This displays shocking ignorance. First, Friedman is part of the Austrian school of economics which regards business cycles as normal not "unanticipated." Second, the mortgage and banking crisis were widely anticipated by conservatives and even Republicans, just not by Democrats. Posner's claim that conservative economics lacks "intellectual groundings" is simply due to Posner failure to read.
My theme is the intellectual decline of conservatism, and it is notable that the policies of the new conservatism are powered largely by emotion and religion and have for the most part weak intellectual groundings. .... Conservative intellectuals had no party.
And then came the financial crash last September and the ensuing depression. These unanticipated and shocking events have exposed significant analytical weaknesses in core beliefs of conservative economists concerning the business cycle and the macroeconomy generally. Friedmanite monetarism and the efficient-market theory of finance have taken some sharp hits, and there is renewed respect for the macroeconomic thought of John Maynard Kenyes, a conservatives' bête noire.
Tuesday, May 12, 2009
Richard Posner writes: