Monday, 23 February 2009

The Misdirection of Resources and the Current Recession

I read a great speech by Mario J. Rizzo over at today. So I thought I'd share it with you.

Also if you haven't come across the thinking of Friedrich Hayek before this provides a great introduction...
I have spent my academic career in the economic analysis of law and in the broad area of "political economy." I am not a macroeconomist. So why have I been writing and speaking on this subject in recent months?

The simple answer is that we are at a crossroads with regard to the role of the state in our lives. This is a matter that no political economist can ignore. The impetus for a vast expansion in the role of the state is coming from our current financial and economic situation mediated by urgent macroeconomic policy advice. This past Sunday's Washington Post proclaims that almost all economists agree that even a flawed package is better than none and time is of the essence![1]

So the political economist must now think about a whole new complex of issues.

Unfortunately, much of the policy advice offered recently by commentators, including many economists, is shockingly superficial. It is reminiscent of the simple prime-the-pump ideas of the early Keynes and does not acknowledge Keynes's own cautions and qualifications after the General Theory was published, especially in his advisory work for the UK Treasury in the 1940s.

Enjoy the rest here...

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