02 Oct 2012

Gary North, King of the Internet

Economics, Krugman, Shameless Self-Promotion 33 Comments

Gary North has written two great articles, one that I like because it’s about the Krugman debate, and the other that I like because it’s objectively great.

Here’s North telling Krugman that he (Krugman) shouldn’t debate me:

I strongly recommend that Krugman not accept the challenge. I think he is a rational man, so I think he can understand the following arguments.

First, Murphy is a nobody, and Krugman is a somebody. The fact that he would even acknowledge Murphy’s existence would be an advantage to Murphy….

Second, Murphy is outside of academia, and Krugman is up to his eyeballs in it. Therefore, Krugman is an object of intense envy. There is no group more envious than a bunch of academics, and economists are probably the most envious of the lot. There is only one thing that pleases an academic more than seeing a famous academic taken down a notch: seeing a famous academic taken down two notches. The academics within the big shot’s own discipline are most delighted when this happens, because all of them know that they are far more qualified than the big shot, and they resent the fact that the big shot is so big. If the big shot academic also has access to the media, which means that nonspecialists are actually paying attention to him, the envy is intense beyond anything that the normal person would be familiar with.

Third, Krugman would be regarded as Goliath, and Murphy would be regarded as David….

Fourth, Krugman has spent his entire career in academia, which means he has spent his entire career lecturing to students. He can flunk them if they give him any flak…So, Krugman is without any experience in public debate. He has been able to get away with conceptual murder in the classroom for his entire career. This is why academics usually are lousy debaters.

Fifth, Krugman suffers from a degree of shyness greater than most academics ever experience. He really is stuck for an answer in an elevator if somebody says “hello.” This is not a man to take on a challenger in a public forum which is going to be captured on video and posted on YouTube within 20 minutes after the debate is over.

Sixth, Krugman is a Keynesian. Keynesianism is incoherent in its original form…Therefore, a Keynesian is virtually defenseless in the presence of an Austrian school economist in a public debate forum….

Seventh, Krugman faces an economy with over 8% unemployment, while his colleague from Princeton, Ben Bernanke, has been unable to get the unemployment rate below 8%…

Eighth, Murphy is really good in front of a crowd. Krugman cannot even work an audience in an elevator.

Ninth, Krugman doesn’t lose anything by not debating. Poor people will lose about $80,000 worth of food, but when you’re a full professor at Princeton, and you have been awarded a Nobel Prize, you don’t know any poor people….

In conclusion, Krugman would be a fool to debate Murphy. Krugman is no fool. Krugman is a self-interested, rationally calculating, totally economic man.

Now for grander things, North talks about the impending collapse of Keynesian economics:

I offer this optimistic assessment: the bad guys are going to lose. Their statist policies will bring destruction that they will not be able to explain away. Their plea will be rejected. “Give us more time. We just need a little more time. We can fix this if you let us get deeper into your wallets.”

In the very long run, the good guys are going to win, but in the interim, there is going to be a lot of competition to see which group gets to dance on the grave of the Keynesian system.

Get out your dancing shoes. Keep them polished. Our day is coming.

I know that sometimes I personally don’t read all of North’s articles, because they can be long. But this one I couldn’t stop reading until I had finished. It was very compelling.

33 Responses to “Gary North, King of the Internet”

  1. John S says:

    Bob, I would really like to hear your thoughts about this idea:

    Why don’t you challenge Krugman to a series of 6 essays, Cato-unbound style (3 by him, 3 by you, with a specified page/word limit for each)?

    He said on radio ( http://www.youtube.com/watch?v=cV-ga1oKzC8 ) that a live debate isn’t the correct format b/c econ issues shouldn’t be settled by “who is quicker on the uptake” or “who has the best one liners.” This gives him a legitimate sounding excuse (I won’t engage in a circus, I’m a Nobel Prize winner, dammit!).

    So maybe you should publicly alter your challenge by stating that the money would be released IF the essays ran as his official NYT columns (NOT blog entries). Then he really doesn’t have an excuse for ducking you. It would also give you an even better format to eviscerate him.

    Publicity-wise, I think a series of columns would be even better. A debate would only be a one-time shot. With a series of columns, massive buzz would build up in the blogosphere btw columns (and not just the econosphere).

