20 Jun 2011

Daniel Kuehn Embraces Bimetallism

Krugman 45 Comments

Over the years, some have suggested that I am overly sensitive to criticism. (Naturally, I don’t talk to those jerks anymore.) Because of this, I want to report on a running dispute Daniel Kuehn and I have had. I believe that Daniel has demonstrated a clearcut double standard with respect to Paul Krugman and me, but I am open to other thoughts.

It all began when Daniel linked to a “fascinating paper” that explored the difference between aggregate expenditures and aggregate income. In theory the two should be the same, but for whatever reason(s) they are measured differently in the real world. The authors of the paper took the difference between the two measures, and plotted it against the national unemployment rate. Lo and behold, the two series clearly moved together. Daniel suggested that this was consistent with Keynesian theory, saying:

We would expect these discrepancies to have pronounced cyclical qualities. Particularly, when the income measure is high relative to the expenditure measure (when more income is being earned than is being spent) we’d expect to see more unemployment, and when the income measure is low relative to the expenditure measure, we’d expect to see less unemployment.

There was just one problem: The graph showed the opposite of what Daniel was saying he “expected” based on Keynesian theory. In other words, the graph from the “fascinating paper” showed that when the income measure was high relative to the expenditure measure, then we saw less unemployment, and vice versa.

Naturally I pointed this out, and suggested it was a problem for Daniel and Keynesianism. He didn’t see what the problem was, so I spelled it out in a post and then in a particular comment of that post.

Daniel then came back with a new post entitled, “Bob Murphy sees economic science very differently from how I see it, I think.” Here are some key excerpts from that post:

When I was working off a misunderstanding of the graphic, I talked about what we “expect to see” according to Keynesianism, and I said it was an interesting graph (I still think it’s an interesting graph – it’s surprising these discrepancies would end up being anything other than noise). I didn’t say it was proof of Keynesianism. But I did have an expectation going into it, and that expectation ended up being wrong.

So is that a reason to discount Keynesianism? Maybe. But I don’t understand why Bob is so quick to jump on that. He jumped on it with 1920-21. He jumped on it with his recent Mises Daily article where he declared the Austrian school was right on the stimulus and Keynesianism was wrong. And he appears eager to tally this to the anti-Keynesian camp here. I don’t understand this perspective.

My reaction is to say “Huh – that’s weird. I wonder why that is happening?” (non-Keynesians might not find it quite as weird because their expectations weren’t dashed like mine were). It seems to me we oughta try to answer that question before considering this a mark against anyone. Commenters here offered some ideas (including Nick Rowe who just said it’s impossible to interpret). In Bob’s comment string, I suggested a life cycle consumption hypothesis explanation – an explanation Bob apparently came to forty comments after me. That seems like a pretty reasonable explanation to me, which solves our conundrum. Is life-cycle consumption inconsistent with Keynesianism? It wasn’t the consumption theory Keynes offered, but it is not inconsistent with Keynesian macroeconomics. Is it inconsistent with the Austrian school? Not that I’m aware of. So the best explanation that the crowd-sourced minds of my blog and Bob’s blog can come up with for this data is once again something that is consistent with multiple macroeconomic theories. That’s where I come out at the end of this, and that’s what I call scientific progress. We have a lot of ideas. We take it to the data. I make mistakes. I get my mistakes corrected by my peers. I get curious and confused. We figure out an explanation of the data, and we draw conclusions. For a scientific or an empirical mind, this has all been a great experience, and I am plenty happy to admit I was wrong.

But there seems to be this tendency in some corners – instead of doing science – to do proofs and falsifications. It makes sense, of course, that Austrians think in terms of “proving” things. That’s the deductive mindset after all. It shouldn’t surprise regular readers to learn that I really don’t think we’re equipped to do that. If you’re interested in abstract philosophy and epistemology, Popper is among the best. If you’re actually interested in doing something useful you can largely forget Popper (well – at least you can forget Popperian epistemology – I don’t want to rip on Popper himself, who may very well have agreed that epistemology is of limited use in the practice of science, except as a vague mirage). I have serious doubts that Keynesian theory is falsifiable. I have serious doubts that Austrian theory is falsifiable. I have serious doubts that any truly interesting theory, at least of a highly complex phenomenon, is falsifiable. This point is crucial for scientists to understand.

