Sunday, August 28, 2011

NYC's "stimulus" plan falls flat: Irene is a dud

So, it looks as though Paul Krugman will survive the Storm of the Century, and one only wishes that the political careers of Michael Bloomberg, Chris Christie, Janet Napolitano, and Barack "I'm in Charge of Hurricane Central" Obama could take the hit that the Big Apple was supposed to take.

So, the newsies don't get their disaster, the politicians look like fools instead of heroes, and New York doesn't have enough broken windows to stimulate the economy. How sad.

19 comments:

Major_Freedom said...

I suspect Krugman's ideology is leading him to feel sad at the fact that the hurricane did not do enough damage. All that missed opportunity of spending!

Anonymous said...

It just might be helpful to actually read what the guy is writing instead of just blindly lashing out.

I guess logical reasoning has a liberal bias...

Major_Freedom said...

I guess logical reasoning has a liberal bias...

Then explain why liberals keep contradicting themselves about individual liberties.

ekeyra said...

"It just might be helpful to actually read what the guy is writing instead of just blindly lashing out."

Thats a wonderful idea. When do you plan to start?

R. Stanton Scott said...

What kind of a mean-spirited post is this? Do you have an intellectual argument to make about economic policy? Or do you just want to hurl gratuitous insults?

I mean, seriously!

Anonymous said...

"Do you have an intellectual argument to make about economic policy?"

The post is a reference to an argument about the broken window fallacy, a.k.a., the fallacy of unadmitted opportunity cost.

It simply went over your head.

nimrod said...

But what if you live in a town where everybody is hoarding their money? Where there is no trade going on at all? What can one do besides breaking windows to force chain reaction spending?

Jim said...

"But what if you live in a town where everybody is hoarding their money? Where there is no trade going on at all? What can one do besides breaking windows to force chain reaction spending?"


Hmm, could it be that they are uncertain about what kind of action the government is going to take next?

William L. Anderson said...

I like how Keynesians, taking a hint from Thomas Malthus, hold that people all of a sudden start hoarding cash, which is the cause of the crisis. With Keyneians, it is "animal spirits," which, scientifically speaking, is no explanation at all.

Thus, for all of the "science" talk from Keynesians, they really are anti-science when it comes to dealing with issues of causality. For them, things just happen. Sorry, folks. That ain't science.

Lord Keynes said...

"With Keynesians, it is "animal spirits," which, scientifically speaking, is no explanation at all."

Correct. And that's why the term and concept of animal spirits is not even necessary to the real issue - which is the instability of investment owing to subjective expectations in the investment decision by business people:

http://socialdemocracy21stcentury.blogspot.com/2011/06/animal-spirits-is-red-herring.html

According to Steve Horwitz, Austrians also think expectations are subjective , but maybe you're ignorant of that.

It interesting that Austrians who aren't lazy hacks recognise that Keynes had much the same ideas as they do on subjective expectations:

Mario Rizzo, “Lord Keynes: A Hayekian Appreciation,” ThinkMarkets, March 31, 2009.
http://thinkmarkets.wordpress.com/2009/03/31/lord-keynes-a-hayekian-appreciation/

Ludwig Lachmann, “John Maynard Keynes: A View from an Austrian Window,” South African Journal of Economics 51 (1983): 253–260.

Bob Roddis said...

Like all of LK’s “arguments” he starts at the conclusion he wants and works backwards with lots of citations to authorities. Further, he refuses to understand the central Austrian concept of economic calculation or how it is (and must be) fatally impaired by Keyensian-style policies. The comparison of the real world inherent limitations of human knowledge as understood by the Austrians with the Keynesian concept of “subjective expectations” is silly and pathetic. The Austrians understand that funny money dilution must distort the voluntary pricing process which is the only process available to provide meaningful economic information to others. The Keynesian “concept” of “subjective expectations” is nothing but a generalized assumption that average people are too stupid and irrational to run their own affairs but are somehow still smart enough in a democracy to elect their economic overseers backed up by SWAT teams. Of course, as Keynes pointed out, this process would work better and make more sense in a totalitarian state where the selection of overseers does not depend on the whims of a dim-witted populace.

Also, I see we have some new Kommenters with no familiarity whatsoever with Austrian concepts.

Lord Keynes said...

"The Keynesian “concept” of “subjective expectations” is nothing but a generalized assumption ..."

