The most educated ignoramuses in history

reading percentages

On Christmas Day we were at friends who had other friends we had not met before. And one of these friends – wearing the largest diamond ring I have ever seen, not that it is relevant – brought up in conversation that she never read. Nor did she bring it up after some prodding, or as part of an explanation for anything else. She brought it up as a matter of some pride, as if this were some kind of evidence of a higher intellect and refined taste. So, I asked her about this. Was it true that she never read any fiction, ever? And if not, why was this a good thing? No never, she said, had never read Dickens, or Shakespeare, and never wanted to and never would. So I asked – but only once I had reached the staircase – whether she would admire someone who had told her that they hated travel, and never wanted to go anywhere? But we know the answer to that, and would she anyway have seen the point?

I was reminded of this in reading Hal Colebatch’s article at Quadrant Online dealing with Celebrity Culture and Literacy’s Decline, which is mostly about the UK. This is not from Colebatch, but from someone he quotes, who was teaching would-be journalists:

These were people who were mostly studying for A-levels in media studies … The standard of literacy in their written work was roughly what I would have expected to find 25 years ago in the work of one of the less-able classes of nine-year-olds in an inner-city state school.

I cannot tell if this is a form of “these kids today”, or whether we are on the edge of some kind of descent into much worse. We may have enough people to run the technology, and if the rest of the population is pig ignorant, how does it matter? I am, of course, with Colebatch in seeing these trends not just as a disgrace but as a fearsome menace, although I would happily listen to someone who told me otherwise. I think this is the part of what he wrote that worried me most:

In June 2007 the think-tank Civitas claimed that issues and knowledge vital to education had been scrapped in schools in favour of trendy subjects and fashionable causes. No major subject area had escaped, its report, The Corruption of the Curriculum, claimed. The authors included Chris McGovern, chairman of the History Curriculum Authority. It said traditional subject areas had been hijacked to promote fashionable causes such as gender-awareness, the environment and anti-racism. In science-teaching controversial reforms had made fewer, not more, pupils interested in the subject. The new science curriculum replaced laboratory work and scientific probing with debates on abortion and nuclear power. In geography, it concluded, children were no longer taught facts about the world but how to be global citizens.

The state education system apparently paid little regard to teaching mathematics, physics or science. Only 7 per cent of pupils were educated in private or fee-paying systems (including the last remnant 164 grammar schools) but these comprised 40 per cent of pupils specialising in maths and physics at A-level. In 2005 there were only 3000 undergraduates studying physics and eighteen university physics departments—nearly one third—had closed since Labour came to power in 1997. By 2006 chemistry departments had also closed at some of Britain’s best universities, including Exeter, King’s College London, Dundee, and at Sussex, which had previously produced two Nobel chemistry laureates.

In my own area – the history of economic thought – the major issue of the moment is whether we should shut the entire enterprise down as a component of economics, and move it over into the history and philosophy of science. Till now, HET has been about the historical development of economic theory, and has been almost entirely undertaken by economists, who are the only people who know enough about economic theory to actually do it. This shift would turn it over to the sociologists of knowledge, who would have no need to know in dealing with any economics question, which way was up (for supply and demand curves, say), but could endlessly pontificate on power relations and white privilege.

But that is only mentioned as an example. This is not the informed citizenry the enlightenment wished to create. These are the fodder for a succession of revolutionary mobs, know-nothings about everything other than global warming, social injustice and their own desires.

Fiddling the stats before our eyes

obamacare gdp

The downward momentum of the American economy’s ability to sustain real income and employment growth, is something you can hardly find mentioned anywhere in the good-news media (good news as long as there is a Democrat President, that is). The fall in the unemployment rate driven by falling participation rates is a phenomenon that is almost never remarked on. The massive fall in real household incomes is incredible, but also hardly ever remarked on. Still, the outright deception in the latest National Accounts is something else again. The 5.0% quarterly growth rate for American GDP in the September quarter is a fiddle in more ways than one. The usual fiddle is the annualising of the quarterly data, which is an American practice that has never made sense. But this time they have gone one step farther still. This is from Tyler Durden at Zerohedge:

Back in June, when we were looking at the final Q1 GDP print, we discovered something very surprising: after the BEA had first reported that absent for Obamacare, Q1 GDP would have been negative in its first Q1 GDP report, subsequent GDP prints imploded as a result of what is now believed to be the polar vortex. But the real surprise was that the Obamacare boost was, in the final print, revised massively lower to actually reduce GDP!

