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Paul Krugman, Amity Shlaes, and Tom DiLorenzo



February 10, 2011 – Comments (6)

Let's talk dirty.

Yesterday, in response to Tom DiLorenzo's testimony at Ron Paul's first monetary hearing, Paul Krugman offered a short respone titled: "Johnny Reb Economics."

Mike Konczal has a post about Ron Paul’s first hearing on monetary policy, in which he points out that the lead witness is a big Lincoln-hater and defender of the Southern secession.

And it’s true! I went to his articles at Mises, and clicked more or less idly on the piece about American health care fascialism — I guess that’s supposed to be a milder term than fascism, although he seems to equate the two. And sure enough, he ends:

"This is not likely to happen in the United States, which at the moment seems hell-bent on descending into the abyss of socialism. Once some states begin seceding from the new American fascialistic state, however, there will be opportunities to restore healthcare freedom within them." - DiLorenzo

I presume that Amity Shlaes is already working on her Lincoln assessment, The Even More Forgotten Man.

Let's break this down:

In the first sentence, Krugman's method (and that of Konzai) is clear. Smear the man to smear the message. Lincoln-hater = wacko. Heck, the blog is titled "Johnny Reb Economics," a reference to Confederate soldiers.

Krugman wants you associate Austrian School economics with the Confederacy (say that like Kartman would say it, it's more fun) and therefore with...... (key ominous music).....racism! slavery!

And judging by the comments section, it works. Then again, a Krugmanite isn't exacly a scholar. If he/she was, they wouldn't be taking advice from Krugman.

But back to the issue at hand,

Victory for the Austrian School

As Bob Roddis points out,

I hereby declare total victory for the Austrian School.

Our opponents have nothing. Ever. That's why they engage in name-calling. They have nothing else.

Absolutely right. Since Krugman has been thoroughly crushed in the blogosphere for his weak interpretation of Austrian Business Cycle Theory and his flimsy attacks on sound money, he has little choice but to engage in a smear campaign. This is a victory for the Austrian School.  

What the heck is fascialism?

Here's where it gets really. In the Mises article that Krugman claims to have read, DiLorenzo explains exactly what he means by this phrase in the first paragraph!!!:

Some time ago I invented the phrase "fascialism" to describe the American system of political economy. Fascialism means an economy is part fascist, part socialist. Economic fascism has nothing to do with dictatorship, militarism, or bizarre racial theories. Fascism is a brand of socialism that was the economic system of Germany and Italy in the early 20th century. It was characterized by private enterprise, but private enterprise that was comprehensively regulated and regimented by the state, ostensibly "in the public interest" (as arbitrarily defined by the state). - DiLorenzo

The very first paragraph!

Of course, Krugman knows that his sheeple readers aren't going to actually read DiLorenzo's article. Voila! Look at the first comment that Krugman allowed on his blog:

1.Michael Halasy Rochester, MNFebruary 9th, 20118:06 pm

This is somewhat comical to a degree.

Equating Fascism and Socialism seems to be all the rage now, and yet, they two political ideologies could not be farther apart on the political spectrum...

They are diametric opposites...

Actually, they're not. Diametric opposites would be collectivist ideologies (fascism and socialism are both collectiveist) and individualist ideologies.I actually tried to respond to this comment with a reasoned (honestly) explanation of the similarities between fascism and socialism, but Krugman did not post it. Surprise, surprise. 

Here's the summary:
Both replace voluntary exchange with force.
Both rely on government decree to direct economic activity.
Both fascism and market socialism (Krugman's fav) require cooperation between state and corporate interests.
Both centralize power.Both view individual liberty as a threat, rather than something worth cherishing.

Krugman doesn't want his readers to know that there are views outside of the liberal/conservative false paradigm.

Who the heck is Amity Shlaes?

To be honest, I had never heard of this person.

I'm going to let Robert Wenzel take this one:

So why is Krugman making the broad swipe to link Shlaes to the dishonest Clay attack, when the linking is absolutely absurd?

