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Steve Horwitz
1,304 followers -
Economics professor, writer, libertarian
Economics professor, writer, libertarian

1,304 followers
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Steve's posts

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My new Briefing Paper at Cato debunks the myth of Herbert Hoover as a partisan of "laissez faire".

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My latest at Coordination Problem suggests that the Fed is both out of bullets and missing the point.

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A little follow up to today's Freeman column that points out that small appliances like toasters are 6 to 7 times cheaper than in 1975. So even if those appliances wear out more easily, we are still better off today having to replace them than we were in 1975 buying just one.

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This morning's "The Calling" is the story of my new heat distribution plate and why it helps us to understand how standard economic aggregates may be understating economic growth.

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As Bob Higgs has documented, the problem right now is not insufficient consumption or government spending, but investment and the data bear it out. Why is investment so low? Bob argues that we are suffering "regime uncertainty" similar to that of the 1930s. In this blog post I note:

"There's no better sign of the implicit acceptance of the Keynesian world view than the emphasis in the political realm and the popular press on the centrality of consumption (and jobs, for that matter) as a sign of economic health. It's not. From at least J. B. Say onward, we've known that production is the source of demand, and that you have to produce value before it can be consumed. Austrians have long emphasized the importance of capital investment for economic growth. In fact, the contrast between consumption and capital is a good proxy for the contrast between Keynesians and Austrians. Austrians have also pointed out that the necessary investment will only take place in an economy characterized by respect for private property, the rule of law, and sound money. Right now, we don't seem to have any of those three in the sufficient amount, and the results are just what Bob argues in this post."

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Ah, yup: "But this year on Labor Day weekend, I’ll also be thinking about the remarkable achievements of inventors of labor-saving devices, the risk-taking venture capitalists who put their own money (not your tax money) on the line and the fact that nobody in America has to dig a ditch with a spoon or cut his lawn with a knife. Labor Day and Capital Day—I don’t know why we should have just one and not the other."

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Another new post at CP, this time arguing that the most important economics debate of the interwar period was neither the Hayek-Keynes debate nor the socialist calculation debate, but the Hayek-Knight debate over the nature of capital. It is that debate that is at the foundation of the other two.

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All the talk about having "shovel-ready" stimulus projects overlooks the question of whether the human capital of the unemployed would match with the human capital required to get those projects going. Even if they were "ready for shovels" (which Obama has admitted they were not), the question of whether they were ready for the relevant, specific human capital was one that I don't recall ever being asked by the supporters of the stimulus. Again, if labor is not perfectly fungible, then it matters what sorts of human capital is required for stimulus jobs and at what point in the multi-period production process those complementary factors are required.

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Here's my appearance on "The Real Estate Guys" radio show/podcast from a couple of weeks back. The August 22nd show at the link below.
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