowledge of the principle
by which these phenomena are produced will rarely if ever enable
us to predict the precise result of any concrete situation. While
we can explain the principle on which certain phenomena are produced
and can from this knowledge exclude the possibility of certain
results, e.g. of certain events occurring together, our knowledge will
in a sense be only negative, i.e. it will merely enable us to preclude
certain results but not enable us to narrow the range of possibilities
sufficiently so that only one remains.”
The Counter-Revolution in Science, Hayek p 41,42
Published: September 4, 2009 12:11 PM
S Andrews
You are right. It almost did! Then, a miracle happened. FDR hit the death spiral before the economy, and that saved us. In 1947, Government cut the budget to 1/3 of it's 1945 level, and the economy boomed again.
Published: September 4, 2009 12:24 PM
Lord Buzungulus, Bringer of the Purple Light
Piotrek, this might not address your questions about banking and business cycle theory, but if you're interested in some of the methodological foundations of the Austrian school (in particular, how they can provide insights without employing mathematics), this work by Hoppe would be a good start (specifically chapter 6):
http://mises.org/books/Socialismcapitalism.pdf
Published: September 4, 2009 12:24 PM
Richie
Piotrek,
What is your purpose other than to troll? Your complaints about Austrian economics not being mathematical enough have been discussed ad nauseum at this site; you present nothing new.
Personally, I fail to understand why the contributors to this site continue to discuss Krugman. Everyone knows his economics and his politics. Of course Krugman is going to advocate for more government intervention. Of course he does not trust the "free" market. Yet, when he writes a new column, article, etc. espousing those views, they seem amazed that he continues to advocate for more Keynesianism.
No one should be surprised that Krugman, or the mainstream, ignores Austrians. Krugman and the mainstream love the State, Austrians want the complete elimination of the State, or to have it greatly scaled back. With the current power structure in place, you can guess which side will be dominant.
Published: September 4, 2009 12:25 PM
Russ
Piotrek wrote:
"Show me a quantitative apper [sic] warning about the crisis."
Hahahaha!!! If you came here looking for quantitative theories, you came to the wrong place!
I don't completely buy into Austrian methodology myself, and don't like the lack of attention to falsifiability that I see in Austrian theory. But a theory doesn't have to be based on mathematics to be scientific, either.
Let's say I have a dream, and in this dream I see a vision of a ritual involving backgammon dice, bat guano, deep-fried plantains, chicken gizzards, and a prayer to Baron Samedi. This dream tells me that this ritual will enable me to predict the closing daily price of pork belly futures.
Is this ritual a scientific theory? Probably not. But let's say that the ritual is repeatable. I get the same answer every time I perform it (as long as the market hasn't closed for the day, then I get the next business day's price). And other people can reproduce the ritual, and they get the same answers that I do. Is it a scientific theory now?
I would say ... yes! Granted, it's probably not a very good one; it would probably be easy to falsify.
But let's say that people try to falsify it, and they repeatedly fail to do so. Then is it a good scientific theory?
I would say ... yes! You would probably object that it has no math. But so what? It is repeatable, falsifiable, and has not been falsified. So what's wrong with it? You might object that we don't have any idea why the theory works (and Austrians would share this objection). Again, so what? We don't really have any idea why mathematics works well at predicting physical phenomena; all we know is that it does. So there's no real fundamental difference between physics and my hypothetical ritual; they both qualify as scientific theories, and for exactly the same reasons.
Published: September 4, 2009 2:03 PM
GilesS
I don't get it. So Krugman writes a well writen, 8 page analysis of what's wrong with macroeconomics at the moment. He echoes the criticisms made by Austrians such as Rizzo, Murphy, Boettke and others. He criticizes the formalism of modern economics, the irrelevance modern macro, the focus on style at the expense of substance and notions such as the EMH.
Yet, somehow he is portraying himself as the "hero" ( I didn't see that at all, any some supporting quotations would be nice)and his piece is laughable "state propaganda".
He forgets Mises and Hayek because so has everybody else. I've yet to see any mainstream economist so much as refer to Harbeler's book, find me a principles level macro book that mentions that ABCT and you might have a point, but the fact remains that Austrian macro has been sorely underdeveloped (most Austrians will admit this, amongst them would be Salerno, Garrison and Horwitz). So why would he mention the Austrian school? The whole piece is a critique of obsession with substance, ignorance of reality and a lack of realism. It would be silly of him to mention the Austrian school.
Look, if you want to criticize Krugman for his macroeconomics, go ahead. But this is largely a piece about the development of modern macro and the problems that have resulted. Even people associated with the LvMI will admit that it's more worthwhile listening to Keynes' exposition than it is of those who have come since (see Klein over at "Organizations and Markets").
