The "Austrian" is Gerard Jackson who puts out weekly bulletins of opinion and commentary. This is his rejoinder to The Weekly article by the PM.
He accuses Hayek of treating the market as a "game" "specifically a game of 'catallaxy'". Thereby dishonestly giving the impression that like all games it is one of winners and losers. What Hayek actually said is that the market process is'a wealth-creating game (and not what game theory calls a zero-sum game), that is, one that leads to an increase of the stream of goods and of the prospects of all participants to satisfy their needs, but which retains the character of a game in the sense in which the term is defined by the Oxford English Dictionary: "a contest played according to rules and decided by superior skill, strength or good fortune".'
He was making it abundantly clear that market itself is not a game, it is a process that left free from the hands of meddling politicians will raise society's living standards. That Rudd does not agree with this does not give him the right to distort Hayek's opinions.
The Prime Ministerial speech should have resulted in coast to coast mirth and disbelief, as if he had stood up and delivered a long defence of creation science last week. Due to the ignorance of the intellectuals and the commentariat, or maybe just their political bias, and the inertness of the Conservative forces, nothing much happened. Interestingly,when Mr Rudd gave his first anti-Hayek speech two or three years ago The Economist picked up his mistakes within the week.
Rafe you are the second person I've seen online gushing over the views of this Gerard Jackson, the other being Joe Cambria. I'm unable however to find any reason why his opinions have any more merit than those of a bloke in a pub. Can you perhaps link to a site outlining Jackson's economic qualifications, peer-reviewed publications and relevant work experience?
Ken, what if you engage with the evidence and arguments in the article?
I don't think it matters but if you think it does, then you should lead off with a statement of your qualifications, peer-reviewed publications etc.
In other words, if you admit that you can't understand what he is saying, that sort of disqualifies you from further discussion. Either you can follow his argument or you can't, and that is not affected by his qualifications, blood type or address etc.
Why are my publications and qualifications relevant Rafe? I'm not trying to explain Hayek's writings. I've read some of his stuff, it's quite clearly expressed and doesn't require interpretation by amateurs.
I assume the answer to my question is that Jackson has no relevant qualifications, publications or experience.
If that is the case Ken then you should have little difficulty setting out where poor Gerard went wrong.
What Gerard shares with Rafe is a complete inability to understand why Rudd made such inaccurate remarks in the first place.
Only Peter Hartcher and Bernard Keane seemed to understand the politics behind Rudd's 'writings'.
It passed over everyone at Catalaxy as well
Hartcher's analysis of Rudd's Hayek stuff is here. I agree with Homer that it's an excellent analysis.
I eagerly await Ken's refutation, of course accompanied by a list of his economic qualifications, since they're apparently pre-requisites for someone to be allowed to hold an opinion about economic matters.
Of course, one wonders what (if any) qualifications Kevvy Rudd has to be writing about economic matters. He doesn't seem to have qualifications, so much, as advisers...
By the way, Rafe, Kev's article was published in The Monthly, not The Weekly.
Please remember Rudd breathes politics even more than Howard did.
I do find it ironic that most of the critics of Rudd being highly inaccurate of Hayek (which of course he was) as just as inaccurate when it comes to Keynes
The problem is that many of the people who "breathe politics" have brought on more harm than good (the Russian Revolution, the sub-prime collapse).
What good purpose justifies the silence of people who can apparently applaud or admire the political savvy of a person who parades bare-faced and economically illiterate lies for the possibility of short-term political gain?
What "greater good" is being served in this instance?
As soon as I saw the phrase "meddling politicians" I was 90% sure the guy had little worthwhile to say. I don't suppose he bothers to mention anything about "meddling corporations".
Rafe,
The people who brought on the sub-prime crisis were the Investment bankers.
They do not live and breathe politics.
They live and breathe money
Michael, that diagnosis of the crisis is contested but that is a separate topic from the question of the PM's gross misrpresentation of Hayek's views. Do you have a comment on that?
Homer, believe it or not, plenty of people, even at catalaxy, know why Rudd is spouting the nonsence about hayek. But it is still nonsense. I think you can find the measure of the man (Rudd) in the link he made between the stimulus package and relief for bushfire victims. He stands for nothing but his own advancement in my view.
"The people who brought on the sub-prime crisis were the Investment bankers."
Homer, even I get irritated by that sort of statement so I admire Rafe for his restraint. What about the inept regulation of financial markets in the US? What about the role of earlier US governments in urging financial institutions to devise schemes to allow the poor, who weren't eligible for normal housing loans, to buy a home? Surely that has a role.
As for Rudd's evident misrepresenting of Hayek's thought, I agree it's not admirable but that's politics. As Hartcher teases out (linked earlier at #6), his strategic purposes required a scapegoat/bete noire and Hayek got the guernsey. From a pragmatic politican's viewpoint, no-one other than a few bloggers and academic economists or political scientists gives a rat's about whether he was fair to Hayek, so you wouldn't lose any sleep about it. In the scale of political dishonesty it ranks fairly low IMO.
Who is being admiring of Rudd at his misrepresentation? I certainly am not.
I though Keating was the ultimate persom who saw politics in anything and everything but Howard easily beat him in this. Now Rudd easily beats Howard in this. This isn't something to be admired. Quite the opposite
Rafe,
Rudd found he hit the jackpot when he originally did this. You will recall I mentioned why he did this but you and the rest of the Catallaxy crew refused to see the obvious politics in what he did. Contrary to what Pedro has said they still couldn't see the politics of what Rudd was doing until you hit them over the head with it.
given the success he had before so he is trying it again. If Turnbull is any good as a politician he will not succeed. If he is not Rudd will succeed again and the Liberals will be in the wilderness for some time.
Ken,
yes but at the gist of the crisis was Investment bankers who thought they were so smart and turned out to be so stupid.
I again find it so ironic that people who are SOOO het up about what Hayek stood for like to spread such misleading information of what Keynes stood for
Well TimT I haven't read Rudd's piece but I would certainly not look to it for any reliable economic theory. Your comment misses the point.
Of course anyone is allowed to hold an opinion about economic matters but Rafe's post implies that Jackson's opinions carry more weight than most. Jackson (if indeed he is a real person) is not some random blogger offering spontaneous off-the-cuff snippets, he 'puts out weekly bulletins of opinion and commentary' in which he purports to critically analyse complex economic theories, contests the views of eminent professional economists and takes it upon himself (as here) to summarise and interpret the writings of great intellectuals of the past.
In other words he is engaging in scholarly activities and before deciding whether to devote scarce time and effort to reading his material, it's perfectly legitimate to inquire about his scholarly qualifications. If I were ever misguided enough to set out my stall online as an economics scholar I would equally expect to have to explain why anyone should take my writing seriously.
Since everyone seems very coy about explaining Jackson's standing as a scholar I can only assume he has none, and will therefore treat his work accordingly.
I think that any discussion about what Jackson is on about, with respect to his comment on Rudd, needs to determine how close Jackson is or not with respect to his espoused adherence to the Austrian position.
