Quotation of the Day…

by Don Boudreaux on November 4, 2011

in Scientism, State of Macro

… is from Gerald P. O’Driscoll’s and Sudha R. Shenoy’s superb 1976 essay “Inflation, Recession, and Stagflation” (published as a chapter in Ed Dolan’s landmark collection, The Foundations of Modern Austrian Economics):

[I]ndeed, the Keynesian concept may be said to be that of full unemployment, that is, the implicit assumption that all goods and services are available in abundance, so that output and employment can be increased by all firms simultaneously.  Or, to put this point somewhat differently, the level of unemployment and excess capacity at the bottom of the cycle is assumed to be uniform throughout the economy.  The substantial variations, in both unemployment and excess capacity, as among different firms, industries, and regions, are disregarded in the Keynesian framework as having little analytical significance.

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Nikolai Luzhin, Eastern Promises November 4, 2011 at 6:09 pm

Don

What about China?

It’s stimulus worked

vidyohs November 4, 2011 at 6:19 pm

Yeah they produce a lot of steel in those backyard steel smelters and refineries of the Mao Great Leap forward days, or have they upgraded?

What is it about China that stimulates you, troll? Surely it isn’t anything to do with business, since you reveal you don’t understand diddly about business.

Is it that you lust for exotic slant eyed sex partners , or is it the girls?

Anonymous Librarians November 5, 2011 at 1:58 am

Vidyohs said about Nikolai, “you don’t understand diddly about business.”

I can assure you that Nikolai doesn’t know diddly about anything.

brotio November 5, 2011 at 2:56 am

Is it that you lust for exotic slant eyed sex partners , or is it the girls?

LMAO! :D

Nikolai Luzhin, Eastern Promises November 6, 2011 at 10:54 am

it was the girls

saw Don on Fox and thought he could benefit for similar stimulation

Nikolai Luzhin, Eastern Promises November 6, 2011 at 3:56 pm

Because distinctions of geography are becoming increasingly irrelevant, Morris views the old saw that “East is East and West is West” as a catastrophic way of looking at our present situation. Like it or not, East and West are now in a common mess, and “the next 40 years will be the most important in history.”

Although he implies it everywhere, Morris does not explicitly call for the United States and China to find new ways to collaborate. There may be no other solution. But will the leaders of these two unpredictable countries be able to rise to the unprecedented challenge they face? Not even Morris’s polymathic research abilities and pathbreaking analytic skills can help us answer that . . . for now.

“Why the West Rules — For Now”

Jon Murphy November 6, 2011 at 4:00 pm

“Although he implies it everywhere, Morris does not explicitly call for the United States and China to find new ways to collaborate. There may be no other solution.”

So why keep establishing barriers to such collaboration such as protectionist tariffs and currency wars? Would it not make more sense to remove these barriers in order to establish more collaboration?

Sam Grove November 4, 2011 at 6:26 pm

Trains don’t wreck if they aren’t first moving.

Mesa Econoguy November 5, 2011 at 1:41 am

Awesome.

Mesa Econoguy November 5, 2011 at 2:03 am
GAAPrulesIFRSdrools November 5, 2011 at 12:52 pm

Sam, actually they do (or did).

Back in the late 1960′s and 1970′s after the Interstate Commerce Commission had spent 80-90 years telling railroads EXACTLY how to run their business (into the ground), including disallowing for depreciation of track structures in government regulated rates, despite the persistent criticism from the best minds in accounting, a new phenomenon emerged. The “right of way” had become so decrepit that there were instances of “standing derailments”, on the

where a crew would “set off” a car on a siding for pick up by another crew. When the pick up crew came, the weight of the car “rolled” the rail.

So while it seems physically impossible, with enough government interference, you can wreck a stationary train.

Prior to the total implosion of railroads in the Northeast, Penn Central produced a film requesting a bailout, one that was eventually received in the form of Conrail in 1976 and followed by deregulation of the Staggers Act in 1981 after the government realized just how impossible it was to run a railroad by its rules.

The film is on you tube. Should be required viewing for the statists of the world and resident CH trolls who think federal fiat is a magical incantation that suspends the laws of supply and demand.

http://www.youtube.com/watch?v=GHmyYqfNYnc

Mesa Econoguy November 5, 2011 at 1:43 am
Ken November 5, 2011 at 1:55 am

Mesa,

You just don’t get it. China’s building, not just things, but whole cities. Who cares if no one lives there? Who cares if it’s not useful? Who cares if there’s no demand? Just so long as the government, or anyone, spends. That’s what drives growth and makes everyone’s lives better. Well at least it makes GDP larger, despite that number being more useless than usual.

It doesn’t matter if people make things that people use. All that matter is that something, anything is being made, even if it’s just going to be thrown away. If you’re having trouble understanding that logic, ask Paul Krugman, or muirgeo, or Eastern Promises, or Invisible Backhand.

Regards,
Ken

Mesa Econoguy November 5, 2011 at 1:59 am

Space aliens.

We need an invasion.

They can either help us build more free stuff, or destroy our planet, so we can build more free stuff, or they can buy EFSF bonds.

Same thing, really.