    • skylien says:

      Agree with John!

    • Bharat says:

      I’d assume that everyone that donated is expecting a person-to-person debate though. Some of them might not be happy with a written one. I am not sure if that was specified before, but I’m sure that was the general impression given or was simply assumed by most.

      • integral says:

        Yeah, maybe he could get Krugman to agree to the face-to-face and then follow that up with a series of essays? Or maybe the essays culminating in a face-off?

      • John S says:

        This is true. Perhaps Murphy could send an email to the people who pledged, ask them if a live OR written debate would be acceptable, and allow them to withdraw their pledges if they declined.

    • Bob Murphy says:

      John would Rocky have been as exciting if he and Creed spent the last 30 minutes of the movie engaged in a best-of-five chess match?

      • John S says:

        Chess matches can draw big publicity–think about Fischer/Spassky.

        Let’s face reality–Krugman had a live debate with Ron Paul and obv didn’t like the experience. So now he’s formulated the “circus” defense, i.e. econ issues are too complex to be settled by sound bite. It sounds reasonable to the public and gives him lifelong immunity from your challenge. I’d say the odds of him agreeing to a live debate are, generously, less than 50:1.

        Can you honestly say those odds wouldn’t shorten tremendously if the format were changed to a series of essays?

        Perhaps a live debate would be more exciting than a written one. But a written debate would be infinitely more interesting that no debate, which is the likely outcome now.

  2. Dan says:

    Man, that was my kind of article from Gary North.

  3. Lord Keynes says:

    Regarding North’s second article, the one you think is “objectively great. ”

    “Mises’s argument [against socialism in 1920] was not taken seriously by the academic community. Socialism was so popular by 1920 among academics that they did not respond to Mises for over 15 years.

    When finally one major economist, who really was not a major economist but was simply a Polish Communist, wrote a response to Mises, it got a great deal of publicity. His name was Oscar Lange. He was a hack. He taught at the University of Chicago. He had no theory of economics. ….
    So, the only major supposed academic refutation of Mises was made by a hack who switched sides to Communism when he got a better offer. Yet he was heralded as a brilliant economist because he had supposedly refuted Mises.

    The words in bold are so absurd it beggars belief. Nobody responded to Mises for over 15 years? Only Lange ever wrote a reply?

    I guess all these replies to Mises slipped down the Austrian memory hole:

    Polanyi K. 1922. “Sozialistische Rechnungslegung,” Archiv für Sozialwissenschaft und Sozialpolitik 49.2: 377–420.

    Leichter, O. 1923. Die Wirtschaftsrechnung in der socialistische Gesellschaft. Verlag der Wiener Volksbuchhandlung, Vienna.

    Polanyi K. 1924. “Die funktionelle Theorie der Gesellschaft und das Problem der sozialistischen Rechnungslegung,” Archiv für Sozialwissenschaft und Sozialpolitik 52: 218–228.

    Neurath, Otto. 1925. Wirtschaftsplan und Naturalrechnung. Laub, Berlin.

    Taylor, F. M. 1929. “The Guidance of Production in a Socialist State,” American Economic Review 19 (March): 1–8.

    Roper, W. C. 1929. The Problem of Pricing in a Socialist State. Harvard University Press, Cambridge, Mass.

    Dickinson, H. D. 1933. “Price Formation in a Socialist Community,” Economic Journal 43 (June): 237–250.

    Dickinson, H. D. 1939. Economics of Socialism. Oxford University Press, Oxford.

    Lerner, A. 1937. “Statics and Dynamics in Socialist Economics,” Economic Journal 47: 251–270.

    Lerner, A. 1938. “Theory and Practice in Socialist Economics,” Review of Economic Studies 6 (October): 71–75.

    More refutation here:

    http://socialdemocracy21stcentury.blogspot.com/2012/10/austrians-rewrite-history-of-socialist.html

    • Matt Tanous says:

      1) A bunch of titles discussing socialism as a concept, or even pricing and production under socialism, does not constitute a REPLY to Mises. Was he cited? Was the article directed “A Reply to Mises” or some other point?

