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I Dare Paul Krugman To Debate Austrian Theory
How much would it be worth to you to see arch-Keynesian Paul Krugman debate a top-notch Austrian theory economist on business cycle theory?
Krugman has prattled for years about Austrian theory being a flawed dead-end of economics. My guess he has never read anything by Mises, Hayek, or Rothbard, the greatest scholars of the Austrian School. He doesn't understand it in any way; I have read his critiques and they are uniformed.
Robert Murphy, one of the bright young lights of Austrian theory economics, has challenged Krugman to a debate. Now let me say others have tried to draw Krugman out, but he won't do it. Murphy, who got his Ph.D at NYU, has made an offer of debate that Krugman will be hard pressed to refuse. Here's the challenge:
When Krugman agrees to debate Murphy at the Mises Institute, $100,000 will be donated to the Fresh Food Program of FoodBankNYC.org, a non-profit dedicated to feeding the hungry of NYC .
Murphy is soliciting donations for the debate through The Point, a web site that hosts campaigns. Launched only 4 days ago, they already have raised $22,000. I just pledged $100. If Krugman doesn't accept the challenge, I will not be charged. If he does, I get a charitable donation deduction to the Food Bank of NYC.
Here is where you can donate: Murphy-Krugman Debate. Please join me. This will be money very well spent.
Here is a video about it:
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"Here the best theories are useless if not supported by public opinion. "
LOL, theories are either true or false. Either 1+1=2 or 1+1=3. I seek true knowledge and I've profited from it.
You missed the point but validate your own math
1 me + 1 you + tax = 3 so why would anyone even need to tax shoes.
Utility we can agree on. Actual cost is another issue.
The basis of all trade is benefit to both parties. There is no need for the traders to like each other for each to gain by the trade.
There is no reason, therefore, why the Communists, even if in charge of most of the world, would not be willing to trade with us, just as they are willing and eager to trade now. A return to old-fashioned isolationism, then, is paradoxically the only really practical foreign policy that we have. It is precisely because we are living in the terrible technology of the nuclear age that we have a sound basis for a workable disarmament agreement with the Russians. And, with such an agreement, we would be back to the military realities of the prenuclear age when even our present
right-wing interventionists agreed that isolationism was practical. One thing I would like to make quite clear: I am not proposing a program of large-scale foreign aid to any Government, or a joint UN slush fund for the backward nations. In fact, adoption of a true isolationist program would finally end, once and for all, the blackmail of foreign countries that they will go Communist if we don’t come across with a suitable bribe. We can now tell the Foreign nations to paddle their own canoes at last and to take full responsibility for their own actions.
So I assume you Free, and what Nations listen?
"A return to old-fashioned isolationism, then, is paradoxically the only really practical foreign policy that we have"
Troll
Get rid of the Keynesian Demand Constraint.
http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredit/
When you write:
...you're begging the question - that is, baking your own answer into the "hypothesis" you mean to test.
Keynesian and modern monetarist views suggest that M2 is free to change independent of changes in M0. Money is created and destroyed all the time, not only created.
Just the idea that you are already grappling with M0 and M2 arguments is a good indication that you either don't understand Austrian economics or you skipped some important parts like human action and time preference.
Nonsense.
I was making a point about somebody else's argument.
"Time preference" is yet another parallel between Austrian economics and Marx's LTV. The LTV starts with something that is not true, but a truism - that all value is created by labor. But the set of all labor hours and the set of all value-producing labor hours is not the same. So, Marx created the idea of "socially necessary" labor time - which is a deep concept, but amounts for our purposes to a multiplier on labor time so that it fits the theory.
Austrians start with the truism that all exchanges are constrained by the amount of (true, Austrian) moneys extant, but the set of all moneys extant is not the set of all moneys available which is yet different from the set of all moneys deployed. Austrians get around this fact by introducing their own "multipliers" such as time preference.
?
I was a little tired.
"Time preference" is a multiplier - like a constant in a physical or chemical formula - used to make Austrian money match the behavior of credit money. It's a convenience, a dodge, a way out of cunundra when matching too mechanical a standard to reality.