Of course, even back then we knew what this means: payback is coming, and all the BEA is looking for is the right quarter in which to insert the “GDP boost”. This is what we said verbatim:

Don’t worry though: this is actually great news! Because the brilliant propaganda minds at the Dept of Commerce figured out something banks also realized with the stub “kitchen sink” quarter in November 2008. Namely, since Q1 is a total loss in GDP terms, let’s just remove Obamacare spending as a contributor to Q1 GDP and just shove it in Q2.

Stated otherwise, some $40 billion in PCE that was supposed to boost Q1 GDP will now be added to Q2-Q4.

And now, we all await as the US department of truth says, with a straight face, that in Q2 the US GDP “grew” by over 5% (no really: you’ll see).
Well, we were wrong: it wasn’t Q2. It was Q3, albeit precisely in the Q2-Q4 interval we expected.

Fast forward to today when as every pundit is happy to report, the final estimate of Q3 GDP indeed rose by 5% (no really, just as we predicted), with a surge in personal consumption being the main driver of US growth in the June-September quarter. As noted before, between the second revision of the Q3 GDP number and its final print, Personal Consumption increased from 2.2% to 3.2% Q/Q, and ended up contributing 2.21% of the final 4.96% GDP amount, up from 1.51%.

So what did Americans supposedly spend so much more on compared to the previous revision released one month ago? Was it cars? Furnishings? Housing and Utilities? Recreational Goods and RVs? Or maybe nondurable goods and financial services?

Actually no. The answer, just as we predicted precisely 6 months ago is… well, just see for yourselves [i.e. see the diagram above].

In short, two-thirds of the “boost” to final Q3 personal consumption came from, drumroll, the same Obamacare which initially was supposed to boost Q1 GDP until the “polar vortex” crashed the number so badly, the BEA decided to pull it completely and leave this “growth dry powder” for another quarter. That quarter was Q3.

The business cycle is a cycle, but we are experiencing the worst recovery from recession since the Great Depression. And as bad as the statistics are, the underlying reality is worse than these data show since they are all based on income flows rather than providing a picture of the underlying structure of the economy. The best data for that kind of reality is this:

U.S. real (inflation adjusted) median household income was $51,939 in 2013 versus $51,759 in 2012, statistically unchanged. In 2013, real median household income was 8.0 percent lower than in 2007, the year before the latest recession.

What you would actually need to calculate to show what’s going on, no statistical agency in the world even tries to collect. Meantime, everyone adjusts to the world around them. But whatever the stats might say, it is very unlikely that we will see prosperity as we once knew it on any kind of national level for a long long time to come.

Progressive internationalism and the withering away of the state

I was reading a book that has turned out as good as I thought it might be before I started, Mind vs. Money: The War between Intellectuals and Capitalism by someone I had never heard of, Alan S. Kahan. And there on page 145 I came across this sentence:

For Marx, the ideal form of politics is not the state, which he famously predicted would wither away, but free association.

And immediately as I read those words, the entire matrix of ideas that sit behind the progressive internationalist of our day, the elites who wish to subvert the nation state, the kinds of people who set up the EU, or open the borders on the American southern frontier, presented itself to me as a completely closed circle of ideas. This is the utopian vision of the far left, is and has always been. Obama is an empty vessel, generally with no serious wit and depth. But the animating ideas that drive those who fund and fill his head with the rhetoric he reads, that is their vision, the end of the nation state and the mixing of us all in one global village.

