Monday, July 06, 2009

The unemployment timebomb is quietly ticking

It's been a while since I visited old Ambrose Evans-Pritchard, so I thought today might be a good day to revisit the Keynesian hack with what, for him, is quite a good article.

I did think, however, he needed to be put straight on one or two items:

Jack Maturin on July 06, 2009 at 10:19 AM

"It may be time to put away our texts of Keynes, Friedman, and Fisher, so useful for Phase 1, and start studying what happened to society when global unemployment went haywire in 1932."

It was time to put the Keynes away in 1940, when it was clear that his policies had aggravated the 1929 crash and had turned a one-year possible recession, similar to the 1920-21 crisis, into a ten-year depression.

The reason we are experiencing a similar delayed-effect disaster now, is because so many turned to Keynes in the first stage of this current crisis.

It would all have been over by now if instead we had turned to Mises and Rothbard and their other modern followers in the Austrian School.

Of course, Fisher too failed to spot the 1929 crash, unlike Mises and Hayek, with Fisher actually predicting that the market would go spectacularly up in 1930, so we can rule out his work too, and although Friedman is a lot less bad than Keynes, his insistence on governmental control and constant increase of a fiat paper money supply (which got us into this mess in the first place) also rules him out.

You might say that using Fisher, Friedman, and Keynes for the first phase is what has GIVEN US this second phase, that you are so right to be concerned about.

Unless we want the usual third phase of a world war, spreading out from Iran, Pakistan, and Afghanistan, and rolling up into Russia and down into the Gulf via Iraq, then it is vital that we throw away the failed books of the neo-classicists, the monetarists, and the spectacularly awful Keynesians, and use the books of the one group who understand how this crisis formed, who successfully predicted every twist and turn along the way, and who know how to get us out this mess in the shortest amount of time possible.

Yes, it will mean the severe diminution of government power and control over our lives and the removal of many privileges from the legions of tax eaters who infest our western nations, but what would be so wrong with that? Let's get them all doing something useful for a change, rather than constantly wrecking the lives of the rest of us.

This should be the time of the Austrians. And none of your wishy-washy George Mason or LSE Hayekianism. Things are well beyond that. We need hard-core Austrianism, as popularised by Peter Schiff, Jim Rogers, Marc Faber, Thomas Woods, and the Ludwig von Mises Institute, if we are to come out of this in anything under ten years.

How bad do you think it has to get, Ambrose, over how many years, before anyone in power, or within their court of licensed press, dares to listen to the Austrians? All of the mathematical economists have failed, as they did in the 1930s, as they did in the 1970s, and as they did in Japan.

It is now time to turn to the real economists in the Austrian School, who deal with how real human beings act in the real world rather than with how fictitious and nonsensical numbers can be shuffled around a cyber-space page by hyper-intelligent halfwits and liars, like Ben Bernanke and his ilk.

Drop the Keynes, Ambrose. Open up the Mises.

This generated an interesting response:
Charles Lee on July 06, 2009 at 11:12 AM

For Jack Maturin:

"the removal of many privileges from the legions of tax eaters who infest our western nations, but what would be so wrong with that? Let's get them all doing something useful for a change, rather than constantly wrecking the lives of the rest of us."

I'm sure you're talking about bankers and City folk here, Jack, who've been rescued from their greed and ineptitude with colossal amounts of taxpayer money.
Or would you like to hack to pieces the safety net of the Welfare State that ordinary people rely on?
Once more into the breach:
Jack Maturin on July 06, 2009 at 12:58 PM

For Charles Lee:

"I'm sure you're talking about bankers and City folk here, Jack, who've been rescued from their greed and ineptitude with colossal amounts of taxpayer money.
Or would you like to hack to pieces the safety net of the Welfare State that ordinary people rely on?"

Yes, the banksters of Wall Street and the City are top of the list. Goldman Sachs, JP Morgan, AIG, and all of the others are effectively running the central banks and the treasury departments of most western government for their own benefit, and this cosy relationship is at the heart of why we're in such a mess.

But let us not forget the 200 or so BBC executives who earn more than the Prime Minister, or the thousands of quangos, each of which is chaired by someone on a 100,000 plus salary, or the tens of thousands of civil servants on similarly enormous salaries, scattered throughout Whitehall, plus all of the benefits, index-linked final salary pensions, and all of the rest, of the millions of unnecessary bureaucrats who have mushroomed in the last fifty years.

