29 Jan 2013

Krugman: Government Spending Surged If It Helps My Case, Otherwise It’s a Dirty Right-Wing Myth

Economics, Federal Reserve, Krugman 123 Comments

[UPDATE below.]

I am really busy with work deadlines, so not much blogging for another two weeks or so. But in the meantime, I wanted to point something out, though I don’t have time to buttress my claims with links. Here is my observation: Paul Krugman will say that government spending has surged under Obama (and Bernanke has engaged in monetary stimulus) when he wants to blow up right-wingers for their failed predictions, yet referring to the same period of time he will say that government spending has actually been either normal or even contractionary, when explaining why his Keynesian solutions haven’t fixed the economy. To spell it out more clearly:

==> Right-wingers warned that massive Fed and federal stimulus would lead to rising interest rates and price inflation. Krugman argues that we’ve had massive Fed and federal stimulus, but low interest rates and price inflation, so therefore the right-wingers’ views are totally refuted.

==> Krugman has recommended massive Fed and federal stimulus to fix the economy. He argues that we haven’t had massive Fed and federal stimulus, and that’s why the weak economy doesn’t refute Krugman’s views.

This isn’t simply a matter of “too little.” Krugman has argued that there was no surge at all in government spending under Obama, properly defined, certainly not in the last few years. And yet, he has no problem pointing to a right-winger warning of crowding out or inflation made in, say, 2010, as proof of what an idiot that guy is.

Krugman is allowed to disagree with what constitutes a large stimulus, either fiscal or monetary. But he’s not allowed to say we had a large stimulus when that fact embarrasses right-wingers, buta small stimulus when that fact rescues Keynesianism.

P.S. Let me give you one quick link to show what I mean. In this post, Krugman ridicules Paul Ryan for his “Paulite/Randite [sic]” monetary theories, in particular citing Ryan’s warnings on interest rates and price inflation. Krugman shows a chart starting in January 2011 of these two series. Year/year consumer price inflation rises to almost 4 percent around August 2011, then drops sharply. The yield on ten-year government securities also drops sharply around July 2011.

So, this would really be embarrassing for Paul Ryan, if the Fed engaged in a massive expansion of its balance sheet, starting in mid-2011, or if the federal government ramped up its spending in mid-2011. Yet the reality is the exact opposite. The Fed’s balance sheet stopped its massive expansion on a dime right at this time, and the federal government’s surge in “current expenditures” also turned around in early 2011.

I’m not trying to be coy here. Obviously people like me thought the absolute level of even officially reported consumer price inflation was going to be higher during the last 5 years than it was, in reality. But I just want to point out how blind Krugman is to any problems with his worldview. He can point to a chart that is prima facie great confirmation that the Fed and federal government move interest and price inflation rates in the directions that the “austerians” say, and thinks this somehow blows them up. To add insult to injury, he explicitly accuses them of being ignorant of, and impervious to, the empirical evidence.

UPDATE: As even Paul Ryan could have predicted, I have people in the comments saying that Krugman never denied that were was a surge of spending under Obama. OK, he literally mocks that notion in this post. But I’m just doing a “gotcha” I guess.

123 Responses to “Krugman: Government Spending Surged If It Helps My Case, Otherwise It’s a Dirty Right-Wing Myth”

  1. Transformer says:

    Krugman believes that a much bigger level of fiscal stimulus than we currently have would be needed to get the economy to full employment and that such a stimulus would lift the inflation rate and the interest rate above its current level but would not run the risk of hyper-inflation.

    It is on record that others (including Bob Murphy and Paul Ryan) have predicted that the current level of stimulus would be much more inflationary than it has turned out to be..

    How is Krugman being inconsistent in pointing this out ?

    In regards to the link to Krugman’s post on Ryan: The charts show that after monetary and fiscal stimulus were reduced in 2011 the rate of inflation and the interest rate both fell. Krugman would say both things are consistent with stimulus being below the required level.

    • guest says:

      It is on record that others (including Bob Murphy and Paul Ryan) have predicted that the current level of stimulus would be much more inflationary than it has turned out to be..

      It’s already higher than the CPI pretends it is:

      Inflation Propaganda Exposed
      http://www.youtube.com/watch?v=pwI3Nya5L9g

      The CPI is no longer a tool to accurately measure inflation, but an instrument of propaganda the government uses to hide accelerating inflation from the public and financial markets. Modest CPI increases over the past several years do not reflect an absence of inflation, but a design flaw in the index that fails to fully capture the magnitude of price increases. Central bankers drawing economic conclusions regarding inflation and monetary policy based on this highly flawed data point are making a major policy error.

      The Illusions of Hedonics
      http://mises.org/daily/1873http://mises.org/daily/1873

      Most of what appears like an objective standard of measurement in economic statistics is a deeply flawed endeavor to measure the non-measurable. As the price statistician must admit, there is no meaningful way to measure the “price level”. At best, it is changes of the price level that can be constructed. But even with these changes, the measurement is flawed, because one cannot measure something, when both, the measurement rod and the object of measurement, are subject to change.

      The price statistician constructs a basket of products in order to measure the changes of the value of money. He claims that this basket is representative. But he cannot ignore the fact that the composition of this basket changes over time. Some products become obsolete, other products get modified and new goods and services appear. So he will change the composition of the basket. By this procedure, however, he implicitly changes also the units of measurement.

      And by the way, Paul Ryan believes in Supply Side Economics, which means that he agrees with Bernanke, Krugman, Obama, and Friedman, that the Fed didn’t inflate enough after the crash of 1929; So Paul Ryan is essentially Keynesian, as is the vast majority of the GOP.

      Here’s some links on Supply Side Economics from an Austrian perspective:

      Is Ron Paul the ‘Supply-Side Mr. Rogers’?
      http://www.lewrockwell.com/blog/lewrw/archives/51518.html

      The Return of Supply Side
      http://www.lewrockwell.com/archives/fm/10-96.html

  2. Major_Freedom says:

    I’m thinking of how to defend PK…

    Thinking….thinking….thinking….

    OK, I got it.

    We haven’t had the amount of monetary inflation and deficits necessary to generate the kind of high price inflation and interest rates the Ryanites warned about. But we also haven’t had the amount of monetary inflation and deficits necessary to restore output and employment.

    We need to go from X, to X + x, in order to restore employment and output, and X+x is less than the X + X that would be required to generate hyperinflation.

    There is a sweet spot. I tell my inflationist friends that we haven’t had enough inflation and deficits to restore employment and output. I tell me deflationist enemies that we haven’t had enough inflation and deficits to generate their predicted hyperinflation and high interest rates.

    Does that work?

  3. Ken B says:

    Bob may have an actual Kontradiction here, but there is a possible line of defence.

    “The inflation alarmists predicted hyperinflation even from the piddling stimulus we had. By their terms it’s massive, but they are so wrong it’s just laughable. We haven’t had even half enough, much less what would be really massive and really cause high inflation.”

