Is Stephen Metcalf the shallow clueless phony "intellectual" who escaped from a Woody Allen movie?

I have transcribed Metcalf's amazingly smug, shallow and ignorant podcast regarding his Nozick piece where he broadcasts to the world the vastness and depth of his ignorance on the topic.  A point-by-point analysis of the podcast may be forthcoming.  This kind of thing is simply more proof that Austrians and libertarians have won the intellectual war and that the statists are shooting with blanks (or, like Yosemite Sam, with gumdrops). 

Woman: Steve wrote a wonderful piece in Slate this week that is an analysis of the libertarian thinker Robert Nozick placing him within the larger context of the history of libertarianism and then also explaining how he later sort of fell out with his own creation [unintelligible].

You point out a history that I really didn’t understand at all which is essentially you make the case that Nozick is the only libertarian thinker with any kind of academic cred. Can you explain a little bit of how he achieved that and what it was about his ideas that were so interesting?

Metcalf: Yeah, I mean what I was trying to say was that there was period from roughly WWII when American consensus consolidated around the New Deal, one was that we wanted our government to tax and spend in order to fight the Cold War. It is unclear that the major social advances of the New Deal itself ever achieved major consensus. But setting aside that issue, we were heavily taxed, we were very unlibertarian in our income distribution structure in this country for roughly the period let’s say mid forties to until the mid 1970s when for a variety of reasons that consensus fell apart, one that there was stagflation and nowhere in Keynes is there an adequate explanation for how you get both high unemployment and inflation at the same time. Growth rates were slowing, the Arab oil embargo was economically disastrous for us and the vital center which had reigned in this country since roughly Harry Truman collapsed completely. So what I was arguing two things, one was that during those thirty or so years, libertarianism was really off the map of the spectrum of respectable academic opinion which for better or worse really policed itself, you know the monetarism of Milton Friedman was considered pretty far out there. Friedman obviously won a Nobel Prize, it wasn’t totally out there, Chicago economics was on the map of semi-respectable opinion. But it was very far from the halls of power. Nixon famously said in the 1970s that we’re all Keynesians now.

Woman: Did he famously say that? It wasn’t famous to me.

Metcalf: It is up there with “I am not a crook”. And in the midst of all this before the Thatcher and Reagan revolutions, there was a small revolution in academia which was Robert Nozick of Harvard philosophy professor who was enormously gifted and precocious thinker. He was a full tenured Harvard philosophy professor if I’m correct at age thirty, came out with an absolutely full throated totally unapologetic defense of libertarian ideals and capitalism, he himself said that he had made arguments internally against capitalism and he was just beginning to understand that none of them were sustainable. And so he wrote a classic book called “Anarchy State and Utopia”, won the National Book Award in 1975, one indication of how big it blew up and how ready people were to read something along these lines. It is an absolutely brilliant book. It is the most bracing confrontation with one’s own most deeply held beliefs that a person of the left, which I am, and I was drawn to write about it because libertarianism is making a massive comeback ironically in the wake of the banking collapse and the tea party owes its existence in some odd way to the failure of capitalism which strikes me as a mind-bending contradiction.


So I was trying to answer two questions. One is if this was the best principled case for libertarianism, how does it hold up after thirty years given the fact that we are living with this legacy, Thatcher all but quoted Nozick from the podium. Reagan never really acknowledged Nozick, but he acknowledged Hayek who was a huge influence on Nozick. So question one was you know could the principled case for libertarianism sustain itself and question two was how do you reconcile this massive contradiction which is that you know the idea that capitalism is self healing/ self regulating and that the government plays no role in keeping it going and distributing justice – just life outcomes. How do you reconcile that with capitalism’s totally overt failure in two thousand and – what is it? – six, seven, eight.

Woman: Eight

Metcalf: And that was the genesis of the piece.


Woman: Yeah. I’ve been hearing about this piece for months now and I’m curious about it because in some ways I kinda feel like this book got in your head a little bit when you read it and it seems that there were parts of his argumentation that you found persuasive. Tell me what is so compelling about his defense.


