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Guest Post: Is UTA's James Galbraith A True Economist?

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Submitted by Taylor Conant at Economic Policy Journal

Is UTA's James Galbraith A True Economist?

It's hard to arrive at that conclusion after listening to an hour long interview/debate on Scott Horton's Antiwar Radio program between Austrian economist Robert Higgs and Keynesian "economist" James Kenneth Galbraith.

of Galbraith's support for Keynesian government intervention rest on
what he believes one could "reasonably" argue, where the word
"reasonable" is always and everywhere a Marxist code-word for "What I
think I can get unprincipled people to agree to my stealing without too
much fuss."

Furthermore, he puts forth this bizarre notion of
"social value" as opposed to economic value as the standard by which he
judges whether government expenditure or regulation is worthy of his
support (note, there are few, if any, government activities that do not
meet the muster of Galbraith's rigid
standards). The odd thing about "social value" is it seems completely
undefined beyond his personal, arbitrary declarations. This means that
other economists and scientists wishing to recreate Galbraith's
economic studies and verify they arrive at the same findings as he does
are unable to do so. It also means that there is no metric by which one
can compare economic value and "social value" in order to judge if, for
example, the "social value" gained by a program of mass highway
building during the Great Depression outstrips the economic cost of
doing so, arriving at a surplus of utility (Galbraith doesn't even make
it clear if utility can be derived from "social value").

other words, economists are individuals who study the production and
consumption of scarce resources amongst societies. They refer to
marginal utility and subjective value theories in analyzing the choices
individuals make in their patterns of production, consumption and
exchange to arrive at conclusions about economic efficiency and the
economic value of courses of action pursued by the various actors
within an economy.

Galbraith does none of these things. In fact,
he explicitly discounts the value of studies of economic value, in
favor of his "social value" and "social rate of return" on investment.
Galbraith, then, is not an economist studying the economy but rather a
socialist studying society and how it responds to the various arbitrary
dictates of the political elite that have captured it. Yet, "study" is
perhaps too kind a word to describe what Galbraith does on an
intellectual level, because it implies something academic or scientific
in nature when the truth is that Galbraith, as a socialist, is a
politician, not a scientist.

In fact, he's much further from a
practitioner of science and much closer to a practitioner of divine
mysticism. Galbraith is like some kind of self-appointed high priest of
the social value cult, the only one able to communicate with the social
value gods and return from the holy mount with the latest prophecy.
What if someone else wants to go up and have a word with the spirits?
Sorry, says Galbraith, they only talk to me. But, I think you're wrong,
says you. I'll be the judge of that, says Galbraith.

Galbraith is not a true economist but a politician masquerading as one.
He's also not much of a historian, which makes his interactions with
Higgs (who is a historian, specifically a scholar of economic history)
all the more comical. Whereas economics, according to the Austrian
school, is a science of deductive logic rather than empirical
examination, history is decidedly a study based in and on human
experience. That's what history is, or is supposed to be, a record of
human events and experience. And yet, it is here where Galbraith's
arguments fall flat on their face even harder than in the theoretical
arguments department.

Galbraith continually argues for a
particular form of enlightened, compassionate, interventionist statism.
He supports this imaginary benevolent State on the grounds that "we're
better off when the government works efficiently." But how are we off
when the government works inefficiently, or worse yet, works in the
specific interest of a few against the many? Here, Higgs points out,
the record on the matter is clear-- that the State is a predatory
nightmare at its worst and a bumbling, idiot buffoon at its best, that
history is an almost completely uninterrupted record of it being so and
that given that kind of track record, it's a bit naive to hope or
expect for the State to ever be anything else in the future given the
clear demonstration of its nature in the past.

Galbraith, the non-economist, non-historian's response? "You can point to many failures, but you can also point to some successes"
in studying the record of regulators, bold emphasis mine. It seems from
Galbraith's imprecise choice of words that even he is aware of the
futility of his viewpoint, and yet he holds to it anyway. Even more
appallingly, Galbraith observed that the original gold standard in the
United States was "controlled to the benefit of the money center banks
in New York," and yet, acknowledging this fact of history he supports
the Federal Reserve system and the fiat currency monetary regime it
controls. But who, then, does Galbraith think controls the Federal
Reserve? Apparently not, still, the money center banks of New York.

thing Galbraith proves he is not in this debate is a sound legal or
ethical philosopher. Perhaps to burnish his "realist" credentials
vis-a-vis the incredulous "romantic" idealist Bob Higgs, Galbraith
announces to the listeners that "government is not a dirty word to me.
Instead, I think of government as a tool."

Oh yes, government is
a tool, and a mighty tool at that, much like the swords, clubs, chains,
prisons, guns, bombs and tanks that government is after you remove all
the fancy, euphemistic governmental-rhetoric. Galbraith lobbed a lot of
logical softballs that any sound thinker could've smashed out of the
ballpark, but claiming that "government is not a dirty word" as if this
brought him and his ideas out of the clouds, planting them firmly on
the ground, has got to be one of the more imbecilic moves Galbraith

Seeing that the idea of theft and the use of violence to
achieve social ends is not a taboo one in Galbraith's mind, one is left
to conclude that the only reason Galbraith prefers and advocates for
the State's criminality over private criminality is because Galbraith
concedes the libertarian point that the State is nothing but a monopoly
crime syndicate. And because of its unique monopoly position amongst
mafia groups, the State is therefore the the most efficient band of
thieves around.

Galbraith is a great many things, for sure. As a
man who understands almost nothing about the subjects he regularly
opines on, he is undoubtedly a fool, and a self-deluded one at that. As
a tool of the State and its beneficiary elites, he has proven himself
to be a consistent and able-minded socialist politician. But a
historian, an etho-legal philosopher and an economist, James Kenneth
Galbraith surely is not.


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Sat, 06/26/2010 - 13:57 | 435480 DavidC
DavidC's picture

So, he's not impressed with Galbraith then, do I read that correctly?



Sat, 06/26/2010 - 16:45 | 435631 Eternal Student
Eternal Student's picture

Well, it's kind of mixed, I'd say. He seems to think that not being an Economist is a bad thing. How any one can think that being an Economist is somehow worthy of respect, given the incredibly bad track record, is beyond me.


