tag:blogger.com,1999:blog-17232051.post685894121353943120..comments2024-03-18T22:32:52.802-04:00Comments on Noahpinion: How the New Classicals drank the Austrians' milkshakeNoah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger104125tag:blogger.com,1999:blog-17232051.post-79644898431942024272014-02-11T07:53:40.902-05:002014-02-11T07:53:40.902-05:00For a list of nearly 20 things the "GMU Austr...For a list of nearly 20 things the "GMU Austrians" have done in monetary economics, see this post (including the comments):<br />http://www.freebanking.org/2013/07/13/what-we-have-done-for-you-lately/Kurt Schulernoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-7857592820561026522014-02-10T13:43:30.683-05:002014-02-10T13:43:30.683-05:00William Blake: "Things which are alike, in na...William Blake: "Things which are alike, in nature, grow to look alike."Conscience Warriorhttps://www.blogger.com/profile/13487448481194494386noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-37621384891996548282014-02-10T00:49:50.606-05:002014-02-10T00:49:50.606-05:00"The Knowledge Problem" is one of those ..."The Knowledge Problem" is one of those Austrian ideas that feels true when you first read through it, and if you never bother to think critically about it, you'll probably go around the internet using it as an example of why central planning doesn't work. The only problem is that it's completely bunk. I always found it odd that people would charge central planning for ineffectiveness when the 2 prime examples of it, Russia and China, both took backwards feudal societies and turned them into industrial powerhouses inside of a single generation. It came at a huge toll in human suffering, for sure, but the resulting industrial expansion is indisputable. But more to your point, the Soviet Union did not collapse because of it's economy. There was a strong move for political liberalisation within the USSR that eventually overturned the old order and pushed the country into adopting a free market economy. But it's not like the USSR saw a 1930's style depression and was forced to abandon central planning. And China still produces half it's goods and employs half its work force under state owned enterprises with strong guidance from central planning. China's not going to collapse anytime soon. Anonymoushttps://www.blogger.com/profile/05932496549711542374noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-56037402951355110612014-02-09T23:59:16.572-05:002014-02-09T23:59:16.572-05:00Insofar as the best of it has been assimilated int...Insofar as the best of it has been assimilated into mainstream economics, you might say that the Austrian school has been successful. On the other hand, with fewer professional economists identifying as one, the name of it seems to have become co-opted by people who care more about being in the out group, criticising the in group. On YouTube you will find many self-styled Austrians, each with a disturbing following. Google's tracking system is used to suggest similar channels and videos according to viewership. When you watch these "Austrian economists" you're always only one step away from some completely bonkers conspiracy theory stuff. It should disturb anyone who has affinity for the Austrian tradition that it's gravitating in the direction of some rather shady ideas. It doesn't bother me at all, and I'm vouchsafed in my original judgement of Austrianism given that it comports so well with formidable nonsense. Anonymoushttps://www.blogger.com/profile/05932496549711542374noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-90966075301120394962014-02-09T17:20:37.734-05:002014-02-09T17:20:37.734-05:00"And now all this miss-allocated resources ar..."And now all this miss-allocated resources are destroyed, so have to be restored (saving again)."<br /><br />This statement shows a great misunderstanding. First mis-allocated resoures don't get destroyed, it is money that gets destroyed in bankrupcy. Many of the resources can be sold and reused. Secondly, saving won't restore the resources, at best it just restores individuals financial stability - but if the whole society tries to save at once everyone will be poorer, because one man's cost is another man's income. You can't just extrapolate from an individual to an entire economy, it doesn't work like that.reasonhttps://www.blogger.com/profile/10958786975015285323noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-41508588290309739682014-02-09T17:00:16.522-05:002014-02-09T17:00:16.522-05:00Well no it not interest rate manipulation that is ...Well no it not interest rate manipulation that is the issue, it is the single currency. (And the country as a whole savings more, means that it needs to run a trade surplus.) I don't deny that there were real estate bubbles in some countries (but all the badly hit countries - except the own goal in Holland were trade deficit countries). But there is no evidence that low interest rates are sufficient to cause housing bubbles (really land price bubbles).reasonhttps://www.blogger.com/profile/10958786975015285323noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-6550065608884664532014-02-07T20:00:48.673-05:002014-02-07T20:00:48.673-05:00Austrian is dead, bro. Put a fork in it, move on.Austrian is dead, bro. Put a fork in it, move on.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-46982498660751686792014-02-07T19:57:05.133-05:002014-02-07T19:57:05.133-05:00Deep suspicion of government intervention
