Keynesians Make Errors In "Pro-Austerity" Study; Keynesians Rejoice!
Believers in Keynesian economics the world 'round are rejoicing at the news that the an influential paper by Carmen Reinhart and Ken Rogoff that has gained influence by 'proving' that austerity is beneficial to the economies of nations who undertake it is rife with errors and faulty calculation methods. Chief Keynesian mouthpiece Paul Krugman writes with glee:
the austerians have lost and whatshisname {editor's note - read: Krugman)has won. And it’s definitely true that in sheer intellectual terms, this is looking like an epic rout. The main economic studies that supposedly justified the austerian position have imploded; inflation has stayed low; the bond vigilantes have failed to make an appearance; the actual economic effects of austerity have tracked almost exactly what Keynesians predicted.
The reason Krugman is so thrilled is that a paper by PhD candidate Thomas Herndon showed that an Excel coding flaw was partly responsible for the results of the study, thus debunking it all together. Now I don't care to get into the study itself; the fact of the matter is that "austerity" is largely a scheme where government spending is very minimally 'cut' - mostly in areas that directly affect the citizens such as welfare programs - while taxes are raised in order to pay off the banksters who own the debt of said countries in the first place.Disproving or proving the effects of "austerity" programs such as these does nothing to prove or disprove Austrian economists, as no Austrian economist advocates increasing taxes while advocating much more drastic cuts to government spending. Austrians know that every government dollar taken from the economy either via taxation or debt is being removed from the private sector, and therefore removed from its most efficient usage.Krugs continues:
The cynic in me therefore says that after a brief period of regrouping, the VSPs will be right back at it — they’ll find new studies to put on pedestals, new economists to tell them what they want to hear, and those who got it right will continue to be considered unsound and unserious.
The cynic in me says that Keynesians like Krugman will continue to grasp at anything - any study, any flaw in a study - that can possibly be construed to support their ideas. They will even use flaws in studies by other Keynesian economists. Yes, that's right, Reinhart and Rogoff are certifiable Keynesians.According to his Wikipedia profile, Ken Rogoff was an economist at the International Monetary Fund (IMF), and the Board of Governors of the Federal Reserve System, the two organizations that exert Keynesian economic policies upon the entire globe. Carmen Reinhart also spent much of her early career at the IMF.So Paul Krugman is using the flaws in data from two Keynesian economists to prove that Keynesian policies are sound. Well that makes sense!The problem lies in methodology. Keynesians believe that their economic policies can be proven and that others can be debunked simply be performing empirical studies. "Country A had massive deficit spending. The economy of Country A improved. This proves deficit spending is good."Students of the Austrian school know that the ideas of economics are derived from logical deductions based on the axiom of human action. All humans act, and act according to a set of preferences they hold. Everything we know about economics can be logically deduced from this fact. No studies are needed, nor are they relevant.One last shot from the Krugster
But maybe I’m wrong; maybe truth will prevail. Here’s hoping.
No maybe about it, Krugs.And if Austrian economists and libertarians keep doing their job, truth indeed will prevail. Here's hoping.Receive access to ALL of our EXCLUSIVE bonus audio content – including “Conspiracy Corner”, “Degenerate Gamblers” and the “League of Liberty Podcast” by joining the Lions of Liberty Pride and supporting us on Patreon!