Sat, 06/26/2010 - 20:59 | 435796 Withdrawn Sanction
Withdrawn Sanction's picture


“…How any one can think that being an Economist is somehow worthy of respect given the incredibly bad track record, is beyond me.”  Doubtless it IS beyond you, as is an understanding that people or professions are not monolithic; but hey I get it, stereotypes are so handy.  One doesn’t usually see such intellectual bigotry so nakedly on display.  BTW, it should have been a lower case “e.”    


Sun, 06/27/2010 - 08:39 | 436298 Eternal Student
Eternal Student's picture

Well, considering that nearly the entire field missed calling the Crash of 2008, yes, I'd say it's really clear that there's something quite wrong with the profession. Completely missing the biggest event in their career is the definition of incompetence. That you're so impressed by this inability is something that you might want to wonder about.

For the 18 or so who actually did publish warnings about it, yes, I am impressed by them. But even one of them thinks the world would be better off if all Economists were shot. I agree mostly with him; I'd give those 18 a free pass though. The hell with the others; they are clearly fools, and dangerous ones at that.

Sun, 06/27/2010 - 13:08 | 436601 sgt_doom
sgt_doom's picture

Exactly, and brilliantly said, Eternal Student (and great handle, BTW).

The far more valid and salient question is: how many of those clowns who claim to be heavy-duty economists understand anything?

What they have long been preaching is nothing more than monopoly finance.

And guess what (rhetorical question here)?  It doesn't work but for a select few debt-financed billionaires and trillionaires!

And those who have long been preaching this -- and claim to be economists -- have begun attempting to reinvent themselves.

Far too late for globalist-loving (let's offshore all jobs in America) Paul Krugman, Alan Blinder, Simon Johnson, Jeffrey Sachs, Stiglitz (although I appreciate his recent pronouncements, 'natch!), et al.

If one isn't honest enough, or man enough, or scholarly enough, to admit to the real agenda being pushed by the IMF and World Bank and their associated banksters, then the description "professional economist" simply doesn't cut it.

If a woman claiming to be one, who is a university economics professor and has been a senior fellow at the Peterson Institute (or Toot!) can't even support her filmsy so-called "studies" with actual source data (after repeated calls and correspondence, she could only mail a pathetic graph to me), then these aren't remotely economists we are constantly being subjected to!

Years back, the Bretton Woods Committee, the lobbyist group for the ultra-rich, seeded various universities throughout the country (Harvard, Princeton, UC, University of Michigan, etc., etc.) with various of their lackey economists (anyone who is doubtful of the integrity of any economist, please consult their membership list at


Sun, 06/27/2010 - 14:54 | 436813 SwapThis
SwapThis's picture

Excellent post Sargent. 

Mon, 06/28/2010 - 01:16 | 437818 Eternal Student
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Thank you. And spot on and briliantly said yourself!

Sat, 06/26/2010 - 21:02 | 435799 Vecon
Vecon's picture

Apparently we now live in the world of Mccarthyism, again. Everyone who cares for anything other than some ignorant misinterpreted definition of capitalism (we haven't seen real capitalism in decades) is a comunist.

Here's a definition of sociology:


Sociology is the study of society.[1] It is a social science—a term with which it is sometimes synonymous—that uses various methods of empirical investigation[2] and critical analysis[3] to develop and refine a body of knowledge about human social activity, often with the goal of applying such knowledge to the pursuit of social welfare. Subject matter ranges from the micro level of agency and interaction to the macro level of systems and social structures.[4]

Sun, 06/27/2010 - 12:08 | 436540 Insiderman
Insiderman's picture

Definitions, too, can be pretty subjective: "Sociology is excited ignorance in the frantic search for a truth that never existed." 

The problem as I see it is we continually try to add utility across individuals.  For example, I have a STRONG negative utility function associated with taking my money and giving it to others.  Depending on my level of income, sociologists would argue that the receiver has a higher utility from the redistributed work product due to the diminishing returns to utility as my income rises.  Therefore, society gains from redistributing my work product.

That completely belies the true purpose of money in a capitalist system; that is, cumulating money in the hands of efficient producers for the greater good of society.  True that I have diminishing returns from personal expenditure of that marginal work product.  However, society has exponentially greater utility from the redeployment of my marginal work product into greater production (moving the long-run supply curve to the right in Econ 1010 terms).  I not only get to keep my marginal utility (albeit diminished), but I engender utility-creating increases in potential output.

Sat, 06/26/2010 - 14:01 | 435483 mikla
mikla's picture


Nice work!

In fact, he's much further from a practitioner of science and much closer to a practitioner of divine mysticism. Galbraith is like some kind of self-appointed high priest of the social value cult, the only one able to communicate with the social value gods and return from the holy mount with the latest prophecy. What if someone else wants to go up and have a word with the spirits? Sorry, says Galbraith, they only talk to me. But, I think you're wrong, says you. I'll be the judge of that, says Galbraith.

This, of course, is the essence of most social engineering masquerading as rationalized "science" by the ruling elites.  Sometimes they are merely projecting their warped world view; sometimes they are actively stealing whatever they can while distracting you with bullsh*t.  All of the time people and society suffer as a result.

It's amazing society tolerates their nonsense and their demonstrably repeatedly failed central planning.


Sat, 06/26/2010 - 22:59 | 435917 Cognitive Dissonance
Cognitive Dissonance's picture

Galbraith is a public keeper of the myth, also known as the public lies. Some are official, some are officially sponsored and some are self appointed. Collectively their job is simply, support and reinforced all our public myths, be they economic, military, social contract/status, religious and so on.

Galbraith is self appointed but also belongs to the officially sponsored category. The keepers of the myth are the most important part of the overall control mechanism because they teach the slaves (you and me) where we fall in the pecking order and the rules for being the best slave we can be. 

