Did border restrictions kill the US economy?

A very long and involved Sumner article. But the most interesting part is just one paragraph interests me:

"Imagine I’m debating Tyler Cowen on the question of whether the 2006 wealth was real in 2006. What’s at stake? I might argue that the wealth was 100% real, but later policies like immigration crackdown and tight money reduced the wealth later on."

So the idea here is that maybe there really was no housing bubble, but there would have been enough demand for the houses being built if more people were being let into the country. Very interesting.

More on Sweden

Good post on quasi-moneterasim. According to the article, Sweden is trying nominal GDP targeting. And its leading to an economic recovery.

Again, let's have an accurage view of the state. We can oppose it without disorting its record.

Rothbard's Cluster of Errors

Rothbard says:

"why is there a sudden general cluster of business errors?"

He goes on:

"How, then, do we explain the curious phenomenon of the crisis when almost all entrepreneurs suffer sudden losses"

and later confidently announces:

"In the purely free and unhampered market, there will be no cluster of errors, since trained entrepreneurs will not all make errors at the same time."

But of course Rothbard is wrong. The large cluster of errors exists because many businessman and workers have the same set of cognitive biases that creates the phenomenon of sticky wages. With a large pool of qualified unemployed workers, a rational world would advice all workers to accept lower wages. Instead, wages fall slower than prices and many businesses go under.

Eventually something happens which reverses the process. (An increase in aggregate demand or perhaps an eventual "catch up" of declining wages in respect to prices). Businesses become profitable and we enter the boom period.