Sunday, July 9, 2017

CNN Denies Say's Law

Well, this is interesting timing.

After putting a post together explaining Say's Law, it's history and importance, The Truth About Say's Law With a Nod to John Maynard Keynes, CNN, after Rick Perry said supply creates demand, is out with an essay stating that the concept is wrong.

CNN's  Eugene Scott quotes two house intellectuals in the piece:
"It's an old assertion named Say's Law and it's wrong. It's that simple," said Doug Holtz-Eakin, president of the American Action Forum, a center-right think tank. "Supply does not automatically create its own demand."
"There are two separate entities that have their own determinants and then they interact to deliver prices," he added.
The late French economist Jean-Baptiste Say argued that supplying beyond demand never occurred because demand would always match the supply. But Holtz-Eakin, a former Congressional Budget Office director, said that is a misunderstanding of basic economics.
"Maybe not everyone takes economics. And I know for a fact not everyone passes it," he said.
Adele Morris, policy director for Climate and Energy Economics at the Brookings Institution, said Perry's words "really don't make any sense."
Maybe Holtz-Eakin thinks he experiences this personally when he puts out research papers that there is no demand for but I remind readers that Say's Law works only when we are considering a product that is an economic good.

BTW, former New York Times and Newsweek columnist Henry Hazlitt viewed Say's Law as providing important insights and referenced it in his columns.

Current NYT propagandist and #FakeEconomist Paul Krugman has problems with it:
Say’s Law (Say’s false law? Say’s fallacy?) is something that opponents of Keynesian economics consistently invoke to this day

1 comment:

  1. Don't Keynesian believe that increasing the money supply increases the demand for production and consumption?