This just stinks of dogmatism and it really isn't the sort of behaviour an already marginalized school should be indulging in.
Published: September 4, 2009 7:30 PM
HM
@Piotrek
I actually quite enjoy reading Dr. Krugman's articles in the NYT. As an Engineer, I am willing to concede that Dr. Krugman's knowledge in Economics (probably a PhD) are a little superior to my two simple Economics courses in college (one micro, one macro class).
But here's what the folks here at Mises have taught me.
That economics is really no different than religion. It all comes down to what you "believe" (you have to say that like Eddie Murphy or Steve Martin would).
And like religion, rational arguments have little to do with it.
You simply see the things you want to see, and ignore everything that proves opposite.
For the Keynesians (and Krugmans), see the good that government does and the havoc that unregulated business creates. But ignore the government waste unintended consequences (Cash for Clunkers, anyone?).
For the Austrians, they point out that a few Austrians pointed out a bubble before others. But they tend to ignore working government programs whenever they occur (health care in the rest of the world), infrastructure (been to Mexico lately?), etc.
In the end, it is all like religion.
And like religion, you need your good and evil.
Rally the troops around your prophets (Jesus, Moses, etc), or in economics, your Keynes or Rothbards.
When that plays out, you rally the believers in defense of the evil (the Devil or the Axis of Evil), or in economics (Krugmans).
So in the end, both sides of the economics debate are funny to watch. Its like watching the religious folks. Its entertaining to watch the antics of various religions. But economists, like religious leaders, are very dangerous when they get put in charge of things (or at least able to unduly influence them). It leads to disasters like the Crusades or Reaganomics...
Published: September 4, 2009 7:36 PM
Bob Roddis
In the current article, Krugman takes down monetarism. Monetarism is the gift that keeps on giving to statists like Krugman. Monetarism is a government program (slow, steady Fed monetary dilution) that’s bound to fail, and when it does fail, the statists can again celebrate the collapse of laissez faire. Which, in fact, hadn't been operating.
Krugman will always ignore the Austrian theory because, if fairly presented, it would destroy his worldview. Austrian theory is like Krytonite to Keynesians. They will avoid it at all costs.
Thanks to clowns like Krugman, the ultimate source of the monetary dilution, the boom and bust cycle and price inflation (the Fed) may never be spoken in polite company. Krugman’s main task is keeping the general public from understanding the simple truth while convincing everyone that economics is arcane and incomprehensible to anyone other than "geniuses" like himself.
Krugman’s rants should properly appear on the style and fashion page of the newspaper in concert with “What Not to Wear”. It would be called “What Not to Think or Say”.
Published: September 4, 2009 8:17 PM
Randy
GilesS,
The blog post is criticizing the "laissez-faire-caused-the-Depression-and-this-recession" fairytale the article promotes and that's all it's doing. I guess that's dogmatic...???
Published: September 4, 2009 8:21 PM
Bob Roddis
In his current article, Krugman takes down monetarism. Monetarism is the gift that keeps on giving to statists like Krugman. Monetarism is a government program (slow, steady Fed monetary dilution) that’s bound to fail, and when it does fail, the statists can again celebrate the alleged collapse of laissez faire.
The Fed and its supporters are in a panic about Ron Paul’s audit the Fed bill (just today, there is a new scaremonger article by Alan Blinder that fails to mention Austrian theory). Ron Paul’s actions are inspired directly by Austrian theory. Austrian theory is now quite newsworthy. If it were this horrible, misguided theory that will allegedly destroy the American and world economies, I would think that all of the great minds of the Keynesian world could put together a short and precise refutation that would vanquish Ron Paul once and for all. The truth is that the Keynesians like Krugman are scared to death of the Austrian School and will never allow it to be presented fairly to the public because Keynesianism is now and has always been a scam. Austrian theory is like Krytonite to Keynesians. They will avoid and ignore it at all costs.
Thanks to clowns like Krugman, the ultimate source of the monetary dilution, the boom and bust cycle and price inflation (the Fed) may never be spoken in polite company. Krugman’s main task is keeping the general public from understanding the simple truth while convincing everyone that economics is arcane and incomprehensible to anyone other than "geniuses" like himself and that the fiat money inspired bust was caused by the “free market”.
Krugman’s rants should properly appear on the style and fashion page of the newspaper right next to“What Not to Wear”.They would be called “What Not to Think or Say”.
Published: September 4, 2009 8:29 PM
Bob Roddis
I apologize for the double post. The first submission resulted in an error message that stated that the submission had failed.
