Russ Roberts’ economic prediction from 2.5 years ago not coming true. (I think that’s why he’s been on a claiming austerity was never tried kick lately)
May 21, 2012 § 2 Comments
This exchange between market champion Russell Roberts of George Mason University and Britain’s famed biographer of Keynes, Robert Skidelsky, captures the conflict.
RUSS ROBERTS: Capitalist economies have slowdowns, contractions, slumps, recessions, and depressions. [And bounce] back fairly quickly without government intervention.
ROBERT SKIDELSKY: [But] there were terrific sufferings. I mean, people, whole communities were uprooted. … I don’t think we can take risks of the kind I think you’re implying. I think the political downsides of taking those risks are going to be too great. And, in Germany, they were absolutely horrendous in the early ’30s.
PAUL SOLMAN: Is that not true?
RUSS ROBERTS: Well, my claim is that, in our attempts to engineer our economy from the top down, we have actually made, in many many cases, the world less secure, workers less secure, and lowered our prosperity, and hurt people.
PAUL SOLMAN: Because, otherwise, the system would have adjusted?
RUSS ROBERTS: Would have done better.
That was two-and-a-half years ago. In much of the world, Austrian austerity has more or less prevailed. In much of the world, global politics seem to be proving Skidelsky prophetic. Economics, remember, is the discipline that weighs costs against benefits and insists that there is no such thing as a free lunch. I’m not sure I agree with the latter statement — what else is technological growth if not a free meal of some sort? But as to costs and benefits and the tradeoffs they inevitably dictate, there can be little question. And it’s awfully hard for those of us with jobs to blame the unemployed for insisting that the tradeoffs ought not to come at their expense.