There are a few varieties of Austrians, but you cannot go far wrong if you stick to the Menger - B
Ok Homer, you win. Everybody is dumb and only you saw Rudd's cunning plan from the beginning.
Pedro,
An inability to see the politics of Rudd's shenanigans is not the same as being dumb as you very well know.
on the other hand Catallaxy is full of Rudd getting Hayek wrong and one person pointing out that is irrelevant to the main point he was trying to make!
Correction then Homer, you are the world champion of stating the bleeding obvious. The fact that Rudd had a political goal is kinda self-evident don't you think? Maybe you're just a bit prone to lauding your heroes.
Can I suggest four reasons why a citation by Rafe would be used.
1) Jackson has made an insight Rafe has not and to co-opt it without reference would be dishonest.
2) Jackson's post expresses the insight better than Rafe can.
3) Jackson has an authority to speak that Rafe does not.
4) Jackson found a better hayek quote than Rafe has, and attribution is appropriate.
As far as I can see 1) is false. I am assuming Rafe is familiar enough with Hayek to see Rudd's essay as a misrepresentation.
2) I think is unlikely as well. It's a straightforward point that Rafe could have made simply, and Jackson's inclusion of terms like "meddling governments" is the kind of political epiphet that can damage otherwise insightful posts.
3) is what Ken seems concerned with. The idea of the virtue of appealing to auhtority has its own problems anyway, but Jackson doesn't appear to have title etc. usually associated.
4) This seems likely and a valid reason, although I would have quoted merely the Hayek quote with a HT.
Due to the ignorance of the intellectuals and the commentariat, or maybe just their political bias, and the inertness of the Conservative forces, nothing much happened. . Rafe you've made the case and at length that Rudd misrepresents Hayek. So what? For the last 3 decades or so the Left have been subjected to increasingly shrill claims that Marx and therefore all social-democrats (and in fact anyone who entertains any policy associated with socialism) are as bad as Stalin. And of the concomitant notion that Hitler was essentially a differently branded Bolshevik (thereby letting all the conservatives and corporations who backed him off the hook). . Rudd is playing politics. He's using the GFC as a launching pad for a neo-Keynsian wave. Yes it's over-simplistic, yes he demonizes and distorts. However as long as the Right do the same there's no moral basis for whining. Sorry. . Naturally neoliberalism is a much contested category. However there is such a thing and it is associated with the main thrust of economic policy since c. 1980. Like all economic paradigms it had successes and failures (even command economics had its successes). . Now, as always happens, the pendulum's swung back. Unfortunately it's swung right back to Keynsian exhalations. It'd be nice if, after a thorough and objective review of economic policy, something new came to pass.
I hear that google whistle
Okay what have I done now? KenL , was that you? How amusing.
? I haven't mentioned Jackson for ages, but thanks for reminding me.
His economics is pretty flawless from a free market perspective. As far as i recall he has a an economics degree from Liverpool University. Don't hold me to it though as you can email ask him if you like to confirm it.
Let's compare Ken L.
Two/three hours before the second bomb went off in the UK (after London) you were touting a conspiracy theory (at Road to Insanity) that Gordon Brown's government was behind the London bomb attack.
About two/three hours later the Scottish attack happened.
(Now I can't stand Brown but not for a minute would I ever think the man or anyone working for him would think of doing such a thing.)
You're reasonably well credentialed KenL; firmly ensconced as an academic somewhere and you're touting conspiracy theories that would barely make it on any specialist conspiracy theory blog.
Now your attacking Jackson's credentials? My head just pun 360 degs and I reckon it could do another two.
--------------------
Homer/ Michael:
Stop beating a dead horse. Perhaps Rudd is playing politics, but who knows? Who cares? Like most lefties he really doesn't seem to understand the various factions of the right. The fact is that he doesn't understand Hayek and people are simply picking him up on that.
And why shouldn't they?
Honestly after your recent defense of Latham's use of the term, "Skanke Ho", it shocks me how cavalier you are diving into speculation again.
Homer/ Micheal let's remember you were/are still touting the argument that Skanke Ho was a reference to an Asian Warlond's mistress rather than what it actually means in American Guetto slang. You were so "exacting" that you once corrected me for suggesting an Asian Warlord's wife instead of mistress!
Here's the thing I find amusing about Rudd's piece. The one real government that reformed Australia's economy in a neo-liberal way was possibly one of the best best governments we ever had. Hawke (PM) and Keating (treasurer) was the only reformist government the country has experienced since Federation and something any party ought to be proud of.
That's not the sort of history any party ought to be throwing away in the trash.
Maybe Rafe should do a post quoting the opinion of one Ken Lovell and then we could all say "wtf is a Ken Lovell?" with some certainty
As for Homer, his hindsight applauds Nazi economic policy along with Mark Latham, who was always political
Steady on chaps. It's all getting a bit needlessly ad hominem, dont you think? A few deep breaths and a stiff gin and tonic might be in order. That's how we chaps and chapettes do it here at the Pymble Pony Club.
As opposed to your lads and ladettes, who just chuck a browneye, so it seems.
If Rudd's a leftie, I'm a monkey's uncle. Turnbull has better leftie credentials.
JC if the nation's soils were as fertile as your capacity to write creative fiction, we could eliminate world hunger in a year.
You use Google Alert to notify you of stories that mention ... yourself? Wow, that takes a very special kind of something or other.
Now that the thread has degenerated into standard Catallaxy ritual juvenilia I'll be getting along.
Ah Club Troppo, once you showed so much promise.
Wrong again KenL, i didn't use Google to notify me, I read someone's comment elsewhere referring to Homer's silliness on this thread. Mentioning me was what caught my eye.
What fiction are you referring to Ken: that you weren't speculating on the bombing attack in London?
Isn't this you, or is it another blogger (at Road to Insanity) pretending it was you.
Aptly Titled:In which I become a conspiracy theorist
and
and
The rest of this glorious epic into the parallel universe of Conspiradom is here
http://www.roadtosurfdom.com/2007/06/30/in-which-i-become-a-conspiracy-theorist/
Somehow KenL Making a snide remark about juveniles/ demanding professional voice/ conspiracy theories is quite head spinning. Dontcha think?
Sorry Ken P
Didn't see your words of wisdom until I posted the last comment.
Why is everyone calling Michael "Homer"?
Because that's his real name. He changes his screen name every few months just for fun, and maybe because he hopes we won't know who it is, but the longstanding tradition is that we just ignore this and keep calling him Homer anyway.
He is called Homer because he hits "outside of the park"
The acid test is whether Gerry Jackson will be proved right and so far I'm backing his Austrian analysis and doing quite nicely thank you very much Gerry and antecedents. In July last year I agreed with Gerry's analysis and sold my carefully constructed share portfolio and bought gold with 50% of the proceeds and bank term deposits for the rest. Actually I bought paper gold in the form of tradeable Perth Mint Gold Warrants since they are ultimately backed by the WA State Govt (the Feds now guaranteeing my other half) Essentially PMGWs are for delivery of 1/100th oz of physical gold in 2013, so their value tracks 1/100th the spot price of gold. At the time of purchase gold was around AUD$1000/oz and has now broken the $1500/oz barrier. I thank Keynesians everywhere from the bottom of my Austrian heart and fully anticipate to go on thanking them in the forseeable future, unless they ultimately succeed in achieving the complete collapse of fiat currency as they seem so hell bent on doing.
