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Spreading Hayek, Spurning Keynes

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Re: Spreading Hayek, Spurning Keynes

#41

Post by jbooth »

hga wrote: post #37
jbooth wrote: post #34

Earlier quoted context omitted.

Even on intervention, what'd he do, he held the federal budget pretty stable, he did the Smoot Hawley tarriffs which were large but I wouldn't call them "massive" or "unprecedented".. What's the huge intervention? I see perhaps slightly more active than the typical President but, considering the massive and unprecedented circumstances, I don't see a whole ton of activity. Regarding the never-ending debate on the topi…

The two big ones I'm somewhat familiar with are: "Jawboning": convincing companies to not decrease wages in the face of deflation, so they just went bankrupt instead. ( http://en.wikipedia.org/wiki/Herbert_Hoover#Great_Depression , first paragraph.) And then there's the http://en.wikipedia.org/wiki/Reconstruction_Finance_Corporat... There's lots more although many not as consequential and unprecedented (i.e. excludin…

Fair points, I could nitpick at those too but I can see where you're coming from. I guess I just see his actions as more "reactive" rather than "intervention". If the economy's falling apart, and the government's intertwined with it, then you're going to see some increased activity from the government.. I tend to differentiate between whether the person's running around sticking their thumb in various holes in the dike (Hoover) or rebuilding the whole dike (FDR).

Subjective measurement, though, so YMMV.

Re: Spreading Hayek, Spurning Keynes

#42

Post by hga »

macromicro wrote: post #39

Does anyone else think that the surge in sales of the Road to Serfdom stemmed from the viral youtube rap battle? http://www.youtube.com/watch?v=d0nERTFo-Sk

Depends on how you score it. A big (% wise, bigger than that of Atlas Shrugged) sales increase preceded the video, e.g.: http://www.cato-at-liberty.org/soaring-sales-for-road-to-ser... suggests by about a year.

On the other hand, hitting #1 on Amazon in the middle of this year...: http://www.cato-at-liberty.org/hayeks-road-to-serfdom-1-on-a...

Re: Spreading Hayek, Spurning Keynes

#43

Post by bitwize »

presidentender wrote: post #29
danielsoneg wrote: post #20

Earlier quoted context omitted.

I tend to take this approach with medicine too - the human body's a pretty complex machine.

Anatomy, physiology and pharmacy are susceptible to investigation via the scientific method. The economy is not. Furthermore, the layman had best not mess with his own treatment in many cases: "Give me antibiotics, they worked last time I was sick!"

Anatomy, physiology and pharmacy are susceptible to investigation via the scientific method. The economy is not.

Tell that to Esther Duflo, the only rational economist. Unlike just about the entirety of the rest of her field, she actually conducts controlled experiments and gathers data, rather than arguing from a priori assumptions.

Re: Spreading Hayek, Spurning Keynes

#44

Post by lzw »

hga wrote: post #40
thedaveoflife wrote: post #35

Earlier quoted context omitted.

The one problem with this logic is that occasionally leaving it alone, as you put it, can be more costly than taking action. Often when we see the problems that emerge when the government takes action, i.e. with bailouts, we ignore the problems that were prevented.

Agreed: TARP and the related interventions of that period were designed to prevent a cascading failure of the world's financial system, which we know is very bad: http://en.wikipedia.org/wiki/Creditanstalt .

The failure has not been prevented, it has merely been postponed to a point at which it will be vastly worse.

This is a fundamental misunderstanding of economics that politicians tend to have. You can't spend money and change history, all you can do is let the errors f the past be worked out via natural processes, like bankruptcy. If we had liquidated all those fraudulent securities we would have a stronger economy than we do by damaging the rest of the economy in order to perpetuate the fiction that those securities were not fraudulent.

The money used to support these bog use housing securities was taken out of the economy, and that act damaged it more than letting banks fail.

It, notably, also did not free up the credit markets which remain seized. In this case the market was not tricked by a political action that did not address the fundamental issues.

Re: Spreading Hayek, Spurning Keynes

#45

Post by lzw »

weeksie wrote: post #28

I find economics, more than almost any other topic of discussion amongst techies, elicits an incredibly strong Dunning-Krueger effect. Mention economics, particularly something like Austrian economics which doesn't have complex mathematical models, and all of the sudden everybody is an expert. I don't pretend to understand the vagaries, and I tend to read Paul Krugman columns, but the vehemence in which people who ar…

The error is to assume that krugman is an expert and that people who disagree with him are unqualified.

This is because much of what passes for economics is rationalizations given with a political purpose, and the primary propagandist in that effort is krugman. Remember. This is the guy who advocated that we should have a housing bubble, the denied we were in one, etc.

He is, to be sincere, and embarrassment to the science of economics.... But he is the government designated esparto and so there are millions of people who believe his nonsense because they don't know better and trust the experts.

Actually, the science of economics isn't that hard, nor is it complicated enough to need ot listen to an expert. You can teach yourself. Economics in one lesson is the tittle of a book that im sure you will find enlightening.... And it was written by an expert.

Re: Spreading Hayek, Spurning Keynes

#46

Post by lzw »

tocomment wrote: post #2

Austrian economics always struck me as kind of hand wavy. I never made it more than 1/3 of the way through the Wikipedia article on it before realizing I didn't know what it was talking about. Does Austrian economics make an testable predictions? Is it based on empirical data? Does it have models? It seems more like a statement of beliefs to me. What am I missing?

Austrians correctly predicted: The great depression The rise of Naziism The decline of the soviet union, and it's fall, and why it would fall, based on economic principles about 50 years before it happened. The appearance of the housing bubble in 2000, along with the prediction that it would burst and take down major banks.

