The Macroeconomics of Food Stamps

by Mario Rizzo The expansion of food stamp eligibility in response to the Great Recession was part of the so-called stimulus package. There were several aspects. First, there was a simple increase in the maximum amount allowed to beneficiaries of about 14%. There was also a tremendous drive to get people who are eligible, but … Continue reading The Macroeconomics of Food Stamps

Uncertainty and the Keynesians

by Chidem Kurdas At the current economic juncture two camps offer diametrically opposed macro policy prescriptions. Economists on the Keynesian side such as Joseph Stiglitz and Paul Krugman advocate further monetary easing by the Federal Reserve and massive new federal deficit spending. The opposing camp includes Austrians and monetarists. Among its distinguished members is Allan Meltzer, who in … Continue reading Uncertainty and the Keynesians

Krugman Redistribution or Ponzi Scheme

by Chidem Kurdas A nice thing about Paul Krugman, he does not mince his words. Thus his new book, End This Depression Now!, repeats as boldly as possible the central point he’s repeatedly made in his New York Times columns and blogs for years. Namely, governments have to spend a lot more. They have to … Continue reading Krugman Redistribution or Ponzi Scheme

European Austerity in Perspective

by Chidem Kurdas Attempts to rein in government spending necessarily have unpleasant side effects.  Thus the Dutch government collapsed amid budget talks to control the deficit.   And British national output appears to be shrinking. Keynesians and advocates of the Obama administration’s colossal budget see this as vindication for unrestrained government spending. But in fact … Continue reading European Austerity in Perspective

Keynes, the Future and Present Austerity

by Chidem Kurdas In 1930, John Maynard Keynes dashed off an amazing prophecy. Extrapolating from the productivity gains of the past centuries, he came to the bold conclusion that the fundamental economic problem of scarcity would fade away in 100 years or so. Thanks to technological innovation and the accumulation of capital, the ancient condition … Continue reading Keynes, the Future and Present Austerity

Malinvestment in Human Capital

by Jerry O’Driscoll The Weekend Wall Street Journal has a front-page article on labor mismatch: “Help Wanted: In Unexpected Twist, Some Skilled Jobs Go Begging.” It focuses on the problems that the Union Pacific Railroad is experiencing trying to hire skilled workers to keep the trains rolling. These include electricians who work on diesel engines. … Continue reading Malinvestment in Human Capital

The Infrastructure Death Rattle

by Mario Rizzo The incessant discussion and demand for job-creating infrastructure spending on the part of the news media, Democratic politicians, and some unreconstructed Keynesian economists is both frustrating and pathetic. It is frustrating because how many times can people repeat the same thing without listening to the objections? It is pathetic because the level … Continue reading The Infrastructure Death Rattle

“A Divine Miracle”

by Jerry O’Driscoll   In the August 24th Wall Street Journal, Harvard Professor Robert Barro penned a hard-hitting op ed: “Keynesian Economics vs. Regular Economics.” He contrasts the lessons of standard economics with some of the unsubstantiated claims of Keynesian economics. He zeroes in on the idea that transfer payments provide economic stimulus. Transfer payments in … Continue reading “A Divine Miracle”

“Keynesian Death Spiral”

by Jerry O’Driscoll   In Wednesday’s Wall Street Journal, Kevin Hassett explains the economic logic against fiscal stimulus (“Stimulus Optimists vs. Economic Reality”). It’s a superb piece. The more powerful one believes fiscal stimulus to be, the more adept the Keynesian policymaker must be. If the stimulus has powerful positive effects when added, it will have … Continue reading “Keynesian Death Spiral”

Thanksgivings Past

by Chidem Kurdas Thanksgiving was originally a spontaneous celebration. Over time it grew into a social custom. It did not become an official holiday until Lincoln issued a Thanksgiving proclamation in 1863. Then in 1939 Franklin D. Roosevelt moved the date. New England Puritans must have needed an alternative holiday because they did not like … Continue reading Thanksgivings Past

Taylor, Krugman and Quantitative Easing

by Chidem Kurdas In two substantial New York Review of Books articles, Paul Krugman and Robin Wells offer their views on various explanations of the property bubble and ways to get out of the slump.  On the latter front, they advocate aggressive deficit spending by the federal government and  quantitative easing by the Federal Reserve— … Continue reading Taylor, Krugman and Quantitative Easing

