29 Jun 2012


Economics, Krugman, Shameless Self-Promotion, Tom Woods 37 Comments

==> Oh boy, here we go again, flirting with the event horizon in economics known as capital & interest theory. If I were an academic, puffing on my pipe and flaunting a tweed sportcoat, I could really get into this. As it is, you will have to content yourself with my comments in Nick Rowe’s post. Anyway, here is Nick and then David Glasner talking about the Sraffa-Hayek debate. (Others like Daniel Kuehn are involved, but you can follow the links to see all the blogosphere fun.) I am pretty sure I agree with everything those two guys say, except when they conclude (Nick explicitly, David implicitly) that Sraffa’s point wasn’t so hot, in the famous debate. As I point out here in this heretical paper, yes it was a big deal, and in particular, Ludwig Lachmann’s attempt to solve the problem fails completely. I am not throwing out Austrian business cycle theory–that’s what I try to rehabilitate in that very paper–but I don’t think Austrians have done a good job at all in responding to Sraffa’s challenge, which was perfectly fair in the context of that debate. To wit, Hayek had recommended that the monetary authority do something that was impossible. I don’t see why Sraffa is out line for bringing up that awkward fact.

==> This guy at The American Conservative didn’t like my utopian approach to the marriage question.

==> Speaking of TAC, here is a piece from a while back that I forgot to post. I take on the claim by Lawrence Summers, Brad DeLong, and Gene Callahan that governments should borrow more right now, and be acting like smart businesses.

==> This article condemning the Confederacy for going to war is amazing because it never occurred to the author that all of his arguments could be used…to condemn the North for going to war. The Confederate states didn’t invade the North in order to protect slavery, rather they wanted to secede and be left alone. The North said, “Nuts to that,” and sent in generals who burned their cities to the ground. If the author wants to say today’s libertarians shouldn’t be talking about this, because it’s strategically silly for us to waste time “defending” slave owners, OK I’ll listen to that argument, but as it is this piece makes no sense to me. If anything, it proves the opposite of what the author intends.

==> Mario Rizzo reminds us that Bloomberg’s soda ban isn’t the only dumb thing going on in New York.

==> The crafty veteran economist David R. Henderson shows me how to find a Krugman Kontradiction old-school style. The topic is what the “Keynesian” prediction on inflation was in the early Reagan years, and it is simply breathtaking how confidently Krugman yells at his opponents and accuses them of making stuff up, when he himself spouted the views that they are attributing to Keynesians. Wow.

==> Another Henderson post, this time on the oft-heard claim that if we had conscription, the politicians would think twice before plunging us into another war. I give David and his co-author some pushback in the comments, just keeping them honest.

==> Apparently Tom Woods has had people ask him about Webster Tarpley too.

37 Responses to “Potpourri”

  1. Teqzilla says:

    What’s the bet that if challenged Krugman will be able cite something from the period where he entertained the opposite view? You know, It’s easy to boast that you predicted everything when you actually have predicted everything. Deflation, Inflation, stagnation, food nation, whatever. If there is even the slightest possibility of something happening Krugman has noted it and has it waiting to blossom into a prediction or wilt into nothing depending on how the weather turns.

  2. Gee says:

    ” I take on the claim by Lawrence Summers, Brad DeLong, and Gene Callahan that governments should borrow more right now, and be acting like smart businesses.”

    Companies are capital-constrained, liquidity is not the problem and that’s why they don’t need to borrow. Ex-post it makes the most sense to say that companies should have raised capital via stock issuance when their stock price was still trading at inflated levels. Unfortunately, there is no equivalent for government.

  3. integral says:

    It’s hilarious that the tarpley posts at both your blogs end up with 2-300 comments.

  4. Bala says:

    I think the “heretical” paper has some serious flaws. The concept of “interest rate” used out there appears, IMHO, to be unrelated to the Austrian concept of the interest rate as the price spread across various lines of production.

  5. Ken B says:

    The Confederate states didn’t invade the North in order to protect slavery, rather they wanted to secede and be left alone. The North said, “Nuts to that,” and sent in generals who burned their cities to the ground.

