Quotation of the Day…

by Don Boudreaux on November 20, 2011

in Scientism, Seen and Unseen, State of Macro

… is from pages 399-400 of Liberty Fund’s 1979 reissue of Benjamin Anderson’s remarkable 1949 book, Economics and the Public Welfare: A Financial and Economic History of the United States, 1914-1946 (original emphasis):

There is no more startling instance of deterioration in a great science than the recent trends, largely influenced by Keynes, to turn away from an analysis that takes account of all the changing factors in economic life, and to concentrate attention almost exclusively upon monetary and budgetarty phenomena, in explaining the business cycle and in formulating public policy with respect to prosperity and employment….

From theoretical concepts of the Keynesian type we receive no help at all.

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Nikolai Luzhin, Eastern Promises November 20, 2011 at 10:17 am


Your tripe is constant.

Here is an excellent discussion on location theory from Matthew Yglesias

“By contrast, Kentucky (population 4.3 million) and the San Francisco / Oakland / Fremont Metropolitan Statistical Area (population 4.3 million) do share a currency. They do this despite the fact that Kentucky has a longstanding lack of competitiveness relative to San Francisco. Eighty-seven percent of San Franciscans have high school degrees compared to just 80 percent in Kentucky. Forty-three percent of San Franciscans have bachelor’s degrees to just 20 percent of Kentuckians. Not surprisingly, San Francisco’s workers are much more productive, earning a median household income of $74,000 to Kentucky’s $40,000.

* * *

“The way this is made to work is by long-term, sustained, open-ended financial transfers to Kentucky. Overall taxation in the United States is not very redistributive because state and local governments use regressive tax bases. But that means that federal taxes and transfers — i.e., the ones that matter for the SF/Kentucky relationship — are highly redistributive. Hard work, prudent investment, and human capital development in San Francisco are taxed to support indolence in Kentucky. And note that it’s not just poor people in Kentucky who are winning out in this arrangement. Kentucky is full of doctors and hospital administrators who think of themselves as hard working, highly educated professionals working in the private sector. But they’re living in a dreamland where their customers can afford their services thanks to taxes paid in San Francisco. Absent Medicare and Medicaid, health care professionals in Kentucky would see their incomes plummet with secondary consequences for the people who those professionals buy goods and services from. Nor does San Francisco demand any kind of conditionality for this assistance. Kentucky is not, to my knowledge, doing anything on the structural side to ameliorate its fundamental lack of competitiveness. What’s more, the structure of San Francisco to Kentucky transfers is perverse. If Kentucky implements new bad anti-growth policies, it will get more transfers from San Francisco. If it improves its policies and finds a way to grow, the transfers will diminish.”

IOW all your tripe is about protecting the Red part of the US which isn’t competitive but lives on the federal teat.

Our problem is not crony capitalism. Our problem are all those Red states with uneducated unproductive populations

Jon Murphy November 20, 2011 at 10:27 am

Um, are you aware the article has nothing to do with the above quote?

vikingvista November 20, 2011 at 12:04 pm

He and IB are like a non sequitur tag team.

Invisible Backhand November 21, 2011 at 3:48 am

He and IB are like a non sequitur tag team.

We are much more than that. Nikolai Luzhin, Eastern Promises is my lover. He taught me everything I know about economics.

Please don’t tell my wife.

Nikolai Luzhin, Eastern Promises November 20, 2011 at 12:43 pm


I am posting comments that have something to do with the current economic environment, to counter this blog which publishes falsehoods and irrelevancies.

Jon Murphy November 20, 2011 at 12:50 pm

I just wanted to make sure you had an agenda and not putting on one of your amazing displays of reading incomprehension.

vikingvista November 20, 2011 at 1:16 pm

Trust me. You are undermining your own cause.

SmoledMan November 20, 2011 at 12:52 pm

Who asks you to visit this blog? Unless of course you feel this blog is a huge threat to liberalism and you need to try and somehow convince the libertarians on this blog that they need to convert over to socialism? Dude, you’re barking up the wrong tree. We are all set in our ways here, you are never going to convince us that statism is better then capitalism.