Metcalf: Well, I think first of all in a way he’s just a terrific philosopher. He loves going on for pages and pages and pages working through a thought experiment and working with it and teasing with it without beginning with a conclusion. He really begins with a question and then let’s no part of it go unanswered or unexplored. That’s on absolutely no received opinion whatsoever and to hear someone philosophize with that degree of rigor on behalf of something that me I find hateful is amazing, it’s so bracing. I don’t think you walk away as a left-winger unchanged by this book at all. And think another thing to say about this book very quickly which I was not able to do in the piece but which I find very fascinating is that in it he clearly announces his affinity for other things that are inchoate but are about to become intellectually and socially dominant, for example neo-darwinism, market theory, rational choice, all kinds of things in the seventies are just brewing on the margins of respectable academic opinion and are all about to rush to the center and he absolutely understood this. And so we have inherited ways of thinking from people like Nozick that we now use to just process reality basically and it’s amazing to go back to the source to see them getting assembled.

Woman: In your article you take us through one particularly sorta brilliantly constructed and yet I think you call it tenuously specious argument about Wilt Chamberlain. Can you quickly outline that here because it really is a good example I think of how the book’s argumentation works in this completely context-free utopian marketplace of the imagination.

Metcalf: Yeah. I mean this is perfect example of the central aim of the book which is to take the most cherished beliefs of the left and manipulate and use them against leftists and show how what they believe is hopelessly contradictory and what they really want is a kind of continuous coercion against what should be an otherwise free individual.

And the example that he uses is the central example and certainly most famous examples from the book is the Wilt Chamberlain argument. And he says I’m going to let you the reader select pick whatever society you want. I’m going to let you design it in your own head and it’s going to distribute justice, life outcomes, income, anything the way you want. And he’s implicitly assuming that you’re going do something roughly egalitarian and that’s allowing you do be the most devilish advocate against him in a way. So he’s assuming you pick something somewhat egalitarian. And then he says ok in this society that you’ve designed, people like love going to see basketball. And they don’t just like basketball, they love going to see Wilt Chamberlain in particular. And Wilt negotiates with the owner of the team an arrangement whereby he gets paid a percentage of the door effectively say it’s a buck to see the game but you put 25 cents of it in a separate jar and that goes directly to Wilt Chamberlain. Low and behold, a million people love seeing this and paying for it, happy to pay for it. Wilt ends up with a huge amount of money relative to your egalitarian society $250,000, and it’s way more than anyone else has, and suddenly your society is no longer egalitarian. By what principle are you going to take that money away from Wilt Chamberlain? By what principle are you going to deny him the prerogative of [???] that talent? And he spins out this argument.

One of my favorite philosophers, a Canadian philosopher, a person who totally inspired me to write this piece is a philosopher named G. A. Cohen who wrote an entire book attempting to refute Nozick.

Woman: Which you endorsed.

Metcalf: Awhile ago. Just an incredible book. And he basically said, we all remember where we were when we first heard the Wilt Chamberlain argument. It was floating around academia before it had taken written form and was sort of being passed along like [? ] they were terrified of it and they thought, oh my god, this is gonna

Woman: We’re undone.

Metcalf: Exactly. This is the universal corrosive, this is going to destroy all of our most cherished beliefs. I attempt to sort of slow it down a little bit and say what is he really trying to say here, does this argument really hold up. And that’s kind of the heart of what I’m writing.

Woman: You also [ ] recanted [ ]


Metcalf: Well this is really interesting. Nozick is a totally fascinating guy. He died I think about ten years ago. He was married to one of my favorite poets, a woman named Gjertrud Schnackenberg who’s a wonderful poet. She just came out with a book of elegies about Nozick which I haven’t read yet but I’m very excited to. He was a man who admitted of many many parts, and that’s clear in this book. He wasn’t kind of a mindless right-winger with a faith in nothing but, you know, purely commercial transactions.

So in 1989, he wrote a book, I think it’s called “Philosophical Meditations” which has a bunch of essays about a bunch of different things that became interested in, he became interested in Buddhism, really interested in different belief systems, and in it there is an essay in which he says quite openly, I now think the libertarian position that I espoused is a kind of thought experiment in my book “Anarchy State and Utopia” and no longer holds, I no longer believe it. I actually do believe in democratic institutions. I do believe in collective social hope, he doesn’t use exactly that language, I’m putting words in his mouth a little bit, but he indicates a belief in collective social will and its embodiment in institutions. And frankly, what I think what happened is that he saw Reaganism, saw what he had spun out as a thought experiment in action in both England and in America and he saw that it didn’t result in a libertarian paradise of individuals freely pursuing their own self interest in an ennobled way, but a kind of greedy, vulgar, cheap, trashy society that was getting uglier by the minute and I think he responded to it accordingly. Now, people have pointed out and I was aware of this that he then recanted his


Woman: Recantation

Metcalf: Recantation in an interview later on so it’s sort of unclear where he ended up ultimately. But the essay in 1989, he’s very firm and very explicit and I quoted him in my piece.