In my lifetime, when krugman and politicians have been saying one thing, and austrians have been saying another, consistently the austrians have turned out to be right. Meanwhile the politicians in question are no longer in office, and krugman contradicts himself regularly.

Plus, if you will read some austrian writings you will find the are retry straightforward and comprehensible.

Unfortunately, on topics like this, wikipedia has a very strong left bias, so it is best to go to the source.

Start reading the daily articles at mises.org or check out Henry hazlitts book "economics one Eason" which you can get there.

Mises.org also has many major Austrian books for free download

Re: Spreading Hayek, Spurning Keynes

#47

Post by lzw »

yummyfajitas wrote: post #27
Perceval wrote: post #21

Earlier quoted context omitted.

Chicago and Austrian schools are separate groups, despite both being on the side of less government intervention. They have different philosophical/methodological roots, and have different histories of their interaction with government.

I stand corrected.

I think monetary policy is the primary axis upon which these two schools are separated. Chicago is under sway Keynes when it comets minatory policy-- but note this is not the same as keynsianism which is a modern political theory that ignores the repercussions of easement that Keynes warned about.

Austrians are pretty much hard money. There are some interesting comments made by rothbards and Friedman about each other ot illustrate the split.

The schools reach similar conclusions on a number of issues, though.

You already accepted they are separate, I'm just trying to add flavor here, not win a point.

Re: Spreading Hayek, Spurning Keynes

#48

Post by weeksie »

lzw wrote: post #45
weeksie wrote: post #28

I find economics, more than almost any other topic of discussion amongst techies, elicits an incredibly strong Dunning-Krueger effect. Mention economics, particularly something like Austrian economics which doesn't have complex mathematical models, and all of the sudden everybody is an expert. I don't pretend to understand the vagaries, and I tend to read Paul Krugman columns, but the vehemence in which people who ar…

The error is to assume that krugman is an expert and that people who disagree with him are unqualified. This is because much of what passes for economics is rationalizations given with a political purpose, and the primary propagandist in that effort is krugman. Remember. This is the guy who advocated that we should have a housing bubble, the denied we were in one, etc. He is, to be sincere, and embarrassment to the s…

This is exactly what I'm talking about. I only mentioned Krugman because he's often vilified by the same people who get wound up in economics threads.

People on the Keynes side of the equation also get wound up over mentions of Chicago School stuff.

That said, it is weird that you're saying Krugman is some sort of government designated expert when almost every column he writes is critical of the economic policies being made in Washington. He disagreed with the size of the stimulus (he wanted it to be larger), he thinks the Fed has its head in the sand, etc. . . .

And as far as Paul Krugman being an expert, I find it very strange that you would disagree with that. You might disagree with his policy positions but he is most definitely an expert in the field.

Notice I never made any judgements about policy itself. My remark was that people who are not qualified in economics dismiss people who are right out of hand: Krugman is just a good example because he really seems to rile up libertarians and Austrians.

Personally my favourite opposing viewpoints to Krugman are made by Tyler Cowan, I like to read them both. Anyway, it's not my objective to get into a policy discussion, I was interested more in the meta-observation which you so handily provided reinforcement for.

Re: Spreading Hayek, Spurning Keynes

#49

Post by jhpriestley »

yummyfajitas wrote: post #25
jhpriestley wrote: post #22

Earlier quoted context omitted.

Okay, I assumed you were talking about the 'aggregation problem' (the aggregation of unlike quantities, rather a common pitfall in economics). If you agree that aggregate demand is a well-defined quantity, then I'm not sure what you're objecting to. You can disagree with a theory based on this curve, but the curve itself requires no justification beyond a proof that it is well-defined.

An aggregate theory of any sort has two separate pieces. The first is the definition of the aggregate. The second is a a reduction of the more complicated system to a simplified one based on the aggregate, i.e. showing that theories based on the aggregate quantity are sufficient to predict the world. I'll make the analogy to statistical physics again. You can always define the average temperature and pressure in a ve…

It's fairly clear to see that stimulus will have different effects depending on whether it is a housing stimulus or an "everything else" stimulus, and that stimulus can mostly only help with the knock-on effects.

This is exactly what is not clear. If Keynes is right, then any stimulus which boosts aggregate demand will have the same effect on unemployment, whether it acts through the housing market or by building Furbies. It is not that Keynes is unable to recognize the distinction; he positively asserts that the distinction does not matter when in a situation of deficient aggregate demand.

A lot of the unemployment is in housing and related industries (~2 million jobs lost in construction), but a lot of it is also not in housing and related industries (~8 million jobs lost total). Every industry save health and education has lost jobs since 2008. The expected effect from a large loss of jobs in one sector, absent the resulting loss in AD, would be an increase of employment in other sectors, since the employees freed from the bad sector would lower the price of labor in other sectors. This is simple supply and demand. The fact that the opposite impact is seen every single time strongly suggests that the adjustment is blocked, per Keynes theory.

Re: Spreading Hayek, Spurning Keynes

#50

Post by lzw »

weeksie wrote: post #48
lzw wrote: post #45

Earlier quoted context omitted.

The error is to assume that krugman is an expert and that people who disagree with him are unqualified. This is because much of what passes for economics is rationalizations given with a political purpose, and the primary propagandist in that effort is krugman. Remember. This is the guy who advocated that we should have a housing bubble, the denied we were in one, etc. He is, to be sincere, and embarrassment to the s…

This is exactly what I'm talking about. I only mentioned Krugman because he's often vilified by the same people who get wound up in economics threads. People on the Keynes side of the equation also get wound up over mentions of Chicago School stuff. That said, it is weird that you're saying Krugman is some sort of government designated expert when almost every column he writes is critical of the economic policies bei…

Always good to see a troll admit they were trolling.
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