LOL.. The Post Keynesian “concept” of “subjective expectations” is the same as that of Ludwig Lachmann and most other Austrians.

This is why O’Driscoll and Rizzo (moderate subjectivists) tried to reach out to Post Keynesians in their book The Economics of Time and Ignorance:

“[i]t is evident that there is much more common ground between post-Keynesian subjectivism and Austrian subjectivism …. the possibilities for mutually advantageous interchange seem significant” (The Economics of Time and Ignorance, Oxford, UK, 1985, p. 9).

Christ, even George Selgin is a genuine pleasure to debate and an oasis of sanity compared to Rothbardian loonies.

Bob Roddis said...

LK:

You completely ignored my points and changed the subject by citing irrelevant sources.

I'll repeat:

1. Elitist Keynesian policies IMPAIR the knowledge of average people who can otherwise manage their own affairs. The Keynesians need to get the hell out of the way and stop causing trouble. This is a VERY SPECIFIC and undeniable assertion unless Keynesians can specifically show that people have some additional knowledge that Austrians deny they have.

2. Elitist Keynesians believe that average people are too stupid to run their own affairs and need overseers with SWAT teams (aka "reasonable regulation" in Keynesianese). This is nothing more than an unproven and generalized snooty Keynesian emoting.

3. 1 and 2 are completely different and the complete opposite.

4. Neither you nor the other Keynesians understand the Austrian concept of economic calculation. Otherwise, it wouldn't be absent and ignored from every single economic "analysis" you ever make whether attacking us or promoting your own nonsense. Further, if you understood it, you wouldn't try to compare it to the generalized amorphous Keynesian emoting of "subjective expectations".

Mike Cheel said...

@Bob

"Elitist Keynesians believe that average people are too stupid to run their own affairs and need overseers with SWAT teams (aka "reasonable regulation" in Keynesianese). "

And the funny thing is that unless they are in the 'elite' class, even the people here fall under what you said.

Major_Freedom said...

LK:

LOL.. The Post Keynesian “concept” of “subjective expectations” is the same as that of Ludwig Lachmann and most other Austrians.

No, it isn't the same at all. Ludwig Lachmann was not a "mainstream" Austrian. He was fringe. Citing him (and George Selgin for that matter) is therefore a straw man.

"Even George Selgin agrees with me!" is not a proper response to the Austrian argument concerning economic calculation.

Austrians hold that economic calculation is the only way that disparate and independent producers in a division of labor economy, can rationally allocate resources and labor, such that their own operation "fits" into the larger puzzle that is the aggregate economy.

Keynesians believe that not only are individuals too stupid to be able to even take part in a division of labor, economic calculation economy, and benefit themselves, but also they believe that by physically disrupting the field of economic calculation, individual's only tool for making economic decisions that "work", that they can pretend that their own rule can substitute for the price system. Keynesian policies are essentially price fixing. Calling for lower interest rates is at attempt to fix the price of loans. Calling for the government to spend money is an attempt to fix the price of goods in general such that aggregate statistics move away from individual private property owner and entrepreneurial judgments, and replaced by the judgments of state bureaucrats.

The concept of "subjective expectations" is, to the Keynesian, just "individual expectations are not able to efficiently allocate labor and resources, so the government overlords must retain final authority on what people's money is worth, how much spending takes place, and everything else that is completely ignorant of individual economic calculation."

nimrod said...

Here’s what I’ve learned so far:

1. In a world with broken windows, there will also be hoarding. The baker does not buy the suit, or the new window, and will simply live with the broken window.

2. Keynesians believe in sanctioned crowd control, during panic or mob events.

3. The Austrians believe that any crowd control always makes things worse.

jason h said...

@ nimrod
1. Oh noes! Not hoarding. How dare people conserve their resources during uncertain economic times. If you want the baker's money so bad convince him to part with it in voluntary exchange. Don't send SWAT teams to steal it.

2. Sure give the Keynesians more power to "fix" the panic they caused.

3. Crowd control = inducing people to spend by confiscating their purchasing power through counterfeiting. Or simply stealing wealth from one to give to another.

Anonymous said...

@Jim


"What can one do besides breaking windows to force chain reaction spending?"

interesting use of the word "force" - it says a lot.

nimrod said...

Of course, there are no ways possible that limiting government can ever force people to malinvestment. They do it to themselves, always.