tag:blogger.com,1999:blog-5404820640426099135.post2073180227586049396..comments2023-10-31T00:46:35.316+13:00Comments on Anti-Dismal: Economics does not liePaul Walkerhttp://www.blogger.com/profile/13731003529546075700noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-5404820640426099135.post-88903545329160846332008-08-12T14:29:00.000+12:002008-08-12T14:29:00.000+12:00As noted in my piece "The Sorman article discusses...As noted in my piece "The Sorman article discusses each of these in more detail"<BR/><BR/>"Only if you're talking about a market economy within appropriate regulatory limits and government control." Too vague to be of much use. What exactly is "appropriate"? As many economists would point out "regulatory limits and government control" are more likely to be the problem rather than the solution. For example, Dominick T. Armentano makes the case against anti-trust in this book "Antitrust: The Case for Repeal". Sir Arnold Plant made a case against copyright and patents back in the 1930s and so on.<BR/><BR/>As to deflation, in his book "Less than Zero: The Case for a Falling Price Level in a Growing Economy", George Selgin argues that the aim of those who make monetary policy should be not merely price stability but falling prices when productivity change suggests it. So deflation may not be so bad.<BR/><BR/>Milton Friedman and Anna Jacobson Schwartz showed convincingly that the Federal Reserve's monetary policies were largely to blame for the severity of the Great Depression. This argues against the ideas we need "regulation of the finance industry". According to Friedman and Schwartz, it was a complete abdication of the Fed’s core responsibilities—responsibilities it had taken away from the commercial bank clearinghouses that had acted to mitigate panics before 1914—and was the primary cause of the Great Depression.<BR/><BR/>You should check the true reason for the term "dismal science" and you would understand why economists are happy to be the "dismal science"Paul Walkerhttps://www.blogger.com/profile/13731003529546075700noreply@blogger.comtag:blogger.com,1999:blog-5404820640426099135.post-11291886688773640592008-08-12T13:48:00.000+12:002008-08-12T13:48:00.000+12:00Of course it's Mellon not Mellow...:)Of course it's Mellon not Mellow...<BR/><BR/>:)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5404820640426099135.post-46465687324484359692008-08-12T13:47:00.000+12:002008-08-12T13:47:00.000+12:00Some of this is quite disingenious - misleading if...Some of this is quite disingenious - misleading if not false. Other parts are vague enough to mean very little.<BR/><BR/>" 1. The market economy is the most efficient of all economic systems."<BR/><BR/>Only if you're talking about a market economy within appropriate regulatory limits and government control. The success stories of capitalist nations include those with anti-trust laws, regulation of the finance industry (notably banks), consumer protection laws (such as our consumers guarntee act) and strong regulation of property sales and rentals.<BR/><BR/>This isn't just a claim that "strong institutions" are also important. It's an attempt to prevent hte false dichotomy that libertarians so love. It's too easy to pretend there are only two options: govt control of the economy or free market. Actually both extremes are bad - and while we're better off down the market end of the spectrum you don't want to get too close to that end of the spectrum. <BR/><BR/><BR/>" 5. Creative destruction is the engine of economic growth."<BR/><BR/>As presented that's quite misleading. Secretary of the US Treasury Andrew Mellow swore that you needed a bust now and then to drive out bad businesses. And advised his president Hoover to take no action to ameliorate the Depression. The result was a disaster. Milton Friedman's analysis of this is classic: he blamed the Depression's severeness on the govt, in particular on the lack of early govt intervention under Hoover to save drowning businesses.<BR/><BR/>Schumpter's very popular amongst the libertarians who hate to see govt intervention - but it's hard to think of "top economists" who'd rate this claim unless it was qualified.<BR/><BR/>" 6. Monetary stability, too, is necessary for growth; inflation is always harmful."<BR/><BR/>The first half of that is true, the second is false. Deflation is worse, but more importantly there's a lot of good evidence that a low (around 2%-3%) inflation rate is better for you than nil inflation as it permits rebalancing of labour costs across sectors. So again I can't imagine "top economists" signing up what's written here.<BR/><BR/>" 8. While the welfare state is necessary in some form, it isn’t always effective."<BR/><BR/>So vague as to be almost meaningless. It's like saying "While medicine is necessary in some form it isn't always effective". <BR/><BR/>" 9. The creation of complex financial markets has brought about economic progress."<BR/><BR/>The creation of large and liquid financial markets has brough about economic progress. The more complex parts of the markets aren't very helpful - the ability to undertake a rainbow option or power-swap don't do much.<BR/><BR/>If these 10 aphorisms are really the best the science can do, then it's certainly dismal.Anonymousnoreply@blogger.com