Pinochet

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Op maandag 29 maart 2010 08:51 schreef Dichtpiet. het volgende:

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wir haben es nicht gewusst

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Op maandag 29 maart 2010 10:21 schreef Ribbenburg het volgende:
Who was Milton Friedman?

Vooral het laatste stuk is lezenswaardig:
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There’s nothing liberals love more than apologizing for the misdeeds of others. Recently in the New York Times Magazine, Paul Krugman took it to an extreme with his 6,670-word article titled “How Did Economists Get It So Wrong?”.

Don’t bother reading it. It’s clear that he still doesn’t get it and definitely isn’t looking for any real answers.

Just the length of the piece is comical. We imagine poor Paul gazing out the window of his New York Times office searching for just one more quote, one more study, one more insight to help redeem his profession and his reputation in the wake of the greatest financial crisis since the Great Depression.

Because in Krugman’s ivory tower and on the Times editorial board, economics still matters and no debate about stimulus packages or health care plans or financial regulation would be complete without his unique and important insights. He’s too big to fail and worth every word. And who could edit him anyway? He won a Nobel Prize.

Over here in reality, most of us already know that he and those that follow in his footsteps have no reputation to salvage. As the chief hand waver for the liberal establishment, Krugman is ready at a moment’s notice to pen op-eds and cite studies that support any policy that his progressive paymasters dream up, even if it defies the most basic economic principles.

Economics is a subject that students love to hate, and I was no exception. Much of it is so theoretical that it is not just a waste of time, but in obvious conflict with the real world. For example, in Macro, I was taught that having both low inflation and low unemployment was impossible, even though thankfully America has accomplished this for most of my working life.

Still, two economic concepts did penetrate the fog: “supply and demand” and “incentives matter.” They are intuitive, easy to understand and apply, and deadly weapons against progressive economic policies.

Take ObamaCare, an easy target. According to the Democrats’ dubious accounting there are 30 to 45 million uninsured. But once the government starts to offer quality health insurance priced below-market, why wouldn’t every single American have an incentive to sign up? Especially when their employers decide that it is easier to pay the fine than to provide care? Incentives matter.

Then supply and demand enters the picture. More patients means more demand for doctors, which would normally be a good thing for the profession. Yet the government is capping and cutting reimbursements, which reduces the supply of medical care. It’s Jimmy Carter all over again, but with lines at the “free” clinic instead of the gas pump.

Does it end there? No, it never ends. Patients still want care, so they buy supplemental private insurance policies. The best doctors exit public care and patient wait times increase and quality deteriorates. And although the government should be happy to get a few patients off the rolls, just ask anyone in the UK or Australia what the general attitude is to private insurance and care.

Apply supply and demand and incentives, and its obvious that progressive policies disrupt markets, kill jobs, and destroy wealth. History is full of examples, and we don’t need to turn to the wreckage of the Soviet empire. Amity Shales wrote an excellent book, the Forgotten Man, that describes how President Roosevelt’s policies during and after the Great Depression harmed the very people they were supposed to help for at least a decade.

What’s maddening is that Krugman and his kind aren’t completely ignorant of supply and demand and incentives. They know that with the right economic policies in place, America – in other words, you — can be on the right side of the social justice fight. Your carbon and soda tax dollars can pay GE and the green jobs czar whatever is necessary to turn America — yes, you again – into a country of green global citizens supporting multiculturalism and diversity.

Progressives wielding junk science is nothing new, but economics is a particularly attractive target because it is a soft science masquerading as a hard one. It is a social science, like sociology or anthropology, and an economist is simply someone, anyone, who studies the economy in whatever way they choose to do so.

That’s why a list of economists can include Karl Marx, Milton Friedman, Adam Smith, John Keynes, Ludwig Von Mises, and J.K. Galbraith. They share no inviolate principles or even common subject boundaries, only a common interest in how societies produce and consume.

To call economics a social science is no insult, as human society is certainly worthy of study. The danger is that social sciences are especially vulnerable to subjectivity and political bias.

Still, before anyone makes the feeble relativist argument that there are no good and bad economists and each has their own valid view, let’s defer to Henry Hazlitt, an economist and writer for the Wall Street Journal who is credited with bringing Hayek ‘s Road to Serfdom to the American reader:

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.


In just one line from his insightful, accessible, and freely available book, Economics in One Lesson, Hazlitt tells you where to find the Forgotten Man — just keep looking around and ahead.

By this definition, and by any reasonable application of critical thinking, the Obama administration is getting their advice from bad economists.

For despite their Ph.Ds, they can’t or won’t think through the long-term consequences of a nanny-state blank check government that can take over car companies with no vote, reorganize the health care or energy industry in a few weeks of debate, and spend a trillion dollars it doesn’t have on stuff it doesn’t need.

If Krugman wants to write an article about how economists got it so wrong, that’s low hanging fruit. Just explain why people like him, who undoubtedly know better, feel compelled to carry the progressives’ water and give their policies credence. Why does he follow the party line instead of doing genuine analysis and research?

For example, what is his opinion of Freddie Mac and Fannie Mae? Was it a good idea to funnel taxpayer dollars into the riskiest home mortgages? The past, present, and future of our multi-trillion dollar progressive loan-guarantee programs is one of the most important economic issues facing our nation and was at the core of the financial crisis, but predictably Krugman doesn’t spare a word in his lengthy article.