Time preference is an explanation for why interest is paid. It is not Austrian- it is from the Spanish school. You pay a premium for future money in the hope of profiting off the use of it in the present.
It is an argument in favor of usury which had been denied christian merchants for hundreds of years and left the Jewish bankers as the sole source of credit since it was thought they were going to hell anyway.
Bingo.
http://www.auburn.edu/~garriro/ppsus.htm
the graphical analytics demonstrate the inevitability--but not the timing--of the subsequent bust.
Get rid of the Keynesian Demand Constraint.
It is a badly written book, poorly organized; any layman who beguiled by the author's previous reputation, bought the book was cheated of his five shillings. It is not well suited for classroom use. It is arrogant, bad tempered, polemical and not overly generous in its acknowledgements. It abounds in mares' nests and confusions... In short, it is a work of genius.
Because The General Theory is such a poorly written book, "there is," according to Axel Leijonhufvud (1968: 35), "room...for differing interpretations of Keynes." Indeed, Leijonhufvud argues that if his interpretation is not what Keynes meant to say, it's "...what he should have said." Samuelson (1964: 316) writes that "there is reason to believe that Keynes himself did not truly understand his own analysis."
They will not do anything since it is a Political Economy and they are still going in the wrong direction in this new predicated market cycle we provide products to. Overall, what I have found in our sector's is the new normal is 20 percent less post bubble for now in a few area. We are in 31 countries – 2,100 patents – 20,000 products. Winner and Losers have never been a question, but just who is allowed to survive since the Market ceased from the New Deal. Consistent with the Mises-Hayek theory of the business cycle, the graphical analytics demonstrate the inevitability--but not the timing--of the subsequent bust
I would too, but that would be granting credibility to the validity of either argument and neither deals with people's needs. Hmm..maybe if we could simply extract the funny bits from 90 hours of debate. Yes, I would donate 100 bucks for a give minute laugh!
No offense econophile, I know your intentions are good, but economics is not the answer here, I fear.
Yes it is dumb ass.
Austrian economics is real.
Of course it is real - there's still a few economists who are using it.
Austrian economics also got pretty much every prediction wrong in the current ZIRP environment. Show me a link to a single austrian economist predicting the current deflationary environment (prior to it actually happening).
If you look back to 2008-2009 you will only find worries in austrian circles about inflation and hyperinflation - because those are the only things that come out of the austrian belief: bigger money supply must necessarily result in inflation. (Never mind why Japan has not fallen out of the sky hyperinflating in the past 15 years and counting)
So, IMO austrian economics can only gain back some credibility if it starts explaining reality, in a way that does not start with "Bernanke and co is part of a global conspiracy that manipulates a hyperinflating fiat money system into producing deflationary signals".
Right now following the predictions of austrian economics is pretty much analogous with "lose a lot of money in the markets".
Please explain what is getting cheaper other than the dollar?
hahaha
$1387 gold is dollar deflationary ?
Not even worth a full reply.......
You are confusing bubble prices such as the current bubble in fiat gold with metrics of inflation/deflation.
I've yet to see a single 'full reply' from you anywhere (that would explain your point of view), and I didn't really expect one here either.
You are not educated enough to comment on this thread.
You have it backwards. Gold is the only reference point for fiat. The whole buzzword of "bubbles" did not exist to this extent until the US dollar lost its abilities to produce non price inflationary gains.
I am not here to give you an education.
How optimistic. How ignorant of market history. Had you converted your dollars to gold in 1980 (with a $7000+ peak in today's dollars) you'd today be at a massive loss with a 70% drawdown.
Had you converted your dollars to gold in 1980 (with a $7000+ peak in today's dollars) you'd today be at a massive loss with a 70% drawdown.
I'd be interested in how you calculated the gold price in 1980 in today's dollars. Gold reached a then nominal high of $850 in April 1980. $850 in current dollars is approximately $2,000, a far cry from $7,000.
http://www.measuringworth.com/uscompare
Anyway, selective time horizons can be misleading (i.e. starting at the prior nominal peak - trying doing this for the Nasdaq from March 2000 and see what results you get!). I choose to evaluate gold prices over a number of different time periods.
