What I Think Tank

Posts Tagged ‘Austrian Economics

Is the Austrian School Getting Tired of Being Right, Yet Not Heard?

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Government needs to stop wasting all the € toilet paper in Greece (Image by Neil T via Flickr).

Just watched the news here in Norway about how Greece is asking the European Union for another stimulus package to deal with the bust and economic crisis they suffered a while ago, but as usual they offered no questions or investigations and simply mindlessly reported whatever they’re fed.

So what are people missing here? What is the most fundamental and most important question that “TV2 Nyhetskanalen (The Norwegian TV2 News Channel)” completely failed to ask and examine when reporting this case?

There are probably many great questions they could ask, but I would expect this much: “Why did the first stimulus package fail, and why should it follow that another stimulus can do what the first one obviously couldn’t?”

You cannot print yourself to prosperity and economic growth – not real growth in a sound economy in any case. The greek government had taken grossly advantage of the situtation up until their crisis – with a big majority of the nation on the government’s payroll. They were wasting resources and spending themselves to poverty. Yes, that’s right – simply spending all you have would do that. This applies for both individuals and governments, you know. Their government spent loads of money and warped the economy into a disaster. Upon this crisis the European Union with their central bank shipped a bunch of euros down to the old birthplace of the western civilization. Things seemed to quiet down a little. People thought Greece would do what was necessary to restructure their economy and get back to economic austerity, but as many Austrians and economic know-hows explained early on: This had been a great opportunity to do what is right and get rid of some bad government and start becoming responsible again, but it was wasted and things were just business as usual when Germany and the European Union decided to shoot the greeks up on heroine again and delay their long needed rehab.

Now it seems like the greeks have run out of their shipment of heroine and goes begging to their dealer to cut them some slack and give them some more – promising that they’ll soon get things in order, start producing and give something back. Are we at all surprised? Are Austrian economists getting tired of being vindicated by the cold facts of contemporary history yet again, without anyone else noticing what is flashing red right in front of them?

Quite honestly, I think Greece will whine to the European Union about another stimulus package until the Union will listen and provide them with what they think is the correct way of dealing with problem – surely sending their Union currency into oblivion hand in hand with the US dollar. Greece will probably shut up for a while, but only until they’re back to where they left off. Then it’s back to climbing onto the backs of their productive german friends again.

When will the world finally learn? Germany needs to teach Europe some of that economic german discipline, or else they’ll get dragged into the mud along with all the ignorant drug addicts in Europe.

Robert Murphy vs Paul Krugman

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I wanted to use Robert Murphy of the Austrian School of Economic vs Paul Krugman the Nobel Laureate King of Keynesianism as the title for this post, but I was afraid that it might be a little bit too long, although it does give you a better idea of what the essence of this is.

Paul Krugman, for anyone who has ever read his pieces in the New York Times or has seen the attempts of Austrians to argue against his positions, will know that he at times has taken some swings after Austrians, for instance calling Austrian Theory “a theory that I regard as being about as worthy of serious study as the phlogiston theory of fire“. While he may very well be right to think so, one could question why he won’t debate anyone of the Austrian School. Peter Schiff has repeatedly challenged Paul Krugman straight out, saying for instance that he should return his Nobel Prize, because he doesn’t understand economics, and Andrew Schiff, Peter’s brother, has even tried to come in contact with Krugman to make arrangements for such a debate. All Krugman would have to do was to meet up and slaughter Peter Schiff in front of everyone, with the world as his witness. Instead, Paul Krugman tries to take easy jabs now and then, with pompous comments like “I do know that I keep being told that Peter Schiff has been right about everything; so, how’s that hyperinflation thing going?

The latest attempt at luring Paul Krugman out of his cave comes from Robert Murphy, a fairly ‘recent addition’ to the long line of scholars in the Austrian School of Economics, one who at several occasions has taken on Paul Krugman’s arguments in his articles and seems to be well acquainted with the content of a possible debate.  What is unique with his attempt is its appeal to emotions and moral conscience. Currently, only 5 days after the challenge has been made, almost 29,000$ has been put into the pot to see a debate between Robert Murphy and Paul Krugman happening.

“Why is there money involved?” I hear you ask. The idea is to raise as much money as possible that will be donated to the Fresh Food Program of FoodBankNYC.org.