      2) Some of your titles that refute the claim of 15 years are dated more than 15 years after Mises’ article was published. For instance:

      Dickinson, H. D. 1939. Economics of Socialism. Oxford University Press, Oxford.

      Lerner, A. 1937. “Statics and Dynamics in Socialist Economics,” Economic Journal 47: 251–270.

      Lerner, A. 1938. “Theory and Practice in Socialist Economics,” Review of Economic Studies 6 (October): 71–75.

      All are past the 15 year point of 1935. Are you really *that* bad with numbers?

      • Lord Keynes says:

        “A bunch of titles discussing socialism as a concept, or even pricing and production under socialism, does not constitute a REPLY to Mises. Was he cited? Was the article directed “A Reply to Mises” or some other point?

        Yes, Mises was cited, and you only need read these to prove that:

        (1) Hayek, 1935. Collectivist Economic Planning: Critical Studies on the Possibilities of Socialism. G. Routledge & Sons, London. and

        (2) Keizer, W. 1987. “Two Forgotten Articles by Ludwig von Mises on the Rationality of Socialist Economic Calculation,” Review of Austrian Economics 1.1: 109–122.

        (2) “Some of your titles that refute the claim of 15 years are dated more than 15 years after Mises’ article was published”

        Correct: but only 3 of them. And their existence proves North worng in his absurd claim that nobody except Lange ever tried to refute Mises.

        • Matt Tanous says:

          “Yes, Mises was cited, and you only need read these to prove that”

          Hayek didn’t even understand Mises’ point, instead going off on some point about the lack of knowledge the planners could obtain (when Mises’ critique was far more fundamental than that).

          “And their existence proves North worng in his absurd claim that nobody except Lange ever tried to refute Mises.”

          No *major* economist. Such adjectives matter in discussion.

          • Matt Tanous says:

            “Hayek didn’t even understand Mises’ point”

            Clarification: I’m certain he *understood* it – he just did not give it much import in his writings, favoring the “pretence of knowledge” point.

          • Lord Keynes says:

            (1) Hayek didn’t understand Mises?
            Perhaps Hayek was an evil “socialist” himself

            (2) North:

            Socialism was so popular by 1920 among academics that they did not respond to Mises for over 15 years. When finally one major economist, who really was not a major economist but was simply a Polish Communist, wrote a response to Mises,”

            North is quite clear: “academics … did not respond to Mises for over 15 years”.

            That’s rubbish.

            And even if he meant “no major economist”,
            Polanyi and Lerner were major economists.

    • Bob Roddis says:

      While LK still does not understand the basic concept of economic calculation, what did all of those anti-Mises writers actually say about economic calculation? Especially as to the myriad itty bitty parts of capital goods?

      • Lord Keynes says:

        On the contrary, I suspect you clearly don’t understand the basic concept of Austrian economic calculation – for your stock quote explaining dragged most time sit’smentioned is nothing but Hayek regurgitating market clearing Walrasian GE theory.

        As for what the socialist critics wrote about Mises read my post:

        http://socialdemocracy21stcentury.blogspot.com/2012/10/austrians-rewrite-history-of-socialist.html

        • Lord Keynes says:

          ” for your stock quote explaining it, that is dragged out most times it’s mentioned,”

        • Bob Roddis says:

          The Hayek quote I believe LK is referring to is this:

          “The primary cause of the appearance of extensive unemployment, however, is a deviation of the actual structure of prices and wages from its equilibrium structure. Remember, please: that is the crucial concept. The point I want to make is that this equilibrium structure of prices is something which we cannot know beforehand because the only way to discover it is to give the market free play; by definition, therefore, the divergence of actual prices from the equilibrium structure is something that can never be statistically measured.

          ****

          In contrast, the modern fashion demands that a theoretical assertion which cannot be statistically tested must not be taken seriously and has to be discarded. As a result of this belief, a theory which, in my opinion, is the true explanation has been discarded as not adequately confirmed, and a false theory has been generally accepted merely because it happens to be the only one for which statistical evidence, even though very inadequate evidence, is available.”