It is a nightmare vision, where the worst will ultimately pull the framework down, because the best will be drowned in the flood. And whatever you may wish for yourself, it is the outcome that is step by step being put into place, and cannot be stopped because the only answer is to recognise the problem, and then put that problem into words that will shape the politics of a people. And the fact is that there is virtually no place on the face of the globe where such politics is allowed to prevail, and where it is – Israel say – the enmity of the world, driven by its progressive elites, makes impossible a defence of any social order built on the historic circumstances of a particular people over the longer term.

It’s not the money, it’s the metaphor

So perfect. So exact. So just how I think things are.

RENOVATIONS to the Prime Minister’s possum-infested official Canberra residence have blown out to $6.4 million — more than double the initial estimate, three times the original construction cost and 50 per cent more than building an entirely new Lodge.

The completion date for the project has been delayed again, meaning the refurbishment will now take far longer than the ­original 14-month construction in 1926 and 1927, which cost £28,319 (roughly $2.1m, adjusted for ­inflation). Quantity surveyor BMT estimates a new 800sqm architecturally designed executive residence in Canberra should cost between $3.9m and $4.2m.

The upgrades to the 40-room Georgian-style home were commissioned by Labor and have been under way since September last year. Tender documents reveal the government on December 12 varied its agreement with head contractor Manteena to match the new $6.38m price tag, and the ­Department of Finance has further delayed completion to the middle of next year.

Morality and the rise of the capitalist west

Mary Thoreau at the Independent Institute on If You Like Rights, Liberty, and Economic Opportunity, Celebrate Christmas.

Those of us enjoying the multiple benefits of societies built upon respect for our human and economic rights ought especially to pause to give thanks for God’s incarnation as Christ, celebrated this week.

There is thankfully now a rich literature from which we can learn how the many principles and laws we take for granted today would have remained undiscovered had Christ not lived.

Joseph Schumpeter, Murray Rothbard, Alex Chafuen, and others have well documented the earliest roots of modern-day Austrian economics in medieval Christian scholarship—including the development of just price theory, the subjective theory of value, support for capitalism and free trade, and sophisticated thinking on money and banking (including fierce criticism of fractional-reserve banking).

[The Spanish Scholastics] taught morals and theology at the University of Salamanca, a medieval city located 150 miles to the northwest of Madrid, close to the border with Portugal. They were mainly Dominicans or Jesuits, and their view on economics closely parallels that stressed by Carl Menger more than 300 years later.

A short overview is in this excellent interview with Jesús Huerta de Soto, and Rothbard’s “New Light on the Prehistory of the Austrian School”.

These findings by Christian scholars were no accident: their discoveries were possible only because of their theology: believing that the universe was created and ruled by a just, loving, and rational Creator who had endowed His creatures with minds with which to come to know Him, they set out to discover His laws.

The sociologist Rodney Stark’s accessible ouvre traces the history of Christianity and its myriad contributions to the well-being of humanity. Among my favorites is his showing why women were especially drawn in great numbers to convert, as, for example, Roman noblewomen. The early Christian church accorded women unusual status and rights, in stark contrast with Roman society, where women were subject to their families and husbands, often forced to abort (generally a death sentence to the mother as well), and married off prepubescently to much older men. Romans also widely practiced infanticide, especially of girls. Christian women held positions of authority in the early church, chose whom they married (and married much later, as adults), and could hold title to and control of their own property.

Early Christian practice of charity and care for the sick, as during frequent plagues, also contributed to growing segments of Roman society converting, alarming the Emperor Julian so much that he ordered pagan priests to emulate their practices:

The impious Galileans support not only their poor, but ours as well, everyone can see that our people lack aid from us.

Stark also shows Christian theology as the font of reason, and lays lie to the claim that Christianity, reason, and science are somehow at odds. He documents, for example, that as with the politicization of science around today’s global warming hysteria, the much-repeated dispute between Galileo and the pope was largely a matter of political power, rather than scientific debate. (Similarly the “flat earth” myth, largely a construct of the late-nineteenth century debate over evolution. The primary medieval astronomy textbook was titled, On the Sphere.)

A short version of Stark’s thesis is in “How Christianity Led to Freedom, Capitalism, and the Success of the West”.

None of this, of course, is a denial that much cruelty and stupidity has been carried out in the name of Christianity. Thus the need to look primarily to the source: Christ, his life and teachings, and their implications for how we each ought to lead our lives.

