May 2021

Sun Mon Tue Wed Thu Fri Sat
            1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31          
Blog powered by Typepad

« Obamacare, Jobs, and Regime Uncertainty - Some Evidence | Main | "The only business that tells you to reduce consumption of its product is a government regulated utility." »

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Wow. This should be very good. I can't wait!

Will the debate take place in a mock boxing ring, and will the participants be wearing boxing attire? Please say yes.

Sounds like Skidelsky will have an easy win. He'll just have to point out that Selgin also advocates inflation and that will be all.

I think the debate will be live on radio. Will this be streamed online? I'm glad they chose Jamie Whyte as one of the Hayekians. I didn't know about him before this debate was advertised, but his writing suggests he's someone worth reading. I've heard nothing but good things from English Austrians I've asked.

I don't wish to appear paranoid, but I wonder why LSE only included links to additional material for the pro-Keynesian speakers? Are we to presume that links to the publications, opinions & interpretations of the Hayekians is unavailable on the internet?

This is an interesting pairing. As Niko points out, Selgin isn't necessarily typical of Hayekians and as long as the discussion doesn't veer into free banking there's going to be some modest common ground.

By the same token, Skidelsky - although intelligent and articulate - isn't exactly typical of Keynesians either. He associates with post-Keynesians and he pounds the uncertainty points/savings leakages/hydraulic Keynesianism and stays away from anything smacking of (1.) neoclassical synthesis, which forms the bedrock of a lot of modern Keynesian commentary, or (2.) New Keynesianism/sticky wages/coordination failure that forms the bedrock of a lot of what Keynesians have done immediately prior to the crisis.

Of course Post-Keynesians would say he's being more faithful to Keynes in this sense, but others would beg to differ.

Either way it should be an interesting debate... I'm a little less sure of what to make of how it turns out.

In what sense is Selgin not "typical of Hayekians"?

Random amusing thought:

How do you spot a true believer? They spell "government" with a capital "G".

As a former debater myself (in high school with many trophies), I am a firm opponent of debate in the formal sense. I think it is a good thing for students to practice their skills through debate. But it is a terrible way to expose arguments and improve understanding. It rewards quick cleverness, pithy statements -- the so-called sound bite before the TV era. I think the British practice the "art" in an especially toxic fashion. It is a form of pretentious pseudo intellectual entertainment.

All that said, I wish the Hayek side all the best.

Selgin is a ringer. Hope all goes well. Best of luck to the Hayek team.

Daniel,

I have the same question as Jonathan --- how is Selgin not a typical Hayekian? What would be the position a typical Hayekian hold?

Lee,

Doesn't it depend where the word is placed in the sentence?

My understanding was that Selgin (and many other free bankers) wouldn't dispute the idea that increased money demand is an important macroeconomic problem. This sort of view is what motivated Steve to be not entirely opposed to QE1, for example.

If support for QE1 as somewhat helpful and an acknowledgement of the problems associated with increased money demand due to liquidity preference is typical of Hayekians, this is news to me.

Am I misunderstanding something?

Now, as I had already said, if the discussion veers off into mechanisms and institutions there will be greater disagreement, of course.

What Mario said.

And maybe I should clarify - it's not as if Selgin is a weirdo. There are lots of Austrians with this monetary disequilibrium outlook. But it is a very specific brand (just like Skidelsky and more Post-Keynesian Keynesians). It'll be an interesting talk.

Daniel,

Selgin, White, and others have pointed to where Hayek also opposes monetary deflation.

Yes, I know that Jonathan.

I'm simply saying that I'd get different reactions from different Austrians if I said "excess money demand is an important determinant of the high level of unemployment".

That's all I'm saying Jonathan. If Skidelsky said that sentence he'd probably get a different reaction from Selgin, White, or Horwitz than he would from others. That's all I'm saying.

Once again, for the record: I was NOT "not entirely opposed to QE1." I was UTTERLY opposed to it.

