…for giving Stephen Landsburg a megaphone.
But Landsburg was Edgy. Contrarian. Provocative. Exactly what Kinsley and Weisburg wanted for Slate…
Daniel take his turn as the Sanitation Department:
Facts & other stubborn things: As misleading as…: "Now, though I cannot seem to find a reference, I have a vague memory that it was Murray Rothbard who observed [<<< DPK: Well we're clearly off to a bad start] that the really neat thing about this [Keynesian] argument is that you can do exactly the same thing with any accounting identity. Let’s start with this one: Y = L + E; Here Y is economy-wide income, L is Landsburg’s income, and E is everyone else’s income. No disputing that one. Next we observe that everyone else’s share of the income tends to be about 99.999999% of the total. In symbols, we have: E = .99999999 Y. Combine these two equations, do your algebra, and voila: Y = 100,000,000 L. That 100,000,000 there is the soon-to-be-famous “Landsburg multiplier”. Our equation proves that if you send Landsburg a dollar, you’ll generate $100,000,000 worth of income for everyone else."
No, no, no, no.
The Keynesian multiplier has two sides: income and expenditure. The economy's income today is the economy's expenditure yesterday. If you had a lot of income today but there was not a lot of expenditure today, then tomorrow you will have less income. Landsburg drops the expenditure side…. So by botching the income/expenditure distinction Landsburg gives us a triviality. Even Say did better than that…. Landsburg adds a genuine error. The slope of the consumption component… is not… the consumption share of output… [but] the marginal propensity to consume…. Keynes made the multiplier go because he had income and expenditure. When you have income and income you… just have a tautology…. Econ 101 students ought to know better because of course the Keynesian cross is pretty uniformly taught with both income and expenditure from the get-go!…
Apparently this reasoning, which Landsburg got from Rothbard, originally came from Hazlitt…: ...giving me yet another reason to never, ever, waste any of my precious time on this Earth reading Hazlitt.