Thursday, 18 October 2012

Know your Subject

If you write on a subject you would expect the writer to have some knowledge of the subject he is pontificating on.

Sometimes this doesn't happen. Take Simon Cowan's piece at the CIS blog.

There are a lot of unfortunate errors.
Keynesian policy involves boosting spending ONLY when monetary policy doesn't work or is impaired. ( It is commonly called a liquidity trap.) The spending is a one-off as well usually on infrastructure.

It also involves a balanced budget or surplus ( sometimes substantially so) in economic good times.

Running an alleged 45 deficits in 50 years since WW2 might be a lot of things but Keynesian economics it most certainly isn't.

A few other things but in no particular order.

He seems to think you must have a budget surplus to reduce debt. He should examine the UK between the wars as the IMF did. Its debt increased despite budget surpluses. Why you ask. Lack of growth!!

Japan's lost decade came about from premature austerity.see Adam Posen .

Europe's problem's were exacerbated by austerity as we have seen previously.

Both Spain and Ireland had either a superior fiscal policy or a similar fiscal policy to Australia coming into the GFC.
Italy had a primary surplus.

Not good Simon. Not what I would expect from the CIS.

Paul Fritjers on both Club Troppo and Core Economics wrote about China at some time overturning the USA as the world super-power.
He linked to a paper on the USA/USSR rivalry.

When asked why he didn't review when the USA superseded the UK as the World Super -power he said the war of independence wasn't a great look or words to that effect.

Only problem he was out by at least 180 years.
He didn't even understand about the line about both countries arguing about battleships.
Yipes most people have the Washington Treaty as when the changeover was confirmed.

And he is an academic. Moreover he stops comments when this is pointed out so he combines a thin skin with inaccuracy.