Man has only one tool to fight error: reason.
— Ludwig von Mises
1. Richard Ebeling on John Maynard Keynes (HT Bob Murphy). One correction: Keynes’ theory of wages did not rely only on the “money illusion,” but on the idea that a reduction in wages would manifest in the price of outputs through a proportional reduction (operating under the assumption that the cost of labor is main determinant of the price of produced goods). In any case, I have never read a biography of Keynes, although I hope to one day read the three-volume biography by Skidelsky. But, of what I have read on Keynes, it seems clear that he had a specific vision of society and its operations, and it seems inescapable to me to conclude that his economics was largely shaped by these prejudices. An economic theory should be judged on its own, but we also have to consider that the possibility of flaws in the theory exists on the basis of the flaws of the theorist’s social vision, especially if the former was undeniable influenced by the latter.
2. Jesús Huerta de Soto, “In Defense of the Euro.” Huerta de Soto sees the euro as a key to ending monetary nationalism between the various member countries. It also allows for a greater degree of market discipline (against deficit spending and monetary inflation) than floating exchange rates. But, I think he naively misjudges the capabilities of the State. Bretton Woods, after all, was a (possibly more imperfect?) monetary system of fixed exchange.
3. Rumor is (in Spanish) that Spain will ask for a European bailout this weekend, with the purpose of recapitalizing Spanish banks. This information comes in light of the revelation that more and more banks are asking for additional public funds to continue operations. If European banks cannot eliminate unproductive debt in time, what happens when bailouts are no longer a viable option? On a more personal level, as someone who more or less knew Spain before 2008, it can be seen even on the streets that this country is a very deep depression.
4. Today, Peter Klein is teaching a free Mises webinar on Austrian microeconomics.
5. Tiago Mata interviews Ivan Moscati on the history of the pure logic of choice.
6. I am now working my way through Acemoglu’s and Robinson’s Why Nations Fail. So far, it is incredibly interesting.