Sun, 06/27/2010 - 01:00 | 436045 lawrence1
lawrence1's picture

Well put.  Most US trained enonomists are apologists for their employe's interests. I recommend reading Ravi Batra who wrote "Greenspan's Fraud" and would welcome suggestions of non-US establishment economists.
And with respect to the author of this critique of Gailbraith, I note on his homepage the offer of a free report recommending a stock owned by Buffet. I guess Gailbraith's viewpoints don't mix well with his stock picks. Sometimes I think Tyler chooses guest posts just to see what happens. But that's just fine, it's the best site around and there is a certain satisfaction in watching intellectual crucifixions considering the almost everything in the mainstream media deserves them.


Sun, 06/27/2010 - 09:44 | 436366 idle muesli
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Ravi Batra, that's not the guy who regularly predicts economic end times?

Sun, 06/27/2010 - 12:10 | 436545 Insiderman
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Sociologists are responsible for codifying the vision of the anointed.

Sun, 06/27/2010 - 13:12 | 436605 sgt_doom
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What was your opinion of Galbraith's book, The Predator State?

Sat, 06/26/2010 - 14:15 | 435492 dryam
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Here's a clip from April when Schiff took on Galbraith.  The guy is a complete putz.

Sat, 06/26/2010 - 14:17 | 435493 Carl Marks
Carl Marks's picture

Socialism is treasonous because it violates the principles upon which this country was founded and makes a mockery of our Constitutional liberties. Socialists should be tried for treason and suffer the consequences.

Sat, 06/26/2010 - 16:42 | 435628 Eternal Student
Eternal Student's picture

Yeah. Free Market Capitalism has worked out just so well.

Honestly, how much money do you have to lose, directly and through higher taxes, before you get a clue?

My guess is all of it. And even then, you'll still be funding the Corporate Elite through your delusions.


Sat, 06/26/2010 - 17:36 | 435672 Bay of Pigs
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Free Market Capitalism? WTF? Speaking of delusions. Junked.

Sat, 06/26/2010 - 18:05 | 435692 Eternal Student
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I guess you haven't been following what's been going on in the Economy. Yes, the point is that Free Market Capitalism is indeed delusional. Backatcha.

Sat, 06/26/2010 - 18:20 | 435703 PeterSchump
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Mr. Circular Reasoning

Sat, 06/26/2010 - 21:33 | 435832 Sespian
Sespian's picture

A fitting name you have...keep studying and maybe you'll come to understand what free market capitalism is and why we haven't had it here in the US in well over a century.  Best wishes to you freshmen.

Sat, 06/26/2010 - 22:45 | 435891 ggm
ggm's picture

Isn't that always the complaint that practitioners of failed ideologies make?

"If only we had practiced the pure form of ________, it all would have turned out alright."

Sat, 06/26/2010 - 23:18 | 435935 fearsomepirate
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Free market capitalism is like a circle.  A circle is an abstract, mathematical concept that exists nowhere in reality.  But there are things in reality that approximate a circle, and, to the extent they approximate a circle, they act like a circle theoretically would.

So it is with free market capitalism.  To the extent our social order approximates free market capitalism, it produces prosperity and advance.  The less and less like a free market it becomes, the more and more unstable and destructive it gets.  But even a "close" approximation of the free market produces unfathomably more wealth than the many kinds of outright serfdom human history has given us.

Arguing that imperfect capitalism results in problems, therefore we might as well have socialism, is like arguing that imperfectly round gears vibrate, so we might as well make square gears.

Sun, 06/27/2010 - 09:05 | 436322 fiftybagger
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I suggest you move to Zimbabwe and see how that works out for you.


Sun, 06/27/2010 - 07:20 | 436253 Eternal Student
Eternal Student's picture

As opposed to yourself, who is clearly all knowledgeable.

It's funny how the defenders of Goldman-Sachs and the Bankers come out when challenged about their failed belief system.

Free Market Capitalism and Communism are a lot alike. Neither have been tried in practice, both are fundamentally flawed, failed philosophies. And both still have their fuzzy headed advocates after each has failed, with the failure causing incredible destruction to the Economy and people's lives.

Sorry to gore your religion, but how many times does it have to fail before you get a clue?

Sun, 06/27/2010 - 15:27 | 436883 Bay of Pigs
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Sun, 06/27/2010 - 19:57 | 437342 Eternal Student
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This entire financial mess was created by the proponents of the neo-con version of Free Market Capitalism. They've been waving this banner for the past 20+ years, while marching everyone over the cliff.

Sorry, but anyone trying to support the very obviously failed notion of Free Market Capitalism is standing up, supporting and cheering for, Goldman and the neo-con agenda. That is the modern definition of Free Market Capitalism. Some might claim "oh, no, that's not what we mean". Sorry, that doesn't cut it. We got into this mess from the original version of FMC morphing into what it is now. The definition of insanity is doing the same thing over and expecting different results.

Sun, 06/27/2010 - 15:25 | 436885 Bay of Pigs
Bay of Pigs's picture

WTF are you talking about? Defenders of Goldman Sachs? There isn't anyone doing that around here. Get your head out of the sand smartass.

Sun, 06/27/2010 - 13:17 | 436614 sgt_doom
sgt_doom's picture

You guys keep claiming that "free market capitalism" works, then claim it was stolen by the predatory capitalists and their tools you claim to be "socialists" and then claim the USA doesn't have free market capitalism!

There has never been a free market, but plenty of free lunches for all those debt-financed billionaires and trillionaires.

Sun, 06/27/2010 - 02:07 | 436100 Miles Kendig
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Just because you have most likely never seen free markets in action is no reason to deride them...  One of the issues under discussion in the article is the potential that economics is nothing more than a theocracy that underpins what amounts to a form of faith based governance.

Sat, 06/26/2010 - 20:23 | 435736 MichiganMilitiaMan
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Hey Eternal Student; I don't know! Where is the proof that ZIRP, QE, and "inflating the economy" to a solution" has worked out just so well .  How much of your wealth/savings has to be destroyed (and future for that matter), before you get a clue.  And at the end of it, all you will have done is financed a handful of corporate and political elites thievery of the lower and middle classes. Backatchaaaaaaaaaaaa.