    • Bob Murphy says:

      Ken B right, it’s possible that if you just looked at certain Krugman posts, you could mount that defense. But he hasn’t just been saying that we had big stimulus, though not big enough. Instead, at times he says we have had austerity. For sure, he says that the British have had “unprecedented austerity,” and if you look at some of his recent posts about the non-surge of government spending under Obama, he comes dangerously close to saying there has been no Keynesian experiment at all.

      For another example, go look at Daniel Kuehn’s blog. He’s telling Russ Roberts that Congress has acted more like Hayek than Keynes. If that’s the case, it’s hard to see why I should have to revise my views, since we all agree that what I thought was “a Keynesian remedy will bring stagflation.” If instead we’ve had Hayekian policies, then why am I wrong for my predictions about what Keynesian stimulus will do?

      • Ken B says:

        Well at best my imagined defence looks a bit like special pleading. As for DK, perhaps you need a tag for “Kuehntradictions”? I couldn’t make much sense of Daniel’s post there, I thought Russ’s post was a bit abstract but fine, but the whole issue was a bit inside baseball for me. “The semiotics of economic theories”

        • Daniel Kuehn says:

          What’s the contradiction exactly?

        • Transformer says:

          Krugman is clearly on record as believing that ARRA was Keynsian-style stimulus, just not enough to end the recession.
          Since then he believes that the falling levels of government spending since 2009 qualify as “austerity.

          http://krugman.blogs.nytimes.com/2012/04/25/american-austerity/

          Looking at the deficit numbers (and defining austerity as “a reduction in the size of the govt deficit”) he has the facts on his side.
          http://research.stlouisfed.org/fred2/graph/?g=f0g

          So: We had a large stimulus in 2009 (as reflected in the govt deficit and monetary base) that Krugman said was not enough and would neither cure the recession nor lead to significantly higher inflation while Murphy and others predicted inflation.
          Hard to blame Krugman for claiming victory on that one.

          Bob could then say “we would have got inflation if the stimulus had continued longer, it was stopped in time” as he seems to be doing here. That would be a rerun of the earlier discussion with Krugman still saying that a large enough stimulus would cure the recession and not be inflationary, while Bob would presumably (having in Krugman’s eyes learnt nothing from the earlier scenario) again predict higher inflation

          Were that to happen then I would wager that a lot more people would be prepared to take a bet with Bob on future inflation levels if he offered the same terms he offered Henderson.

          • Bob Murphy says:

            Transformer wrote:

            Krugman is clearly on record as believing that ARRA was Keynsian-style stimulus, just not enough to end the recession.
            Since then he believes that the falling levels of government spending since 2009 qualify as “austerity.

            OK, then the fact that we have low (and falling) interest and price inflation since January 2011 shows that Paul Ryan is at best right, and at worst we don’t know. And yet, Krugman pointed to that as stunning confirmation of what an idiot Ryan was.

            • Transformer says:

              I would agree that when in the Krugman article you linked to he says

              “You may recall that two years ago Ryan led the charge of Republicans demanding that Ben Bernanke stop his expansionary policies, issuing dire warnings about rising interest rates and soaring inflation. ”

              His point is weak because said expansionary policies did indeed stop (so we don’t know if Ryan was right or not).

              But your point was:

              “Paul Krugman will say that government spending has surged under Obama (and Bernanke has engaged in monetary stimulus) when he wants to blow up right-wingers for their failed predictions, yet referring to the same period of time he will say that government spending has actually been either normal or even contractionary, when explaining why his Keynesian solutions haven’t fixed the economy”

              Where is he categorizing the same period of time as both expansionary and contractionary in that post?

              • Dan says:

                “Where is he categorizing the same period of time as both expansionary and contractionary in that post?”

                Where did Dr. Murphy say Krugman categorized the same period of time as both expansionary and contractionary in that post?

                He is saying that Krugman will say one thing in one post and then contradict that in other posts.

              • Transformer says:

                “He is saying that Krugman will say one thing in one post and then contradict that in other posts.”

                Agreed. So show me the posts where he does that because the one post Bob references does not demonstrate that Krugman is guilty of the charge.

              • Transformer says:

                And the specific kind of expansion that Ryan warned of

                ‘My concern is that the costs of the Fed’s current monetary policy — the money creation and massive balance sheet expansion — will come to outweigh the perceived short-term benefits”

                Actually did happen over past 2 years. see

                http://research.stlouisfed.org/fred2/graph/?id=WRESBAL

              • Dan says:

                Here he talks about how there hasn’t been a surge in spending. http://krugman.blogs.nytimes.com/2013/01/22/the-non-surge-in-government-spending/

              • Dan says:

                Here he talks about how a large expansionary monetary policy didn’t result in inflation.

                “For if you believed a demand-side story, you would also believe that even a large monetary expansion would have little inflationary effect; if you believed a supply-side story, you would expect lots of inflation from too much money chasing a reduced supply of goods. And indeed, people on the right have been forecasting runaway inflation for years now.”

                http://krugman.blogs.nytimes.com/2012/08/25/inflation-lessons/

              • Dan says:

                Here he complains that the Fed isn’t using expansionary monetary policy to reduce unemployment. http://www.nytimes.com/2009/12/11/opinion/11krugman.html?emc=eta1&_r=0

              • Transformer says:

                http://krugman.blogs.nytimes.com/2013/01/22/the-non-surge-in-government-spending/
                is about how there was little fiscal stimulus since 2010

                http://www.nytimes.com/2009/12/11/opinion/11krugman.html?emc=eta1&_r=0
                is about how additional monetary stimulus is needed (in his opinion) to address the lack of fiscal stimulus

                http://krugman.blogs.nytimes.com/2012/08/25/inflation-lessons/
                is about how monetary expansion didn’t prove to be inflationary as others had predicted

                Can you be more precise as to how you see these articles contradicting each other and/or categorizing the same period differently in terms of stimulus/non-stimulus ?

              • Andrew Keen says:

                Look at how (much/little) inflation we had and how (little inflation/much unemployment) it caused. Boy, those Republicans sure look foolish. How lucky that we had enough stimulus to call the Republicans idiots, but not enough to adequately test any of my theories?

              • Gamble says:

                Don’t argue with liars, they will beat you with experience.

      • Daniel Kuehn says:

        Hey, don’t turn this on me. Our position has always been that inflation risk was not a problem whether the policy is Keynesian or non-Keynesian. You’re the one that identified the policy conditions as justifying your side of the bet, not me!

        I told Russ that the initial stimulus was modest Keynesianism, but since 2009 the Congress has been worrying about the problems he’s worried about and providing the answers that he wants. It’s not at a level that would make either of us happy, obviously. The figures I gave were the Rs were guided by about 15% libertarian thinking and Ds were guided by about 5% Keynesian thinking.

        • Dan says:

          What has congress done since 2009 that you think libertarians would agree with?

          • Major_Freedom says:

            Examples 1 through 57,678:

            “Those pesky libertarians got their desired absence of totalitarianism, so they should shut up and stop complaining.”