Caesar ran the Roman Republic with a hundred bureaucrats. I think the British managed with a similar number running the Indian subcontinent. In our modern age, it takes about a thousand to run the average hospital. Such are the wonders of modern technology.

Then there are our glorious expense-fiddling MPs, corrupt "Laws For Hire" Lords, and associated hangers-on and apparatchiks, plus all the money we have to waste on keeping the EU gravy train going. Then we have the subsidy junkies and other corporate welfare seekers in many of large industries of Britain, such as in the farming industry, the car industry, and the Big Pharma industry, then there's the colossal monster of the NHS and the hundreds of thousands of useless bureaucrats that it supports, plus the hundreds thousands more in all of the local councils.

Did I mention all of the doctors who have cleaned up with contracts designed to buy them off, or all of the lawyers who have feasted upon the table of human rights legislation?

I'll be happy, Charles, if we tackle all of those above before we get to the millions of people feigning disablement to get extra benefits and the hundreds of thousands of other liars and swindlers who claim every benefit they can get, pretending to be unemployed, while working for cash in the black market.

Then we finally get to what you might call the 'deserving poor' of people who are capable of working, who want to work, and who only use welfare as a last resort. I think we can leave these people out of it for the moment, while we tackle everyone else already mentioned, if that makes you feel any better.

But let's face it, unless we get the great monster of government off our back, and all of the debts, taxes, and regulations, that it is saddling our future with in its bid to retain all of its current crop of parasites, then there are going to be a lot more 'deserving poor' in the next few years, perhaps even including me and you.

And then where will the welfare come from, if tax receipts have cut in half, and nobody is prepared to lend any more money to the British government? Yes, I suppose we could print it all.

Roll on Zimbabwe Britain, the true result of believing in Keynesianism.

In the meantime Charles, perhaps if you haven't checked it out already, you might want to try the Mises too. Here's a link to a free online PDF:

A splendid gentleman writes (I won't quibble about the Keynes stuff):
David Goldsby on July 06, 2009 at 02:05 PM

Jack Maturin at 12.58 pm

You say, "Yes, I suppose we could print it all."

Not only could we print it all, we will, because there is going to be no option, for us or any other developed country.

Otherwise, I agree with most everything you say, but then again, Keynes agreed with virtually everything Hayek said in the Road to Serfdom, which he thought was a great book, with the exception that it was merely a special case of his General Theory, and that in practice, because of 'hoarding' savings and investment only come together at effective full employment by chance once in a blue moon, if ever, unless there is government intervention to prevent 'hoarding', by government control of the money supply and interest rates.

But not to quibble too much - excellent list of wastrels and waste.


Andy Bacon said...


David Goldsby is an idiot. I do not use that term lightly; in fact he is close to being a moron. If you check out his Labourgraph posts you will find he believes the following:

The Great Depression was caused by the Gold Standard

Real interest rates are usary

Keynes was the Second Coming

Jack Maturin said...

So, he's like 99.99% of economists then! :-)

Peter Schiff keeps quoting Bernanke's American School exit scores, which are much higher than Schiff's, which probably makes him one of the 'brightest' men in America (if you can equate exam success with intelligence). But Bernanke ostensibly believes everything you say David Goldsby does.

(Though it is my secret theory that the top-level financial apparatchiks in the world - Bernanke, King, etc - are all secret Black Austrians - i.e. they know that Austrianism is the only true economics, but they pervert it for their own ends, as opposed to the White Austrians in the Ludwig von Mises Institute.)

Well, at least Mr Goldsby said nice things about my post, even if he did couch them in nonsensical Keynesianism. So fair's fair, I kept the guns covered.

I was happily sitting and waiting, powder dry, for some pro-government idiot to wade into the fray, so I could really rake their decks.

It was a bit of a shock to find someone being pleasant.

Don't these people realise we need sport in these terrible times?

I was hoping that Charles Lee would retort, so I could uncloak the big guns, but he disappeared back into the mist.

Such is the fog of war, poor Labourgraph technology, and their moderator's random way of publishing posts.

Andy Bacon said...

Did you see Mervyn King sitting in the Royal box at Wimbledon? Better than being some obscure Austrian Economist?
I also reckon Charles Lee is AEP.