I’m not sure if anybody takes Gerry Jackson seriously. I know I shouldn’t waste my time on him, but his articles are just so jaw-droppingly dishonest and absurd that he deserves another kick in the pants. There is a distinct possibility that he doing a parody of an ignorant old fool. If so — it’s a very good likeness.
After constantly attacking other free-market thinkers such as Davidson, Lindsay, Berg, Manners, Evans, Moore and many others, Gerry starts his article (as he usually does) with a whinge about how nobody is nice to him. Don’t worry Gerry, Bird and Mad-Doug still love you.
Amusingly, his first actual point is a straight out lie:
“…an overvalued currency acts like a subsidy on imports and a tax on domestic production. Humphreys states this is not possible where floating exchange rates are the rule.”
I never said this. Indeed, I directly said that the reserve bank could over-value the exchange rate by running a contractionary monetary policy. He is either grossly dishonest or unbelievably stupid. Or both.
After starting with this howler, Gerry references Ricardo and Thornton to make the obvious point that government policy influences comparative advantage. Of course, nobody denied this. Presumably, Gerry thinks he has made a point. He hasn’t.
The point I made was quite different. I pointed out that you can’t simultaneously have expansionary and contractionary monetary policy. Gerry complains that monetary policy is leading to inflation (expansionary monetary policy) and also to an overvalued exchange rate (contractionary monetary policy). He is contradicting himself and proving that he’s not an economist. His incoherent response was:
“In such a world [non-gold standard] a loose monetary policy can go hand-in-hand with an over-valued currency. In other words, ours becomes a world of undervalued and overvalued currencies in a continuous state of flux and thus the tacit assumption that monetary policy cannot cause distortions because exchange rates are flexible does not hold.”
This is a non-answer. At any point in time a currency can only be overvalued (hurting exports) or undervalued (leading to inflation). It can’t be both. Further, loose monetary policy leads to currency devaluation, not appreciation. And finally, there is no assumption that monetary policy cannot cause distortions. Gerry has simply made that up. It is clear he doesn’t understand the first thing about standard monetary economics.
If people took Gerry seriously, this would be worrying. But given how important he isn’t, we can afford to simply laugh at the old coot.
Gerry thinks that we all laugh at him because he responded to my article on a carbon tax. To rehash this old issue — Gerry’s point was that a carbon tax was bad for the economy. Of course, I have always said that a carbon tax would be bad for the economy, but that offsetting tax cuts would be good for the economy. I pointed out that if you increase one tax and decrease another tax then you get ambiguous results, depending on the nature of the tax swap. Gerry can’t understand this.
When he is confronted with these simple facts I get a mental image of Gerry’s face going bright red and starting to huff, and then he puts his hands over his eyes and starts chanting “take me to a happy place… take me to a happy place”. Poor guy. And then when he calms down he simply declares victory and Mad Doug believes him.
I destroyed all his carbon tax idiocy here, with several examples of how he blatantly lied. That was the point when Gerry lost all credibility. Today was the day he went into negative.
UPDATE: At the suggestion of Mark Hill, and to show what a magnanimous chap I am, Gerry is invited to write anything free-market and coherent and we will publish it here at the ALS blog. I’ve always said that I will treat him with respect once he learns to treat others with respect. That is an open offer.