Heh. This one's for you, obby.
BTW, all of the return you mention from AUD1,000/oz to AUD1,500/oz was from the AUD depreciating against the USD. The gold price hasn't moved much in USD terms since you bought it. You would have made a much better return out of USD treasuries [*Gasp!* Not...dirty fiat paper?!]. Not to mention that you've bought gold at close to record high (USD) prices.
Naturally, however, you're aware of these issues and have the empirical underpinnings of "Austrian" economics to back you up.
I get the feeling you're a gold debugger, Fyds.
[Twice in this comment I challenge Lovell to put up on two things, they are very good challenges and Lovell is, going on his remarks, very confident and assured and gallant and so cannot possibly refuse the challenges.]
I have some remarks to make but first, it is correct, isn't it, the Ken Lovell who has commented on Jackson's evisceration of Rudd, is the Ken Lovell of:
http://kenalovell.com/blog/
http://kenalovell.com/
For I find the two sites, taken with Lovell's remarks on this page amusing. Though it is not required to kill Lovell's obsession with 'credentialism' and other matters, it's a pleasure to use it. It's enjoyable as Lovell raised a pressing question, contained in comment No 16 by Lovell, from In other words he is engaging in scholarly activities..., to, ....expect to have to explain why anyone should take my writing seriously."
1.Remarkable. No first rate scholar I have had the pleasure of also a jolly good intellectual fight with ever felt the need to justify why they should be taken seriously by reaching for a credential sheet. They, as I do, assume their mastery of the field speaks for itself, as it certainly does. I defy any man to take on, as I did, very fine scholars when not equal to it. Rudd is no scholar in economics and is not equal to the task he set himself, even though I agree he is helped by advisers, demolishing Austrian school economics and not only Hayek but, crucially, the potent seminal thinker, von Mises.
2.What is this nonsense - before deciding whether to devote scarce time and effort. In the past, it's apparently for many these days the distant past, anyone genuinely engaged in their field found it no bother at all to engage in others who are serious and have serious things to say. And grave matters are at stake in economics. Lousy economics has delivered lousy policies that have caused damage and have hurt many. Jackson did what the CIS, IPA and the Right cannot do and against the Left, eviscerated non-existent economics just lousy, destructive nonsense, and defended capitalism.
3. its perfectly legitimate to inquire about his scholarly qualifications. What, there must be 'credential police' to approve before someone engages in scholarship. Me, I couldn't care a hoot if anyone never went to a school from the age of 5 but off their own bat emerged as a first rate scholar. Why would anyone sensible ignore a fine scholar who had never even spent a day in school.
4. I fail to see how this makes Lovell a a genuinely learned man in economics, from Lovell's website:
"became an academic almost by accident. From 1978 to 1992 ...worked as an industrial relations/human resource management executive in the
building and construction industry. I was the National Industrial Relations Director of the Australian Federation of Construction Contractors for several years, following a stint as Director of the National Industrial Construction Council.
"in the early 1990s I got out of employment relations into more general lobbying and then consulting work.
IR, ah yes, what a recommendation. Were they, bye the bye, the days when Lovell became the formidable Professor of economics. I can;t write to some distinguished economists overseas to ask if they have heard of them. I wouldn't do it. No fear and no need.
5.1995 went back to uni. Bachelor of Commerce from Uni of NSW... 1960s but didn't get very good grades. There were too many distractions.
Lovell's shcolarship stopped when he gradauted and, as he remarked, badly read in it and only passable intellectual depth.
1995 a Bachelor of Social Science at Southern Cross as an
external student... subjects that were related to my work experience and it
was interesting to get a theoretical insight into the events that I had been part of.
enrolled at UNE as a cross-institutional politics student for two years and did
some of my work there.
mastered the art of academic writing so I went on and did honours. I got a first, [then]...a job at Griffith doing research .... and then [commenced teaching]
What! It took from the 1960's to the 1990's to learn how tow rite a paper? My mistake. Lovell read sociology.
Sociology, a pseudo-science, cuts no ice at all. The substantive challenge in sociology is 'mastering' not jargon because it's an insult to jargon, but a tortured abuse of language. The 'distinguished' sociologists alone use three to five paragraphs to deliver a very ordinary, at best statement try, facile.
Wading through one of their volumes is teeth gritting stuff. That is what is 'learning to write and academic paper is in sociology, as opposed to someone solid in a sound field who crisply sets out an argument in brief, incisive strokes, using quotes accurately and citations done, wrapped and out the way, and it certainly stamps everything Jackson writes; and it is acquired before, or should be, before anyone goes up to University as an undergraduate .
Lovell's credentials do no read as the life of a rigorous scholar engaged in intellectual progress in their chosen field.
6. Lovell contradicts himself , in comment 3 he wrote:
Why are my publications and qualifications relevant Rafe? Im not trying to explain Hayeks writings. Ive read some of his stuff, its quite clearly expressed and doesnt require interpretation by amateurs.
In comment 16 he wrote " I would equally expect to have to explain why anyone should take my writing seriously." Everyone is waiting Lovell.
But this is trivial to:
7. Lovell's notion of rebutting Jackson is an ad hominem smear, which is nothing but an attempt to damage Jackson's standing as an economist and more on this below. This does not rate as the rigorous reasoning expected of first week,freshmen, though there is plenty of evidence many have been admitted to reading at university who are well below this very basic mark.
Jackson has spent his life in intellectual advance in his filed, it is easy to spot by a good sign, the sheer body of works he cites and quotes and accurately because why pretend to put an argument, a solution to a question, a theory, when someone before did it. Jackson quotes them because he is learned in depth and breadth, and formidable because he is a theoretician in his own right, and thoroughly understands the sources. His articles on Brookesnews tell me that.
It's a bit like all those who are in awe of Christine Nixon because she has credentials and is therefore an academic. A swift survey of her grounding makes a good giggle, and it is reflected in, this neo-Marxist moron is ignorant, she is below fifth rate, emptier than a colander holding water. Gee, all her credentials and Lovell says, when some one has credentials they have to be taken seriously. I would! But I can't stop laughing.
It doesn't pay for Lovell to smear someone on a straw man of a test, credentialism. Better still, when Lovell's own 'credential's don't reflect a rigorous scholar whose life is spent in his chosen field. And sociology, a pseudo-science, cuts no ice at all.
Just wished to clear this up, before making further remarks, because I haven';t finished yet. I'll conclude this section: Lovell shouldn't merely make good his claim. He should confront Jackson directly. Best of all, Lovell should send an article to Brookesnews rebutting Jackson. I love blood sports.