We are fortunate to have many great thinkers’ assistance in doing so, but, ultimately, it is a matter between God and each of us. This week we celebrate His making that relationship more possible, reaching out to all His creation in coming to earth as man.

Atheism is the greatest delusion of all

Last night, Christmas eve, I came home and read my freshly bought copies of Standpoint and The Spectator, both of which had the same ad for a book by one John Marsh titled, The Liberal Delusion: The Roots of our Current Moral Crisis. The title of the ad was: “Did Einstein Believe in God?” And after reading the text of the ad, I’m afraid I will have to get the book. This is from an article by Marsh, that I have chopped through to remove passages where other arguments are interwoven, to leave only what is found in the title, which was the same title as the ad: Did Einstein Believe in God?.

Is there clear unequivocal evidence that Einstein did believe in God? . . . The following quotations from Einstein are all in Jammer’s book:

“Behind all the discernible concatenations, there remains something subtle, intangible and inexplicable. Veneration for this force is my religion. To that extent, I am in point of fact, religious.”

“Every scientist becomes convinced that the laws of nature manifest the existence of a spirit vastly superior to that of men.”

“Everyone who is seriously involved in the pursuit of science becomes convinced that a spirit is manifest in the laws of the universe – a spirit vastly superior to that of man.”

“The divine reveals itself in the physical world.”

“My God created laws… His universe is not ruled by wishful thinking but by immutable laws.”

“I want to know how God created this world. I want to know his thoughts.”

“What I am really interested in knowing is whether God could have created the world in a different way.”

“This firm belief in a superior mind that reveals itself in the world of experience, represents my conception of God.”

“My religiosity consists of a humble admiration of the infinitely superior spirit, …That superior reasoning power forms my idea of God.”

Further confirmation that Einstein believed in a transcendent God comes from his conversations with his friends. David Ben-Gurion, the former Prime Minister of Israel, records Einstein saying “There must be something behind the energy.” And the distinguished physicist Max Born commented, “He did not think religious belief a sign of stupidity, nor unbelief a sign of intelligence.” Einstein did not believe in a personal God, who answers prayers and interferes in the universe. But he did believe in an intelligent mind or spirit, which created the universe with its immutable laws. What Einstein actually said is:

“I am not an atheist, and I don’t think I can call myself a pantheist.”

“Then there are the fanatical atheists whose intolerance is of the same kind as the intolerance of the religious fanatics and comes from the same source.”

“There is harmony in the cosmos which I, with my limited human mind, am able to recognise, yet there are people who say there is no God. But what really makes me angry is that they quote me to support such views.”

Einstein takes the opposite point of view: “A legitimate conflict between science and religion cannot exist. Science without religion is lame; religion without science is blind.”

Max Jammer was a personal friend of Einstein and Professor of Physics at Bar-Ilan University in Israel. His book is a comprehensive survey of Einstein’s writing, conversations and speeches on God and religion. In his book, Jammer wrote, “Einstein was neither an atheist nor an agnostic” and he added, “Einstein renounced atheism because he never considered his denial of a personal God as a denial of God. This subtle but decisive distinction has long been ignored.” His conclusion is that Einstein believed in God, albeit not a God who answers prayers. Eduard Büsching sent a copy of his book Es gibt keinen Gott (There is no God) to Einstein, who suggested a different title: Es gibt keinen persönlichen Gott (There is no personal God). However in his letter to Büsching, Einstein commented, “A belief in a personal God is preferable to the lack of any transcendental outlook.” According to Jammer, “Not only was Einstein not an atheist, but his writings have turned many away from atheism, although he did not set out to convert anyone”. Einstein was very religious; he wrote, “Thus I came – despite the fact that I was the son of entirely irreligious (Jewish) parents – to a deep religiosity.”