It's because Shlaes is a member of a group that Krugman is very much concerned about keeping in line with the Ben Bernanke view of the world. Shlaes is a member of the Council on Foreign Relations. What's more, she is starting to have an impact at the CFR with her positive view on Hayek and Mises. That's a major problem for Krugman and his former Princeton colleague Bernnake.

Just recently, maybe a week or two ago, I talked to a very senior person at the CFR who brought the name Shlaes up to me. This person mentioned Shlaes positive views on Hayek. Further, Shlaes was described to me as, "a serious scholar." In other words, she's having impact, and Krugman is desperate to stop it, regardless of what absurd smears he needs to use.

Do you get it? Krugman is trying to smear Shlaes by associating here with LvMI. Very clever. He figures, correctly, that if his readers have gotten this far, they already view LvMI in a negative way. Associate Shlaes with the institute and you kill two birds with one stone.

Very clever, Paul.

David in Qatar

6 Comments – Post Your Own

#1) On February 10, 2011 at 11:36 AM, kdakota630 (29.09) wrote:

When I saw the name Amity Shlaes I was thinking that I was sure I recognized the name before when I re-read your blog and realized she's the author of The Forgotten Man.

Excellent blog, as always.

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#2) On February 10, 2011 at 11:50 AM, whereaminow (< 20) wrote:


Until today, I had never heard of this book, but I can see after reading the reviews here why Krugman would be so hostile. Hehe.

This one caught my eye:

"She offers abundant evidence that both the Republican Hoover and the Democrat Roosevelt unwittingly worsened the Great Depression. They opted for policies preventing the economic system from self-correcting."

Anyone who contradicts Krugman's false narrative of a laissez-faire Hoover presidency is ex-communicated from the Fed Church.

David in Qatar

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#3) On February 10, 2011 at 12:11 PM, Option1307 (30.59) wrote:

Who the heck is Amity Shlaes?

To be honest, I had never heard of this person.

I thought you knew everything? ;)

I read her book in late 2009 ish. Somewhat dull in areas and a tad repetitive but it definitely presented a well thought out case that is rarely seen/mentioned i.e.

"She offers abundant evidence that both the Republican Hoover and the Democrat Roosevelt unwittingly worsened the Great Depression. They opted for policies preventing the economic system from self-correcting."

I have to say it was pretty interesting nonetheless.

I definitely would recommend it to anyone interseted in the subject.

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#4) On February 10, 2011 at 12:47 PM, whereaminow (< 20) wrote:


I thought you knew everything? ;)

I'm an idiot savant. But more idiot than savant.

I definitely would recommend it to anyone interseted in the subject.

I'll put it in the Amazon cart and hopefully get to it in the near future.

David in Qatar

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#5) On February 10, 2011 at 3:12 PM, kdakota630 (29.09) wrote:

Found something related to your blog:

Ron Paul: Bernanke 'Cocky' About Fed Strategy



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#6) On February 10, 2011 at 4:25 PM, whereaminow (< 20) wrote:



Josh Bivens, an economist at the liberal-leaning Economic Policy Institute, represented the view held by many mainstream economists who say the recession would have been much worse had the Fed not lowered interest rates and pumped money into the economy through quantitative easing.

Just because the Fed's actions failed to prevent a recession does not mean they were ineffective, he said.

"Imagine a town that is building a levee wall in response to a flood. You can say, 'It's the biggest wall we've ever built, the water keeps coming over, we should stop,"' Bivens said. "You have to build a wall as big as the shock."

What a sack of sh*t. Notice in the analogy Bivens uses, the flood is a natural disaster. It just happens. That's all. It's no one's fault. There's a flood. You build a levy.

Bullsh*t. This was no "natural" market occurence. This was caused directly by people like Bivens - people who think they can manage the economy, who believe that they know better than the little people.

He's a pile of garbage.

David in Qatar

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