            • Matt Tanous says:

              Standard boilerplate response. Clearly, you can see, the government is not too big, because no one is being hanged for their religious beliefs or anything.

          • Daniel Kuehn says:

            Not much of anything.

            They are more influenced by libertarian-type approaches than Keynesian. That’s the claim. So you could say they agree with libertarians MORE, but I would not say they agree with libertarians.

            They think the problem right now is too much spending and debt, and they have not pursued expansionary policy since the stimulus.

            Last I checked libertarians are concerned about spending and debt and do not want to pursue expansionary policy. It’s not your wishlist of course, but it’s your orientation at the very least.

  4. Erika B. English says:

    As the financial system moved to the brink of collapse in late 2008 and early 2009, the Fed made up a whole new rule book, not only slashing interest rates virtually to zero, but pumping well over a trillion dollars into the economy through purchases of securities and the creation of new lending platforms. Most economists credit those actions, known as quantitative easing , along with the stimulus bill and the federal bank bailout, with preventing a global depression. But they also made the Fed the focus of unusual scrutiny and criticism, with critics pointing to its failure to head off the real estate bubble and others denouncing what they saw as unwarranted giveaways.

    • Jonathan M.F. Catalán says:

      This is a pretty sophisticated spam comment!

      • Major_Freedom says:

        2.5 year old spam to be exact:

        http://dinmerican.wordpress.com/2010/08/13/understanding-the-fed/

        To wit:

        “As the financial system moved to the brink of collapse in late 2008 and early 2009, the Fed made up a whole new rule book, not only slashing interest rates virtually to zero, but pumping well over a trillion dollars into the economy through purchases of securities and the creation of new lending platforms.

        “Most economists credit those actions, known as quantitative easing, along with the stimulus bill and the federal bank bailout, with preventing a global depression. But they also made the Fed the focus of unusual scrutiny and criticism, with critics pointing to its failure to head off the real estate bubble and others denouncing what they saw as unwarranted giveaways.”

        While spam lasts a long time in the can, this particular batch is probably way past its due date by now.

  5. Andrew Jackson says:

    Paul Krugman on MSNBC. He had this to say about Joe Scarborough.

    “Scarborough seems upset, and under the delusion that my more or less standard Keynesian views are way off on the fringe. Also, that the Swedish thingie is given by Norwegian royalty.”

    http://video.msnbc.msn.com/morning-joe/50613650/#50613650

    • Bob Roddis says:

      Krugman reminds me of Jerry Ford as described by Chevy Chase on the very first SNL in 1975:

      “(President) Ford was on the campaign trail, announcing in Detroit that he had written his own campaign slogan. The slogan: “If He’s So Dumb, How Come He’s President?”

    • Bob Roddis says:

      Krugman: If my proposal to spend zillions on an imaginary alien invasion is so dumb and fringe, how come I’m the biggest Keynesian in the galaxy?

  6. Peter says:

    This whole discussion of “deficits” and “austerity” is so besides the point. There is no such thing as deficits. They truly don’t matter. All government spending gets taxed one way or the other. What does it matter how much and how.gov extracts our wealth. Why do we have taxes at all? Wouldn’t it be preferable (given a level of .gov spending) for the government to just print the money? Yes, we would have higher prices, but that would be preferable to having a gun to our heads to pay taxes. The biggest problem is the level of .gov spending.
    With that in mind, I actually thought (in principle at least) that the $1T coin idea wasn’t so bad. At least .gov would be more in control, rather than the appointees @ Fed Reserve. That’s it, abolish all taxes and just mint a couple of $1T coins a year.

    • Yancey Ward says:

      They would have to put a gun to your head to force you to take the government script. No difference.

  7. Keshav Srinivasan says:

    Bob, what’s wrong with Krugman saying the following?

    1. The US did not experience high interest rates or high inflation, despite the fact that the US has pursued more Keynesian policies than countries in Europe.
    2. The policies of the US have not been Keynesian enough to produce full employment.

    That’s pretty much what he says in his Morning Joe appearance here:
    http://www.nbcnews.com/id/3036789/ns/msnbc_tv-morning_joe/#50613650
    What’s the contradiction in that?

    • Bob Murphy says:

      Keshav, if that’s all he ever said, that might be OK. But he has said more than that. Dan is documenting example after example.

  8. Dan says:

    Here he talks about how big government saved the economy. http://www.nytimes.com/2009/08/10/opinion/10krugman.html?_r=1&partner=rssnyt&emc=rss

  9. Transformer says:

    Bob,

    It keeps saying “Your comment is awaiting moderation” which it has never done in the past – did you change the security or am I entering my comments wrong ?

    • Bob Murphy says:

      I’m thinking it was the multiple links.

      • guest says:

        If you don’t think it’d be too much of a hastle going forward, will you please turn off the “multiple links” part of the security?

        • Bob Murphy says:

          Well, it catches a lot of spam though. You don’t see that on your end, all you see is when you have multiple links and I’m away from my computer for a few hours.

      • Transformer says:

        yes, I think the multiple links is the common factor on those needing approval – I will take that into account in future.

  10. Bob Roddis says:

    Off topic, but a commenter at Acting-Man said this:

    “The fact that its effects (increased funny money supply) haven’t yet shown up in consumer price indexes is not tantamount to it being harmless. ”

    Indeed. It is a direct reflection of how badly relative prices have already been distorted by the previous growth in money supply. A more rapid response in consumer prices would have been a much healthier sign. The longer the lag the more devastating the sequel

    I’ve never thought about it that way before.

    http://www.acting-man.com/?p=21442&cpage=1#comment-3765

    • guest says:

      I think they would say, though, “Whatever the money IS doing right now, why can’t it just continue doing that?”

      The CPI is omitting a lot of inflation, but someone is hoarding Fed notes it seems.

      Would secret currency swaps explain it? Speculation on my part.

  11. Lord Keynes says:

    “This isn’t simply a matter of “too little.” Krugman has argued that there was no surge at all in government spending under Obama, properly defined, certainly not in the last few years. .”

    And where exactly does Krugman say that?

    “P.S. Let me give you one quick link to show what I mean. In this post, Krugman ridicules Paul Ryan for his “Paulite/Randite [sic]” monetary theories, in particular citing Ryan’s warnings on interest rates and price inflation…

    So what you’re saying here is that you didn’t expect at all that QE and fiscal stimulus in 2008-2010 to have any effects in later years??

    Despite the fact that you bet that inflation would be much higher now?

    “He can point to a chart that is prima facie great confirmation that the Fed and federal government move interest and price inflation rates in the directions that the “austerians” say, and thinks this somehow blows them up. “

    What the …?
    Keynesians of all types said that both fiscal stimulus and QE WOULD cause some inflation, just not hyperinflation or severe inflation. As for interest rates, there was no massive surge in interest rates or bond yields to this day, just as Keynesians predicted.

    What Ryan said is that “the inflation dynamic can be quick to materialize and painful to eradicate once it takes hold” – implying some kind of severe inflation crisis. But such a thing has not happened.

