Following my post on Hollande and Say’s Law, there has so far been just one response, which merely carried an article by Paul Krugman, Scandal in France. The scandal, as seen by Krugman, has nothing to do with
I haven’t paid much attention to François Hollande, the president of France, since it became clear that he wasn’t going to break with Europe’s destructive, austerity-minded policy orthodoxy. But now he has done something truly scandalous.
I am not, of course, talking about his alleged affair with an actress, which, even if true, is neither surprising (hey, it’s France) nor disturbing. No, what’s shocking is his embrace of discredited right-wing economic doctrines.
You would think that the way he writes that the recovery that followed the American stimulus has been a light unto the nations and that the US and Keynes have much to teach us about economic management.
Mr. Hollande, in announcing his intention to reduce taxes on businesses while cutting (unspecified) spending to offset the cost, declared, “It is upon supply that we need to act,” and he further declared that “supply actually creates demand.”
Oh, boy. That echoes, almost verbatim, the long-debunked fallacy known as Say’s Law — the claim that overall shortfalls in demand can’t happen, because people have to spend their income on something. This just isn’t true, and it’s very much not true as a practical matter at the beginning of 2014. All the evidence says that France is awash in productive resources, both labor and capital, that are sitting idle because demand is inadequate. For proof, one need only look at inflation, which is sliding fast. Indeed, both France and Europe as a whole are getting dangerously close to Japan-style deflation.
That Krugman is as innocent as the day is long of the actual meaning of Say’s Law is merely evidence that he is like 99% of the profession who have been mis-educated on a principle that was at the centre of the classical theory of the cycle. He wouldn’t know that either. It is actually shocking to see someone so ignorant of the things about which he so confidently speaks. Well the fact of the matter is that Krugman is an ignoramus who is continually pushing economic advice that is keeping the American economy low and is impoverishing millions of his fellow citizens.
The European economies, and Australia as well, emerged from the Great Depression faster than we have today because they used classical theory and policy to work things out. The UK famously balanced its budget in 1933 at the very trough of the Great Depression. We cut spending here in 1931 and was the first economy to come out of the Great Depression with the Australian trough being reached in 1931 from which time things continually improved.
Only the American economy, with its Keynesian-Roosevelt road to recovery remained in the Great Depression right up until the US entered the war at the end of 1941.
There’s more to the world economy than the US, and even if that is all Krugman knows, even that should make him just a bit more cautious, perhaps a whole lot more cautious in speaking about things he knows nothing about.
I posted the following comment on the SHOE list (Societies for the History of Economics) on 25 January.
This only came to my attention a few days ago but apparently François Hollande, the President of France, quoted what he believed to have been the actual words J.-B. Say used to describe the meaning of what we today refer to as Say’s Law: L’offre crée même la demande. He quoted it because he intends to use this maxim as a guide to policy in directing the French economy. Here is the quotation, in French:
Le temps est venu de régler le principal problème de la France : sa production. Oui, je dis bien sa production. Il nous faut produire plus, il nous faut produire mieux. C’est donc sur l’offre qu’il faut agir. Sur l’offre ! Ce n’est pas contradictoire avec la demande. L’offre crée même la demande.
François Hollande – January 14, 2014 [My bolding]
This only came to my attention because of an article reprinted from The Financial Times dated 19 January and written by one of the FT’s columnists, Wolfgang Münchau.
This was the relevant para:
“Last week, we heard another Frenchman, President François Hollande, proclaiming: ‘L’offre crée même la demande’, which translates as ‘supply actually creates its own demand’. If you want to look for the real political scandal in France today, it is not the sight of the president in a motorcycle helmet about to sneak into a Parisian apartment building. It is that official economic thinking in Paris has not progressed in 211 years.”
This is significant to me for two reasons which I have discussed in past threads on this site, not to mention in my Defending the History of Economic Thought. First, economic ideas of the past are never transcended in the sense that once something better has been devised, older ways of looking at things never come back. As we can see here, older ideas retain a life of their own and may, in the right circumstances, turn out to be relevant in understanding contemporary events. With the now generally recognised failure of the Keynesian stimulus packages, the question has become, what should be done now?