What I was NOT opposed to was expansionary monetary policy in Sept 2008 along traditional lines of making liquidity available to sound banks, which is an entirely different beast from QE1, which took place later and with very different purposes and methods.

Hopefully that sets Daniel and other straight.

See: http://www.coordinationproblem.org/2011/01/qe1-and-monetary-disequilibrium.html

"It's clear this commenter is using "QE1" as a synonym for any increase in the monetary base the Fed might have or did undertake in 2008. Unfortunately, that only reveals his confusion about what exactly QE1 was. According to most sources, it refers to the expansion undertaken by the Fed beginning in late November of 2008, the core of which was the purchase of GSE debt and mortgage-backed securities and then, in March of 2009, some longer term Treasury securities, to the tune of well over $1 trillion in total.

These were radically new and different policies adopted by the Fed that required it unilaterally taking on powers it did not previously possess. That is why it is called "quantitative easing" not "expansionary monetary policy" or some other standard term. It is also why the recent purchases were termed QE2 as they too involved longer-term bonds and other strategies not part of the Fed's traditional toolkit.

So now that we all understand what QE1 was about, let's be clear: I was NEVER in favor of it. You can read through anything I've written or said about the crisis and recession and not find me supporting what the Fed did. In fact, I've explicitly said that the taking on of new powers and the particular ways the Fed went about expanding the base were wrong and dangerous.

What I have said is that in the heat of the crisis in September of 2008 (note, two months before QE1 was put into place), the responsible thing for the Fed, or any central bank, to have done was to follow the traditional practice for such banks during a crisis: which is to be prepared to create liquidity to match the need for it by lending to sound banks. That's Bagehot's rule and that's all I've ever defended. (And, it goes without saying, this is all in the world of the second best. Given a central bank, this is what sound monetary economics says, in my view, it should have done.) As I've pointed out on multiple occasions, the Fed did precisely the opposite of that by lending to distressed banks and then compounded the problem with the strategies of QE1 and QE2."

Daniel,

You wrote, "...Selgin isn't necessarily typical of Hayekians". If what you really meant is what you wrote in your last comment, then maybe you should have written "...Selgin isn't necessarily typical of Austrians."

There has been a great deal of literature (a lot of it, in my opinion, erroneous) attempting to de-homogenize Hayek and Mises (where Mises is interpreted within the Rothbardian tradition).

I think, though, that most professional, academic Austrians are tending towards monetary (dis)equilibrium theory (or, such as in my case, MET-lite).

Hilarious.

In daniel's first post here he laments that a debate on Hayek and Keynes will not be presenting his version of keynesianism in place of keyne's views (which is what I take from the debate title Skidelsky will be presenting).

OK - I take back the QE talk.

You have written: "But in the world of the second best, under some circumstances, it might be the case that instructing the very imperfect central bank to try [to maintain monetary equilibrium] might be less bad than telling it to "do nothing" (assuming we even know what that means). I just don't see how you can dismiss that possibility a priori given what we know about the costs of price level adjustments."

George Selgin - I would guess, but I could be wrong - agrees with this sentiment.

This isn't necessarily the reaction you'd get from all Austrians, which is my only point. You say here "this might be less bad than doing nothing". Others would say "this is most definitely worse than doing nothing".

von pepe -
I'm not lamenting anything. I've said a couple times now this will be a great debate.

Then I don't understand the point of your post.

I read it as if Skidelsky "isn't exactly typical of Keynesians" and won't use bedrock this or bedrock that. This is lamenting to me.

You also think it will be interesting.

What's the point? Or is this your famous middle-ground?

The confusion here I think may be created more from the policy views of some of George's former students, namely one David Beckworth, and possibly other folks in the self-described "quasi-monetarist" camp.

Perhaps some of the commentors above should be careful in ascribing to George Selgin everything some of his students might espouse, or others who extend some of George's monetary ideas made popular in his paper "Less than Zero" further than he himself is prepared to go.