          Although Hayek does not really like the term “equilibrium”, he is trying to explain why statistical analysis might fail because the relevant price statistics are not allowed to come into existence. the quote does not directly discuss economic calculation or its impairment.

          http://www.flickr.com/photos/bob_roddis/7534880718/in/set-72157630494776170/

          • Lord Keynes says:

            (1) Hayek was an equilibrium theorists until the 1940s.

            (2) “the quote does not directly discuss economic calculation or its impairment.”

            LOL.. so now adjustment towards market clearing Walrasian GE is not Austrian economic calculation? Make up you mind, do.

            • Matt Tanous says:

              ” so now adjustment towards market clearing Walrasian GE is not Austrian economic calculation?”

              It never was. What are you on about?

              Walrasian equilibrium negates uncertainty, which is what calculation is precisely meant to deal with. Further, the equilibrium aspect deals with the clearing of markets with already existent stock – NOT the production of future stock and the most efficient ways to go about production.

              For instance, if I can produce some good X with 2 units of Y and three units of Z, or with 3 units of Y and one unit of Z, there is no way to determine which is the more economic method of production without actual prices for those factors of production. This is not “adjustment towards equilibrium”, but calculation made to maximize profit in production, and thus use more efficient methods.

              Equilibrium is conditional on not having any production changes at all – but does not specify the already existent modes and their use. Inefficient methods of production are not incompatible with any conception of equilibrium I am aware of, except in the sense that profit cannot disappear if more efficient (and thus profitable) methods are known to exist.

              “Hayek was an equilibrium theorists until the 1940s.”

              And? The Misesian paradigm and the Hayekian differ substantially, in both sociopolitical theory and economic understanding. There is much to indicate that Hayek either implicitly rejected or maybe even failed to fully grasp the praxeological method of Mises. Certainly, the implication that if Hayek thought X, it is by definition “Austrian”, is fallacious.

              In particular, Hayek DID NOT advance Mises’ argument about calculation. While Mises argued that, without markets and prices set by the subjective valuation of all involved, there can be no way for a central planner to rationally allocate resources to lines of production, Hayek argued the much weaker point that the planner just cannot actually know all the facts necessary to calculate. In essence, Hayek claimed that the variables involved with the calculation would be unknown to the planners, while Mises claimed they *wouldn’t even make sense in the first place* without the existence of free markets.

        • Bob Roddis says:

          The relevant quote plus some introductory statements are found starting at the top of page 7 of the discussion:

          http://www.flickr.com/photos/bob_roddis/7534880182/sizes/l/in/set-72157630494776170/

    • Bob Murphy says:

      LK, obviously my style is far different from that of North. He’s more of a flip the table over kind of guy, whereas I like witty barbs that sink in an hour after I’ve left the room.

      As far as the socialist calculation debate, if you look again at North’s words, he was saying from a “major economist.” So it’s possible that’s what he meant. I mean, North is obviously aware of the other responses (or at least, he must have been at one point in his life, and he’s still sharp as a tack), so I think that’s what he meant. Not that there was literally no response, but that “the response from the mainstream”–the one that historians of economic thought would point to as “the” refutation of Mises–didn’t occur until 15 years later.

      • Lord Keynes says:

        “Not that there was literally no response, but that “the response from the mainstream”–the one that historians of economic thought would point to as “the” refutation of Mises–didn’t occur until 15 years later.”

        Bob Murphy,

        OK, thanks for your comments, which I appreciate.

        But some food for thought:

        The “mainstream” had no interest in refuting Mises because the “mainstream” were neoclassical economists in the 1920s/1930s, mostly nodding their head in agreement with him.

        It was only the Marxist/socialist economists who wished to respond to Mises. And weren’t Polanyi and Lerner “major” economists?

        And, most astonishingly of all, even Schumpeter wrote some work against Mises and Hayek’s idea that rational economic calculation was impossible under socialism – Schumpeter invoked Walrasian GE theory to try and show that it was possible.

        Is Schumpeter a “major” enough economist?

        See W. Keizer, 1997. ‘Schumpeter’s Walrasian Stand in the Socialist Calculation Debate’, in W. Keizer, B. Tieben and R. van Zijp (eds), Austrian Economics in Debate. Routledge, London and New York.

