Few economists openly admit to believing in Say’s Law anymore. It is generally considered a relic of the past, a once dominant theory that had faded away. Although it was prominent in the 19th century, it was swept away in the Keynesian revolution like so much of Classical economics. However, economic theories never die. Say’s Law lives on in conservatives think tanks like the Heritage Foundation and when Marco Rubio (who many favour as the next Republican candidate for President) rose to reply to Obama’s State of the Union address, it was Say’s Law he invoked. Even in the world of economics, some economists unconsciously channel the spirit of Say when they preach about the worries of crowding out and through Walras’ Law which is just a weak version of Say’s. This year’s joint winner of the (pretend) Nobel Prize in Economics Eugene Fama constructed an argument against government stimulus (unconsciously) based more or less on Say’s Law. Continue reading “Say It Isn’t So”
Republicans regularly criticise Obama’s stimulus plan, claiming it was an ineffectual waste of money. The internet is full of people arguing it failed to work, that unemployment is still high and growth is low. However what few people realise is that the stimulus did work. Without unemployment would be higher and growth lower. In fact the only problem is that it was too small to solve the greatest crisis since the Great Depression. Continue reading “The Truth About Spending And The Stimulus”
“The Road To Serfdom” by Fredrick Hayek is a disappointing book. Conservative bloggers often race about it claiming it has great insights into modern politics. While I disagree with the Austrian school of economics I read it to here the other point of view. I found it a boring, out dated book that didn’t have anything particularly original or insightful to say. It’s mainly concerned with saying a totalitarian state where the government controls everything doesn’t work (you don’t say). The book might have been relevant when it was published, but I am at a loss to see its use today.
I think to a large extent Hayek has been misunderstood. I have regularly heard people use Hayek to criticize the growth of the state or the Obama administration. Yet Continue reading “Misunderstanding Hayek And The Road To Serfdom”
We are in the midst of the worst recession since the Great Depression. It is therefore logical that we should see how that recession was ended for solutions to our current problems. It was solved by Continue reading “How To End The Recession”