Sunday, February 27, 2011

Assault of Thoughts - 2/27/2011

"Words ought to be a little wild, for they are the assault of thoughts on the unthinking" - JMK

- Brian Leiter critiques Paul Krugman on market efficiency? What do you think of his argument? I obviously think it's pretty badly put (but then, I'm one of those economists). Market failures are real, but you don't point to one specific failure and say "gee, it all must be suspect". It doesn't work when people do that with the government and call it "Public Choice Theory", and it doesn't work when people do that with the market.

- Brad DeLong highlights a portion of Christina Romer's discussion of empiricists vs. theorists at the Fed. She says empiricists note deflationary pressures because that's in the data and theorists worry about inflationary pressures because that's in their theories. A while back, I contrasted John Dewey and Murray Rothbard on empiricists vs. theorists. Dewey argued that empiricists were more likely to stay grounded, to make valuable claims about reality, to support democracy and liberalism and self-government, and that theorists (rationalists specifically) where more likely to entertain high-falutin radical ideas that were less grounded to reality, and more likely to discount the value of democracy and other liberal institutions. Rothbard - with a logic that I'm still having trouble grasping - precisely reversed Dewey's argument. The distinction probably isn't as clean as either of them like to make it, but I think DeLong and Romer seem to be in Dewey's corner on this one.

- Catherine Rampell with an update on government spending and the economy.


  1. There are market failures if any only if neoclassical equilibrium theory is correct. If it is not (and it's not), then market failure is a nonsense term.

  2. I don't think that's true at all, Troy. There are very clear analogs to non-neoclassical theory.

    Could you explain a little more why you think it's a "nonsense term".


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