The rest of what I have to say, I will write up on my site MT. Yes, the best is yet to come. I'm going to eviscerate some of Lovell's stunning economic analysis, and best of all, I don't have Jackson's depth and breadth in economics. This is hilarious. Lovell pretends to eviscerate Jackson, and I am about to send some of Lovell's right down the drain. Nah, I'll do it now and post all this on MT, He doesn't know what is wrong with what Krugman wrote.
It was the policies Krugman supports that caused the recession, and that diseased Leftist hypocritically wrings his hands, that's a callous, calculating, treacherous Leftist in action and that is what Krugman is. Oh, what policies Keynesian snake oil. For a thorough, masterly account, google, Krugman Brookesnews. Jackson has eviscerated Krugman time and again over many years. And there is Professor Lovell who just doesn't have a clue about Krugman, and saying admires Krugman's callous lie.
What was that point you attempted to make, Lovell? I know, it was all about intellectual integrity and attacking Jackson to, well what else but attempt to smear his reputation as an economist. Bye the bye Lovell, Jackson is internationally highly regarded. I know this from overseas economists I correspond, citation of Jackson in a welter of material. The ILO studies him, the ACTU do too and fear him. That's some reach. Where's Lovell's? Here it is:
Besides his feeble grip on Krugman, very revealing it is too, Lovell is a callous Greeny who spat on victims of the fire-storms in Victoria. It's Politicians imposed Greens Policies' that killed hundreds of Victorians. Lovell equates this with 'natural disasters'. This is a damned lie. His stunning articles on Krugman and the fire-storms by which Victorians were murdered, are confined to his blog site. That's real reach, that's treading the giddy heights of distinguished scholars.
Lovell, being a dedicated Greeny, has blood on his hands. Lovell can write a defence of his Greeny, economically illiterate and anti-science beliefs and policies and I'll post it on MT. I confessed it above, I love blood sports.
What you say about the Ozzie is true Fyodor but with a more enthusiastic bunch of Keynesians in Canberra I thought that part of the equation was a one way bet and they didn't disappoint. If you viewed gold as just another commodity, then clearly along with the crash in commodity prices(from those panic buying highs as fiat money went looking for value imediately after asset decline)and forthcoming recession/depression, you would expect the 'goldrums' for a long time as well. Austrian analysis said no if Keynesians were to roll the printing presses and so gold has climbed out of that initial trough. In terms of US$, gold has been trying to break out of the $850-$900 range for some time and one suspects some central bank intervention everytime it approached $900. Whatever, it has clearly sailed through that and the $950 level now in an ominous warning to the US Fed.
Gold is hedge against past and present Keynesian sins in two ways. Either a safe haven in depressionary times as years of monetary induced malinvestments are unwound, or a hedge against future inflation should current Keynesianism prevail. In Austrian opinion is that's an each way safe bet and we'll see just how long US Treasuries are supported, should Keynesians succeed in reinflation. With virtually zero interest rates now, any whiff of rising interest rates (ie bond price declines) will produce a horror feedback scenario the likes of which these central bankers have never experienced. They should ask themselves where will all that fiat money go if it's not already beginning to?
By the way you don't take a decision to flog a share portfolio lightly. You analyse and agonise over it for some time before finally click, click, click.... all at whatever market prices and then see what you've got to play with and where you're going to put it. All a bit too hysterical for MrsO I can assure you, but she's a bit more of an Austrian fan nowadays.
Douglas,
Kruggers was one of the very few to point out the housing bubble and its enivatable consequence.
Far from being wrong he was very very right.
Here's a conundrum for you Fyodor in the world's eighth largest economy- http://www.news.com.au/story/0,10117,25071808-401,00.html?from=public_rss What would you do now they're running out of cash? Ask Washington to print some more or tell public servants they have to take a haircut like the private sector and cut their wages accordingly? That's called deflation by the way.
Wow, that's amazing: an asset that outperforms whatever the conditions? It's a Good Thing you made this discovery before everyone else bought into gold and made the easy gains. You keep the faith, y'hear?
Um, no, it isn't; it's called "retrenchment". What do the fiscal problems of California have to do with the price of fish? Or gold, for that matter.
Fyodor
It does seem to be what's happening now though, Fyds. Basically gold hasn't just risen against the Aussie alone, it's gone up against every major currency.
It could be indicating something new, but it's too soon to tell.
Observer
How about the old fashioned thing. Cut expenses to current level of tax receipts. Since when has a downturn become automatically become deflation? It's not.
Homer:
Krugman predicted a business cycle? Do you consider that unique for an economist?
Response to Michael Kalecki, comment number 41.
If Krugman was "Far from being wrong he was very very right"
How, then can this by Krugman, be explained:
Dont Cry for Me, America
January 18, 2008
http://www.nytimes.com/2008/01/18/opinion/18krugman.html?ex=1358312400&en=cdfbff07fe6a339a&ei=5124&partner=permalink&exprod=permalink
If he had predicted as you say, why hasn't reffered to his record, not out of pretentiousness but for the demonstration of prediction and, crucially from theory.
Jackson, in contrast, has warned for many years what the consequences of keynesian snake-oil would be. In addition In 2004 he predicted, a prediction gnerated out of solid theory, the bubble would burst in 2008 plus or minus a copuple of months. Now, this is prediction and he got it all dead right.
So, to examine Krugman the marvelous treacherous Leftists, this, as only a couple of refernces that shows how shallow Krugman is and his prediction record - it's so shallow he never did predict:
1. Obama's economic folly and Paul Krugmans hypocrisy
Monday 16 June 2008
http://www.brookesnews.com/081606obamakrugman.html
2. And I include a coule of quotes from this article:
Paul Krugman's explanation of the financial crisis is pure baloney
Krugman admits that his forecasting record is not what one might call brilliant. In fact, if he had worked for a stock broker he would have been fired.
There are several striking things about Krugman's approach: first, he makes no reference to real factors. Second, capital as the material means of production does not rate a mention. Third, the role of credit expansion is dismissed. Fourth, makes no reference to the degree to which government intervention can greatly worsen a crisis. (When writing on the Asian crisis he made no mention of how government planning, especially in South Korea, made things much worse). Fifth, for him there is no capital structure. Sixth, even the structure of relative prices does not warrant any consideration.
http://www.brookesnews.com/082710krugman.html
This is all besides the fact Krugman is all for the very snakeoil that causes recession, and that is not all that is economically destructive Krugman supports.
Simply put, Krugman can't defend his mendacious 'efforts' in 'economic analysis and commentary'. If he tried, a competent economist would make mince-meat of him in full view of the public. Krugman knows this, that's why he won't face economists who can defend capitalism and eviscerate Krugman's 'economics'.
He's only another Deplphic Oracle, and that is being generous, but he is ideologically driven to dwell at the bottom of the ocean. He has some very rotten things in common with Lovell. Perhaps they should exchange love letters.
Douglas,
Kruggers said for yonks that there was a housing bubble and that prices had to fall and when that would happen there would be a severe recession.
