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Source link: http://archive.mises.org/10238/krugmans-rearguard-apologists/

Krugman’s Rearguard Apologists

July 7, 2009 by

As most readers will know, a collection of damning quotes has surfaced recently, exposing Paul Krugman, the doyen of the economic Left, as having been completely backward on the most material economic event in our generation: the housing bubble. My recent article on the subject, “Krugman’s Intellectual Waterloo,” has elicited some pretty heated rearguard apologetics. FULL ARTICLE BY LILBURNE

{ 56 comments }

Artisan July 7, 2009 at 9:02 am

To me it seems outrageous Krugmann quotes Steven Roach as support of his ideas… I have a different memory of his analysis and warnings back then… Don’t you?

Walt D. July 7, 2009 at 10:28 am

The flaw in Krugman’s reasoning is that the state of affairs just before the .com or housing bubbles burst was an ideal state that we should all strive to return to, rather than an a gross distortion produced by malinvestment resulting from easy credit, as a result of flawed FED policy.
Hence his support for yet another bubble to get us back to where we were before the housing bubble burst. Deja vu all over again.
I think this is called compulsive repetition.

End the Fed July 7, 2009 at 10:35 am

Well, Keynes did want a permanent bubble. So it’s no surprise Krugman would want the Federal Reserve to create another bubble (a green bubble I guess).

Wait a minute, the Federal Reserve can create and destroy bubbles by expanding and contracting the money supply? That means Austrian business cycle theory is correct.

Ben Ranson July 7, 2009 at 10:39 am

Fine article, Lilburne! The emperor has no clothes.

David Spellman July 7, 2009 at 11:53 am

The Statists picked the wrong stooge when they made Krugman their point man. But fortunately there is always another Nobel prize to award and crown a new crony.

Ben July 7, 2009 at 1:01 pm

I disagree, Krugman was their best possible selection. It’s been the case that no matter how bad you prove Krugman to be wrong, it does little if any damage to his reputation in the mainstream media, academia, or his little circle of worshipers. We may have turned a point the past month, but it’s yet to be seen. Despite the barrage of 2001 quotes, it seems that apologists still try to justify the man’s positions.

That being said, another common apologist remark towards Krugman is that he did not advocate keeping the rates this low for this long. That’s complete nonsense. In 2003 and 2004, he submitted plenty of articles in which he stated we were in the so called “Liquidity Trap”. Throughout those articles, he clearly wrote that 0% interest rates would not even be enough and was openly advocating for fiscal stimulus because monetary policy was stretched to the limit.

Marc Faber also mentioned Krugman and his distaste for him in his newsletter last month where he referenced a conversation he had with Krugman in the late 90s where Krugman claimed that the Nasdaq would never decline.

Beyond that, his arrogance is simply amazing. I have yet to see a single interview where he ever admits to being wrong on any single issue. Even our greatest economic forecasters like Marc Faber admit when they made misjudgments or misreadings. Faber also said something to the tune “I am neither young enough, nor Paul Krugman to know everything” last month.

I am simply amazed at how much credibility this hack has managed to gather in the past 4 years despite his awful record.

Yancey Ward July 7, 2009 at 1:03 pm

Bravo! Krugman is the gift that keeps on giving.

dewind July 7, 2009 at 1:58 pm

That article was delightful. Especially since providing even more context made it even worse for Krugman.

Walt D. July 7, 2009 at 2:14 pm

Doris Day tribute to Paul Krugman?
http://www.youtube.com/watch?v=886Z6zKXmG4

Artisan July 7, 2009 at 4:50 pm

Krugmann doesn’t fool too many people I think. But at some point, propaganda doesn’t need to be believeable.

I met a German socialist (!) lawyer for agricultural laws at the European Council in Brussels who told me: “I know nothing about economics, I must admit though I find it exciting … but this Krugman with his ever expanding bubbles seems to be crazy: He just CAN’T be right!”