Sun, 06/27/2010 - 07:11 | 436256 Eternal Student
Eternal Student's picture

Sorry, I don't support Bernake's policies one bit, and am of the opinion that they will lead to worse disaster over the long term.

Sun, 06/27/2010 - 13:19 | 436615 sgt_doom
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What you obviously fail to comprehend, MMM, is the trillions of dollars worth of loans upon layered loans upon layered loans, brought to you by the controllers of those credit derivatives which creates a continuum of economic meltdowns and wealth transfers.

Sat, 06/26/2010 - 23:12 | 435931 fearsomepirate
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Wake me when we try free market capitalism.

Sun, 06/27/2010 - 14:08 | 436705 Bearster
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Uh, where in the world, exactly, do you think free market capitalism is being practiced?

Irredeemable paper money, central banks, high taxation, overweening regulation, antitrust, minimum wage, labor law, unlimited product liability doctrine, TBTF, FDIC, the welfare state, institutionalized reverse discrimination... these are NOT the hallmarks of free market capitalism.

But you knew that.

Sat, 06/26/2010 - 17:25 | 435666 Uncle Remus
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Socialism is treasonous because it violates the principles upon which this country was founded and makes a mockery of our Constitutional liberties.


[V]iolat[ing] the principles upon which this country was founded and mak[ing] a mockery of our Constitutional liberties [is treason]? Ruh roh.

Sat, 06/26/2010 - 14:23 | 435501 Remington IV
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Krugman , is that you ???

Sat, 06/26/2010 - 15:14 | 435544 SayTabserb
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I was thinking that Galbraith and Krugman should form a cult, called the Nonrealist School.

Sat, 06/26/2010 - 15:05 | 435533 Charley
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"'Galbraith's support for Keynesian government intervention rest on what he believes one could 'reasonably' argue, where the word 'reasonable' is always and everywhere a Marxist code-word for 'What I think I can get unprincipled people to agree to my stealing without too much fuss.'" -- Conant

"I am not a marxist." --Karl Marx

(Trans. Don't blame Prof Galbraith's insipid arguments for Keynesianism on Marx. Keynes had only distaste for Marx, and the sentiment would have been returned in kind)

Sat, 06/26/2010 - 15:10 | 435539 Charley
Charley's picture

In fact, Keynes had a fondness for Hayek, as I recall. Which did not, on that account, make him a follower of Hayek.

Sat, 06/26/2010 - 15:20 | 435546 BumpSkool
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"the truth is that Galbraith, as a socialist, is a politician, not a scientist"


....and economists are ??? (scientists? ... don't make me laugh)and anyway ... why should the banal "scientism" of provable empiricism be considered high art?



Sat, 06/26/2010 - 16:40 | 435625 AnAnonymous
AnAnonymous's picture

Old trick. Old trick. The guy points fingers because he does not want fingers to be pointed at him.

No difference between economists, all wings.

Sat, 06/26/2010 - 18:01 | 435688 Gully Foyle
Gully Foyle's picture


"No difference between economists, all wings."

Maybe next season Penn and Teller will have an economist episode of BULLSHIT!

Sat, 06/26/2010 - 15:38 | 435564 lolmaster
lolmaster's picture

this article reflects nothing but a foolish naivety on behalf of the author. the role of all professional "economists" is nothing more than to be clever socialists and PR managers for the state, as anyone who practices real economics would quickly get a job that adds value to society. in fact "economists" have done more damage to the world than all the worst dictators and murderers in history combined, and through much more nefarious and cold-blooded methods. Marx himself (who incidentally first posed the "Jewish question") has done more damage than a thousand thousand Hitlers

Sat, 06/26/2010 - 15:44 | 435567 mikla
mikla's picture


(Although I must admit I enjoyed the article, and I agree with its fundamental assertions that Galbraith, like most professional economists, is a charlatan that hurts people.)

Sat, 06/26/2010 - 15:44 | 435573 lolmaster
lolmaster's picture

furthermore the author is ignorant of austrian economics, which thoroughly rejects "scientism." 


Galbraith is nothing but a mini-Marx, having done maybe 1/10th a Hitler's worth of damage to society.

Sat, 06/26/2010 - 15:54 | 435579 BumpSkool
BumpSkool's picture

so instead of PR managers "for the state" ... let's do away with the state!

(and who was it who advocated that??)

Sun, 06/27/2010 - 13:25 | 436628 sgt_doom
sgt_doom's picture

I would partially agree with your assessment, lolmaster, but differ in that in the Western Hemisphere there have been a very limited number of true economists.

Certainly, Michael Hudson is probably the most brilliant economist living, and Galbraith, Steven Keen, R. T. Naylor, Ravi Batra, and a small number of others actually practise economics per se.

Nassim Taleb brings a fine understanding of global finance and fundamental econ to the table.

But the aforementioned, along with one of the greatest economics thinkers of all time, Thorstein Veblen, act exactly the opposite of your "damage" opinion.


Sat, 06/26/2010 - 15:44 | 435572 Apostate
Apostate's picture

I listened to the interview. Jimmy G is slipping... he's wasn't nearly as insane as is accustomed to.

My question is... why is he even debating an Austrian? I thought Austrians were supposed to be fringe lunatics who bark at the moon and don't believe in math?

How could such a respected professor deign to speak with such rabble?

Sat, 06/26/2010 - 16:00 | 435587 Miles Kendig
Miles Kendig's picture

The vertical axis must not be keeping up with expectations....

Sat, 06/26/2010 - 15:57 | 435580 piceridu
piceridu's picture

Galbraith makes me sick...when he talks, I want crawl through the TV and choke him. He's the perfect model "authority" right out of an Ayn Rand book.

Sat, 06/26/2010 - 22:15 | 435865 Rusty_Shackleford
Rusty_Shackleford's picture


Krugman already called dibs on Ellsworth Monkton Toohey.

Sat, 06/26/2010 - 15:59 | 435585 Miles Kendig
Miles Kendig's picture's a bit naive to hope or expect for the State to ever be anything else in the future given the clear demonstration of its nature in the past.

