After listening to this, I'm beginning to think that the idea that macroeconomists can accurately model and predict the future of the economy is total BS. The national economy is insanely complex. It would be like a historian trying to derive a mathematical model for history that could predict the future based on the past--clearly impossible.

Arnold & Mark independently rediscover Friedrich Hayek's misdirection of investment and heterogeneous labor explanation of the artificial boom & inevitable bust cycle at 26:10 in the conversation. Their criticism of a "physics" model of the mathematical relations between non-micro grounded aggregates comes to the same conclusion Hayek argued for between the 1920s and the 1980s -- including in his Nobel Prize lecture "The Pretense of Knowledge". The problems with "incomes policy", the cost inflation model and the rest of the 1950s / 1960s Keynesian scheme wer discussed already in 1972 by Shuda Shenoy in her excellent introduction to the 1972 collections of writings by Hayek on Keynes and Keynesian economics titled "A Tiger by the Tail". The "New Classical" information macroeconomics that Arnold and Mark rightly criticize was Robert Lucas's misfired attempt to re-introduce the microeconomics of knowledge and expectations coordination that Lucas had found in Hayek's macroeconomics, but in a way that satisfied the non-micro ground aggregates used by the Keynesians and the Monetarists. As a matter of historical fact, Hayek's misinvestment theory was the beginnings of the "information" economics revolution, Hayek brought his thinking about the coordination

As a matter of historical fact, Hayek's misinvestment (sic) theory was the beginnings of the "information" economics revolution

Wasn't his work on this an extension of Mises'? As far as I can tell, Austrian economics hasn't changed much since the 30s or 40s, and the idea that business cycles were the result of (primarily central bank induced) mal-investment was covered by Mises first.

Quoting Jyminee: It would be like a historian trying to derive a mathematical model for history that could predict the future based on the past--clearly impossible.

Ever read Das Kapital?

Quoting Thanks, dad!: dan, do you have any books that don't suck?

do you have any posts that don't suck?

No--what does it predict about history? The proletariat have yet to lose their false consciousness and seize the means of production from the bourgeoisie...

Quoting Jyminee: No--what does it predict about history? The proletariat have yet to lose their false consciousness and seize the means of production from the bourgeoisie...

But it is inevitable that they will lose their false consciousness due to "heightened contradictions" and the eventual paucity of markets to expand into. Marx argues that it is simply inevitable that capitalism will destroy itself. At least that's the incredibly simplified Nikkibong's Notes version of the 500 page tome.

ahhh, defending a spammer! at least that's 100% less boring than the rest of your posts are

Fine discussion even thoough I didn't understand much of it due to never taking a course in business or economics. Listening to these 2 diavloggers gave me the impression the government doesn't have all the answers to what ails this economy. I can't get away from the feeling that life as we know it in the U.S. is changing for the worse in the money area and the government doesn't have the proper amount of life preservers to save everyone. Granted, I see the various levels of governement doing quite a bit to help the poor and needy but there just seem to be so many slipping through the cracks which are widening. John

No one ever brings up the fact that productivity is up HUGE since 1975
but wages are flat to sloping down
so the money went to the 1% at the top
and now the economy is suffering ...why? by definition the rich save there money instead of spend it.

Quoting nikkibong: But it is inevitable that they will lose their false consciousness due to "heightened contradictions" and the eventual paucity of markets to expand into. Marx argues that it is simply inevitable that capitalism will destroy itself.

At least that's the incredibly simplified Nikkibong's Notes version of the 500 page tome.

Are you saying this is correct? Mises predicted the fall of the Soviet Union in direct contradiction to socialists the world over who thought its central planning was scientific and guaranteed the best outcomes. About 40% of GDP is spent by the various US governments and I don't know what percentage it has to reach before socialists reach the conclusion that the US isn't really a capitalist country.

Do you mean inflation adjusted wages? I think you can blame that on... inflation.