There can be no doubt that the Socialist President of France, who more than anything else would have liked to have spent the French economy into recovery, but having personally experienced the consequences of trying to use Keynesian economic policies, has concluded that economies are not driven by a public sector stimulus. Hollande is therefore looking in another direction and has embraced Say’s Law as best he understands it.
You may be sure Hollande did not do this lightly. This awareness has come as the result of the bitter fruits of experience. The stimulus packages of 2009 are today’s debt and dying economies.
Which brings me to my second issue which is also something I have discussed on this website. The classical economists may well have been right that there will be no recovery until demand is again constituted by actual value adding supply. And what is interesting is that Hollande, far from leading the way in his approach to economic theory, is following in the footsteps of others who are trying to achieve a turnaround in their economies. This is again from the article in The Financial Times:
“The third significance lies in the fact that the new consensus spans the entire mainstream political spectrum. If you live on the European continent and if you have a problem with Say’s Law, the only political parties that cater to you are the extreme left or the extreme right.”
Economic policy everywhere is, according to this article, guided by Say’s Law. I don’t actually believe that is literally true, but the problem remains that while policy makers are trying to walk away from Keynes there are no longer any guideposts on what to do since almost no economics text will explain the actual meaning of Say’s Law, the classical theory of the cycle and what needs to be done to generate a recovery when the economy is in recession.
History of economic thought has its uses as economics. It is not the history and philosophy of science, it is not the discarded ideas of Dead White Males. It is part of the collective wisdom of economists that we, as historians of economic thought, do our best to keep alive.
The new McCarthyists should not be subsidised by taxpayers. Nor should fools unable to distinguish rational, conservative democrats from genocidal Nazi totalitarians.
As it happens, I am particularly sensitive to this issue at the moment because of my having read American Betrayal which deals with the massive communist influence on American conduct of World War II. The book has opened a major debate in the United States on the significance of Soviet penetration of the Roosevelt White House which has led to a further discussion of Senator McCarthy which has been an eye-opener itself. These are the opening paras of an article at Breitbart by M. Stanton Evans titled, “‘McCarthyism’ by the Numbers” which goes to the heart of this issue:
The orchestrated attack on Diana West’s important book, American Betrayal, has been brutal and unseemly, but in one respect at least it has served a useful purpose.
This lone positive angle–counter-intuitive at first glance–is that her iconoclastic Cold War history has sparked a barrage of charges about “McCarthyism” and the senator from Wisconsin who gave his name to a decisive epoch in America’s long death struggle with the Kremlin.
As is well-known, “McCarthyism” was an alleged focus of political evil in the 1950s: accusations of Communist taint, without any factual basis; bogus “lists” of supposed Communists who never existed; failure in the end to produce even one provable Communist or Soviet agent, despite his myriad charges of subversion.
Such is the standard image of “McCarthyism” set forth in all the usual histories and media treatments of the era. Such is the image relied on by the critics of Ms. West to discredit her book and dismiss her as a crackpot and “conspiracy theorist.” By arguing that pro-Red elements in our government exerted baleful influence on US policy to suit the aims of Moscow, it is said, she becomes “McCarthy’s heiress,” reprising the evils of the fifties.
It does no one any good at this stage to actually try to turn back this tide but we do what we must. And before I go on, I would like to emphasise that this is SENATOR McCarthy who had nothing to do with the HOUSE Committee on UnAmerican Affairs (HUAC). You must read the above article, but unless you have read Stanton Evans’ Blacklisted by History, it is unlikely you will have very much if any personal knowledge about Joe McCarthy that has not come from sources so tainted you would never normally accept any unvarified statement from them about anything of a political nature. Stanton Evans’ concludes:
All told, the McCarthy cases linked together in such fashion amounted to several hundred people, constituting a massive security danger to the nation. However, numbers per se were not the central issue. By far the most important thing about his suspects was their positioning in the governmental structure, and other posts of influence, where they could shape American policy or opinion in favor of the Communist interest. This they did on a fairly regular basis, a subject that deserves discussion in its own right.
For now, there is enough to note that the standard version of McCarthy and “McCarthyism” being wielded to discredit Diana West is, throughout, a fiction.
