Abu Hatem أبو حاتم

Very sad news for the Nobel Prize in economics, which is rewarded by a Swedish central bank anyway (unlike the other Nobel prizes) and hence already discredited.  Some good economic commentary on the Krugman disaster today:

Russell Roberts at Cafe Hayek:

I’ve talked to a number of people who are depressed and angry at Krugman’s prize.

For me, it is just another reminder that those of us who believe in liberty are in for a long time in the intellectual wilderness. Today’s intellectual climate is a taste of what it must have been like to believe in liberty in 1933, or what it must have been like to be Milton Friedman in say, 1962.

I think things are much better today. We have many more outlets for spreading the virtues of freedom than we had in the past. I take solace in the fact that the average American today has a much richer understanding of the case for liberty today.

Economist Peter Woekette at the wonderful blog The Austrian Economists:

 I will be writing a lot more about this, but the Swedes just made perhaps the worst decision in the history of the prize today in naming Paul Krugman the 2008 award winner.  It is not that Krugman’s work is entirely without merit, but it always had major problems with it.  Right now I have to get over my shock and horror and write a commissioned piece on this.  But today I would say is a sad day for economics, not a day to be celebrated.  Mises supposedly said during his dying days that he hoped for another Hayek, as I am picking up my jaw from the floor I am hoping for another Samuelson or Arrow to get the award rather the hackonomics that was just honored.

Woekette has a much less passionate, and much more intellectual critique in today’s Forbes Magazine.

Meanwhile, one of my favorite economists Bill Anderson also reacts at Forbes Magazine:

 This is not as tragic a moment in western civilization as the sacking of Constantinople in 1453 or the Bolshevik Revolution of 1917, but it suffices as one of those sad moments we will regret over time…

Thus, Krugman believes the problem is that the Bush administration is not socialist enough, which makes it ideologically “free market.” If Obama is elected and Krugman receives a high position in his administration, we shall see if Krugman becomes the first commissar who makes socialism work. I’ll be betting against him.

And instead, Anderson offers an actually sane candidate for the position:

Once again, the Great Jeffrey Miron comes through. Unlike Paul “The Fraud” Krugman, Miron actually does understand financial markets and the ramifications of the current policies.

If you want to read something clear, concise, and on-target, read Miron.

Bob Higgs of the Independent Institute laments Krugman’s nomination as well, after demonstrating that Krugman truly does not understand trade theory he says:

For economists who would like the Nobel Prize to mean something, today is a very sad day. Besides making a travesty of the prize, Krugman’s selection constitutes an insult to the few excellent economists (I am thinking especially of F. A. Hayek and James Buchanan) who have received the prize in the past.

Congressman Dr. Ron Paul’s Campaign for Liberty gives the funniest and most succinct analysis:

Krugman wins Nobel prize, Hayek turns over in grave.  Yup, humanity is doomed.

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I know I have repeated this point too many times in the last week, but David Brooks (who I usually don’t like) hits it on the mark in today’s New York Times:

“we’re in for a Keynesian renaissance… What we’re going to see, in short, is the Gingrich revolution in reverse and on steroids.”

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That Paul Krugman won the Nobel Prize in economics was perhaps the most disgusting news out of yesterday.  Anyone who has followed Krugman and his New York Times columns, knows that he is a die hard Keynesian statist.  He has called for the transformation of the American economy into a statist anti-freedom socialistic European model claiming they have “conquered poverty.”  He has also affirmed the broken window fallacy of Frederic Bastiat saying that the Iraq war is “good for the economy.”

Austrian economists have published numerous critiques of Krugman’s positions on the business cycle.  They are all available here, here, and here.

But I don’t want to speak totally bad about the man.  David Henderson, the free market economist many of you all might know from Antiwar.com, offers some praise for Krugman’s work on free trade in today’s Wall Street Journal.

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Hope is a virtue.  Indeed, it is one of the three cardinal Christian virtues, alongside of faith and love.  It is also one of the cardinal Muslim virtues - al-raja’ fillah or hope in God.  The early Muslims used to say “Whoever expects the best from his Lord will find the best.”

Barack Obama tells us to have the audacity to hope, whatever he means by that.  There is indeed some silver lining in the clouds, there are some positive benefits out of this election no matter who wins.

The fact is, no matter how imperfect and unideal our candidates have been since 1980, they have been vastly superior in economic policy than 1933-1980, consequent to FDR’s New Deal and the Keynesian economic revolution.

We may complain about our conservatives not being “conservative enough” on economic freedom, but the fact is that Bill Clinton, a democrat, was one of the more markedly free market presidents in our history.  Not for 28 years have we seen 90% top marginal income tax rates.