Woman: This is a very dumb question but why is “Anarchy State and Utopia” not the book that libertarians hold aloft? Why is it Ayn Rand who has become the spokesperson? Just because his argumentation is so dense and people don’t want to read it?

Metcalf: I think the recantation is awkward. Nozick gives you the weapons with which to disassemble his argument or refute it because there are just too many places where one’s intellectual conscience gets in the way of saying that this is really going to conduce to anything like a remotely fair society even by the standards that a libertarian might put forward. And I think he’s just too dangerous, he possesses too much depth of intellectual conscience. The book is difficult. I think the real book that is being held up even more than Ayn Rand now is “The Road to Serfdom” by Hayek, that is a whole other kettle of fish.

Woman: So that’s the one that Rand Paul would hold aloft, for example?


Metcalf: That is the one that Glenn Beck does hold aloft and in fact got it onto the Amazon best seller list. And that’s whole other 5,000 word…

Woman: Can I also say that my favorite thing about this Stephen Metcalf/Robert Nozick argument is that it is the most read, most emailed thing on Slate right now which makes me feel so great about Slate readers that they really want to dive into 5,000 words of dense writing about libertarian philosophers.

Republicans hate the troops - but Democrats hate brown people

Phillip Crawford and David R. Henderson have written "The Case Against Leon Panetta" at antiwar.com:

As director of the CIA, Mr. Panetta has been in charge of CIA programs that killed hundreds, if not thousands, of people in Pakistan.

According to the Dawn, Pakistan’s oldest and most widely read English-language newspaper, of the 44 Predator strikes carried out by U.S. drones in the tribal areas of Pakistan in 2009, only five were able to hit their actual targets, killing five key al-Qaeda and Taliban leaders, but at the cost of over 700 innocent civilians. For each al-Qaeda and Taliban terrorist killed by U.S. drones, 140 innocent Pakistanis also had to die.

In June 2009, a CIA drone fired a Hellfire missile that destroyed a “suspected militant hideout” in a border village in Pakistan, burying a family inside the ruins of the building. When rescuers rushed to help the injured, the hovering drone fired a second missile, killing 13 of those seeking to help the victims of the first strike. On the next day, a funeral procession for the dead was also hit, killing 80 civilians. The funeral attack was reportedly aimed at Tehreek-e Taliban Pakistan chief Baitullah Mehsud, though officials acknowledged that he was not killed in the salvo.

This is so cool because it shows that Democrats can be just as bad-ass and tough as Republicans while slaughtering thousands of overpopulated third-worlders in the bargain, right?  PLUS!  Just think of all those bereaved relatives of the victims pledging DEATH TO AMERICA!  This will require more half-wit TSA agents who can then undress 95 year-old ladies in order to protect us from the new terror created by the drone strikes AND to create jobs to replace those lost by paying for unwinable wars.  The miracle of democracy.

From the same DeLong blog post, he writes:

Friedrich Hayek and Andrew Mellon claimed--and Mellon dragged Herbert Hoover along into policies of austerity, of tax increases and spending cuts during the Great Depression--that as a result of lax monetary policy in the 1920s the economy in 1930s had too much plant and equipment and too many workers employed making capital goods, and had to suffer from a "prolonged liquidation" in order to productively redeploy resources into the consumer goods industries where they really should be.

In truth, Hoover cut taxes at first and vastly increased spending.

1930 $3.3 billion

1931 $3.6 billion

1932 $4.7 billion

1933 $4.6 billion

1934 $6.5 billion [FDR]

In 1931, the discount rate at the New York Fed was 1.5%. There was no "austerity" or policy of "liquidation", much less "prolonged liquidation". The entire establishment/liberal/Keynesian narrative has been and continues to be a complete hoax, like Keynesianism itself.

Further, there was no insistence that a liquidation must be a "prolonged liquidation".  The Great Depression was prolonged by interventionist policies, especially Hoover's insistence that prices and wages be maintained at high, unsustainable levels. Bob Murphy explains here.

The entirety of the inventionist economic program from which we suffer today is based upon falsehood and distortions of reality.

