Friday, March 12, 2010


Murphy Demolished?

I actually don't have a problem with this lengthy review of New Deal revisionism (thanks to reader teqzilla for the tip), because the writer quotes me more than I think any other reviewer has done. I'm reading his stuff thinking, "Yep, yep, this guy Murphy makes a lot of sense." I don't recall "sniff"ing and being disgusted with things, the way the reviewer describes my book, but perhaps I need outside eyes to be objective.

I will probably write a response to this at some point, but it will have to wait for now...In the meantime, here's a good excerpt:
But since the mobilization effort mandated such measures as price controls, the draft, and rationing of scarce materials such as rubber and steel for war production purposes, the whole thing was the foulest of economic abominations. “So the carefully constructed measures of ‘inflation-adjusted gross domestic output’ during the 1940s are about as meaningful as the economic statistics reported by the Soviet Union,” Murphy notes in disgust. “The government effectively made it illegal for market prices to signal how much inflation the Fed was pumping into the system.”

And so it is with all the economic measures of the grotesquely defiled Forties. Sure, the poor saps drafted into the Army or the female workers who thronged into war production factories might have thought things were turning around. But they were blind to how the pure model of laissez-faire was being molested! After all, Murphy explains, “there are other goods and services that those scarce resources could have produced, but which humans will now never enjoy because they were devoted to government projects.” Think of all the miniature golf facilities, nylon stockings and radios senselessly sacrificed just for the liberal vanity project of defeating fascism!

Likewise with the erstwhile layabouts now caught up by the draft—how could anyone count this as a legitimate form of employment? Suppose, for example, “that FDR announced in 1940 that in an effort to fight the Depression, all able-bodied unemployed men would be shipped to African jungles (where they faced lions and disease). That policy would have brought down the official unemployment rate,” Murphy sniffs, “yet it obviously would not have promoted actual economic recovery. Had FDR suggested something this monstrous as a ‘cure’ for mass unemployment, citizens would have rightfully recoiled in horror.”

Indeed, one can almost picture Murphy himself, after typing up such infamies, smiting his breast, slumping alongside his laptop, lifting his head heavenward only to convulsively shout, “Unclean! Unclean!” After all, had the market approved of the war, it could by itself have instructed wartime production facilities where to allocate resources, by the magic of the price mechanism. “Precisely because World War II was an unprecedented event, there were no ‘experts’ on transforming civilian production to military production on this scale. When it comes to motivating millions of people to brainstorm and quickly come up with better ways to make a mousetrap (or tank), nothing beats the profit-driven market economy.”

Back in consensual reality, however, the Second World War doesn’t actually reduce to a perverse safari outing. There was a Japanese attack on a U.S. naval base, and a massive German effort to conquer the West and spread racial genocide. Oh, and the “pecuniary” stakes were far from negligible, as well, with a war-driven Nazi command economy curiously indifferent to the domestic production needs of Poland, France, Belgium, the Balkan states, and so on. A laissez-faire outlook among the Allied powers, in other words, would almost certainly have resulted in a fascist triumph. (Even more inconveniently, the killing blow to Nazi imperialism was delivered by the most hatefully statist command economy of them all, Stalinist Russia.)

Well, it's good to see you're at least getting a mention here. But I'm always perplexed by the tendency of people to invoke the praise of some elements of fascism insofar as it is being used to defeat other elements of fascism. Yes, we must invoke the strength of authoratarian command and control economies in order to defeat...well...authoratarian command and control economies.

All kidding asside though, it always burns me up a little when people simply repeat stated ends when engaging in discussions about the effectiveness of means. It's understood that there was a serious problem on our hands when discussing WWII Germany or the Great Depression, but just reitterating the problem at hand certainly doesn't prove that whatever steps were taken were the only ones that could have been taken...or the best, at that. It's like listening to someone rationalizing their actions after a car wreck. When asked why they slammed on the brakes and spun the wheel when they started to fish-tail, they might tell you they did it because they were sliding on ice and trying to stop. And they might even believe that if they hadn't taken such actions, something worse could have happened. But that certainly doesn't mean that was the best action to take to reach said ends.
Wartime and peacetime economies serve very different functions and cannot (and should not) be compared using the same statistical aggregates. The purpose of a peacetime economy is to satisfy the diverse wants of individuals using scarce resources. The purpose of a wartime economy is to kill some Nazis.

Draftees were considered employed, so technically the war lowered unemployment, but what does that even mean if it wasn't voluntary? We could simply round up unemployed people and ship them overseas to fight random people, but that wouldn't make anyone better off. Different tasks require different techniques to solve. I do not like it when people claim that WW2 was either good or bad for the economy. It was neither. The war transformed the economy into a completely different thing.
I am blown away. Seriously.

That guy is a complete idiot.
Reading this bolstered your positions because the author had no positions. I gained absolutely zero insight into the author's arguments on why you would be wrong. For me it read like this: quote Dr. Murphy, follow with snide remark guessing how Dr. Murphy would feel writing what he was writing, then repeat. Conclude with no response.
The reviewer was shouting "Look at me!" Everyone who knows anything about US economic history knows that. Goes with the territory, Bob. Get over it, if you plan to continue writing interesting books about controversial subjects. My advice: Keep up the good work.
The thing that really annoyed me about it, and why I pointed it out, was the author's handling of Bob's arguments against the idea that world war 2 created prosperity. He portrays the arguments as if they were arguments against world war 2 itself and paints Bob as someone who is more concerned with money than human lives. He cheekily even quotes from the very passage in the chapter which is included to prevent anybody getting such a mis-impression.
Boneheaded commentary or not, you have to admit that the writer knows how write an entertaining piece.

I look forward to an equally spirited response, Bob!
Now I know how F.A. Hayek must have felt when he decided it was not worth his time to bother rebuffing Keynes' General Theory.

I don't think a rebuttal to this guy is necessary.
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