There seems to be an easy temptation to shoehorn all the Austrian MET guys into exactly the same camp as Scott Sumner for example, since they do in fact share much in common in terms of theory. The difference comes in application of that theory to real situations. In the realm of practical application, there seems to be quite an array of opinion on how, or even if the theory can be effectively turned into sound monetary policy in a world of central banking.

On the other hand, from what I gather, there are other self-described Austrian school economists who in fact accept much of the modern MET, yet when it comes to the realm of actual monetary policy considerations under central banking, they have become convinced that all options are only "bad and worse", often owing the "bad and worse" choices to broader issues dealing with political economy.

von Pepe I'm not sure what to say.

The choices are interesting because there are a lot of Austrians out there that don't see money demand as a major issue compared to other problems, and there are a lot of Keynesians out there that don't talk like Post Keynesians. Plus there are two journalists and one of the non-journalists isn't even really an economist, he's a historian. So... it's an interesting group.

And it will be a great debate.

Where's my morosity? I'm really not understanding your point.

An example of lamenting:

"Selgin isn't exactly typical of Hayekians". "I wish he though more like me on Hayek" (lament)

"But, the debate should be interesting and great...even though I disagree with Selgin nad he won't present the position well" (jibberish)

And, it appears your misunderstanding of Selgin has led the blog into the usual tangents you generate...including another tangent where you mis-state Prof. Horowitz's position.

I, for one, think Prof. Selgin will do an awesome job representing Hayek's views versus Keynes views.

I'm only going to bother correcting you on the spelling of Steve's name, which is "Horwitz", because I doubt I'll be able to make any headway correcting you on anything else in that last comment.

What was your point on Skidelsky? I presume he will be presenting Keynes actual views. That is how the debate it titled. I also expect Selgin ot present Hayek's actual views...not Selgin's free banking.

If Skidelsky presents the version of Keynes you think he will, and it is not true to Keynes then we should discuss the errors in his Keynes presentation.

Either you are critical of Skidelsky's presentation of Keynes before he has presented or your post makes no sense.

It might be emphasised that the second view I highlighted above is distinctively different than a radical Rothbardian view which holds that a deflationary monetary policy is actually "good medicine" (the depression is the cure view).

My bet is that very few academic economists, Austrian or not, actually hold a Rothbardian view.

Hayek also spoke of stabiling MV. But he also was skeptical of the possibility of engaging in counter-cyclcial monetary policy. So I'd say that George's Hayekian credentials are intact. And Steve's.

This is a bit of a side issue, but I think it's important...

"It is also why the recent purchases were termed QE2 as they too involved longer-term bonds and other strategies not part of the Fed's traditional toolkit."

I don't think that the purchase of long-term bonds is really "fiscal policy" or "unorthodox monetary policy". I may be wrong, but as far as I know central bank OMOs normally use long-dated bonds at least in part.

@Current,

It's WHAT long bonds the Fed purchased that made it fiscal policy. It involved bailouts of specific industries (e.g., housing). The assets purchased were non-traditional.

Thus there was both credit risk and duration risk. The Fed has never made so much money, but it has done so by taking on more risk than belongs on the balance sheet of any central bank. Read the op ed by Bill Ford (former Atlanata Fed president) and Walker Todd (former research officer at the Cleveland Fed) on the issue in this week's Barrons.

It's meaningless to suggest that a central bank should "do nothing." It's like wishing there wasn't any weather. So criticizing those of us who speak of an ideal of constant MV because it means we are discouraging central banks from doing nothing is just talking nonsense.

I'm glad that Jerry has come to my defense against those who claim that I'm too much of an inflationist to plead Hayek's case. But I'm rather embarrassed to find myself engaged in what he and Mario regard as "pseudo scientific intellectual entertainment." For the record, the BBC called me just to weeks ago asking me if I wanted to debate with Skideslky at the LSE on Hayek, Keynes and the present recession. The set-up sounded genuinely intellectual enough. It was only this week that I learned about the Brit-style format, which I don't care for myself.