Yesterday I discussed the never ending attack on Walt Disney by the left which has recently re-surfaced in a speech by Meryl Streep in which she accused Disney of being a misogynist and anti-semite. In his defence of Disney, one of the points made was this, in which he referred to the views of someone who had known Disney extremely well:
As you might imagine, my friend and his wife bristled at Streep’s accusations, noting that she was recycling smears that originated with the communist attempts to take over Hollywood following the Second World War. This was the same period in which Ronald Reagan was fighting the communists in the Screen Actors Guild, first as a member of the union’s board, then as its president. When Reagan said at his first presidential press conference that the Soviets “openly and publicly declared that the only morality they recognize is what will further their cause, meaning they reserve unto themselves the right to commit any crime, to lie, to cheat,” he was speaking in part from his experience with Hollywood communists. Disney, my friend and his wife attest, was a target of the kind of lying and cheating to which Reagan referred.
Accusing someone of McCarthyism is to fall into a trap set by the left, McCarthy being as honest and brave as anyone has ever been. To smear and defame are the tactics of the left which you can see before you at every turn which is exactly the point that Andrew Bolt is trying to make but with the wrong analogy. But it is an analogy that by employing it oneself assumes into the very middle of the debate an equivalence that simply does not exist.
I’ve read the book myself and agree with how exceptional it is. But here we have the same thing said in this article by Kori Schake who is Research Fellow and member, military history working group. The title of the article is War: The Gambling Man’s Game and this is the opening para:
Geoffrey Blainey’s The Causes of War is a genuinely wonderful book. I had it pressed on me by one of the Pentagon’s most thoughtful people, and while it’s not a new book, it should be at the top of the reading lists of people interested in international relations. Like much else in the book, Blainey is straightforward in his title: he is examining why wars occur. He quotes Clausewitz to the effect that of all the branches of human activity, war is the most like a gambling game, and Blainey’s approach is very much marked by game theory.
I am two days away from finally sending the manuscript of the 2nd edition of my Free Market Economics off to the publisher. What do academics do when they aren’t teaching? This, at least, is what one of them has done. But for interest and comment, I am putting the following up which I have just finished writing not five minutes ago. It will be at the very start of the book, right after the preface which I will get to as soon as I finish this section on the definitions.
And I hope you all have as much fun on this long weekend as I hope to have myself.
Before venturing into the full text before you, it is useful to have a few definitions in your mind. The language of economics is entirely made up of words that have ordinary meanings in everyday life. But these words, when they cross over into economics, suddenly take on very specific meanings that can cause someone to lose the thread during an economic discussion. We therefore provide a series of definitions of the specialised words used in the text. Having at least a preliminary grasp of these words and their more technical meaning will also in itself provide a grounding in the nature of the economic theory you will meet in the rest of the book.
Economics often looks easy because everyone already thinks they understand what’s going on in an economy without even having to study. Not true at all. For an economist it is painful to hear the mistakes that those who have not studied economics to at least a reasonable depth constantly make. But there are also major differences in the conclusions different economists reach and these are often at a very deep level that no lay person could possibly resolve.
This text will teach you everything you will find in studying economics in a normal, usual way. But it also provides a second perspective that has been taken from the economic theories that were dominant during the nineteenth century. But unlike with the natural sciences, economic theory does not progress to higher plains and then remain there. Economic theory is infused with the hopes and wishes of policy makers and of those who study the subject who are predisposed to some particular point of view. People just wish the world was one way when the way things are turn out to be something else again, and their wishes cause them to accept economic theories that are not properly grounded in the way the world actually is.
The definitions found here are already pointing in a particular direction. The very first definition is “entrepreneur”. These are the people who run our businesses and often, if they are successful, become very wealthy as a result. As this book will explain, entrepreneurially-managed firms are the foundation for wealth and prosperity for an entire community but also for personal freedom and independence from government. Economic attitudes are often determined by one’s reactions to entrepreneurs running our firms. Some people don’t agree that we should allow people to run firms any way they like as long as they follow the law. Some people think that governments should run our businesses or at least our major businesses. Or if they don’t run them should have a major say in what they do.