In that I can recall Robert Schiller and Nouriel Roubini making similar comments.
His forecasting 'errors' was in the timing.
It can be easy to spot a bubble sometimes it is very much harder to predict when it will spike.
Homer:
Can you link to anything Kurugman said before 2007 that shows evidence of his fears about a housing bubble.
I'm not of course suggesting I'm doubting you, but I would like to see it.
Forrest,
go to his blog and go from there.
It is even easier to go back in time and look at the sites back then.
Not very hard.
Anyone who has looked at this would recall how the Bush attack dogs got into Kruggers for expressing his opinions about housing.
Of course your memory of that is conveniently blank
Krugman dod not independently identify a bubble and its repercussions he only considered the views of the likes of Morgan Stanley and PIMCO - he was then chided by de Long
I don't read him, so I wouldn't know.
Not conveniently so, Homes. I never read any attacks on "Kruggers" for pointing out a housing bubble well ahead of time. Feel scorn towards me, beat me across the head and ears, but I just can't recall.
Can you help? Stop playing so hard to get and provide a link. That's all I'm asking.
Housing bubble is a late sign. Manufacturing is hit first and goes into contraction. Why didn't he predict something so fundamental?
If he did make any predictions before 2007, and interestingly any more than a year or two before, on what were they based? What is the reasoning? This means solid, sound theory. Best of all, if he was articulating sound explanation, which is what theory is, he would have hammered the Feds and their credit expansion, and long before the recession began hitting it's final manifestations such as housing bubble bursting.
Solid theory is not in Krugman. It's not there.
It might be pointed out, Keynesians is anti capitalism, and that is what Krugman is. Ruination of many Amricans is of no concern to him. The rise of the hard Left is.
Waffling about signs is not prediction. It is safe to say, "a housing bubble and that prices had to fall". Many a man in the street knows this, and becomes apprehensive when they see bubbles forming. But it's not prediction.
Jackson predicted: He predicted it would happen, when it would happen because he thoroughly understands what causes recessions, the dpeth to cut through to it. Now over a decade Jackson wasn't merely predicting, he was warning, giving the reason,the cause and he was tracking it, the RBA in Australia,and the US ed.
Dr. Frank Shostak was doing exactly the same.
Prediction is a very important test of theory. What's Krugman's waffle and it is waffle but mendacious misleading of the public. Then he has the hide to spit on modest Americans over debt without being honest in stating, it is keynesian monetary expansion that caused that. Wring his hands over their plight today. Of course he has the hide to do this, he's a treacherous Leftist.
Rog postd before I completed No53 and what a Krugman killer it is,
"Krugman did not independently identify a bubble and its repercussions he only considered the views of the likes of Morgan Stanley and PIMCO - he was then chided by de Long"
No it isn't a killer indeed it is a clincher.
Kruggers is saying in 2005 a bubble is developing.
douglas,
the housing bubble crashed which LED to Manufacturing then crashing.
One does not have to be the first to identify something merely to see what is there.
He did as Rog has excellently pointed out.
Brad didn't.
That is a blatant misrepresentation of what he actually did say Homer but it is in keeping with Krugman, who likes to claim all the credit
JC asks- 'Since when has a downturn become automatically become deflation?' Since the Great Geriatrification began with a bang rather than a whimper, bearing in mind the youngest is 47 and the oldest 64 and their Great Moderation phase is finished. Keynesian stimulatory policies worked a treat in GM phase but not now nor in their earlier Great Stagflation phase. As one sarcastic media report quoting Obama in response to the passing of his stimulus bill put it- 'It is the beginning of the end..' A demographic downturn of this magnitude automatically becomes deflationary when public sector haircuts follow the precursor private sector ones, given the overall size of the public sector nowadays. That's Californy's massive problem now and soon to be ours.
claptrap Rog.
it is there for all to see.
It is early on and he gets quite pessimistic around 2007.
Observa,
The great moderation did not see any 'Keynesian' policies.
Yes it is easy to argue it is Keynesian now. the US has a liquidity trap and hence must rely on fiscal policies to get out of the mess
The truth is that in 2004 krugman was urging Greenspan to keep % rates low, he's a Keynesian remember?
Apologies for interrupting this episode of duelling oracles, but I have a question for Douglas.
Not that I buy into the credentialist line KL was pushing earlier, as Jackson's arguments stand or fall on their own merits, but what's the evidence for your assertions, Douglas?
Here's the point about predictions and forecasts. If someone says they predicted some out of the loop financial event they need to show how they mitigated or profited from it.
Homer: Telling us Krugman predicted the asset crash is like telling a boater to be careful navigating in the barrier reef.
The Economist was warning about the various housing markets for 6 years. Guess what though they actually thought the US housing bust wasn't going to be a big bust. According to them Australia and Spain were and the UK was about 3rd.
'The great moderation did not see any Keynesian policies.'
Michael, I use 'Keynesian' in the broadest sense that it is an unfailing belief by policymakers that they can control things like 'animal spirits' and all things that go bump in the night. Dump Greenspan, et al in with them as they lowered interest rates, bailed out S&Ls, LTCM, etc, creating long term moral hazard. Money supply went crazy throughout the GM, but instead of fuelling inflation due to an alignment of the planets of MDC demographics and Asian's propensity to save, it didn't show up in general inflation as it did in the Whitlam, et al era. Everyone missed that and here we all are. Austrian analysis simply predicts that the longer and deeper the malinvestments due to credit expansion, likewise the unwinding. Ipso facto Keynesians everywhere are flogging a dead horse now and the mug punters are beginning to wake up to that-
http://www.telegraph.co.uk/finance/4682554/Gold-hits-record-against-euro-on-fear-of-Zimbabwean-style-response-to-bank-crisis.html
Michael Kalecki, how does a housing bubble cause manufacturing to crash?
It's a crucial question, for if it means as it reads, a serious fallacy is committed. So, I'll leave the questrion standing for the moment.
Now, I follow the, The Australian Industry Group's Performance Manufacturing Index
Amusingly, AIG doesn't graps the force of its own Index, but this is another matter.
AIG had tracked four months to Septembers 2008 and summed in it's October 2008 report. 4 months mind, July to September. Manufacturing ws already in contraction. What does this mean?
Next, Austrian analysis predicts prices of manufacturing input prices will rise first too, and higher than consumer prices will (these rises are due to the cause of recession Central Banks' money creation - try it at home and see what happens). What happened?
From March 1996 to January 2008 they had risen by a massive 73%. This by the way is how Costello recorded surpluses. He multiplied Government Federal consumption - at times it seemed near exponential. His increased were less than the massive increased in tax collection all from the Central Bank inflation resulting in prices lifting.SO long has his budgets were less than the multiplication of revenues, he was bound to record 'surpluses'.
Until December 2008 when the RBA tried to deflate, the RBA had engaged in monetary expasnion from before 2006 until Dec. 2008.
These are not considence, and chicken oracle signs, they are evidence of the cause of recession.
What is required? Capital theory.
I leave the question, 'how does a housing bubble cause manufacturing to crash?'