    • Transformer says:

      ““This isn’t simply a matter of “too little.” Krugman has argued that there was no surge at all in government spending under Obama, properly defined, certainly not in the last few years. .”
      And where exactly does Krugman say that?”

      I think he says that here

      http://krugman.blogs.nytimes.com/2012/04/25/american-austerity/

      • Lord Keynes says:

        No, Transformer, the post you link to says no such thing.

        Krugman there is talking about public employment, not government spending under Obama.

        All Krugman says is that if Obama had provided more public employment, then unemployment would be lower now.

        In no sense at all is this evidence that Krugman ever said that there was “no surge at all in government spending under Obama.”

        • Major_Freedom says:

          No, Transformer, the post you link to says no such thing.

          Krugman there is talking about public employment, not government spending under Obama.

          All Krugman says is that if Obama had provided more public employment, then unemployment would be lower now.

          In no sense at all is this evidence that Krugman ever said that there was “no surge at all in government spending under Obama.”

          It’s always amusing to read LK’s totally superlative-infused posts that in no way shape or form could ever be even remotely understood as even hinting at the notion that there is any sense at all that….

          Wait, what were we talking about again?

          • Lord Keynes says:

            “Wait, what were we talking about again?”

            Perhaps your laughable career as the internet’s most prolific Austrian troll, Major_freedom?

            I have, by the way, been fascinated to see “Andrew Jackson’s” recent posts on you.

            You are a troll who has posted under a vast number of different names, apparently even on reddit (e.g., Captain Freedom, Sage_Advice, Waaah etc.), as identified by many savvy people:

            http://www.reddit.com/r/TrollAlert/comments/cexi6/captain_freedom_aka_sage_advice_private

            http://www.reddit.com/r/TrollAlert/comments/dsy9z/waaah_was_a_successful_investor_for_50_years_was/

            On my blog, you have posted under a number of handles like George, Pete, David, etc, and, when defeated in one persona, you quickly switch to another, not even having not the guts or honesty to stick with your original handle.

            But you gave the game away in this comment here:

            http://socialdemocracy21stcentury.blogspot.com/2011/11/michael-emmett-brady-on-keyness.html?showComment=1322680209311#c6209119304324371187

            Also, Gene Callahan has your number:

            “Major Freedom is absolutely the most ugly, vicious commentator at Bob’s blog. I once had a private discussion with another commentator there who guessed he is an angry thirteen-year-old.

            http://factsandotherstubbornthings.blogspot.com/2012/01/couple-debt-updates.html?showComment=1325816136764#c7672460519914875997

            • Major_Freedom says:

              Oh right, we were talking about me. I forgot.

              Callahan doesn’t have my number. I’ve got his number, and I’ve got DK’s number. They can’t stand my posts that expose their true convictions. They also don’t like it when I am defended on this blog from their attacks, which is probably why Callahan and DK b&*ch on DK’s blog. Callahan and DK know they are both advocates of violence, and so they give themselves occasional affirmations through attacking me, who seems to be the only person who is not afraid of pointing out their thirst for aggression.

              I think if Callahan started talking to me the way he talks to DK, then I might start to think I am a thug myself. So it’s very gratifying and a genuine relief that he would use such verbiage when talking about me.

              On DK’s blog, commenter “Lord Vader” seems to understand that my characterization of DK was accurate.

              DK even admits what I have said is the case all along here on his blog where he writes:

              “Well, I only support a “strong, centralized state” relative to the internet company I keep. If someone were to ask me on the street whether I support a “strong, centralized state” my answer would be “no”.”

              DK is saying that when he and people like Callahan are having discussions, they admit to each other their desire for violence. But they dare not admit it to a man on the street, because the man on the street may naturally take offense to someone wanting more violence.

              I know what’s going on here, LK, so you don’t have to pretend like it’s anything else. You and DK and Callahan and all the rest of you violence advocating thugs don’t like being exposed as the thugs you are, so you will go to tremendous lengths to rescue your characters, and the only way you can do it is through the same psychology that has lead you to advocate for political aggression in the first place: You have to attack my character, in order to try to put me as below you so that your already low position doesn’t seem so low anymore both to yourselves and to others.

              You thugs can all try to paint me as bad as I have actually exposed you to be, but it won’t work. I have got all of your numbers, and I will continue to tell you and others what violence advocating anti-social people you are.

              • Major_Freedom says:

                And just in case DK deletes my comment, I wrote this on his blog:

                Gene Callahan, Desolation Jones, Daniel Kuehn, are all just very upset (understandably!) at me for showing how their worldviews are based on advocating violence, or for showing their contradictory premises in economics.

                “Vicious” and “ugly” doesn’t even come close to describing what kind of a psychology is needed by someone to DESIRE using violence against innocent people, which is the case for all three of these people.

                Callahan feels vicious and ugly himself when seeing what I write, and that’s why he connects those terms to me. It’s a mental defect called psychological projection.

                Desolation Jones I only faintly remember, but I do remember him not much liking my criticisms of what he stands for either.

                DK is rather easily offended, who thinks he is better than being treated like a thug, and yet he, like the other two, really do want violence to be used against innocent people, because that is the only way he can get his desired “political” programs.

                You people are looking for shoulders to cry on, and for thug friendships over the internet.

                I on the other hand am looking not for thug friends, nor shoulders to cry on, but to shake up and rattle conventional thinking that pervades so many blogs, this one included, and to drop intellectual missiles into the various bases and meeting places of said thugs, that may seem to the casual observer as cordial and civilized discussions, but in reality are often contemptible discussions of how to best use the state’s guns against innocent people in order to accomplish your desired ends that can’t be done through voluntary and peaceful activity. You refuse to meet reality head on. You want human shields to stand between you and reality because reality is too scary to be dealt with through your own and everyone else’s own responsibility.

                You’re all acting like guests at champagne and caviar social functions run by criminals. You dabble whimsically in various affairs, casually dropping suggestions to step up the protection racket operation, or to perhaps visit some disobedient people by toting machine guns (DK once suggested that if the Texas people wanted independence, then the feds should send in machine gun toting goons to stand in schoolyard playgrounds and places of business in Austin to make them think again).

                Notice how DK only quoted what I said, and sarcastically said “Yeah, sure, that’s what I believe, geez.” No, there was no challenge to that “because it’s not worth it.” No, there was no challenge to that “because everyone knows it’s not true.” No, there was no challenge because he knows it is true and is seeking validation and encouragement from his fellow violence advocating thugs to go after me, so he doesn’t have to. Gee, much like his politics isn’t it?

                You people literally disgust me, but I have tough enough skin that I don’t mind what spitballs you fling at me.

              • Lord Keynes says:

                Oh, so now you do not even bother (as in the past) to deny that you are a serial troll who has posted under multiple handles on reddit, mikenorman.com and my blog, as, e.g., Captain_ Freedom, Sage_Advice, Waaah, George, Pete, David, Christof, Pete PetePete, etc. etc.?

