"Words ought to be a little wild, for they are the assault of thoughts on the unthinking" -JMK
- Jonathan Catalan has a very good post up expressing his concern that so many Austrians seem to have accepted the impossibility of involuntary unemployment. Part of the reason for this may be embedded in his post itself. He quotes Mises claiming the impossibility of involuntary unemployment. Of course I agree with Catalan and Rothbard. It seems to me, though, that the reasons Rothbard and Catalan give are fairly traditional neoclassical reasons for unemployment that you get from guys like Pigou: essentially the residue of labor market adjustment. I think almost all neoclassicals believed this sort of thing, so Catalan may be closer to them than he thinks. Where he is different, as he points out, is that he doesn't approve of the use of long-run equilibrium (which is essentially the source of claims the neoclassicism doesn't accept the idea of involuntary unemployment). But I would caution that this is just a pedagogical starting point for them. They make all the adjustment claims that Rothbard does to account for the unemployment that obviously exists.
- The Danish "Mohammed Cartoonist", Kurt Westergaard, is retiring. You can listen to a really fascinating interview of Westergaard here.
- Economics FAIL. Murphy shouldn't have needed an email from a friend to correct him on this (see the update). He just needs to read the newspaper on a more regular basis and stop assuming his own conclusions. Consumer loans do not jump by 50% in one month - and even if they did we would have heard about it. It's one thing to read a really solid Austrian like Mario Rizzo and say "well, I really don't buy the argument" or to read a really solid Keynesian like Brad DeLong and say "I don't know... I'm really not convinced". Not being convinced by someone that clearly knows what they're talking about is one thing. It happens. But when you see a blog post like this you really need to just stop reading the blog.
- Scott Kuhagen responds to Virginia AG Cuccinelli's crusades. He covers the challenge to the health insurance mandate here. Readers know I'm opposed to the mandate as well, from a policy perspective. I'm not sure quite what to make of the legal case, though. My understanding is that the legal case is solid, but that perhaps the argument for it is somewhat byzantine and unsatisfying. Basically, the mandate is being sold as a tax, which Congress is well within its rights to levy. I'm not sure if that's the full extent of the defense. If Virginia were actually willing to do something with it's fantastic credit rating, instead of selling liquor stores and cutting school budgets I might say "hell - let the AG boost AD and perhaps bring a little clarity to the legality of the mandate in the process". But since we're not going that route I have little patience for Cuccinelli's quixotic pursuits that are draining money from other potentially more useful state functions. Scott also blogged on another Cuccinelli crusade: second guessing academic freedom at the university founded by our country's (the world's?) foremost proponent of academic freedom. Ah the ironies.
- Charles Lane does a great job tempering Paul Krugman on the debt. I get Krugman's concern. It's a huge problem that we're doing essentially no fiscal stimulus for this downturn (remember - we are a federal republic - you can't just count federal increases, you have to also count state and local decreases). But Lane is right to criticize Krugman's "us vs. them" approach. The debt is a major concern. One of the biggest reasons why I'm concerned about state and local inaction is precisely that I'm worried about the federal government's long term ability to shoulder the states' shortcomings. It's not an either/or situation. This is why I get so frustrated when liberals yell about the deficit commission or entitlements. The only thing to yell about is the fact that the commission has no real teeth. We do have a problem with public debt in the United States, even if that problem doesn't threaten our current solvency and even if that problem shouldn't cause us to forget good macroeconomics that Krugman always has to remind us about.
For the Weekend...
2 hours ago