Now that is fine as far as it goes, but at this point in our debate I had already begun to suspect the dreaded double standard. So I said in the comments:

Daniel, can you point us to where you criticized Krugman’s deductionist viewpoint in the numerous posts he’s made, like this? If I didn’t know [any better], I would say Krugman feels vindicated since Keynesian theory predicted interest rate and inflation movements better than the Chicago School and Austrian guys. But surely Krugman isn’t a follower of non-scientific Austrianism.

(You can read Daniel’s reply here.)

* * *

There the controversy died away. It was rekindled today when Krugman ran a post containing yet another victory lap:

And here we are, two-plus years later, and the interest rate on 10-year U.S. Treasuries is only 2.94 percent. This should count as a triumph of economic analysis: the model was pitted against the intuitions of practical men, making a prediction many people considered ridiculous – and the model was right.

And nobody noticed; economic discourse – and even a lot of investment strategy — continues to rely on the supply-and-demand-for-bonds view, even though it has been thoroughly discredited by experience.

How is this possible?

One answer is that the Greeks muddied the waters…

More broadly, I guess it turns out that Hicks/Keynes analysis is harder than it looks, and that even smart people – many of them with economics PhDs – just can’t wrap their minds around the notion that sometimes just doing supply and demand isn’t enough.

The result – that one theory has been proved wrong, another proved right, yet the world continues to believe in Theory #1 – is frustrating. It’s also tragic, because that intellectual obstinacy is contributing to the “new normal” of permanently high unemployment.

Now the connection (to me) to my dispute with Daniel was so obvious, I sent the following email (in its entirety), subject line “krugman sounding like murphy,” to him:

“If I were completely petty, I would post a blog and this demanding that you chastise Krugman. But I’ll just send it to you instead.”

And then I pasted the link to Krugman’s blog. Here is what Daniel said in response. This is his full email, reproduced with his permission:

I’m happy to chastize, but what exactly would I be chastizing him for?

The strict “proven wrong/proven right” language? I could certainly note that it’s hard to absolutely dismiss arguments in macro… but if you soften that language a little I’m pretty sympathetic to the drift of the post. Is that what you were getting at?

I had actually requested that Brad repost that post that Krugman is refering to. I think it’s one of his best.

So, am I being touchy, or is this a jaw-dropping double standard? I am genuinely open to different opinions on this, since Daniel isn’t trying to be a jerk (and neither am I). Is this just a classic illustration of the fact that it seems worse when somebody on “their side” attacks “one of us”?

45 Responses to “Daniel Kuehn Embraces Bimetallism”

  1. Major_Freedom says:

    Wow. Bob, you’re absolutely without a doubt right on this. Kuehn clearly just contradicted himself. I will agree that it is just a classic illustration of the fact that it seems worse when somebody on “their side” attacks “one of us.”

    When Austrians make a ‘”proof/disproof” argument, Kuehn invokes all kinds of hand wavey nonsense. When a Keynesian like Krugman makes a “proof/disproof” argument, then it doesn’t deserve criticism, because he agrees with the Keynesian conclusion.

    He’s nowhere close to your ability or respectability. He’s just a principle-less smarmy water carrier for statist Keynesianism.

    • bobmurphy says:

      Thanks MF. I’m sure coming from you, Daniel will lose sleep tonight. :)

    • Daniel Kuehn says:

      re: “When a Keynesian like Krugman makes a “proof/disproof” argument, then it doesn’t deserve criticism”

      Am I blind, or did I say to Bob in the email that Krugman DOES deserve criticism for making such a stark proof/disproof argument.

      What the hell are you talking about, Major_freedom?

