WOW, shocker for salt water economists

The Harvahd Business Review reports that when government engages in stimulus, businesses cut back spending! The study is pretty comprehensive, starting in 1967.

When you practice economics at the alter of Keynesism, you believe that government spending primes the pump, increasing demand and multiplying throughout the economy.

This belief is as false as the people who argue the Holocaust never happened.

The “salt water economists” are incorrect. Time to refresh yourself in the fresh water movement that started in Chicago back in the 1950’s. Milton Friedman, Ronald Coase, George Stigler, Merton Miller, Bob Lucas, Gene Heckman were right. The tradition is being carried on by some great work at Booth Chicago today. Check it out at their homepage.

Free markets work. Incentives matter. Centrally planned economies are inefficient.

  • Michael Gibbs

    Small comments to a post I agree with:

    1. it’s Jim Heckman, & he didn’t come to Chicago until the 1970s. He’s also an econometrician, not someone who does research these kinds of topics.

    2. more importantly – Chicago Booth (my employer) does do great work in this area. But let’s please remember the other #1 economics department at Chicago, the one that started it all & continues to dominate. It is even more pre-eminent than Chicago Booth, though the two are close partners. Of course, I mean the University of Chicago’s Economics Department. Of the guys you list above, only Miller & Stigler were in the business school, & Stigler held a joint appointment, beginning in Economics.

  • Michael Gibbs

    Small comments to a post I agree with:

    1. it’s Jim Heckman, & he didn’t come to Chicago until the 1970s. He’s also an econometrician, not someone who does research these kinds of topics.

    2. more importantly – Chicago Booth (my employer) does do great work in this area. But let’s please remember the other #1 economics department at Chicago, the one that started it all & continues to dominate. It is even more pre-eminent than Chicago Booth, though the two are close partners. Of course, I mean the University of Chicago’s Economics Department. Of the guys you list above, only Miller & Stigler were in the business school, & Stigler held a joint appointment, beginning in Economics.

  • Michael Gibbs

    Small comments to a post I agree with:

    1. it’s Jim Heckman, & he didn’t come to Chicago until the 1970s. He’s also an econometrician, not someone who does research these kinds of topics.

    2. more importantly – Chicago Booth (my employer) does do great work in this area. But let’s please remember the other #1 economics department at Chicago, the one that started it all & continues to dominate. It is even more pre-eminent than Chicago Booth, though the two are close partners. Of course, I mean the University of Chicago’s Economics Department. Of the guys you list above, only Miller & Stigler were in the business school, & Stigler held a joint appointment, beginning in Economics.

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