    You know just the other day when the cops in Somalia raided a compound and freed hostages I was thinking, those hostage takers just wanted to secede and be left alone. So I take your point. But perhaps you see mine: the hostage takers DID invade Somalia and violate its laws, just as the confederacy violated the *union* and its laws. Not the NORTH, but the UNION. And for similar motives. Next you will argue that FBI agents who live in Kentucky cannot enforce federal laws in Tennessee.

    Anyone who doubts the cassus belli was slavery needs to get out more. And read The Approaching Fury by Oats.

    • integral says:

      What Union law did the confederacy violate by seceding?

      • Ken B says:

        The amendment process for a start.

        • Ken B says:

          While you chew on that one, article 1, section 10:
          “No State shall enter into any Treaty, Alliance, or Confederation;” That whole section repays reading.

          There are more, these suffice.

          • jjoxman says:

            That section more likely pertains to states entering treaties, alliances, and confederations with foreign powers. The states didn’t want each other making special deals with the French, or British, or Germans while remaining in the Union. The Constitution itself does not speak to the right to secede. Once states have seceded, they are free to form whatever alliances they want, being as they are no longer bound by the Constitution.

            Virginia, New York, and Rhode Island included clauses in their ratifications of the Constitution that permitted them to withdraw from the new government if it became too oppressive. Under the Constitution, all states have equal dignity and rights, therefore it must be presumed all states have a right to secede.

            President Buchanan, Lincoln’s predecessor, recognized this and so allowed the original seven seceding states to leave peacefully. Well, sort of; he didn’t necessarily think the states had a right to secede, but he also didn’t think the federal government had the right to coerce a state to remain in the union.

            The Tenth Amendment states that if some power is not specifically given to the United States in the Constitution nor prohibited by the Constitution, then that power remains with the State or its people. Since the Constitution is silent on secession, that power must remain with the state.

            • Ken B says:

              You say that what it pertains to. The wording does not say that. It says no confederation. When readers on the blog quote the first amendment they often ask sarcastically “what part of no law do you not understand?” I suggest a certain consistency would be seemly.

              When you look at it, ‘no confederation’ is listed along with no treaty and no alliance.

              • jjoxman says:

                Okay… how about responding to the remainder of my arguments? Or do you think that the problem was that several of them seceded at once?

              • jjoxman says:

                Also, the states seceded individually first, then they formed a joint government. After seceding, it’s not sensible to think they would still be bound by the Constitution.

              • Ken B says:

                Seceding voiolates the amendment process. Violates more too, since it deprives residents of federal protections, but amendment is enough.

              • jjoxman says:

                What is your argument that seceding violates the amendment process?

              • Ken B says:

                ‘the rest of my arguments’

                Unpersuasive. Your reading of am 10 makes no sense as secession is not *logically* applicable to the federal gov’t.

                Your disclaimer argument is weak too. You can say whatever you want before you sign a contract, but what matters is the contract. Plus of course the lack of any provision in say either Carolina cuts the other way.

          • Ken B says:

            What is your argument that seceding violates the amendment process?

            That seceding is a change in the constitution. It vitiates federal law, including the constitution, within the state. That’s a change. [This is handled explicitly and separately for new states under article 4.]

            Whether secession via amendment is possible is an interesting question. But secession by taking your marbles and going home because your candidate lost the election certainly is not.

    • marris says:

      > Anyone who doubts the cassus belli was slavery needs to get out more.

      Anyone who thinks it is needs to spend more time at the library studying what people at the time of the Civil War actually thought. The Civil War was not caused by anything that people felt *during* or *after* the war, no matter how intensely they felt it.

      • Ken B says:

        Ironic, considering I recommended a book that did exactly that. Or Arguing About Slavery by Miller, which is a terrific book.

        • jjoxman says:


          If you think the War for Southern Independence was about slavery, why did the Union not go to war with Kentucky, Missouri, Maryland, and New Jersey? Slavery was legal in all those states, and they were in the Union.

          • Ken B says:

            You are confusing war aims and motives. Abolition did not become a war aim until the war had gone on for some time. But the animosity and disagreements that lead to the war was all about slavery.
            Saying the underlying cause of the war was not slavery is like saying the Troubles in Ireland are not about religion.
            Here’s another analogy. Bob cheats on his wife. She sues for divorce. I say, Bob’s marriage is ending because he cheated. Would you retort “No, his marriage is breaking up because his wife sued for divorce.”? It’s true, but missing a key point.

