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AUSTRIAN WORLD, performance: Keynesian ARE NOT KNOW!

That says Paul Krugman (PK), so do not take the opposite, it is not then call us arrogant.

http://krugman.blogs.nytimes.com/2010/04/07/austrian-followup/

had previously PK said that the Austrians fail to explain the fluctuations in unemployment associated with economic cycles (decrease of unemployment in times of economic growth and rise in times of crisis). PK has already reduced the doctrine repeatedly Austrian business cycle theory about overinvestment , which to me makes me very simplistic, as he has not read all that presumes either that simplifies ceiling pretend to have understood the theory.

PK

But not afraid to try the Austrian not for what they have said the founders of the School but by the comments he made in his column some of NYT digital :

As Predicted, Many of the comments to my post Are Austrian economics of the form "Well, of course Employment Rises When investment is Expanding, and falls When the investment is falling - in the first case the economy is booming while in the second it's slumping."

arrogant The Austrians, however, are more diligent when it comes to criticizing the Keynesians and focus not on the comments of anonymous Internet but the General Theory Keynes or Krugman's own thesis. But well, anyway. PK says that as the Austrians use the concept of aggregate demand, it makes them Keynesians. Take that.

PK first accused the Austrian School of Economics (EAE ) of failing to address unemployment, which implies a falsehood (Employment is considered as a factor of production) and a ruse, accusing Austrians of insensitivity to the tragedy of unemployment . But also, it is obvious that the Austrians emphasize the mechanism that causes the crisis (systematic manipulation by the governments of the money supply and interest rates), does that mean obliterate unemployment?

On the other hand, deliberately ignores PK (which is more serious than it unintentionally) that employment and economic growth will feed back as unemployment and recession. Is it before the chicken or the egg? Employment growth (caused by various factors) may be the cause of economic growth, which in turn will mean greater demand for employment.

What can cause this increase in employment that is prior to growth?

many factors, entrepreneurship and the free work of private actors the main causes: technological breakthroughs, advances in a nascent industry. But mention a much more visible: that a country moves from a situation of uncertainty (where investment is withdrawn) to another trusted , for example, to emerge from a war or to move from a dictatorship to a democratic cornered international support (what we expect to finish going in Cuba and others). In such situations, Bull, legal changes in an environment of legal certainty and private property is fueling demand for jobs and growth in investment and hiring go together continually receives feedback.

Similarly, a uncertainty like the present in Greece, for example, is a retraction Hiring n business investment to fall because of the risk, fewer jobs mean less consumption, less investment in turn, less demand for new employment ...

This is such common sense are not needed theoretical and methodological tools Austrian School to understand.

more complicated to understand why Keynesianism rampant (especially the last two years) in the U.S.. UU. endorsed by people like PK, has failed to dampen the decline in employment , which has only recently begun to recover. Or how a Keynesian agenda until the end as the government of Spain has failed to prevent the bleeding which means that one in five workers is unemployed.

But PK does have interest in what he says the Austrian School of Economics on increased unemployment in an economic recession, perhaps I should start for not considering instant the industrial reconversion and redeployment of capital goods. Obviously, when it demonstrates the infeasibility of a given economic activity (for example, when the housing bubble bursts caused by credit expansion, which generate Krugman encouraged enthusiastically from 2001 ) is impossible for capital goods in that activity inserts are recycled imminent and transferred to other productive sectors to create jobs to replace the destroyed in the activities most affected by the recession.

Similarly, the laborer can hardly be immediately put to work broker or plumber. need a training stage for the performance of his new job. And if you want a job quickly? Logically, it must accept an occupation that requires minimal training, for example, stacking boxes in the supermarket, a waiter in a bar or business that is selling down the street or in malls. On the other hand, is almost certain that his salary be reduced because the marginal productivity his new job will be less than the previous . If we also note that you must compete with many other unemployed, it is obvious that wages are undercut.

The stimulus through public spending aimed perpetuate profitable economic activities, is an obstacle to the necessary conversion and recycling of capital and workers . It creates the expectation that we must wait for rain the subsidy rather than "making a living, running a very expensive and poisonous sedating business initiative and the formation and promotion of workers, promoting a social morass production that we see today in Spain.

But even outside the Austrian school of economics, there are other theories that Krugman should know and provide strong denials about the supposed effectiveness of the increase in aggregate demand: the Theory of Rational Expectations , despite going over braking showed that increased public expenditure is seen as a future tax increase , what which promotes an increase in savings and hence a reduction marginal propensity to consume that is supposed to govern the eerie "multiplier " Keynesian.

And this "rational expectation" not only affects the citizenry (the more farsighted) but especially the government bond markets , much more observers and used to make long-term analysis of fiscal and economic policies of governments. A government that increase public spending to increase aggregate demand is a government that will raise the risk premium on their bond debt , so you will have more difficulty that Keynesian finance increases in public spending.

If it is to stimulate aggregate demand , Mr. Krugman, do you seem few millionaires stimuli Obama and Zapatero government? Should there be more to the taxpayer sandblasted or have even more debt to "stimulate" Aggregate Demand better sacrosanct?

Moreover, the argument that " how to use the concept of aggregate demand, that is supposed to be Keynesian unknowingly" seems ridiculous. The Aggregate Demand is the sum of private consumption demand plus investment plus consumption (expenditure), plus exports minus imports . Is a pre-existing scale Keynes put it though the British name, does their use of terminology is to assume all the "General Theory" of Hayek's rival?

That's something as absurd as claiming that " austroliberal Krugman is recommended for fiscal responsibility" (so typical of the Austrians that he denigrates) when speaking of the Greek crisis :

But What Are the lessons for America? Of course, We Should Be fiscally responsible.

Given that "fiscal responsibility" has little to do with Keynesian agenda Public Expenditure in cold blood, I guess that phrase Krugman makes him an anti-Keynesian.

The concept of a mainstream economy is occasionally used by an anonymous commenter who claims to be an Austrian, I doubt that will serve to bring into question his maligned Austrian School of Economics. And if PK gets so high the demand level terminology, what are recipes that are prolonging the crisis in the U.S. and acute in countries like Spain? Will it be just as severe with Keynes?

If these are the arguments against the Austrians, I have no PK is clear that the "Messi" the Keynesians, really. It would seem that is an infiltrator who intends to let a fool speaking on their behalf.

to see if it is Austrian and has not noticed ...