              • Lord Keynes says:

                Oops, forgot “Private_Freedom,” this another of your many internet pen names.

              • Lord Keynes says:

                And right here you admit that you and “Pete” are the same person:

                http://krugman-in-wonderland.blogspot.com/2011/09/krugman-versus-volker-will-krugman-now.html?showComment=1316530798689#c2303056598984672933

                Yet over at Mikenorman.com you pretend that “Pete PetePete” – with exactly the same writing style and trolling prolixity as you – is not you:

                http://mikenormaneconomics.blogspot.com/2012/11/lord-keynes-my-posts-on-origin-of-money.html?showComment=1351826808009#c610579791503711029

                It is quite clear you’re posting under multiple handles so you can change your views whenever it suits, in an act of breathtaking intellectual dishonesty.

              • Richie says:

                “who has posted under multiple handles on reddit, mikenorman.com and my blog, as, e.g., Captain_ Freedom, Sage_Advice, Waaah, George, Pete, David, Christof, Pete PetePete, etc. etc.?”

                LOL this is coming from a cultist called “Lord Keynes”. Please lecture us on using internet pen names.

              • JSR08 says:

                LK, I think you need to look up the definition of “troll” as it is understood on the intertubes. Also, let me highlight one of M_F’s sentences and see if you can figure out how it applies to your comment above:

                “You have to attack my character, in order to try to put me as below you so that your already low position doesn’t seem so low anymore both to yourselves and to others.”

              • Ken B says:

                Interesting that a poster should be criticized for choosing the name of the man who shot to fame protesting the iniquitous Versailles Treaty, but not for choosing the name of a borderline genocidal politician.
                Odd.

              • K.P. says:

                Wait, it’s the choice of pen name that’s the issue?

              • Major_Freedom says:

                LK:

                Oh so now you don’t even bother denying you are an advocate of violence against innocent people.

                For me, I also do not bother denying that I am a baby killing serial rapist, or Spartacus, or Keyser Söze, or the man who shot JFK.

                It’s more fun watching violence advocating thugs like you squirm and waste your time trying to connect the usernames of all those usernames that contain posts of exposing your thirst for aggression, flawed “economics”, lack of critical thinking, and ignorance of that which you choose to criticize.

              • Major_Freedom says:

                K.P.:

                The issue is that LK doesn’t like settling arguments and disputes and disagreements on the basis of rationality, because that is his weakness.

                He needs to connect a person to the ideas so that he can attack the person.

                Which is exactly why I have used some (not all) of the names he listed above. It’s to help ensure that what I say stands or falls on its own merits, so that statists like LK address the ideas more than the person who speaks them.

                LK’s behavior here shows that he would like others to also attack the man rather than the ideas, because he is realizing he can’t win on the basis of such attacks alone.

                Kind of like how flat earthers need to be in great numbers in order to effectively disrupt scientists who are proving them wrong, only LK is not yet even at the flat earth stage.

              • Lord Keynes says:

                “Which is exactly why I have used some (not all) of the names he listed above. It’s to help ensure that what I say stands or falls on its own merits, so that statists like LK address the ideas more than the person who speaks them.”

                No, M_F, if that were true, you would have a consistent set of arguments. Instead, you slyly shift your arguments, e.g., sometimes taking a strict anti-FR banking Rothbardian line, sometimes accepting FR banking.

              • K.P. says:

                LK, why couldn’t one be inconsistent but still insist on one’s argument be the focus and not character? It’s not like many (or any) are completely consistent.

                Why not be a bit more charitable?

              • Major_Freedom says:

                LK:

                “No, M_F, if that were true, you would have a consistent set of arguments. Instead, you slyly shift your arguments, e.g., sometimes taking a strict anti-FR banking Rothbardian line, sometimes accepting FR banking.”

                First, that’s a non sequitur. It does not follow that if I am to say I am not some of those usernames you listed, that I have to hold a particular position on FRB banking. That’s just lunacy.

                Second, I have not “slyly shifted” my position on FRB. It’s evolved, as all knowledge does, but my overall position has been it has to pass the property rights test, and its various corollaries, including informed contracting.

                As for the charge of “breathtaking intellectual dishonesty, that is just absurd. I am anonymous. I am not putting what I write behind any formal name to benefit myself, which has been plagiarized by others, nor does changing my username on occasion necessarily imply I am being a dishonest person who is saying what I don’t actually believe.

                It’s not “dishonest” to post anonymously. You do it. Just because I occasionally change my name, it doesn’t mean my arguments are somehow less credible.

                My arguments stand or fall on their own merits. Attacking me isn’t going to refute my arguments, no matter how much you wish that was the case.

                The more you keep focusing on me, the more you prove yourself unable to handle what I write. You would never waste your time posting all these historical comments (much of which isn’t even from me, BTW) if you didn’t RESPECT my intellectual prowess (from your perspective of course, not making any declarations per se) and found me to be a threat to your goals of more violence based self-aggrandizing in society.

                Because of that, all your attacks are in fact encouragements to redouble my efforts, to know that I am on the right track.

                So in that sense, thank you very much for encouraging and flattering me.

              • Joseph Fetz says:

                FWIW, my opinions on FRB have also changed over the years, I understand that completely.

                As for posting anonymously, I posted anonymously for many years and have had many handle changes, but I eventually decided that if I was going to say the things that I say, it’s better if I fully stand behind those words.

                This is not to say that those who post anonymously are cowards or anything, it’s just that I think that it is much more respectable for people to know that it is me. It’s just the way that I am wired, I guess.

        • Bob Murphy says:

          See my update, kids.

        • Transformer says:

          How about this one?

          http://krugman.blogs.nytimes.com/2012/06/03/the-level-of-government-spending/
          and the one Bob links to above in his update ?

          LK, Are you disputing that Krugman has the view that

          1. ARRA was “Keynesian” stimulus but inadequate
          2. Since then US fiscal policy has moved towards “Austerity”

          Just curious.

  12. Ken B says:

    “But I’m just doing a “gotcha” I guess.”
    There’s gotchas and there’s getting. This looks like getting.

  13. Lord Keynes says:

    “UPDATE: As even Paul Ryan could have predicted, I have people in the comments saying that Krugman never denied that were was a surge of spending under Obama. OK, he literally mocks that notion in this post. But I’m just doing a “gotcha” I guess.”

    No, Murphy, the post you link to denies that “Obama has presided over a huge increase in government spending“.

    Notice that word “huge” – meaning a massive increase.

    Krugman even here does not deny that Obama’s administration saw a surge in government spending – just not a huge, unprecedented spike.

    Even Krugman says:

    “Now, the picture looks a little different if you look at all government spending, a number that includes Social Security, Medicare, and other transfer payments… etc. [with the graph]

    This is disgusting dishonesty.

    • Major_Freedom says:

      “Huge” and “massive” are in the eye of the beholder.

      For socialists, ANY spending is too little.

      For libertarians, ANY spending is too much.

