Thursday, September 9, 2010

If I had a nickel every time an Austrian compared a recovery during a period of strong AD to a recovery during a period of weak AD...

... OK, I'd have like $0.25 because there are only so many recessions people talk about. But that's not the point!

Cafe Hayek and Coordination Problem, on Larry White's article describing the Wirtschaftswunder.

1. If anyone wasn't aware, this is a very standard interpretation of West Germany in the post-war years. You get it in Barry Eichengreen's new book too, and he's no libertarian. This isn't to criticize White's article or Coordination Problem or Cafe Hayek's posts at all - it's to say I think they're right on the history. The point is to temper the conclusions they draw from their history.

2. Röpke explains quite clearly why output picks up after disasters, despite Bastiat's point that it's a net wealth loss.

If you want to "prove Keynesians wrong" - think first about whether you're even talking about a situation where Keynesian theory would advocate fiscal policy. Herbert Marcuse once said of Marxism "not every problem someone has with his girlfriend is necessarily due to the capitalist mode of production". Well, I say "not every problem someone has with his girlfriend is necessarily due to an aggregate demand deficiency".


  1. Bit by bit I feel like I'm getting 'priced out of the market' -- that is, if the market is participation in the comments on this blog and the price is something like depth and breadth of economic knowledge. I'm really interested, but I'm having a harder time keeping up today than I was a few months ago. Just an example: I had to Google "AD" because aggregate demand just didn't leap to mind. And I have to admit I've never read Röpke.

    Maybe I'm not your target audience, but at the same time I feel really engaged by the kind of discussion. I just wish there was a tiny bit more explanation...a tiny bit less that I have to bring to the table in order to evaluate the arguments that are being made.

  2. I'm really glad you said that, Robert. I'll try to work on it. And of course don't hesitate to ask for clarification.

    I also write the vast majority of these very early in the morning, which may by itself account for a significant portion of the lack of clarity!

    I was referencing some things I've covered w.r.t. Ropke on these issues from previous posts. I can also be better about linking when I make allusions like this. What I've written in the past on Ropke and these sorts of "broken window fallacy" questions is here:

    and here:

  3. My audience is whoever is engaged by what I write so yup - you're in it :)


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