In case I've misunderstood Kalecki
Observer:
California's troubles are the direct result of falling tax receipts top meet a mostly fixed layer of expenses. It doesn't portend to anything other than that. Fact is, it's actually a lagging indicator or events rather primer of things to come. That's not a sign of deflation .
I presume you're suggesting the older generations are causing deflation? So if the oldsters all died tomorrow we would immediately find ourselves with inflation?
Ob:
Can I give you a little advice on your gold trade? Bearish/bullish sentiment indicator is at 83% this morning. Not saying gold can't go higher, but I'd be careful touting gold when it looks increasing like a crowded trade.
Market consensus has killed more people than the 2 wars combined.
Don't worry about me JC with no debt, rental income, surplus to requirements savings half in cash and half in Perth Mint Gold Warrants. You want to worry more about WA taxpayers should 'their' mint fail to have the gold stashed away to cover those warrants.
Whilst the price of my freehold RE holdings is purely academic and I can't do much about the missus and my compulsory super going down the gurgler, I can concern myself with what to do with increasing savings. I'm hedging half gold half cash and can sell that gold holding at the click of a button should a better opportunity present itself. It's just a question of timing and yes I do think they'll overbuy gold at some stage, but that's some way off IMO.
As for- 'Californias troubles are the direct result of falling tax receipts top meet a mostly fixed layer of expenses.'
that's stating the obvious but behind that is a bloated public sector grown fat on funny money tax receipts and asset returns that were unsustainable, once an aging demographic realised it was had and is now hell bent on restoring real savings. Actually what many are doing now is furiously saving to prop up existing values, rather than see them fire-saled and those losses amortised. Swings and merry go rounds really. Young people aren't net savers. It's the propensity to save of the aged that matters and that demographic really matters now. They're a black hole for pouring Keynisian fiscal stimulus into now. Trust me, I'm one of them.
Homer says dig into the past, here is Krugman in 1998 explaining that recessions are caused by business increasing cash reserves and that it can be easily countered by increasing the supply of money and if banks make bad loans, just junk 'em
He is wrong there!
Here he is in 2007 talking about the supply of money
The man is a nut
perhaps rog you should read articles you link before linking.
For example Kruggers is perfectly right.
it is very hard for policymakers to deal with liquidity problems.
Merely cutting rates doesn't right the ship.
HE isn't wasn't a nut he merely foretold what would happen.
Homer:
Stop telling us what he foretold and link to it. Recall last time you did that other people found out you were incorrectly attributing views the author of the book that never went close to suggesting those conclusions. The author could quite possibly be in a strait jacket and padded cell if he knew what you did to him, Homes.
Be a good guy and give us all the link of "kruggers" foretelling.
Again you misrepresmt Homer, others foretold what would happen yet you ignore them and put Krugman up there as a prophet.
Anyway here's an alternative fix- "Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate ... It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.'' http://www.atimes.com/atimes/Global_Economy/KB19Dj02.html Yeah that'll be the day. Instead it'll be groundhog 1930s, hopefully without the grand finale.
And fer gorsake stop laughing, this is serious- http://www.atimes.com/atimes/Global_Economy/KB19Dj01.html He's a funny bugger sometimes Mogambo, but they do so richly deserve it.
Hang on a minute, Kalecki you asserted,
Housing bubbles cause manufacturing to crash.
The question you have not answered is, how.
Instead, you leap -
"For example Kruggers is perfectly right."
Ah, Krugman is right, fiat. No, that's not a defence of krugman's 'economics'.
As for "it is very hard for policymakers to deal with liquidity problems."
Do you understand what you have stated? This question I'll also give you time to answer.
"Merely cutting rates doesnt right the ship."
Do you understand what a)Interest rates are? b) What cutting interest rates is?
"HE isnt wasnt a nut he merely foretold what would happen."
No he didn't, and the reasons why were given in comment 53 and cemented with 63.
But let's see how good that diseased Delpic Oracle leftist Krugman is:
Rog, good man, that is also a sterling find, comment 67:
'Krugman in 1998 explaining that recessions are caused by business increasing cash reserves and that it can be easily countered by increasing the supply of money and if banks make bad loans, just junk em
[Krugman:] "nobody has managed to explain why bad investments in the past require the unemployment of good workers in the present."
The force of Krugman's assertion is:
For manufacturers to increase their cash reserves in the manner described by Krugman they would have to reduce their purchases of intermediate goods. This is like Coles or Safeways suddenly deciding to stop buying inventory to so as to increase their cash reserves. Its crazy. The Austrians have been the only ones able to explain the phenomenon of manufacturing being hit first. Krugman is just thrashing about.
Krugman has lied on "bad investments" and unemployment. It's not 'bad investments' but malinvestments induced because Central Banks' created money distorts prices, and the crucial one of interest rates. Recession, unnecessary but for Keynesian snake-oil, wipes out malinvestments. Created money creates the appearance savings are higher than they actually are.
Right now, Kalecki, you are as Krugman, just thrashing about. Now, I can finish this off right now, but there's a question you have a little time left to answer:
Housing bubbles cause manufacturing to crash.How?
In view of your statements, it as well you give your explanation of "liquidity", and what a)Interest rates are b) What cutting interest rates is
I'll give a few hours, for then I finish it off, and that means Krugman and your defence of that treacherous, diseased Leftist.
Rog,
At no time did I say KRuggers was the ONLY person however I am happy you produced the evidence he was saying housing was going bubbleish in 2005.
HE does foretell the problems which the Fed would encounter.
either you guys can't read english or you simply do not understand what is written.
Douglas ,
for a start Shostak was no more accurate than other in the market.
I remember as I was there.
housing prices fall, people walk away. housing goes into a downturn. This affects the economy at the margin.
Of course it is the sub-prime fiascos that lead to the credit crunch where investors have little confidence in any securities, no-one has confidence in banks and their solvency and liquidity. Not to mention the effects of banks lending falling.
the housing bubble has now affected the real economy indeed the US is now in the worst position since the great depression.
You haven't answered, you are asserting, Housing bubbles cause manufacturing to crash.
What is,Kalecki, the great economic explanation, which is what theory is. So, what is the theory to ground the merely asserted.
Unbelievable.
well actually I did you simply do not understand
You did, eh.
I take it that's your explanation of the major question, and then all the sundry questions your assertions are question begging?
Well, I'm about to turn to writing up the promised response. Any more explanations to add before I set it all up and then enter it?
I have completed the response to kalecki's 'defence', but I have a little cleaning up left to do, typos, and insertion of a bit of info that is needed. It will be up tomorrow - and on my site tomorrow
Douglas, once you've finished your homework, could you answer my question back at #60?
Fyodor: it's not trivial as you imply, "homework", matter.
I stepped out all that I wished to say. That's one thing. Secondly, it's not unimportant to put it in good form, right down to errors, and a comment or a few are untidy in this way.
Secondly, matters interfered today. It took up all my time and now I have to go to attend to some more business, and it's also my weekend chewed up too.