On Spinoza, Einstein said, “I believe in Spinoza’s God, who reveals himself in the orderly harmony of what exists, not in a God who concerns himself with the fates and actions of human beings.” Spinoza wrote, “The view of certain people that I identify God with nature is quite mistaken.” The French philosopher Martial Guéroult suggested the term panentheism, rather than pantheism, to describe Spinoza’s view of the relation between God and the universe. The Oxford English Dictionary defines ‘panentheism’ as the theory or belief that God encompasses and interpenetrates the universe, but at the same time is greater than, and independent of it. So panentheism is similar to pantheism, but crucially in addition believes that God exists as a mind or a spirit. The idea that God is both transcendent and immanent is also a major tenet of both Christianity and Judaism.

To sum up: Einstein was – like Newton before him – deeply religious and a firm believer in a transcendent God. However Einstein rejected anthropomorphic and personal understandings of the word ‘God’. His beliefs may be seen as a form of Deism: “the belief in the existence of a Supreme Being as the source of finite existence, with rejection of revelation and the supernatural doctrines of Christianity” (The Oxford English Dictionary).

I am no Spinoza or Einstein, but of all possibilities, the absence of some creator presence in the universe seems the least likely possibility of all.

FURTHER THOUGHTS: Not that it can influence anyone either one way or the other, but this is just something to note: RELIGIOUS PEOPLE MUCH HAPPIER THAN OTHERS, NEW STUDY SHOWS. As it says in the first line:

A strong correlation exists between religiosity and personal happiness, according to a new study by the Austin Institute for the Study of Family and Culture.

Who knows the cause and effect, and which way it runs, nor is happiness the reason to feel the existence of a transcendent presence in the universe. Atheism just seems an unnatural act, where the incredible impossibility of our existence must be denied, and one’s face set against all the evidence to the contrary.

Criticising Keynes

People worry about many aspects of the economy, and about their future security and income, but there is hardly enough worrying going on specifically about Keynesian economics, today’s mainstream version of what used to be the theory of the cycle. Keynesian theory has done an immense amount to undermine our potential for growth, and has made billions of people around the world insecure about the future, ironically based on the promise of higher incomes and greater security if one merely follows the prescriptions laid out by “Keynes”. The number of versions of “Keynes” there are is, of course, approximately equal to the number of Keynesians there are, but that’s another matter.

As it happens, I am at the final turn in producing what will be a two-volume, 1600-page collection on the critics of Keynes. The collection is complete, in that I am unlikely to add any additional articles. There is therefore only the introduction to write, which I have set aside the next three months to complete. Sometime thereafter, in 2015, the two volumes will be published. I cannot guess how many people will seek to read it, but the one criterion I laid down was that each article had to be accessible. The number of books on how wonderful Keynesian theory is remains amazing to me, and they keep pouring off the shelves. Even this year, there have been yet more of the same, when you would have thought Keynesian economics would be in deep retreat. It is a phenomenon.

My latest venture into dealing with Keynesian economics came from this query by Andysaurus: “This article which argues that governments have bottomless purses seems unlikely to me. Do you have anything with which I may refute it please? Thanks.”

The article was at The Conversation, and although my first instincts was merely to reply in-house, having written what I did I sent it off to The Conversation, which from the note I received, is apparently closed to new articles on economics until January 5 next year. So I sent it off to Quadrant Online instead, where it is now posted under the title, Seduced by Keynes’ Sweet ‘Nothings’. Why “sweet ‘nothings'” you may ask? Here is what I think of as the central para in the article I was replying to:

“Times like these represent opportunities for the government to finance productivity improving infrastructure and provide much needed services for nothing. I know it sounds too good to be true but this is the reality of a fiscally sovereign government.” (author’s emphasis)

It sounds too good to be true because it is. Here is part of the answer I wrote but I know that for a Keynesian this is the kind of thing that just pings off their armour, an attitude reinforced with virtually every macro text published today.

The belief that a government has any idea where value-adding activities can be found is one of the dopiest notions ever concocted. Governments can certainly spend the money they create, and some of what they do is value adding, but hardly everything. To believe that what governments produce automatically has greater value than the resources they use up is so nonsensical it is hard to believe any economist would ever peddle such a notion.