Ned Netterville July 7, 2009 at 7:51 pm

Everything–from economic analysis (so-called) to policy recommendations–that John Maynard Keynes wrote in his magnum opus, GENERAL THEORY, ETC. was logically punctured, skewered and roasted to a rare turn by Henry Hazlitt back in 1949 and 1950 in the book he wrote (THE FAILURE OF THE NEW ECONOMICS) and the volume he edited (THE CRITICS OF KEYNESIAN ECONOMICS). After publication of these two tomes it became intellectual suicide to defend Keynes or his silly theories because conclusive refutation of everything he wrote was there on display in public libraries for one and all to see. Today the Mises Institute makes both of these books readily available on the worldwide web. How can Paul Krugman have the temerity to parrot Keynes as he does? This economist (?) has the jaws, shell and character of a snapping turtle.

Emil Suric July 7, 2009 at 10:36 pm

Paul Krugman went to the supermarket with a credit card to get his family out of debt.

Tom July 8, 2009 at 10:29 am

What era do you geniuses want to go back to? The 1800′s? Keynesian economics provided more than 40 years of strong economic growth. What did we get during the 1800′s?

Jeremy July 8, 2009 at 10:50 am

Tom,

Ever heard of the ‘post hoc ergo propter hoc’ fallacy? Just because economic growth continued to occur along with the advent of Keynesian policies does not mean that these policies caused the growth. Perhaps these policies inhibited growth but there was growth in spite of them.

So, Tom, please demonstrate the mechanism by which Keynesian policies caused sustainable economic growth which would not otherwise have occurred.

And by the way, the 1800′s were a century of amazing advances in production. Relative to the previous century, the innovation and growth of that century were astounding. How do such advances occur without Keynesian policies? Or would they have been that much greater with such policies? If so, why so? Please explain.

Tom July 8, 2009 at 11:33 am

Jeremy

Keynesian policies created the greatest growth any country has ever seen. Your contention is that without implementing these policies, everyone would be brushing their teeth with gold toothbrushes and driving Caddilacs? We had great growth because Keynesian economics works. It works because it sustains growth without creating “bubbles.” When private capital speeds up, Keynesian helps reign it in to a sustainale level. When their is inadequate private capital, it takes it’s place.

The 1800′s had some advances due to slave and near slave labor but it did nothing to advance the middle class. Unless by middle class, you mean some people could afford to eat beans and rice for dinner.

Jeremy July 8, 2009 at 12:36 pm

Tom,

I did not make the claim you attribute to me, I merely suggested that you need to demonstrate the cause and effect relationship between Keynesian policies and economic growth. I asked for clarification on your take on this relationship. You have provided this, but I find your contention wholly inadequate.

First, you claim that Keynesian policies allow for sustainable growth without bubbles. What about the numerous bubbles since these policies have been implemented? Keynes’ most prominent disciple, Krugman, explicitly stated that the only solution for the dot.com bubble was the creation of a housing bubble. You should really read up on the Austrian theory of the business cycle. It should become clear to you that manipulation of money and credit causes cycles and does not prevent them.

Back to your theory of cause and effect: you seem to be saying that economic growth is dependent upon the regulation of the amount of capital in an economy (“When private capital speeds up, Keynesian helps reign it in to a sustainale (sic) level. When their (sic) is inadequate private capital, it takes it’s (sic) place.”). Further, you seem to be arguing that growth in the 19th century was minimal and that it was dependent upon slave/near slave labour (“The 1800′s had some advances due to slave and near slave labor but it did nothing to advance the middle class”).

As to your second point, if economic growth is dependent upon slave labor, why was not growth tremendous in previous centuries (Roman time, etc.) when slave labor was widely used? Why did tyrannical countries like China not become the most prosperous, as workers were virtual slaves? Your theory of cause and effect seems lacking.

Also, you point out that the advances did nothing for the middle class. To what are you comparing this middle class? To compare it to modern day middle classes is silly. You must compare the middle class of the 19th century to those that came before. In fact, in previous centuries there was, on the whole, no such thing as a middle class. Most people were farmers barely scraping by. The common Western man in the 1800′s was vastly better off than the common Western man in the centuries prior. There was great economic improvement from one century to the next. That is not to say it was ideal, and that is not to say that slavery did not exist and was not horrible. But to attribute the cause of growth to slavery is silly, and to claim that common people did not improve their lot relative to previous times is also silly.