In the meantime, there is another thing missing in all this debate. Two things really.
1. Gruen is strangely silent. As an "Hayekian expert" why hasn't he also jumpoed, and surely he would be able to kill Krugman's economics.
Having read some items by Gruen on Hayek, some observations:
Hayek was an Austrian. It means understanding the Austrian school and, it goes without saying, the influence on Hayek, Mises. The Austrian school is not monolithic.
Hayek provoked an understanadable reaction on something he got wrong. Hayek was mistaken on central planning. It was von Mises who nailed it, and long before Hayek ventured his treatment. Coase, bye the bye, nailed the firm and its size, the market decides it.
The essential point is, Gruen did not jump in at the start and nailed Lovell, Kalecki and Krugman.
2. It occurs to me, that each attacking Jackson, and / or defending Krugman's economics, why haven't they challenged Jackson, and also since Kalecki raised it, Shostak.
Here's a passage from what I've have put down. It is a note on debate, lack of:
"Dr. Frank Shostak publicly issued an invitation to Krugman to engage in a public debate. He refused.
As a contrast and in another field the BBC Copplestone - Russell debates. Copplestone accepted to defend theological claims against physics. There is much behind the arguments of both that is not obvious. However, it was a great battle. Copplestone made a mistake, a fundamental one, and from this he made several more. There is an argument to be made, but he didnt find it. Russell eviscerated Copplestones case.
It was tense, dramatic engagement which had a broad audience, live and tuned in on radio, in great numbers. Neither man shirked the challenge and Copplestone didnt shirk when the early indication came he was done -- its in the transcript. He committed a very subtle but fatal error in his reasoning. He fought on the best he could until, put it this way, in his final speech he was re-stepping through his reasoning. He wasnt prepared.
Krugman wont face a challenge. He ran away. Hes not the only one, and it is not only Leftists who run away either. If, Kalecki, Krugmans reasoning is as solid as you say it is, why is he afraid?"
The trouble is, it's not only Leftists, but it is also the Right who fear debate from those solidly equipped to engage in it. The odd thing is, Gruen knows this too.
It's really odd that some having a fling against Jackson and Dr.Shostak, don't go the sources direct. I'm not apologising for them. They are simply fine economists and their record demonstrates it. Krugman blows away in the wind.
There is something else, lousy defence is as bad lousy economic policy, it causes great damage. It shows, that's why Rudd is in office and has delcared this morning he will wipe out capital via carbon taxation middle of next year. Just spiffing. Meanwhile, the commentariat continue to attribute the also dmaging recession to false causes, letting the culprits off the hook central banks and their monetary expansion that led to this mess.
So, I meant it Fyodor, in preparing the response I wasn't being casual about it. Then, when I look at it, because it is serious, why not go to the sources.
I haven't read a refutation of Jackson's demolition of Rudd. Lovell fell apart up his own diseased Greens backside.
Kalecki merely delivers assertions as 'argument'. And Gruen, well, he is the CIS "hayekian'. By the way Gruen, that item on Gitmo, is a disgrace. Treacherous Leftists will enjoy it. I had it from a first rate source, who hunted vermin in Afhanistan what they are and do - also to villagers. I wrote it up. I'll republish it Monday. And that is what is sitting in Gitmo, and Hicks was one of them.
Torture, you call what you describe torture? Jeepers, my grandfather, fighting Germans 4 years, escaped three times returning to the fron teach time, he and his mates,in that case, were put through unimaginable torture, but it wasn't, it was standard what they endured. A man could be shot for merely dropping his hands on a forced march. Prison life, guys went right round the bend and the food wasn't nice. That's the best of it.
What the Islamo-fascists do to villagers is real torture, just hearing about it can make some vomit. I know, I've observed some retching when I related the accounts.
They were not tortured in Gitmo.
Oh, and the 30 they did release some years ago because they were delcared to be OK, vermin brave men risked their lives fighting and hauled back alive. They all returned to their terrorist units, so brave men have to risk their lives hunting them down all over again.
"Prison life, guys went right round the bend and the food wasnt nice. Thats the best of it."
That's an outrageous lie. Ally POWs were treated very well by the Germans as indicated in the docudrama Hogan's Heroes.
"Oh, and the 30 they did release some years ago because they were delcared to be OK, vermin brave men risked their lives fighting and hauled back alive. They all returned to their terrorist units, so brave men have to risk their lives hunting them down all over again."
Any evidence offered for this outrageous assertion?
"They were not tortured in Gitmo."
Or that one? Any reason why you don't believe the first-hand accounts of those brave men who actually did the torturing?
"The blog ate my homework."
Reply to Kalecki
Oh, it's so straightforward, is it Fydor. It's not. There is a lot involved. Mind, that's why the media commentariat, the 'think tanks', politicians and others get things so badly wrong. They 'know it' and the blow it, badly. Indeed, going through what I had put down, I had to pare back, because chains of reasoning are involved requiring depth, and it is transparent there are those who pretend to know are shallow but this doesn't prevent them from speaking, as it were, excathedra. I stick within my limits, which is why I always attend to the only two in Australia who are equipped. However, the reply:
Those who attacked Jackson's demolition of Rudd did not attack his arguments, failed to show where he is wrong. So, it ended up with Lovell, then Kalecki holding up Krugman as having nailed the cause of recession and predicted it.Still no rebuttal of Jackson, only mere assertions.
Kalecki states a Krugmanism, that 'housing bubbles cause manufacturing to crash'. What is the presumed explanation of how this occurs, the mechanism? None is supplied. A mere assertion, the strength of it can be can be illuminated by its extension, which is a reductio ad absurdum; manufacturing is pinned to housing prices.
To the first, strange notion, it is asserted, 'housing prices fall, people walk away'; why? Those who own outright dont have to walk away; neither do those paying off a housing loan.. Assume there was a 50% price cut in a house price. The owner is still on the same income, say $200,000 with a $900,000 home. He now has a $450,000 home and that is painful, no mistake. He still has his $200,000 salary. If Krugman is right, how can this be?
At the end of the Korean War, there was no housing to speak off. The South had been razed to the ground. That bees had to be flown in before agriculture could be resumed, reflected the total destruction caused by the grim fight against the communist forces. The reason the South recovered and became prosperous was the same reason for the post WWII German 'economic miracle', capitalism.
Paradoxical it might seem but consumption rises in a recession. To this, in a recession housing prices do not necessarily prices collapse. In Australia, in the 1990s recesssion (if it wasnt a depression certainly in Victoria its splitting hairs to tell the difference) housing prices did not fall.
In the current recession, housing prices did go through a slight correction of a few % in 2008. In anticipation of it the banks corrected their housing valuations some months before the market correction. The price falls did not diverge from the banks anticipations. Thats it, end of the fall. Prices have firmed. These corrections had nothing to do with manufacturing. If Krugman is right, how can this be?
