I emailed Gerry Jackson’s article The Real Classical Theory of the Trade Cycle to the Executive Director of the Institute of Public Affairs John Roskam, IPA Review editor Chris Berg, Quadrant editor Keith Windshuttle and On Line Opinion editor Graham Young — and, of course, Steve Kates. For those of you have not read Gerry Jackson’s article it is a complete refutation of Steve Kates presentation of his so-called classical theory of the trade cycle.
Kudos to Steve Kates for a prompt and polite reply. The others played true to form. The fearless Chris Berg refused to acknowledge the article. To have done so would have required a modicum of tellectual integrity that he is incapable of mustering. Berg and Professor Sinclair Davidson co-wrote an article* on Australian manufacturing which Gerry Jackson promptly eviscerated on Brookesnews.com. Rather than accept Gerry’s offer of full right of reply they courageously scurried off to John Humphreys’ site to whine about what a horrible meanie that Gerry Jackson is. This is the same Chris Berg who said, “the more free marketeers, the merrier—a sentiment which, interesting, Jackson himself does not appear to extend to others”. (I added the emphasis). He then ridiculously claimed that Gerry had engaged in “self-marginalisation”. Both these gents have made it clear that offering people they smear right of reply is not in their playbook.
That this pair sought safe refuge on John Humphreys’ site is illuminating. Humphreys wrote and incredibly shabby and dishonest paper for the Centre of Independent Studies promoting the destructive carbon tax. Berg and Davidson refused to attack it. They still do even though they both assert that they are opposed to a carbon tax. The only person to attack and demolish Humphreys appalling paper, which he no longer defends, was Gerry Jackson. The only person our right attacked was Gerry Jackson. You will find neither courage nor integrity in the Institute for Public Affairs, which explains a lot.
Of course, it was inconceivable that John Roskam would have the decency to respond, just as it was inconceivable that he too would attack John Humphreys’ carbon tax. Roskam’s role is not to defend free markets but to ensure that only one version of the story gets out. Any free market-based view that contradicts or refutes the IPA’s party line is to be immediately marginalised. Therefore, Steve Kates is to be protected at all costs, along with Sinclair Davidson and Julie Novak.
This pair announced that commonwealth spending cuts got Australia out the Great Depression. Now that this is the established line the IPA will make sure nothing will be allowed to contradict it. Clearly, the notion that the IPA should countenance an open and honest debate is an anathema to them. Therefore it is only to be expected that the IPA would refuse to even recognise the existence of any evidence that they have committed serious error. (Boy, wait till they see Gerry Jackson’s article on Australia and the Great Depression!)
Graham Young’s response was particularly nasty. He basically accused Gerry Jackson of being a liar (the IPA has done the same thing) because Gerry had never read the classical economists. How the hell would Graham Young know what Gerry Jackson has read? My guess is that Young’s mates at the IPA spoon-fed him this malicious rubbish. This genius then claimed to be something of an expert on trade cycle theory (sic) and that is why he knows Gerry Jackson is wrong. The man is utterly, utterly pathetic.
I had only the faintest hope of getting a positive response from Quadrant, despite the fact that it bills itself as Australia’s “leading general intellectual journal of ideas”. Steve Kates frequently writes for the magazine and because of that I consider it extremely improbable that the editor Keith Windshuttle would even think of referring to an article that thoroughly debunks Kates’ views on the classical economists and the trade cycle.
Now for Steve Kates response:
I got the paper from Prodos where you may have received it yourself. I thought about replying but to tell the truth, there are only so many fronts I can engage on at one time and this seemed for the moment less important than others. Good luck, though, in trying to fit the monetary school of the trade cycle into the recession that followed the oil shock in 1973. And unless all recessions in the world are related to the Federal Reserve in the United States, even the GFC is not entirely a story that can be told using his kind of story. Imbalances happen for a range of reasons, some monetary and others not. Why restrict your range? But regardless of which way you look at it, his or mine, the policy that follows the downturn does not include public spending your way out. As for crafting policy in which recessions never occur, good luck again. The great moderation was supposed to have ended business cycles forever and how well did that work out?
What in the Lord’s name does any of this have to do with Gerry Jackson’s critique? Gerry categorically stated that he was not dealing with general economic fluctuations but a “specific phenomenon” called boom and bust. What he did was to show that what Steve Kates is saying about the classical economists and the trade cycle is 100 percent wrong. Gerry argues that the classical theory was a monetary theory. Kates says it was not. They both cannot be right. Gerry points out that the currency school formulated the real theory of the trade cycle and that Kates is confusing it with the “Took-Mill” theory that the banking school adhered to. These are important points that Steve Kates adamantly refused to address. As Gerry Jackson said: “If you are not prepared to defend what you write, then don’t write it”.
Trade cycle theory is extremely important when it comes to economic policies. This makes the difference of views between Gerry Jackson and Steve Kates also extremely important. Unfortunately the Institute of Public Affairs and Catallaxy have decided, as expected, that no debate will be permitted. And this is the same crowd that sneers at the left for being close-minded.
*The odd thing about this article is that Chris Berg is not a professional economist. I raised this point because Sinclair Davidson said he only deals with professional economists and that’s why he won’t have any exchanges with Gerry Jackson. But he doesn’t mind his “very, very good friend” John Humphreys acting as his attack dog. Davidson is not exactly what you would call a profile in courage.