You should know better. Hayek was very close to Henry Simons. Are Henry Simons and Frank Knight ideologues? Have you ever read Why I Am Not A Conservative? Did Edmund Burke believe government was evil? Hayek called himself a Burkean Whig. I do too. I think I've provided a number of quotes where Hayek says we need government for the market to work. He did have a misunderstanding of the stability of the welfare state. But he was not a libertarian or anarchist. Friedman had a Pragmatic view and a Utopian view. But the when he said government should take advantage of a crisis, what did Friedman give as an example? Deposit Insurance. FDR was not a fan of Deposit Insurance. John Gray thinks Hayek didn't realize how much capitalism disturbed tradition. Surely you've read John Gray? Socialism is a road to serfdom. The welfare state is not. Keynes claimed he was a Burkean Whig. He detested socialism. There are sensible socialists, but they are, in fact, believers in the Welfare State. So am I . There isn't any other system that works. It's a capitalist system that has a role for government to play. How much government is the real issue. Excuse me if I don't bow down to people who aren't either as smart or as good as they think they are. Central Planning is not inherently ethical or decent. That belief is just laughable.
My understanding is that this was the view of Aaron Director, and he passed it on. Robert Bork was one of the people he passed it on to. But note this...
“Dismissing long decades of political struggle by workers and antimonopolists, Galbraith posited that countervailing power was an inevitable and automatic process that happened concurrently with industrial concentration. “The long trend toward concentration of industrial enterprise in the hands of a relatively few firms,” he wrote, “has brought into existence not only strong sellers,” but strong buyers. 81 Part of the germination of countervailing power came from Galbraith’s disdain for the fight against A& P. The power of large cereal makers to control prices led to the creation of large chain stores, which then could bargain with cereal makers for better prices, on behalf of the consumer. Echoing A& P’s own PR campaign at the height of the FTC’s antitrust case, Galbraith mocked the government for charging the company with the “crime” of “too vigorous bargaining… on the consumer’s behalf.” The case against the company was a “serious embarrassment to friends of the antitrust laws. No explanation, however elaborate, could quite conceal the fact that the effect of antitrust enforcement, in this case, was to the disadvantage of the public.” 82 Galbraith extended this theme across the entire economy. Countervailing power left no room for agency, but was a story of inevitability. Big buyers generated strong sellers, and big business created big labor as a balance. This process was automatic, and “as a common rule, we can rely on countervailing power to appear as a curb on economic power.” Bigness was modern and progressive, with smart new technology. Smallness was dingy and reactionary. As Galbraith put it, the giant corporation was not an independent merchant writ large, but a new type of institution that could wield increasingly complex capital-intensive technology. A& P was not a corner grocer, but something newer, bigger, a friend of the consumer, a scourge of powerful food suppliers like canning companies. 83 Galbraith would assert the virtues of bigness his whole life. “Half a century ago,” he argued in 1938, “the ambitious workman might reasonably hope to be able in time to set up in business for himself, but today even the white collar man has little prospect of ever becoming an independent enterprise.” 84 He continued this argument into American Capitalism and then The Affluent Society in the late 1950s. The American reality of 1958, with strong unions, a strong and democratic government, and industrial corporations run by patriotic, even somewhat selfless men, was natural, right, and a permanent state of things. At least in terms of productivity, it was according to Galbraith an unchanging utopian end state.”
— Goliath: The 100-Year War Between Monopoly Power and Democracy by Matt Stoller
The difference between Classical "Classical" and later-day Liberals:
The former could not conceive of state power being used to improve the welfare of the less well off. The best we can do is fend off the predatory state. Hayek reigns.
Today's "Classical liberals" conceive of it but think that in practice it is vanishingly unlikely. Buchannan reigns.
DSGE: Should I fee sangfroid? My PhD used what I though was the best possible model to say something macroeconomically consistent about the effects of systematic change in tariffs, quotas and subsidies across multiple sectors with an attempt to estimate the effect of the the changes on relative prices of tradeable and non-tradable goods. And then came DSGE and my intellectual capital was creatively destroyed, not that anyone at the World Bank cared. :)
Still, what kind of model SHOULD the Fed use to decide how to link observations to its policy levers?
"The market should be free to the extent and in the direction that such freedom leads to widely distributed prosperity, and wealth should be pursued not as an end in itself but a means to the political and societal good."
Yes agree subject only to the realization that in this sub-lunar world we will often get it wrong,
"the [Keynesian] economy to would be a very low-interest rate economy.
I just cannot see why a full employment economy would necessarily have low real interest rates. Should we not al least hope that technology would continue dropping tempting morsels in front of us that would make it worthwhile to give up some current consumption to pick up. Not to mention [bringing this down to the early 21th century] for the need to invest boatloads of resources in zero co2 energy, zero CO2 industrial processes, electric grids. Now I guess that all that saving COULD come from massive public sector current account surpluses, but .... that seems like a corner solution to me.
Alex Tabarrok beat you to posting the McDonald/Shalizi paper and I took a look at it last night. I have personal interest in it. As you know, Cosma grew up next door to me though I cannot take any credit for his vast knowledge (that was perhaps more a result of his UC education that likely included one or more of your courses). This is not the only example of a model failing the test of time and there will be many more regardless of the computing power thrown at various economic problems. I love your Ptolemy example at the end of the section!!!
ADDED: I read the Patrick Collinson note to employees and it was quite good. He admitted they over hired against some strong headwinds. Those being terminated are being given a good set of benefits. It would be interesting to know whether those Musk has cashiered are being provided similar ones.
Unrelated question -- would you say you identify as "neoliberal" in any sense of the term? I remember you mentioning before that you did, but I might be misremembering.
