braddelong.substack.com/p/a-non-socrat…
Claudia Sahm: "We should have a recession,” John H. Cochrane said in November [2008], speaking to students and investors. “People who spend their lives pounding nails in Nevada need something else to do.” #yikes...
Scott Gosnell: I was there... 1/
Claudia Sahm: "We should have a recession,” John H. Cochrane said in November [2008], speaking to students and investors. “People who spend their lives pounding nails in Nevada need something else to do.” #yikes...
Scott Gosnell: I was there... 1/
.... I may even have a recording down in the archives and may have sprained my eyes I rolled them so hard.
...Brad DeLong: What! Really? Tell me more… I mean, private housing construction as a share of GDP had crashed from its peak of 5.0% of GDP in 2005Q4 through its... 2/
...Brad DeLong: What! Really? Tell me more… I mean, private housing construction as a share of GDP had crashed from its peak of 5.0% of GDP in 2005Q4 through its... 2/
...historical average of 3.4% in 2007Q2, and had bottomed all the way down to 2.1% by 2008Q4, when Cochrane was opining about too many people pounding nails in Nevada. How was it possible to say such a thing? How could he avoid looking at graphs like this one... 3/ 
...How was it possible to avoid noticing that residential construction employment had already fallen from 150% to 60% of its normal share even as he spoke? And how did the audience react?
Joe Marshall: Holy hell. What the f—- was wrong with these people?... 4/
Joe Marshall: Holy hell. What the f—- was wrong with these people?... 4/
Scott Gosnell: I went to all of those econ talks at Gleacher.... Faculty could say all kinds of things without getting much skepticism. Being a Mellon-style liquidationist was sort of edgy and cool among the Republican-leaning economists at the time... 5/
Brad DeLong: Touché... One question I always ask Paul Krugman and company is: what happened to the influence of Milton Friedman? No one was a stronger anti-liquidationist than Milton Friedman.… The shift to "liquidationism" as the default policy view of a Republican... 6/
...economist (when Republicans were out of power, at least), seems to have happened remarkably quickly in one decade, the 2000s, and without analysis and without argument. How and why did this happen, that being a full-fledged Mellonian became "edgy" and "cool"?... 7/
...Krugman's explanations <
I think it has something... 8/
https://twitter.com/delong/status/1395927328904015873>... [seem to me] (a) right, (b) much too compressed, but (c) ignores the problem of “where do you stop?”.... Why is police & courts acceptable, while police & courts & demand management is not?
I think it has something... 8/
...to do with Schumpeter, von Hayek, and von Mises; the context of early–20th center Vienna; the idea that humans are individuals for whom private property and one-shot exchange are “natural” (as opposed to creatures that establish and cement societal bonds via ongoing... 9/
...reciprocal gift-exchange relationships); the philosophical position that all is for the best in this the best of all possible worlds; and the resulting theological belief that:
>the market giveth; the market taketh away; blessed be the name of the market…
In short... 10/
>the market giveth; the market taketh away; blessed be the name of the market…
In short... 10/
...I think [Paul Krugman is] right, but I do not understand why. And here I know I am out of my depth, and I want to call for people like Emma Rothschild and Glory Liu who are trained professionals to help here, for they she might be able to teacheth me the lesson… 11/END
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