"A few posts ago, I pointed out that Krugman unintentionally let slip the fact that he wants policies that reignite a boom. Naturally, a Krugman defender said I was nuts in the comments."
http://consultingbyrpm.com/blog/2013/03/more-on-keynesians-loving-the-boom.html#comments
Now I don't know about this whole idea in his title on "Keynesians loving the boom"-we'll actually have to unpack that. However, let me say that I love having my comments referenced in Murphy's post. For the record, I never quite said he is nuts. I don't have any reason to think that he is. I suspect maybe he thinks I and all Keynesians are nuts.
Bob Roddis certainly, whether or not he thinks they're all nuts or not, has a very low opinion of them, seeing us all as basically beneath the pale:
"it is pointless and foolish to treat Keynesians as serious, thoughtful and/or honorable."
So I'm not sure who Bob Murphy thinks is calling who nuts. I was just explaining that in my view he has Krugman all wrong when he said this:
"I’m not going to bother with a full write-up, but in this post Krugman makes a joke, but inadvertently reveals what we’ve been saying all along: His solution to a depressed economy is to ignite a boom. In this particular post, Krugman is ridiculing the idea that Ireland is in recovery, because they’re not in a boom. Since Ireland isn’t currently in a boom–according to the logic behind Krugman’s sarcastic quip–the policies in Ireland must be bad."
My point was simply that's not what Krugman was saying. It might get a little confusing here: I'm addressing Bob Murphy the blogger, not Bob Roddis the commentator who writes his own blog, though his posts are pretty irregular these days.
http://bobroddis.blogspot.com/2013/03/a-clueless-stephanie-kelton-on-thom.html#comment-form
Here was answer to Bob Murphy:
"Bob if there were no Krugman what would you write about? He wasn’t saying that Ireland’s policies “must have been bad” because there was “no boom.”
"His point was that it’s still way beneath it’s 2007 high and historical trend. There remains a major output gap that it hasn’t even made up a third of."
"Now I don’t have the formal background in Econ that you guys have but I’m aware that in mainstream economics an economy can’t even pretend to have healed until it at least makes up the previous output gap. Ireland has very far to go."
"Or are you taking a page out of Tyler Cowen’s book and declaring Ireland in the throes of a Great Stagnation where this is the new normal?"
Actually between responses to my comment both from Roddis and "George"-Major Freedom?-what seems to be emerging is this. Austrians don't think the goal of fiscal policy is to engineer a recovery. Basically they do agree with Cowen's Great Stagnation. Listen here to another Austrian-"David" who I'm pretty sure is Major Freedom-who left a recent response to Krugman:
"It is wrong to believe that Ireland's GDP has to grow back to where it was during the boom. The whole point of austerity is to get people to live within their means. We should EXPECT real GDP to be lower today than during the boom, and to stay there for a long time, until productivity grows to match the boom time GDP."
"To expect GDP to be as high soon after a boom as during a boom, is like believing a debt ridden profligate consumer who finally goes bankrupt should soon have the same standard of living as they did during their consumption binge.""The point of austerity is not to mimic unsustainable growth trends. It is to put growth trends on what they should have been all along, and in Ireland's case, lower than during the boom."
Ok. The goal of Austrian fiscal policy is actually low and faltering GDP growth. I think then the Austrians should declare success. We have subpar growth in both the U.S. and Europe-in Europe it's actually negative again, so they're Austrian policies were superior to ours as they achieved a double dip. In other works for them Cowen's Great Stagnation is more than just a prediction: it's a policy objective.
As Krugman would say, Good job gentlemen!
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