Tuesday, September 13, 2011

Assault of Thoughts - 9/13/2011

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

- Greg Mankiw puzzles over that investment graph Krugman shared the other day. I did too, at first - I wasn't sure exactly what Krugman was trying to say with it. I think the point was that volatile investment ought to have a volatile cause, and Barro's treatment of the investment primarily as a long-run policy problem ignores this. Approaching it as a long-run problem, should we keep taxes low, inflation stable, policy predictable, etc? Sure - definitely. But keeping an even keel in the long run doesn't seem like it has anything to do with the short-run fluctuations in investment that cause a lot of the damage. Indeed, if you look at a GDP series it's pretty clear that the long-run that Barro is worried about is actually the one that we do pretty well at (probably not of our own doing, of course). Krugman and Barro agree that our problem is an investment problem. I believe Krugman is noting that our investment problem is mostly a short-run problem, while Barro seems to think otherwise.

- When Tyler Cowen used the term "New Old Keynesians" I kind of liked it yesterday. I imaginet his mostly mean neoclassical synthesis Keynesianism with some modern theory mixed in. But ultimately, I wasn't sure how well it fit. Mark Thoma expresses exactly my reservations about it here.

- Krugman shares some interesting articles by Sylvia Nasar on Keynes and Schumpeter in 1919, and on Irving Fisher.


  1. What I found interesting about Sylvia Nasar's excerpted writings on then-ongoing events in Austria was that early 20th century socialism did not have a positive upbeat mood about it.

    Instead, the socialists in the Austrian republic were borne of extreme cynicism and dry acceptance of downward spiral movement of life. Even when Schumpeter showed there was an available, feasible plan to kickstart the Austrian government again and help Austria's financial situation to recover, his fellow ministers were angry that anybody would hinder their pessimism.

    It was only such a pessimism that could excuse socialist reforms to be enforced, because officials could convince themselves that there was only one solution. Lord Keynes of the Social Democracy blog says that socialists admired the ideas of certain free marketers and classical economists, because they found some of the more pessimistic ideas appealing.

  2. Did you see this Daniel?



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