Jon Murphy November 20, 2011 at 12:54 pm

“Unless of course you feel this blog is a huge threat to liberalism and you need to try and somehow convince the libertarians on this blog that they need to convert over to socialism?

Actually, that is his stated goal.

Andrew_M_Garland November 20, 2011 at 1:43 pm

() Comparing a rural state to a well-developed city, only on the basis of population. Laughable.

() It would seem that our generous Liberals have set up progressive taxation to help out the backward, conservative states. Also laughable.

Nikolai Luzhin, Eastern Promises November 20, 2011 at 10:17 am
Inspector fu November 20, 2011 at 11:28 am

oooh think progress eh? Matt yglesias eh? Gosh how about that.

Yergit Abrav November 20, 2011 at 9:45 pm

Your appeals to authority [of socialists] is not likely to achieve your stated aim of converting us to socialism, if indeed that is your objective.

muirgeo November 20, 2011 at 10:18 am

Yeah and than the next 30 years after the wrote that the USA saw un-surpassed growth & prosperity and the rise and biggest expansion of the middle class ever. Literally the most successful free society in all of civilization.

Nikolai Luzhin, Eastern Promises November 20, 2011 at 12:44 pm

the truth hurts them muirgeo

muirgeo November 20, 2011 at 3:44 pm

The facts have a liberal bias…. that’s the problem for them.

Greg Webb November 20, 2011 at 5:45 pm

Yes, a classical liberal bias…

Russ Fan November 20, 2011 at 10:50 am

Because there totally is economic analysis that takes into account ALL the factors of economic life, right?

anthonyl November 20, 2011 at 12:13 pm

Most economic analysis by Keynesians isn’t very pertinent to anything really!  See Krugman.  Keynes was the master at making economics irrelevant to humans and completely failed to explain anything about the reality of life.  
I mean, they analyze monetary policy.  First you set things up to go a certain way then you write papers about how things actually went that certain way!  Suprise!  No one else could have figured that out!  ”I must be so clever!”
When it doesn’t go the way they thought, they have no explanation.  Like they have no concept of what incentives are, that humans are just machines, that markets are irrational, crazy, out-of-control institutions.  They don’t try to show the relevance of economics to everyone’s everyday life. 

Nikolai Luzhin, Eastern Promises November 20, 2011 at 12:41 pm


you are showing all the signs of a failed mind, including a massive case of inability to handle ambiguity

Nikolai Luzhin, Eastern Promises November 20, 2011 at 12:39 pm

Truth to Don:

Why does the Fed need to print more money?

“Low interest rates are generally a sign that money has been tight, as in Japan; high interest rates, that money has been easy.”

Milton Friedman, here


Greg Webb November 20, 2011 at 5:49 pm

Luzha, you do not understand basic supply and demand concepts. But, that is not surprising since you took Milton Friedman out of context. Are you and IB related?

Nikolai Luzhin, Eastern Promises November 20, 2011 at 12:50 pm

chart confirming the decline in velocity of money, M2


Jon Murphy November 20, 2011 at 12:53 pm

What’s your point here?

vikingvista November 20, 2011 at 3:49 pm

You gotta wonder if he’s just a bot.

Jon Murphy November 20, 2011 at 3:54 pm

Well, the fact that the VM2 declines in and of itself doesn’t mean anything. I think he’s trying to show that a declining VM2 means the money supply is tight, but he doesn’t know what the calculation is:

VM2= P/M

Where P is price level
M is money supply.

Since the Fed increased the money supply so much, you’d expect VM2 to be lower.

Jon Murphy November 20, 2011 at 2:59 pm

This blog-post reminds me of an old saying:

Insanity is doing the same thing and expecting different results.

Chucklehead November 21, 2011 at 3:19 am

This explains everything and nothing.
Statisticians can prove almost anything, a new study finds

Coty November 21, 2011 at 9:26 am

“There are three kinds of lies: lies, damned lies, and statistics.”
- Benjamin Disraeli

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