As to your first point, that Keynesian ‘massaging’ of capital levels is required for growth, you still have not demonstrated why “inadequate” amounts or excessive amounts of capital are the main impediments to growth and that thus it is their regulation that unleashes the forces of economic expansion. What is excessive? What is inadequate? Why?

To repeat, you have not demonstrated any cause and effect relationships that necessitate Keynesian policies. Nor have you demonstrated a cause and effect relationship between slavery/near slavery and economic growth.

Lilburne July 8, 2009 at 12:42 pm

Tom, I’m guessing you only recently started debating these issues. Otherwise, you would have already been corrected on such an incorrect statement, or at least wouldn’t seem so assured of its self-evidence.

What did we get during the 1800s? Despite the Dickensian/Marxian/public school myths you seem to have unquestioningly imbibed, we got…

The industrial revolution.

The most rapid increase in human welfare in human history.

A chronological island of production, trade, and peace between the largely necessary upheavals of the revolutionary age and the completely unnecessary era of genocide, world war, and tyranny of the 20th century.

Keynesian doctrine swept ACADEMIC economics early in its life, but it took longer to completely install itself in economic POLICY. As soon as it did (remember Nixon’s “We are all Keynesians now”?), it only yielded inflation, stagnation, and waste.

Tom July 8, 2009 at 12:51 pm

First: Krugman was stating that the way Greenspan would have to get out of the situation he was in was to create another bubble. He never said this was an acceptable way to regulate the economy. When you bring this up, it takes away from your credibility because it seems you are parroting talking points.
Second: There were many advances in ancient Rome, ancient Egypt, etc . . . And you will also find that China is one of the fastest growing economies in the world and I hope you are not arguing it is because they are so much freer.
Third: I do not believe the people outside the very wealthy were so much better off in the 19th century than they were in the 18th century. You can call that silly if you want but what in your view made them better off? Many of them worked endless hours never seeing much of their family and occupational deaths were extremely high. You will have to prove to me that the 19th century was so much better because I have seen no empirical evidence to offer that. What I have seen is that the 19th century was so much more prone to economic hardship and boom and bust cycles in general in the economy than the 20th century.
Lastly: I never used the term “excessive.” I said to sustainable levels. The growth of the 1920′s was unsustainable. This led to the depression. That is one area I hope you and I agree. Why it was unsustainable was that there were no triggers in place to reign it in and there were no triggers in place when the private capital dried up to let us down softly in the 30′s. FDR helped get us down softly but he could do nothing prior to 1933.

Tom July 8, 2009 at 1:05 pm

Lilburn

Your condescension aside, what proof do you offer that the 1800′s gave us the most rapid increase in human welfare?

And your contention is that because of the advances in the 1800′s, we were free from the world wars of the 1900′s? Seriously?

It had nothing to do with the German longstanding grab for power strating in the 1800′s? Or the fact that we were content to grab land in our own hemisphere before getting involved in European wars?

You have to help me here professor. What made the 1800′s better than say the 1950′s and 60′s? Aside from the fact that you claim we never practiced keynesian economics till Nixon (apparently a side joke between you and the others on this board).

Jeremy July 8, 2009 at 1:12 pm

Tom,

1. Did you read the article above? The point is that Keynesian economics is all about creating bubbles. That’s what they advocate, that’s all they know how to advocate. Krugman, from his Keynesian perspective, was outlining the only way he knows how to address a slump – created a bubble. Who cares if it was advocacy or not,

2. My point was that if, advances come from slavery why did not China, rather than the West, emerge as the most wealthy area of the world? I was not referring to modern day China. If slavery leads to growth why was it “European miracle” and not the “Chinese miracle?”

3. Before the Industrial Revolution, famine was always a threat. Work on farms was extremely grueling, certainly no easier than factory work. Diets were very limited. People could not buy cheap, mass produced cotton clothing and most could hardly afford more than one set in their lifetime. Are we really arguing about the material benefits of the Industrial Revolution? Even E.P. Thompson recognized that people were materially better off.

3.A. Please give me a causal explanation of the boom and bust cycles in the 19th century. The Austrians have one. What’s yours? If Keynesian policies are the remedy, why have there continued to be such cycles?