      • bobmurphy says:

        Daniel, this is why I was open to the idea that I was being overly sensitive. Yes, you did acknowledge that Krugman shouldn’t have used the terms “proof/disproof,” but in my case you:

        (a) denied that there was even something a Keynesian should be worried about, despite the fact that what you said you “expected” (due to Keynesian theory) was exactly contradicted by the data, and then you wrote a blog post saying you and I have very different views of science. You lectured me throughout with references to Kuhn, and somehow patronizingly said it’s understandable, given my Austrian deductive views, that I would think like this, even though that’s not how science works.

        But when Krugman does the exact same thing you

        (b) describe it not as a fundamentally different view of science, and try to psychoanalyze to discover why he is coming up with this obsolete, non-Kuhnian approach. Instead you say you wish he would have softened it just a tad, but otherwise you are in full agreement with him. Further, it really is embarrassing for the free-market folks that they predicted the opposite of what happened with interest rates/inflation.

        In the two episodes, there are two relevant difference is that the Austrian had no reason to predict that income would exceed expenditures in that paper’s graph, when unemployment was low. But is that difference really enough to explain the above discrepancy?

        The other relevant difference is that I was posting about you, by name. So it made sense that you would devote a whole blog post to me, explaining our different views of science, whereas it would not be as appropriate for you to do the same for Krugman out of the clear blue sky.

        So I believe that in your mind, those two differences are sincerely what drove the different reactions on your part. But can you see why it looks very suspicious to people on our side? It sure looks like when an Austrian points out a Keynesian “bad prediction” and claims victory, you will have none of it, but when a Keynesian does the same, you express mild discomfort with the wording but basically endorse the analysis.

        • Daniel Kuehn says:

          1. Right – you dedicated a post to me that had 110 comments, so of course I’m going to write a response to that in detail. Wouldn’t you be more likely to respond to someone that specifically identified you than someone who wasn’t refering to you?

          2. Again – my expectations were dashed and I’ve said this several times in several fora at this point. But I simply don’t see how Keynesianism is challenged by life cycle income explanation (which I came up with as an explanation for that data after you corrected me – I’ll also remind people) in any significant way. I have egg on my face, but we have a solution to the question that isn’t particularly problematic for anyone involved. One could make a case that ABCT isn’t particularly challenged by the interest rate situation either. Krugman actually noted this! He noted there are ex post explanations that are consistent with it. I find those less persuasive than I find the life cycle consumption hypothesis. If that bothers you, then you can feel free to persuad me:

          (1.) why I should be losing sleep over a life cycle consumption hypothesis explanation, and

          (2.) why I should not be as persuaded by the interest rate evidence.

          • Major_Freedom says:

            I find it fascinating contemplating what life must be like for someone who actually believes that himself being “persuaded” and “not persuaded” somehow constitutes a rational standard for judging and comparing contrasting ideas, and then, to add more crap to the pile, you actually have the gall to suggest that you, as opposed to Austrian deductive thinkers, really understand how science works? How utterly insulting to advocates of rational discourse.

            Does anyone else not really care how “persuasive” arguments are to people, as opposed to how they actually stack up to a rational standard? Or is it just me?

            Bob is right about what he said above, but I also think his opinion of you is too kind. I think your lack of rigor goes even deeper. Your positive reference to Thomas Kuhn as what “real science is all about” displays a deep misunderstanding of the philosophy of science. No wonder you’re so evasive all the time.

            Kuhn misconceived scientific theories to be merely verbal propositions only, not grounded at all on what Austrians correctly understand to be a rational standard of human action and interaction.

            By stripping away scientific propositions away from the rational foundation, you cannot help but consider your fundamental beliefs (“Keynesianism has not been proven wrong here!!”) to be immune from refutation, and thus can only be accepted or rejected on the basis of some arbitrary standard, which for you is “being persuaded.”

