Monday, October 13, 2008

Krugman wins his Nobel Prize

Many years ago, Steve Kangas pointed me to Paul Krugman as a really good economist. I've followed his writings in numerous sources since then, and have at least ten of them in the Critiques indexes. (Go to the All Links page and scroll to the first mention of his name.)

Krugman has many harsh things to say about libertarianism and Austrian economics. The one that is really relevant today is The Hangover Theory: Are recessions the inevitable payback for good times?.


Glen said...

What do you think of Krugman's views on Comparative Advantage?

Markus said...

I'm a big fan of Paul Krugman. I'm reading his book "Conscience of a Liberal," his retort to Barry Goldwater's "Conscience of a Conservative."

In it he talks about The Great Compression, something that America could do with right about now.


Glen said...

For what it's worth, a MarginalRevolution commentator suggests this and this and this in response to Krugman's critique of Austrian business cycle theory.

(ht: Tyler Cowen here)

Mike Huben said...

I read those 3, and they're saying pretty much identical dogmatic things.

The MR response is here.

I'm not an economist, but I do notice several things about Austrian economics (as presented by Mises and Rothbard.)

First, it is not scientific: it is prescientific. There is no measurement, and any corellation with the real world is by mere assertion of opinion by Austrians, rather than some more objective measure. If Austrians make the same assertions, it is because they have the same sorts of ideological biases that would cause all Christians to assert Satan as a cause of evil. Not because they objectively observe some positive cause.

Second, there is a huge cognitive dissonance between Austrianism and scientific model-based economics. If somebody believes arguments from both camps, I'd say that they are providing good evidence that they don't really understand much economics.

It would greatly amuse me to see somebody turn Austrian economics upside down by simply adopting assumptions that are not ultra-right wing. Cohen did that with much of libertarian rights theory, and it could be done with Austrianism.