It has always been this way so it always will be!  heh

Sat, 06/26/2010 - 16:10 | 435601 aurum
aurum's picture

check out the reuters feed for the g20...police cars on fire among other things

Sat, 06/26/2010 - 16:15 | 435603 Oh regional Indian
Oh regional Indian's picture

Hmmmmmmmm..... quite a bit of spite in that article. Almost sounded too personal, like the author had an old grudge. Well written though and poor economics, it's got nowhere to hide. I wonder how econ grads are feeling now-s-days.


My favourite part:

Here, Higgs points out, the record on the matter is clear-- that the State is a predatory nightmare at its worst and a bumbling, idiot buffoon at its best, that history is an almost completely uninterrupted record of it being so and that given that kind of track record, it's a bit naive to hope or expect for the State to ever be anything else in the future given the clear demonstration of its nature in the past.


Sat, 06/26/2010 - 16:14 | 435605 b_thunder
b_thunder's picture

"As a man who understands almost nothing about the subjects he regularly opines on, he is undoubtedly a fool, and a self-deluded one at that" -  a fool?   And who really are you, Mr. Conant?  What's your claim to fame?  What of note have you published lately to declare someone a "fool"?  I think he's far from being a fool.  If I disagree with someone's non-violent, non-extremist view does not make that a fool, or does it?

The rule is that the reasonble people can agree or disagree when discussing reasonable opinions. Oh, sorry, I forgot, you don't "get" the meaning of the word "reasonable."

I don't agree with most of what Galbraith is advocatind, but I don't think he is a fool.  Galbrith's views would be completely out of place *if* the governament had been truly democratic, truly answerable to the people, limited, fair, and impartial.  Unfortunately in the last 30-40 years it has not been any of that.  The pendulum has swung for too long in favor of Goldmans, Fannies/Freddies, HFT traders, and other various cartels.  The governement has been "a tool" of the Wall St, of the unions, of oil companies, of defense contractors to grab more power than they are entiltled to. 

This is a cleptocracy in its finest. The 2-party machine does not allow The People to restore true constitutional order in a non-violent way, only the government can "swing" the pendulum the other way and restore the balance.  If right this moment you take the government completely out of the game, and let  unelected top 0.001% dictate the policy,  next time the people may simply elect the next Stalin or Hitler, and then, sir, ain't gonna be good for anyone. 

In conclusion, I don't think it's unreasonable for the governemnt to provide some "social value" and let me give you an example:  let's say government stops providing food stamps, what would happen then?  The 20%+ of the population would line up to get free mean in soup kitchens, just as they have during the Great Depression.  Do you think more or fewer people would buy cars, homes, or any kind of iCrap when there are 60 million hungry people on the streets and on TV 24/7?  Do you think in that scenario the Dow would be closer to 11000, 8000, or 3000?  What I'm trying to say is that for relatively small "social" investment (and I don't mean $787Billio stimulus BS) you can have a very substantial real return.

Sat, 06/26/2010 - 18:12 | 435696 Eternal Student
Eternal Student's picture


Sat, 06/26/2010 - 23:22 | 435943 fearsomepirate
fearsomepirate's picture

Publishing and being famous doesn't make you smart.  Not fucking things up makes you smart.  Not advocating for theories that demonstrably keep fucking things up makes you smart.  Not being a patsy for the state and using euphemisms for violent fucking-up of things makes you smart.

Sun, 06/27/2010 - 00:29 | 436037 b_thunder
b_thunder's picture

Agree, publishing papers and books doesn't make you smart, but it allows us to better judge if the author is smart.

On the other hand,  not fucking things up and doing nothing else doesn't make one smart, it makes one irrelevant for this debate.

And as far as "using euphemisms for violent fucking-up of things", sorryy, i'm against violence when it's used to achieve political goals.  In this sense I believe that America not just different, but better than most other nations:  we have a history of peaceful changes of the government.


Sun, 06/27/2010 - 13:29 | 436632 sgt_doom
sgt_doom's picture


You nailed it!  And when the USA exists as nothing more than an anti-meritocratic society (all those neolib clowns writing at the Atlantic Monthly to the contrary), it buggers belief that anyone could possibly disagree with your wisdom, fearsomepirate!!!

Sat, 06/26/2010 - 16:27 | 435614 bugs_
bugs_'s picture

HSDU's - Hitler Societal Damage Units

Sat, 06/26/2010 - 16:39 | 435624 nmewn
nmewn's picture

It is little wonder that Keynes theory would find acceptance among government officials (both major & minor officials).

I too find it interesting that all these high browed, head tilted slightly upwards looking down their nose, pedigreed blue blooded snobs inside & outside government are now defending their "settled" economic discipline.

If it were "settled" it would be apparent to all and unworthy of debate.

Of course they already tried that tact and it failed as well, so here we are...LOL.

Take heart my brothers...we are gaining ground.


Sat, 06/26/2010 - 16:45 | 435630 BumpSkool
BumpSkool's picture

ohhh take heart indeed... if the 'enlightened' anti-government ZHs ever took charge - - you'd be lookin at the Nazi ('free market') party in 2 seconds , which would make everything we see today very similar... those little Ayn Rand bibles would be like Mao's Little Red Book

Sat, 06/26/2010 - 17:32 | 435671 Freewheelin Franklin
Freewheelin Franklin's picture

We've already been down that road. While some Libertarians may be Randians, the majority of Austrians are Rothbardians. If you are going to criticize us, at least take a little time and learn our positions. Straw Men are easy to knock down, right?

Sat, 06/26/2010 - 17:59 | 435687 Gully Foyle
Gully Foyle's picture


"ohhh take heart indeed... if the 'enlightened' anti-government ZHs ever took charge"

Dude half these people couldn't find their Gold with a burning copy of Atlas shrugged.
I came here because I was tired of all the Democrat bullshit. I discovered a whole new level of stupid.
Not all mind you, many deserve respect.
The rest are reactionary dipshits worse than those they bitch about.
I'm not a genius but I do understand " You don't need a flaming asshole to see behind you in the dark".