Republicans hate the troops

What else can you say about people who send our soldiers around the world to spread Clintonista policies so they can get their legs and genitals blown off? 

Doctors and nurses treating soldiers injured in Afghanistan have begun speaking of a new "signature wound" - two legs blown off at the knee or higher, accompanied by damage to the genitals and pelvic injuries requiring at least a temporary colostomy.

DeLong misrepresents Austrian theory again

Austrian School theory must be irrefutable because no Austrian critique can ever manage to even state its basic assumptions.  DeLong manages yet another mangling of Austrian theory.  He writes:

"When you ask believers in "recalculation" what pattern of production and trade proved to be unsustainable in 2007, they answer: "building so many houses." When you ask believers why the market economy has been unable to sort out this problem in three years, they answer with nothing--silence. When you say that OK, there were $300 billion of excess houses at the start of 2007 but now construction has been so depressed for so long that there are $1 trillion fewer of houses than trend and why isn't the 2007 pattern of production and trade sustainable again, they answer once again with nothing--silence. That annoys me."

Please.  How can recalculation possibly take place without a market-based interest rate, the most important price of them all?  DeLong's beloved fiat-based super low rates will continue to impede economic calculation and thus "recalculation".  There is no silence on this issue.  Low rates have been catastrophic and will continue to be.  As Hayek said in a 1975 speech:

“The primary cause of the appearance of extensive unemployment, however, is a deviation of the actual structure of prices and wages from its equilibrium structure. Remember, please: that is the crucial concept. The point I want to make is that this equilibrium structure of prices is something which we cannot know beforehand because the only way to discover it is to give the market free play; by definition, therefore, the divergence of actual prices from the equilibrium structure is something that can never be statistically measured."

We cannot and will not know the equilibrium interest rate because it will not be allowed to come into existence.  No one can conceivably know what houses are actually worth because the possibility of any informed long-term economic calculation has been completely distorted by low interest rates and regime uncertainty.  Keynesian policies have us by the throat.

(Jonathan Finegold Catalan gives a suburb Austrian view of why government spending further impoverishes us here.)

There is no silence. There is your answer, DeLong. Again, our problems are caused by the Keynesian policies which are presented as the cure. We're doomed.

Happy Memorial Day - Jim Tressel resigns

Doctors and nurses treating soldiers injured in Afghanistan have begun speaking of a new "signature wound" - two legs blown off at the knee or higher, accompanied by damage to the genitals and pelvic injuries requiring at least a temporary colostomy.

But the REAL NEWS this Memorial Day 2011 is that Jim Tressel resigned for lying about some of his players who sold their championship rings in order to get some gas money for their beat up old cars while Tressel and OSU raked in millions.

Tyler Cowen misconstrues Austrian theory, supports Krugman

I'm shocked. Shocked.

See here.

DeLong demands more debt and money dilution

See here

DeLong fraud

What Is Austrian Economics?


Me, over at Martin Wolf's Exchange:



Let me give eight propositions that I think of as "Austrian," meaning that they have been maintained by some "Austrian" somewhere and somehow, and assess them:



(1) IF THE FEDERAL RESERVE HAD FOLLOWED A "SOUND" MONETARY POLICY--"SOUND" MEANING THAT IT SHRANK THE STOCK OF HIGH-POWERED MONEY AT THE SUM OF THE TREND GROWTH RATES OF THE INSIDE MONEY MULTIPLIER AND OF VELOCITY--THEN WE WOULD NOT HAVE FINANCIAL CRISIS OR BIG RECESSIONS.



Status: FALSE. Requiring trend deflation at the rate of labor force and labor productivity growth in order to keep nominal spending without a trend would be more likely to generate waves of universal bankruptcy, deep financial crises, and big recessions than our current system.



(2) SPECULATION AND LACK OF PRUDENCE IN FINANCIAL MARKETS LED TO OVERBUILDING IN HOUSING IN THE MID-2000S.



Status. TRUE.



(3) OUR ONLY SIGNIFICANT PROBLEM IS GOVERNMENT: IT WAS FECKLESS AND OVEREXPANSIONARY GOVERNMENT POLICY LED TO THE SPECULATION AND THE BUBBLE THAT CREATED THE PROBLEM.



Status. FALSE. It is certainly the case that sufficiently austere policy can keep any bubble from ever arising, but the costs of such policy are high. And periods in which monetary policy is overexpansionary are periods in which households, feeling flush, expand their consumption spending and create consumer price inflation. There was no wave of rising consumer price inflation in the 2000s.