Take our own Rudd-Gillard stimulus. The two major projects were pink batts and school halls. Ask me if we are better off with more and better insulated houses and a better school infrastucture, I am happy to say that, all things being equal, we are. But if you ask me whether we have seen a return of more than $43 billion on our outlay – the approximate price tag of this spending – then the answer is that we have not had anything like that amount of benefit.

You may delude yourself from now until the end of time that these benefits were provided “for nothing”, but have you not seen our own reality: the dollar is falling, our standard of living is being dragged down, unemployment is on the rise. Ah, but where is that inflation? For most, real incomes are not rising, so however small the official inflation rate may be, it is plenty high enough to erode our ability to demand. Have you tried to buy a house lately, to cite but one example?

Keynesian economics has a lot to answer for. When I think of how sensationally prosperous we could all be, each and every one of us, had governments not seen it as their role to divert trillions into useless projects of their own choosing, it does make me despair. Not all government spending is useless, of course, but there are only so many roads and schools you can build, and almost every government project comes in over-budget and under-delivered. Anyway, the next three months will be devoted to thinking these issues through as my own small contribution to a better world.

Let me therefore end with a quote from Henry Hazlitt, my predecessor in putting together a collection of criticisms of Keynesian economics back in 1960. The following was written in 1984 when he was over ninety:

At this point I hear someone say: “Why are you still whipping a dead horse? The criticism of the last quarter-century has done its work. Keynesianism has already been discredited in the minds of economists.”

Of most professional economists, perhaps. But it is still the prescription of the great majority of politicians, and is at least still acquiesced in by the majority of voters. The undiminished prevalence of punitive graduated income taxes, the steady increase of other redistributive measures, the persistence of government monetary authorities in trying to hold down interest rates, and the endless and mounting budget deficits of the last half-century–these are Keynesianism rampant.

Keynesian economics is more rampant than ever, in spite of everything that has happened since.

OTHER LISTS: This is a list on critics of Keynes put together by Tom Woods that has been forwarded to me. If you see how thin this list is, you can see more clearly how hard such books and papers are to find.

Critiques of Keynes: Here’s a List

5th March 2012Tom Woods14 COMMENTS

A reader wrote to ask what he could read that challenged Keynes and his system. On a popular level, there’s Hunter Lewis’ book Where Keynes Went Wrong. Henry Hazlitt’s book The Failure of the “New Economics”: An Analysis of the Keynesian Fallacies goes through and critiques the General Theory line by line. It’s a valuable book and a great achievement, but my own opinion is that it gets so caught up in line-by-line minutiae that the reader never really gets the big-picture critique. Mark Skousen edited a good collection of essays called Dissent on Keynes: A Critical Appraisal of Keynesian Economics, which you can read for free online.

Murray Rothbard wrote the lengthy memo “Spotlight on Keynesian Economics” when he was only 21. Also worth reading are Robert P. Murphy’s “The Critical Flaw in Keynes’s System” and George Reisman’s “Standing Keynesianism on Its Head.”

The only one on the list that I think of serious use was Mark Skousen’s Dissent on Keynes. I may have gone through a thousand articles and book on the way to my PhD but that was far and away my favourite. It exactly captured what I thought myself and I kept his book on hand and out of the library for a year after the thesis was done, with the intention of writing to him to tell him how much I admired what he had written. In the end, I just couldn’t bring myself to do it, so I gave the book back to the library. And on the very next morning, there were, like an apparition, two emails to me from Mark Skousen, who was then writing his history of economic text and had run across my Say’s Law and the Keynesian Revolution, the title I gave my thesis when it was published by Elgar. Mark had read it, and wrote to me to say what I had wanted to say to him. It remains the single most mystical experience of my life.

In unity there is treason

Hal Colebatch takes the domestic shame of half the population and exposes the Australian left to ridicule on the American Spectator website. WINNING THE PM’S HISTORY PRIZE AND UPSETTING THE LEFTY LUVVIES is the heading, but the sub-head is more to the point:

A study of labor union treachery during World War II.