Sat, 06/26/2010 - 20:08 | 435737 BumpSkool
BumpSkool's picture

mmmmm okay... yeah .... but does it deny the point...our little collection here is a sanctimonious pedigree only marginally better than most and in no way deserving of its self-avowed accolades of knowlege... and that fucking includes ME. When/If push comes to shove you will see more Napoleons in waiting spring out of this site than you have ever dreamt of.... I'm suggesting self-examination along the road of self-n enlightenment/righteousness .... trash away... its really what I would expect...

Sun, 06/27/2010 - 13:33 | 436643 sgt_doom
sgt_doom's picture

So I take it you agree with the classic American scenario, best exemplifed recently by Bill Gates (Microsoft), which bought a regulation at the Washington state's Dept. of Labor and Industries to cap independent contractors' salaries (2000)?

And then in 2010, lobbies the state legislature to raise the tax on indepedent software developers (small business types), while granting ever greater tax loopholes (and avoidance) to Microsoft?

Sun, 06/27/2010 - 11:41 | 436511 Lux Fiat
Lux Fiat's picture

There was nothing "free market" about the National Socialist German Worker's Party.  They took power based on elections, but slowly tightened the noose and destroyed all representative institutions in the march toward what some would call fascism, others totalitarianism.  Eventually, the gov't told you where you would work, what you could do, etc. 

However, if your point was that pockets of intolerance for dissent in thought and action can lurk behind all forms of "isms", then yes, there is some truth to your comment.  But you paint with a brush that is too wide by far.

Sat, 06/26/2010 - 17:21 | 435661 Mitchman
Mitchman's picture

This is OT but did not know where else to post it:

CRACKS ON 767s PROMPT CONCERNS: Structural cracks discovered recently on at
least two American Airlines Boeing 767 jetliners, including one jet that
air-safety regulators believe easily could have lost an engine, are
prompting concerns that some of the problems may turn out to be more
widespread. Over the past two weeks, American, with oversight from the
Federal Aviation Administration, has checked the bulk of its wide-body 767
fleet to look for possible cracks in critical components that attach engines
to the wings. On Monday, the FAA said problems were found on three planes.
The agency said it was working with American and manufacturer Boeing to
"identify the source of the cracking" and was considering new industry-wide
safety mandates. "We are considering additional action, including requiring
more frequent inspections" of the suspect parts, called engine pylons,
according to an FAA spokesman. American spokesman Tim Wagner disputed the
FAA's tally of affected planes. He said the recent flurry of inspections
found two planes with pylon-related cracks and the problems "were caught
when they should have been." Boeing, which has been working closely with the
FAA to identify reasons for the cracks and assess their significance, didn't
have any immediate comment. The size and type of some of the cracks
discovered in the pylons surprised Boeing, which now is drafting a service
bulletin that in the next few days is likely to recommend substantially
stepped-up inspections by virtually all 767 operators, according to people
familiar with the details. The FAA, which has authority to mandate the
changes, is expected to adopt most of Boeing's guidelines. The issue is
attracting high-level attention inside the FAA, Boeing and American partly
because for years there have been relatively strict requirements to inspect
certain parts of all 767 engine pylons after every 1,500 flights. Despite
the frequent inspections, these people say, a routine check of one American
jet for a different issue found a combination of cracks that hadn't been
seen before and was deemed by FAA officials to pose a significant hazard.
Separately, American and the FAA are examining another complex, but
unrelated structural issue that also has potentially significant safety
implications for the airline's Boeing 767 fleet. Engineering experts,
according to people familiar with the matter, continue to assess whether
large, upwardly curved panels attached to the wingtips of some American 767s
have caused or contributed to certain cracks discovered in a section of the
structural backbone of a few planes. Called winglets and installed on many
types of commercial and business jets, the additions are designed to
increase fuel efficiency. (Andy Pasztor, Wall Street Journal - 6/22)

Sat, 06/26/2010 - 17:53 | 435683 Gully Foyle
Gully Foyle's picture

Something for the kiddies. It is a cartoon after all.
Damn funny.

Al Gore-Massage Therapist Encounter Recreated [Video]

A cartoon is worth a thousand words, right? Perhaps. A Hong Kong animation company has recreated Al Gore’s alleged four-year-old sexual assault on a massage therapist in Portland, Oregon. Although there are no subtitles, the action seems self explanatory!

Sat, 06/26/2010 - 18:02 | 435690 JR
JR's picture

Oh yes, government is a tool, and a mighty tool at that, much like the swords, clubs, chains, prisons, guns, bombs and tanks that government is after you remove all the fancy, euphemistic governmental-rhetoric. --Taylor Conant 

What a piece! What a writer! Here’s more from Galbraith—compiled by Bill Anderson commenting on The LRC Blog:

James K. Galbraith: An Economic Illiterate Like His Father | March 23, 2010:

James K. Galbraith continues the Galbraithian tradition begun by his late father of economic ignorance, promotion of fallacies, and all-around stupidity in his recent article in (What else?) The Nation. “In Defense of Deficits” sets a new low, even by Galbraithian standards. Here is a jewel:

For ordinary people, public budget deficits, despite their bad reputation, are much better than private loans. Deficits put money in private pockets. Private households get more cash. They own that cash free and clear, and they can spend it as they like. If they wish, they can also convert it into interest-earning government bonds or they can repay their debts. This is called an increase in “net financial wealth.” Ordinary people benefit, but there is nothing in it for banks.

As they say on late-night TV, “Wait! There’s More!”

Here is another one:

The misinformation is rooted in what many consider to be plain common sense. It may seem like homely wisdom, especially, to say that “just like the family, the government can’t live beyond its means.” But it’s not. In these matters the public and private sectors differ on a very basic point. Your family needs income in order to pay its debts. Your government does not.

Private borrowers can and do default. They go bankrupt (a protection civilized societies afford them instead of debtors’ prisons). Or if they have a mortgage, in most states they can simply walk away from their house if they can no longer continue to make payments on it.

With government, the risk of nonpayment does not exist. Government spends money (and pays interest) simply by typing numbers into a computer. Unlike private debtors, government does not need to have cash on hand. As the inspired amateur economist Warren Mosler likes to say, the person who writes Social Security checks at the Treasury does not have the phone number of the tax collector at the IRS. If you choose to pay taxes in cash, the government will give you a receipt–and shred the bills. Since it is the source of money, government can’t run out.