You do ...<i>Deep suspicion of government intervention</i><br /><br />You do know about "The Knowledge Problem" right? I mean, anyone who takes even a cursory glance at Austrian Economics would know about that. That's the bit where the Austrians explain the actual reason why central planning consistently fails. Not based on prejudice but based on theory (and successful theory that predicted the collapse of Communism in more than one country, as well as predicting the present day poverty of North Korea, and the coming collapse in Venezuela).<br /><br />http://knowledgeproblem.com/tag/austrian-economics/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-91949825303507681602014-02-07T19:50:21.552-05:002014-02-07T19:50:21.552-05:00But in the main, "Austrian economics" is...<i>But in the main, "Austrian economics" is an ex-thing.</i><br /><br />Where do you get this from? Do you just make up whatever sounds controversial, or you have some other blog to copy from?<br /><br />Rothbard was not Mises, Hayak was not Rothbard. If you want something modern try Peter G. Klein who has taken the theory in his own direction, very much building on the ideas that came before him, but not slavish to them.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-89454428862926442272014-02-07T17:44:39.253-05:002014-02-07T17:44:39.253-05:00Isn't it funny that I can cite a scholarly and...Isn't it funny that I can cite a scholarly and authoritative debunking of Austrian Economics, but I am "indiscriminate" and a "crank" in the eyes of the author of an introductary Austrian Economics text?<br /><br />I see Gene has also joined the ranks of libertarian mind readers who can remotely diagnose obsession and survey conference goers by mysterious mental powers alone.<br /><br />What Gene claims is "indiscriminate" is actually selecting criticisms that are appropriate for multiple audiences: different people have different standards of validity. He'd know that if he had read the page I suggested.<br /><br />Don't be pompous and puffed-up, Gene. Use the words you really mean, such as "poopeyhead".Mike Hubenhttps://www.blogger.com/profile/01371469964446567690noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-34928205452888783822014-02-07T17:11:24.957-05:002014-02-07T17:11:24.957-05:00I want to highlight one point you mention in passi...I want to highlight one point you mention in passing. I have a pet theory that a fair amount of intelligent peoples' natural left-right leanings derive from their natural preference for deductive vs. inductive reasoning. It seems that people who place relatively high value on logic and reason tend to be more conservative than those who place greater weight on observation and evidence.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-15679310373895821222014-02-07T15:45:54.966-05:002014-02-07T15:45:54.966-05:00This reliance on external shocks is really the New...This reliance on external shocks is really the New Classicals saying: "Everything really interesting and important happens outside our theory and all we are studying is how the system responds to random impulses".Absalonhttps://www.blogger.com/profile/09131268683451462949noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-41608408324573270542014-02-07T14:47:18.221-05:002014-02-07T14:47:18.221-05:00[i]The only slight exception is the idea of malinv...[i]The only slight exception is the idea of malinvestment and financial market malfunction, which the New Classicals discarded entirely[/i]<br /><br />I think this is a great post, but to me this seems like more than a "slight exception". I don't have nearly your breadth of knowledge of econ, but I also don't have any reason to worry about upsetting anyone in the sphere of econ, so I can say quite clearly that ignoring malinvestment as a potential cause of business cycles and instead insisting that business cycles are caused exclusively by shocks such as slowdowns in the rate of technological progress or increases in harmful government intervention is so silly as to make it hard to take "New Classical" thought seriously. It seems a school of thought for those who are highly educated but not very intelligent.jcd222https://www.blogger.com/profile/03597854197694730653noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-55631090439699484322014-02-07T14:02:44.890-05:002014-02-07T14:02:44.890-05:00No one would ever brag about being illiterate. It...No one would ever brag about being illiterate. It always amazes me when someone celebrates innumeracy.Absalonhttps://www.blogger.com/profile/09131268683451462949noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-47774612117897011172014-02-07T11:11:09.773-05:002014-02-07T11:11:09.773-05:00@Lord Keynes: "Oh lord, accusations of "...@Lord Keynes: "Oh lord, accusations of "crank" are priceless coming from an economics school that is regarded by **virtually everyone** (except themselves) as one of the worst schools of cranks around."<br /><br />LK, are you being intentionally dishonest here? Because you know darned well that I am not "coming" from any school of economic thought at all, and you yourself have seen me defend Keynesian ideas against Austrians on many occasions.<br /><br />That being said:<br /><br />1) I call Mike a crank because he obsessively and indiscriminately collects every criticism of libertarianism (on a page I surely HAVE seen) without any regard to whether they have any validity.<br /><br />2) I have attended many major conferences (EEA, AEA) where there were Austrian economists present. NO ONE regarded them as "cranks." That being said, there are Austrian economists who would be so regarded... they just don't attend those conferences.gcallahhttps://www.blogger.com/profile/10065877215969589482noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-41384118866015366602014-02-07T10:45:40.801-05:002014-02-07T10:45:40.801-05:00Good take.Good take.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-60223704348038496312014-02-07T10:05:45.075-05:002014-02-07T10:05:45.075-05:00Gene obviously hasn't read my About Critiques ...Gene obviously hasn't read my <a href="http://critiques.us/wiki/Critiques_Of_Libertarianism:About" rel="nofollow">About Critiques Of Libertarianism</a> page.<br /><br />And he somehow overlooks the fact that no matter what position one takes, including his own, one must <i>"refute" an entire group of people including many of the most renowned economists in the history of the subject.