Saturday, August 7, 2010

A Harvard "Libertarian" Economist Who Doesn't Watch the Money Supply or Understand Austrian Economics

Jeffrey Miron writes:

Why is the Recovery So Slow?

The short answer is, “Nobody knows for sure.”
He continues:
 Keynesians like Paul Krugman believe the stimulus was too small. That view, however, seems based more on blind faith in the Keynesian model than on a calm assessment of the evidence, which does not make a strong case that spending boosts the economy.

An alternative view is that the economy expects substantial tax increases going forward, and taxes are a drag on economic activity. Taxes are likely to rise in the short term as some or all of the Bush tax cuts expire. Taxes are likely to rise in the long term as the U.S. attempts to grapple with its sky-rocketing debt.

More broadly, the slow recovery may reflect pessimism about the focus of economic policy - redistribution versus productivity – and the uncertainty generated by the administration’s interventionist tilt.
At least, he doesn't sound Keynesian, but not a damn word about the Austrian's who were the only group who warned about the original downturn and who, especially here at EPJ, warned that there would be trouble ahead, even when most others were beginning to proclaim the Great Recession over.

Apparently just to prove he doesn't understand business cycle theory, he goes on to claim Republican victories in November may reverse the economy:
The best hope for improvement, in my view, is enough Republican victories in November to produce gridlock in Washington. It’s not that the Republicans are so great on economic policy, although on balance they are probably a smidge better than the Democrats. It’s that doing nothing is likely to be better than whatever new policies a Democratic controlled Congress would generate
Gridlock is good, but how can you possibly mention the future trend of the economy without pointing out that the key factor will be what the mad scientist, Fed chairman Ben Bernanke, does with the money supply.


  1. We'll I'm sure glad I saved that extra quarter million by going to State.

  2. And I actually was introduced to Rothbard's "Power and Market" in a poly sci course at Michigan State in 1973.

    At Harvard, one is clearly rewarded for opaqueness.

  3. The short answer is, “Nobody knows for sure.”

    This is such a popular idea amongst the academic elite. Saves them being accused of being ideological for anything they say next while allowing ample room for mysticism-based "science experiments" with the economy.

    No one has any idea how any of this econ stuff works-- so let's try stuff until something takes.

  4. I remember back in the mid 80's when I was in my mid 20's and the excitement I and just about everyone else around me had about starting a business. Between 1985 and 1990, I started three and everyone of them failed but the entrepreneurial spirit stuck and in 1992, I started my 4th one that flew and made me set for life. Back then it wasn't the low tax rates that directly motivated me but the belief that if I worked smart enough and hard enough, I might actually be able to become wealthy or at least live a comfortable life. Maybe that's the wrong reason to start a business, but I have never met an aspiring entrepreneur that doesn't at least think about the end game at some point. After all, why would anyone take the amount of risk that comes with owning a small business if the goal was to live marginally. What also probably drove this entrepreneurial spirit was societies very favorable view of the successful entrepreneur.

    Today I don't have that spirit and neither does just about anyone else I talk with. My guess is that this current negative view is becuase of the class warfare that this administration, Democrats and the left have capitalized upon. They have demonized wealth and business to a point that they have essentially killed the entrepreneurial spirit.