Thursday, December 10, 2009


I Just Emailed With Something Worse Than Banana Fungus...

...or so Paul Krugman would have you believe. On an unrelated business matter, I have been corresponding with someone (who wishes to remain anonymous) who told me the following in an email today:
Last night, my friend and I attempted to persuade Paul Krugman to debate the Austrians at his presentation on "Are We Getting the Change We Need?" at Baruch College. My friend politely asked Dr. Krugman to comment on Dr. Paul's audit the Fed legislation, which he responded to derisively with, "Ron Paul wants to return to the gold standard" and "the Fed's monetary policies are already audited." My friend tried to emphasize foreign governments and foreign central banks but was interrupted by the moderator.

I later commented that the collapse is due to the failure of Keynesian economics, not free market capitalism, which was predicted by the Austrian school and asked if he would be willing to engage in an academic debate with Austrian economists. He dismissed the Austrian school as passe and incapable of explaining unemployment and preventing the Great Depression. I again asked politely if he would debate one of you since the Austrians correctly predicted the housing bubble, subsequent collapse and is growing in popularity. His answer was basically, "it sounds like intellectual snootiness...and it is...I have better things to do with my resources." And so he spent his resources writing this on today's NYT blog.
If it affects your verdict, my correspondent is a female but not a student. (I didn't ask her her age, as my momma raised me better than that.) But her "friend" mentioned above (not sure if guy or girl) just graduated, so he or she must be pretty young.

I don't know about you, but when Krugman said the people asking him about Austrian economists were less desirable than banana fungus, I was picturing redneck guys in their 40s wearing camo jackets, passing around Skoal and Glenn Beck's latest book, and discussing their next deer hunt. It changes things a lot that at least one of his alleged hecklers was a recent graduate, and I tend to believe my correspondent when she says they were polite to Krugman.

(It's possible the rednecks shouted things afterward, of course.)

"He dismissed the Austrian school as passe and incapable of explaining unemployment and preventing the Great Depression"

Well, that's a fair enough criticism. To some extent Austrians really can't explain the downturn.
Hey now. Stop insulting rednecks! ;)

Having been heavily involved with the Ron Paul folks/adherents to Austrian theory for several years in my state, I can tell you that it is the most (cough, I hate this word) diverse group of people with whom I've ever been associated. Sure, the packaging may be sometimes be "redneck" (among other things) but one thing is common in the group: brains and logic, intimidatingly so, whether formally educated or not.

And yes, we've had our fair share of bad actors but they are few and far between.

In general, my experience has been that any time one of us have challenged the status-quo, regardless of how politely we did so or how we were "packaged", we have received one of 2 responses: either we were "shouted down" (absolutely no attempt to argue/discuss a point) and marginalized ("y'all are a bunch of kooks!") sometimes coupled with threats of arrest or removal from the premises; or given the equivalent of a dismissal, complete with a pat on the head ("there, there now; you just don't understand The Way Things Are"). The latter is usually reserved for us females.

Looks like Krugman followed the protocol...

Even so, I'm always happy to see it when someone politely questions the status-quo. It may not sway Krugman but it may have sparked the interest of someone in that room.

I sure would like to see a youtube of this exchange.
The reaction of Keynesians to Austrian economists is akin to the way alchemists would have reacted to mendeleev.
Krugman dismisses Austrian econ based upon flawed empirical analyses (like the "gold standard" during the 20's representing any and all possible combinations of gold's use in the monetary system) and misinterpretations of Austrian theory (the Hangover Effect article).

Meanwhile, we can dismiss Krugman based upon empiricism, the illogic of Keynesian theory, or Austrian theory.

The only thing we can't win is votes from bleeding heart idiots.
"He dismissed the Austrian school as passe and incapable of explaining unemployment and preventing the Great Depression"

Well, that's a fair enough criticism. To some extent Austrians really can't explain the downturn.

To what extent?

Only the timing was uncertain, because individual human action is unpredictable, and crashes are triggered by humans acting. That the bubble existed was no secret among Austrians, and the cause is due to misallocation of capital brought on by, among other things, the law funneling investment into the housing market and derivative mortgage trading through active regulation.

Austrians can explain unemployment and the Great Depression - notably Mises called it before the 1929 crash, and the entire school knew Hoover's and FDR's policy responses were nothing but trouble.

I can claim that the Chicago School doesn't deserve further investigation because they claim that ice cream is made from excess clown tears. If true, the school would certainly be dismissible - but there is no basis of truth to these petty accusations by the Krug.
...and many of the people in that room noted his unwillingness to debate, I'm sure. Nice of him to blog about his unwillingness, too.

"It is error alone which needs the support of government. Truth can stand by itself." Thomas Jefferson
I was just reading through freddy krugman's comments and I learn that apparently austrian economics is the gospel writ of the republican party and that is has serious influence on the democratic party.
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