Krugman was talking about health care again in his op eds, so Tom and I discussed this blast from the past. An outline:
3:00 Bob summarizes a really old Krugman column on “hangover theories” of the business cycle: why isn’t there a consumption boom during the “recession”?
4:15 Bob then summarizes Tyler Cowen’s related objection: Why is there a boom period at all? If investment rises, shouldn’t consumption fall? Why empirically do we see comovement in these variables over the course of the business cycle?
5:40 Bob says the key issue: capital consumption.
6:00 Bob summarizes his “sushi example.” 100 people on an island, then Krugman shows up.
7:35 Why an illusion?
8:35 Why should there be unemployment if people are poorer? Wouldn’t they work more?
10:30 Tom summarizes Krugman’s response to my “sushi article.”
14:55 Bob points out Krugman’s response to me, is actually a concession, a retreat from his original claim that ABCT was akin to phlogiston theory of fire.
17:10 The problem lying behind Krugman’s questions (he conflates Austrian with RBC).
18:50 Central banks *can* slow growth.
22:00 What evidence do we have of Austrian malinvestment?
26:45 Bob goes through two examples distinguishing Keynesian versus Recalculation view.
35:40 Why aren’t slumps associated with accelerating price inflation?