The irony is that your job, or at least your career, is probably more secure than Krugman’s. Not just because he works for the troubled New York Times, an economic satire of itself, but because the role of a progressive cheerleader with a graduate degree in economics seems like a much easier one to fill than that of a genuine scientist.

As a modern-day Lysenko, he contributes nothing to the field, but simply burns through whatever credibility he once had at a dizzying rate. He didn’t predict the financial crisis, and he was wrong about the stimulus. As the errors, justifications, and blusters mount, at a certain point even the progressives will tire of him and look for someone else that can sell the story without reminding us of their past failings.

Still, as long as there are progressive funds flowing to progressive publications and organizations, there will be progressive economists. It’s just their job to use their credentials to convince and confuse, promoting social justice and progressive causes in the guise of economic science.

And for those of us not on the Soros-ACORN payroll, it’s our job as intelligent American citizens to discredit them before they can do any further damage. As Hazlitt wrote in 1946:

We are already suffering the long-run consequences of the policies of the remote or recent past. Today is already the tomorrow which the bad economist yesterday urged us to ignore.

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Op maandag 29 maart 2010 12:14 schreef Ribbenburg het volgende:

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Zijn beoordeling van Milton Friedman als publiek intellectueel lijkt me juist dus ik heb geen idee wat je hier mee probeert te bewijzen behalve dan dat Krugman geen heilige is.

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Op maandag 29 maart 2010 12:48 schreef Ribbenburg het volgende:

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Lees eerst het artikel eens.

Krugman erkent dat Friedman als economist de eer toekomt voor zijn werk, maar dat zijn rol als publiek intellectueel ervoor gezorgd heeft dat hij de messias van de Vrije Markt ging uithangen en een dogmatische boodschap begon te verkondigen.

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Krugman's Chilean Fantasy
Paul Krugman never ceases to amaze me with how he dishonestly rewrites history. Indeed, he does not so much give us history as he does Democrat-Socialist talking points, which he shouts out while holding his ears shut.

In this blog post, Krugman claims that relative free markets established after the Marxist Allende government fell in 1973 had nothing to do with Chile's prosperity today or the fact that the recent earthquake that hit the country -- one of the most powerful earthquakes ever recorded -- had a relatively small death toll, especially compared to the carnage in Haiti. As usual, the post has a number of howlers. Take the following, for example:



Actually, as you can see from the chart above, what happened was this: Chile had a huge economic crisis in the early 70s, which was, yes, partly due to Allende and the accompanying turmoil. Then the country experienced a recovery driven in large part by massive capital inflows, which mostly consisted of making up the lost ground. Then there was a huge crisis again in the early 1980s — part of the broader Latin debt crisis, but Chile was hit much worse than other major players. It wasn’t until the late 1980s, by which time the hard-line free-market policies had been considerably softened, that Chile finally moved definitively ahead of where it had been in the early 70s.

So: free-market policies are applied, and presto! prosperity follows — fifteen years later.
Ah! Where does one begin? First, Krugman glosses over the fact that Allende was trying to establish a full communist state. His government seized businesses, both foreign and domestic, printed money out the wazoo (creating 1,000 percent inflation), erected huge tariffs and trade barriers, and decimated civil liberties. Yeah, I guess that would cause some economic problems.

Next, just why might have Chile experienced some capital inflows following the overthrow of Allende? Maybe it was because the new government promised not to seize capital invested in Chile by foreign firms, and maybe because the government lowered many of its trade barriers.

Chile was hardly the only country to experience a serious recession in the early 1980s. As I recall, a country named the United States of America suffered its biggest downturn since the Great Depression, and, like Chile, had a robust recovery. There is no doubt that Chile has a much more free economy than do most Latin American countries, and also has a higher standard of living. (I'm sure Krugman has another explanation for Chile's prosperity. Maybe it finally is experiencing the "good effects" of all that money Allende printed nearly 40 years ago.)

As for the country's survival rate following the earthquake, Krugman writes:
As a number of people have pointed out, there’s this little matter of building codes. Friedman wasn’t exactly fond of such codes — see this interview in which he calls such codes a form of government spending, because they “impose costs that you might not privately want to engage in”.
First, building codes by themselves are meaningless. One must have the wherewithall to build structures that actually meet codes. Second, Chile has a strong record of private property rights.

Haiti, on the other hand does not. I recently read that about 80 percent of Haitians live on land of which no one holds clear title. That means that people basically are squatters, and squatters do not build strong buildings. (I am sure that Haiti also has building codes, but even the presidential palace was heavily damaged and the Haiti earthquake was not nearly as strong as what recently hit Chile.)

Being a good socialist, however, Krugman is going to claim that Chile's survival rate following the earthquake is due entirely to state power. And there is one more issue to address: the false notion that economic booms immediately follow economic liberalization.

That often is not the case, as what we saw in the early 1980s. Economies that are heavily regulated or have a lot of state ownership engage in malinvestments that cannot stand after an economy is liberalized. Indeed, given the massive malinvestments and the utter chaos that accompanied the Allende government, I would expect Chile's recovery to take a long time after liberalization, and that is what happened.

However, Keynesians believe that all economies are homogeneous, and that all a government needs to do is add money. Interestingly, that is exactly what Allende did, and even Krugman's little graph does not show that the communist government brought prosperity.

Guess Krugman needs to go back to the drawing board.