            This is exactly what rationalist economists have been warning the profession for years about. Infiltration of economics by hermeneutics, historicism, and Kuhnian rhetoric. There is no rational foundation according to Kuhn. There are only paradigm shifts throughout history.

            Kuhn argued that during the period of the second stage, the “normal science” stage, the failure of a result to conform to the paradigm is seen not as refuting the paradigm, but as the mistake of the researcher.

            This is why you patronizingly argued that it is understandable that “Bob as a deducer just couldn’t think any other way” about that graph on GDP(E)/GDP(I).

            Kuhn’s philosophy leads to irrational relativism. This because he claimed each paradigm shift was incommensurable with all others. Well, if there is no commensurability between paradigms, then then it implies the theory of choice in scientific standards to be perpetually irrational. Well, with irrationality as the standard, the only consequence is relativism.

            Contrary to your claims, Kuhn’s views are NOT “real science.” They are irrational hermeneutic, rhetorical nonsense. Real science is based on rationalism. Every progress made in science has conformed to rationalism and nothing else.

            This is precisely why Bob’s worldview on economics is not only vastly SUPERIOR to your own irrational one, but it’s not even on the same level. For you to sit there, with less education and less experience, to be able to accurately judge Bob’s logical deduction worldview as “understandably wrong”, is both incredibly hilarious, and yet at the same time so very tragic, because it truly reveals the low quality of your knowledge.

      • Major_Freedom says:

        Am I blind, or did I say to Bob in the email that Krugman DOES deserve criticism for making such a stark proof/disproof argument.

        Saying something in email, passively, is NOT the same thing as carrying the flag of criticism on your own two feet on your own blog, the way you do when Austrians make the exact same type of argument.

        Saying he deserves criticism is not the same thing as you actually going out and criticizing him, now is it?

        Can’t you see the difference between:

        “Daniel is absolutely wrong on this point, and here’s why…”

        and

        “Hmmm, yes, it seems to be that maybe perhaps it appears that Daniel does deserve criticism on this one small point, sure, he could have softened up a bit, but he’s right.”

        • Daniel Kuehn says:

          When Krugman dedicates a blog post to saying I have botched something that garners 110 comments and he makes this mistake, I will respond just like I responded to Bob without prompting.

          Bob’s welcome to critique me – I’m not saying he was wrong to write that post (although I do think he was wrong on certain critiques). But you better believe I’m going to be more likely to mention someone that has mentioned me by name.

          That decision on my part doesn’t justify you calling me “nowhere close to your ability or respectability” and “a principle-less smarmy water carrier for statist Keynesianism.

          I have no idea why you think it’s OK to be so condescending to other people, but I really resent how often I get treated like that from you. You need to learn to keep it to yourself.

          • Major_Freedom says:

            I have no idea why you think it’s OK to be so condescending to other people, but I really resent how often I get treated like that from you. You need to learn to keep it to yourself.

            Now you know how Bob feels you hypocrite.

            • Daniel Kuehn says:

              What are you talking about?

              When have I EVER said anything remotely that insulting to you or Bob or anyone else on here???

              Are you really unable to distinguish between the disagreements that Bob and I have fairly often and calling people “principleless” and “smarmy”?

              • Major_Freedom says:

                You called Silas “foolish” below. But that’s not “even remotely insulting.” It’s a respectful response!

            • Major_Freedom says:

              Who me? What did I do? What are you talking about? Me? Little old me? Really? Where?

              When have I EVER said anything remotely that insulting to you or Bob or anyone else on here???

              Bob already went over this in his responses to you.

              Are you really unable to distinguish between the disagreements that Bob and I have fairly often and calling people “principleless” and “smarmy”?

              Are you really unable to distinguish between you patronizing someone, and someone else really patronizing you?

  2. Dan says:

    I think Bob Roddis is right, DK would make a great lawyer.

  3. Daniel Kuehn says:

    Well this is why I asked you what your concern with Krugman’s post was. Clearly he’s talking too starkly about “proving” or “disproving” things. Didn’t I tell you in my email I was more than happy to chastize him for that?

