[ExI] Was it just greed?
pharos at gmail.com
Thu Jun 4 14:37:22 UTC 2009
On Thu, Jun 4, 2009 at 2:26 PM, Dan_ust wrote:
> There are always new factors. In this case, some relatively new financial instruments
> (IIRC, these swaps came into being in the late 1990s) did play a role. This doesn't negate
> the Austrian Business Cycle Theory (ABCT) explanation;
Only if you are a true believer in the Austrian Business Cycle.
Most of your comments appear to concentrate on defending the ABC.
Wikepedia points out some of the criticisms of the ABC
More recently, mainstream economists like Milton Friedman, Gordon
Tullock, Bryan Caplan and Paul Krugman have stated that they regard
the theory as incorrect. David Laidler views the theory as motivated
by the political leanings of its major proponents, as Austrian
economists are known for their strong opposition to government
involvement in the economy, and argues that the theory was discredited
because of its association with "nihilistic policy prescriptions" for
the Great Depression.
In 1988 Gordon Tullock explained his disagreement with the theory. His
main point is that "if the process that Rothbard describes did occur,
there would be many corporate bankruptcies and business people jumping
out of the windows of office buildings, but there would be only minor
transitional unemployment. In fact, measured GNP would be higher as a
result." This is because the Austrian theory implies fluctuations in
investment, but not in the production decisions of firms. Nobel
laurete Paul Krugman also made a similar argument when he stated that
the theory implies that consumption would increase during downturns
and cannot explain the empirical observation that spending in all
sectors of the economy falls during a recession
I doubt if there is much to be gained from you saying" 'Tis" and
others saying " Tsn't".
We can all decide which economic theory suits our prejudices best. ;)
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