I don’t believe Krugman saw Judge Napolitano’s invitation, but he at least is grappling with specific (and modern-day) proponents of Austrian business cycle theory. There is a definite imbalance in the comments if any of you want to chime in. (And remember, they don’t like naughty words at the NYT.)
Source link: http://archive.mises.org/15368/murphy-krugman-debate-print-version/
{ 23 comments }
Much of Krugman’s argument relies on phony government statistics – number that have been deliberately constructed to conceal the truth, so we end up with a self-fulfilling prophecy.
I wonder how thing would look if we, for instance, substituted John Williams ShadowStats numbers.
My intuition is that Krugman’s assertions would be false.
When I see the price of food and gas skyrocketing, should I believe my lying eyes, or the CPI index that is telling me that I am mistaken?
I put a post on there trying to refute the most erroneous of the claims made by other posters. I was so riled up by the time I got to the end of the comments and wrote mine, that I hope I didn’t misrepresent the Austrian viewpoint or present it in a bad light. I didn’t get into policy specifics, just tried to keep the facts simple, the narrative straight-forward, and even put in a few links to some of my favorite Mises daily articles.
If Krugman is right, and we did what he and the other “mainstream” economists suggested, why is unemployment still so high? Why were recessions so much shorter, with faster recoveries, before the FED? There’s a lot more I’d have gotten into, but it would have just turned into a rant.
I just want the names of the legions of Austrian Economics Theory leaning Republicans in positions of power in the US Federal Government, I count 1, Ron Paul, and have counted 1 since Nixon was President. And he, Ron Paul, does not like immigrants in the USA without USG permission. There have been more than a few but less than several dozen who have claimed to be Austrian leaning, One President, RR, comes to mind. There is the son of RP and some other recently elected congressman but their positions are far less Austrian than RP.
The most ironic thing about Krugman is that he is for using statistics and math to back up his claims but can not possibly back up his claim that large numbers of Republicans are in any way Austrian.
“And he, Ron Paul, does not like immigrants in the USA without USG permission.”
Incorrect. His first choice is virtually unlimited immigration with NO welfare state.
The whole tying of Austrian economics into some vast, right-wing conspiracy is absurd, but then they would just choke on the libertarian/anarchist truth if they were ever faced with it. They would think it was far worse.
And remember, they don’t like naughty words at the NYT.
Like “freedom”?
BAN HIM!
I could feel Krugman’s fingers shaking as he typed that mess, no, not from anger by from fear. Krugman is not accustomed to having to actually defend his positions in public. He usually gets to take pot shots from the side without confrontation.
I remember years ago I Krugman and Kudlow on a show, I think the Lehrer News Hours, and Kudlow had him so tied in knots he could hardly speak. Now if Kudlow could do that imagine what would happen if he had to debate a real economist.
I wish Krugman was stupid enough to go on TV with Peter Schiff. Like James Galbraith.
http://www.youtube.com/watch?v=fZrWoZiB9HY
OK. So, is it a short u, a.k.a. ugh. Or is it an “oo” as in boot? Krughman or Kroogman?
Krugman:
Here’s your positive evidence.
I detect something of a sea-change in Krugman’s attitude, almost a retreat. Maybe he’s just taking a step backwards so he can muster the force for (he thinks) a devastating blow against the “hangover theorists”, but it is quite significant that he actually linked directly to a mises.org article. In the past, his references to Austrian economists were so oblique that I had the impression he was deliberately making it difficult for his readers to find any concrete information about his free-market opponents.
Re: Mike Clem’s comment.
Sadly, still so true. Lots of work to be done, one step at a time; Example, educate, disseminate, practice. But it is happening.
Lynn Atherton-Bloxham
I loaded the text below onto the NYT blog on Krugman. Let’s see if they upload it.
I have now studied long and hard many of the theories of Austrian Economics (unlike the majority of the respondents to this blog) and see no benefit to the vast majority of the populace from the current Keynesian approach. We have Governments the world over pretending to have “Free Markets” while setting the most important price in the economy (INTEREST RATES). To set interest rates, Governments via their “INDEPENDENT” Central Banks inject more paper tickets ($) into the economy by reducing the price of borrowing and the Banks amplify this injection through the mechanism of Fractional Reserve Banking (this is where the Central Bank loses it’s direct influence on the amount of credit available). This is the seed of the boom. Interest rates have little effect on economic actor’s short term decisions, but have a very powerful effect on the long term decisions. In an economy where there is NO credit manipulation available (by either the Central Bank or through fractional reserve Banking), then credit is made available through savers saving money which is then lent to borrowers. Those borrowing the money pay for the use of the money (interest). If there are not enough savers, then interest rates rise and vice versa when there are too many savers. Everything is in balance. Production is exchanged for money which is then saved (money representing products [goods or services]) and money is lent to an Entrepreneur who then exchanges for the products. Here there is no distortion. The Entrepreneur has calculated that he will receive in the future profits from which he can recover his interest, repay his debt and make a net profit, otherwise he would NOT embark on his project.
