Reason and CATO are not on the level

No, America Is Not Turning Libertarian by Jonathan Chait

MAP: Your State Lost Billions by Refusing to Expand Medicaid by Jonathan Cohn

Central Planners

Wikipedia articles on:

Economy of Nazi Germany

Economy of the Soviet Union

The New Deal

commenter at DeLong's blog writes

Bob isn't quite as crazy as Greenspan though. Greenspan would say, "It is unfortunate that we haven't had 10% inflation because the markets might stop expecting inflation, producing a sense of complacency, and could render them ill-prepared when it does happen." 

Translation: "The markets are wrong." Perhaps he wants to use 'central planning' to force people out of bonds... oh, wait... that is what the debt ceiling default is for! The Republicans are central planners who wish to plan the end of the USA.

 It is ironic when libertarians say that the infallible market is wrong. It is quite often wrong as DeLong and Krugman point out, even if they take the market more seriously than glibertarians do.

Markets can be subject to panic (see 2008) and bubbles (pre-2008). As Yglesias writes in a thought-provoking post in the context of Shinzo Abe and the LPD's landslide election:

From time to time sheer economic desperation will give us a Junichiro Koizumi or a Franklin Roosevelent but Koizumi didn't last and FDR plunged the country back into recession in 1937 with contractionary policy. Foreign policy crisis is the main thing that drives a national establishment toward heterodoxy and growth. Nobody tried to finance either world war on a sound money basis, and in most respects Keynesian theory followed wartime practice rather than vice versa.

Proof is in the Pudding

Tyler Cowen has a go at the liberal economics blogosphere.

The old Keynesian approach has a major presence in the blogosphere but much less influence in current academic macroeconomics.  Whether Econ 101 sides with the Old Keynesians I am not sure (it depends who teaches the class), but Econ 2011 in many cases does not.=

There are enough AD-denialist arguments running around that the new and old Keynesian perspectives can forge an alliance on some major issues.  But as the downturn continues, this intellectual alliance will grow increasingly fragile, mostly over the question of whether long-run or short-run models are relevant.
Not long ago I tweeted this:

Confused by the Right on macro, you’re a New Old Keynesian; confused by the Left, you’re an Old New Keynesian.

I also see old Keynesians as believing that the IS-LM framework follows directly from the quantity theory of money, while new Keynesians are not committed to such a view and may even oppose it.  I may write a post devoted to this topic.

I am sort of out of my depth, but it appears the "old Keynesians" constitutes the DeLong-Krugman-Thoma axis and the "new Keynesians" are Cowen and his ilk.

I like this comment made at DeLong's blog from "RPL":

I have a suggestion for the commenter above, and in fact for most observers of the absurd stuff being written by the free market ideologues of the economics profession. Ignore the ideologues and take a look at the perspective of the economists who make their forecasts in the service of actually making money, i.el[sic], the economists of the asset management industry and of Wall Street. I assure you that for the most part they don't pay any attention to the rantings of guys like Barro, Cochrane, Mulligan and the rest of the University of Chicago gang. Hatzius of Goldman Sachs, Zandi of Moody's analytics, Harless of Atlantic Asset management analyze the economy from the perspective of what works, because they have to, it is not an intellectual hobby for them, they and their bosses are all trying to make money. And lo and behold what you will find is that their analysis has a lot more in common with Krugman, Delong, et.al., than it does the guys listed above. Why, because their stuff needs to work. As Barry Ritholtz points out all the time, successful investing requires fact-based analysis. How do I know? Because I am the retired Chief Investment Officer of a firm that ran and still runs well over $100 billion and I assure you there is no other way to be successful. I hope Barro has been trading on his beliefs, because it is certain that I now have some of his money safely locked away in my personal portfolio.

I haven't carefully documented it, but from my memory the "old Keynesians" have proven to be more correct than the "new Keynesians" starting with the housing bubble and through Lehman, the government's response (via the Fed and fiscal stimulus) and the weak recovery.

The arguments that the stimulus or quantitative easing didn't work are harder to contradict because these policies have prevented things from getting worse but conditions are still bad. It's there in the data, but critics refuse to engage the data with an open mind.

In Wreckage of Lost Jobs, Lost Power by David Leonhardt

The column of the year so far. It hits on the issue. What he doesn't mention is that Bernanke and the Federal Reserve Bank are failing miserably at their mission.  They have gone above and beyond, but it hasn't been enough.

The unemployment rate is higher in this country than in Britain or Russia and much higher than in Germany or Japan, according to a study of worldwide job markets that Gallup will release on Wednesday. The American jobless rate is also higher than China’s, Gallup found. The European countries with worse unemployment than the United States tend to be those still mired in crisis, like Greece, Ireland and Spain.

Economists are now engaged in a spirited debate, much of it conducted on popular blogs like Marginal Revolution, about the causes of the American jobs slump. Lawrence Katz, a Harvard labor economist, calls the full picture "genuinely puzzling."

Tyler Cowen at Marginal Revolution and libertarians of his type leach politics out of their discussion. What would he think of Leonhardt's pitch-perfect column?

Why? One obvious possibility is the balance of power between employers and employees.

Relative to the situation in most other countries -- or in this country for most of the last century -- American employers operate with few restraints. Unions have withered, at least in the private sector, and courts have grown friendlier to business. Many companies can now come much closer to setting the terms of their relationship with employees, letting them go when they become a drag on profits and relying on remaining workers or temporary ones when business picks up.  

Just consider the main measure of corporate health: profits. In Canada, Japan and most of Europe, corporate profits have still not recovered to precrisis levels. In the United States, profits have more than recovered, rising 12 percent since late 2007.

For corporate America, the Great Recession is over. For the American work force, it’s not.

Yglesias had a post on this subject yesterday, where he linked to Krugman's speculations on "postmodern" recessions, that is ones not caused by the Fed hiking interest rates.

Leonhardt:

Germany’s job-sharing program -- known as "Kurzarbeit," or short work -- has won praise from both conservative and liberal economists. Senator Jack Reed, Democrat of Rhode Island, has offered a bill that would encourage similar programs. So far, though, the White House has not pursued it aggressively. Perhaps Gene Sperling, the new director of the National Economic Council, can put it back on the agenda.

Restoring some balance to the relationship between employers and employees will be more difficult. One problem is that too many labor unions, like the auto industry’s, have been poorly run, hurting companies and, ultimately, workers. Of course, many other companies -- AT&T, General Electric, Southwest Airlines -- have thrived with unionized workers, and study after study has shown that unions usually do benefit workers. As one bumper sticker says, "Unions: The folks who brought you the weekend."

Today, unions are clearly playing on an uneven field. Companies pay minimal penalties for illegally trying to bar unions and have become expert at doing so, legally and otherwise. For all their shortcomings, unions remain many workers’ best hope for some bargaining power.

Dean Baker gives the column a thumbs-up.

Libertarian Julian Sanchez writes about libertarian Dave Weigel.

I have an unfortunate tendency to call liberatarians "glibertarians," but theses two guys are much, much better than your typical "conservative" or Republican.

You know that feeling you get when a melodramatic soccer player flops to the ground in a World Cup match? I get sort of offfended and disappointed, like "that's unsportsmanlike and cheap." It brings the whole proceedings down a notch. That's what I feel about the Journolist leaker and Tucker Carlson and his website and Fishbowl DC. As Sanchez points out the leaker could have been someone from the extreme partisan left or simply someone with a grudge against Weigel and/or the Washington Post.