(4) OUR ONLY SIGNIFICANT PROBLEM IS GOVERNMENT: IT WAS GOVERNMENT GUARANTEES OF FANNIE, FREDDIE, OF COMMERCIAL BANKS, AND OF TOO-BIG-TO-FAIL UNIVERSAL BANKS THAT WERE THE ONLY SIGNIFICANT CAUSES OF OUR CURRENT PROBLEMS.



Status: FALSE. We had financial crises and recessions like this long before we had FANNIE, FREDDIE, or commercial bank deposit insurance. And the princes of Wall Street and the shareholders of our universal banks now all wish that they had emulated Jamie Dimond and Lloyd Blankfein and gone short the subprime mortgage market in 2006. "Heads we win--tails the government pays" was not in the forefront of the minds of those whose wealth was invested in the bank stocks that have still lost much more than half their value since the summer of 2007.



(5) BECAUSE OF OVERBUILDING IN HOUSING, WE WERE DOOMED TO HAVE A PERIOD OF HIGH UNEMPLOYMENT AS THE ECONOMY REBALANCED ITSELF AND TRANSFERRED RESOURCES OUT OF THE HOUSING CONSTRUCTION SECTOR.



Status: FALSE. There is generally no period of high unemployment when resources are transferred out of consumption-producing sectors into investment goods-producing sectors. There is no necessity that the transfer of resources out of investment goods-producing sectors be accompanied by high unemployment. The business of shifting resources between sectors is pretty much orthogonal to the business of maintaining near full-employment and proper capacity utilization. Indeed, high unemployment and low capacity utilization are much more obstacles than aids to sectoral readjustment and reallocation: how can the market figure out where resources have their best economic use when no use produces a profit on the market?



(6) OUR CURRENT PROBLEMS ARE THE RESULT OF THE NEED TO TRANSFER RESOURCES OUT OF HOUSING CONSTRUCTION AND RESTORE TREND GROWTH EQUILIBRIUM BETWEEN THE SECTORS.



Status: FALSE. The housing sector adjustment is over. We are now back to trend in the number of houses. And we are well below trend in new houses being built. If this period of depressed economic activity were primarily a way of transferring resources out of housing construction and shrinking the housing capital stock and the house-building industry back to its sustainable long-run trend size, the period of depressed economic activity would be over.



(7) EXPANSIONARY MONETARY POLICY IS UNWARRANTED BECAUSE IT WILL ONLY BOOST SHORT-TERM EMPLOYMENT IF IT WILL ONLY LEAD TO ANOTHER BOUT OF ASSET PRICE INFLATION AND A BIGGER RECESSION DOWN THE ROAD.



Status: FALSE. See "crying 'Fire! Fire!' in Noah's Flood..."



(8) EXPANSIONARY FISCAL POLICY IS UNWARRANTED BECAUSE IT WILL ONLY BOOST SHORT-TERM EMPLOYMENT IF IT LEADS TO ANOTHER BOUT OF ASSET PRICE INFLATION AND A BIGGER RECESSION DOWN THE ROAD.



Status: FALSE. See "crying 'Fire! Fire!' in Noah's Flood..."



In general, exercises like this are much more fruitful if they are applied not to a vague concept--an "Austrian"--but to a living, breathing articulate example of Economicus Danuviensis...





--------------------------------------------------------------------------------



UPDATE: Here's one, posted below my comment by Luis H. Arroyo: Economicus Danubiensis in the 1930s:



Does Austrian economics understand financial crises better than other schools of thought?
Martin Wolf's Exchange: ...still more difficult to see what lasting good effects can come from credit expansion. The thing which is most needed to secure healthy conditions is the most speedy and complete adaptation possible of the structure of production. If the proportion as determined by the voluntary decisions of individuals is distorted by the creation of artificial demand resources [are] again led into a wrong direction and a definite and lasting adjustment is again postponed. The only way permanently to 'mobilise' all available resources is, therefore to leave it to time to effect a permanent cure by the slow process of adapting the structure of production...

Krugman: Liar or dingbat? How about both at the same time.

Due his Princeton professorship and Nobel Prize, I had always assumed that Krugman was simply a brilliant liar.  But after reading this piece in the The New Yorker, the only conclusion one might have is that he is a true blue dingbat.  He's still a prodigious liar, but a very stupid liar. 

