CNBC Economist Accidentally Endorses Laissez-Faire
At CNBC’s website there is a headline saying, “Is US Economy Flirting With ‘Modern-Day Depression’?”
Then the blurb says:
A depression occurs “only once it becomes painfully obvious that the markets and economy are failing to respond to repeated bouts of policy stimulus,” one economist said.
So the way to be absolutely sure you’ll avoid depression is…?
Jon Stewart Crushes Mitt Romney
I am really going to laugh if the Republicans end up nominating this guy. I can’t wait to hear Sean Hannity explain why RomneyCare in Massachusetts is a bold experiment in federalism, whereas ObamaCare in the USA is crazy socialism.
C’mon Republican primary voters, search your feelings. There’s one candidate who does well in head-to-head match-ups with Obama and who actually has consistently supported the Constitution while in office for decades.
Starting From Scratch With the Quasi-Monetarists
Scott Sumner popped in to leave a comment on my earlier post. To refresh your memory, I was complaining that Scott (and his quasi-monetarist peers) is so sure that tight monetary policy is to blame for our economic woes, that he’s neglecting the host of other massive interventions into the market economy that have occurred in the last 3 years in particular. One of the things I mentioned was the continued extension of unemployment benefits. In his comment Scott said:
“I think the 99 week extended [unemployment insurance] has sign[i]ficantly increased unemployment. But that doesn’t reduce M*V.”
OK, this floored me. (I know, I know, maybe what’s happening here isn’t that Scott is a shocking fellow, but that I just need to get out more and experience the world.)
Let me say it plainly: Some economists (largely centered in the Rothbardian tradition, but perhaps there are others) REJECT the theory that explains years-long recessions on “inadequate demand.” In a healthy, free market economy, if for some reason people decided they wanted to hold 10% more in cash balances, then prices would fall. I’m not saying it would happen instantly, and of course it would screw up people’s plans if they didn’t see it coming. There might be bankruptcies, wealth transfers from debtors to creditors, etc. etc. But I don’t think you would see (the broadest measures of) unemployment shoot up into double digits for years on end, nor would real output collapse for years on end.
In contrast, when I am asked to explain why we’ve been stuck in such a slump for the last 3-4 years, I would go through and list the incredible interventions. (I’m not going to make this list now; I’ll do an article at Mises.org on this.)
Go look at Scott’s comment again. He is agreeing with me that extending unemployment benefits–i.e. paying people to not find a new job–is keeping unemployment high. OK, how are real goods and services produced? Firms hire workers who then process natural resources and capital goods, to create the output.
So, if we can explain why unemployment remains high, that’s a darn good start on explaining why (a) unemployment remains high (which is what most people care about) and (b) why real output isn’t snapping back (which is what economists care about).
As Scott’s comment reveals, he doesn’t think this can be a large part of the story, because it doesn’t explain the trend in MV. But what if the trend in MV is an interesting bit of trivia?
You don’t have to share my extreme views that aggregate demand will largely take care of itself, to at least see that Scott is unwittingly going to the other extreme.
Last point: The reason I pick on Scott so much is because he is such a good representative of the quasi-monetarist position. Let us recall my August 2009 blog post:
Wow. I am totally blown away by Scott Sumner’s blog, The Money Illusion. He is a Chicago PhD who specializes in the gold standard and the Great Depression. I don’t even necessarily agree with his overall views, but WOW his posts are really really good. It’s what I would have expected from nerdy academic economists before I actually saw the real world buffet available for sampling.
Michael Savage Agrees With Ron Paul on Awlaki Killing
I am pleasantly surprised by this. Michael Savage is a very interesting character; he’s the only (major) talk show host I can stomach anymore. Not that I agree with him on everything, mind you, but that’s what makes this clip so pleasantly surprising. If you don’t know him, Savage is actually pretty big on the Islamo-fascists-are-taking-over-and-Obama-is-letting-them card.
Near the end, Savage even admits that he initially applauded the drone strike, and then later changed his mind.
P.S. Yes, Savage makes a lot of the citizen/non-citizen distinction, which shouldn’t matter for people who think murder is bad, period. But hey, I’ll take what I can get.
