Wednesday, May 16, 2012

The Krugman Economic View Built on a House of Babysitting Coupons

I'm reading Paul Krugman's new book, End This Depression Now!. I'll have a review of the entire book in a couple of days, but I have to comment now that he builds support for his entire Keynesian viewpoint of the book on the closed system babysitting co-op story that he has blogged about before.

I mean, it is one thing to babble on, on a slow day, about this babysitter co-op, in a blog post, but to build his entire Keynesian beliefs on this story is mindbogglingly idiotic. I have already commented on Krugman's erroneous understanding of what the co-op is here, but I will have a more detailed response in my review of his book.

9 comments:

  1. "but to build his entire Keynesian beliefs on this story is mindbogglingly idiotic"

    So you've obviously died and went to Hell, where Satan has decided that you are to read Paul Krugman books for eternity...lol...how well did Satan know you?

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  2. PAUL KRUGMAN IS GREAT ECONOMIST. PRINTING MONEY IS GOOD AND WORKS WONDERS.

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    1. HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHHAHA OH MY GOD.

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  3. Those of us that at least understand the unintended consequences of his Keynesian ideas could make a small fortune if government would ever chose to follow them to the extent he calls for. We are already stimulating the economy to the tune of $1.3T annually, but I guess we need 3 to 5x that amount and lots of money printing too. So, thinking like a banker or crony capitalist Buffet, why not encourage government to do these things and profit handsomely. The key will be to take profits quickly and convert them into precious metals and land before the grand collapse. After all this is what the government and a good many lemmings in the public want too. Why not give it to them. LOL

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  4. I think we should 'go for it'. We all know that regardless of which party is in power, our fiscal "goose" is cooked. We can do it slow & painful with Mitt or fast & painful with the Savior.

    Let's go 'all in'. QE-infinity. Blow the currency's doors off. At least we might learn something & finally agree on fiscal policy once the SHTF.

    Snoop-Diggity-DANG-Dawg

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    1. I've actually been pushing that exact thing with all my buddies for about the last year and a half now.

      I may actually cast a vote for Obama on the basis that he will destroy things a bit more quickly...kind of like a "coup de grace" so to speak.

      That way something most likely better will come along. (of course, there's always a chance we could go to dictatorship...but we're almost there anyway)

      If it gets worse then I know exactly what to do...vacate the premises.

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  5. In your updated criticism of the babysitting co-op, make sure you include the following points:

    It is a false equivalence to say the baby-sitting co-op "went into recession", because the baby-sitting co-op example utterly depends on an outlet for other activities to be carried out given that parents are doing less baby-sitting business. This "outlet" is not possible in the economy as a whole. So there is no "recession" to speak of if parents engage in less babysitting co-op business, and engaging in more of home movies and stay at dinner date business. The BARTER commodity slips used for babysitting are not transferable to movies and dinner dates, so if creating more slips did end up resulting in more baby-sitting business, then there would have been less home movies and stay at home dinner dates. Krugman is speaking as if choices don't contain sacrifices.

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  7. Regardless of the Krugman take on the theories of Keynes, Krugman baby sitting co-operative example, it's probably illegal in many jurisdictions.

    Krugman also derived his example from a 1977 article by Joan and Richard Sweeney. Or at least that what David Henderson says.

    Henderson also says something that Krugman does not say:

    "... nowhere does Krugman mention that another way to solve a problem of excess supply is to let prices fall. This missing piece is interesting, given that it was explicitly discussed in the article from which Krugman draws the analogy. The Sweeneys pointed out that because the founders of the co-op economy imposed price controls, decreeing that one unit of scrip must always exchange for a half-hour of baby-sitting services, there would be shortages when demand was too high and surpluses when it was too low. It's not surprising that Krugman left this out: He seems to be biased in favor of having government step in rather than letting markets work things out."

    So maybe Krugman was playing with a stacked deck.

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