Tuesday, August 13, 2013

Rand Paul Is Embarrassing the Austrian School of Economics

This is just terrible. Rand's stupid comment about naming Austrian-hater Milton Friedman an ideal-type candidate to head the Fed is continuing to cause even more blowback. Paul Krugman is having a field day, laughing at the Austrians. He writes:
Matt O’Brien follows up on Rand Paul and Milton Friedman, and finds the senator trying– in the face of all the facts — to claim that Friedman would have supported his monetary views. Again, Paul is a self-proclaimed Austrian, and Friedman was contemptuous of the Austrians:
I think the Austrian business-cycle theory has done the world a great deal of harm. If you go back to the 1930s, which is a key point, here you had the Austrians sitting in London, Hayek and Lionel Robbins, and saying you just have to let the bottom drop out of the world. You’ve just got to let it cure itself. You can’t do anything about it. You will only make it worse. You have Rothbard saying it was a great mistake not to let the whole banking system collapse. I think by encouraging that kind of do-nothing policy both in Britain and in the United States, they did harm.
So Paul’s denial is a sight to behold. The best point in Matt’s post, however, is his final line, which summarizes what I was trying to say in yesterday’s column perfectly:
The irony, of course, is that Milton Friedman was trying to save conservatism from people exactly like Rand Paul.
Quite frankly, Rand looks like an idiot, here.

But, for the record, in his North Beach confession, Friedman disavowed his own crude and loopy monetary theory. And the Austrian, Hayek, in less than 5 minutes, explained on television Friedman's failure to understand Austrian monetary theory and made clear that Freidman was merely a Keynesian.

Also for the record, Rand Paul is a political opportunist who will say and do anything if he thinks it will get him closer to a vote of 50% plus 1, in a presidential election. If Rand is as an Austrian, then Krugman and his obese cats are all gold medal winning Olympic swimmers.


  1. LOL at those fat cats

  2. What's most troubling about Rand's "mainstreaming" is that on on critical issues he has moved towards the establishment but in return the establishment hasn't moved an inch towards him.

    1. Yet the party nd talk radio types have been forced to move closer to Ron's views - at least in rhetoric - on gold, the fed, the patriot act, the NSA, etc. interesting how that not compromising stuff works.....

    2. Yep, he's giving all of his principles away for zero return...then again, who is to know if he had any to begin with? We give Rand the benefit of the doubt because of his relation to Ron, and his prior dedication to Liberty, but seeing how he acts now it's clear he was simply playing the strongest hand he could to get ahead. Liberty was the easy way forward then, and now it's neocon thinking. Libertarians need to disown him immediately and move on. Make it clear that he does not represent our thinking so he can't do any more damge.

  3. What's most troubling about Rand's "mainstreaming" is that even though he has moved a mile towards the Political Establishment, they haven't moved an inch towards him.

  4. There are SO MANY STYLES AND VERSIONS of Keynesianism.

    The entire body of work that you yourself [Krugman] associate with is based on an MIT tradition that interprets Keynesian economics through the lens of Samuelson’s neo-classical synthesis. Prices and wages are sticky; therefore unemployment is high. As I have argued now for more than six years, Keynesian economics is not about sticky wages and prices. It is about the inability of a market economy to coordinate on a Pareto efficient steady-state equilibrium.

    In the General Theory, high involuntary unemployment is one of many steady state equilibria. It is not enough to fall back on the IS-LM model to understand that idea. The Hicks-Hansen IS-LM interpretation of the General Theory was never properly reconciled with microeconomic behavior. Recognizing that fact, and integrating Keynesian ideas with forward-looking expectations, leads to a whole new way of thinking; one that I have elaborated on in my books and articles published over the past six years. Perhaps you are familiar with them? If not, I would be happy to send you signed copies.



    Roger E. A. Farmer
    Distinguished Professor of Economics, UCLA and
    Senior Houblon Norman Fellow, Bank of England


    I don't think he understands economic calculation.

  5. Just like it’s always good for people to understand that libertarians are not “conservatives” or Republicans, I think it’s always good for everyone to know that Friedman was a Keynesian.

    1. Which is why people like George selgin are so vicious against rothbard while kissing up to krugman and praising Friedman as being a better economist than Rothbard.

  6. Apple trees bear apples and they do not fall too far from the tree. Ron is an imbecile so Rand is an imbecile.