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Comments about ‘My view: Looking beyond John M. Hayek and Friedrich Keynes’

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Published: Thursday, Sept. 27 2012 12:00 a.m. MDT

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Roland Kayser
Cottonwood Heights, UT

The current GOP ostensibly reveres Hayek, but they disregard much of his work. For example, he thought that the provision of healthcare was a legitimate government function.

reymun77
Denver, CO

Friedman understood the two fundamental human emotions: fear and desire (or as those who revile those unafraid of failure, risk and competition term it0 "greed").

If anyone would understand motivation, I'd assume it to be a theatrical director....Rand "marginal"? She occupies the top two spots on the Modern Library's list of 100 greatest American novels as judged by the public..

Hayek marginal?

The only person who is marginal is Krugman. How can the government take on more debt and print more money and expect a good outcome? By selling wheelborrows with which to carry our money to the store?

Roger Terry
Happy Valley, UT

Excellent "My View," Eric. Yes, Krugman can be a bit pointed in his critique, but the GOP does deserve to have its nonsensical economic ideas revealed for what they are.

SEY
Sandy, UT

Here's another aspect that the GOP and, likely, most other people disregard about Hayek: he considered himself a "social democrat." For example, he dedicated his Road to Serfdom to "the socialists in all parties."

They also disregard that his major work as an economist was something called Pure Theory of Capitalism. His fame as an economist came from other works, primarily 1) Monetary Theory and the Trade Cycle and 2) his Prices and Production. The Road to Serfdom was more of a philosophical work that attracted popular attention, but was not the basis for his Nobel Prize selection. His greatest contribution was his trade cycle theory, which he borrowed up from the great Ludwig von Mises. It was not his original thinking, but because Nobel committees cannot find it in their Keynesian hearts to bestow the prize on anyone but another Keynesian, they waited until Hayek established himself as one of them and no longer as an Austrian economist.

Austrian economists predicted the dot-com bust, the real-estate bust, and they predict that the prescriptions of Bernanke and Krugman will cause probably the greatest economic downturn of all-time.

reymun77
Denver, CO

Sey- thank you for educating me further on this matter....insightful indeed, and useful

Eric Samuelsen
Provo, UT

Reymun,
I would suggest that the fact that Ayn Rand is popular as a novelist in a poll does not suggest that her views on economics should be considered of value. And since essentially all major economists predicted the real estate bust does not suggest that the views of Austrian school economists should be given any credence whatever. They're wrong about Krugman, just as they've been wrong about every development since the establishment of the Fed.

ron holdaway
Draper, UT

So Mr. Samuelson is putting all his eggs in the Krugman basket. Problem is Krugman is a rabid partisan and one can't be sure his politics aren't framing his theory. Even so given the fact that the most noted economists have more often than not been wrong in their prophecies, perhaps even Krugman in his non-partisan moments, if he has any, would admit to a degree of humility as to his "solutions". Samuelson also ignores other noted Economists who don't write columns who disdagree with brother Krugman. I recall in none of Krugman's pre-crash columns any warnings of an impending sub-prime crisis. The relatively conservative Economist, edited in London, was warning about the bubble and the Frank-Dodd policies long before the bubble burst. Incidentally at the time of the Nobel prize there was much talk that the prize was as much due to his anti-Bush diatribes as his professional work. The Swedes loved his politics as much as they may have admired his theories.

Roland Kayser
Cottonwood Heights, UT

To ron holdaway: Paul Krugman is far less partisan than any economist on the right. He very frequently criticizes President Obama and the Democrats.

Twin Lights
Louisville, KY

Eric,

First, if another post appears similar to this, I apologize. I have waited several hours and my original post has not surfaced so I am writing again.

Second, I agree wholeheartedly that neither Keynes nor Hayek are the gold standard. They were innovators in their time, but modern economics provides more nuanced views and better data support.

Third, I too am discouraged with the modern fascination with Austrian economics. Though Hayek moved forward, the thoughts of the most ardent Austrians have not. Their patron saint is Von Mises, not Hayek.

