On Monday, economists Eugene Fama and Lars Peter Hansen of the University of Chicago and Robert Shiller of Yale University were awarded the Nobel Prize in Economics (specifically the 2013 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel) for their “empirical analysis” on stock, bond and home prices – though contradictory at times. The three men will now share a $1.2 million prize.
But who are these three economists? Have they been instrumental in the field of economics? Well, Robert Shiller has been put under the microscope this week, especially by the Austrian theorists and libertarians. Shiller, who has been boasted as someone who criticized the Federal Reserve for creating bubbles (so did Peter Schiff), is a Keynesian through and through.
Earlier this year, Shiller published a paper titled “Austerity and Demoralization,” in which he blames unemployment on capitalism rather than supply and demand economics. Since he now has a Nobel Prize in economics it would seem that he would understand that unemployment is usually a transition in employment unless it is steered in a different direction due to government intervention, such as minimum wage laws and employment insurance.
“Unemployment is a product of capitalism: people who are no longer needed are simply made redundant. On the traditional family farm, there was no unemployment,” wrote Shiller in his article.
To solve the financial crisis we are in, Shiller calls for either tax increases or deficit spending, a Keynesian model that has been preached since the Great Depression and has never left the global economy.
“[W]e need fiscal stimulus – ideally, the debt-friendly stimulus that raises taxes and expenditures equally. The increased tax burden for all who are employed is analogous to the reduced hours in work-sharing,” stated Shiller. “But, if tax increases are not politically expedient, policymakers should proceed with old-fashioned deficit spending. The important thing is to achieve any fiscal stimulus that boosts job creation and puts the unemployed back to work.”
In addition, Shiller has explained that if the inequality gap widens then there must be tax hikes on the rich.
It seems the Royal Swedish Academy of Sciences just adores the Keynesians and those who admire government intervention. If they wanted someone who predicted the crisis we are in today, they could have simply chosen a handful of Austrians, such as Robert Murphy, Robert Higgs, Walter Block and Hans-Hermann Hoppe.