Friday, September 13, 2013

Bizarre Attack on Austrian Economics By Barry Ritholtz

Ritholz posts (though with a hat tip to "dream shade")
An Austrian economist gets tired of dealing with money, and so decides to go back to school for a career switch. A decade later, he has a medical degree. He passes his boards, and opens up his own general practice.

His first patient comes in for a routine checkup, and he asks, “So, doc, how’m I doing?”

And the Austrian doctor says, “You’re dying.”

The patient freezes for a moment, then he starts to panic. He shouts, “Well, what do I do?”

And the Austrian doctor says, “Nothing.”

The patient panics even more. He screams, “Do I need surgery? Do I need a prescription? Do I need therapy?”

The Austrian doctor replies, “No! Those things could have unintended side effects! Just let it run its course!”

The patient sits down with his head in his hands, catching his breath. He finally says, “Okay, doc, give it to me straight. What am I dying of?”

The Austrian doctor says, “Old age.”

The patient nearly falls off the cushioned table. “Old age?!” he shouts. “I’m 32 years old! When am I supposed to die of that?!”

And the Austrian doctor growls, “ANY DAY NOW.”

Bizarre. There is no view held by Austrian economists that the economy must necessarily be on the road to problems. Austrian economists hold that the business cycle is the result of central bank manipulations of the money and that if central banks are eliminated and there is a return to the gold standard, businesses cycles will be eliminated.

Here is a more accurate medical metaphor, but it involves a Keynesian economist turned medical doctor.

Patient: Doc, everytime I go out drinking, the next morning I have a headache.

Keynesian Doc: Well then, as soon as you feel the headache coming on start drinking again.

18 comments:

  1. The Keynesian doctor would have to lie to avoid a malpractice claim.

    Keynesian Doc: You are dying.

    Patient: What can you do to save me?

    Keynesian Doc: No, you don't understand. I am the one that killed you.

    ReplyDelete
  2. Yeah, let's fix that story with a bit of reality:
    Patient: "What am I dying from, Doc?"
    Doctor: "A multitude of blood-sucking insects. You are suffering from Poly-tics. There is the federal income tax tick, the Social Security tick, the Medicare tick, the state income tax tick, the gasoline tax tick, the payroll tax tick, etc. But you see, we need to take all that blood to protect you from all those blood-suckers out there, which would surely get you without the services and protection provided by Poly-ticks."

    ReplyDelete
  3. This is such a tired analogy that further shows mainstream economists don't understand economics. The economy never "dies," insomuch as ceasing all exchange. It's the faulty logical conclusion of an unending deflationary spiral. However, yes, the economy can get sick. So, let's go thru and correct this analogy:



    "An Austrian economist gets tired of dealing with money, and so decides to go back to school for a career switch. A decade later, he has a medical degree. He passes his boards, and opens up his own general practice.

    His first patient comes in for a routine checkup, and he asks, “So, doc, how’m I doing?”

    And the Austrian doctor says, “You’re [sick].”

    The patient freezes for a moment, then he starts to panic. He shouts, “Well, what do I do?”

    And the Austrian doctor says, “[Rest. Contrary to Dr. Keynes fear-mongering, you're not dying, but your lifestyle was unsustainable and unhealthy. It may have felt good temporarily, but your body is naturally rejecting it now. It will take some time to recover, but then you'll be fine]”

    The patient panics even more. He screams, “Do I need surgery? Do I need a prescription? Do I need therapy?”

    The Austrian doctor replies, “[Certainly not what Dr. Keynes was prescribing as there are unknown side effects that could exacerbate your symptoms. I understand being panicked that it might be uncomfortable for you in the next couple weeks, but in a month or so, you'll be back to normal activity. In the short-term, the symptoms seem severe but it's just a signal of how you were on the wrong path.]”

    The patient sits down with his head in his hands, catching his breath. He finally says, “Okay, doc, give it to me straight. What am I [sick] of?”

