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This is a headline in the leftist New Republic magazine, over an article lauding any kind of US government spending, by Jonathan Cohn:
“Wanted: More Fraud, Abuse in Government Spending”
Here’s a paragraph to show just how far down the Keynesian rabbit-hole parts of the pro-stimulus crowd have gone:
“But efficiency isn’t the Recovery Act’s primary purpose. Reviving the economy is. And that’s required spending a vast amount of money very quickly–a goal that, inevitably, is at odds with spending the money carefully. Or, to put it another way, a stimulus that threw a little more money away might have created more jobs.”
So “throwing away” money – which is ultimately not the government’s to “throw away” but belongs, or is claimed, from individual citizens – “creates” jobs, does it? So if the US unemployment rate is stubbornly holding just below 10 per cent – a miserable result – then what is needed is yet even more spending, more money printing. These guys remind me of what was said, not always fairly I might add, of WW1 generals, who, when faced with the failure of their latest mass infantry assaults against the German army in Flanders, were urged for one more push, one more bout of bloodletting and hence on to victory.
Einstein once defined madness, I recall, as the repeating of an error and failing to learn from such errors over, and over again. By that measure, parts of the media and commentariat in the US are out of their conceited, Keynesian minds.
Patrick Crozier reports on another ripple spreading outwards from the Cobden Centre:
CNBC is much better than the BBC. But that is not saying much. For the most part it offers up a stream of Keynesians with a smattering of Monetarists.
So, imagine my surprise when I turned on today to hear someone talking sense. Real, proper, honest-to-Godness, complete, free-market, Austrian sense. I even spent the next half an hour glued to the show just so I could catch his name.
I succeeded. The guy’s name is Sean Corrigan and he works for these people.
Oh, and he writes for the Cobden Centre. …
Corrigan is indeed excellent, as I found out for myself when I heard him speak at a Cobden Centre organised meeting at the IEA. What marks him out from other people who have jobs as Somethings in the City is that whereas most such persons are only now asking themselves: “What the hell just happened?”, Corrigan was asking himself: “What the hell is happening?” about a decade ago or more. And, as Patrick Crozier notes, he got the answers right too.
Unlike, says Patrick in his immediately following posting, George Osborne.
“Ireland’s membership of the euro was thus the single most important reason for yesterday eye-wateringly large bailout of the Irish banks, which will take the budget deficit to 32 per cent of GDP and its gross government debt to 96 per cent of GDP. The tragedy is that nobody is pointing this out: the political establishment is too closely implicated and may yet need to draw on a European bailout fund. Imagine what would have happened had Britain also embraced the single currency: our interest rates – which were substantially higher than the Eurozone’s, albeit still too low – would have stoked our own bubble to an even greater extent than anything managed by the Bank of England. The UK property bubble would have been even larger and its implosion even more devastating. We don’t realise it – but Britain’s bust of 2008-09 could easily have been much, much nastier.”
– Allister Heath.
It might be worth re-reading this to recall the ferocity of those pro-euro folk and their treatment of anyone who sought to stand in their way, including, it seems, ordinary voters.
What’s wrong with capitalism is that the banking system is socialist.
– Steve Baker MP talking on Cobden Centre Radio. Blog posting by interviewer and CCR boss Andy Duncan here. Listen here. It lasts twenty six minutes. That money quote comes just over half way into it.
Indeed:
Mr Bean said that encouraging Britons to spend was one reason why the Bank had cut interest rates.
The Cobden Centre’s James Tyler is not impressed, that being where I found out about this latest piece of Keynesian crassness.
The author of the economics high-seller, The Black Swan, has given a fairly fierce denunciation of US government fiscal policy in recent years. In fairness, he probably is not just beating up the current holders of office, but previous ones too.
Last night, I attended a very entertaining Adam Smith Insitute event at which Eamonn Butler and guests talked about Austrian economics. Mr Butler has a new book out and it is an excellent, succinct summary of what this form of economics is all about. And he touches, very briefly, on the issue that seems to be getting some people worked up into a tizzy: fractional reserve banking. FRB is an issue we have already had a good working over on at this site and a good comment thread. A brief summary of my view is that I don’t think many forms of FRB would be able to survive in a pure free market without bailouts, “too big to fail” protections, government deposit protection, etc. But it should not be banned: if folk want to take the risk of depositing money in an FRB account, then that is their business, like smoking, off-piste skiing and unprotected sex. With currency competition and removal of legal tender laws, such FRB banks would have to be run with ruthless attention to risk control. So I don’t see the need for any restrictions.