These are, of course, philosophical and political issues that are absolutely part of economics when thought about in the widest sense, but are not part of what gets taught at the introductory level when starting out on economic theory. Yet this is the foundational point. Economics, as we teach it and learn it today, assumes that most of what is produced is produced by businesses independent of governments and are run by entrepreneurs for a profit. These businesses sell goods and services on a market and these goods and services are bought by consumers with money they have for the most part earned by providing either their own labour or some other input into the production of some other good or service. How this process works in detail is what the study of economic theory is about.
This is more than creepy. The story behind the accusation that Walt Disney was both a misogynist and an anti-Semite and why it has suddenly surfaced once again. Via Hugh Hewitt:
Defending Mr. Disney
By Clark S. Judge: managing director, White House Writers Group, Inc.; chairman, Pacific Research Institute
As a child, I was fascinated by Walt Disney. Not by his cartoons. Not by the Mouseketeers. Not by Davy Crocket. But by Disney himself, the creator of the company that produced all those films and TV shows. So I was dismayed two weeks ago when, as you have no doubt heard, actress Meryl Streep accused Disney of being a “gender bigot” and an anti-Semite.
Ms. Streep leveled the charges in the course of presenting a best actress award to Emma Thompson for her work in Saving Mr. Banks, which is about Disney, the children’s book author P.L Travers and the making of Mary Poppins. Commentators have noted that Streep spoke midway through the voting period for the Oscars. In a Hollywood meets Washington move, Streep was, some suggest, attempting to deny Thompson that highest profile Best Actress nod, and if so, she succeeded. Thompson and her film failed to snag a single major slot on this year’s lists.
Of course, Streep said the other day that she was “shocked” at Thompson being bumped from the Oscar lists, “shocked,” some say, in a Claude Raines Casablanca style. Ms. Streep is among the five nominees.
But what about the charges? Was Disney misogynous or anti-Semitic?
Streep quoted from a 1938 letter describing the division of the tasks between male and female artists. Animation, as opposed to coloring and other support tasks, was confined to men. But if that in fact was Disney’s practice in 1938, it was short lived. The lead animator in Bambi, made four years later, was a woman. And assigning her wasn’t a matter of finding someone could be paid less. Disney’s rule was, as he put it, “If a woman can do the work as well, she is worth as much as a man.”
Regarding anti-Semitism, Disney had numerous Jewish friends, business associates and employees, supported a number of Jewish charities and in 1955 was named the Beverly Hill’s B’nai B’rith’s Man of the year.
But here is one reason I am telling this. It happens that some of those friends, business associates and employees were the parents of friends of mine.
As a child, one of my friends played in Disney’s office. His father was in charge of some critical operations at the Disney studios. His mother was the model for Snow White. When he had days at the office with Dad, he would at times be deposited in the boss’ office, where one wall slid open revealing another room filled with Disney character toys and dolls. Today, on a wall at his home, this friend has on display framed Disney cartoons and animation cells, several made especially for his father and mother.
As you might imagine, my friend and his wife bristled at Streep’s accusations, noting that she was recycling smears that originated with the communist attempts to take over Hollywood following the Second World War. This was the same period in which Ronald Reagan was fighting the communists in the Screen Actors Guild, first as a member of the union’s board, then as its president. When Reagan said at his first presidential press conference that the Soviets “openly and publicly declared that the only morality they recognize is what will further their cause, meaning they reserve unto themselves the right to commit any crime, to lie, to cheat,” he was speaking in part from his experience with Hollywood communists. Disney, my friend and his wife attest, was a target of the kind of lying and cheating to which Reagan referred.
The father of someone else to whom I am close was an investor in Hollywood in the 1950s. He was also among the Americans who provided instrumental support for the foundation of the State of Israel. He had a “radar” for anti-Semitism, I am told, and no use for anyone in whom he detected it. He knew and liked Disney and may have invested in Disney’s movies.
Here is the other reason I am telling this story.