4. So you blame “unsustainable” growth for the boom of the 20′s, I agree. What was the cause of the boom? You talk of no “trigger” to “reign it in” but what was its cause? Why was that depression so much worse if FDR “helped us get down softly”?

Tom July 8, 2009 at 1:19 pm

Krugman never advocated creating cycles. The cycles you refer to for Keynesian economics are business cycles. Keynes does not advocate creating them. They occur naturally and cannot be stopped, only the boom and bust can be slightly controlled.

America is the greatest country and greatest wealth in the world due to the polices (Keynesian) of FDR so on that we agree. We were not the greatest economic power of the 1800′s though.

I am not arguing the industrial revolution did not lead to advances and I never did. What I am saying is that the vast majority of the people were much much much better off in the 20th century than the 19th century. Some, and only some, were much better off in the 19th centruy than the 18th century. The industrial revolution was not a US even though it was a global event.

The depression was so bad because of laissez faire policies. Once keynesian policies were put in place we never had a major economic disrtuption again until (arguably) Bush destroyed much of what FDR had put in place.

Tom July 8, 2009 at 1:22 pm

One more thing. Until the dismantling of much of Keynesian economics in the 1980′s there were no boom and bust cycles as we knew them prior to FDR.

RWW July 8, 2009 at 1:45 pm

Tom, I recommend going through some of the literature (most of it is available for free) on the Mises Institute website before continuing to make a fool of yourself. You may be particularly interested in works relating to the Great Depression, which, as is plain by now, can only be understood in light of so-called Austrian economic theory.

Tom July 8, 2009 at 1:48 pm

RWW

See there- exactly why nobody will ever accept your school of economic thought. No real models put forward. No empirical evidence yet the arrogance from you and your like is so heavy you can cut it with a knife.

Jeremy July 8, 2009 at 1:49 pm

Tom,
Again, you are making statements without demonstrating cause and effect relationships.

“America is the greatest country and greatest wealth in the world due to the polices (Keynesian) of FDR so on that we agree.”

Um, no. No one here agrees with you on that because it’s utter nonsense. Again, you have yet to explain HOW Keynesian policies create wealth.

“The depression was so bad because of laissez faire policies.”

Please demonstrate HOW laissez faire policies made the depression so bad (after first demonstrating that laissez faire policies were in fact in place). And, no, I don’t buy the B.S. that Hoover implemented laissez faire policies. In fact, the FDR administration merely continued many of Hoover’s programs under different names.

“Once keynesian policies were put in place we never had a major economic disrtuption again until (arguably) Bush destroyed much of what FDR had put in place.”

What about stagflation in the 70′s?
What did Bush do and HOW did those actions cause disruptions?

Tom July 8, 2009 at 1:53 pm

The stagflation of the 70′s (mainly cause by the oil shocks) was bad. It was not a major economic disruption and the middle class did not shrink because of it, it still managed to go on.

Keynesian policies do not in and of themselves create wealth. What they do is allow our country to absorb economic shocks so that we can come out of these disruptions quickly and be able to continue to create wealth. Some of the fiscal policies put in place also serve as a catalyst for economic growth in the future. You really think without public freeways (not private freeways) the boom in the automobile would have been so huge for instance.

Emil Suric July 8, 2009 at 1:54 pm

Tom,

“What era do you geniuses want to go back to? The 1800′s? Keynesian economics provided more than 40 years of strong economic growth. What did we get during the 1800′s?”

1880-1896 had no central bank and a gold standard, the result? 86% increase in real incomes across the board, merely saving made you money. This is the largest expansion of wealth the world has ever seen. During the period Keynes dominated, namely the 50′s to late 70′s we had 3 of the worst recessions in U.S history, 48,53,60, and a looming stagflation crises which ultimately put Keynes to bed. Or at least it was supposed to.

“Krugman never advocated creating cycles. The cycles you refer to for Keynesian economics are business cycles. Keynes does not advocate creating them. They occur naturally and cannot be stopped, only the boom and bust can be slightly controlled.”

This is most definitely not what Keynes believed: “Thus the remedy for the boom is not a higher rate of interest but a lower rate of interest! For that may enable the so-called boom to last. The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and thus keeping us permanently in a quasi-boom. (General Theory, p. 322; emphasis added, but the exclamation point is Keynes’s own.)”