Food Bank For New York City works to end hunger and increase access to affordable, nutritious food for low-income New Yorkers through a comprehensive group of programs that combat hunger and its causes.

There is a hunch, however: The money will only be donated if and when Paul Krugman accepts to debate Robert Murphy for one hour. These are the terms:

See Paul Krugman debate Robert Murphy on Keynesian versus Austrian business cycle theory! Moderated by Ezra Klein, or another moderator of mutual choosing.

If this objective is met, then the money (after 5% to The Point) will go to the Fresh Food Program at FoodBankNYC.org.

Why the Food Bank For New York City? Well, why not? It’s as good a cause as anything else, and since Krugman just happens to write in the opinion pages for The New York Times it probably just fits the occasion, not to mention that this would be a very nice present in the upcoming holiday season for the hungry men, women and children of New York. If 100,000$ were to be raised, that means 95,000$ cash in food for the hungry, and all Paul Krugman would have to do is meet up at the Mises Institute in Alabama, skewer Robert Murphy like a sow at the buffet, cash the money for FoodBankNYC and get back on his plane home. Even his supporters and academic equals would hound on him to accept.

That is why it will be quite hard to see how Paul Krugman could ignore this offer if it becomes big enough. Think about it, how could anyone ever say “No, I will not be ‘tricked’ into doing something I have regarded as too easy for all these years, because I do not care enough to do something that could feed the hungry of New York”? Unless, of course, it is an awful (or even evil) person, or at the very least wishes to be regarded as one by everyone else.

What do I think? It’s quite unique and it could get huge. I urge everyone to put down some money, even if it’s just a small amount. Everyone can afford 10$, and for Americans it’ll even be tax deductible. Remember, you will not lose the money unless Paul Krugman accepts the challenge. But will he? While it might be hard to see how he can ignore this, I’m quite certain the odds for you keeping your money is high. No matter how big it gets, he’ll act like this doesn’t exist, that he hasn’t had the time to read all the comments and mails he receives that urges him to accept, because he’s such an important person and hasn’t had time for that, or he’ll disregard it as some kind of hoax/set-up/scam if he ever actually gets faced with it. Let’s be frank, he’s somewhat of a coward when it comes to debating Austrians.

So I do not keep my hopes up high, but I’m as hopeful as ever. Let me make it clear that I’m not necessarily thinking this is gonna be some kinda “blood-fest” where “my Austrian guy” will shred the “Keynesian fool” to pieces. While I may think Paul Krugman is a fool, he’s also a smart one, even if he doesn’t know economics – like his “Princeton brother” over at the Federal Reserve. I’m actually hoping for an informative, educational and interesting debate where you would truly see two different ways of understanding the world try to make their cases and reveal weaknesses in each others sides, and perhaps give the audience something to think about. I for one enjoy listening to a spoken debate much more than seeing two sides battle each other over blog posts in a chaotic fashion. It’s much more dynamic and real, even if it might be viewed as unfair to some, since a lack of charisma will shine through a lot easier and will appear to weaken the power of the argument. I do have to admit my opinion that I do not find Robert Murphy to necessarily be the most charismatic of speakers, at least not compared to a person like Peter Schiff, who with his many comedic metaphors and stories would render Paul Krugman a dull zombie, but he is a genius, and while he may not have the speechcraft of a politician, it should be noted that Paul Krugman really isn’t the most eloquent speaker around either, at least not from what I’ve seen of him, so I think it’s much more fair and honest this way (not to mention more likely to happen). They’re not embarking on any political campaigns after all. Sadly, though, it will not gather the same publicity as it would with Peter Schiff, but you give some and take some.

I nonetheless think Robert Murphy is more than well up for the task, and he has at the very least found a very interesting and powerful way of making this happen. Time will tell if it will ever become a reality.

This Is What I Think Tank

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What I Think Tank is a blog that will revolve entirely around whatever interesting thought yours truly may have at any time, but aims to concentrate its content on politics, economics and history, with a keen interest in American politics and the American tradition of Libertarianism and Austrian Economics.

If this interests you or provokes you, please read along. If not, then you have probably not even bothered reading this.

Thanks for visiting and have a good day.

Written by Morten Rolland

October 24, 2010 at 3:27 am