Thursday, August 04, 2011

Via RealClear Markets comes a short, amusing send-up of Paul Krugman, the Keynesian economics columnist for the New York Times. I particularly enjoyed this part of the set-up, in which Robert Higgs notes the irony of Krugman's dismissal of his arguments as relying on a "confidence fairy:"

The irony in this dismissal, as others, including my friend Donald Boudreaux, have already pointed out, is that Krugman's own vulgar Keynesianism relies on a much more ethereal explanatory force for its own account of macroeconomic fluctuations–namely, the so-called animal spirits. The master himself wrote in The General Theory: "Thus if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die. . . . [I]ndividual initiative will only be adequate when reasonable calculation is supplemented and supported by animal spirits. . . ." (p. 162). Because Keynes conceived of his "animal spirits" as "a spontaneous urge to action rather than inaction" (p. 161), he of course had no way to explain their coming and going or to measure or evaluate them in any way. They are as surreal as a ghost -- when and why they come and go, no man knows or can know. Such is the force that drives the ups and downs of private investment in Keynesian economic theory, and such theory unfailingly drives Krugman's commentaries on the recession and on the possibility and effective means of recovery from it. [link omitted, minor format edits]
And do go on to read the punchline, in which Keynes's "animal spirits" are revealed to be, if anything, a reflection of the assessments of people in the marketplace of the general hospitality of the political and economic situation to the conduct of their affairs. (Higgs notes that Keynes does not sufficiently acknowledge a rational basis for these evaluations.) Thus Krugman not only advocates a discredited theory, he does so ignorantly of the theory itself.

-- CAV

--- In Other News ---

Caught on the nanny (state) cam: The Feds have conducted an armed raid of a health food store for selling raw milk. I don't advocate the consumption of unpasteurized dairy products, but it is not the proper function of the government to dictate how people feed and care for themselves any more than it is to make people pay for the same.

The problem, being cultural, was inevitable, but an interesting item I learned from a recent Christopher Hitchens piece is that joining the EU hastened the Islamization of Turkey by subordinating its military to civilian control. This is yet another example of how merely imitating the institutional arrangements of a Western-style republic is not enough to protect individual rights.

James Taylor of the Heartland Institute argues that new NASA data "blows a hole" in AGW "alarmism." This may well harm the case for AGW, but it is in the nature of the alarmist to ignore or explain away data that indicate that there is no cause for alarm. This is part of why I regard it as a waste of time, past a certain point, to argue against global warming (assuming that it isn't happening) without also at least bringing up the idea that it would be improper for the government to do anything even if global warming were occurring. [Update: A reader emails me with a piece that is far less enthusiastic about the paper discussed by Taylor. It starts off with this: "The hype surrounding a new paper by Roy Spencer and Danny Braswell is impressive (see for instance Fox News); unfortunately the paper itself is not."]


: Added update to last section on AGW.


Michael said...

the criticism by Trenberth & Fasullo is insufficient.

Gus Van Horn said...

Not to stake a position here -- I would need to read and think more about this -- but:

Sez you.

narayan said...

I'm afraid the RealClimate people defend a lot of so-so research when it is from one of their own. But I'm also afraid that the quality of the research that global warming deniers pick up on isn't so great either.

Gus Van Horn said...


I think you may have meant something to the effect of each side promoting research that fits its political agenda, a proposition with which I agree.


Michael said...

Well I am no denier and I object to the use of that word in the first place. However the RealClimate article was indeed insufficient criticism

Gus Van Horn said...

"Well I am no denier and I object to the use of that word in the first place."

You're no stickler for not using words you find objectionable, either.

Again, you have already said that you find the second piece insufficient. What do I care that some random guy who calls himself Michael deems the piece "insufficient," unless there's an argument to go with that assertion?