Lest you think the guy is being a comedian, read on:

It’s true that government can spend imprudently. Too much spending, net of taxes, may lead to inflation, often via currency depreciation–though with the world in recession, that’s not an immediate risk. Wasteful spending–on unnecessary military adventures, say–burns real resources. But no government can ever be forced to default on debts in a currency it controls. Public defaults happen only when governments don’t control the currency in which they owe debts–as Argentina owed dollars or as Greece now (it hasn’t defaulted yet) owes euros. But for true sovereigns, bankruptcy is an irrelevant concept. When Obama says, even offhand, that the United States is “out of money,” he’s talking nonsense–dangerous nonsense. One wonders if he believes it.

Nor is public debt a burden on future generations. It does not have to be repaid, and in practice it will never be repaid. Personal debts are generally settled during the lifetime of the debtor or at death, because one person cannot easily encumber another. But public debt does not ever have to be repaid. Governments do not die–except in war or revolution, and when that happens, their debts are generally moot anyway.

So the public debt simply increases from one year to the next. In the entire history of the United States it has done so, with budget deficits and increased public debt on all but about six very short occasions–with each surplus followed by a recession. Far from being a burden, these debts are the foundation of economic growth. Bonds owed by the government yield net income to the private sector, unlike all purely private debts, which merely transfer income from one part of the private sector to another.

I could go on, but you get the picture. Note that he is a professor at the Lyndon B. Johnson School of Public Affairs and at the Department of Government, University of Texas at Austin. How fitting that a crank like this would be at the LBJ school.

(Thanks to John Saxton for sending me the original link)

Sun, 06/27/2010 - 06:52 | 436246 setaspell
setaspell's picture

with each surplus followed by a recession.


It would be interesting to follow his implication here.  It sounds like a strong argument...but I suspect it is more post hoc ergo propter hoc.

What we have here is a guy who is book smart.  Like Krugman and other ideologues, he can cite you chapter and verse but that only means he knows the books. Of course he only needs to know the books to overcome his relatively mild cognitive dissonance.

Galbraith and  his ilk are happy to accept perpetual inflation because they see that the alternative is collapse and the loss of status, position and property for them and their masters.   Chaos impending is the only persuasive argument for a broken system.

Sat, 06/26/2010 - 18:08 | 435693 Salinger
Salinger's picture

a question also worth asking:  Is Basline Scenario's and Simon Johnson's side kick James Kwak a real economist?

James Kwak   the co-founder/co-author of THE BASELINE SCENARIO. Kwak is currently a student at the Yale Law School. Previously, he was a management consultant at McKinsey and Company and co-founder of a successful software company. Kwak received an A.B. in Social Studies from Harvard College and an M.A. and a Ph.D. in History from the University of California, Berkeley.

Sun, 06/27/2010 - 13:39 | 436656 sgt_doom
sgt_doom's picture

Negative, Kwak is a shill for McKinsey & thieves.  Just like Obama's appointment to his "economic advisors" -- another non-economist from McKinsey Global Institute, Diana Farrell (who has made all her millions as an adult by pushing for the offshoring of as many jobs as possible, from America and the U.K.).

And Simon Johnson wouldn't be at MIT -- which has always staffed its econ dept. with corporate America's shills, and who has been all over the landscape with regard to credit default swaps, on Monday saying they are evil, on Tuesdays, Thursdays and Fridays proclaiming their intrinsic value?????

The guy is starting to sound sane, but be very careful with taking anything he says seriously --- he is still a big supporter of the IMF.

Sat, 06/26/2010 - 18:13 | 435697 linrom
linrom's picture

This article is written by an Austrian School of Economics advocate, Taylor Conant, who is employed at an Austrian economics-oriented investment management firm( I think this is a loan shark outfit.)

The webside Economic Policy is run by seminar promoters of so called hard money loans: loan shark loans secured by real estate made to desperate folks. In some cases these loans are at 25-29%.

Sat, 06/26/2010 - 19:50 | 435718 Apostate
Apostate's picture


And ZeroHedge is run by evil speculators and semi-sentient algorithms.

Loan sharking is vaguely unsavory, but there's nothing immoral about it.

Sat, 06/26/2010 - 20:53 | 435785 jlr
jlr's picture

Actually, by definition loan-sharking is immoral in mainstream value-systems, only those of the Austrian school would view taking advantage of the weak and desperate as merely "vaguely usavory."

Sat, 06/26/2010 - 21:06 | 435795 Cheeky Bastard
Cheeky Bastard's picture

Again wrong.

Loan sharking is immoral [defined so by every theology, philosophy and system of ethics; but of course not Randian] but not illegal. Learn the difference. 

Thats why I try [not here] to talk as much as I can about Islamic banking and Islamic finance. Of course; you will never see me talking about those two here; most [not all] will respond to me in some idiotic reactionary manner and quote me some outdated speculative book written by some moron who lived in the 20s.

Since Judaic Theologians declared loaning at interest to non-Jews [that happened in the Middle Ages when the problem of money scarcity mixed with religious profiling played a major role] moral interest rates, compounded interest rates and eventually loan-sharking became more mainstream, but the Catholic church still forbade Christians to loan at interest to anyone.

Hence when the Templars started to charge an interest [instead of fees] the Church took them down. Not until Lutheran Theologies took hold did Christian start to loan at interest. And to stay current and strong Catholic Church also forgo their previous theological doctrine and started to lend and approve lending with IR attached. 

Sat, 06/26/2010 - 23:30 | 435948 Apostate
Apostate's picture

That's an argument from authority.

Sat, 06/26/2010 - 23:45 | 435970 Cheeky Bastard
Cheeky Bastard's picture

What fucking "authority"?  What does that even mean? Is that something from The Fountainhead ? You are so entrenched in your own stupidity you are now calling "History" an authority [but in a negative way]. Good for you, you'll come far. Stick with 3 books read, and 0 critical thought; thats a sure winning strategy.

