- Cafe Hayek - http://cafehayek.com -

The Fairies Have It

Posted By Don Boudreaux On August 2, 2011 @ 5:13 pm In Country Problems,State of Macro,The Economy | Comments Disabled

Here’s a letter to the New York Times:

Paul Krugman’s frequently made case for more government spending rests unapologetically on Keynesian economics.  So what are we to make of Mr. Krugman’s advice – offered to counter those who insist that the regulatory, fiscal, and monetary policies of the past few years are diminishing investors’ confidence in the economy – to “Pay no attention to those who invoke the confidence fairy” (“The President Surrenders [1],” Aug. 1)?

A key component of Keynesian theory is what Lord Keynes himself famously called “animal spirits” – mysterious phantoms that, although invisible and non-quantifiable, dramatically affect the level of economic activity by messing with investors’ minds.

By advocating a theory that relies heavily on disembodied imps called “animal spirits,” Mr. Krugman has no business denying the existence of “the confidence fairy.”

Donald J. Boudreaux

In fact, I do believe that animal spirits play some role – just as I believe in the “confidence fairy.”  (If anything, the “confidence fairy” is a tad more plausible given that she/he/it is alleged to cause responses in predictable and rational ways to regime uncertainty, while animal spirits are just plain irrational.)

Be Sociable, Share!
  • [2]
  • [3]
  • [4]
  • [5]
  • [6]



Article printed from Cafe Hayek: http://cafehayek.com

URL to article: http://cafehayek.com/2011/08/the-fairies-have-it.html

URLs in this post:

[1] The President Surrenders: http://www.nytimes.com/2011/08/01/opinion/the-president-surrenders-on-debt-ceiling.html?partner=rssnyt&emc=rss


  • : http://twitter.com/intent/tweet?text=The%20Fairies%20Have%20It%20-%20http%3A%2F%2Fcafehayek.com%2F2011%2F08%2Fthe-fairies-have-it.html%20


  • : https://mail.google.com/mail/?view=cm&fs=1&to&su=The%20Fairies%20Have%20It&body=http%3A%2F%2Fcafehayek.com%2F2011%2F08%2Fthe-fairies-have-it.html&ui=2&tf=1&shva=1


  • : http://www.stumbleupon.com/submit?url=http%3A%2F%2Fcafehayek.com%2F2011%2F08%2Fthe-fairies-have-it.html&title=The%20Fairies%20Have%20It


  • : http://www.google.com/reader/link?url=http%3A%2F%2Fcafehayek.com%2F2011%2F08%2Fthe-fairies-have-it.html&title=The%20Fairies%20Have%20It&srcURL=http%3A%2F%2Fcafehayek.com%2F2011%2F08%2Fthe-fairies-have-it.html&srcTitle=Cafe+Hayek+where+orders+emerge

    [6] Image: http://www.blinklist.com/index.php?Action=Blink/addblink.php&Url=http%3A%2F%2Fcafehayek.com%2F2011%2F08%2Fthe-fairies-have-it.html&Title=The%20Fairies%20Have%20It


  • : http://www.myspace.com/Modules/PostTo/Pages/?u=http%3A%2F%2Fcafehayek.com%2F2011%2F08%2Fthe-fairies-have-it.html&t=The%20Fairies%20Have%20It


  • : http://reddit.com/submit?url=http%3A%2F%2Fcafehayek.com%2F2011%2F08%2Fthe-fairies-have-it.html&title=The%20Fairies%20Have%20It


  • : http://news.ycombinator.com/submitlink?u=http%3A%2F%2Fcafehayek.com%2F2011%2F08%2Fthe-fairies-have-it.html&t=The%20Fairies%20Have%20It


  • : http://sphinn.com/index.php?c=post&m=submit&link=http%3A%2F%2Fcafehayek.com%2F2011%2F08%2Fthe-fairies-have-it.html

    [11] Tweet: https://twitter.com/share

  • Copyright © 2011 CafeHayek.com. All rights reserved.