I’ve been arguing with Neoclassical economists for over fifty years, without ever getting a concession from them that I was right, even when there was overwhelming logical or empirical evidence on my side.
Recently, I’ve realised why. It’s because they don’t read—really read—critical literature. Instead, they skim it, looking for anything they can use to dismiss your argument. Once they find something that satisfies them, that’s the end of the matter: they turn off completely because, from their point of view, they’ve already won the argument. They’re not engaging with you: they’re looking for some excuse, no matter how trivial, to dismiss you.
This particular lightbulb clicked on for me in a Twitter exchange with the CATO Institute economist George Selgin. It’s a superb example of this general rule, because there are no matters of contentious economics involved. I don’t need to persuade anyone of some economic proposition, which is contrary to accepted wisdom, to expose how they behave in an argument. All you have to be able to do is comprehend English.
The back story is that George wrote a critique of the empirically realistic theory that banks are not primarily intermediaries in lending, but instead they are primarily money creators:
Banks Are Intermediaries of Loanable Funds
I read his paper very carefully, and wrote a detailed reply (with an admittedly cheeky title):
Selgin’s Hot Air on Bank Money Creation (on Patreon; on Substack)
George then wrote a tweet thread in response to my criticisms, in which he said that:
First, Steve says that I “ignore[] banks borrowing from non-banks, and then on-lending these funds to other non-bank borrowers,” as if I claimed that banks fund their lending only by borrowing from other banks. (https://x.com/GeorgeSelgin/status/1788655373840248925)
…click on the above link to read the rest of the article…