However, what annoys me about the reaction of fellows like this is that they seem to be supposing that the current banking system, the system that has recently been brought almost to its knees, with such shining examples such as Northern Rock, the Dunfirmline Building Society, Bradford & Bingley, HBOS, etc, etc, is somehow basically okay. Riiiight. They are saying that those pesky Austrians, with their “loopy” ideas about how two people cannot simultaneously hold the same claim to the same money at the same time (which strikes me as a perfectly sensible view, in fact), should shut up. Well, they are not going to shut up.
I have to say I find the sheer gall of these “why don’t these guys shut up?” line of analysis to be pretty unedifying. If FRB – at least as it currently operates – is so splendid, and if banking really is about “borrowing short and lending long”, then maybe the defenders of the current form of banking could explain to the taxpayers of the UK quite why we have had had to spend hundreds of billions of pounds in the recent banking clusterfuck. Just asking.
I guess it will be interesting to see whether there is any pressure among backbench Tory MPs – or at least some of the more intelligent ones – for the government to try and edge out “Vince” Cable from his post as Business Secretary, following a terrible speech that has been monstered in many quarters, such as here, and here.
The funny thing is, had Cable said something on the lines of “risky gambling by banks and hedge funds has been a problem and has been encouraged by irresponsible central banks”, he’d have a very good point. Had he, in his attack on monopolies, attacked the regulations, taxes and other government moves that drive up barriers to entry, he’d also be correct. But he does nothing of the kind. He’s a sort of economist who, trained from, I suspect, neo-classical textbooks full of elegant supply-demand curves rather than real human beings, imagines that any market that does not have a vast number of identical players with no pricing power or edge is “imperfect”, and therefore in need of correction by government. He ignores how it is the very “imperfections” of the real world – such as differences in tastes, values, levels of knowledge and so on – that give markets their raison d’etre, as understood by the “Austrian” school, with its view of competition as a discovery process, not as a static game full of omniscient Gods.
In fact, the government actions that lead to less flexible markets continue to get worse, which is something Mr Cable seems not to be dealing with. At the moment, the Financial Services Authority, the UK financial regulator, is rolling out a programme of “reforms” called, excitingly, the Retail Distribution Review. The aim, which sounds very noble, is to raise the standard and independence of financial advice. The effect, however, will be to drive hundreds of financial advisors out of business – some industry figures predict that as many as 20 per cent of UK IFAs could go by the time the RDR takes full effect in 2012. This, of course, only worsens the problem of how financial advice is often something that ordinary UK citizens rarely use.
Here is something I wrote before on attacks on the City.
Doctor Zero:
ObamaCare is the most powerful job-killing force unleashed against our economy in decades. It dramatically increases the cost of labor, and applies huge fines against companies that resist its mandates. Companies such as Caterpillar, John Deere, Prudential, and AT&T responded by announcing thousands of layoffs. This is a perfectly rational reaction to a bill that dramatically increases the cost of labor, especially when the legislation keeps mutating and producing expensive new horrors, such as the nationalization of student loans that wiped out thousands of jobs at Sallie Mae.
I sort of get much of that, although I would definitely have to follow the second link to see how ObamaCare is nationalising student loans, and to find out what on earth “Sallie Mae” might be. But, speaking more generally about this huge furore, I have a real problem with ObamaCare. Not in the sense that it is causing me to lay off hundreds of my employees, but in the sense that I am finding the arguments about it very hard to follow. Mountains of verbiage have already been written about ObamaCare and many more will follow. But I am afraid I missed the early bits, where the actual blow-by-blow damage that ObamaCare will unleash (is now unleashing) was itemised, briefly and punchily. Anti-ObamaCare writers tend now merely to allude to the assumed harm of it, rather than yet again itemising it. Much is made by critics of ObamaCare of the immense length and complexity of the relevant legislation, which it seems most US politicians have no more read right through than I have. But what, approximately speaking, does it all say?
I suspect I am not the only Brit who feels this way. Not that long ago, for instance, I heard those comedians on Mock The Week take it in turns to denounce Americans for not welcoming ObamaCare, and I knew they were talking out of their smug and self-satisfied arses (especially that little bald one who is smug self-satisfaction personified, if you don’t happen to agree with something he is saying). Death panels? No. It’s free healthcare for those who can’t now afford it, you obese God-frazzled morons. What could possibly be wrong with that?!? Do you all want to die prematurely of terrible diseases and accidents that the British health service cures immediately at no cost?
