When did the Republican Party go off the rails?

[Lord Mord]

FLoW,

Well, it looks like that particular clock may have gotten the two biggest ones right. Anyway, I again am not arguing that Austrian Business Cycle theory is a perfect predictor. It clearly is not. But then, neither is anything else. Predictions of the Crash were rare, and predictions of the 2008 crisis didn't start bubbling up until the writing was on the wall in 2007. Why did neither of the two dominant schools -- and their variants -- that you identified previously pick this one up until it was too late to do anything about it?

How late are you saying it was picked up? Why was that point necessarily too late to do anything about it?

[The Progressive]

Speaking purely politically, I'm not quite as certain that Bunning's tactic helped Democrats at all. After all, the thing did eventually pass, and he's not running again so it can't hurt him personally. His obstructionism did point out the complete hypocrisy of paygo, which may be a useful bit of political rhetoric for Republicans down the road to the extent they want to play on deficit fears. They can freely disagree with his tactic, but use the news coverage it got to remind people that democratic promises to "pay as you go" didn't last even one month, and so there's no reason to believe their promises in the future.

Again, that's a purely political observation on my part as to how it may play out in the end. Or not.

New poll seems to suggest differently:

http://www.miamiherald.com/2010/03/03/1509297/disgust-with-politics-found.html

Americans tilt slightly against Republicans as to which party they blame more. They also give a 10-point edge to Democrats when they're asked which party they'd vote for if the congressional elections were today.

The poll found 33 percent blaming Republicans for a broken Washington and 27 percent blaming Democrats, with 2 percent blaming both parties, 5 percent unsure and 17 percent saying that Washington isn't broken at all.

[Former Lord of Winterfell]

Investing in high risk investments obviously was an issue, the point is that there is no evidence that it was caused by interest rates being artificailly and unsustainably low

You don't think the effective mortgage rates were either artificially or unsustainably low? What do you consider the GSE's purposefully buying up the paper as fast as it could be written, meeting federally mandated targets for low-income applicants? Was that a "free market"? Or do you think those rates were perfectly sustainable? And I noted that you didn't touch the issue of the savings rate.

why should investors be more rational with different interest rates?

If money is cheaper, its more tempting to borrow more of it. You also don't need as good of a return to make a profit. But again, you're asking me to defend every component of the theory, and I've said repeatedly that I'm not doing that. I'm pointing out a red flagging value to it that can have merit when you have a significant credit distortion.

The article you linked is suggesting regulation that is completely the opposite of what the Austrian theory suggests should be the correct course of action, actually if the theory is correct there should be far more pressure from the market to drive up interest rates but that isn't the case.

The point was the diagnosis, not the remedy. We agree that the Austrians and Keynesians are 180 degrees apart in terms of solutions. But in terms of the particular aspect of Austrian theory holding that too low interest rates can distort economic decision-making, the article is on all fours. The Keynesians just want to regulate the effects of that distortion directly.

As a side note Stiglitz got a Nobel prize for a theory that rejects Hayek's conclusions in The Use of Knowledge.

So Stiglitz got a Nobel for what you claim to be able to do in a couple of paragraphs? That sort of validates my point that a thread that has devolved to a pissing match over economists is pointless.

Friedman apparently taught Use of Knowledge to his grad students. So what? It would be asinine for anyone to cite to winning the Nobel as a validation of the underlying theory because the Committee has sometimes split the award between two guys who hold almost the exact opposite view. In fact, Hayek himself essentially said that it was more a popularity contest than anything else since economics is not subject to the kind of mathematical rigor and proof as the hard sciences. That's not why I mentioned it. I only mentioned the Nobel with respect to Hayek, and later Buchanan, for the purpose of showing that the person isn't just a crackpot who can be dismissed with a couple of one liners. It's not prove that they are right, which would go way beyond what is possible here.

[ljkeane]

And I noted that you didn't touch the issue of the savings rate.

We've been asked to stop discussing this in this thread so I'll leave it at this but according to the Austrian theory the savings rate isn't relevant unless people aren't using banks.

ETA: You're also misrepresenting the Keynesian position, the fact that bad investments happen has never been denied but the issue is whether that is driven by interest rates, which Keynes specifically rejected.

[Former Lord of Winterfell]

We've been asked to stop discussing this in this thread so I'll leave it at this but according to the Austrian theory the savings rate isn't relevant unless people aren't using banks.

Didn't see the mods comment either so I'll stop.

[Lord of Rhinos]

Double post

[Lord of Rhinos]

Re: Tarant

It's from Heritage Foundation.

I didn't bother reading it, because I already know what it will say. I read things from that organization only when I'm planning on taking the time to rebut it. As you have done, and I appreciate the effort. But just sort of FYI for those not familiar with the American political landscape that Heritage Foundation is always (American) right-wing when it comes to fiscal policies, regardless of data or issue.

I'm a rightwinger and I'm familiar with them, though I appreciate the heads up. The level of hypocrisy, ignorance, spin, and lying that has emerged from the right in the HCR has been very frustrating to me and in general has made me very skeptical of rightwing news sources. If I'm catching them telling so many lies and half truths about issues which I'm familiar it seems like I'm probably getting fed a lot of BS on topics I don't know well...but this is more appropriate for a different topic.

[Annelise]

His obstructionism did point out the complete hypocrisy of paygo, which may be a useful bit of political rhetoric for Republicans down the road to the extent they want to play on deficit fears.

Sure on paygo. Although it may be hard to get much traction on that example, since the Republicans voted with the Democrats to a wo/man, even Bunning in the end. I think other examples have and will present better opportunities for that, frankly.

The timing is good for Dems insomuch that they can use it to highlight Senate rule dysfunction in the short term to plead their case for HCR via reconciliation. I saw they were also trying to broaden it to GOP obstructionism even tho Bunning was the only hold out, but I dunno how much success that will enjoy, given that the story is centered on 99-1.

[Aemon Stark]

In fact, Hayek himself essentially said that it was more a popularity contest than anything else since economics is not subject to the kind of mathematical rigor and proof as the hard sciences.

This is just an aside, but the only field subject any kind of mathematical rigour and proof is mathematics. The "hard" sciences are about evidence, hypotheses, theories, and experimentation. Any discipline that starts from anything less than a descriptive and empirical approach has no business calling itself a "science" of any kind. The Austrians fail insofar as they specifically eschew such an approach, yet do not shrink from making sweeping claims with little to no reliance on evidence of any kind, a point made repeatedly (and correctly) in this thread. Economists generally (at least as they appear in the media) seem to suffer from a peculiar hubris that causes them to vastly overstate the definitiveness of their prognostications and suggestions. As a social science discipline, all conclusions will lack the rigour available with random controlled trials or controlled studies of any kind. That doesn't mean contradictory evidence can be ignored.

If there is a connection to the OP in this, it's simply that the Republican party seems rife with such garbage - "Death Panels", "Government takeover of health care", "Iraq was involved with 9/11", "Obama is fiscally irresponsible and we clearly didn't spend 8 years destroying national finances". Facts don't matter when you have a nice set of talking points. The Austrian School seems a textbook case of just that mentality - their theories don't fit with observed phenomena very well, but because we can selectively pick a few examples which superficially appear to confirm some of their arguments, we might as well continue to assert those theories' validity. Ideology is no substitute for scholarship and talking points are no substitute for facts.