EconLog: And Then There Were Three
There’s a new face on the EconLog masthead: that of David Henderson. Congrats, David. Seeing you magically appear in between Bryan Caplan and Arnold Kling reminded me of a movie scene.
TIME Blogger Digs Himself Deeper
Intrigued by Lew Rockwell’s raised hackles, the TIME econ blogger Justin Fox gives a follow-up post. Now look, I am a relative young pup in the field and have thought all these big schisms in Austrian economics are dumb and counterproductive. But this is just silly. After explaining that Lew Rockwell responded to his earlier piece, the TIME guy quotes from David Gordon’s version of the Koch/LvMI feud and then the TIME guy says:
Now I get why citing Tyler Cowen on matters Austrian so raises the hackles of some Austrian true believers. He’s an apostate! Notice how Gordon makes no attempt to explain what’s wrong with Cowen’s critique of Misesian and Rothbardian ideas–it’s enough just to point out that he has strayed from orthodoxy. Theirs is the true path, and all others are in error.
This kind of thing happens a lot, so let’s be clear, Mr. Fox. The reason LRC posted that response, and the reason some people posted comments on your site, is NOT because you cited Tyler Cowen. There are thousands of blogs that cite Tyler Cowen all the time, and I don’t see the LRC blog linking to them with defensive posts. No, the reason your initial post raised hackles was that you said this:
People in the U.S. who self-identify as believers in Austrian economics, though, tend to follow a much narrower path, that of Mises and his American disciple Murray Rothbard. They are extremely libertarian (at the first meeting of the Mont Pelerin Society, a libertarian group organized by Hayek in 1947, Mises stormed out saying “You’re a bunch of socialists”). They yearn for a return to the gold standard. Many possess a near-religious conviction that their beliefs are correct and that all other economic theories are pure folly. Some of them–I’m thinking here mainly of the crowd around Lew Rockwell–combine these beliefs with far loopier stuff. Others–such as financial pundits Peter Schiff and Michael Shedlock–often let their rabid Austrian leanings overpower (and, to my taste, ruin) otherwise trenchant economic analyses. Am I going to go to these people for perspective on the business cycle or Austrian economics? No, I don’t think so.
So yep, those nutjobs in Auburn take offense when people call them loopy extremists, and don’t consider them even worth reading when it comes to Misesian economics. Is that so hard to fathom, Mr. Fox? Do you really think that it was your citation of Tyler Cowen that stirred up resentment, or could it possibly have been the above paragraph instead?
TIME Hit Piece on Lew Rockwell
This is hilarious (HT2LRC). If you are new to my blog and are just learning about Austrian economics etc., don’t bother clicking the above link. But if you know the ins, outs, whys, and wherefores, just look at how ignorant the TIME blogger is when discussing the factions in Austrian economics. In particular, he implies that Steve Horwitz (!!) is a nutjob Rothbardian taking orders from Lew Rockwell. Also, he implies that Tyler Cowen has a respectable book on Hayekian business cycles whereas Roger Garrison doesn’t.
What’s really scary is that this TIME guy probably knows more about the Austrian movement than the Bush Administration knew about Iraqi insurgents.
UPDATE: OK in fairness to the TIME guy, at the end of his post he pulls back by saying, “Roger Garrison of Auburn and Steve Horwitz of St. Lawrence University, the two modern Austrian-school economists he recommends, seem on first examination to be more interesting than loopy or strident, so I’ll start looking out for their writings.” So fine fine, he is more careful than certain members of the Bush Administration.
Blago Pick: Barack Obama Should Study Game Theory
“Defiant” Governor Blagojevich has named Roland W. Burris as the successor to Obama’s senate seat. Plenty of people, including the President-Elect himself, had said that Blagojevich shouldn’t name anybody, for obvious reasons. But these people went further: Obama foolishly declared that anyone named by Blagojevich should not fill the vacancy.
Do you see the problem? Obama et al.’s declarations just gave Blagojevich the power to prevent one person from getting the job. I don’t know anything about Illinois politics, but we can easily imagine someone behind the scenes bribing Blagojevich to nominate a political enemy, and thus tarnish that person.
The correct thing, for both game theoretic but also meritocratic reasons, would have been for Obama to say, “I think the governor should refrain from naming a successor, due to the unusual circumstances and the pending charges. In the event that he does throw out a name, I think his recommendation should be ignored, and that the process should unfold as it otherwise would have, in order to determine the best person to serve the citizens of Illinois.”
One final thought: At this point, it is not clear (at least to those of us reliant on newspaper stories) whether the Senate Democrats really have the power to refuse to seat someone named by Governor Blagojevich. But if so, then they are really dumb, for making an empty threat.
Ringing in the New Year With People Who Are At Least 55 Years Young
I spent New Year’s Eve at my parents’ relatively new house in a retirement community in Florida, where new residents must be at least 55 years old. (We had come down for Christmas.) I noticed some huge differences between this party and those that I remember from my youthful days:
* Everybody left before 2.
* There was a lot of talk of medical ailments afflicting those both absent and present.
* Much discussion of finances (though admittedly this was a special year for that).