“One more thing. Until the dismantling of much of Keynesian economics in the 1980′s there were no boom and bust cycles as we knew them prior to FDR.”

What the hell are you talking about? I guess Hume, Wicksell, the Currency School, Jackson, Marx, Mises, Hayek, were all able to see into the future.

Jeremy July 8, 2009 at 1:57 pm

Tom,

“No real models put forward.”

Wrong, Austrians focus on the real CAUSE and EFFECT relationships that exist within the economy and thus model the economy on those REAL relationships. If by model you mean mathematical model which makes unwarranted assumptions then, yes, Austrians do not put forward models.

“No empirical evidence…”

Wrong. There is lots and lots of emipirical evidence that backs up Austrian theory. However, one cannot derive cause and effect relationships from empirical evidence by itself when it comes to the study of human activity (economics, history, sociology).

Tom July 8, 2009 at 1:58 pm

Emil

You are arguing that the recessions of 48, 53 and 60 were worse than the great depression and the recession we are currently in. Is that your contention? Really?

Lil and Jeremy, that is also your contention?

Also, so I am clear, the 1800′s was better for the vast majority of the people economically than the 1900′s?

Wow (or in the words of Borat: Wa Wa Wouie)

Tom July 8, 2009 at 2:01 pm

I think I stand corrected. Just went back and looked and unemployment was almost 7% by the end of 1960. What horror this country was going through. Must have been soup lines everywhere.

Emil Suric July 8, 2009 at 2:06 pm

Tom,

“You are arguing that the recessions of 48, 53 and 60 were worse than the great depression and the recession we are currently in. Is that your contention? Really?”

What? Who said that? You said Keynesian doctrine created the largest sustained creation of wealth in history. This simply isn’t true, and I explained why. Please don’t put words into my mouth.

“Also, so I am clear, the 1800′s was better for the vast majority of the people economically than the 1900′s?”

Of course this would be impossible. The poorest people today are richer than the richest of the 19th century. But obviously this denies the fact that the fastest period of wealth creation occurred in the 19th century.

“The depression was so bad because of laissez faire policies. Once keynesian policies were put in place we never had a major economic disrtuption again until (arguably) Bush destroyed much of what FDR had put in place.”

Hoover increased spending by 40%, and passed the worst regulation imaginable, namely, Smoot-Hartley. In fact, FDR called Hoover a socialist during the campaign:

“Franklin D. Roosevelt blasted the Republican incumbent for spending and taxing too much, increasing national debt, as well as placing millions on the dole of the government. Roosevelt attacked Hoover for “reckless and extravagant” spending, and, “of leading “the greatest spending administration in peacetime in all of history.” Roosevelt’s running mate, John Nance Garner, accused the Republican of “leading the country down the path of socialism.” -Wikepedia

The stagflation crises nearly destroyed England, who were ultra-Keynesians, and severely damaged the U.S.

Tom July 8, 2009 at 2:11 pm

Emil

Do you have a split personality?

Emil: “During the period Keynes dominated, namely the 50′s to late 70′s we had 3 of the worst recessions in U.S history, 48,53,60″

You really did not post this? Did someone hack into your computer or just pretend to be you?

RWW July 8, 2009 at 2:13 pm

The quote you posted makes Emil’s point for him, Tom.

Emil Suric July 8, 2009 at 2:14 pm

Tom,

Me: “During the period Keynes dominated, namely the 50′s to late 70′s we had 3 of the worst recessions in U.S history, 48,53,60, and a looming stagflation crises which ultimately put Keynes to bed. Or at least it was supposed to.”

You: “You are arguing that the recessions of 48, 53 and 60 were worse than the great depression and the recession we are currently in. Is that your contention? Really?”

What am I missing? When did I say that the depressions in the middle part of the last century were worse than the recession today or the great depression?

“Do you have a split personality?”

No.

RWW July 8, 2009 at 2:14 pm

It’s possible that English isn’t your native language, but “3 of the worst” is not the same as “the 3 worst”.

Tom July 8, 2009 at 2:15 pm

You guys seriously are like a cult. Do you guys also sell Amway?