Sun, 06/27/2010 - 20:53 | 437440 Dr. Sandi
Dr. Sandi's picture

Thank you again, Cheeks. I learn a lot here.

This is the first time in my life that I had the background info necessary to understand the mindless antipathy toward the Jews that is so common in European-based culture.

It doesn't make it okay with me, but finally, thanks to the clarity of your explanation, the bits add up.

It's always okay to hate the people you owe money to. And doubly okay if you can make them "the other" in some way. And what better way than religion.

You 'da man, Cheeky!


Sun, 06/27/2010 - 13:41 | 436659 sgt_doom
sgt_doom's picture

Hey! Screw you! There's nothing wrong with us semi-sentient algorithms.

Expect your next inflight meal to be strange tasting....

Sat, 06/26/2010 - 21:07 | 435807 just.a.guy
just.a.guy's picture

Good article, and Galbraith is a putz, BUT the headline should refer to "UT Austin" (unambiguously correct) or just "UT" (ambiguously correct as people in Tennessee also have a university they call "UT")... whereas "UTA" is unambiguously incorrect and the abbreviation most commonly used for University of Texas at ARLINGTON.




A nit picking Texan

Sat, 06/26/2010 - 22:25 | 435859 Rusty_Shackleford
Rusty_Shackleford's picture

Great stuff Taylor Conant.

Spot on.

F-ing - A.


"No his mind is not for rent
To any god or government
Always hopeful, yet discontent
He knows changes aren't permanent
But change is

Sorry.  Watching Beyond the Lighted Stage on Palladia.  Tom Sawyer should be the theme song to ZH.

Sat, 06/26/2010 - 22:16 | 435862 Freewheelin Franklin
Freewheelin Franklin's picture
Free markets are the effect (result) of a free society, not the cause. Free people, engaged in free trade, without interference from the government except in cases of fraud, trespass, robbery and misrepresentation. People are not perfect, thus, free markets are not perfect.

The free market should not be feared. What should be feared are the
Charlatans that lure people into a false sense of security, for their
own political and personal gain, with their claims that they can
actually "control" the economy, and human nature, or right some "social injustice" by stealing from others, the fruits of their labor.

Sat, 06/26/2010 - 22:17 | 435867 Gimp
Gimp's picture

Galbraith another Ivory Tower occupant who has never worked for a living and comes up with hypothesis after hypothesis of junk. Let's see where he stands when we are unable to pay our interest debt.

Sun, 06/27/2010 - 13:44 | 436664 sgt_doom
sgt_doom's picture

"Let's see where he stands when we are unable to pay our interest debt."

Geez, your encyclopedic knowledge is stunning (just kidding, yokel!).

Seriously, Gimp, they will pay it the same way as usual, with debt-supported securitized financial instruments.

Sat, 06/26/2010 - 23:19 | 435937 svendthrift
svendthrift's picture

I'm glad to see Scott Horton's Antiwar Radio getting a plug. I never - ever - miss a show. It is outstanding.

Sun, 06/27/2010 - 08:34 | 436293 hooligan2009
hooligan2009's picture

so we are comparing Higgs boson with the Marx brothers? I think that Brownian motion represents the best of the random walk of free market theory.

Economics is rather like a black box that works when it works and who's only link to reality is a quasi answer to the question "where do you start looking for the blind man at the top of a hill?" (A. at the top of the hill, of course!" but doesn't answer the point as to why you need to find him! :)

Getting into debates about politics, economics and philosophy is as close to infinity as we can get. There is no grand unifying theory between the infinite and infinitessimal...yet!

Sun, 06/27/2010 - 10:23 | 436428 BlingBlingBen
BlingBlingBen's picture

I've spent my entire life moving back and forth between liberal and libertarian positions. My personal experience and heart favors the liberals but my brain (U. of Chicago econ grad) knows that the libertarians have a compelling argument. The fatal flaw in the libertarian argument is the endgame with NO SOLUTION. There is always that awkward Rand Paul/ Rachel Maddow moment where the libertarians get exposed as self interested predators. They are rebels without a cause (except themselves). Social anarchy is not a viable state for most humans.

A good economist will study all choices and weigh the costs. The smart ones know that COST IS SUBJECTIVE and leave it to their clients to reach a conclusion. In order to make a comfortable living, economists have to become advocates. Keynes acquired tremedous wealth because he was selling an idea that people wanted to hear. When economists become advocates they are attacked and called fools by those selling their own interests like the author of this article.

Sun, 06/27/2010 - 13:49 | 436670 sgt_doom
sgt_doom's picture

(U. of Chicago econ grad)

That says it all --- Looney Tunes U. (Milton Friedman, et al.) and Rockefeller-financed U.

After the age of 25, one stops believing in libertarianism.

Sun, 06/27/2010 - 21:33 | 437524 BlingBlingBen
BlingBlingBen's picture

You are probably not a true libertarian like the author of this poorly reasoned article. Read Friedman's Free to Choose carefully and understand that he's talking about improving government not destroying it.

Sun, 06/27/2010 - 11:38 | 436507 M4570D0N
M4570D0N's picture

UTA?? It's UT. UTA is the University of Texas at Arlington. Galbraith teaches at UT Austin. I took one of his classes a few years ago. He's a nice enough guy, but he's been drinking too much Keynesian Kool-aid for far too long.

Sun, 06/27/2010 - 18:00 | 437204 Gimp
Gimp's picture

Hey Sgt_Doom just an FYI I am talking in the future when no one wants our crap T-Bills anymore, then how do we pay the interest on our debt? More Taxes? I am thinking more of a reverse split on our currency if you know what I mean.

Don't want to get to far ahead there for you Sarge  :-)

Mon, 06/28/2010 - 14:05 | 439251 sgt_doom
sgt_doom's picture

OK, Gimp, what you say is intelligent on the sane and rational level, but the situation and those behind it aren't sane and rational, they are greedhead sociopaths -- and the sociopathic mind has no true time sense (i.e., real belief in any future) which prevails as it does in the rational mind.

That's the entire point, there will be no extant possibility of payment on that debt interest, and the reverse split will work in their favor.

Do NOT follow this link or you will be banned from the site!