* The hosts (my parents) cleaned up everything before going to bed.
* The guests brought homemade food that was delicious.
* The hosts ended up with more alcohol than they started the night with.
The most unexpected treat occurred when I was talking with a guy who said he was a ditch digger when I asked him his line of work. Turns out he owns a $300k piece of equipment that lays drainage pipes for farmers in Indiana. (It was fascinating how he explained that it greatly boosted crop yields, but it would be difficult for me to translate it into blog-speak.)
Anyway, we were talking about the economy and I was offering my views in a guarded fashion, since I didn’t know the guy’s politics. But then with very little prodding from me, he basically out of nowhere announces, “It’s these low interest rates making 20-year-olds spend money they don’t have. Greenspan really f*cked us all.”
At that, for the first time in my life, I was able to raise my glass and say, “I’ll drink to that!” with no irony. I almost risked saying, “You read LewRockwell, don’t you!” but I first tested him by asking if he held gold. He said no, he just invested in his business. So I chickened out.
New Energy Blog and Why Governments, Not Human Nature, Foster Mass Warfare
Rob Bradley (disclosure: the guy who hired me for IER) has a new energy blog. Some of the big guns who will be posting are still on vacation, but it looks to be great for daily commentary on energy issues.
David Henderson had a great Christmas Eve article discussing the outbreak of peace on the front lines in World War I. Naturally, the commanders nipped it in the bud and made sure their men resumed killing ASAP. If you have no idea what I’m talking about, you should definitely read the article.
Krugman: You Can’t Prove My Plan Is a Bad Idea
As always, I am stunned by Krugman’s latest blog post (HT2MR). Check this out, and note that this is his entire post:
Readers have been correcting me for saying “niggling nabobs of negativism” in this post. Yes, I know the original (written by my former colleague William Safire.) But “niggling” is better for the current situation.
Here’s how I see it: the opponents of a strong stimulus plan don’t really have an alternative to offer. They don’t even have a really coherent critique; as Brad DeLong points out, if you believe that a surge in private spending would raise employment — and even the critics agree on that — it’s very hard to explain why a surge of public spending wouldn’t have the same effect.
The critics are instead mainly engaged in a series of minor complaints, aka niggles; FDR didn’t do so well, the statistical evidence ain’t so great, you can’t trust government, etc., etc..
So niggling nabobs it is.
Do you understand how crazy this is? To give context, Tyler Cowen has been repeatedly arguing lately that proponents of stimulus have not made the case that it has ever actually, you know, WORKED. That’s what Krugman means by “FDR didn’t do so well, the statistical evidence ain’t so great, etc.”
Notice that the two biggest case histories to “prove” the need for a huge stimulus right now, ARE EXAMPLES WHEN HUGE GOVERNMENT STIMULUS EFFORTS WENT HAND-IN-HAND WITH ECONOMIC DISASTER. Everyone got that? Clearly FDR was more of a Krugmanite than, say, Warren Harding or Calvin Coolidge, and yet the depression under FDR was much much worse than any previous one.
By the same token, what the Japanese tried in the 1990s was far from libertarian liquidationism, and it went hand-in-hand with the “lost decade.”
Now Krugman et al. have responses here. E.g. both Hoover and FDR idiotically raised taxes during the 1930s, so it wasn’t textbook Keynesian fiscal stimulus. And Japan didn’t credibly promise large price inflation (to get adequate negative real interest rates) as Krugman recommended, so his prescriptions weren’t fully tried.
But Tyler’s point (and I’m paraphrasing) is that Krugman et al. are just excusing apparent FAILURES of pump priming to kickstart the economy out of recession. OK fine, so give us one good example WHERE IT ACTUALLY WORKED.
And to this challenge, Krugman offers the above.
Those Fighting for Economic Freedom Need a Good Halftime Speech
I recently wrote a piece for Mises.org (should run soon) saying something to the effect that what more could the SEC do, than its handling of the Madoff Ponzi scheme, to prove that it’s doing an awful job and should be abolished? In other words, if one thinks that all this proves is that some heads need to roll and some priorities need readjustment, then this is an admission that the case for the existence of the SEC is non-falsifiable.
But while chasing my son around, outside the church on Christmas Eve (he was NOT going to sit quietly during the Mass that my parents took us to), it struck me: Those of us who have volunteered to fight the good fight against State power…Um, we screwed up pretty badly the last 6 months. I’m not saying we should quit, but I do think we should seriously think about HOW THE HECK DID THIS HAPPEN, and run the film over and over trying to figure out what we could have done differently.
One huge thing that occurs to me: We should have spent more time debunking the conventional story that the free market (and/or Fed allowing money stock to decline) caused the Great Depression, and then Roosevelt got us out of it. If that’s what you “learned,” then no kidding you’d fall for Paulson’s hysterical threats.
I am being serious with this post. Let’s think outside the box if you’ll forgive the cliche. (C’mon kids, let’s be pro-active and foment some synergy here, to implement some preventive protocols going forward…)
Last point: I am traveling and posts will not resume normal regularity until the new year.
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