Archive for 9 October 2008
No Analysis, No Data
| Peter Klein |
Earlier I complained that public discussions of the current financial situation are largely devoid of analysis. A recent example: virtually no one has explained why the commercial-paper market is “frozen.” We’re told that even firms with good commercial prospects can’t turn over their short-term notes, leaving them desperately short on working capital. In other words, there is real economic value to be created by extending short-term credit to these firms, but no one is willing to lend. $20 bills on the sidewalk, indeed! Presumably there is some kind of Stiglitz and Weiss (1981) story underlying these claims — banks cannot distinguish good from bad borrowers, so they refuse to lend to anyone — but nobody has bothered to spell it out, or to explain how indiscriminate Fed purchases of commercial paper solves the problem. Ah, well, perhaps to ask for analysis makes one a stuffy and unrealistic fundamentalist.
Bob Higgs notes that not only is the analysis largely absent, the data are wildly inconsistent with the kinds of claims being made.
The Federal Reserve System publishes comprehensive data on commercial paper issuance, commercial paper outstanding, and interest rates on commercial paper. I presume that these data give us a clearer picture of what’s going on in the markets than a covey of hyperventilating Wall Street commentators. (more…)
Salerno on Hayek
| Peter Klein |
Joe Salerno’s introduction to the Hayek collection mentioned earlier is now online. Writes Joe:
Hayek’s amazingly precocious intellect and creative genius are on full display in these works. Thus, before the age of thirty, Hayek already had fully mastered and begun to synthesize and build upon the major contributions of his predecessors in the Austrian tradition. These included, in particular: Eugen von Böhm-Bawerk’s theory of capital and interest; Knut Wicksell’s further elaborations on Böhm-Bawerk’s capital theory and his own insights into the “cumulative process” of changes in money, interest rates and prices; Ludwig von Mises’s groundbreaking theories of money and business cycles; and the general analytical approach of the broad Austrian school from Menger onward that focused on both the subjective basis and the dynamic interdependence of all economic phenomena.
There is something else about Hayek that becomes apparent when reading his contributions in this volume. The young Hayek was a great economic controversialist, perhaps the greatest of the twentieth century. His entire macroeconomic system was forged within the crucible of the great theoretical controversies of the era. His opponents were some of the great (and not so great) figures in interwar economics: Keynes, W.T. Foster and W. Catchings, Ralph Hawtrey, Irving Fisher, Frank Knight, Joseph Schumpeter, Gustav Cassel, Alvin Hansen, A.C. Pigou, Arthur Spiethoff to name a few. Hayek took on all comers without fear or favor and inevitably emerged victorious. As Alan Ebenstein notes, “Hayek came to be seen in Cambridge, as Robbins and LSE’s point man in intellectual combat with Cambridge.”
Hayek’s views are essential to understanding the current mess, though it’s hard to summarize Hayek’s business-cycle theory in a bumper-sticker slogan that, say, Barney Frank could understand.
Society for Entrepreneurship Scholars Manuscript Boot Camp
| Peter Klein |
The Society for Entrepreneurship Scholars runs a manuscript “boot-camp” to help junior faculty and graduate students in entrepreneurship, as well as established scholars from other disciplines who are new to the entrepreneurship field, get a manuscript ready for publication in a top-tier journal. Bill Schulze and Sharon Alvarez are chairing the conference this year, to be held 11-13 December at the Solitude Mountain Resort near Salt Lake City. A team of senior scholar-mentors, including Rajshree Argawal, Julio DeCastro, Greg Dess, David Deeds, Harry Sapienza, and me, will work with participants to get their manuscripts in shape. There’s also great networking and, this year, great skiing.
Submissions should be sent to ses@utah.edu by November 3. The full announcement, with all the relevant contact information, is posted below the fold. (more…)
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