It strikes me that, in addition to (if reports are true) grotesque ambition, Ms. Streep reflects a certain warped mindset that is all too prominent in the fashionable circles of our time. I am talking about a predisposition to believe that anything iconically American is corrupt. That anyone who has achieved great things in this country did it through exploiting power differentials derived from gender and ethnicity. That nothing is deserved, except, perhaps, the fashionable circle’s own fashionable achievements. That no other life’s work can be credited, particularly if it comes from, say, a dirt-poor kid of itinerant parents who grew up in the unfashionable precincts of the Midwest and never received one of the fashionable circle’s fashionable degrees.
Ronald Reagan was such a kid. So was Walt Disney.
UPDATE: I have done a bit of research into the issue of Walt Disney’s anti-semiteism. This accusation has apparently been in part based on this 1929 Mickey Mouse cartoon, “The Opry House”, since it has a section in it where Mickey, in “his caricature of a Hasidic Jew”, dances to a Hasidic tune. You should watch it, and also what comes just before (starting at 3:19), to see how vile this accusation is. On the basis of this 85 year old cartoon, animation aside, Disney not only was but still is a man ahead of his time.
FURTHER UPDATE: This is from an article trying to substantiate Disney’s anti-semitism:
Disney was plagued by allegations of anti-Semitism during his life and after his death. Sure enough, ethnic stereotypes common to films of the 1930s were included in several of his early cartoons.
For example, Three Little Pigs featured the Big Bad Wolf sneaking up to the door dressed as a Jewish peddler. And The Opry House, during which Mickey Mouse dresses up and dances like a Hasidic Jew.
The Opry House we have dealt with. As for “the Big Bad Wolf sneaking up to the door dressed as a Jewish peddler”, the peddler was specifically stated to be a “Fuller Brush Man” (see 5:59 in) which was the farthest thing in the world at the time from a Jewish peddler (think Avon Lady if that makes any sense today). But irrespective, the person at the door has to be seen as utterly trustworthy which is why the wolf chooses it as a disguise since his aim is to get the three little pigs to let him in. And if he’s Jewish, the most important question is why does he want to eat pigs at all?
These people and their accusations are disgusting, pitiful and sickening. Jews have enough trouble without inventing enemies who were actually their friends and allies.
Dinesh D’Souza, director of the 2012 documentary “2016: Obama’s America,” was arrested and indicted for campaign finance fraud on Thursday, Reuters reports.
Conservative activist James O’Keefe is accusing New York Gov. Andrew Cuomo’s administration of targeting his group with document requests and a subpoena, claiming the Democratic governor’s recent comments critical of conservatives “aren’t simply words.”
The ABC is filled with such pathetic losers whose only claim to our attention is the billion dollars they receive from the rest of us. Take away the billion and we can find them on street corners of a Friday night selling The Green-Left Review. It is one thing to mention that a bunch of asylum seekers said that they had been abused by the RAN. It is quite another to go on with it as if there were anything more than the remotest possibility that it’s true. Unless this is being broadcast to help the government dissuade asylum seekers from coming across from Indonesia where, surely, they have already found a safe haven.
THE ABC has defended its editorial processes against a rising tide of criticism of its reports that Australian navy personnel beat and burned asylum-seekers during a tow-back operation earlier this month.
This is despite strong assertions from the government and the Australian Defence Force that the claims are unfounded and another television network, Seven, treating the asylum-seekers’ allegations with much greater scepticism a fortnight earlier.
The reports, by ABC Indonesia correspondent George Roberts, featured prominently on the network’s radio, television and online platforms on Wednesday. They centred on video footage of the asylum-seekers receiving treatment for burned and blistered hands at a medical facility in Kupang, West Timor.
The asylum-seekers claimed the burns were a result of being forced to hold hot engine pipes by navy personnel. They also alleged they were badly beaten by navy personnel before their boat was turned back to Rote Island on New Year’s Day.
“This video and the version of events given by Indonesian police appears (sic) to back up the claims of mistreatment first made by the asylum-seekers when they spoke to the ABC a fortnight ago,” Roberts said in a video report.
ABC news director Kate Torney yesterday defended the reports. “These claims are indeed difficult to verify and we have reported that too, along with Immigration Minister Scott Morrison’s emphatic denials,” she said.
It’s not so much that it’s untrue that is the issue, but that the ABC wants it to be true, and in this post-modern world will do everything to turn this fiction into truth even if the events never happened.