      For PK, who is socialist, thinks to himself government spending isn’t enough. But he knows that (the misleadingly named) “austerians” think any spending is too much, so he coyly refers to the lack of what he thinks they would define as “huge”, “massive” price inflation and interest rates. So then he insinuates government was NOT “huge” or “massive”.

      You socialists often can’t do anything but argue over word definitions, because you’re worldviews are how to control people by force, and how to control people by force requires controlling the message. That in turn requires turning debates into definition games so that you can do what different perspective terminology would make more difficult.

      • Major_Freedom says:

        *your

      • Ken B says:

        “For libertarians, ANY spending is too much.”

        Just in case anyone forgot, Murphy was mad at me for calling some on this blog purists.

        • Bob Murphy says:

          Ken B. wrote:

          Just in case anyone forgot, Murphy was mad at me for calling some on this blog purists.

          Just in case anyone forgot, I only did that because eighteen minutes earlier, Daniel Kuehn and Ken B. were laughing that libertarians had such broad definitions that even Daniel would be “libertarian.” So I was mad at the damned-if-we-do, damned-if-we-don’t. I don’t care about the definition you use, just don’t mock us for having a too broad and then too narrow definition, within the same half hour.

          Same thing with Krugman here in this post. I don’t care if he says Obama had a surge in spending or not. But he can’t say, “There was no surge in spending, once you look at the numbers right, and that’s why we have high unemployment,” and then also say, “By the austerians’ own logic, they *should* have predicted rising interest rates. After all, they think a surge in government spending causes crowding out.”

          • Ken B says:

            Just because some New Yorkers are rude doesn’t mean some New Yorkers aren’t polite. They might be different New Yorkers.

            • Bob Murphy says:

              right, but if in the same half hour you complained that

              “New Yorkers are so rude!!”

              and

              “Man I can’t believe how concerned about courtesy New Yorkers are!”

              that would be weird and people would think you just had it out for New Yorkers.

              • Ken B says:

                Bob, did I not just say “some on this blog”. Some. Much less “on this blog”!

                DK complained that SOME definitions of Libertarianism were so woolly they fit him. This provoked attackes here SOME of which I called purist.

              • Major_Freedom says:

                Yeah, damn Bob for simply answering a request to provide a more concrete definition of libertarianism, and getting justifiably huffy when his response is met with silly sardonic rhetoric like “it’s a purity test DK!”

                Just apologize like a man and give it up already. I for one know you’re just refusing to admit you acted a little jerkish, because if you admit that, then that would open the floodgates in the future wouldn’t it? We have to take you seriously while you act non-serious. You know, because we each have to abide by different rules.

        • Major_Freedom says:

          For the record, Murphy didn’t criticize you for calling people purists per se. Rather, he criticized you for retreating to that tactic AFTER you and DK complained about the lack of concrete explanations from libertarians as to what libertarianism is all about.

          An analogy would be this:

          Major_Freedom: You statists don’t communicate your definition of social democracy very well.

          DK: OK, fine, I’ll define it for you so that there is no confusion: Social democracy is the political philosophy that holds A, B, C, etc.

          Major_Freedom: YOU GUYS ARE PURISTS!!!!

          DK: What? What a ridiculous response! I was just responding to your question!

          Ken B, you’re either a hack, or someone with a memory worse than a fish, or both.

          • Major_Freedom says:

            Dang, Murphy responded as I was typing.

    • Bob Murphy says:

      LK did you see Krugman’s line

      “Feel the surge!”

      So he is ridiculing those who claim there was a surge in spending under Obama.

      I have literally found Krugman ridiculing the notion that there was a surge. He didn’t say, “Feel the huge surge!” He said “Feel the surge!”

      Checkmate. Don’t give up, you can practice and play again.

      • Transformer says:

        If you look at the numbers it is clear that there has been a huge surge in govt spending since 2009.

        By manipulating the numbers (taking out transfer payments and measuring spending again “potential” GDP rather than actual) Krugman manages to produce some charts that show spending only increasing slightly or even falling abit.

        This he then spins into a story of how ARRA provided an inadequate level of stimulus, and since then US fiscal policy has moved towards “austerity”.

        I think Bob is right to state that Krugman is claiming no surge in govt spending but wrong to say Krugman is inconsistent on this point. I have seen on evidence of that.

        • Ken B says:

          The Kontradictions are often strained when they are about PK’s economic ideas per se, but are usually real when they are about PK being partisan or applying a double standard to his political foes. This one seems to fit. You can cavil about whetehr he’s careful in the fine print, but if you look at the picture PK paints, Bob has a good point here.

          • Ken B says:

            The word of the day is “captious”. Often the Kontradictions are; this time LK’s objections are.

            • Transformer says:

              I wish Bob would take the strongest version of Krugman’s model and critique it rather than captiously looking for Kontradictions.

              • Ken B says:

                Actually he has! That’s what the OLG debate was. Bob made an error, but Krugman and Landsburg (and Gene Callahan and Ken B) got it right. Scroll down on my blog for a general discussion and a counter example to one of Bob’s claims.

              • Major_Freedom says:

                Saying that Bob is right considering his assumptions, and you are right considering different assumptions, I don’t think justifies saying Bob is wrong and you are right.

                The whole point of the OLG is to show that over an individual’s lifetime, indeed all individual’s lifetimes, their (lifetime) consumption can fall with debt, as opposed to no debt.

                The point is that the “cross-sectional” constant 200 apple consumption doesn’t help individuals, because even if there is a constant cross sectional consumption, each and every individual consumes less over their lifetimes.

                I think that this really does constitute a rebuttal to the PK claim that debt cannot ever represent a burden to future generations. Rowe and Murphy showed that no, debt can make the lifetime consumption of everyone in the future decline.

                The question then is “Should we care more about every individual’s consumption, or some abstract social concept income?”

                For me the answer is easy.

              • Ken B says:

                MF is ignoring my counter example, where I show *using Bo’s definition of burden*, his criteria, that a debt can *enrich* the future. That shows Bob’s criterion for claiming there is a burden is wonky.
                Plus of course I can replicate his example with taxes and transfers *just as Krugman said you could*

                If Bob finds a flaw in the reasoning he can post. But it’s been months and he has conceded he hasn’t found a flaw yet, he just thinks it must be there.

              • Ken B says:

                PS, thanks MF. I am trying to prod Bob into a serious reply so any agitation helps.

              • Major_Freedom says:

                Ken B:

                Maybe you have a short memory, but you were already corrected about the false claim that because outcome X may be accomplished by different means, that it somehow eliminates whatever means you want as a potential causal means.

                If you can identify that outcome X can be achieved through means A or means B, then it is absurd to believe that this means you can eliminate only B as a causal means and that A is the “true” means.

                All you’re doing is simply denying the existence of a possible causal relationship B, by biasing the conversation towards A.

                Secondly, it is also no argument against the validity of causal means B to suggest that with slightly different assumptions, B could be a process of causing a different outcome, say Y, rather than X.

                All you have been doing is denying the requirements of thought experiments, which is to accept the assumptions.