Invisible Backhand November 5, 2011 at 11:49 am

Taking a break from your section 13-705 activities, Greg?

Anonymous Librarians November 5, 2011 at 2:22 am

Ken, you said, “ask Paul Krugman, or muirgeo, or Eastern Promises, or Invisible Backhand.”

Those are the four dumbest guys in any room.

Anonymous Librarians November 5, 2011 at 2:19 am

Holy shit, Mesa! Excellent video proving China is a state-run ship about to hit the economic-reality shoals. What a bunch of dumb Keynesian statists.

Jim from Kansas November 5, 2011 at 7:59 am

Thanks for posting the video link, Mesa. I’m still in shock. It occurs to me that this is exactly what is proscribed by Keynesians today: “government must be the consumer of last resort”, “the US didn’t do a big enough stimulus”, “it’s not what you spend it on that matters as long as you spend something”, etc, etc. This is a marvelous example of what “going big” looks like. The US doesn’t need to try anything, we have a world-class lab experiment going on right now.

Jim from Kansas November 5, 2011 at 8:03 am

Whoops. “proscribed” should be “prescribed”. Sorry.

Methinks1776 November 5, 2011 at 10:57 am

What are you complaining about, Mesa? GDP is growing. The Chinese are getting richer by the amount of the GDP growth. The multiplier is greater than zero. Keynesianism works.

Just repeat that until you don’t care if it makes sense anymore.

(great video. Thanks)

vidyohs November 4, 2011 at 6:15 pm

“[I]ndeed, the Keynesian concept may be said to be that of full unemployment, that is, the implicit assumption that all goods and services are available in abundance, so that output and employment can be increased by all firms simultaneously. “

Is that wording correct?

Is it being said that at full “unemployment” (meaning no one is working), that all goods and services are available in abundance…..how dat happen?

Then with all that abundance all employers can gear up with full employment and full production of what is already in abundance……for what purpose?

I am obviously not connecting something correctly there, or am I?

Invisible Backhand November 4, 2011 at 6:37 pm

From the same essay:

As Hayek incisively noted:
It has of course never been denied that employment can be rapidly increased, and a position of ‘full employment’ achieved in the shortest possible time by means of monetary expansion…

We’ve seen a shipload of monetary expansion, where is the rapidly increased unemployment?

Invisible Backhand November 4, 2011 at 6:38 pm

employment, not unemployment.

Sam Grove November 4, 2011 at 7:06 pm

can be”> is not the same as “will be”.

Witness WWII.

GAAPrulesIFRSdrools November 4, 2011 at 8:12 pm

“can be rapidly increased”

can, not will.

Jon Murphy November 4, 2011 at 8:48 pm

Right. We can solve our debt issues by printing money, but it won’t solve the issue.

vikingvista November 4, 2011 at 10:20 pm

Will you post the reference so I can read the full context? If he said this without major qualification (like conscription), then I disagree with him. Government and firms may hire with monetary expansion, but not without knocking off jobs at the back end. That is, monetary expansion shifts resources, it does not create them.

Invisible Backhand November 4, 2011 at 10:40 pm
Mesa Econoguy November 5, 2011 at 1:51 am

Gerry O’Driscoll, in addition to being a brilliant CATO mind, apparently was also the doorman for Abbey Road Studios, who uttered the famous lines from Dark Side of the Moon:

http://www.youtube.com/watch?v=fGS9auPPDsg

Nikolai Luzhin, Eastern Promises November 5, 2011 at 6:53 am

a brilliant CATO mind? B/s “Corrupt opportunism,” at best:

This relates to Steve Walt’s description of the two ways that a discipline can abandon its public mission. Academics can become insular, a closed group that mostly talks to itself, or they can become beholden to powerful outside interests. He uses the phrase “the Scylla of hyper-professionalized irrelevance and the Charybdis of corrupt opportunism” to characterize this distinction.
Which of the two happened in economics? As described above, when academics retreated from the public sphere, powerful interests were able to step in and influence the public dialogue through economists at think tanks and other means. There were certainly some economists within academia who supported these efforts, but these outside influences were important conduits for special interest politics. Thus, I view insularity and the void it left in the public sphere rather than subservience to powerful interests within the profession as the more important problem.

http://publicsphere.ssrc.org/thoma-new-forms-of-communication-and-the-public-mission-of-economics/

Invisible Backhand November 5, 2011 at 10:01 am

Hey, the child molester is back! How are the neighbors treating you?

Nikolai Luzhin, Eastern Promises November 5, 2011 at 10:17 am

imposter

Don has a split personality. I am his better side

vidyohs November 5, 2011 at 11:34 am

http://www.youtube.com/watch?v=-Hx_4mBZBjk&feature=related

This is why the drive-by media hates Fox News and talk radio so much. They can no longer hide behind a facade of respectability, the drive-by media are all whores to the socialist agenda.

Nikolai Luzhin, Eastern Promises November 6, 2011 at 4:11 pm

vidyohs

there is a new book out about you

The Reactionary Mind: Conservatism from Edmund Burke to Sarah Palin

what is your address so that I can buy you a copy and mail it, torrrow

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