Krugman, Keynes, and the Uncited Austrians

Business Cycles
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Apparently, Paul Krugman has never read the work of Ludwig von Mises and F.A. Hayek. Chortling on The New York Times blog, he yammers away in this manner:

Many of the comments to my Austrian economics post are of the form “Well, of course employment rises when investment is expanding, and falls when the investment is falling — in the first case the economy is booming while in the second it’s slumping.”

As I tried to explain, however, that’s assuming the conclusion; there’s no “of course” about it. Why do periods when the economy is investing more correspond to booms, while periods when it’s investing less correspond to slumps? That’s easy to understand in Keynesian terms — but the whole Austrian claim is that they’re an alternative to Keynesianism. Yet I have never seen a clear explanation of this central point.

There are books that deal with this by Hayek, Mises and others. Why doesn’t Krugman reference them, rather than drone on about the quality (or lack thereof) of his blog commenters?

I could, at this point, dredge up those Hayekian and Misesian pearls. But, for the moment, I feel challenged by Krugman’s apparent requirement that bloggers spin this stuff anew, so I’ll give my shot at an answer to his challenge, without referencing any of the Austrian classics. They are there for all to read. But it’s always a good experiment to see how one thinks through this on one’s feet.

Problem is, Krugman’s challenge seems fairly obvious. I need a handicap. So I’ve downed three shots of anisette, and am on my fourth. Can I answer Krugman drunk?

I think so.

Reading his post, I see that the question should be reformulated: Why is it when investment picks up, so does employment? …

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The Division of Responsibility

Drug Policy, Health Care, The Basics
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It is odd, perhaps, that just as the federal (read: national) government moves to take primary responsibility for our medical lives, the several states are moving in the other direction. The right to self-medicate is, increasingly, being seen as important. First medical marijuana — a slap on the face to federal nannies — and now recreational use, sees advocacy and advance at the state level.

Any advance in taking full responsibility for medicine, on the part of citizens, individuals, goes against the grain of our collectivist age, and sparks some hope.

Of course, in a sense, it seems 35 years behind the time. …

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Taxing Cannabis

Democracy, Drug Policy, Taxation
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Enough signatures having been gathered for The Regulate, Control and Tax Cannabis Act of 2010, Californians will have the chance to vote on legalizing marijuana next November. The measure, known popularly as the “Tax Cannabis Act,” would decriminalize the plant and its psychoactive uses statewide, leaving it to the state’s counties and cities to tax and regulate . . . or continue to prohibit. (If passed it would also severely test the two weakest Amendments to the United States’ Constitution, the Ninth and Tenth.)

Though this could be a major step forward against the barbaric war on drug use, may I express some sadness at the measure’s title, and the way some folks argue for it? “Legalize it so we can tax it!” What a depressing mantra. This binding of freedom to eternal victimhood by the state irks me. It’s the giving of a base reason to do a noble thing.

Of course, nobility of thought is the last thing on most people’s minds. …

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