Walter Block Declares War on the Left; Calls Krugman an Economic Illiterate Brainless Creep

Wow, Walter Block is about to enter the ring against leftist economists. He writes:

I may have missed something in my c.v., but I don’t think I have ever written a critique of any leftist economist. In searching through my own publication records, my targets have almost always been scholars perceiving themselves as, or widely being seen as, right wing supporters of free markets, but who either are really no such thing, or who fall short of this honorific mark... 

But today I am embarked on a new mission: putting lefties in their place, starting with Paul Krugman. I had long eschewed this sort of thing, thinking it akin to taking candy from babies, intellectually speaking...

So what does he really think about Krugman. Check this out:

The thought of actually debating with this creep, coming face to face with him, really gives me the willies. These people really have no brains, and it is really unfair to debate them. But, what the heck; Krugman has won the Nobel Prize in economics, and is a Harvard professor, so, maybe, it is not exactly like criticizing a mentally handicapped person... 

Krugman actually calls for the undermining of quality in order to help the economy. This man never should have been given the Nobel Prize in economics. MIT, which awarded this economic illiterate a Ph.D., ought to engage in a recall. After all, if commercial firms commonly do so for defective products, the same ought to hold true for academia.

This is going to be interesting. For the record, I do not think Krugman does not have a brain. I have no idea if he is a creep. (Ed Crane is a creep) I think Krugman has terrible taste in music.  I really honestly, aslo, think he has problems thinking more than two steps deep.

As I pointed out in 2008, Krugman couldn't even work out a problem in Austrian Business Cycle Theory that he raised. I wrote back then and worked it out for him:

As for as Krugman’s question as to why there isn’t a rise in unemployment during the boom part of the cycle , this clearly demonstrates his lack of a deep understanding of ABCT. Before a boom starts, the economy can be said to be in equilibrium between the consumer goods production and capital goods production. When a central bank then pumps in new money, new demand is created for labor in the capital goods sector causing bidding for labor away from the consumer goods sector. Thus, there is no point where rising unemployment would be a factor in this part of the cycle. However, during the downturn part of the cycle, it is not a case that the central bank is pumping money into the consumer sector. What is occurring, instead, is that a transfer of money is taking place from the capital goods sector to the consumer goods sector. It is this money drain from the capital goods sector that causes the unemployment. During the central bank induced boom, money isn’t being drained from anywhere.

 Less than six months after I wrote this, Bob Murphy was kind enough to advance my view at Mises.org (Although he did not reference me, so perhaps he reached this thought independently.) He wrote:

So, in this context, Krugman the Nobel laureate is confused. When the Fed starts dumping wads of newly printed cash into particular sectors of the economy, why does this foster a period of prosperity — however illusory and fleeting it may be? Why instead doesn't the money drop cause millions of people to get laid off? 

I admit I feel sheepish even phrasing the question that way, but go reread Krugman's blog post; that's what he's asking. The answer, of course, is that businesses armed with newly printed Fed dollars must bid away workers from their original niches in the structure of production. Obviously, this process doesn't lead to mass unemployment. The workers voluntarily quit their original jobs because the inflated money supply has allowed a few firms to offer them higher salaries. The Fed's injection of new money has not yet distorted the whole economy, and so there is no reason for other businesses to suddenly find themselves in trouble and lay off workers at the beginning of the artificial boom. 

In contrast, once the bubble has popped, many firms realize they are embarked on unsustainable projects. They need to lay off their workers. Unemployment goes up, and only as workers reluctantly accept lower wages can they be reintegrated into the economy. On average, workers are earning less during the bust period than at the height of the boom. This is because the salaries and wages of the boom period were exaggerations of the true "fundamentals" of worker productivity, and also because the fundamentals themselves have been hurt due to the waste of capital during the boom period. 

In short, workers on average are not as economically productive during the recession because the whole structure of production has been thrown out of whack by the Fed's injections of funny money. It is much harder for workers to switch jobs and take a pay cut versus quitting a job in order to take a better one that pays more. 

So you have me and, weeks later, Murphy pounding on Krugman's confusion and inability to think deep. But it goes beyond this. Krugman admits that he became a Keynesian after learning of a  babysitting co-op story. Krugman wrote in Slate about this silly co-op story (my bold)

Twenty years ago I read a story that changed my life. I think about that story often; it helps me to stay calm in the face of crisis, to remain hopeful in times of depression, and to resist the pull of fatalism and pessimism.

In my review of his book, End the Depression Now, I point out the things Krugman misunderstands about the co-op story, which is tragic, since he has told us that he has based his entire economic world view based on this co-op story. 

And in my own response to Krugman's misunderstanding of the Broken Window fallacy, I wrote:

Krugman seems to get about half this in his comment, which supports my new suspicion that Krugman has trouble thinking more than two layers deep. Remember, the man completely misunderstands the baby sitting co-op example that he states led him to Keynesianism in the first place, and he doesn't understand Austrian business cycle theory, and now this.

I mean, think about it, Henry Ford's Model T replacing the horse and buggy is somehow an example, in Krugman's mind, of the broken window fallacy!

So I welcome Dr. Block's decision to go into direct head-to-head battle against lefty economists. They need to be smashed and there is no one as capable of smashing them as Dr. Block. But, I caution Dr. Block that we shouldn't call them brainless, that's not going to help us move toward advancing the cause. Let's, in addition to smashing their bad theories, point out the true defects in the brains they do have. Because when it comes down to it, these lefties are either dishonest or they have problems thinking things through properly. Let's nail them completely on what causes them to advance incorrect theory.