            • jjoxman says:

              I’m not saying slavery had nothing to do with North-South animosity. I’m saying the war had nothing to do with ending slavery. Until, as you say, a ways into the war. Likely, that was only to garner public support for the war in the North.

              Slavery was only a problem for the North because of economics and territorial expansion, and had nothing to do with concern for the conditions of slaves. In fact, there were more emancipation and abolition societies in the South than the North. If the North really wanted to end slavery, all they’d have to have done was to grant asylum to all slaves. That’s what Brazil did, and slavery ended within a few years.

  6. Ken B says:

    @jjoxman: Interesting civil discussion. I conclude you wondered onto this blog by accident.

    • jjoxman says:

      Wondered? A guess a little – Murphy keeps me guessing.

      I don’t see how seceding changes the Constitution. I changes who belongs to the union – in other words it changes who agrees to the Constitution, not the document itself.

      Okay, so Virginia only accepted the Constitution on the grounds that if they didn’t like it, they could leave. That’s the essence of the Virginia ’98 resolution (and Kentucky). Why would it be wrong for them to secede?

      • Ken B says:

        Because what matters is the contract not any reservations you express before you sign it. If Puerto Rico ever becomes a state and they announce while ratifying “but that first amendmant won’t apply here” would it apply there? The states ratified the constistution, it is what governs, not anything they passed whilst ratifying. And this suggests an interesting reductio for your proviso-and-uniformity argument: if PR did ratify in that manner then according to your theory the 1st amendment would not apply anywhere.

        • jjoxman says:

          Here is the relevant section of the Virginia resolution:

          “That this Assembly doth explicitly and peremptorily declare, that it views the powers of the federal government, as resulting from the compact, to which the states are parties; as limited by the plain sense and intention of the instrument constituting the compact; as no further valid that they are authorized by the grants enumerated in that compact; and that in case of a deliberate, palpable, and dangerous exercise of other powers, not granted by the said compact, the states who are parties thereto, have the right, and are in duty bound, to interpose for arresting the progress of the evil, and for maintaining within their respective limits, the authorities, rights and liberties appertaining to them.”

          Basically: We accept this Constitution, but we, the people of the State of Virginia, retain the right to stop the encroachment of the federal government on our rights, under the Constitution.

          WRT Puerto Rico:

          When the Constitution was ratified, it was accepted in whole, so PR would have to as well. The right of secession, not being addressed in the Constitution, must be (by the 10th Amendment) assumed to remain with the states. Thus Virginia is saying “We have this right.” If a union is made voluntarily, then why should leaving it not also be voluntary?

        • jjoxman says:

          And since you brought up free speech, I dug this up from the Kentucky Resolution:

          “3. Resolved, That it is true as a general principle, and is also expressly declared by one of the amendments to the Constitutions, that “the powers not delegated to the United States by the Constitution, our prohibited by it to the States, are reserved to the States respectively, or to the people”; and that no power over the freedom of religion, freedom of speech, or freedom of the press being delegated to the United States by the Constitution, nor prohibited by it to the States, all lawful powers respecting the same did of right remain, and were reserved to the States or the people: that thus was manifested their determination to retain to themselves the right of judging how far the licentiousness of speech and of the press may be abridged without lessening their useful freedom, and how far those abuses which cannot be separated from their use should be tolerated, rather than the use be destroyed. And thus also they guarded against all abridgment by the United States of the freedom of religious opinions and exercises, and retained to themselves the right of protecting the same, as this State, by a law passed on the general demand of its citizens, had already protected them from all human restraint or interference. And that in addition to this general principle and express declaration, another and more special provision has been made by one of the amendments to the Constitution, which expressly declares, that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof, or abridging the freedom of speech or of the press”: thereby guarding in the same sentence, and under the same words, the freedom of religion, of speech, and of the press: insomuch, that whatever violated either, throws down the sanctuary which covers the others, arid that libels, falsehood, and defamation, equally with heresy and false religion, are withheld from the cognizance of federal tribunals. That, therefore, the act of Congress of the United States, passed on the 14th day of July, 1798, intituled “An Act in addition to the act intituled An Act for the punishment of certain crimes against the United States,” which does abridge the freedom of the press, is not law, but is altogether void, and of no force.”

