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The Economy blog
Six myths about the 1929 crash and the New Deal recovery, tested The Hoover-did-nothing, New Deal-saved-us story fails six tests against the record, from the 1932 tax hike to unemployment in 1938. Greed Is Good Was a Movie Villain's Line, and Other Myths About Capitalism Seven popular claims about capitalism, from greed to zero-sum trade, tested against Adam Smith, a 1987 movie and the long record of market economies. Ludwig Erhard ended price controls on a Sunday and launched a miracle West Germany lifted most price controls in June 1948 against occupation advice. Erhard's choice, its limits and what it teaches about courage in policy. The 2009 stimulus promised unemployment under 8 percent, then came 10 The 2009 stimulus came with a forecast. The multiplier argument at its strongest, then the record: unemployment hit 10 percent and the projects were not ready. America's Richest Counties Ring the Capital, and That Is No Accident Suburbs around Washington top the national income charts year after year. Follow the federal money to see who profits when government grows. Austrian, Chicago and Keynesian economics compared on one table Three schools shape the economic arguments Americans hear. One table shows where they split and which ideas conservatives should keep from each. The Austrian school in plain words, from Carl Menger to Friedrich Hayek Value is subjective, prices carry knowledge, and cheap credit causes booms that bust. The Austrian school explained, with the criticisms fairly stated. The Home Front Built Ships in Days and Became the Arsenal of Democracy American industry out-produced every enemy in World War II, and the figures show what free enterprise can do when mobilized, controls and rationing included. Six myths about robber barons, sweatshops and the age of capitalism The textbook Gilded Age leaves out that the so-called robber barons often got rich by cutting prices. Six popular claims, tested against the record. Creative destruction, why the buggy whip makers lost and America won Growth always destroys old jobs and firms, and shielding incumbents makes everyone poorer. Schumpeter's insight explains how a country gets richer. Profit is a signal, not a sin, and what a loss tells a company Profit and loss are the economy's feedback system, telling firms what customers value and what wastes resources. Government programs lack that signal. Wilhelm Röpke Defended Markets and Warned They Need Something Beyond Them An exiled German economist argued that free markets live on moral and social capital they do not make, and his ideas helped rebuild West Germany. Eleven questions about recessions and who decides when one has started The two-quarter rule is a rule of thumb. A private committee makes the official call, months late. Eleven plain answers on how recessions are dated. Markets Reward Serving Strangers, and That Is a Moral Achievement A market lets you prosper only by meeting other people's needs on terms they accept, which makes it a moral order, and Sandel's critique does not overturn it. Cash for Clunkers destroyed working cars in 2009 to stimulate the economy Washington paid people to trade in working cars, had the engines ruined on purpose, and later studies found it mostly moved sales forward in time. Friedman Argued That Economic Freedom Comes Before Political Freedom Capitalism and Freedom's first chapter says a free economy is a condition of political liberty, because it disperses power and lets dissenters earn a living. The Invisible Hand Appears Once in The Wealth of Nations, Here Is Why Smith's famous phrase appears a single time in his 1776 book, about investment, and it means something more modest and more powerful than critics think. Before The Wealth of Nations, Adam Smith Wrote a Book About Conscience The father of economics was first a moral philosopher, and his 1759 book on sympathy and the impartial spectator explains the market he later described.