Here we find a brilliant Krugman critique of libertarianism.  Pitiful.

UPDATE:  The New York Times graciously printed my comment to Krugman's post here.

Stimulus vs stimulus

There's no question that when a specific person receives government cash (specifically, cash that has been described as Keynesian "stimulus") that such person is now richer than before. 

The problem is the idea of "stimulus".  The Keynesians (being dunderheads) see "the economy" as a merry-go-round stuck in neutral without "stimulus". That's preposterous.  There's no basis for such an assumption in fact, logic or history (which is why Keynesians get absolutely hysterical and call you names when you challenge them). 

As we can all see from recent events, the forced wealth transfers do nothing to restart the stalled merry-go-round (which is stalled in the first place DUE TO KEYNESIAN POLICIES).

Keynesian Dean Baker and the media

That's the alleged topic of his blog.  Here, he finds Steven Pearlstein of the WaPo minimizing how poor reporting by the press (I call it ghastly and horrible) exacerbated our present crisis.

He [Pearlstein] tells readers that:

"Three years after the onset of what was then thought of as the "subprime crisis," there remarkably is still no consensus on why it happened, who is to blame, how necessary the government bailouts were and what needs to be done to prevent such a cataclysm from happening again. Over time, the issues have been overwhelmed by populist anger, infused with political ideology, distorted by partisan maneuvering and special-interest pleading, and ultimately eclipsed by economic recovery."

Yeah, it's all really really complicated. Except it isn't.

Nationwide house prices had diverged from a 100-year long trend, increasing by more than 70 percent in real terms. There was no remotely plausible explanation for this run-up. What is hard to to understand to about this? What is complicated? Third grade arithmetic was all that was needed. It's simple, not complicated.

The run-up in house prices was driving the economy. This was also really easy to see. The government publishes GDP data every quarter. The data showed that housing construction had exploded as a share of the economy. You just had to look at the data. It's simple, not complicated.

The data also showed that consumption was booming and savings had fallen to near zero. This was driven by the well-known housing wealth effect. It's simple, not complicated.

It's even more simple than Baker thinks because the entire mess was caused by his beloved Fed and its program of theft and fraud.

Is Robert Reich a crazy right winger?

In his Salon.com post of April 12, 2010, the famously liberal Robert Reich notes:

Sixty years later, we boomers have a lot to be worried about because most of us plan to retire in a few years and Social Security and Medicare are on the way to going bust [NO!!]. I should know because I used to be a trustee of the Social Security and Medicare trust funds. Those of you who are younger than we early boomers have even more to be worried about because if those funds go bust they won’t be there when you’re ready to retire.

It’s already starting to happen. This year Social Security will pay out more in benefits than it receives in payroll taxes. The tipping point came sooner than anyone expected [anyone?????] because the recession has kicked so many people off payrolls. But it was coming anyway.

By saying that these entitlements were unfunded and are going broke, I guess that makes Reich a crazy right winger.

Glenn Greenwald: More cause and effect in the War against Terrorists and O'Reilly is insane

From Greenwald's 4/12/10 Salon post:

As I wrote about last week, American troops in mid-February entered a village in the Eastern Afghan province of Paktia, killed five civilians (a male government official, his brother, and three female relatives, including two pregnant women and a teenager) and then lied about what happened. ABC News this week described the efforts of U.S. Special Forces to apologize to Haji Sharabuddin -- the 80-year-old patriarch of that family who lost two sons, two daughters and a granddaughter in the attack -- by offering him two sheep [!!!!] (a gesture of begging forgiveness in Pashtun custom)......

We know that drone launched missiles have killed hundreds of innocents.  700 dead by some accounts.  BHO couldn't be a war criminal, could he?

The mass slaughter of third world innocents:  Finally, O'Reilly finds a reason to love Obama.  I guess that makes me a right wing crazy AND a member of the "extreme left" simultanously.

Martin Wolf and Keynes by Mattias Svensson

Check this out.  A great blog post on Wolf and Keynes by Mattias Svensson.

Krugman Charges Neanderthals with Being Self-Hating Jews

An excellent post by Robert Wenzel:

Well, not quite, but almost the same.  He is suggesting that Austrian economists are self-hating Keynesians:

What happens, instead — or at least that’s how I read it — is that Austrians slip Keynesianism in through the back door. Implicitly, they associate booms and slumps with rising or falling aggregate demand — utterly unaware that their own theory doesn’t actually make room for such a thing as aggregate demand to exist, or at least to affect overall employment. So Austrians are basically Keynesians in denial — self-hating Keynesians? — pretending to themselves that they’re not using ideas that are in fact essential to their story

You can't call Neanderthals self hating-Jews because they roamed the land long before Jews even existed.

