Tuesday, December 6, 2011

Austrians vs. Keynesians, Forecast Comparison

Keynesians 1989: "The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive."
- Paul Samuelson, Nobel Prize-winning Keynesian

Austrians 1920: "One may anticipate the nature of the future socialist society. There will be hundreds and thousands of factories in operation. Very few of these will be producing wares ready for use; in the majority of cases what will be manufactured will be unfinished goods and production goods. (...) In the ceaseless toil and moil of this process, however, the administration will be without any means of testing their bearings. (...) In place of the economy of the “anarchic” method of production, recourse will be had to the senseless output of an absurd apparatus. The wheels will turn, but will run to no effect."
- Ludwig von Mises, "Economic Calculation in the Socialist Commonwealth"

Keynesians 02.08.2002: "To fight this recession the Fed needs (...) soaring household spending to offset moribund business investment. And to do that (...) Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."
- Paul Krugman, another Nobel Prize-winning Keynesian

Austrians 06.04.2004: "Given the government's encouragement of lax lending practices, home prices could crash, bankruptcies would increase, and financial companies, including the government-sponsored mortgage companies, might require another taxpayer bailout."
- Mark Thornton, Mises Institute

Keynesians 10.02.2010: "Greece has formulated a very carefully balanced balance between social cohesion and economic reestructuring."
- Joseph Stiglitz, yet another Nobel Prize-winning Keynesian

Austrians 11.02.2010: "While the increase in taxes will cause new problems for the Greeks, other problems remain unaddressed: The huge public sector has not been substantially reduced. Wage rates remain uncompetitive as a result of strong labor unions. (...) The future of the euro is dark because there are such strong incentives for reckless fiscal behavior, not only for Greece but also for other countries."
- Philipp Bagus, author of "The Tragedy of the Euro"

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