Look – those are the words. You have to interpret them just like I do. You clearly can interpret “general welfare” in a limited but non-trivial way. Trust that I can too. And we’ll fight it out in Congress.

That’s one of my biggest problems with the Austrian school – it’s so damn insular. It can be like a cult. People call Keynesianism a cult – but Keynesianism has changed TREMENDOUSLY since the thirties. How much has the Austrian school changed? Not that much. That’s a pretty good sign that things are taken more on faith or at best dedication to a philosophical foundation than on rational scientific inquiry.

And in that case, why don’t they ever explain the Japanese counter-example? In Japan in the 1990s they pumped money into the system as surely as we’re pumping it into it now. And yet not a bit of inflation… in fact, there was deflation. Why don’t the Austrians ever explain that? Confirmatory bias. The more obvious interpretation is that liquidity traps are real – that all this Keynes bashing is unwarranted.

No, certainly not immunity from bias. Mankiw (and then Kling) were contrasting scientist with engineer, and I suppose saying engineers were more susceptible to confirmatory bias. I (1.) am not sure that is true that they are more susceptible, and (2.) agree with you that scientists (and Austrians and New Classical School) are very susceptible to it too. AT LEAST as susceptible to it as the “engineers”. After all… engineers have to actually make it work. They have less latitutide for abstract theorizing.

“I’ve never read anything saying WWII and the New Deal were responsible for 1970s inflation.”

No – exactly. I probably worded that confusingly. We hear now that the debt will cause inflation. But we don’t hear from the people who claim that the current debt will cause inflation why WWII and New Deal debt didn’t. Not that they claim they didn’t, they just never seem to bother to address that very obvious counter-example. I actually agree with Friedman for the most part on the causes of the 1970s inflation. I don’t agree with his statement that “inflation is everywhere a monetary phenomenon”… he probably could have allowed a little more room for Keynesian cost-push explanations. But as far as it goes, I buy into Friedman’s understanding of all that. A sin of omission, rather than commission, if you will

“I believe an Austrian response to Kling’s post would be general skepticism of macroeconomics as a discipline”

They sure wish you would think that, wouldn’t they? And yet they always seem perfectly willing to chime in with a fiat-currency centric model of the business cycle. That always struck me as fairly macroeconomic.

“Unfortunately, that leaves government policy to the wrong people.”

Aww, now that’s uncharitable

This is “constitution is flawed”…

This is about the constitution as a document of negative rights, and therefore the courts not being the best (or at least a sufficient) route for civil rights movement:
http://www.youtube.com/watch?v=3VctiYQplw8

It is difficult to see any aspect of our lives that is not covered by this interpretation of the Constitution. It is in that sense I refer to it as “blanket authority.” What limits are there?

– I have acknowledged that I am no economist, but I would love to see you and Milton Friedman debate this point. Isn’t it true that the deficits from WWII were reversed immediately, and the debt paid down substantially in pretty short order? I’ve never read anything saying WWII and the New Deal were responsible for 1970s inflation. It seem to me Austrians consistently blame inflation on money supply being expanded beyond the level called for by production. So there may be confirmatory bias, but not where you are looking. Your claim about Keynes’ answers being right is far from “obvious” as long as confirmatory bias is left out.

Actually, I believe an Austrian response to Kling’s post would be general skepticism of macroeconomics as a discipline. I quite agree with you as to why Classical/ Austrians are not in government. Unfortunately, that leaves government policy to the wrong people.

Remember confirmatory bias.

Madison had the huge advantage of being the last one to die. But just because he could make those pronouncements after the fact doesn’t make them gospel truth.

I think that’s a great piece by Kling. I compeltely ascribe to his caution on the data and on cofirmatory bias. But I would in turn caution him about the exact same thing. Econlib (and this blog, and mises) are RIFE with confirmatory bias (at least from my perspective) but it doesn’t SEEM that way to people who agree. The inflation/Keynesian fiscal policy connection is one I always chuckle at. We’re supposed to be terrified of inflation right now, right? Obama’s deficits are going to make that awful. Well then why did it take New Deal and WWII deficits DECADES to result in an inflation in the 70s? Indeed, by the time of the inflation the debt as a percent of GDP was at a post-war low! Austrians never seem to address that question. Why? Confirmatory bias, that’s why. The most obvious answer is that Keynes was more or less right about liquidity traps as well as cost-push inflation. But that obvious answer doesn’t mesh with the Austrian paradigm, so they overlook it.

I don’t think that’s PROOF of anyone’s theory. And I’m certainly not raising this point as a challenge to Kling at all. Indeed – I’m raising it as a generalization of exactly what Kling is saying. It’s a great post! And like he said, we don’t have the data to say for sure.

But the reason why the New Classical/Austrian school isn’t in politics isn’t because they have more scientific proclivities than the New Keynesians. They’re not in politics because they’re philosophically anti-political! MAYBE that means New Keynesians are engineers, maybe it doesn’t. But the fact that the New Classical school is anti-political doesn’t by any stretch imply that it’s more scientific or immune to confirmatory bias.

Great link! – thanks.

There is nothing limited about this claimed blanket authority.

What does Madison have to say about this phrase?

You’re conflating two different parts of that interview. He said it was “backwards” insofar as it didn’t outlaw slavery. I acknowledge that the founders’ hands were tied on that issue, but I can’t argue that it was still backwards on that front. You’re completely wrong on the negative/positive rights question (which regardless was discussed at another point in the interview entirely). Obama said that BECAUSE the Constitution is a document of negative rights and not positive rights, the Civil Rights approach of pursuing things through the courts was doomed to have limited success. With a negative rights Constitution, it’s not the court’s job to do that – it’s the job of community organizing.

Anyways…
RE: “So, if Obama is your guy, be honest and admit that you agree with Obama that the idea of limited government doesn’t make sense.”

Nope – I don’t have to submit to or accept your silly caricature of him. The Congress has the enumerated power to appropriate money for the general welfare, as well as to pass any other legislation that is necessary and proper for exercising that enumerated power. And I’ll be damned if I cow on that one to anyone who attempts a “more Catholic than the pope” approach to the Constitution (“more originalist than the Framers?”). I have the utmost respect for the Constitution and limited government (it’s hard to grow up in Virginia – a stone’s throw away from Mount Vernon – and not get inculcated with that respect).

I respect the fact that you have a different view of things. But I won’t respect an implication that I think limited government doesn’t make sense.