I differ with you on Krugman. He has some good insights but is clearly partisan. I don’t think anyone is 100% on predicting the future (not over the long term). The economy is too complex and the variables too many. But he did have that great quote about Atlas Shrugged . . .

Hank Pym
SLC, UT

re: reymun77 8:58 a.m.

Krugman is forgetting one of the basic tenets of economics... the more common something is; the less valuable it is.

LDS Liberal
Farmington, UT

And the GOP VP nominee is Paul (Ayn Rand) Ryan.

I loved this:

"The point is, ladies and gentleman, that greed -- for lack of a better word -- is good.

Greed is right.

Greed works.

Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.

Greed, in all of its forms -- greed for life, for money, for love, knowledge -- has marked the upward surge of mankind.

And greed -- you mark my words -- will not only save Teldar Paper, but that other malfunctioning corporation called the USA.



Thank you very much." ~ The modern GOP is best potrayed as the fictional character Gordon Gekko, played by Michael Douglas in the movie "WallStreet".

Eric Samuelsen
Provo, UT

Ron Holdaway
>So Mr. Samuelsen is putting all his eggs in the Krugman basket.
No, but he's a voice we should listen to. I mentioned several economists.
Samuelson also ignores other noted Economists.
I cited several other economists.
>I recall in none of Krugman's pre-crash columns any warnings of an impending sub-prime crisis.
In fact, he did, repeatedly, loudly and often.
>At the time of the Nobel prize there was much talk that the prize was as much due to his anti-Bush diatribes as his professional work.
On Fox News and the Wall Street Journal editorial page. In fact, he was honored for his contributions to New Trade Theory and his work on liquidity traps. Read his citation; nothing there about politics at all.
But yes, I do think it's time for another stimulus, and I do think that, since the debt is actually not harming our economy at all yet, it's a problem to be dealt with later.

Eric Samuelsen
Provo, UT

Twin Lights
Good to hear from you again! It's been awhile.
I appreciate your insights. I quite agree, of course, about the Austrian school, and I imagine you share my dismay over the huge crush so many on the Right have on Ayn Rand. (If that's not true, I apologize; I don't mean to misstate your views, Atlas Shrugged quote notwithstanding!)
On Krugman, I just suggest that people read his book. Make up their own minds. It's like Rachel Maddow's book, Drift. Because it's written by Rachel Maddow, I suspect a lot people figure it's just the usual partisan nonsense. It's not. It's a thoughtful, interesting, thought-provoking book. Same with Krugman. Read End This Depression. You may find it surprising.
I should add, by the way, that I did not write the headline for my My View. The DesNews headline writer did--unnecessarily cutesy, I thought.

SEY
Sandy, UT

Just for fun, since we seem to be recommending outside reading, I recommend that some of you take the time to read an article by the Austrian economist (yes, a Ph.D. and all that) Robert P. Murphy called "Charting Fun with Krugman." You'll get an idea of just how convoluted Paul Krugman can be in his analysis of economic history. It sheds light on how Krugman denies Fed mismanagement.

Another one you might enjoy is by Mark Thornton, another Austrian economist. He put together an article called "Krugman Did Cause the Housing Bubble." Krugman was a huge advocate (and influence) of the very policies that brought about the housing bubble and its inevitable collapse.

And finally, if you're up for it, there's a book review by David Gordon of Krugman's book The Hangover Theory. Gordon relentlessly pokes gaping holes in Krugman's understanding of Austrian business cycle theory. Apparently, Krugman is one of the leading misinterpreters of Austrian economics.

I'm hoping against hope that maybe the aspersions cast on Austrian economics can be rectified if people actually read what they say rather than just believing what their favorite critic says about them. Just sayin'.

Twin Lights
Louisville, KY

Eric,

I think there is much of Hayek that is valuable. Same with Keynes. But I find neither to be complete by themselves. What I see as more problematic is the fascination with Von Mises and the very strict Austrian school. Inevitably this seems to lead to the concept of no central bank and to bringing back the gold standard.