                What you’re doing is akin to someone in elementary math class, upon seeing “2+2=4″ on the board, replying with, “That’s not necessarily true, because I can achieve the same outcome 4 by adding 3 and 1 instead. Plus, if we include another variable, -8, to the left side, then we end up with a totally different result!”

                If you can’t refute the fact that in the OLG model, each individual really does experience a reduction in their lifetime consumption, then you have no grounds for saying it’s wrong.

              • Transformer says:

                The government can distribute income in anyway it chooses in a given generation (leaving political consideration aside).

                If it chooses to use debt it may create a moral obligation for the future but in that future the government will still have the option to ignore that moral obligation and redistribute income however it chooses.

              • Ken B says:

                Transformer: Yes. PK said super explicitly that debt transfers can be mimicked by tax transfers, so any cost of debt is the result of *transfer effects* not *diminution of available resources* Bob calimed to have a counter example, and I showed and explained why it doesn’t refute PK at all.

              • Transformer says:

                I think Bob’s OLG models assume a causal relationship between the creation of the debt and the repayment of the debt.

                The generations that are taxed to “repay” the debt can be shown to have lower lifetime utility as a result of the repayment than they otherwise would (I think this possibility is missing from Krugman’s model).

                However as the need to repay the debt is not binding (any future living generation can use default or tax to negate its effects) I don’t think it is true to say that the statement “debt can burden future generations” is proven by Bob’s models.

              • guest says:

                … debt transfers can be mimicked by tax transfers, so any cost of debt is the result of *transfer effects* not *diminution of available resources*

                All transfers which are not the result of voluntary agreements are a diminuation of resources in the sense that matters: some individuals had their property stolen from them.

                Trade happens between individuals, so the concept of “we owe it to ourselves” is meaningless.

                Deals are made between some individuals and not others, and therefore debt is owed to individuals, not “the collective”.

                The government violates individuals’ rights when it presumes to make someone a party to a contract against his will.

              • Ken B says:

                All of your claims could be true guest (they aren’t in fact) and it wouldn’t matter to the points that were in contention. You are trying to change a positive into a normative discussion.

          • Transformer says:

            Krugman is hugely partisan. He is frequently unfair and disrespectful to his opponents , using all sorts of dirty tricks to score points.

            However I think it is his economics we need to challenge and I think he is generally consistent and true to his model in this area.

      • Lord Keynes says:

        No, bob murphy: “Feel the surge!” is nothing but Krugman using humour – a facetious remark making fun of those people who think Obama was a some unprecedended socialist, presiding over the greatest spending increase ever seen in US history.

        If you are reduced to distorting facetious remarks, this really is sad.

        On the same post you cite, Kurgman admits:

        “Now, the picture looks a little different if you look at all government spending, a number that includes Social Security, Medicare, and other transfer payments… etc. [with the graph]

        • Major_Freedom says:

          LK, you seriously need to work on your reading comprehension.

          Murphy is not saying PK said that there was an actual surge in spending. In fact, Murphy is recognizing PK as being facetious with that comment.

          That’s why Murphy wrote “he is ridiculing those who claim there was a surge in spending under Obama.”

          You’re out to lunch, or out with a vendetta, but any way you slice it, you just made a fool of yourself once again.

  14. Gamble says:

    How much money should government spend to usher in the age of utopia?

    I say we give it to them and when it fails, they must all jump off a cliff, literally.

  15. Bob Roddis says:

    For the record, LK still does not and/or will not understand the concept of “economic calculation” especially as applied to distortions induced or caused by Keynesian policy. And he’s still banging that same old “Walrasian equilibrium is Hayekian equilibrium” drum even when he kinds sorta admits that they aren’t the same thing.

    http://mikenormaneconomics.blogspot.com/2013/01/lord-keynes-debunking-austrian.html?showComment=1359535326930#c3771827721539242700

    And I agree that when you confront Keynesians with the simple distinction between force and no force, they will, without exception, obfuscate until the ends of the earth to avoid the fact that libertarians insist upon peace and Keynesians base their entire existence on siccing SWAT teams upon innocent people.

  16. Andrew Jackson says:

    I had no idea my conversation with Major_Freedom the other day would result in an extensive debate between him and LK. I’ve learned quite a lot from reading their banter, despite the insults that are often exchanged. They really have a lot of time to get their points across. It’s like they never sleep when they engage in such exchange of ideas.

  17. Bob Roddis says:

    LK is at it again.

    What Sanchez is trying to argue here is that ABCT can be reformulated by purging it of its use of the natural rate of interest, and that such a reformulated ABCT can be defended against Sraffa’s critique on the basis of the mythical natural rate.

    That is perfectly true, of course, and I have never denied this. The problem is that such a theory is not a Hayekian theory, it requires real world tendency to a general equilibrium state, and it is still subject to a host of other problems, such as subjective expectations, uncertainty, capital theory, unrealistic assumptions about use of resources, and so on.

    http://socialdemocracy21stcentury.blogspot.com/2013/01/the-natural-rate-of-interest-and.html

    LK still does not understand the central concept of economic calculation.

    • Andrew Jackson says:

      Whether you like LK or not, you have to admit that he does seem to read the texts that he criticizes. I’ve seen you write that “does not understand the concept of economic calculation” often plenty of times whenever LK writes anything related to the ABCT.

      • Bob Roddis says:

        I say that for one simple reason. LK still does not understand the central concept of economic calculation. Recently, somewhere in the comments, Bob Murphy finally admitted that I was correct. If you have insomnia or nothing to do in your life, you might want to follow along on this:

        http://mikenormaneconomics.blogspot.com/2013/01/lord-keynes-debunking-austrian.html

        • Ken B says:

          I don’t see a Bob Murphy commewnt on that thread. Should I conclude Bob Roddis doesn’t understand the central concept of comment calculation?

          • Lord Keynes says:

            Yes, that thread has no comment at all from Bob Murphy. In fact, I can’t recall ever having seen bob murphy comment at Mikenorman.com.

          • skylien says:

            Well for what it is worth here is bob murphy agreeing with roddis:

            http://consultingbyrpm.com/blog/2012/09/tom-woods-keeps-krugmans-feet-to-the-fire.html#comment-45198

            I am just wondering why roddis didn’t provide it himself.

            • Lord Keynes says:

              Frankly, I do not think Murphy was even aware of what Roddis was actually referring to his endless carping about “economic calculation”. Perhaps Murphy was thinking there of the socialist calculation debate.

              Anyway, if he wants to clarify his position let him do so.

              Let Murphy tell us whether he thinks that Walrasian general equilibrium theory has “nothing whatsoever to do” with this quote from Hayek and the concepts it contains (e.g., a market clearing wage and price vector):

              “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.” (Hayek 1975: 6–7).

              Until Murphy answers this question clearly, I’ll reserve judgement on whether he agrees with Roddis or not.

            • Ken B says:

              Yeah but note the caveat. Based on some of Bob’s imeptuous angry responses you could say he’s an idiot. But he’s not of course. Like everyone else he sometimes misspeaks. So this cite isn’t very compelling.