Emil Suric July 8, 2009 at 2:18 pm

“You guys seriously are like a cult. Do you guys also sell Amway?”

No.

RWW July 8, 2009 at 2:19 pm

And you’re a fine disciple of Krugman and Keynes. There’s nothing to your argument but misrepresentation and obfuscation. Seriously, at least go poke around in the available literature. I promise it won’t hurt you.

Tom July 8, 2009 at 2:20 pm

Emil

So then we are clear, these recessions were worse than when exactly? They were 3 of the worst recessions you say. What were the many recessions that were not as bad?

Tom July 8, 2009 at 2:23 pm

RWW

No offense but I have read quite a bit from your school of thought and find it to be missing a lot. It’s really a school of thought that says that we don’t need any school’s of thought.

Jeremy July 8, 2009 at 2:26 pm

Tom,

When reason and logic fail, resort to insults. I like your style.

I have three tips for you:

1. Look up the “post hoc ergo propter hoc” fallacy

2. Read some of the historical literature here before raising points that are extensively debunked within said literature (i.e. that Hoover’s policies were laissez faire, that FDR helped get us out of the depression).

3. Read up on Austrian econ before making ignorant statements regarding it (i.e. no empirical evidence, no models, “a school of thought that says we don’t need schools of thought” (!?!?))

Emil Suric July 8, 2009 at 2:29 pm

Tom,

“So then we are clear, these recessions were worse than when exactly? They were 3 of the worst recessions you say. What were the many recessions that were not as bad?”

Well, most notably, the depression of 1920. I doubt you have ever heard of it Tom; but it was the worst one year decline ever, even more so then 29,32,33. The Harding administration did nothing, and the central bank laid idle. The result? It lasted for 1 year. Unfortunately, the central bank decided to engage in open market operations, under Fisher and Strong (in1922), to perpetuate, artificially, the natural boom of the 20s. Hayek said that they were creating an unsustainable bubble which must eventually cause a depression. Of course, everyone thought Hayek was crazy. He was able to call the depression 3 months before it hit. I might also add, Tom, that this depression destroyed England, Germany, and Japan. But America was left practically unscathed.

The question now is; what do you do when the truth unforgivingly smacks you in the face? Do you continue on the same muddled path? Or do you educate yourself?

Tom July 8, 2009 at 2:31 pm

Jeremy

I’m the one that attacked? I am? I have been told I need to read more (Because your brand of economics is the only kind I guess) and that I must have just started debating this.

I have debated you extensively here.The problem is, with any cult-like following, there is no room for debate here. You guys all have your talking points and that is it.

I disagree with Krugman from time to time and from Keynes from time to time as well but something tells me that disagreeing with the great Austrian masters is tantamount to blasphemy here.

Jeremy July 8, 2009 at 2:38 pm

Tom,

What do you expect when you come here and parrot talking points and fallacies that have been extensively dealt with? Did you not think that people would question your commitment to knowledge? Did you not think that people would think that you are new to Austrian econ and related fields?

People have consistently responded to you points. No one insulted you, they merely suggested that you look at the literature before you debate. You are the one who moved to ad hominem arguments with the cult comments (If you’ve been around here, you will see that there is extensive disagreement within the Austrian school).

But anyway, what’s your take on the depression/recession of 1920?

Lilburne July 8, 2009 at 2:38 pm

“First: Krugman was stating that the way Greenspan would have to get out of the situation he was in was to create another bubble. He never said this was an acceptable way to regulate the economy..”

As I wrote in the piece, from a simple, honest reading of two of the quotes (the ones with the words, “optimistic” and “wishful thinking”) “he was clearly characterizing a housing bubble as an object of optimism, whether or not he thought it was possible. In other words, at best, Krugman could be interpreted as saying that it would be great if Greenspan could pull off a housing bubble, but that he, Krugman, doubts whether he’ll be able to accomplish such a worthy feat.” Basically Krugman likes bubbles for getting out of recessions WHENEVER they’re possible. But in situations he calls “liquidity traps” he thinks they sometimes are not; in those situations he calls for outright government seizures to “inject capital”, which also can only cause economic destruction.

