Tuesday, July 7, 2009

Krugman's Rearguard Apologists: Featured on Mises.org

My article Krugman's Rearguard Apologists (originally posted on Summa Anthropica), which follows up my Krugman's Intellectual Waterloo Mises Daily (also orginally posted on Summa Anthropica) has been published today as a front-page Mises Daily.  Please check it out and contribute to the comments.

My sincere thanks again to Jeffrey Tucker and BK Marcus.

Here's an excerpt...
This brings us to the key point that all the Krugman apologists egregiously ignore: namely that it would be surprising if such an arch-Keynesian economist as Krugman (he's written extensively on what he has called "the greatness of Keynes") didn't adovocate a housing bubble to replace the dot-com bubble, since doing so would dovetail perfectly with basic Keynesian doctrine. As a Keynesian, Krugman should have wanted lower interest rates (as he actually did want, as is revealed by the previous quote). To quote Keynes himself,
Thus the remedy for the boom is not a higher rate of interest but a lower rate of interest! For that may enable the so-called boom to last. The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and thus keeping us permanently in a quasi-boom. (General Theory, p. 322; emphasis added, but the exclamation point is Keynes's own.)
To be true to his Keynesian principles, Krugman ought to have to welcomed the housing bubble, since to him
  1. it was a good way to achieve his coveted "soaring household spending", and
  2. it was the likely result of Keynesianism-prescribed lower interest rates.

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