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30 April 2012

Paul v Krugman

So Ron Paul and Paul Krugman have a "debate" on Bloomberg today.  And I really shouldn't use the quotes because this actually came close to a debate.  No, no, no...neither man paid a bit of attention to the other.  But that's not the point, is it?
But both men made their respective cases and were largely silent while the other spoke.  No one shouted. For cable news, it was sort of refreshing.

You can see the video here:



And then afterwards, Krugman writes the following on his blog:


The things I do for book sales. I debated, sort of, Ron Paul on Bloomberg.Video here. I thought we might have a discussion of why the runaway inflation he and his allies keep predicting keeps not happening. But no, he insisted (if I understood him correctly) that currency debasement and price controls destroyed the Roman Empire. I responded that I am not a defender of the economic policies of the Emperor Diocletian.Actually, though, appeals to what supposedly happened somewhere in the distant past are quite common on the goldbug side of economics. And it’s kind of telling.I mean, history is essential to economic analysis. You really do want to know, say, about the failure of Argentina’s convertibility law, of the effects of Chancellor Br√ľning’s dedication to the gold standard, and many other episodes.Somehow, though, people like Ron Paul don’t like to talk about events of the past century, for which we have reasonably good data; they like to talk about events in the dim mists of history, where we don’t really know what happened. And I think that’s no accident. Partly it’s the attempt of the autodidact to show off his esoteric knowledge; but it’s also the fact that because we don’t really know what happened — what really did go down during the Diocletian era? — you can project what you think should have happened onto the sketchy record, then claim vindication for whatever you want to believe.It’s funny, in a way — except that this sort of thinking dominates one of our two main political parties.

It really is kind of funny that the only thing Krugman remembers (or pretends to) is Paul bringing up instances from ancient history "where we don't really know what happened."  But we sort of do.  As Albert Jay Nock pointed out back in 1932:

I have been thinking of how old some of our brand-new economic nostrums really are. Price-regulation by State authority (through State purchase, like our Farm Board) was tried in China about 350 b.c. It did not work. It was tried again, with State distribution, in the first century a.d., and it did not work. Private trading was suppressed in the second century b.c., and regional planning was tried a little later. They did not work; the costs were too high. In the eleventh century a.d., a plan like the R.F.C. [Reconstruction Finance Corporation] was tried, but again cost too much. State monopolies are very old; there were two in China in the seventh century b.c. I suppose there is not a single item on the modern politician’s agenda that was not tried and found wanting ages ago.

And as Alexander Gray points out over and over (and over and over) again in his book the Socialist Tradition: Moses to Lenin, almost every single thing that politicians come up with to help out "the people" has been tried before.  Usually dozens of times.  And it fails.  So it isn't jaundiced cynicism that fuels libertarian disdain and distrust of government intervention into the market and our livelihoods.  It is our understanding of human nature and knowledge of history.

And as to the criticism that Representative Paul relies solely on the "dim mists" of history to make his point, that is utterly false.  And it is not surprising that Krugman doesn't acknowledge the point.  Krugman says that he wants a return to the good old days of "mild inflation, effective government regulation of the financial system, fiscal stimulus (when it was needed)...I like the America that my parents prospered in."  (c. 1950s & 60s).

Ron Paul points out that right after the war, spending and taxes were cut.  Now if you add to the mix the fact that we had millions of soldiers returning home, you have, according to Keynesian economics, a disaster on your hands.  It was a disaster that never happened.  Why?  For one thing, there is no such thing as "aggregate demand."  There is only demand or lack of it.  Second, there is no way to predict how markets (millions of individuals and firms) will respond to circumstances.  And third, regulations.  Or the lack thereof.  In 1953, the year we humble humans were graced with Paul Krugman, the Federal Register ran 8,912 pages.  In 2006, the last year before the poop met the oscillating blades, it ran 78,724 pages.  Does Paul Krugman, does anyone, think America was more regulated in 1953 than we are today?  Does Paul Krugman think it was easier to start a new business in 1953 or in 2012, three years after Obama took office?

It is also beyond hilarious that the Princeton professor who is the definition of preening smugness dismisses the bringing up of historic facts as a trope of "the autodidact to show off his esoteric knowledge."

The man has no conscience or shame.



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