Krugman’s MindBlindness

Here’s Krugman on Tyler Cowen:

If you believe stimulus is a bad idea, fine; but surely the least one could have expected is that opponents would listen, even a bit, to what proponents were saying.

So, people don’t agree with Krugman on something, which means they can’t be listening! If they listened, they would hear the truth, come around to his way of thinking, and the world would be as Keynes envisaged in The Economics Possibilities for our Grandchildren: the big problem would be how to spend leisure time.

What ill-tempered Krugman fails to appreciate, is that no one listened to Milton Friedman either, as his career ascended almost step-by-step with an increase in the size of government and the amount of regulation. I don’t think many legislators do what Noam Chomsky wants either (anarcho-socialism).

Intellectuals should realize that they are ‘influential’ only if they help rationalize a zeitgeist, as von Mises noted about Keynes:

His contribution consisted rather in providing an apparent justification for the policies which were popular with those in power…His achievement was a rationalization of the policies already practiced

Reading Marx, you become struck at how much of what he wrote was about economics, what happends to wages, profits, production, with lots of little examples. No socialist mentions these arguments or examples anymore because they are so blatantly irrelevant, but that was his focus. Instead, Marx wrote such obscure, pedantic, twaddle, despots of all types could simply point to Marx as “proving” their side is the vanguard of history, and few debaters could on the spot know all the many flawed arguments with Marx’s Das Kapital. Marx helped people rationalize what they wanted to do.

So, Paul, remember not to take offense, no intellectuals convince people to choose certain policies, rather, they help people rationalize their prejudices. Just break out of your intellectual echo chamber long enough to realize that emphatic reassertion is not argument, and if fiscal stimulus was the no-brainer you thought it was, it would have clearer empirical support.

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About Eric Falkenstein 136 Articles

Eric Falkenstein is an economist who specializes in quantitative issues in finance: risk management, long/short equity investing, default modeling, etc.

Eric received his Ph.D. in Economics from Northwestern University , 1994 and his B.A. in Economics from Washington University in St. Louis, 1987

He is the author of the 2009 book Finding Alpha.

Visit: Eric Falkenstein's Website

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