    • Bob Murphy says:

      Actually Ken B., jjoxman has been here longer than you. This blog, like the world at large, did not start with you…

      • jjoxman says:

        I’ve had a paucity of commenting of late, so I can see his confusion. If I have nothing to say, I say nothing.

      • Ken B says:

        You were right Bob. Deadpan is lost on the web. Or on some bloggers anyway.

        But perhaps I misread you here. Perhaps you never did tell M_F and MMT you’d have to stop the car …

        • Bob Murphy says:

          Ken B. I understood full well what you were getting at. But rather than me explain why I didn’t think your joke worked, I’ll drop it.

          • Ken B says:

            It’s only funny if you say ‘new to these parts’?

          • Ken B says:

            I do so love it when you discuss jokes though Bob. One time you ended up with Who on second. Another time you had the punchline come out “Take my wife. Thanks.” I’m looking forward to “Aside from that Mrs Lincoln, how did you like the assassination?”

  7. Ken B says:

    I think jjoxman we’re just repeating old points now. I already look too much like Bob to risk writing like him too!

    🙂 That’s just a hard-to-resist friendly shot Bob not a real observation.

    I do notice something amusing about this blog, and a few other Pauline sites. That is the deep affection for the southern secessionist cause. It’s ironic from those claiming to be libertarians as it means in some cases plumping for an unlimited government without a bill of rights over a limited one with a bill of rights. We have debated Obamacare a bit on this blog. I think it unsconstitutional, because of the lack of an enumerated power. But that applies only to the fed; few deny that in most states of the union the same mandate would be permissible. Few would deny that in general dividing power between rival levels blunts it. And yet …

    • jjoxman says:

      I wasn’t repeating old points, I was bringing up new arguments; or rather making more detailed ones. If you want to quit, fine. But then say you want to quit.

      The secessionist cause may or may not be held with ‘deep affection.’ As I mentioned on my blog, I am against slavery (no libertarian is for it), so it’s hard to like the Southern governments. It’s a matter of recognizing the laws that bind the fed.

      Finally, in my view, you have it backwards, just like Lincoln did in his Gettysburg address, when you say we are ‘plumping’ for an unlimited government. In fact, we are defending a reasonable response by states when faced with an unconstitutional encroachment on the rights of the states.

      Last points: the first amendment says Congress shall make no law. Nothing about the states, although most, if not all, states have a similar clause in their own constitutions.

      Second: re: Puerto Rico; I said states have equal dignity and rights with regard to the federal government, not that they had to have the same laws. But the Constitution applies to them all equally.

      Finally, it sounds like you favor subsidiarity. In my view, that’s a very good solution to a lot of problems.

      • Ken B says:

        @JJ: You started quoting the Virginia act after I explained why what it says is not the issue. That’s you repeating the argument that it IS the issue. I could say again why it’s not, but that would be me repeating!

        I agree many states have a bill of rights. Not all do. The argument you make is, it’s OK even if they do not. So you are liable for the conclusion I outlined even if it does not apply to Virginia or ironic Kentucky.

        You are correct in grokking that I am pretty much a federalist. As long as citizens have the federal protections and the federal protected right to meove from state to state this places a check on state power, meaning the states can have more plenary power than the feds. This of course does not work without multiple levels.
        But the secessionist argue must allow for the one-level case. You yourself have argued that secession was logically prior to confederation.

        I accept however your chastisement — that I am as bad as Lincoln. And here I thought Bob was the mean one! 🙂

        • jjoxman says:

          I’ll stop here, but I want to explain why I quoted the Virginia resolution. I quoted that specific paragraph because it was a rebuttal to your claim that the resolution wasn’t the issue. Clearly the Virginian state legislature thought it was the issue.

          And, as regards the migration from state to state: it would be a violation of the right of people to limit their movement. So if the South seceded and forcibly retained those wanting to move North, that’d be a violation of natural rights – just like slavery in fact.

          Again, I don’t think the South was right in their actions to maintain slavery. I maintain only that they had the right to secede. And, I favor the states in the current discussion over nullification.

          I’m not sure you’d accept being compared to Lincoln as gracefully as you do if you knew the depths of my contempt for him. But ain’t no thing.

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