Greenspan Paradox on Recovery

by Chidem Kurdas Alan Greenspan exemplifies an inconsistency that appears to be widespread. He reportedly said that the stimulus has fallen far short of expectations and the government should get out of the way and allow businesses to power the recovery. At the same time, he’s so worried about budget deficits that he supports higher … Continue reading Greenspan Paradox on Recovery

Principled Economic Policy

by Jerry O’Driscoll   Today’s Wall Street Journal features a major op ed, “Principles for Economic Revival,” co-authored by George P. Schultz, Michael J. Boskin, John F. Cogan, Allan H. Meltzer and John B. Taylor. It begins by noting that the “deep recession and anemic recovery have largely been driven by economic policies that have deviated … Continue reading Principled Economic Policy

Heterogeneous Labor

by Jerry O’Driscoll   In the September 4th issue of the Wall Street Journal, Jon Hilsenrath chronicles the debate over the reasons for persistently high unemployment.  What is being described is the problem of heterogeneous labor. Labor, like capital goods, is specialized and specific to certain occupations. When those occupations disappear in recession, the next best alternative … Continue reading Heterogeneous Labor

Perils of Macro Aggregation

by Mario Rizzo   Richard Ebeling, as usual, does an excellent job of showing how the inability to see macroeconomic phenomena as the outcome of complex micro-processes leads to poor policy prescriptions. Take a look at his response, at EconomicPolicyJournal.com edited by Richard Wenzel, to a post by Tyler Cowen at Marginal Revolution. The upshot is … Continue reading Perils of Macro Aggregation

Ending Austerity in the Austerity Debate

by Mario Rizzo   What has been disappointing about the recent stimulus vs. austerity debate is the recycling of arguments that have been gone over many times before in many newspapers and blogs. The debate has become tiresome and unenlightening.   The major feature of the debate that is responsible for the lack of enlightenment is, well, … Continue reading Ending Austerity in the Austerity Debate

The Dismal Jobs Picture

by Jerry O'Driscoll   Steve Horwitz has stimulated a lively discussion of the slow recovery in jobs at Coordination Problem.  There are two letters in today's Wall Street Journal addressing the issue.  One letter references an earlier article in the July 10th Journal.  The article is titled "Debt, Bank Troubles Leave U.S. Trailing in Job Growth." … Continue reading The Dismal Jobs Picture

Just Lend And Be Done With It!

by Mario Rizzo   Recently, there have been reports in the Wall Street Journal and the Financial Times that Ben Bernanke and others are concerned that banks have not been lending “enough” to small businesses. The accusation is that lending standards are too strict.  As Jack Hopkins, the director of the Independent Community Bankers of America, … Continue reading Just Lend And Be Done With It!

Still Hearing Defunct Economists in the Air: Krugman’s Misplaced Attack on Hayek

by Richard Ebeling*  On July 9th, Nobel economist and New York Times columnist, Paul Krugman, gave his read on the recently unearthed letters between J. M. Keynes and F. A. Hayek in the London Times in October 1932, which have been posted and discussed on ThinkMarkets. (and in the Wall Street Journal). Krugman insists that Hayek … Continue reading Still Hearing Defunct Economists in the Air: Krugman’s Misplaced Attack on Hayek

F.A. Hayek and Tyler Cowen

Do we have more evidence of the continuing great debate between Hayek and Keynes? In the now "famous" 1932 letter to The Times of London signed by F.A. Hayek, Lionel Robbins, T. E. Gregory and Arnold Plant, we read:  The signatories of the letter referred to [by Keynes, Pigou et al.], however, appear to deprecate … Continue reading F.A. Hayek and Tyler Cowen

Austerity in Germany – A Keynesian Case

by Andreas Hoffmann* The positions about economic policies could not have been more divided between Germany and the US during the latest G-20 summit. On the one side, Barack Obama pushed Keynesian arguments about the need for further stimulus and the danger of austerity measures for economic recovery. On the other side, Miss “No” is … Continue reading Austerity in Germany – A Keynesian Case

Keynes versus Hayek: Past is Prologue

KEYNES HAYEK 1932 Cambridge vs.LSE by Mario Rizzo   My friend economist Richard Ebeling has discovered two extremely important letters. (Click the link above.) In 1932 before John Maynard Keynes’s General Theory was written, these letters appeared in The Times of London regarding the appropriate economic policies for Britain to follow during the slump.   There are … Continue reading Keynes versus Hayek: Past is Prologue