    The Austrian doctor says, “[Overindulgence]”

    The patient nearly falls off the cushioned table. “[Overindulgence]?!” he shouts. “I’m 32 years old! When am I supposed to die of that?! [It felt soooo good]?!”

    And the Austrian doctor growls, “[You're not dying. That's Dr. Keynes short-sighted blindness again putting fear into you in order to line his pockets with more of your money.]”

    ReplyDelete
  4. I believe the following is closer to the truth

    Patient: Do I look fat?

    Keynesian Doc: No, darling.

    ReplyDelete
  5. All statists believe that they and government "policy" have magical powers. The actors who move an economy are the private parties who own property and engage in transactions. The narcissistic statists think that the world cannot and will not move without their magical input. This applies to economics as well as to Syria and foreign policy.

    It is not a question of "doing something", but a question of who is doing what and to whom and why.

    Our opponents are hopeless and clueless. We've won.

    ReplyDelete
  6. As I am sure that you know, there have been a lot of articles popping up lately that are attempting to refute either Austrian Economics or libertarianism. The thing is that none of them even critique the actual beliefs held by these disciplines (neither the science of Austrian economics, nor the philosophy of libertarianism). It's really quite sad, but apparently the masses eat this stuff up ... or do they?

    The funny part, however, is that most of the comments underneath such articles are vehemently against the straw men and ad hominem attacks that are put up by such articles. This tells me that they're (the gatekeepers) getting quite desperate, they're just now going to their last ditch.

    Unfortunately for them, they're already too late; they're well behind the curve.

    ReplyDelete
    Replies
    1. Yep, and one of them is the dumb-ass, paid troll that RW keeps letting through, aka "Jerry Wolfgang."

      Delete
  7. Most Austrian economists are Christian Reconstructionists who believe that unless American jurisprudence is returned to Biblical law, the nation will collapse. The rest are anarchists who as a matter of faith believe that economic collapse is inevitable so long as there is any central planning. Since all developed economies are centrally planned by the Austrian standard, they too believe that economic collapse is inevitable.

    ReplyDelete
    Replies
    1. Here's one thing I know that can't collapse any further, your intelligence.

      Delete
    2. I thought the problem with Austrians and libertarians was that they are mostly hipster atheists who are loathe to explain to religious types how they would be left in peace to live their own lifestyles under
      AnCap.

      Delete
    3. I consider myself to be a hipster atheists Christian reconstructor fundamental universalist (translation: I Love). I believe in my heart that we are all capable of all things. Even Jerry.

      Delete
    4. lol What????
      You're hilarious, Jerry!
      Spin us another tale!

      Delete
  8. " . . . . if central banks are eliminated and there is a return to the gold standard, businesses cycles will be eliminated."

    Other, of course, than the recessions/depressions/panics of: 1869, 1873, 1879, 1883, 1889, 1893 and 1907.

    ReplyDelete
    Replies
    1. Any bank credit expansion during those years? The lie behind the Fed was that it would solve the business cycle. How's that working out for us? How is it working out for the bankers?

      Delete
  9. I suggest you read a little more about those recessions/depressions/panics...all, of course, were due to certain government interventions and the distortions caused by such interventions into the market and into monetary policy.

    A good place to start is: "A History of Money and Banking in the United States:
    The Colonial Era to World War II" Murray Rothbard.

    ReplyDelete
  10. Quit reading Ritholz years ago after the stench of stasis and rote Keynes-ism became unbearable. He actually would be better off w/ none of his faulty education.

    ReplyDelete
  11. WS Patient: If I don't get my dose of QE I'm apt to collapse.

    Dr. Berspanky: I'm cutting you back but your rate is still good.

    ReplyDelete
  12. It all comes down to Plato's Republic. Everyone not an AnCap/Libertarian/Austrian thinks that people are children who need to be managed by the Golden Ones. Most of them think THEY are the Golden Ones. This need to manage everyone else for their own good causes more problems than anything else.

    ReplyDelete