2000-2010 CAGR: 17.4% period of negative real rates, quantitative easing, etc.
1971-2010 CAGR: 9.2% Nixon ends the international gold standard
1980-2010 CAGR: 1.2% performance since the last nominal peak in gold prices
1955-2010 CAGR: 6.9% long-term time horizon - performance over past 55 years
Also, based on your figures, the drawdown would be 87% not 70% [actual figure is -32%: ($2,000 / 1357.72) -1]. You seemed challenged by basic arithmetic let alone economics.
Gold price also rises when people lose faith in their government, regardless of inflation/deflation of the money supply and prices of other commodities or services. Gold is a hot item because of fears of destruction of the dollar that would be taken down as people lost faith in their government.
No, gold is the only referance point for fiat. When gold is going up, fiat currencies are devaluing causing an inflation in the fiat price of goods.
Except when they dont.
For example we are still waiting for gold to regain its 1980 USD fiat currency value of $7000+ peak value. Had you converted your 'fiat' dollars to gold in that time you'd be 30 years and waiting for it to break par with inflation. Right now that stellar investment would be at a massive loss with 70%+ drawdown, after 30 years. Tick tock.
http://globaleconomicanalysis.blogspot.com/
http://voxday.blogspot.com/
Glad to be of assistance,
praetorian
That's not a link to an actual prediction ...
It was a really easy request.
Show me a link to asingle austrian economist predicting the current deflationary environment (prior to it actually happening)??
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Stopped reading here. If you read ShadowStat, you won't have such conclusions.
In 1970, the US was in chaos and the SU was triumphing. But still some people predicted the demise of the Soviet Union. At that time, those predictions were thought to be wrong. However, in 1991, the Soviet Union was over. It's just about the timing.
praxaeology man! economics is ALL that matters....well unless you want to go back to the stone age in the 21st century......politics is economics by other means and war is politics by other means...follow the money because it never lies.
http://en.wikipedia.org/wiki/Praxeology
>economics is not the answer here, I fear.
Yeah, let's just wallow in ignorance.
wow, late to return to this post. If I were to say to you that economics is an art not a science and that art is subjective not objective, would you call me ignorant?
Seems to me that if economics is the answer we have the wrong question. I have no wish to have the quality of my life solely determined by economics, or health or war.
Live by the (economic) sword and die by it. Common sense may be flawed, but it has other human values at its core that economics does not.
hooligan, you're an austrian and you don't even know it.
The austrians use subjectivism to describe the value judgements individuals make when rank ordering for themselves their preferences and descriptions of human behavior.
No one knows what your "question" is. But the above does not appear to be out of alignment with what Austrian economics is discussing.
The natural law reasoning used by austrians is that man must act toward an ends.
I would, but a wise man once told me never to put on a show that I wouldn't watch.
ha, ha. exactly. nobody in the keynesian school wishes to debate, as they have arrived at the keynesian school by first having an agenda, and next, needing an economic theory to support the agenda. the questions are loaded, and the conclusions unscientific.
keynesianism is to economics what astrology is to astronomy.
+10 for "keynesianism is to economics what astrology is to astronomy"
Couldn't be better said.
It all depends whether you believe economics is a policy tool or a set of natural laws. I'm an Austrian myself, but I think it needs to be pointed out that to some extent Austrian Economics and Keynesian Economics are apples and oranges.
Keynesianism is at it's heart, a platform for policy response. It is at it's essence, an attempt to provide a solution. (a misguided, and naively dangerous solution, IMHO). Austrian economics does little in the way of offering a solution to economies poised on the downside of the business cycle. Of course, an Austrian would argue that nothing really should be 'done' either.
Keynesianism is based on the lie that stimulus is reined in during periods of economic expansion - which as we all know, never happens. Like socialism, it is well intentioned, but naive and impossible in practice. Ultimately it destroys both currency and productive capacity.
But the problem is that the grounds for this debate are not clearly established. Are they debating the effectiveness of each school in terms of policy response to impending economic collapse? Because in that case, Austrian economics offers very little other than "time to eat your lumps"... Which for the record, I agree with, but depending on the grounds for the debate, this non-interventionist solution may not represent the winning hand...
