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Tuesday, November 11, 2008

Consumers Don't Cause Recessions

I explain over at Mises.org. Incidentally, this is an article of medium length, but I really tried to bury the notion that we just need to boost "spending" to fix recessions. Free market geeks should thoroughly enjoy.

7 comments:

  1. "It is truly shocking to learn that Krugman not only tells his students the exact opposite—namely that private virtue leads to public vice, and that saving makes the community poorer—"

    But he doesn't say that... he says it can make the community poorer.

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  2. OK, I"m pretty sure Krugman would say, "You ignored inventories."

    You can get this piece for free by signing up with these folks. (This is the reply, but it's a good summary of the paper.) It claims to demonstrate inventory build-ups far beyond the size of the economic downturn. And consumers certainly can get their Ford from the dealer's lot right away!

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  3. OK Gene, first you knock tax cuts, and now you endorse pump-priming. If only I had access to a warhammer...

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  4. Seriously though, your point about will vs. can is fair enough. I still think Krugman is wrong for saying it's possible that saving = depression, but fine, I put words in his mouth.

    Are you really saying the inventory issue reverses the argument, or are you just pointing out it is a loose end I should have handled in a footnote?

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