Scott Sumner Caricatures Himself
I’m not sure why I’ve been on the warpath against Scott Sumner lately. Maybe it’s because he was on hiatus for a lot of the summer, so my angst built up. Maybe it’s because I didn’t get accepted into the Chicago doctoral program and he did. Who knows.
Anyway, in a recent post Scott continues to astound me. Now, not only does Scott still maintain that Bernanke has been engaged in tight money since 2008 (!!), but there are really no other possible explanations:
There is only one force in the economic universe powerful enough to cause trillions in asset values to suddenly disappear, for no apparent reason. To cause nominal incomes to plunge further and further below trend, causing massive job loses. The center of the black hole sees itself as a force for good, helping to solve the problems it is actually creating. Others see it as a potential source of help, which is not acting forcefully enough. Both are wrong. It’s the center of the black hole. It’s pulling down the things we see disappear over the event horizon. But we can’t see it, and hence most of us don’t understand the problem. It’s the only force capable of determining NGDP growth over time. It’s the force that several decades ago decreed that henceforth NGDP will grow at about 5%, not 11% or 3%. It said “let there be 2% inflation.” And the force saw the 2% inflation, and saw that it was good. Only one force in the universe could pick a 2% inflation rate out of thin air, and make it happen.
It’s the part I put in bold that stunned me. “[S]uddenly disappear, for no apparent reason”??
By the end of the above quotation, you might be getting uncomfortable, since Scott is bordering on blasphemy. But don’t worry, Scott isn’t saying the Fed is God. To continue the above quotation:
“Is it God? No, it’s much more powerful than that. And since mid-2008 the force has decided that 1.4% annual NGDP growth is good enough.”
I still maintain that any day now, Scott is going to put up a post saying, “Gotcha! I can’t believe I managed to convince all of you that the problem these past 3 years has been inadequate money pumping. Ha ha, like nationalizing banks and car companies, 10% deficits, taking over health care, having the EPA threaten to put 95% of the country in non-compliance, and extending unemployment benefits for 99 weeks don’t affect the economy. It was all I could do to keep a straight face when arguing with that punk Murphy down in Nashville, who was the only one who didn’t fall for it.”
Reminder: Class on the Best of Rothbard Starts Tomorrow
I am really looking forward to teaching this material. The final third of Man, Economy, and State is jam-packed with great stuff, including the best critiques of Keynesianism (at least the old school variants).
Glenn Greenwald, Radical, Thinks Government Should Explain Why It Killed Somebody
Some people are getting upset that the antiwar crowd is focusing on the citizenship of Anwar Awlaki, so I won’t bring that up. (The reason is that before, during the Bush years, a lot of people shrugged off the trial-less waterboardings and detentions by saying, “They’re not citizens, so the Constitution doesn’t apply.” Whether or not that was true, clearly you can’t use that excuse for Awlaki.)
Anyway here is Glenn Greenwald (yes in a post that links back here):
The reason [Obama officials] do this is because they know it will work: as the Bush years proved, the American population is well-trained to screech Kill Him!! the minute the Government points to someone and utters the word “Terrorist“ (especially when that someone is brown with a Muslim-ish name, Muslim-ish clothes, and located in one of those Bad Muslim countries). If Our Government Leaders say that someone named “Anwar al-Awlaki” — who looks like this, went to a Bad Muslim-ish place like Yemen, and speaks ill of America — is a Bad Terrorist, then that settles that. It’s time to kill him. Given those “facts,” only a “civil libertarian absolutist” would think that things like “evidence” and “trials” are needed before accepting his guilt and justifying his state-sanctioned murder.
And how’s this for perspective?
[S]ome journalists and priests of the National Security State are now calling on the Obama administration to reveal the evidence proving Awlaki’s guilt; while that is certainly better than nothing, evidence presented in a one-sided manner that isn’t subject to review is the opposite of due process; even more so, the idea of executing a citizen and thereafter showing evidence of guilt is precisely what the Queen in Alice in Wonderland demanded when she decreed: ”Sentence first – verdict afterwards!” That we’re reduced to begging the government to at least comply with the standards of Lewis Carroll’s Queen of Hearts is a potent an indicator of the depths to which we’ve fallen.
Forget Chris Christie: Republican Businessmen Should Draft Robert Johnson
The founder of BET talks common sense, and he might actually get away with it because, well you know why:
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