Keynesianism is based on the lie that stimulus is reined in during periods of economic expansion - which as we all know, never happens.
You should get out more. During the boom years of the 90's, the Canadian federal government (of both Liberal and Conservative stripes; no party axe to grind here) raised taxes, cut spending, and not only balanced the federal budget, went into surplus and started paying down the national debt. That, coupled with the facts that we actually have a fully funded pension plan, real mortgages based on real paper, and banks that stuck to banking as opposed to high stakes gambling, is why Canada is in much better shape than the US of A.
But don't let the facts intrude into your little angry space.
Canada is also gifted with a LOT of natural resources needed by other countries and has run a trade surplus for many years. EVERY country that runs a trade surplus has extra cash for such things as social programs and still allows them to balance their budge. Your argument holds no water.
Canada had a surplus (no deficit) in about the same way as the US did under Clinton, for all of two months, by cooking books, deferring spending, taking money out of trusts, and general trickery to improve optics. Canada did same. The surplus lasted about as long too, where is it now, hmm?
The reality is that our political system, and socialism, cannot tolerate any suplus of money just sitting around waiting for a rainy day. It must be spent, and will be spent. Keynsianism is untenable agaisnt collective human nature and the reality of the system it operates under.
Canada had a surplus (no deficit) in about the same way as the US did under Clinton, for all of two months, by cooking books, deferring spending, taking money out of trusts, and general trickery to improve optics. Canada did same.
1 - Canada has no "trust funds" to raid.
2 - Canada raised taxes, especially the payroll contributions to the Canada Pension Plan, and the Employment Insurance fund. For the latter, the extremely low unemployment that ran until the US-caused financial implosion, meant that both more money was coming in, and much less money was going out. EI racked up a huge, real, surplus.
3 - What spending, exactly, was "deferred"?
4 - from the Department of Finance:
The Federal budget was also in surplus in 2005-6, and 2006-7, making ten straight years with a surplus, not "a few months". And, yes, because of the US-caused crash in finance, we're feeling the pain here, and have dumped money back into the system. This is a logical, consistent, and simple application of Keynes' theories.
But then, we have an intelligent economist in charge up here, compared to whatever it is you have, hmmm?
Kevin, although a bit of an Austrian myself, you seem to have the facts in hand for Canada. I would, however, caution about two things: i.) enough of the snark about the "US caused financial crisis". If the US was creating an artificial wave, it lifted all boats, especially Canada, which is economically an offshoot of the US. You can't take credit for Canada's economic sucess, which is largely due to its presence near the US market, while at the same time, pushing the blame on a major business cycle blow up onto the US. ii.) I don't have enough of an oversite to determine whether Canada has indeed fully funded its government expenditures, or like the rest of the world, has a demographic time bomb waiting to explode. Given the happy nature of the Canada's social welfare programs, I would be surprised if the unfunded pension and social obligations of the Canadian government looked particularly good.
But, I don't want to sound like a Canada basher - I love the place, and think us Yanks can learn a few things from up North.
Give me a break...Canada hooked itself up to the gravy train as much as China did. The US overspent which washed its way back eventually on to Canada. Didn't hear much complaint about our bad habits because there were "benefits" all around. Your growth is endogenous? You've spent the day in the sandbox, yet still think you're not dirty. Sounds like my eight year old. You still need a bath.
But even more obvious, Canada is in a housing bubble of its own, but its different this time. Right... There was plenty of stupidity all around and many pipers will be paid.
Do you honestly believe that Canada will avoid the conflagration when the US dollar melts down as the reserve currency of the world?
Canada, like Australia and others, fund their government and social programs by exporting natural resources to, primarily, SE Asian countries. If the current world model of consumerism falters further, Canada crashes and burns right along with other commodity exporters.
If Canada was really comprised of brilliant thinkers the Canadian Gov would use their own natural resources to produce value added products for sale to domestic and foreign markets, not export raw materials to cheap labor markets to add value to Canadian raw materials.
You gotta nother think coming!
