Sunday, September 28, 2014

Another Pot, Kettle, Black Award

for the all time champion, economics division, Prof. Paul Krugman;
New classical macro was and still is many things – an ideological bludgeon against liberals, a showcase for fancy math, a haven for people who want some kind of intellectual purity in a messy world. But it’s also a self-promoting clique.
I don’t think this clique could have formed and grown powerful in the first place without the intellectual and ideological foundations. Economics as a discipline being what it is, attacks on Keynesian economics as being inconsistent with rational behavior were bound to get some traction, and the stagflation of the 1970s certainly helped that attack, even if it was less relevant than claimed.
We like that sly concession to reality.
Animus against government activism also played a key role, both in motivating the new classical economists themselves and in guaranteeing them external support.
'Animus' toward private consensual exchange--i.e. market behavior--being absent in the post WWII era?
Once the thing had gotten going, however, I think you understand its dynamics much better if you stop assuming that the motives of the movement’s leaders were pure.
We're on board with that one! For one reason, the fact that Prof. Krugman (and his lovely wife) are still, in their best-selling textbook, peddling a theory of market failure that they (he at least, admitted it was false in 1998 to WSJ reporter Lee Gomes) know to be non-existent. As we put it last year;
The Krugmans' confidence being in inverse proportion to the evidence they offer for the actual existence of the 'QWERTY problem'.
Perhaps we should call it the QWERTY Clique.

1 comment:

  1. Krugman and Wells also published "Macroeconomics" in 2012, which I haven't read. Economist Steven Landsburg points to the section in that book "The Income-Expenditure Model", showing that the reasoning in that section leads to impossible results relating spending and income. The discussion is about the Keynesian Multiplier.

    Landsburg speculates that the result is wrong because life changes when economic policy changes. But, I say that it is much more fundamental than that. The Multiplier theory is wrong because is is flat out illogical, namely the argument reverses cause and effect.

    This is a much more serious error than getting QUERTY wrong, as it is the basis for most of our crazy, increased government spending and the entire idea of "stimulus".

    See The Illogic of the Keynes Multiplier - 1 for the links to Landsburg and the unpacking of the idiotic derivation presented in Krugman and Wells 2012.