I see this as an out-of-fashion view that makes a comeback once those that actually remember the old days have disappeared from the scene. The past can then be romanticized which, in turn, leads to a desire to revisit those great days when all was good.

I read Krugman's blogs and articles (I have little time for whole books). I read lots of views. I think it is necessary to compare and contrast.

At least your headline was spelled correctly. I have caught several of late that have contained rookie mistakes.

If you have not seen the video, search for "Fear the Boom and Bust a Hayek vs. Keynes Rap Anthem". It is reasonably good summary of their positions and a lot of fun to watch. I suspect you will appreciate it.

Twin Lights
Louisville, KY

SEY,

You are my favorite Austrian on these boards.

The "Charting Fun with Krugman" Article ignores the issue that the Fed was not the Fed we understand until Marriner Eccles and the Great Depression. That is, to understand the effects of the Fed, you have to look after it was strengthened under Eccles.

The great miss by the Fed in recent times was under Greenspan who fell victim to the concept that markets always cure themselves. Keynes would not be pleased . . .

As to Krugman or any other one person causing the housing bubble. No. It was a confluence of actors all spurred by the same type of ideas that afflicted Greenspan. Also, the deadly idea that risk can be tamed by technology.

Again, I think there is a lot of Hayek that is worthwhile. It is his more austere brethren that I find unacceptable.

Schön mit dir zu reden

Eric Samuelsen
Provo, UT

Twin Lights
I have seen the Keynes/Hayek rap video! Love it! You're right, it's very funny, but it also gets the economics right.
I quite share your dismay over the von Mises shut-down-the-Fed, bring-back-the-gold-standard extremism. It finds political expression, of course, in the Presidential campaign of Ron Paul, and the views of his son. Doesn't Rand Paul represent your fine state? Does that give pause?
I also rather like Ron Paul, however. You have to admire his courage, at least. And he's not wrong about everything. Just economics.
One point I make in my play is the similarity between the Austrian school and Marxism. Marx argued that impersonal forces of history, dialectical materialism would cause capitalism to implode, and that nothing needed to be done, or even could be done, to hasten things along. A dictatorship of the proletariat was the inevitable outcome we could all look forward to. The Austrian school posits a perfect equilibrium, achieved through non-intervention and careful inaction.
I prefer nations to create their own destinies.

Twin Lights
Louisville, KY

Eric,

Yes. We have Rand Paul. I share your (partial) admiration for his father but less so the son. The opposing candidate was pretty terrible.

You wrote a play about economics? Dude, even economists call it the dismal science. What were you thinking? On the other hand, I would probably be interested but then, even my family says I am boring . . .

I count myself as a "semi-strong" adherent to the efficient market hypothesis. I believe markets are powerful, and the only real engine of economic growth in the long term. But they can have weaknesses where govt. structures are important (i.e. regulation). Further, that there are some markets that do not respond well to market forces (at least not in the way we want). Higher education and hospitals are two examples where market forces rarely (I won't say never) result in the best available product.

So, back to the dismal arts. What play of yours dares to put the audience into deep (catatonic?) sleep via economic exposition? You do know that when they say “write what you know about” they don't mean economics, right?

This is my final post. Good luck to that team in Bloomington . . .

SG in SLC
Salt Lake City, UT

Your "My View" and the ensuing comments have been and enjoyable and enlightening read, Eric.

Just over 20 years ago, as an undergrad economics major at the "U", I took a one-time offering upper division economics course titled "Debt and the Twin Deficits Debate" from Professor James Rock. Though Professor Rock was a self-proclaimed "Keynesophile", his course was remarkably balanced and presented contrasting points of view from several highly-regarded economists.

Based on this course, and in addition to the economists that Eric Samuelsen recommends, I would also recommend studying the ideas and writings of Alan Blinder, Robert Barro (particularly regarding "Ricardian Equivalence"), Edward Gramlich, and Robert Heilbroner.

I agree that Paul Krugman has contributed significantly to modern economics; my only real beef with him is over how he generally disparages John Kenneth Galbraith's economic ideas (Galbraith is one of my favorite economists).

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