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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Net Neutrality Developments

Mercantilism, Protectionism, Technology
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net neutrality pictureIn recent years the “Net Neutrality” movement has gained steam. This is an effort by various statists, interventionists, do-gooders, meddlers, and techno-ignoramuses who seek to have the government forbid network providers (e.g. cable companies, telcos, and wireless carriers) from selectively blocking certain types of Internet use–for example, to require companies to give Web users equal access to all content, even if some of that content is clogging the network. Of course, as I noted on A Libertarian Take on Net Neutrality, the network neutrality movement is unlibertarian. There is nothing wrong with price discrimination or with charging different prices for different levels of service. As some anti-corporatist types are only too eager to point out, without state intervention the major telcos might well not have as much monopolistic power as they currently do. But it doesn’t make much sense to urge that the state engage in further intervention to fix the problem of previous state intervention. It is state intervention that is the problem.

In the latest development on this front, as reported in U.S. Court Curbs F.C.C. Authority on Web Traffic, cable company Comcast Corporation had challenged the F.C.C.’s authority to impose Net Neutrality rules. Last week, a federal appeals court ruled in Comcast’s favor, holding that F.C.C. regulators have limited power over Web traffic. As the article notes, “The decision will allow Internet service companies to block or slow specific sites and charge video sites like YouTube to deliver their content faster to users.”

Libertarians should not leap for joy, however. The court merely held that current federal statutes do not happen to give the F.C.C. quite enough authority to regulate Internet companies in this manner. They didn’t say it would be unconstitutional or even unwise. So all Congress has to do is pass a law. And they’re good at doing that.

Update: See my posts Kinsella on This Week in Law discussing IP, Net Neutrality; Against Net Neutrality; and Fernando Herrera-Gonzales’s articles Net Neutrality: Unwarranted Intervention and Opening the Internet — with an Axe.

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Corporate Leftism: Questions About the University of Michigan’s Smoking Ban

Corporatism, Education, Nanny Statism, The Left
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Just less than one year ago, it was announced that the University of Michigan would institute a “smoke free” policy on all three of its campuses, finally banning smoking on all university property after incrementally banning it first indoors and then within fifteen feet of all entrances and exits to university buildings. The new policy is set to take effect on July 1st, 2011.

However, this proposed policy has caused significant and vocal opposition from members of the campus community. In particular, members of the University of Michigan College Libertarians, including myself, have led the efforts to reverse this decision.

Criticisms, up to this point, have focused heavily on the fact that this decision was made entirely from on high by President Mary Sue Coleman without the involvement of students, faculty, or staff. There have also been significant concerns regarding the justifications for the ban: representatives of the “Smoke Free University Initiative” have stated, interestingly, that the ban is not in response to concerns regarding second-hand smoke (the usual excuse for such measures), but rather for the purpose of creating a “culture of health.” This, it seemed, was particularly ridiculous: the university was engaging in blatant paternalism and trying to make personal health decisions for students, faculty, and staff. One of the most vocal opponents of the ban, Alex Biles, had a modest proposal of his own for promoting a “culture of health.” There were a variety of other concerns, of course, including the issue of enforcement, the costs of this policy to the university, the additional cigarette butt littering after the removal of butt huts across campus, and so on.

However, a massive break was made last weekend when it was discovered that President Mary Sue Coleman, architect of the policy, also just so happened to sit on the Board of Directors of the pharmaceutical giant Johnson & Johnson, which is the largest producer of smoking cession products in the nation, and received an incredible $229,978 in compensation. The College Libertarians quickly wrote up and sent out a press release regarding this development and the issue has spawned two articles in the most-read campus newspaper, the Michigan Daily, this week. This significant and obvious conflict of interest has never been addressed by Mary Sue Coleman and it was only through independent investigation that this was discovered.

This, of course, does not constitute evidence that the policy was motivated by her affiliation to the corporate giant. But, as Murray Rothbard insisted, we should not shy away from investigating such relationships and always asking, “cui bono?” when examining the genesis of government policies. What appear to be disinterested and benevolent actions by “public servants” are often motivated by far more sinister and self-serving reasons.

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Liberals to Blacks – “Either You Are a Liberal or a Sell-Out”

Democracy, The Left, Vulgar Politics
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One of the advantages liberals have with a black president is that they can decry any opposition to him or his policies as “racist”. Do you disagree with the health care bill? Clearly you are a racist. So you oppose Obama’s bailout plan? You must be a racist. Do you think McCain should have been president? You must be a member of the KKK. But what do you call black people who oppose Obama? They must be sell-outs.

Many blacks have been joining the Tea Party and some are paying a personal price for doing so:

“I’ve been told I hate myself. I’ve been called an Uncle Tom. I’ve been told I’m a spook at the door,” said Timothy F. Johnson, chairman of the Frederick Douglass Foundation, a group of black conservatives who support free market principles and limited government.

“Black Republicans find themselves always having to prove who they are. Because the assumption is the Republican Party is for whites and the Democratic Party is for blacks,” he said….

“I’ve gotten the statement, ‘How can you not support the brother?'” said David Webb, an organizer of New York City’s Tea Party 365, Inc. movement and a conservative radio personality.

Since Obama’s election, Webb said some black conservatives have even resorted to hiding their political views.

“I know of people who would play the (liberal) role publicly, but have their private opinions,” he said. “They don’t agree with the policy but they have to work, live and exist in the community … Why can’t we speak openly and honestly if we disagree?” …

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Age Must Be Catching Up With Paul Volcker

(Austrian) Economics, Democracy, Humor, Vulgar Politics
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There’s no shame in Paul Volcker’s being confused. It’s common for men his age (82) to slip into an afternoon slumber and wake up discombobulated — it can take a little while to reorient. And that’s when the memory is working well; but, let’s face it, an elderly man’s memory isn’t always fully functional. So that’s why I think it’s only fair to cut the Chairman of the President’s Economic Recovery Advisory Board some slack for his comments yesterday when he announced that taxes were likely to rise in order to “tame” the deficit:

The United States should consider raising taxes to help bring deficits under control and may need to consider a European-style value-added tax, White House adviser Paul Volcker said on Tuesday. Volcker, answering a question from the audience at a New York Historical Society event, said the value-added tax “was not as toxic an idea” as it has been in the past and also said a carbon or other energy-related tax may become necessary.

Though he acknowledged that both were still unpopular ideas, he said getting entitlement costs and the U.S. budget deficit under control may require such moves. “If at the end of the day we need to raise taxes, we should raise taxes,” he said.

See, he has to be confused because my memory still works really, really well, and I remember this from the campaign:

Old “joke”: Know how you can tell if a politician is lying?

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