So it's now a matter of making the best of it.
Anyway, if a Keynes v. Hayek rap video hasn't done Austrians any harm, why should this?

George and Jerry -
If I'm not mistaken nobody on this comment thread has yet claimed you're too much of an inflationist to argue Hayek's case. Regarding Jerry's comment, I'm also quite sure nobody on this comment thread has questioned whether your "Hayekian credentials are intact". I certainly never made that claim.

And for the record von Pepe - in case it wasn't clear earlier - I think Skidelsky will do a fine job representing the Keynes position too.

We need a credentials board to look into people's Hayekianism, Misesianism, and so forth.

It is a bizarre preoccupation that people have, isn't it, Mario?

It seems to me that almost all differences of opinion on this sort of thing are differences in emphases, so I'm not sure why it aggravates people so much. It's so instinctual that I can't note that different Austrians have different emphases without somebody thinking I'm accusing them of not being legit.

This goes on with Keynes too. How many times have you heard "there are deep debates over 'what Keynes really thought'."

The answer is simple. "Keynes thought deeply for decades and he had lots of thoughts". It should go without saying that people who are particularly intrigued by certain thoughts of his are going to sound somewhat different from people who are intrigued by other thoughts of his.

Only the most uninteresting thinkers have said so few important things that we can summarize what they thought in a short restatement.

The truly insightful people - Hayek, Keynes, Jefferson, Smith, Friedman - thought very deeply over very long careers on many topics in a variety of contexts. Of course they're not easy to present in a nutshell and of course different people will draw different insights from that.

Emerson was right about foolish consistency and little minds. I don't think it's so much that consistency is a small-minded thing to pursue, though. I think in many cases the causality is reversed. Small minds never think deeply or broadly enough to run the risk of being (apparently) inconsistent at times.

Most of economics is pseudo-scientific intellectual entertainment to me. Most economists aren't really "scientists" in any interesting sense, and it's not as though I get paid for teaching, reading, or writing about this stuff -- it's a hobby, not a career.

The most important thing about these kind of debates is not that any of the participants changes their minds or "wins" the debate. The most important thing is that people less familiar with the debate will take away little nuggets of information and insight. Hopefully, interested listeners will look up "George Selgin" on the internet after the debate, perhaps read the Free Banking blog or buy one of his books.

What Steve said about QE1. Prof. Bagus at mises.org today charges Steve, George, and me with defending QE1, and I've replied by making basically the same point. In QE1 the Fed did not epanding H to offset an exogenous spike in H demand. It expanded H in order to buy dodgy mortgage-backed assets and thereby benefit banks and the housing industry at taxpayer expense (as Jerry said), and then engineered a spike in H demand by paying interest on bank reserves, in order to sterilize the H expansion.

Correction: "the Fed did not expand H"

I see, I didn't realise you weren't talking about government bonds.

Daniel, Jerry and I were referring to Niko at 1:29. The "inflationist" charge is often levelled at me by Rothbardians, though it's true that they also say it of Hayek himself.

I am not Rothbardian. I don't think you have to be rothbardian in order to reach that conclusion, common sense is enough.

And it is not a "charge," but a statement.

If you want to know what really happened in the original debate between Keynes and Hayek, my Keynes Hayek: The Clash That Shaped Modern Economics is published by W.W.Norton in October.
Professor John B.Taylor of Stanford and the Hoover Institution says that: “Nicholas Wapshott brings the Keynes-Hayek fight of the 20th century back to life, making the clash both entertaining and highly relevant for understanding economic crises of the 21st century.”
Sean Wilentz, Professor of History at Princeton, says, “‘Nicholas Wapshott's Keynes Hayek is a smart and absorbing account of one of the most fateful encounters in modern history, remarkably rendered as a taut intellectual drama. Wapshott brilliantly brings to life the human history of ideas that continue to mold our world.”
If you wish to read an extract at, access: https://sites.google.com/site/wapshottkeyneshayek/

The comments to this entry are closed.

Our Books