    My point is this – he may not have proof, but he has warrant for suggesting the Keynesianism explains the contours of the crisis well – better than any competing theory. He shouldn’t speak so strenuously of “proof”, but he should feel free to make this point clearly.

    If that’s what you’re refering to – if that’s all you’re refering to – then it appears we’re on the same page.

    • Major_Freedom says:

      You should rip Krugman a new asshole on his or your blog, you know, just to show how sincere you are in your ideas over protecting the queen bee.

      • Daniel Kuehn says:

        Bob wrote a post directly engaging my original post on the GDP(E)/GDP(I) issue. Of course I’m going to clarify that:

        1. I was wrong
        2. I never spoke in terms of proof/disproof in my original post
        3. I agree completely with his life cycle explanation (in fact I mentioned it before he did), and
        4. That doesn’t constitute a “disproof” of Keynesianism even if it did force me to readjust my thinking by challenging my expectations.

        Bob mentioned me by name, so it was worth responding and clarifying in detail.

        I didn’t “rip him a new asshole” when I responded to Bob, and I’m not being inconsistent to not jump at Krugman, who doesn’t even mention me the way Bob mentioned me.

        I’m more than happy to say I agree with Bob on this point, though. What’s your deal? What’s your problem with that? How is that not sufficient?

        • Silas Barta says:

          From my (Bayesian) perspective, the damning part of your E/IGDP post was that you were so sure[1] that a piece of evidence would appear one way, when it did appeared the exca. The fact that you later came up with alternate explanations, showing your theory *really did* predict this all along, doesn’t refute this, but makes the error worse.

          Had you been less sure that the data would appear the way you expected, that would have (under the assumption you update as a Bayesian) forced a weaker update away from your credence in Keynesianism, thus allowing you to retain a high credence in it.

          [1] i.e., that you estimated a high likelihood ratio P(E|H) / P(E|~H) for H = Keynesian diagnoses of recessions are correct, E = excess expenditures over income is negatively correlated with unemployment.

          • Daniel Kuehn says:

            Don’t be foolish – how could you possibly know how sure it was? I expected something and I thought I saw it, and I’ve very unbegrudgingly said multiple times now that I was wrong. I’m not sure what else to do.

            Keynesianism is a massive theoretical edifice. Do you expect me to suggest there’s a problem with it because my expectations were dashed.

            When we put our heads together, multiple people – myself included – came up with life cycle consumption hypothesis as a better explanation – an explanation that has been out there for decades.

            What do you want me to do – pretend that that explanation presents a problem for Keynesianism???? I can’t do that Silas. I can’t pretend that because it’s not true. Either I agree with Bob on life cycle consumption as the explanation and am thereby forced to conclude nothing violates Keynesianism, OR I disagree with Bob on life cycle consumption and maintain that the dashing of my expections means there’s an issue for Keynesianism.

            I don’t have the evidence to opt for the latter, so I opt for the former.

            What exactly would you have my do?

            • Silas Barta says:

              I expect that you follow Bayesian inference, of which there are numerous introductions. Yudkowsky’s “A Technical Explanation of Technical Explanation”, for one. TGGP links to a relevant application to a case like this.

              I won’t walk you through the whole process (you’re a smart enough guy to give it a go), except to say that yes, you can decrease your credence in a view (such as Keynesianism) because of counterevidence, while *still* having a high credence in it. But then, I already said that and you haven’t assimilated it, so I don’t know what else to say.

              Regarding how I know you were “so sure” — just go back and read the original post and look at the language you used. It simply wasn’t the language of someone who thought that “yeah, we might could maybe expect to see a weak correlation”.

              Regarding life cycle consumption hypothesis: yes, by shifting to a compound view (combining Keynes + LCCH) you can account for the data. My issue there is not with your updating of views, but that you need to update in a few more areas.

