An Austrian in Australia replies to Kevin Rudd’s assault on “neoliberalism”

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.

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Ken Lovell
Ken Lovell
12 years ago

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 Lovell
Ken Lovell
12 years ago

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.

Patrick
Patrick(@patrick)
12 years ago

If that is the case Ken then you should have little difficulty setting out where poor Gerard went wrong.

Michael Kalecki
Michael Kalecki
12 years ago

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

Ken Parish
Admin
Ken Parish(@ken-parish)
12 years ago

Hartcher’s analysis of Rudd’s Hayek stuff is here. I agree with Homer that it’s an excellent analysis.

TimT
TimT
12 years ago

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.

Michael Kalecki
Michael Kalecki
12 years ago

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

NPOV
NPOV
12 years ago

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”.

Michael Kalecki
Michael Kalecki
12 years ago

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

pedro
pedro
12 years ago

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.

Ken Parish
Admin
Ken Parish(@ken-parish)
12 years ago

“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.

Michael Kalecki
Michael Kalecki
12 years ago

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

Ken Lovell
Ken Lovell
12 years ago

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.

TPL001
TPL001
12 years ago

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

pedro
pedro
12 years ago

Ok Homer, you win. Everybody is dumb and only you saw Rudd’s cunning plan from the beginning.

Michael Kalecki
Michael Kalecki
12 years ago

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!

pedro
pedro
12 years ago

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.

Richard Tsukamasa Green
Richard Tsukamasa Green(@richard-green)
12 years ago

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.

AdrienSword
AdrienSword
12 years ago

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.

JC
JC(@jc)
12 years ago

I hear that google whistle

Okay what have I done now? KenL , was that you? How amusing.

Gushing

? 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!

JC
JC(@jc)
12 years ago

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.

rog
rog
12 years ago

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

rog
rog
12 years ago

As for Homer, his hindsight applauds Nazi economic policy along with Mark Latham, who was always political

Ken Parish
Admin
Ken Parish(@ken-parish)
12 years ago

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.

Ken Parish
Admin
Ken Parish(@ken-parish)
12 years ago

As opposed to your lads and ladettes, who just chuck a browneye, so it seems.

NPOV
NPOV
12 years ago

If Rudd’s a leftie, I’m a monkey’s uncle. Turnbull has better leftie credentials.

Ken Lovell
Ken Lovell
12 years ago

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.

JC
JC(@jc)
12 years ago

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

Terrorism – – Posted on June, 30 at 9:54 pm by Ken L

OK Im probably leading with my chin here but let me say that I find the horrifying stories of car bombs planted in the streets of London, ready to shred hundreds of innocent West End theatre-goers unconvincing. Which suggests that Im becoming a conspiracy theorist, much to my horror.

and

You know the other thing that I thought was a bit funny? Well in Iraq, when they find things that are likely to blow up, like cars or houses or whatever, they get everyone to stand back a prudent distance and then blast the be-Jesus out of the suspicious object. But they didnt do that in London. No sir, the coppers nonchalantly threw an ill-fitting tarp around the bloody things and disarmed them.

and

The incidents have of course been noted in passing by the usual political suspects. New British prime minister Gordon Brown has reaffirmed his governments determination not to allow people to be blown up if he can help it while John Howard was on tonights news gravely reminding us how wise he was in sending out those fridge magnets so we were all on the alert for illegally parked Mercedes with smoke coming out their doors. And the wingnut blogs are in a perfect frenzy screeching See theyre still there! We warned yas! WE WARNED YAS!!

But somehow I remain unconvinced. No doubt it just goes to show how unworldly I am.

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?

JC
JC(@jc)
12 years ago

Sorry Ken P

Didn’t see your words of wisdom until I posted the last comment.

Anthony
Anthony
12 years ago

Why is everyone calling Michael “Homer”?

Ken Parish
Admin
Ken Parish(@ken-parish)
12 years ago

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.

rog
rog
12 years ago

He is called Homer because he hits “outside of the park”

observa
observa
12 years ago

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.

Fyodor
Fyodor
12 years ago

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.

JC
JC(@jc)
12 years ago

I get the feeling you’re a gold debugger, Fyds.

Douglas
Douglas
12 years ago

[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.

observa
observa
12 years ago

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.

Michael Kalecki
Michael Kalecki
12 years ago

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.

trackback

[…] An Austrian in Australia replies to Kevin Rudds assault on neoliberalism […]

observa
observa
12 years ago

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.

Fyodor
Fyodor
12 years ago

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.

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?

Fyodor
Fyodor
12 years ago

What would you do now theyre 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? Thats called deflation by the way.

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.

JC
JC(@jc)
12 years ago

Fyodor

Wow, thats amazing: an asset that outperforms whatever the conditions?

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

What would you do now theyre running out of cash?

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?

Douglas
Douglas
12 years ago

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.

Michael Kalecki
Michael Kalecki
12 years ago

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.

JC
JC(@jc)
12 years ago

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.

Michael Kalecki
Michael Kalecki
12 years ago

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