All posts by Gerard Jackson

Austrian economics, Catallaxy, Classical economists, Classical School, Classical Theory of Trade Cycle, Institute of Public Affairs, Sinclair Davidson, Steve Kates

Catallaxy gets it wrong again on the classical economists on the trade cycle

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I wrote this in response to Sarah’s comments about Austrian economics and Catallaxy. It was my original intention to post it as a comment but I then decided to rewrite it as a post. Sarah wrote that the Catallaxy people are “trying to give the impression that they are the only ones in Australia who have read the Austrians”.

Well, she is spot on. The Catallaxy crowd have been trying for years to pass themselves off as experts on Austrian economics. Yet any genuine Austrian who read them would know they are faking it. When it comes to Austrian capital theory, for instance, Sinclair Davidson doesn’t know what he is talking about. He just regurgitates Roger Garrison. He also knows nothing about Austrian trade cycle theory or Austrian monetary theory. In addition, he is also ignorant of economic history and the classical economists. For heaven’s sake, the man is still preaching the gross historical error that Australia left the gold standard in 1931! His casual approach to the crash of 1937-38 is just as bad. He even thinks ‘Ricardo’s theory’ of economic rent “has its origin in the labour theory of value”. No one who had read the classical economists could make such an egregious error. Continue reading Catallaxy gets it wrong again on the classical economists on the trade cycle →

Alan Moran, Austrian economics, Institute of Public Affairs

Austrian economics, socialists, profits and privatisation

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Socialists deliberately ignore the benefits of privatization because like all cultists they deny any evidence that refutes their dogma, including the fact that socialist states always collapse. Unfortunately, their economic illiteracy can have a malicious influence on public opinion. This is why it’s not enough to empirically demonstrate that genuine privatization generates benefits. One must also explain why free markets produce these results, and this is where Austrian economics has been exceptionally successful. Continue reading Austrian economics, socialists, profits and privatisation →

Alan Moran, Classical Theory of Trade Cycle, Deficits, Deflation, Great Depression, Inflation, Roosevelt, Sinclair Davidson

The Great Depression and the real facts behind Roosevelt’s 1937-38 Depression

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Gerard Jackson

The 1937-38 crash was literally a depression within a depression1. The seasonally adjusted production index peaked 118 in May 19372. A year later it stood at 76, a drop of 36 per cent. From April 1937 to May 1938 manufacturing output fell by 38 per cent. The situation for the iron and steel industry was catastrophic with output collapsing by 67 percent. Factory employment dived by 25 per cent, factory payrolls by 36 per cent while aggregate unemployment peaked at 20 per cent. Such a rapid contraction in production was and is unprecedented in US History. The statistics for manufacturing, and the iron and steel industry in particular, are both striking and instructive if the monthly production figures are examined instead of annual aggregates, a fact that will become increasingly clear. Continue reading The Great Depression and the real facts behind Roosevelt’s 1937-38 Depression →

Cuba, Hollywood, Steven Spielberg

Steven Spielberg: Castro stooge and political bigot

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Some people think I treated Steve Spielberg unfairly by lumping him with Hollywood’s mad left. But Spielberg’s sympathies for the sadistic Castro are no secret. Despite the fact that Castro’s record  of murder, terrorism, torture and anti-Semitism is well documented the proudly progressive Spielberg still idolises him. Continue reading Steven Spielberg: Castro stooge and political bigot →

Hollywood

Now for something different: Hollywood’s America-hating left

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The nauseating spectacle of Hollywood celebrities prostrating themselves before Obama highlights the hypocrisy, ignorance and outright stupidity of these celluloid intellectuals, of whom George Clooney is a particularly nauseating example. As Hollywood’s most prominent celluloid intellectual — the equally imbecilic Ron Howard is a very close second — he probably thought he was being profound as well as smart when he declared that “We are a little bit out of touch in Hollywood. I think that’s probably a good thing”. A not unexpected statement from a man who seems to credit Hollywood with saving America from fascism and racism. Continue reading Now for something different: Hollywood’s America-hating left →

Deflation, Forced Saving, Inflation

Prices, inflation and growth: our economic commentariat get it wrong again

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A few days ago I had an exchange with another brilliant product of one of Australia’s economics departments. This rather conceited young man argued that a little bit of inflation is necessary to maintain economic growth. I tried to get it across to him that inflation is as about as healthy as leprosy. Nevertheless, this young man’s dangerous belief is shared by most of our economic commentariat and this is why one still hears it.

One of those commentators is the renown Terry McCann, no less. This brought to mind his statement of belief that “inflation is not only desirable in its own right. It’s the absolute foundation of sustained growth in the economy and of living standards” (Herald Sun, The prices are right, 9 March 2007). As I recall, McCrann seemed to be coming from one of two positions. The first one was the nonsensical belief that a ‘modest’ rate of inflation is necessary to promote spending and investment. Therefore, without inflation prices would fall which would then curb spending and investment and so depress economic activity. But the idea that any rate of inflation can fuel genuine economic growth is utterly absurd, unless one believes in the ‘beneficial effects’ of “forced saving”.

