I guess I’ve said before that Mark Thoma’s Economist’s Voice is a great one-stop shopping outlet for new stuff on the economy—more comprehensive and less partisan than the usual suspects like DeLong, Mankiw, Marginal Revolution, etc. (link). He has a half dozen good new posts up there today, but I particularly enjoyed his reprint of “Five Macroeconomics Myths,” by Nobelist Ed Prescott (link). What’s so special about cut-and-paste copying from the Wall Street Journal, you ask? Well may you ask: the point is that a post at Thoma is capable of generating the kind of seminar that you wouldn’t mind sitting in on at any good graduate school—some idiotic comments, of course, but a lot of stuff that moves the ball down field—plus a no-extra-charge link to Mankiw saying he doesn’t understand what Prescott is talking about. The only problem here is that there’s too much—
"RBC proponents ... recommend that the government get out of the way as much as possible and allow the private sector to take care of any problems that might arise."
Now that's a myth if ever I saw one!
"They argue for minimal government involvement in the economy and for policies that allow the private sector to respond optimally to changing economic conditions."
The term "minimal government involvement" doesn't have a defined sense unless in a purely ideological meaning. Free-marketeers aren't against government intervention, they are simply against certain forms of government intervention. There is no objective criteria to say that some interventions are more "minimal" than others. It's all foggy language used to cover up an ideological agenda. If they were really against state intervention, they should advocate abolishing property laws. They should advocate a society in which stealing is a legitimate economic activity, just as running a business or trading stock. (It is, in a sense).
Here's a good backgrounder on Prescott:link.
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