Reagan changed America.  When Reagan ran in 1980 on a platform of limited government and economic freedom he was derided by Carter as an extremist.  Freedom used to be an extremist view.  In the 80s, 90s, up until now it is a mainstream view.

Much has been written about the demise of true conservatism this year.  This coincides with republican dissatisfaction with Bush and the high prospects of republican defeat this year.  But this demise is pretty much set to be true.  This year is set to be a realigning election.  While the Reagan revolution, Reagan’s coattails in controlling the Senate, and Bush I’s election in 1988, a markedly freer market agenda was set in place (although it was certainly not a free market by any means).  Clinton’s election didn’t set things back, as Clinton was a “New Democrat” who believed in markets.  1994’s Republican takeover of the Congress by Newt Gingrich reformed welfare and with Clinton established balanced budgets in his last few years.

Then republicans took over all three branches in the age of Bush, and failed miserably.

If democrats control the congress by high enough margins, and Obama wins the presidency by a landslide, we should prepare for the worst.

The fundamental impetus of statism is crisis, as history so often tells us, and this Wall Street crisis and the misunderstandings which stem from it serve to establish a reviving statist Keynesian tide.

We should worry about freedom, which is now maligned openly, and which is in danger of becoming a marginal view of the American electorate and public opinion.  Even Francis Fukuyama, the former neoconservative who once was worshipping democratic capitalism like an idol calling it the “end of history,” is today saying that deregulation is a “discredited idea.“

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… while we go bankrupt bailing out Wall Street.  Here is the request, via CQPolitics.

In principle, if the money would be used for its proper use - defense - rather than offense, a strong national defense is not a bad thing at all.  Its imperial overstretch, and the debt-based financing that goes along with it, that is counterproductive in our defense.  Two great articles on this today, one in the New York Times, and the other by the great international relations scholar Paul Kennedy makes this clear in today’s Times of London:

The American republic, like the feckless kings of Bourbon France, has not been able to pay its way in the world from its own resources. For years the federal government’s expenditures have far exceeded its revenues. Each month that horrible gap has been covered only by the sale of treasury bonds (five-year, 10-year, 30-year promises to repay), chiefly to foreigners, chiefly nowadays to Asian governments and banks…

If that happens, further cracks will start to appear in the American imperial edifice. They will be patched up by congressional and presidential plasterwork in a desperate effort to keep this gigantic, alarmingly unbalanced road show on the tracks for a few more years at least. But the inner fissures will be there.

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Sorry, I couldn’t resist, here’s an old cliche yet important quote from the good ‘ol Gipper:

The ten most dangerous words in the English language are “Hi, I’m from the government, and I’m here to help.”

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Its really interesting the sheer number of articles written this weekend, from the New York Times and Washington Post to the Times of London, Le Monde, The Times of India and all the other world newspapers on how capitalism caused this crisis and how the U.S. is beginning to go into decline.

Rubbish.

Anyone who has even looked at the dictionary definition of capitalism (in the most basic sense - an economic system which recognizes the natural right to private property) knows that the gold standard was always a integral aspect of the capitalist system, the best economic system in the world both in its respect for justice and natural rights and in its generation of prosperity.

But government fiat based currency and central banking wherein the government and economy runs on debt, and has the authority and power to devalue our banknotes continually, is not capitalism.

It was John Maynard Keynes and the left who have always hated the gold standard and have been the most vocal against it, not conservative capitalists.  Keynes saw the gold standard as a relic of barbarism.  The Atlantic Monthly, the New Republic, and all of the mainstream leftist publications in the U.S. have blasted the gold standard continually.

Two quotes from real capitalist conservatives - Ludwig von Mises and Ronald Reagan - on the gold standard follow,

Mises:

The superiority of the gold standard consists in the fact that the value of gold develops independent of political actions.

The gold standard was the world standard of the age of capitalism, increasing welfare, liberty, and democracy, both political and economic.

All those intent upon sabotaging the evolution toward welfare, peace, freedom, and democracy loathed the gold standard, and not only on account of its economic significance.

And Ronald Reagan:

Any great nation that goes off the gold standard ends being a great nation.

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From Lew Rockwell’s blog.  The horrid republicans and democrats in Congress have found a new mentor rather than Adams, Jefferson, and Madison:

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Bush, Pelosi, the democrats, and the republicans all threatened that if we did not pass this bailout the stock market would crash and we would have a disaster.  ”He must act now,” the mantra was.Today, Wednesday, four work days after the bailout was passed, the DOW Jones has fallen  1500 points or 14.6%.  This is not just after a bailout, but after a worldwide rate cut this morning.Central planning didn’t work in the Soviet Union, and it won’t work here.  Crony capitalism and corporate welfare is not the solution to our problems. 

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