If this controversy been "resolved" by most of the economics profession today in favor of some version of the aggregate demand view, what does that say about economics as a science? If the majority is wrong (as Austrians believe) -- after all of these years of discussion -- where is the science? Are we using the word "science" just to impress people?

On a related note, there was a very recent conference at the NBER in Cambridge about the Fed and the *first* hundred years. If you look at the cast of invitees you do not see any serious re-evaluation of the Fed -- anything fundamental has been ruled out by the Establishment.

There is a Chinese (I think) saying that a fool can ask more questions in an hour than a wise man can answer in a lifetime. This list reminds me of that. I would adjust it as: A fool can make more errors in a relatively short column than a wise man can correct in a lifetime. The errors seem to be of two major kinds: (1) A&L often can't distinguish the general rule from the exceptions; (2) They do not realize that most economists do not take the idealizations of economic theory literally. These idealizations require a certain judgment to apply. Complications of the basic model are important but often irrelevant to basic policy. And what's more: public choice considerations often spoil attempt to be subtle -- like counteracting foreign subsidies with domestic tariffs.

Your words are good and true to the man. I remember Leonard from my college days at Fordham. I met him through Murray Rothbard during the late 1960s. Radicalism was everywhere in the air then. We libertarians -- Leonard and Murray included -- were trying to figure out if we could make common cause with the so-called "New Left." That ultimately went nowhere for what are now obvious reasons. Leonard has spent his life building liberal and Austrian movements. I have learned much from Leonard both intellectually and about dedication to a purpose. Thank God he has come our way. Ad multos annos.

The problem is the combination of democracy and the idea of the omnipotence of democracy. This was thoroughly discussed by classical liberals in the 19th century -- Herbert Spencer, Alexis de Tocqueville, William Lecky, Thomas Babington Macauley and others. I like the line from Herbert Spencer -- the political superstition of previous times was the divine right of kings; the political superstition of the present is the divine right of parliaments. I am not sure there is much we can do about this today. The genie is out of the bottle.

Once again my comment -- morally decent and intellectually perfect -- was deleted. There is a communist somewhere in this system.

Very odd clip. But I do think it shows the limits of economics as a "science." I am not saying that Stiglitz's economics is just as good as anyone else's. What I am saying is that when you deal with issues that are as interwoven with political, moral, and ideological considerations, economists have -- in practice -- a hard time keeping all of these considerations separate. He is not wrong that economists can have an interest in believing certain things. But Stiglitz is not the exception he thinks he is. After all, he is in the business of promoting Soros's brand of "new" economic thinking. Lucas, on the other hand, thinks of economics as the discipline that invents toy economies that do not "easily" relate to real economies or real economic policy. But he loves his mathematical precision. What is his interest? Not the real world, I am afraid. So the answer is they both fit into a profession that has lost its way.

Yay, Pete! You didn't forget. Neither did I. http://thinkmarkets.wordpress.com/2013/05/08/f-a-hayek-his-114th-birthday/ I have a similar picture hanging in my office (slightly different pose). But I had the nasty napkin taken out.

Mises is so screwed up on methodology that I wish I have never read that first section of Human Action. It is not that his position is entirely wrong but he doesn't know how to explain it. He uses terms very carelessly. The only interpretation of Mises on methodology that makes any sense to me is that produced by Roderick Long in his yet-unpublished, but available, book on Wittgenstein and Austrian Economics. You can find it on Mises.org and on Roderick's web page. But then we must ultimately thank Wittgenstein for this.

My comment was deleted. ???!!!

As we know, there were economists recommending expanding government spending during recessions even before Keynes made it his own policy. The source was the old Chicago school. I am saying that there was this kind of macro-thinking even before the Keynesian revolution.

I have used Larry's book for the past three years (first in manuscript form). It is truly excellent.

I hate the new way comments are to be posted. I don't know what I am doing. There is no Mariorizzo.wordpress.com Mario Rizzo.

So he changed his mind on redistribution from the position in The Constitution of Liberty? Mario Rizzo.

I have experience teaching a course on classical liberalism in one form or another for twenty years. I can say with some confidence that economists generally have very little clear knowledge of what it is. One economics major thought economic liberalism meant the "efficient markets" hypothesis. We must also remember that Keynes made a mess of the definition of "liberalism" with his dichotomy between the macro sector, including the "socialization" of investment, and the micro world where mom and pop firms could do what they want. It is also the case that some economists do not consider big redistributionist schemes as in any way hindering the liberal economic order. I guess they believe something like John Stuart Mill's split between the laws of production and the laws of redistribution. Of course, we can argue about the purity of liberal policies but I do not think it is too much to ask that people recognize the mixed- economy interventionism is the dominant view in the west. (On a contentious political note, one could hardly listen to Obama Inaugural address and think economic liberalism is the dominant ideology.)

I was also impressed by the documentary, "The Power of Nightmares" which I think of as a companion piece in many ways. It shows the psychological role of scaring people in building a large defense establishment. You can now view it in whole or part free of charge. http://topdocumentaryfilms.com/the-power-of-nightmares/