This Robert Samuelson piece on the inherent problem with Keynesian economic theory – which, in my opinion, can be summed up neatly as “First, assume that your planned economy will be managed forever by an immortal, unelected, and incorruptible Keynesian economist” – is pretty good, but it has one passage in it that makes my teeth ache. Here it is, in all of its questionable glory:
For the record, I supported Obama’s stimulus – though disliking some details – and, under similar circumstances, would again. The economy was in a tailspin; the stimulus provided a psychological and spending boost. But how much is less clear. As Romer notes, estimating the effect is “incredibly hard.” For example, the Congressional Budget Office’s estimate of added jobs from the stimulus ranged from 700,000 to 3.3 million for 2010.
Is it cruel to point out that when Paul Krugman says that an alien invasion would save Keynesianism…
…he’s pretty much cribbing off of Reagan’s observation that an alien invasion would unite humanity and war among us?
Or is it just sad that Krugman comes across as profoundly intellectually stunted, in comparison? I mean, if we’re going to have an alien invasion serve a higher purpose then I’d personally prefer a more meaningful one than salvaging a somewhat dunderheaded liberal economic theory.
Mourners please omit flowers. Or public urination on the graveside.
If there has been one positive result from the recent knife fight in an alley that has been our debt ceiling debate, it’s come from watching the self-appointed Smartest People In The Room come to the belated realization that they’ve been out-maneuvered by a bunch of hobbits. No, don’t take it from me: listen to them. A representative sample is below.
Paul Krugman: “The worst thing you can do in these circumstances is slash government spending…” preceded and followed by a lot of nonsensical blather, of course. Feel free to read or not, as you like; the point is, Krugman thinks that more government spending will solve our problems, so he’s shrieking over this like a traditionalist vampire shrieks at a holy symbol.
Greg Sargent: “Even if you think it’s good politics for Dems to be demonstrating concern about deficits and spending, the clear downside is that the progressive economic case has been entirely marginalized, to the point where it has vanished from the conversation entirely.” Bolding mine; it’s not really relevant to this post, but that mindset is a post all on its own. Continue reading RIP: Neo-Keynesianism, 2007-2011.
Yup. What we have here… is a failure… to communicate. Which is a definite pity, in its way: there really needs to be a good, accessible defense of current neo-Keynesian ec0nomic theory out there, if only to keep the Austrian school from running more amok than they, strictly speaking, deserve. Unfortunately, what we get instead are dull critiques by those who are: a, less creative than the people that provided the original argument (and who are being somewhat bitter about being less creative); and b, more interested in trying to score partisan political points than they are in actually doing a good critique in the first place. Put more simply: EconStories came up with something that people who don’t actually know much about economics can grok. The best that TNR could come up with were some drab arguments designed to keep at least some of the Keynesian faithful from lapsing into heresy.
(Via Instapundit) EconStories has another one of their extremely good Keynes v. Hayek videos up:
My only issue with this series is that it’s fairly obvious that the creators are fundamentally on Hayek’s side… and while they do (I think) a credible job of being fair to Keynes it would be helpful for the economic debate if there was somebody who was ready to as passionately, entertainingly, and creatively argue Keynesian theory on its own merits. Of course, there is some argument whether Keynes himself would be comfortable with some of the stuff done in his name these days…
While influential 20th Century economist John Maynard Keynes would say it’s best to increase deficit spending in tough economic times, only 11% of American adults agree and think the nation needs to increase its deficit spending at this time. A new Rasmussen Reports national telephone survey finds that 70% disagree and say it would be better to cut the deficit.
In fact, 59% think Keynes had it backwards and that increasing the deficit at this time would hurt the economy rather than help.
To help the economy, most Americans (56%) believe that cutting the deficit is the way to go.