You should know better. Hayek was very close to Henry Simons. Are Henry Simons and Frank Knight ideologues? Have you ever read Why I Am Not A Conservative? Did Edmund Burke believe government was evil? Hayek called himself a Burkean Whig. I do too. I think I've provided a number of quotes where Hayek says we need government for the market to work. He did have a misunderstanding of the stability of the welfare state. But he was not a libertarian or anarchist. Friedman had a Pragmatic view and a Utopian view. But the when he said government should take advantage of a crisis, what did Friedman give as an example? Deposit Insurance. FDR was not a fan of Deposit Insurance. John Gray thinks Hayek didn't realize how much capitalism disturbed tradition. Surely you've read John Gray? Socialism is a road to serfdom. The welfare state is not. Keynes claimed he was a Burkean Whig. He detested socialism. There are sensible socialists, but they are, in fact, believers in the Welfare State. So am I . There isn't any other system that works. It's a capitalist system that has a role for government to play. How much government is the real issue. Excuse me if I don't bow down to people who aren't either as smart or as good as they think they are. Central Planning is not inherently ethical or decent. That belief is just laughable.
My understanding is that this was the view of Aaron Director, and he passed it on. Robert Bork was one of the people he passed it on to. But note this...
“Dismissing long decades of political struggle by workers and antimonopolists, Galbraith posited that countervailing power was an inevitable and automatic process that happened concurrently with industrial concentration. “The long trend toward concentration of industrial enterprise in the hands of a relatively few firms,” he wrote, “has brought into existence not only strong sellers,” but strong buyers. 81 Part of the germination of countervailing power came from Galbraith’s disdain for the fight against A& P. The power of large cereal makers to control prices led to the creation of large chain stores, which then could bargain with cereal makers for better prices, on behalf of the consumer. Echoing A& P’s own PR campaign at the height of the FTC’s antitrust case, Galbraith mocked the government for charging the company with the “crime” of “too vigorous bargaining… on the consumer’s behalf.” The case against the company was a “serious embarrassment to friends of the antitrust laws. No explanation, however elaborate, could quite conceal the fact that the effect of antitrust enforcement, in this case, was to the disadvantage of the public.” 82 Galbraith extended this theme across the entire economy. Countervailing power left no room for agency, but was a story of inevitability. Big buyers generated strong sellers, and big business created big labor as a balance. This process was automatic, and “as a common rule, we can rely on countervailing power to appear as a curb on economic power.” Bigness was modern and progressive, with smart new technology. Smallness was dingy and reactionary. As Galbraith put it, the giant corporation was not an independent merchant writ large, but a new type of institution that could wield increasingly complex capital-intensive technology. A& P was not a corner grocer, but something newer, bigger, a friend of the consumer, a scourge of powerful food suppliers like canning companies. 83 Galbraith would assert the virtues of bigness his whole life. “Half a century ago,” he argued in 1938, “the ambitious workman might reasonably hope to be able in time to set up in business for himself, but today even the white collar man has little prospect of ever becoming an independent enterprise.” 84 He continued this argument into American Capitalism and then The Affluent Society in the late 1950s. The American reality of 1958, with strong unions, a strong and democratic government, and industrial corporations run by patriotic, even somewhat selfless men, was natural, right, and a permanent state of things. At least in terms of productivity, it was according to Galbraith an unchanging utopian end state.”
— Goliath: The 100-Year War Between Monopoly Power and Democracy by Matt Stoller
The difference between Classical "Classical" and later-day Liberals:
The former could not conceive of state power being used to improve the welfare of the less well off. The best we can do is fend off the predatory state. Hayek reigns.
Today's "Classical liberals" conceive of it but think that in practice it is vanishingly unlikely. Buchannan reigns.
DSGE: Should I fee sangfroid? My PhD used what I though was the best possible model to say something macroeconomically consistent about the effects of systematic change in tariffs, quotas and subsidies across multiple sectors with an attempt to estimate the effect of the the changes on relative prices of tradeable and non-tradable goods. And then came DSGE and my intellectual capital was creatively destroyed, not that anyone at the World Bank cared. :)
Still, what kind of model SHOULD the Fed use to decide how to link observations to its policy levers?
"The market should be free to the extent and in the direction that such freedom leads to widely distributed prosperity, and wealth should be pursued not as an end in itself but a means to the political and societal good."
Yes agree subject only to the realization that in this sub-lunar world we will often get it wrong,
"the [Keynesian] economy to would be a very low-interest rate economy.
I just cannot see why a full employment economy would necessarily have low real interest rates. Should we not al least hope that technology would continue dropping tempting morsels in front of us that would make it worthwhile to give up some current consumption to pick up. Not to mention [bringing this down to the early 21th century] for the need to invest boatloads of resources in zero co2 energy, zero CO2 industrial processes, electric grids. Now I guess that all that saving COULD come from massive public sector current account surpluses, but .... that seems like a corner solution to me.
Alex Tabarrok beat you to posting the McDonald/Shalizi paper and I took a look at it last night. I have personal interest in it. As you know, Cosma grew up next door to me though I cannot take any credit for his vast knowledge (that was perhaps more a result of his UC education that likely included one or more of your courses). This is not the only example of a model failing the test of time and there will be many more regardless of the computing power thrown at various economic problems. I love your Ptolemy example at the end of the section!!!
ADDED: I read the Patrick Collinson note to employees and it was quite good. He admitted they over hired against some strong headwinds. Those being terminated are being given a good set of benefits. It would be interesting to know whether those Musk has cashiered are being provided similar ones.
"Friedman hoped to win a game of intellectual free-card-monte"
All-time great typo.
Unrelated question -- would you say you identify as "neoliberal" in any sense of the term? I remember you mentioning before that you did, but I might be misremembering.