This, picked up on Powerline, is an open letter to the editor of the Montreal Gazette following the publication of an anti-Semitic cartoon published because of the Canadian Prime Minister’s support of Israel.
This is to inform you that I have cancelled my subscription to the Montreal Gazette in protest of that disgusting cartoon your paper has chosen to publish of Prime Minister Stephen Harper dated January 21, 2014.
In a time when the Muslim world is exploding into war, mass slaughter, mayhem, fratricide, suicide bombings, persecution of Christians and gays, incitement to hatred being taught in schools, the export of terror and the spreading of fanatic Islamic ideology, your “newspaper” has chosen to seize the opportunity to denigrate our Prime Minister for his support of the State of Israel, a nation that reflects Canada’s social principles and values.
This so-called “cartoon” is vulgar in so many ways, it should be banished to the trash can of ignorance and veiled anti-Semitisim.
It portrays Israel (and the Jews as a whole) as being in control of Canada’s policies (this which is echoed and chirped by Jew haters of every stripe).
It portrays Prime Minister Harper as a passive lackey of Israel, bending to the wishes of the Jewish State.
I don’t recall seeing a similar portrayal of Barack Obama after his famous love-in speech given to the Muslim world in Cairo, back in 2009. No way would your left wing publication print such a vile representation of a statesman who quoted the wonderful contributions Islam has bestowed upon America.
I have known for many years that your paper is left leaning and have swallowed much of the biased and selective reporting, but this was the last straw for me, the lowest point.
I remember the other most vulgar of Aislin’s work back in 1982 during Israel’s defensive war against Palestinian terrorists using Lebanon as a launching pad for attacks against the Jewish state. That filthy cartoon depicted Menachem Begin as a vampire bat with fangs, flying along holding bombs in his “talons” with the caption reading “torah, torah, torah.” Pure anti-Semitic filth.
I am sure your paper would never, ever, ever, publish the Danish cartoon of Mohamed with a bomb in his turban. You wouldn’t do it because you are cowards, and engage in cowardly journalism.
You wouldn’t do it because you would be fearful of violent backlash, yet you choose vulgar cartoons insulting to the Jewish community because you know that the Jews behave in a civil & non-violent manner.
I plan on showing this shameful cartoon of Mr. Harper on social media, and will be sending a copy to Honest Reporting, Sun News Network, The Freedom Center in the U.S. AND MORE TO EXPOSE YOUR NEWSPAPER’S BIASED POLITICAL LEANINGS.
I have already sent a copy to friends, associates, colleagues and they in turn are circulating this around.
You should be ashamed to have published this trash picture of the leader of our country who has the courage, dignity, and clear vision to stand up for what is right and wrong.
From this point on, I am boycotting the Gazette and will never purchase your paper again.
The front page story in this morning’s Australian is one more piece of evidence on the death of Keynes and the return to economic management of a kind not seen for almost a century. Its enemies have called it “austerity”, but what you are looking at is a return to a market-based approach to getting economies to work. As the headline says, Tony Abbott tells Davos: let business lead way. And this is what the Prime Minister means:
In meetings in Zurich with Switzerland’s top investors in Australia and an address to the Australian business delegation to the forum, Mr Abbott has launched a pitch for the “absolute centrality” of private business to sustainable economic growth.
Declaring that Australia will take its own actions to cut taxes, raise productivity and reduce regulation, the Prime Minister will call on other nations to make way for business and free trade. . . .
Addressing Australian business leaders, Mr Abbott said it was easy for commentators and governments to forget “the absolute centrality of successful private business to prosperity”.
“You cannot have a society, you cannot have a community and you can’t have an economy without successful private business,” Mr Abbott said.
It sounds so obvious you have to wonder why it isn’t said more often. And this is the new world we are in and I hardly think what the PM will say will fall on deaf ears. If the socialist President of France is quoting Say’s Law, you may be sure that there is a light dawning that will move us towards a kind of prosperity that has been suppressed for seventy years.
And as for the economic textbook writers of the world, if we suddenly find that the road to prosperity is made up of Y=C+I-G, there may have to be a global book burning as macroeconomic theory finds the need to start again.
Law of Markets 