“Second: There were many advances in ancient Rome, ancient Egypt, etc . . . And you will also find that China is one of the fastest growing economies in the world and I hope you are not arguing it is because they are so much freer. ”

You are much too ignorant to be throwing historical assertions around. You probably learned in school about the glory of Rome, Egypt, and China when they were dominated by centralized states, and how in a time of great aqueducts, pyramids, and walls, the people simply MUST have been happy under their wise rulers all-powerful rulers. You probably just blindly accepted that story without looking further into it once in your life. Go beyond your public school textbooks and received “wisdom”. Read Herodotus. The Egyptians of the 5th century BC “remembered” the pyramid-building pharaohs as oppressive, impoverishing despots. Read Tacitus and how the practice of the Romans was to “rob, butcher, plunder, and call it ‘empire’; and where they make desolation, they call it ‘peace.’” Read about the murderous, ultra-statist Legalists of ancient China who made life hell for their subjects. When you come to mises.org, come armed with more history than public school truisms.

Thinker July 8, 2009 at 2:47 pm

Tom

If you want to be treated with respect around here, you need to demonstrate that you know what you are talking about. Provide some evidence rather than simply make statements and demand evidence from others. At the risk of sounding patronizing, don’t just TELL us things, SHOW us things. If we are so terribly wrong, it should not be difficult to tear all the principles of Austrian economics completely to shreds in detail. You are cordially invited to try.

matt July 8, 2009 at 3:00 pm

Tom,
simple excercise to prove us wrong. Tell us an instance where Keynesian economics helped us?

Emil Suric July 8, 2009 at 3:18 pm

Matt,

“simple excercise to prove us wrong. Tell us an instance where Keynesian economics helped us?”

The answer to that is obvious! It has undeniably proven the utter failure and danger of inflationary policies.

Lilburne July 8, 2009 at 3:51 pm

“Your condescension aside, what proof do you offer that the 1800′s gave us the most rapid increase in human welfare?”

From http://www.fff.org/freedom/0793c.asp….
“Moreover, a little investigation reveals that the greatest progress in man’s material condition came precisely during the time the growth in his numbers was the greatest. The Industrial Revolution brought not only increasing wealth, but a dramatic lengthening of life expectancy and fall in infant mortality — in other words, an unprecedented growth in population. The population economist Julian Simon likes to point out that graphs illustrating population growth and life expectancy in the West look nearly identical. From 8000 B.C., the line is nearly horizontal. Then at about 200 years ago, it turns up like a rocket. Life expectancy jumped from under 30 years to over 75.”

“And your contention is that because of the advances in the 1800′s, we were free from the world wars of the 1900′s? Seriously?”

Because of the relative freedom from the state, we were relatively free from wars. It was both of those freedoms which allowed for the advances in the 1800′s, not vice versa.

“What made the 1800′s better than say the 1950′s and 60′s?”

You make the most basic, and most easily avoidable of mistakes. Let us say over 10 years a society has tremendous economic growth. Then starting in year 11, the government begins to wantonly destroy productive property until year 20. During that second ten years, the economy still managed to grow, in spite of the destruction, but not at the rate it was able to in the first ten years. The society may very well be better off in year 20 than it was in, say, year 8, but the wanton destruction would still have been a BAD thing, and in terms of policy and the rate of progress (especially with regards to potential) the first 10 years would have been far better than the second.

“Aside from the fact that you claim we never practiced keynesian economics till Nixon”

I didn’t say that. I said, “Keynesian doctrine swept ACADEMIC economics early in its life, but it took longer to completely install itself in economic POLICY. As soon as it did (remember Nixon’s “We are all Keynesians now”?), it only yielded inflation, stagnation, and waste.” Notice the word, “completely.”

Nathan July 8, 2009 at 3:59 pm

“Lastly: I never used the term “excessive.” I said to sustainable levels. The growth of the 1920′s was unsustainable. This led to the depression. That is one area I hope you and I agree. Why it was unsustainable was that there were no triggers in place to reign it in and there were no triggers in place when the private capital dried up to let us down softly in the 30′s. FDR helped get us down softly but he could do nothing prior to 1933.”

Tom, do you even know the year the Fed was created? Are you really that confused how the bubble of the 20′s became so inflated?

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