Obsticles to Recovery: Marxism and Keynesianism

[feargach]

Misesianism is, of course, the biggest current obstacle of them all.

Money illusion exists, despite the Austrian school's fervent attempts to shout it out of people's minds.

Price stickiness is not going away either.

These two things guarantee that the Austrian school's prescriptions can never, ever work.

[20000miles]

Misesianism is, of course, the biggest current obstacle of them all.

Money illusion exists, despite the Austrian school's fervent attempts to shout it out of people's minds.

Price stickiness is not going away either.

These two things guarantee that the Austrian school's prescriptions can never, ever work.

...just ignore the fact that wage rates fell extremely sharply in the 1920-21 recession while, for some unknown reason, wages were kept above market clearing levels. Either price stickiness during recessions occurred sometime in the 1920s, or the Hoover presidency went to painstaking lengths to persue a high wage policy - and to convince everyone that it would end the recession.

And as I have said over and over again, government responses resembling laissez-faire led to quick recoveries, whereas Keyniesian remedies resulted in decades of misery.

[Irish Liberty Forum]

20k: didn't you notice that it was all the Austrian economists in academia and the central banks who've been running the show and causing these problems for all these years? Clearly, Misesianism is the biggest problem here, the obstacle to recovery. Give Keynesianism a chance.

[feargach]

20k: didn't you notice that it was all the Austrian economists in academia and the central banks who've been running the show and causing these problems for all these years? Clearly, Misesianism is the biggest problem here, the obstacle to recovery. Give Keynesianism a chance.

Are you saying that academia and the central banks are opposed to free markets and in favour of price controls?

Either price stickiness during recessions occurred sometime in the 1920s

What? There's tons of proof that price stickiness is the norm in recessions, stagflation, and periods of high low and moderate growth. It is the absolute norm everywhere, and at all times.

Kindly display one study showing one period where a significant degree of price stickiness was not in evidence.

[Irish Liberty Forum]

Are you saying that academia and the central banks are opposed to free markets and in favour of price controls?

Given that most universities are funded mostly by the state, that most academics are paid by the state, work for the state, and advocate statism, and that central banks would not exist without the state, then I think I have to answer that in the affirmative ;-)

[Irish Liberty Forum]

feargach: note also that fixing interest rates is an exercise in price control.

[20000miles]

Are you saying that academia and the central banks are opposed to free markets and in favour of price controls?



What? There's tons of proof that price stickiness is the norm in recessions, stagflation, and periods of high low and moderate growth. It is the absolute norm everywhere, and at all times.

Kindly display one study showing one period where a significant degree of price stickiness was not in evidence.

1920-21 recession, where the government followed a pretty "do nothing approach". Weak labour unions were also the norm. Wage rates fell 16% in a year.

We really have to look at this from a cause and effect kind of thing. Are wages forbidden from adjusting becuase of government backed unions, "share the work" policies, and unemployment relief?

[feargach]

1920-21 recession, where the government followed a pretty "do nothing approach". Weak labour unions were also the norm. Wage rates fell 16% in a year.

We really have to look at this from a cause and effect kind of thing. Are wages forbidden from adjusting becuase of government backed unions, "share the work" policies, and unemployment relief?

That shows nothing about a significant degree of price stickiness, though. If I recall my history correctly, many retailers went out of business because they failed to reduce their prices enough to adjust to reduced purchasing power by their customers. Which proves that price stickiness was a feature of that period, just as much as with any other historical period we know of.

[20000miles]

How surprising: entrepreneurs who fail to adjust to market conditions go out of business!

Now you seem to be skipping between different markets. I thought this thread pertained specifically to labour markets.

But in any case, despite the business failures there was no mass unemployment, nor a prolonged slump precisely becuase the wages fell and lliquidation was permitted to occur. The same cannot be said of Great Depression era government policies.

[feargach]

Are wages forbidden from adjusting becuase of government backed unions, "share the work" policies, and unemployment relief?

Wages, prices, rents etc are forbidden from adjusting, not by national fiat, but by sheer obstinate human nature.

Evolutionary psychologists have interesting theories to explain this obstinacy, saying that such mechanisms would have been ultimately beneficial to small tribes living on the african Savannah 1000 centuries ago. As our brains have barely changed a whit since then, that would explain why we haven't adapted to evolve behaviour appropriate to capitalism yet.

However, this also suggests that as soon as the year 102,009AD, the human race will have adapted to the modern economy and we will all make intelligent, rational business decisions. So there is a future in your idea of economics, and it's worth being patient.