        • Bob Murphy says:

          I’m not going to go to the barricades defending North’s point, because I personally don’t know what he was trying to say. I’m merely saying that nowadays, if you ask the average economist and he even knows what you’re talking about, he will say, “Oh yeah, Lange blew him up.” I am pretty sure that is how it’s described in historical accounts.

      • Bob Roddis says:

        In lieu of actually learning and understanding the Austrian concept of economic calculation, Lord Keynes has produced a magnificent bibliography. He gets a gold star for being the champion of subject changers.

        http://socialdemocracy21stcentury.blogspot.com/2012/10/bibliography-on-socialist-calculation.html

  4. Bob Roddis says:

    1. I will concede that the vast socialist pseudo-intellectual horde of the 1920s did not ignore Mises’ assertions on the socialist calculation debate for 15 years. But even LK seems to concede that Mises was right about this. zzzzzzz

    2. I will continue to submit that today and for the past many decades, the Keynesians have completely ignored and avoided addressing the Austrian critique of Keynesian policy which is based fundamentally upon the very same related concepts of economic calculation and miscalculation. That is why Keynesianism is doomed.

  5. Dyspeptic says:

    In my feeble layman’s attempt to study economic history I have encountered many Keynesian acolytes who insist that Keynes wasn’t a socialist. They say he came to praise capitalism, not bury it. They say he saved capitalism from its own internal flaws. However, we have before us a Keynesian apologist in the pseudonymous Lord Keynes who apparently claims to be a social democrat, i.e. a democratic socialist. If Keynesians really do esteem the capitalist system as they claim, then it should be very easy to find fulsome praise for it in their published works. Is that really the case? Do we get any enthusiastic encomiums about the wonders of capitalism from Krugman, Blinder, DeLong, Romer, Nordhaus etc. If Keynes wasn’t an anti-capitalist, then why do so many capitalism haters treat him like a demigod. Just asking.

  6. Kevin Donoghue says:

    Dyspeptic: “If Keynesians really do esteem the capitalist system as they claim, then it should be very easy to find fulsome praise for it in their published works. Is that really the case?”

    I’d call this fulsome praise:

    “What an extraordinary episode in the economic progress of man that age was which came to an end in August, 1914! The greater part of the population, it is true, worked hard and lived at a low standard of comfort, yet were, to all appearances, reasonably contented with this lot. But escape was possible, for any man of capacity or character at all exceeding the average, into the middle and upper classes, for whom life offered, at a low cost and with the least trouble, conveniences, comforts, and amenities beyond the compass of the richest and most powerful monarchs of other ages. The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages; or he could decide to couple the security of his fortunes with the good faith of the townspeople of any substantial municipality in any continent that fancy or information might recommend.”

    • Dyspeptic says:

      Fair enough Kevin. I assume the above is a quote from Keynes work “The Economic Consequences of the Peace”. It certainly looks like his writing style. But how about any of the currently fashionable neo-keynesians? To the extent that I am familiar with their views they seem to have a very hostile attitude towards free market capitalism and a decided preference for what one might call crony capitalism or maybe even economic fascism.

      • Kevin Donoghue says:

        Yes, that’s Keynes. But New Keynesians include Mankiw and Taylor who must surely have said lots of nice things about capitalism. I guess you’re thinking of Krugman? But if you look at his old Slate essays such as Unmitigated Gauls, Vulgar Keynesians and The Accidental Theorist you’ll find him quite scathing about critics of capitalism. AFAIAC he hasn’t recanted on those in any significant way but YMMV.

        • Matt Tanous says:

          Krugman doesn’t “recant”. He just starts saying the opposite of what he said before, and hopes no one notices – and if people like Murphy do, that they aren’t big enough to point it out in a significant enough forum to hurt his position.

          • Major_Freedom says:

            No silly, all contradictory claims are jokes.

    • Matt Tanous says:

      Of course, on reading Keynes, one can easily see that his writing is self-contradictory in nature. Often, especially in his General Theory, he wrote one thing, while contradicting it just a few pages later. It is much more obvious when the quotations are aligned to demonstrate this, as in “Where Keynes Went Wrong” (http://books.google.com/books?id=1nhaPgAACAAJ).

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