 And you can't call Austrians self-hating Keynesians because most of the work in Austrian business cycle theory was done pre-Keynes.

Ludwing von Mises wrote the Theory of Money and Credit in 1912.

Friedrich Hayek published the German version of Monetary Theory and the Trade Cycle and The Paradox of Saving in 1929.

Keynes' two-volume Treatise on Money wasn't published until 1930. And the Keynesian bible, The General Theory of Employment and Interest, wasn't published until 1935, by this time even Hayek's Prices and Production had been in print for four years.

Further, even the Nobel Committee, Krugman might recognize them as an authoritative body, pointed out that Hayek had developed enough of his business cycle theory before the 1929 crash to be one of the few to warn of that crash:

Perhaps, partly due to this more profound analysis, he was one of the few economists who gave warning of the possibility of a major economic crisis before the great crash came in the autumn of 1929.

 Some, self-hating Keynesian. The time-line doesn't fit.

Bottom line. Krugman continues to fail to look at the important role money plays in directing economic activity, when a central bank manipulates the money supply. It's almost as if he hates to think about the influence of money.

As I explained in a prior post, Krugman might best be described as a self-hating Austrian (of course, this entire smear of a self-hating anything is absurd).  He demands government money dilution, then notes that the economy runs off the rails. So he wants government regulation to fix the problem while blaming the problem on laissez faire.

Keynesian Liaquat Ahamed wins Pulitzer for another restatement of the false narrative of the Great Depression

Liaquat Ahamed has been awared a Pulitzer Prize for his 2009 book "LORDS OF FINANCE - The Bankers Who Broke the World"

Back in January 2009, Joe Nocera of the New York Times gave a glowing review containing yet another restatement of the relentless fraud which holds that "economic orthodoxy" and the "straightjacket of the gold standard" caused and prolonged the Great Depression.

Besides, the central bankers were prisoners of the economic orthodoxy of their time: the powerful belief that sound monetary policy had to revolve around the gold standard. That is, each country’s reserve bank had to have a certain amount of gold in its vaults to back up its currency — and indeed, “all paper money was legally obligated to be freely convertible into its gold equivalent,” as Ahamed says. Again and again, this straitjacket caused the central bankers — especially Norman, gold’s most fervent advocate — to make moves, like raising interest rates, that would allow their countries to hold on to their dwindling gold supplies, even though the larger economy desperately needed help in the form of lower interest rates.

******

The central bankers of the 1920s and ’30s were flying blind; Ahamed makes that quite clear. They could only hope the moves they made would help the economy instead of hurting it. Sometimes they were right, but often they were wrong. We like to think that today we have a better grasp of the machinery that moves an economy — but do we? Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Henry Paulson were much quicker than the earlier lords of finance to throw money at the banking system to prevent it from collapsing, a lesson they learned from the inaction of the Federal Reserve in the 1930s. But Paulson also allowed Lehman Brothers to default, an event that set off a contagion of failure around the world.

Of course!  Because Paulson allowed Lehman Brothers to default set off a contagion of failure around the world.  Our problems were all caused by A LACK OF MORE BAILOUTS!  What would we do without the NYT?

L. Albert Hahn and "The Economics of Illusion" from 1956

L. Albert Hahn wrote "The Economics of Illusion" in 1956 about the Keynesian Hoax. It most surely is a hoax.  He states in his introduction about Keynes' theory :

The ensuing picture of the economy appears to the non-Keynesian as a sort of trick film. Everything happens in a manner that is exactly the opposite of what he is used to. It is no longer the supply of labor, but the propensity to consume that determines the volume of production; the old and oft-refuted underconsumption theories — of which Keynes's theory is no more than a replica — once more become respectable.

Indeed.

