Wednesday, August 18, 2010

What Keynesians Would Say

I just saw this tweet from Andrew Coyne from two days ago. It links to a post from Cafe Hayek holding up the robustness of the German economy as proof that austerity pays off and all you dirty commies don't know what you're talking about.

My response is that Keynesians would first point out that the German and American economies are incredibly different. They would then point out that the Germans suffered nowhere near as badly as the Americans did in the recent recession. Finally, they would point to Ireland and just as arrogantly ask "What say you libertarians?"

That's what Keynesians would say. This type of absurd argument is common place, indeed it's the basis for just about all economic arguments. I remember reading a Krugman post a few weeks ago lamenting the current ideological warfare in economics. It is pretty disturbing. There is no more, or at least very little, truth seeking in modern economics, just a constant tug of war between saltwater and freshwater schools.


  1. As much as people bemoan economists using modeling equations, at least some of their efforts attempt to approximate the actual trends occurring. The Von Mises people tend to deny such methods yet will rely on verbal arguments to make their case when it comes to economic analysis. The problem is that such verbal arguments are fairly easy to inject some implied premises that rely more on ideological principles. That is not to say ideology creeps into economic models, but at least with economic models, you can quantitatively tease out the errors and shortcomings, compare them to the conclusions of the researcher, and identify some ideology creep.

  2. True. One of the things Austrian School adherents share with their crazy cousins in the new right is a distrust of numbers. They're quite happy not getting their hands dirty.