Paul Krugman was owned so badly by comments on his blog - complete with scholarly references to other mainstream economists even - that he had to disable comments and later reenable them, while restricting them to extremely short ones that couldn't contain any real substance. He's a smart guy, and he had the chance to become a good economist, but he's nothing more than an egotistical propagandist nowadays. If you want to learn from mainstream economists, you should probably pay more attention to the new classical school than the new Keynesian school, and pay more attention to practically ANYONE than Krugman.
Paul Krugman knows his stuff. He probably disabled comments because he didn't want to be responsible for people reading and believing the garbage being posted. Quite honorable.
SNIP
All that said: I DO agree with ericthethe that people should learn a bit about mainstream economic theories as well (e.g. neoclassical economics). The smarter economists actually ARE right about a lot of things, and they [IMO correctly] state that the Austrians overstate their differences with them. You can learn a lot from mainstream economics, but just remember to take their macroeconomic theories with a grain of salt. Resist internalizing them too deeply until you've had the chance to examine the opposing Austrian viewpoint...which, to deliberately misquote Milton Friedman and say the opposite of what he said, "The Hayek-Mises explanation of the business cycle is consistent with the evidence. It is, I believe, true."
First, thank you for being civil and polite. I'd just like to make a few points.
Krugman's line of thinking(mainstream economics) is non-ideological, it follows what the basic textbooks teach you about macroeconomics. It uses statistical regressions to measure to what extent macroeconomic policy can affect indicators like unemployment, inflation, GDP, etc. It uses data, you can prove it right or wrong with numbers. There is no debate in the field of economics over what they teach you in undergrad and over how fiscal or monetary policy basically works, there is only a political debate in government, and it is ideological. No one is using academic arguments.
The quasi-academic Austrian line of thinking doesn't predict anything because it has no models and it uses no statistics. It shoots darts in the dark when government does something that goes against the libertarian ideology. According to their predictions we should have been having runaway hyperinflation since late 2008. Many libertarians predicted a collapse in housing prices, but their explanation said it was because of government policy to lower interest rates to aid poor people in getting housing and favorable mortgages, when it was actually mostly flimsy restructured (already existing) mortgages that got packaged and repackaged to get overvalued by the rating agencies and then sold as AAA bonds. And what allowed these shitty mortgages from banks to get packaged as securities? Government deregulation, the repeal of Glass-Steagall. But you really can't argue with them, because they can't measure to what extent any sort of policy affects the economy, because they can't put a coefficient on any economic variable. Their incorrect predictions can't be criticized either because they can't be tested with models, they don't follow the scientific method. They follow the gut method. Austrian economics is pure ideology.
Second, inequality has just never in the history of humanity been solved through a capitalism that is unregulated and actually boosted by government fiscal policy such as what we have now. In a system that works to centralize investment in the bigger companies while taking as little care for the worker and the consumer as possible, all for the sake of a bit more additional long-term investment, the small gains that the lower classes get in terms of lower prices and new commodities are more than nullified by economic stagnation in the country that benefits and exploitation abroad, for people who aren't rich at any rate.
Laissez faire economics will never bring prosperity and economic freedom to the vast majority of us because it has no answer to vicious cycles of inequality. Inequality as a function of privatization has actually historically been conducive to less competition and gross inefficiency. A free markets system tempered by socialist policies just flat out works better than unbridled capitalism in the long run for everyone. I was an econ major, and I'm well versed in American economic history, so I'd let Bill O'Reilly use my mouth as a toilet before I let myself become deluded by Ron Paul's ideological libertarian theorizing.
Third, Ron Paul is a good guy and I think he really does believe in everything he says. Just like Milton Friedman. They say the free market is supposedly always in our favor and is the answer to everything. Education, foreign policy, the two-party system, the AIDS epidemic, etc, etc. The thing about Austrian economics is that it refuses to use econometrics or anything that can be graphed, because all of its principles are supposed to be self-evident, and so these people refuse to be convinced otherwise. I don't think he's a piece of shit at all, I'm only knocking him because he's wrong about the free market and he's wrong about 'sound money'. And I find it very problematic that his followers do not at all understand the "Evil and Inefficient Keynesian Economics"
rolleyes
, as evidenced by their reciting Ron Paul's line about the housing bubble and ensuing financial crisis being a result of too much government interference (it fucking defies reason). And people are eating this shit up.
People are probably going to "bah" at this, but Ron Paul is dumb when it comes to economic policy. The practical effect of implementing libertarianism is to widen the income gap between poor and rich. That's it. The US is already in a sort of second gilded age. It'd be worse.
He makes a lot of a priori statements, "if the people spent money it would be good, if the government spends it's bad", "to spend money the government has to take it from productive individuals", etc. It's all "austrian economics", it's all bullshit backed up by no data. It's basically basing any analysis on libertarian articles of faith, not on any numbers. His answer is to "get out of the way" and hope for the best, because his ideology is that of hardcore laissez faire. He can't accept anything else. If you tell Ron Paul that inflation does not necessarily go up if the supply of money goes up and the velocity(rate of circulation) of money goes down, he can only tell you that you are crazy and wrong, and that his libertarian precepts are indisputable.
"Yeah, let's not care about going back to the gilded age. Let the economic path take us where it may. Everything will work out in the end if we only stop printing money. Families with a breadwinner father and a stay at home mother with a high school education will be the norm again, and personal responsibility will be the law of the land." What? I guess it sounds romantic, but I don't think people have ever thought of what the tradeoffs for having a gold standard are. All they're really doing is letting themselves be convinced that what Ron Paul says is right because they share his broader principles, and take comfort in the fact that his judgment(and theirs) seems to make sense. And so it must be applied always, like some metaphysical principle that doesn't care about time or historical circumstances.
You can be as stubborn as you want for the sake of being principled, and you can ignore thinking through the consequences of Ron Paul's economic policy(or get mad at the Fed for printing money and making us feel dirty), but at length you'll have to deal with the consequences of not being pragmatic.
You can agree with his foreign policy, his views on civil liberties and even on states' rights, but don't let your love of those ideas cause you to blindly follow his monetary and economic policies. Read a book,
watch youtube videos, talk to people who are educated about economics. The only reason why I'm not completely frightened at the prospect of a Paul presidency is he'd have absolutely zero chance at implementing his economic ideas. He'd have more control over foreign policy and our relationship with countries which isn't all that bad.
Thank you for your compelling rebuttal of
post 61. There's nothing in the world more convincing than unsupported pronouncements from on high.
I got you bro
. I typed all that up before the previous post and I was just proofreading.
Though it looks like I didn't address all of your points. I could do that if you wish.