Published: September 4, 2009 8:33 PM
Bob Roddis
Piotrek:
For a good introduction to Austrian theory, I would suggest "The Essential Von Mises" by Murray Rothbard first published in 1973:
http://mises.org/books/evm.pdf
It will explain why a precise quantitative mathematical prediction of human behavior is impossible.
Do you have a math equation that in 1985 would have predicted how many CDs Vanilla Ice would sell in each of the subsequent 15 years?
Published: September 4, 2009 9:28 PM
GilesS
Randy, you're sort of missing my point. Yes, Krugman reaches some conclusions (that aren't necessarily the point of the article) that you disagree with (as do I, for that matter). But the substance of his article doesn't concern what policies he would advocate or what conclusions he agrees with, but the way other economists have reached different conclusions and advocated other policies.
I disagree with Krugman's conclusions as much as the next person on this blog, but I don't disagree with the way he reaches them. Or at least not as much as other economists reach theirs, and that was the point of this article. You may dislike Krugman, but at least what he is saying is relevant the world in which we live.
Look, I daresay I could take the time a replace 100 words in that essay to make in entirely compatible with what Austrians have been saying since Menger wrote "Principles". There's no need to throw the baby out with the bathwater, this is good piece on the problems of contemporary macro, nothing more.
Published: September 4, 2009 9:29 PM
GilesS
Randy, you're sort of missing my point. Yes, Krugman reaches some conclusions (that aren't necessarily the point of the article) that you disagree with (as do I, for that matter). But the substance of his article doesn't concern what policies he would advocate or what conclusions he agrees with, but the way other economists have reached different conclusions and advocated other policies.
I disagree with Krugman's conclusions as much as the next person on this blog, but I don't disagree with the way he reaches them. Or at least not as much as other economists reach theirs, and that was the point of this article. You may dislike Krugman, but at least what he is saying is relevant the world in which we live.
Look, I daresay I could take the time a replace 100 words in that essay to make in entirely compatible with what Austrians have been saying since Menger wrote "Principles". There's no need to throw the baby out with the bathwater, this is good piece on the problems of contemporary macro, nothing more.
Published: September 4, 2009 9:30 PM
fundamentalist
GilesS, The problem with Krugman's article is that he provides a false history of economic thought. He acts as if Keynes had no opponents but calcified old farts who couldn't learn anything new. He pretends that no intelligent person had any legitimate disagreements with Keynes.
And he pretends that nothing but Friedman's rantings caused the decline of Keynesian econ. In fact, all mainstream econ was Keynesian as late as the 1970's. Those old enough will remember Nixon's famous "We're all Keynesans now" talk. In fact, the stagflation of the 1970's killed Keynesian economics, not Friedman. Friedman merely offered something to fill the vacuum left the demise of Keynesianism. Krugman completely ignores the soul searching that mainstream econ went through in response to its failures in the 1970's, only to reach the wrong conclusions again.
Krugman should have included Austrian econ because 1) he is familiar with it even though he has rejected it and 2) it offers criticisms of mainstream econ that he ignores and 3) he needs to be honest.
Published: September 5, 2009 8:50 AM
Jeffrey Tucker
Salon corrects Krugman, links to Mises.org
http://www.salon.com/tech/htww/2009/09/04/paul_krugman_told_you_so/index.html?source=newsletter
Published: September 5, 2009 11:11 AM
GilesS
fundamentalist,
I think you're holding Krugman to unfair standards. He's a Keynesian, so no doubt he will tell you to look to Keynes for the answer. Just as an Austrian will say the same about Mises.
I didn't really get the notion that Keynes was absolutely correct all of the time and I found (upon a second reading) that very little of the essay was actually devoted to Keynes. No, the impression I got was the Krugman correctly critiques mainstream, neoclassicals for being obsessed with style at the expense of substance. A critique made by numerous Austrians.
What Krugman is saying, as far as I can tell is that we need to return to macro as it was in the mid 20th C and as far as Austrian economics goes that's not so bad. Even ignoring the importance of Hayek at that time, Keynes was far better than most macroeconomists that have come since.
I just don't get the point of criticising *this* piece by Krugman when he, and others, have written far worse.
Published: September 5, 2009 10:53 PM
Vanmind
Economics, like art, is a process not a product. While it may be disappointing to limited intellects who can't think outside the "hard science" framework, economics, like art, can never, ever be quantified with "hard data." Only catallactic history can be studied, in retrospect, to glean data that is mostly useless for future analysis (except in a general business cycle way).
Published: September 6, 2009 2:23 AM
Beau
Piotrek,
I'm also a physics Ph.D. However, I wouldn't judge an economic theory by the number of equations in their work. I'd take a qualitatively correct theory over a quantitatively incorrect theory. Equations don't mean a whole lot if they're not the right ones.
Published: September 11, 2009 2:44 PM