The way it runs with credit expansion, the goods produced do not rise as much as the credit available (money injected), as the Entrepreneur gets close to completing his project, he finds that the last products he needs to complete it are NOT available (they’ve already been spent by those who got) the injected money first (usually Government or those closely allied to it). He now finds that his calculations are screwed and to finish his project needs more money to buy the goods as there are not enough goods produced to complete his project. He now needs to go back to his Bankers to borrow the money, but finds that his interest payments have risen. He is now unprofitable and he will be denied his loan. {In the meantime, the bricks that he thought he had borrowed were bought by the Government to build a pyramid.) This is the bust, the Entrepreneur cannot complete his project, the goods he needed to complete it were allocated to Pyramid building, the consumers in the economy followed the advice of the great economists and consumed all on living it up and trinkets (from China) and saved nothing. What has happened here is wealth destruction!
But the Central Bank (owned and run by Bankers and friendly vested interests) now comes in to prop it up with more money. Ultimately, if it is delayed, the economy goes to HYPER-INFLATION and the currency becomes devalued enormously as no one wants to hold it. The problem for the US is that the USD is the international reserve currency. If Central Banks around the world lose confidence in the USD, then GOD help America, with the reserves built up through credit expansion over decades flooding back to America, trying to find assets (any assets) to buy before the value falls further.
Hey Austrian Economics is spot on! Think back 30 years to the price of a burger and what it is now. If you saved money back then, you’d have lost heaps of value and any interest received would have been taxed, including the component of interest which is required to hold the value of the principle!
Just remember:
OPTIMISM is born of blissful ignorance
PESSIMISM is the product of bitter experience.
Ask a Yugoslav or someone from Zimbawe or Argentina, or wherever credit expansion has gone unchecked what happens.
Fundamentally, money needs to be a commodity, you exchange a thing for a thing, WITHOUT the Central Bank standing on the other side injecting NOTHINGS into the system and terming it “MONETISATION” or “QUANTITATIVE EASING”.
I hate to think of what the world will be like with a fallen America, but only Americans can change it. Read up on Austrian Economics. It is common sense!
I hope this does not bore you too much, but this is a plain concept!
Is there anyone who can classify what Mr. Krugman’s political philosophy is? He says he’s a liberal, but that’s not really true, is it? He’s more like a statist court economist or something.
Paternalist
So the title of his blog should be, “The Conscience of a Paternalist”, then?
Father knows best!
I posted a comment with no naughty words, but it wasn’t published. Perhaps the NYT has adopted Krugman’s position of refraining from what he called “violent rhetoric,” which of course is an oxymoron, and instead embracing ubiquitous, outright violence, such as a government mandate to buy insurance enFORCED (meaning force will be used to collect if necessary). Here is what I said, and I would challenge Krugman to dispute it:Associating Austrian economics with Republicans, as you attempt to do Professor Krugman, is akin to me associating your Keynesian economics with the Nazi party of Germany, except my position is grounded in demonstrable facts whereas your assertion is pure fiction.
As you know, three months after John Maynard Keynes’ GENERAL THEORY was published in English, a German edition was published in early 1936 with a special foreword written by Mr. Keynes, which sounds like Keynes was personally addressing Adolph Hitler, who was concurrently consolidating Nazi power and domination of the German economy. I am not making this up.
Here is what Keynes wrote in that German Foreword: “The theory of aggregate production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire. This is one of the reasons that justifies the fact that I call my theory a general theory.”
What Keynes said of his economics back then is true today. Keynesian economic policies are best suited for totalitarianism, not an economy where people enjoy a degree of economic freedom. Hitler adopted Keynes’ theories and policies aimed at Keynes’ full-employment Nirvana, with some macabre adaptations of his own demented mind. And it cannot be denied that by means of those policies Nazi Germany achieved essentially 100-percent full employment of its Aryan workforce. Hitler started World War II, of course, which was a major factor in Germany’s realization of full employment.
The war had the same “beneficial” effect of drastically reducing unemployment in FDR’s America, as you pointed out in an earlier NYT column (11/10/08), in which you said, “What saved the economy, and the New Deal was the enormous public-works project known as World War II, which finally provided a fiscal stimulus adequate to the economy’s needs.” If it is fair to say that the GOP has embraced Austrian economics, which perhaps 99 percent of Republicans do not understand as it is to say that the Nazis. like you sir, were Keynesians. I first made the connection between Keynes, Krugman and World War II in this essay, written over two years back: http://jesus-on-taxes.com/ON_PAUL_KRUGMAN.html
J.M. Keynes was an advocate of eugenics. How can anyone take him seriously knowing THAT?
Well gents,
My post 4 items above, was not uploaded by the NYT. Either there is a healthy Xenophobic policy at the NYT, or it was considered too long or unhelpful to circulation.
Once America was the land of the free and the brave, but I fear it is now the land of the decree and the enslaved.
I’m ever optimistic that right will overcome wrong, but I do wait with trepidation.
The battle is not lost yet Austrians! GO The Austrians!
Dr Murphy,
it seems that Pete Boettke over at “Coordination Problem” is not very pleased with this. Although Krugman referenced your article on capital theory, Boettke thinks you are just a good video maker. If serious, Krugman should engage the ABCT “head-on”, by debating the “real experts”, namely Horwitz, Selgin, White and co.
Who gives a shit what Pete Boettke thinks about anything?
So is there some way we can get krugy to show us his formulae and replace his data sets with shadowstats?
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