        • Lord Keynes says:

          “LK still does not understand the central concept of economic calculation…

          This parrot-like nonsense is easily refuted.

          Is this what you mean by the concept of “economic (mis)calculation” in a modern Keynesian economy (where the vast majority of all goods are produced privately), bob roddis?:

          (1) the alleged miscalculation problems caused in the Austrian business cycle theory (ABCT).

          (2) distortions of prices away from their equilibrium values (as postulated by (4) below) by government spending, deficit spending, central bank fiat money creation, price controls, subsidies, etc.

          (3) distortions of prices away from their equilibrium values (as postulated by (4) below) by government interventions allegedly leading to Cantillon effects

          (4) in general, obstructions to flexible wages and prices and therefore to a price vector that will clear all markets (with flexible wages clearing the labour market), as in this quotation of Hayek:

          “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.” (Hayek 1975: 6–7).

          If Roddis answers “yes”, he demonstrates that his claim that I do not understand the Austrian concept of economic calculation in a Keynesian economy is false.

          If he answers “no”, then he is saying that none of the things above actually cause economic calculation problems… Obviously we do not need to give them any thought then.

        • Lord Keynes says:

          Also, note how roddis has recently retreated from his extreme claim that Hayek’s wage and price vector has “nothing to do with” Walrasian general equilibrium:

          As Major Freedom has pointed out repeatedly, it was technically incorrect for me to say that the Walrasian concept had “nothing to do with” the Hayekian concept (which I originally whipped off in a blog comment 30 seconds after reading one of your ditties). The true statement is that the Walrasian concept and the Hayekian concept are completely different concepts but that Hayek tried to use the term “equilibrium” in an attempt to get his point across to people who were familiar with the pre-existing use of that term. Only in that tenuous sense does Hayekian “equilibrium” have anything to do with Walrasian “equilibrium”.

          http://mikenormaneconomics.blogspot.com/2013/01/lord-keynes-debunking-austrian.html?showComment=1359558365695#c6165593818688624091

          Of course, the idea that there is only in a “tenuous sense” some relation between Hayekian “equilibrium” and “Walrasian “equilibrium” is equally absurd, but at least we see that roddis has changed his tune.

          • Bob Roddis says:

            I haven’t changed my tune all and I’m not going to rehash for the 17th time the same hair-splitting debate. If people care, they can find it. That was the purpose of the link to the Mike Norman “exchange”, so there aren’t 57 new comments of re-hash.

            However, it is always important to constantly point out the fraudulent game played by LK, Krugman and the vast horde of Keynesian/monetarist critics who refuse to ever understand, explain or clearly state the fairly simple bases of our beliefs and proposals: The non-aggression principle and the “knowledge problem”/economic calculation problem/pricing process.

            • Lord Keynes says:

              Statement 1:
              As Major Freedom has pointed out repeatedly, it was technically incorrect for me to say that the Walrasian concept had “nothing to do with” the Hayekian concept

              Statement 2:

              “I haven’t changed my tune [sc. at?] all …

              Breathtaking coherence and logic there, bob.

              • Bob Roddis says:

                The concepts are completely different and we have been over and over that. You are the one who constantly insists that Hayek’s concept is the same as Walrus’. So, I am right and you are completely wrong.

                Hayek BORROWED the term “equilibrium” from Walrus and applied it to a completely different concept, a “borrowing” which Hayek later regretted.

                So, the hair-splitting conclusion is:

                A. The concepts really have nothing to do with each other because they are not the same.

                B. The term borrowed by Hayek to describe his distinct concept probably can be described as “having something to do with” Walrus’ concept and terminology.

                C. zzzzzzzzzzzzz

              • Lord Keynes says:

                (1) So when Hayek attributes
                “extensive unemployment” to “a deviation of the actual structure of prices and wages from its equilibrium structure”, he is not thinking, e.g., of flexible wages that will gravitate to their equilibrium values, and therefore tending to clear the labour market? Is that correct?

                (2) “Hayek BORROWED the term “equilibrium” from Walrus”

                Um, no, bob… it wasn’t borrowed from some large flippered marine mammal …

              • guest says:

                Walrasian equilibrium, from what I was able to gather from one of Murphy’s papers (thank you, LK), is a price concept;

                whereas Austrian “equilibrium” is a preference concept.

                When Austrians speak of equilibrium, they don’t mean to say that there will ever be a specific price for a given good, relative to the supply of every other good.

                Prices COME FROM preferences, in our view.

              • Bob Roddis says:

                You finally got me, LK. It’s Walras with an “a” not a “u”. You win. I knew that yesterday.

              • Bob Roddis says:

                Hayek’s “equilibrium structure of prices” is nothing more than those prices that would come into being in the absence of intervention and funny money. This “ IS SOMETHING WHICH WE CANNOT KNOW BEFOREHAND BECAUSE THE ONLY WAY TO DISCOVER IT IS TO GIVE THE MARKET FREE PLAY”

                “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 [aka unadulterated 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.” (Hayek 1975: 6–7).

                The adulterated structure of prices could very well “clear” for decades during an artificial Keynesian boom.

              • Lord Keynes says:

                “Hayek’s “equilibrium structure of prices” is nothing more than those prices that would come into being in the absence of intervention and funny money.”

                Such non-market clearing prices would not clear the the labour market, and certainly if he is not thinking of a flexible wage leading to labour market clearing.

                Yet the whole point of the Hayek quote is to explain “extensive unemployment” and how to eliminate unemployment.

                You have demonstrated yet again you have no idea what you talking about.

              • Joseph Fetz says:

                Non-market clearing price? Don’t you mean non-market price?

              • Lord Keynes says:

                I am talking about non-equilibrium wage/prices, that is, disequilibrium prices/wages.

                Roddis is now – with incredible ignorance or dishonesty (take your pick) – denying that Hayek was thinking of a market clearing wage and price vector in that quote.

                So obviously Roddis is now saying that Hayek was not thinking of a market clearing wage to clear the labour market (and hence eliminate unemployment).

                Yet the whole point of the Hayek quote is explain why unemployment persists – and what needs to happen to clear that labour market.

                At heart, it is so obviously just another type of Walrasian GE analysis.

    • guest says:

      LK still does not understand the central concept of economic calculation.

      Maybe he has a theory of aggregates which allows them to be relevant independently from the individual components which comprise them.

      Individuals act to fulfill their preferences, which constantly change, so the aggregate “equilibrium” – comprised of individuals’ preferences – constantly changes.

      Government interventions into the economy place obstacles in the way of individuals trying to fulfill their preferences, and that causes prices to move away from the “equilibrium” of preferences.

      Likewise, government is comprised of individuals; Therefore any claims to authority must be based on the rights of individuals. When any collective function of government violates the rights of individuals, it is not legitimate.

  18. Bob Roddis says:

    I’m curious as to why new comments are not showing up at the bottom of the other comments.

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