On Paul Krugman and the Austrian School

Many people hold NY Times columnist Paul Krugman in high regard. I assume this is especially true since he recently won the Nobel in economics. Of course, he won that award for work he did quite a while ago and not in areas he most typically opines and prescribes policy in his columns and TV interviews. And of course there are numerous other nobel-winning economists who disagree with many of Krugman's views and policy prescriptions.

Based on what I've read from him, I don't hold Krugman in high regard at all. In fact, quite the opposite: while I haven't read all of his columns, I can't recall one where I didn't find at least one important claim in that I didn't disagree with strongly, let alone find myself screaming "no, no... NO!"

I recommend you (especially if you are a Krugman fan or disciple) read the following short item titled Paul Krugman's inconvenient track record. It presents an interesting twist to the claim that Mr. Krugman foresaw the housing bubble. It seems he didn't so much foresee it, as he did in a sense recommend it.

The professional economists who most accurately -- and for the right causal reasons -- predicted not only the housing bubble buts its necessary collapse and various other related isseus that have arisen in the past year, are the contemporary exponents of the so-called Austrian School of economics. This is the school founded by the likes of Carl Menger and Eugene von Bohm-Bawerk, but then made a bit more well-known by the likes of Ludwig von Mises and especially Friedrich Hayek (himself a economics Nobel winner, by the way).

Along with various libertarian and Objectivists writers, it is Austrian School proponents like Peter Schiff and others who understood the primary causal factors (the Fed policy of easy money, the existence and actions of Fannie May and Freddie Mac, and so on) that led up to the housing bubble and the many consequences since its collapse. It was they who correctly predicted it ahead of time (with dire warnings), and it is they who are accurately providing the best economic ex-post-facto analysis today. Alas, they continue to be marginalized for a variety of ideological and other reasons.

How many more boom-bust cycles will we have to go through, how much more (sometimes) well-intentioned but wrong-headed government interferences in the economy will we have to witness, and how much more damage to our rights and freedoms will we have to endure... before more people will start to listen?