October 2015

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« Alexander Fink --- 2014 Winner of ORDO Award for Outstanding Scholarship in the Field of "Economic Order" | Main | Happy Birthday Professor Israel M. Kirzner »



A "brilliant" mind (Stiglitz, allegedly) that can't comprehend the failures of government is hardly brilliant, is my view. Arrogant, yes. Brilliant? No.

great post. As for central banks, as Greg Mankiw noted in a great 2006 JEP article:
• Autobiographies and other hands-on sources show that recent developments in business cycle theory by new classical and new Keynesians have had close to zero impact on practical policymaking at central banks.

• Central banker’s analysis of economic fluctuations and monetary policy as discussed in their autobiographies are intelligent and nuanced, but it shows no traces of modern macroeconomic theory, and would seem almost completely familiar to someone who was schooled in the neoclassical-Keynesian synthesis that prevailed around 1970 and has ignored the scholarly literature ever since.

There is a great difference between intelligence and wisdom. One can be highly intelligent and have no wisdom. To paraphrase Hayke, intelligent people think too highly of intelligence, believing it gives them control over things they can't control.

The best argument against Stiglitz is the Great Depression. No depression in US history lasted as long or went as deep in spite of massive government intervention. The Great Depression is a second example of the failure of intervention.

Of course, mainstream economists would say those are examples of market failure, but they need to explain why markets worked so much better the century before the Great D. The only unique aspect was government and Fed intervention.

And they have said that both would have been worse without state intervention, but it's not likely that the Great D could have been worse, and they don't know that the Great Recession could have been worse. It could have been better without the intervention.

Economic history contradicts mainstream theory, but they don't know economic history.

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