              Specifically, if the LCCH effect can destroy the correlation between excess exp-GDP and reduced unemployment, then why should we bother with Keynesian policies in the first place??? If all attempts to jack up expenditures in an attempt to get unemployment down (as Keynes would want) will just get nullified by this lifetime consumption smoothing, doesn’t that mean we should give up on trying to goose AD altogether?

              • Daniel Kuehn says:

                On giving up Keynesian policies – I’m not sure what you think I’m advocating when you talk about “goosing AD”. You seem to have a sort of cliche hydraulic Keynesianism in mind.

              • Major_Freedom says:

                On giving up Keynesian policies – I’m not sure what you think I’m advocating when you talk about “goosing AD”. You seem to have a sort of cliche hydraulic Keynesianism in mind

                Classic evasion.

              • Silas Barta says:

                Okay, so you don’t support a kind of Keynesianism that involves increasing spending to get out of a recession? Great! Convert the rest of them to be like you!

                We cool on the Bayes stuff?

            • Silas Barta says:

              (oops, that was supposed to begin with “I would have you…” instead of “I expect that you…” to maintain parallelism with the question I was posed.)

            • von Pepe says:

              I expect that when the facts change you change your mind…

          • Daniel Kuehn says:

            Let me reiterate that the interpersonal parsing of that whole thing was beyond absurd.

            I was wrong. I said I was wrong. We worked together and came up with a better explanation.

            It went considerably smoother than a lot of crap I have to wade through with Austrians. Why this became such an intense interest for people – 110 comments on that thread! – is unknown to me.

            • Major_Freedom says:

              It went considerably smoother than a lot of crap I have to wade through with Austrians.

              Austrians crap, yes, but at least they don’t try to smush their own feces onto other people’s faces and then have the gumption to call it “stimulus” like the Keynesians.

        • Silas Barta says:

          Oops, that should read “appeared the exact opposite”.

      • Silas Barta says:

        Ouch! Major zinger from Major_Freedom!

    • Major_Freedom says:

      My point is this – he may not have proof, but he has warrant for suggesting the Keynesianism explains the contours of the crisis well – better than any competing theory. He shouldn’t speak so strenuously of “proof”, but he should feel free to make this point clearly.

      Better than any competing theory based on what standard? Other than the level of you being “persuaded” of course.

      You’re entitled to your opinion of course, but the fact is that Austrianism explains the crisis far better than Keynesianism. Murphy has pointed out so many flaws in the Keynesian story that there are almost too many to count. I mean, you do read what he writes correct? Did they not stick? Or should we just dismiss them as the “understandable” meanderings of a logical deducer, which is not “real science” a la the irrational Kuhnian framework you adhere to?

      Your point is moot. If one just takes 5 minutes of thinking, one can expose what you perceive to be a “warranting” explanation for the crisis, to in fact be not warranted at all.

      I bet you won’t write a single post on your own blog explaining in a detailed way why Krugman was wrong to say “proof”. You probably won’t lecture and psychoanalyze why Krugman said “proof”, by referring to why “it was understandable for him to say that.” You won’t dare do that. No. Just keep it quiet on another person’s blog, and in email, passively say he should have toned it down, while still carrying his water by saying “he has warrant for suggesting it.”

      The double standard in your nonsense is so easily seen I am actually giggling watching you attack but really defend Krugman and Keynesianism. You should have been a lawyer. They don’t have as many scruples.

  4. Daniel Kuehn says:

    btw – if I was around in the 1890s, I imagine I would embrace bimetallism happily.

    • Silas Barta says:

      Just like you would embrace sensible monetary policy in 1920 or 1980 … but not today, for heaven’s sake! No, now we need to flood the system with dollars-for-nothing!

      • Daniel Kuehn says:

        Explain how monetary policy in 1920 or 1980 would make sense for today.

        I’ve made my case for why they called for different policies.

        Make yours, or stop insinuating that something fishy is going on here.

        • Silas Barta says:

          Because it would let the rot out and allow the economy to adjust for the change in production and consumption patterns, as it was allowed to in 1920 and 1980.