A telling report was published last year, August 2008 by EL Consult Australia. It related devastating evidence for Australians. On a bright note, it is also destructive evidence against keynesians and any other economists who either ignore or dismiss capital theory. It lifts out a telling indication: employment of engineers is being cut. It gets better:
Engineers are required for production of capital goods, the building of plant and their maintenance for production. No additional engineers will be hired. No engineers chaning firms or retiring engineers are being replaced, and won't be replaced.All other types of labour hired for these operations will also be cut. Hiring for all types of labour will fall at a high rate.
The report concluded, it confirms no new investment is planned by firms, and firms are peparing to contract. For the manufacturing states, Victoria and NSW, that is a devestating report.
Well, ladies and gentlemen, its been happening for some time now. Contraction in production means some level of unemployment. Housing bubbles don't figure at all, only capital does. The AIG Index is only another attestation of what Austrian capital theory predicts, and only this weekend the news was full of more firms contracting,or facing closure. The contraction cannot be explained by Krugman's odd little investion
Krugman in 1998 explained recessions are caused by business increasing cash reserves and that it can be easily countered by increasing the supply of money and if banks make bad loans, just junk em
Having put the force of what he said -
For manufacturers to increase their cash reserves in the manner described by Krugman they would have to reduce their purchases of intermediate goods. This is like Coles or Safeways suddenly deciding to stop buying inventory so as to increase their cash reserves. Its crazy. The Austrians have been the only ones able to explain the phenomenon of manufacturing being hit first. Krugman is just thrashing about.
Lets reduce Krugman's notion to a single sentence: Firms build funds by destroying their business. My mistake. He's not crazy. Krugman is stark raving mad.
The media commentariat rabbit on about something called a dual economy, financial markets, and the real economy - production. The politicians act on it. The trouble is, it is false.
They are inseparable, they are one and the same. The former exist to raise and form capital funds for investment. Put it another way, capital doesnt occur ex nihilo. Its in financial markets capital funds formation occurs and their allocation. Destroy the former, you destroy the latter. Jackson was too kind to Rudd and his anti-capitalist regulatory, keynesian, 'social democratic policies.
Sound money is generated out of production. Its price is the price of its base, such as gold. Last year it was reported that during the height of the markets corrections, there were some buying oil to use as money as a counter to currencies eroded by keynesian money creation. Gold is continuing to rise. Why would that be, Kalecki, if Krugman is correct?
Interest rates are the price of time, it co-ordinates demand for capital and allocation of capital over time. Natural market rates are real but when central banks inflate (create money) and the function of these vital price signals to entreprenuers and savers. It indicates savings are higher than they really are. This causes the damage that is grievous, to investment.
Having mentioned Dr. Shostak's challenge to Krugman, I had saved and kept the following in my files. In it Shostak nails Krugman's fatal errors and therefore, one can do no better than quote Dr. Shostak and former University Professor:
To finish off, I can suggest a way that would make the statement, people would have to walk away from homes, owned or rented, true. Government can extinguish capital and does. Rudd'sconsumption spend up euphemistically called a 'stimulus' means commandeering savings of Australians and extinguishing them. Wait, it get's better. He can destroy Australians economically fullstop:
Carbon taxes extinguish capital. Its a tax on production. Its no longer a theoretical claim only. The evidence keeps rolling in from Japan, Europe, the UK, and even Victoria Australia. Companies crumpled up because efficient supply of the input energy has been cut, blasted and pulped. Factories overseas folding, thousands suddenly out of jobs each time by the week, and this was occurring before the recession hit and is continuing.
New coal energy plants on a great scale each are needed in Japan to supply demand and they were planned and the plans were killed because of the carbon taxes of the Japanese politicians and now there is an energy crisis in Japan and the fallout from that.
Capital supply to energy producers hit with the tax began drying up by early 2008. Investors dont like their savings wiped out. Under kyoto compliance, there is no future in it, which is why markets wrote down energy companies long before the financial markets correction, and these stocks are still falling.
Taking the next step: What happens to production of the tremendous array of capital goods required for production of more capital goods to finally end up with consumer goods? Gone. So, the modest man is completely ruined too. But according to Krugman, consumer spending maintains capital and increases it. It works! Energy blackouts in Britain, Europe and Victoria Australia. Companies folding, thousands out of paying work by the week, and this was before the recession hit in full force in UK and Europe.
Carbon taxation is being imposed with the policy detail of income transfers which, the policy makers and their advisers assert, will compensate consumers and this consumption assumption will ameliorate, reduce, and eliminate any short- term burdens that flow, such as higher prices. This is right back in Keyneisan fantasy land, and they are saying this in spite of no longer merely solid capital theory, but in the face of the mountain of evidence rolling in. Rudd is going to do this to Australians in July 2010. Next year!
the $200,000 a year man will no longer be in earnings. He cant, because he is out of production. The means of production are no more. Oh, he could take a shovel and dig potatoes by hand, but it is very doubtful he'd earn $200,000 a year.
Ah, since capital is extinct, he doesnt have a shovel. He has to use his bare hands. At this rate, he wont have to worry about his home, and keeping his family. Theyll die of disease, life shortening brutal survival, and starvation; its only a question of which killer hits first.
So reduced, he is hardly bothered by keynesians in Government who expect $300,000 pay by taxing the $200,000 earnings in production, who will be stamping their feet and demanding the ATO collect the mans obviously "hoarded" $600,000 in savings and $300,000 as a fine to teach him a lesson.
Who supports destruction of capital and so the immiseration of millions of Australians?. Why,the Left and the Rigbt do, and they rely on not economics to excuse themselves, for solid economics no more supports this than Krugman's "economics". No, they have something in common with Krugman, belief in voodoo.
Yes, it is straightforward. I asked you a simple question, and you haven't answered it.
Now, now Fyodor, you made what you considered a real, sarcastic putdown 'homoework'. Let's remind readers:
'
'once youve finished your homework',
The blog ate my homework.
I was in the middle of a response Fydor and it is to what the 'debate is about'. Now, what i've seen is:
Ad hominem smears, of Jackson. Then, oh what's his credentials' and so on. Jackson destroyed Rudd and the poison he is pumping out (the fact that he is is a tribute to the incompetent Right)
Then we had assertions to the effect, 'Krugman got things right', when this hard Leftist never has, and there is no mistaking what Krugman really stands for.
I gave a response on points made by Krugman conveyed by Kalecki, in which amongst Krugman's peculiar notions, capital does not figure in his 'economics'. It would easily be said of others that should they come out with what Krugman does, they cannot be considered as even good laymen in economics.
Since Kalecki mentioned him, in the response is included the challenge to Krugman, which also contains a complete demolition of Krugman's 'economics', by Dr. Frank Shostak. To attack Jackson means attacking Dr. Shostak, for his work shows, to read one is to read the other.
What's the defence but all the way through juvenile little whines. Lousy economics is perilous. Monetary expansion is one and Australians are wearing it. Destruction of capital is another. Carbon taxation, to satiate the greens' lie man causes global warming/climate change, is another. People's lives are at stake, and what do we get from spoiled brats but evasion, red herrings, and so on.
Oh, spare me. Shit or get off the pot.