If Canada was really comprised of brilliant thinkers the Canadian Gov would use their own natural resources to produce value added products for sale to domestic and foreign markets, not export raw materials to cheap labor markets to add value to Canadian raw materials.
Apparently, you've never heard of Adam Smith and/or the theory of competitive advantage. Why don't you return after you've learned something about these?
Don't let the entirely subdued tone of his post get in the way of your misplaced nationalism. (or you weak grasp of history)
you should take your head out of your arse more. its not a surplus if you have debt.
But don't let the facts get in the way of your self-righteous ignorance.
its not a surplus if you have debt.
What kind of ignorance is this? Are you unaware of the difference between current and capital accounts? You are an uneducated, uninformed fool. Canada maintained a surplus on its current accounts for a number of years (not months like the equal idiot Devore contends below), and used the surplus on the current account to pay down debt on the capital account.
first, i can tell by your tone that no good deed goes unpunished. here, we in the USA have been providing your national security for years with our taxpayer funded military budgets, and making medical advances in our profit-driven system of healthcare which your national healthcare system benefits, and all you can do is insult us. tssk, tssk. not surprising. you're like a pesky little brother living in the shadows, always looking for some way to tear the older brother down in order to big yourself up. get a new schtick, will you?
Canada has many flaws. yes, you are having your day in the sun with your Canadian dollar all puffed up and strong; but save the Nationalism, Mr. Perfect., unless you wish to stop using every invention you've ever borrowed from the brutes south of you. Is there anything more cliche than a "holier-than-thou" Canadian? ha, ha. Overseas, Canadians are so offended to be confused with Americans, while most Americans believe Canada is a town in northern Minnesota because the country doesn't matter, much like your opinion.
mate, I'm going to start charging you for an education. Your 5-year example (or whatever time period it was) as it relates to keynesian success is laughable and NOT keynesian.
A less terrorizing keynesian (they're impossible to find) would retain government surpluses during good times for the private sector, then spend these surpluses on "public works" during bad times for the private sector in order to offset unemployment. This is very different than deficit spending with borrowed money where some of the interest payments go to foreign investors outside of the domestic economy. this is not to mention that "public works" are a 'broken window fallacy'. Even in our example, in order to gain a surplus governments must take from the private sector during the good times. this takes capital away from the private sector which is where consumers of goods and services are happy to finance job growth.
Nevermind the fact that keynesian economists never allow for price drops (deflation). The entire 'school of thought' (and I use that term loosely) creates a centrally planned money policy that never rewards savers and investors and always rewards excessive risk-taking. Moral hazards abound!
A policy of "moderate inflation" creates artificial demand, which creates hyper-consumption and reckless behavior in the efforts to feed the gluttony (see: Gulf oil spill).
"Government puts" on the economy prolong the booms to unsustainable levels. As a result, the prolonged booms cause both reckless speculation and undue euphoria amongst unsophisticated common folk who go out and borrow and spend and plan their lives around permanently good times (because they always have been), only to lose everything when the inevitable bubble bursts. Then come the wars, murders, suicides and divorces as the populace turns on one another, all because a few smarmy twats like you wish to defy the laws of financial physics by tinkering with reality, you "Keynesian", you.
your viewpoint is simple:
Keynesian economics = over the long-term, everyone can have a free lunch.
Austrian economics = over the long-term, there are no free lunches.
its so simple, even a monkey like you should be able to figure it out. you're goddamned lucky that this yank took the time to explain these things to you. now, go buy some gold and guns and wait this out. your grandkids will thank you for listening to the stupid american back in 2010 in the subversive chatroom of ZeroHedge.
carry on.
more like a "final solution".
'time to take your lumps' rewards savers and punishes excessive risk-taking. by avoiding 'time to take your lumps', keynesians simply compound the final 'lump taking' that inevitably comes when the laws of financial physics can no longer be denied.
you are entirely correct to point out that budget surpluses are never retained for later stimulus. however, the greatest fallacy of keynesian economics is that it can ever work with a built-in policy that creates systemic moral hazards by always punishing private savings and investment and rewarding excessive risk-taking in the private sector.
there is no debate, in my opinion. full disclosure: much of my fiat has been converted to gold so as to put my money where my mouth is.