Explaining Japan's Recession - Benjamin Powell - Mises Daily

One prominent New Keynesian, Paul Krugman, recently recognized that,

Japan's postal savings system which channels money into public works projects that have little if any social payoff, is monumentally inefficient; so is the practice of rolling over the debts of companies that will never regain profitability and hence keeping capital employed producing what nobody wants. (Krugman 2001)

Krugman argues that this is not a problem as long as Japan is not producing at capacity. He says that to assert otherwise is erroneous because the focus on supply ignores the real problem: inadequate demand. Japan's problem, however, is not inadequate aggregate demand but a structure of production that does not meet consumers' particular demands. Producing things that nobody wants and propping up malinvestments cannot possibly help any economy. This policy is equivalent to the old Keynesian depression nostrum of paying people to dig holes and fill them. Neither policy will revive the economy because neither forces businesses to realign their structures of production to match consumer demands.

Krugman offers another policy solution. Because New Keynesians do not strictly prefer fiscal policy over monetary policy, Krugman recommends "unconventional monetary expansion, with the Bank of Japan buying dollars, euros, and long-term government bonds; it also involves accepting and indeed promoting mild inflation and a weak yen. I could explain why this would probably work, but what's the point? It's not about to happen" (Krugman 2001). Krugman should not think that this could not happen, because it is similar to what occurred from mid-1997 to mid-1998, and this approach did not work. During that period the BOJ's holding of commercial paper went from zero to $117 billion (Herbener 1999, p. 14).

Explaining Japan's Recession - Benjamin Powell - Mises Daily

Capitalism Magazine - Book Excerpt: I Am John Galt - Introduction

Capitalism Magazine - Book Excerpt: I Am John Galt - Introduction:

"Maybe when you think of a villain (and let’s leave out overt monsters like, say, Adolf Hitler) you think of a corrupt politician like Richard Nixon or a crook like Bernard Madoff. Who could disagree with that? Ayn Rand certainly demonstrated that evil could exist at the highest levels of government and in business as well. We’ll meet real-world villains of both types in this book. But Rand’s novels focused primarily on that special brand of evil that is carried out under the high-minded slogans of altruism. The real-world villains you’ll meet in this book all have one thing in common: No matter how rabid their lust for power, no matter how voracious their appetite for unearned wealth, and no matter how many lives they have to destroy in the process, their villainy is all carried out in the name of selfless service to others.

Real-life Randian heroes and villains are among us. If you so choose, you can live your life such that you can truly say, “I am John Galt.” This book shows you how."