The part that was always something of a mystery is why our communist unions would subvert our war effort while the Japanese forces were on the march in our direction. Here’s the answer:

It does not take a very profound knowledge of World War II to know Stalin was not at war with Japan until the very end, and had nothing to lose by Australian Communists damaging the Pacific War effort. An important and scholarly U.S. book, Stalin’s Secret Agents, by M. Stanton Evans and Herbert Romerstein, reminds us that Stalinist Russia was not at war with Japan until the very last few days of the war (after Hiroshima). Japanese ships were still coming and going out of Vladivostok through nearly all the war. Most importantly, the authors point out that Stalin did not want a quick and overwhelming allied victory in the Pacific until he had moved troops from Europe and was positioned to take a share of the spoils.

The left are a menace at all times and in all places. There is a kind of insanity that pervades everything they do. It is impossible to understand their actions then, but you would think they would be at least somewhat ashamed of what they did, and I suppose their denial of the facts does show that they are unwilling to accept the reality of the kinds of things they once stood for. But how different are they now if this is the kind of thing that comes out of their keyboards. Colebatch again:

There was some applause at the end of my speech but it did not take long to discover that, with a conservative author winning a major national literary prize, probably, as blogger and wag Tim Blair said, for the first time ever, the leftie luvvies were furious (Tim telephoned Perth to tell my daughter). Twitter was going berserk even before the ceremony finished. Leading the charge was one Mike Carlton, whose own entry, a rehashing of a naval engagement in World War I, had not won a prize. (I had previously written critically of another book by him and received a delightful note from him replete with four-letter words, a practice that is said to have got him sacked from the Sydney Morning Herald.)

He claimed my book was both “badly researched” and “fiction,” though how it could be both I am not sure. It could only be untrue if I or the ex-soldiers, sailors, and airmen who contacted me with first-person accounts, the various memoirs, unit histories, and official documents that I quoted from, were lying. I believe the man who risked their lives to defend our country were telling the truth. Where possible I quoted service numbers to help ensure accuracy.

Carlton also claimed that one of my informants, W.S. Monks — who said a strike at the end of the war prevented him and other men returning from Japanese prison-camps from being disembarked from HMS Speaker — did not exist, despite the fact an hour-long interview with him exists on YouTube.

They have no shame, these people, only their delusions.

Cochrane may think he’s anti-Keynes but he doesn’t go far enough

I am happy to find that others see me in the way I see myself, as a centre for anti-Keynesian thought. The article by John H. Cochrane in the Wall Street Journal with the title, An Autopsy for the Keynesians, made its way to me from a number of directions. I am, of course, content to see Keynesian economics being hammered. But the fact remains that so far as I am concerned, Cochrane makes only an averagey sort of anti-Keynesian. I shouldn’t quibble since slagging Keynes is all to the good, but he needs to go farther.

The essence of classical economics, and the core point made by Say’s Law, was that the economy NEVER receives momentum from the demand side. You cannot make an economy grow by buying more, only by producing more. And even that’s not enough. The “more” that is produced will make an economy grow if, and only if, the value of what is produced is greater than the value of what had been used up during production. Demand is created by value-adding supply. Here is the excerpt from Cochrane’s article that leaves me unsatisfied; I don’t think he quite understands it himself.

Keynesians told us that once interest rates got stuck at or near zero, economies would fall into a deflationary spiral. Deflation would lower demand, causing more deflation, and so on.

It never happened. Zero interest rates and low inflation turn out to be quite a stable state, even in Japan. Yes, Japan is growing more slowly than one might wish, but with 3.5% unemployment and no deflationary spiral, it’s hard to blame slow growth on lack of “demand.”

Keynesian policy has now mutated into a policy of low interest rates, again with the intent of trying to make the economy grow from the demand side. You need to go to the final two chapters of the second edition of my Free Market Economics, where the problems of low interest rates are discussed, to understand the problem. As he says at the end of the article:

Yes, there is plenty wrong and plenty to worry about. Growth is too slow, and not enough people are working.

He doesn’t see that low interest rates are the very essence of the problem, even after all the spending has slowed down. I will think he has finally got it when he starts worrying about quantitative easing, and recognises that rising interest rates are what is needed if recovery is every to take hold.