Think of General Motors as the metaphor of the Keynesian economy in one company -- massive simultaneous spending on unsustainable capital investment and unsustainable consumer consumption. Or as Bloomberg reporters Doron Levin and John Helyar describe it, “burning the furniture in order to stay warm.”
Robert Murphy and Robert Higgs have said this for months, but Reuters is joining in to point out that, whoops
The credit crunch is not nearly as severe as the U.S. authorities appear to believe and public data actually suggest world credit markets are functioning remarkably well, a report released on Thursday says.
So, Joe Stiglitz is weighing in on the crisis with an article with Vanity Fair. His claims? Five major mistakes were made.
Several weeks ago the Southern Economics Association held its 78th annual meeting. At the close of the Presidential Address several hundred economists made their way to the escalators. There were two running upwards, but for some reason everyone was packing into the nearest one, the more distant of the two being six inches further left. In Austrian terminology the empty escalator represented an unexploited opportunity for gain. None of these mainstream economists were alert enough to recognize that they could get to where they were going faster by taking one step to the left.
This question was put to Loews Corporation CEO James Tisch. His answer is splendid:
When history confirms that hands-off is the only effective and humane approach to a bust, and to prosperity generally, while hands-on brings ruination, why do governments today consider every option but free markets? Look back to the founding and the baneful influence of Alexander Hamilton. His influence has been highly detrimental to the majority who live outside the rarefied reality of national politics.
There’s been a good deal of discussion lately of the legitimacy of corporations: see my posts Left-Libertarians on Corporations “Expropriating the Efforts of Stakeholders” and In Defense of the Corporation. Various types--anti-industrialists, socialists, left-libertarians--make a variety of criticisms of the corporation.
In this forum I have argued that Alan Greenspan’s low-interest-rate policy after the dot-com bust and 9/11 attacks sowed the seeds for our current recession and the housing bubble. I have also criticized the alternate theory that a foreign “savings glut” was the true culprit, rather than the Fed. In the present article, I want to deal with a few empirical objections to the case against Greenspan.