Dean Baker is a Keynesian

We all knew that.  Here he responds to DeLong's critique of Baker's new book:

I don't ordinarily use BTP for addressing items that mention me or my work, but I'll make an exception in the hope of getting a good exchange going. Brad DeLong was good enough to begin a review of my book False Profits on his blog. After graciously giving me credit for recognizing the housing bubble and the dangers it posed, Brad goes on:


"But let me start by saying how I disagree with the book. I think that its story of the linkages between our current crisis and Federal Reserve policy is significantly overstated. Its argument about how excessively-low interest rates caused the housing bubble is exaggerated. I think that its belief that the Federal Reserve could have taken much more action to curb the housing bubble while is underway is also exaggerated, and does not recognize the very real constraints that the Federal Reserve works under and all but ignores the costs of austerity. And it overstates the strength of the links between the housing bubble and the housing crash on the one hand and our current situation of macroeconomic despair on the other."

Okay, let's go point by point.

1)"Its argument about how excessively-low interest rates caused the housing bubble is exaggerated."

That doesn't sound like my book. I argued that the weak economy caused by the crash of the stock bubble demanded stimulatory policy. Low interest rates were the right policy -- we needed them to recover from the stock bubble. However, this did create an environment that was conducive to the growth of bubbles. If the Fed had kept the Federal Funds rate at 5.0 percent I feel pretty confident in saying that we would not have had a housing bubble -- very high unemployment, but no housing bubble.

2) "I think that its belief that the Federal Reserve could have taken much more action to curb the housing bubble while is underway is also exaggerated, and does not recognize the very real constraints that the Federal Reserve works under and all but ignores the costs of austerity."

Let's see, my policy prescription was to have every last staffer at the Fed devoting all of his/her time to documenting the evidence for the bubble and the dangers it would cause to the economy. I would have had Alan Greenspan use his congressional testimonies and other public speaking engagements to warn of the risks of the bubble. This doesn't mean mumbling "irrational exuberance," it means carefully showing with charts and graphs how house prices have followed an unprecedented and unsustainable path. He also should have warned explicitly what would have happened to the banks that had made big bets on the bubble when it burst.

In addition, they should have made full use of their regulatory power (including working with other regulators) to crack down on the issuance and securitization of junk mortgages. The "who could have known?" line is crap. These loans were being issued by the million, there is no way Greenspan could not have known about them.

Would this have worked? Brad for some reason is very confident it would not have. It certainly would have been nice if the Fed had tried (what was more important?), then we would both know for sure.

As a last resort I would have raised interest rates. I hate to throw people out of work (except Wall Street bankers and economists), but it would have been better to preemptively burst the bubble rather than let it run its course and be where we are today.

3) "it overstates the strength of the links between the housing bubble and the housing crash on the one hand and our current situation of macroeconomic despair on the other."

There is a pretty direct line from the falloff in residential construction due to the overbuilding caused by the bubble, the falloff in non-residential construction due to the overbuilding caused by the bubble, and the falloff in consumption as a result of the lost housing bubble wealth and where the economy is today. I don't see much obvious room for a financial crisis in this explanation. The crisis may have brought the downturn on more quickly, but it seems that the basic problem is the loss of the demand generated by the bubble.

I have a strong ally in this argument: Spain. Spain did not have a financial crisis, but it now has 19 percent unemployment, the highest in the EU. The explanation is that Spain had a really huge housing bubble. It is not easy to find new sources of demand to replace 8-10 percentage points of GDP.

--Dean Baker

To understand these guys, one must first wrap one's brain about two little assumptions that they make:

1.  Keynesian economics is primarily a theory designed to explain how market economies can remain persistently depressed (so claims Krugman here).

2.  They are a lot smarter than the rest of us and have a duty and a right to treat us like rats in their maze.

Both of these assumptions are false.  "Market economies" don't remain persistently depressed and neither Baker, DeLong nor Krugman are sufficiently omniscient to allow them to overcome the need for free-market pricing.  You know, the little problem of "socialist calculation".

Paul Krugman the self-hating Austrian

Krugman is just a self hating Austrian. He dimly realizes that money dilution causes problems. But in his little totalitarian "I'm smarter than the masses" mind, those problems can and must be solved by the BIG NANNY Mary Poppins, not by the market and an elimination of money dilution.

As Krugman and the Keynesians dimly take note of the mess caused by money dilution, they nevertheless attribute the malinvestments that invariably occur therefrom to laissez faire and the free market. Thus, if the Fed and the banks lend money created out of thin air while the borrowers of that new fiat money can still spend/invest that new money however they please, that system must be called "laissez faire" according to Krugman.

This is what we are up against: Fraud ab initio even at the definition stage of the debate by Krugman and his minions.