Friday, August 21, 2009


Two Men Enter, One Man Leaves: More on Krugman vs. Murphy

Now it's official: Krugman has definitively said we are in a recovery. (In his previous writing, he technically didn't say we were, just that it seemed as if we were, and if we were it was because of Big Government.)

Now what's ironic in all this is that even if unemployment is in double digits for 2010 through 2013--which it very well might be--Krugman would actually weasel out of the post I've linked to above. He would say, "Yes this is unfolding exactly as I predicted. Real GDP started rising again for a few quarters in the summer of 2009, and I said at the time that it would be a jobless recovery."

So just to be clear, when I say we are nowhere near coming out of this, I mean it in the same way as an economist speaking in 1932. Yes, the official recession dating of the NBER shows that there were two recessions in the 1930s--one from 1929-1933, and another from 1937-1938.

But c'mon, that's ridiculous. We all know that "the Great Depression" lasted from 1929 until at least World War II. (And readers of Bob Higgs know that it actually lasted through World War II.)

When it comes to dating business cycles, I am a man of the people. If a tenth of the labor force can't find work, the economy is broken. Don't let those MIT economists like Krugman fool you with their fancy jargon.

You can actually see the fight online here.
I have read some of your posts regarding the Great Depression and wish to ask a question.

You seem to make a strong case that Hoover was an interventionist in order to explain why the economy tanked during his administration.

But FDR was a bigger interventionist than Hoover, yet the economy actually improved under his administration, at least up to 1937ish.

So why did the economy improve at all under FDR when, based on the 'interventionist hypothesis' it should have continued to collapse?
Downunder: "But FDR was a bigger interventionist than Hoover, yet the economy actually improved under his administration, at least up to 1937ish."

Bob Murphy has actually written an entire book about this, I'll let him advertise it.

The answer has to do with what was said in the post, that the great depression lasted until or through WW2. You bring up a good question considering what some would try to make us believe (interventionism).
downunder I recently just read a great book by none other than Dr. Murphy that I strongly recommend as it will give you the answer to your question in a much more complete fashion than I could do.
If that link doesnt work theres also a link to it on my blog.

PS I've got 10 bucks on Murphy in this brawl...
It's very generous of you to use the government's 10% unemployment rate when battling Krugman instead of the real 21% unemployment rate. Not that it will help his case in the least.

Michael Barnett
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