But had I been on the panel, trying to resist (in particular) the Smug Dwarf’s relentless leftery, I don’t think I would have done a very good job. Most Brits watching, if my reaction is anything to go by, either agreed that all American opponents of ObamaCare are indeed morons, or that they perhaps have their reasons for not wanting it, but that these reasons will for ever be a mystery, probably involving some Americanised version of God.
So, commenters, please fill me (us) in. Please help us Brits – this particular Brit especially – to wrap our brains around ObamaCare. What, briefly, are those “mandates” that Doctor Zero refers to? How are student loans involved? And what else is being inflicted?
I would like to be able to concoct a further posting entitled something like: “A brief but pretty much complete explanation for confused Brits of why ObamaCare is a really bad idea and why so many Americans are right to hate it”. And maybe, with your help, I will be able to do that.
One particular request. What concerns me is not to dig deeply into any particular harm that ObamaCare is doing. What I seek is completeness, combined with as much brevity as can be contrived. In the event that I do manage that follow-up posting that I can now only dream of, I want an American to be able to wizz through it, and say something like: “Yup, that about covers it. That’s why so many of us hate it. I actually don’t think number three is quite as bad as your short description of it implies, and I think number five is far worse even than you say. But, nothing major is missing from that list. Good job.”
Maybe such a posting already exists, and I need only read it, and link to it.
Or maybe (I’ve just been following the links in the quote above, just to check that they work), my question is wrong. Maybe what I really want is a brief guillotine-blow-by-guillotine-blow guide to the entire Obama legislative “achievement”, of which “ObamaCare” is only a part.
Anyway, whatever help anyone can offer along these approximate lines would be most welcome.
Paul Krugman is often described as a winner of the Noble Prize for economics – Mr Noble set up no such prize, but let that slide (after all good people have sometimes been awarded this prize over the years). However, he is in fact not an economist at all – he is just someone who is called an “economist” because he has the position of “Professor of Economics” at a university (as if a job title describes knowledge).
Paul Krugman has for decades sneered at the idea that economics is about reason and logic – that it is (as the “Austrian School” claims) an a priori subject. On the contrary, Paul Krugman claims that economics is an empirical subject – all about understanding empirical evidence and making predictions.
The links given in this Cafe Hayek featured article show that Paul Krugman does not understand empirical evidence and makes predictions that are wildly wrong – i.e., by his own definition, he is not an economist.
Of course there is an alternative view:
This would be that Paul Krugman does have some grasp of economics – but chooses to support an ever more interventionist government for reasons of political ideology, in spite of the economic harm he knows such a line of policy will cause.
For example, Paul Krugman does not predict that the Obama “Stimulus” spending orgy will succeed (on top, please remember, of all the wild “Stimulus” spending by President Bush) – on the contrary Paul Krugman admits the “Stimulus” absurdity will fail – however he claims that this is because it is not big enough.
Almost a trillion Dollars is “not enough” – and however many trillions of Dollars were spent it would still be “not enough”. Any failure of statism is explained away as the result of there not being enough statism.
Would anyone still like to claim that Paul Krugman is an economist?
Asks Virginia Postrel in this article. Yes, there are public policy issues involved – such as the declining ratio of workers vs retirees in many developed countries – but she gives a typically constructive, even optimistic take on the issue. Recommended.
I often get the impression – and that is all that it is – that much of the world of government is concerned with achieving stability of various kinds. But there are “good” forms of stability – such as safe and secure property rights, honest money, and laws to protect the person from violence – and “bad” kinds, such as the stagnation of a flat-lining economy (as in 1990s Japan). Consider, we used to hear Gordon Brown drone on, in that manner of his, about “economic stability” (he spectacularly failed to attain it); we used to hear critics of George W. Bush’s foreign policy claiming that he was undermining the supposedly marvellous “stability” of the Middle East; and of course when it comes to issues such as governments’ monetary and fiscal policy, “stability” and the smoothing of all that naughty market activity is taken as a public good.
Sure, the last few years have been frightening in some ways on the economics front, but the gains to living standards across the planet, by and large, have not been thrown away. And in a recent book by Deepak Lal, in “Reviving the Invisible Hand”, he notes that some, “unstable” economies such as Thailand have managed to chalk up much greater growth in wealth overall than those which have grown at a more sedate, less volatile way.
Of course, it might even be argued that it is difficult to distinguish total stability from death. A straight line on a graph, remember, resembles the line of one of those gizmos that tells a doctor that the patient has pegged out.
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Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
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