          • Daniel Kuehn says:

            Fair enough, and it’s clear you’ll respond the same to these recessions.

            Go for it.

            Don’t expect that means that others think that reacting the same way to all recessions constitutes “sensible monetary policy”.

      • Blackadder says:

        Do you think bimetallism was sensible monetary policy in the 1890s? Milton Friedman thought so, but I thought most libertarians believed we should have stayed with the gold standard.

        • Joseph Fetz says:

          Personally, I am a proponent of Austrian econ, but I think that the money should be whatever the market decides to use for exchange, but that gold (and silver) typically are the goods used for that purpose.

          • Blackadder says:

            Joseph,

            That’s fine. But bimetallism is not the same letting the market determine what to use for exchange. It involves fixing the value of the dollar in terms of a set amount of gold and silver, and in the context of the 1890s adopting bimetallism would have meant a significant increase in the money supply.

            • Joseph Fetz says:

              Yes, I understand that.

              I was referring specifically to your remark about what most libertarians believe. I wouldn’t say that most libertarians believe in a gold standard (i.e. a government standard), rather they believe that gold (and possibly silver) would become money by market forces.

              Of course, there is no consensus in this respect (gold standard vs market money), and the debate is primarily between those that lean more toward classical liberalism and those that lean toward ancap. Also, if the libertarian happens to be an Austrian, then you get the debate between Hayekian, Misesian and Rothbardian camps. It isn’t as cut and dry as saying that “most libertarians believe” such and such.

        • Silas Barta says:

          I think that “not giving warehouse receipt holders a big middle finger” is the best monetary policy. Well, the best *anything* policy!

    • Major_Freedom says:

      Because that was the Kuhnian paradigm at the time, right? Because economic laws were different back then, right?

  5. A. says:

    DK is really making a play to be part of team DeKrugman. He can’t be too critical, or he’ll face The Deletion.

  6. david (not henderson) says:

    From Kuehn’s post quoted above:

    “But there seems to be this tendency in some corners – instead of doing science – to do proofs and falsifications. It makes sense, of course, that Austrians think in terms of “proving” things. That’s the deductive mindset after all. It shouldn’t surprise regular readers to learn that I really don’t think we’re equipped to do that. … I have serious doubts that Keynesian theory is falsifiable. I have serious doubts that Austrian theory is falsifiable. I have serious doubts that any truly interesting theory, at least of a highly complex phenomenon, is falsifiable. This point is crucial for scientists to understand.”:

    Am I wrong or can we conclude that:

    a) Daniel Kuehn does not understand Austrian epistemology; and

    b) Daniel Kuehn is, in actual fact, an epistemological Austrian?

    • david (not henderson) says:

      Another thought. I’m wondering if the most important lesson of all is that accurate measurement of theoretically valid aggregates is difficult (and perhaps impossible). Consequently, schools of thought that depend, either for theory, policy or empiricism, on accurate measurement of such aggregates are left without the basis upon which their ideas crucially depend.

  7. TGGP says:

    This would be simpler if you all did the common-sense thing and adopted Bayesianism :)
    See the Conservation of Expected Evidence.

  8. David S. says:

    It’s very simple Bob. You simply don’t understand econ 101. When economies are below potential with low inflation or deflation, you scan stimulate them without worry until inflation gets too high, which comes after getting back to full capacity under most circumstances I can imagine. It is then very easy for a central bank with a fiat currency to slow the economy and get inflation expectations under control.

    You’re not an economist. You’re the equivalent of a “physicist” who says Newton’s laws of motion and gravity are wrong. That is to say, not useful in any context, with any level of precision of measure.

    Your ilk has had since many decades to try to convince the Keynesians, monetarists, and every other non-Austrian your perspectives are correct, and has failed miserably. That you reject the scientific method means you don’t even get past the giggles.

    It’s time to retire and become a pastor, which is your true calling. You’re only delaying the inevitable. Some are for science and others for faith.