</i><br /><br />However, I already link to two of Gene's posts at my site, and intend to link to several more. Because they are good criticisms of specific arguments of libertarianism and that's the purpose of my site.Mike Hubenhttps://www.blogger.com/profile/01371469964446567690noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-84218441837841909352014-02-07T09:56:25.041-05:002014-02-07T09:56:25.041-05:00The question I tried to pose was, "did Keynes...The question I tried to pose was, "did Keynes have his own form of 'praxeology'?"--an a priori microfoundations theory or philosophy independent of "empirics". I would argue the answer is yes, and submit Book III as his "microfoundations of demand". In there, he sets up a priori principles about what motivates man's propensity to consume.<br /><br />Farmer and Minsky both offer alternative stories, e.g. Farmer's rejection of sticky prices.<br /><br />My original criticism was that if Noah lobs a "mistrustful of empirics" grenade at Austrians, he is going to hit the entire macroeconomics field with shrapnel. He should be more careful with that thing.<br />Dan Nilehttp://www.zombo.comnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-21922544099335389252014-02-07T07:21:44.671-05:002014-02-07T07:21:44.671-05:00yeah but according to austrians the government is ...yeah but according to austrians the government is always to blame... for everything. So bring back the gold standard.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-87401702202646730972014-02-07T04:00:43.261-05:002014-02-07T04:00:43.261-05:00"But mathematical modeling is the bread and b..."But mathematical modeling is the bread and butter of New Classicals, and in fact is a "special mark of pride"<br /><br />Mathematical "rigour" should not be the yardstick of good theory or analysis. The priorities are all wrong. Clarity is desirable, sure, but ultimately it is whether it fits the facts. If it also solves a (real world) problem - and believe me we have quite a few - then it is a real winner.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-33496322973824967272014-02-07T03:51:13.600-05:002014-02-07T03:51:13.600-05:00Anonymous, if you want to look at where to point t...Anonymous, if you want to look at where to point the finger, think about what was causing the Fed to have low interest rates in the first place. The answer is the trade deficit - that consistant enormous leakage of liquidity out of the economy. People need to raise their perspective above the purely national. The INTERNATIONAL financial system is dysfunctional.reasonhttps://www.blogger.com/profile/10958786975015285323noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-89608015761360949742014-02-06T23:54:25.903-05:002014-02-06T23:54:25.903-05:00New Keynesians Drinking Their Own Kool-Aid
http:/...New Keynesians Drinking Their Own Kool-Aid<br /><br />http://thelibertarianliquidationist.com/2014/02/06/new-keynesians-drinking-their-own-kool-aid/Henry Moorehttp://thelibertarianliquidationist.com/2014/02/06/new-keynesians-drinking-their-own-kool-aid/noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-63633698665473201602014-02-06T22:15:05.162-05:002014-02-06T22:15:05.162-05:00The General Theory is most definitely not a bedtim...The General Theory is most definitely not a bedtime read. It has been obscured though by Samuelson and Hicks (the Freshwater group are not the only ones with a lot to answer for.) <br /><br />Btw what do you think of Roger Farmer's or Minsky's re-reading of it?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-50215878013641304002014-02-06T22:02:52.360-05:002014-02-06T22:02:52.360-05:00"Blanket statements like these cause rifts wh..."Blanket statements like these cause rifts where there shouldn't be any. Math has for centuries helped us clarify problems. Economics is no exception."<br /><br />Your point that a lot of the problem is bad maths rather than maths being bad is a reasonable one. However, it seems a lot of artificial construct has been put in place for the convenience of constructing formal models and the utilisation of mathematical devices. Think of things like the long run steady state. Do you think any, literally any, real historian would say there is such a thing? <br /><br />Artificial construct and abstraction does not always clarify things, rather it adds unnecessary clutter and obscures things.<br /><br />My understanding is that above all Friedman was an empiricist. He developed his ideas on the problems of variable money supply by looking at data and historical documentation. He did not start with a micro-founded model to get to that insight. <br /><br />A lot of Macro now is about studying things like Markov Chains. Students are encouraged to study this, rather than go away and write a literary dissertation. I just worry that the techniques and the models are determining the analysis and therefore the findings and we are not going to get real insight that comes from going out on the field, observing, formulating your own explanation, and then comparing it with different theories that offer contrasting but plausible explanations and using them as reference points.<br /><br />Basically formalisation could be leading to more empirically dubious artificial construct and abstraction, leading to less likelihood we are going to get new and good ideas on how to deal with third world poverty and youth unemployment.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-50911254281802564672014-02-06T20:39:13.420-05:002014-02-06T20:39:13.420-05:00I refer you to the General Theory, Book III "...I refer you to the General Theory, Book III "The Propensity to Consume" for Keynes' armchair microfoundations bedtime story. It is comforting with a cookie and a glass of milk. It's true that he did not like the classical bedtime story.Dan Nilehttp://www.zombo.comnoreply@blogger.com