Jeremy Bentham was, I believe, the first economist to outline the forced saving doctrine (the process of using inflation to restrict consumption in order to raise the rate of capital accumulation)  which he called “Forced Frugality”. (A Manual of Political Economy, written in 1795 but not published until 1843, p. 44). Thomas Malthus, his contemporary, pointed out the dangers and injustice of “forced savings”. (Edinburgh Review, February 1811, pp. 363-372.)  John Stuart Mill described the process as one of “forced accumulation” and condemned it with the statement that accumulating capital by this means “is no palliation of its iniquity”. (John Stuart Mill, Essays on Economics and Society, University of Toronto Press 1967, p. 307). Continue reading Prices, inflation and growth: our economic commentariat get it wrong again →

Miscellaneous

The carbon tax and the deceit of one of its advocates

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Gerard Jackson

Dealing with someone as relentlessly deceitful as John Humphreys is indeed a tiresome endeavour. Humphreys starts with the statement that “everybody knows, I wrote a paper that said that a carbon tax was ‘relatively better’ than an emissions trading system.” To begin with, an ETS is a carbon tax. This fact is not altered just because the price of carbon is exogenously set for an ETS. This is something that Samuel J at Catallaxy pointed out. If Humphreys disagrees, then I suggest he debate the matter at Catallaxy and not here.

That a self-professed economist could write a paper on a carbon tax versus an ETS and not realise that the latter is merely a more complicated version of the former should beggar belief. It certainly brings into the question the state of the author’s critical faculties. I always argued that no “matter how it is dressed up any emissions trading scheme (ETS) is in fact a carbon tax which in turn translates into a tax on economic growth and hence living standards.” Yet Humphreys set up a false choice and then declared that to disagree with him “is to say that you think an emissions trading system is better than a carbon tax.”

Continue reading The carbon tax and the deceit of one of its advocates →

Carbon tax, Catallaxy, Centre for Independent Studies, Institute of Public Affairs, Julie Novak, Sinclair Davidson, Tim Andrews

Bad economics and double-dealing

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Over the weekend a friend asked me whether I rated George Megalogenis, a former economics writer for The Australian, as a decent economic thinker. No way. That people with Megalogenis’s low level of economic thinking get respect as economic commentators should bother anyone who holds economics in high esteem. My criticism of Megalogenis applies equally across the political spectrum. Economic arrogance and stupidity is not confined to one politically oriented group.

 For example, he supported the destructive carbon tax and the daft idea that it would compel businesses to “switch to cleaner energy sources.” The idea that the tax would instead force them out of business did not occur to him anymore than the idea that the tax would lead to the dissipation of capital. But Megalogenis was not alone in this lunacy. In 2008 the Centre for Independent Studies published a monograph by John Humphreys making the same utterly absurd claims. Since then Alan Moran, Judith Sloan, Steve Kates, Sinclair Davidson, et al., have piled it on the carbon tax and also the assertion that so-called “cleaner energy sources” can support the economy.

Continue reading Bad economics and double-dealing →

Wealth Effect

The ‘wealth effect’: an Austrian view

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It is being said that if the fed could just get the ‘wealth effect’ into motion the US economy would fully recover from the recession. But the ‘wealth effect’ is a phantom, the sort of economic fallacy that only a Keynesian could conjure up.  Those who support this fiction argue that a stock market’s performance is driven by a net inflow of funds which in turn is driven by economic growth. They go further by saying that growth in turn is driven by investment, innovation and productivity, all of which influences corporate profits which in turn drive stock prices. Naturally, when these factors are positive GDP expands. Continue reading The ‘wealth effect’: an Austrian view →

Deficits, Deflation, Gold Standard, Gold-Exchange Standard, Government spending, Great Depression, Julie Novak, Money Supply, Premiers’ Plan, Roosevelt, Sinclair Davidson

Australia and the Great Depression: What you don’t know but should

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Introduction

Greg Byrne

 I think this article about Australia and the Great Depression might open up another chapter on that economic tragedy.  It reveals that contrary to the standard view Australia in fact suffered a near monetary collapse and it was this massive deflation that sent the Australian economy into depression. It is a known fact that manufacturing led the recovery. What is revealed here is that though real wages (nominal wages divided by the price level) remained stable during the depression the real factory wage in terms of output fell by 43 per cent! It comes to the remarkable conclusion that Australia recovered not because of the Premiers’ Plan but because the Plan did so little while allowing prices to do their work.

Continue reading Australia and the Great Depression: What you don’t know but should →