Anyone stumble upon Austrian rebuttals to the Krugman analogy?

Economics Economics Questions
1

Baby-Sitting the EconomyThe baby-sitting co-op that went bust teaches us something that could save the world.

By Paul KrugmanPosted Monday, Oct. 13, 2008, at 11:24 AM ET_Paul Krugman, who won the Nobel Memorial Prize in Economic Sciences today for his work on international trade patterns, was the lead economics columnist for Slate from the magazine’s launch in 1996 to 1999, when he became a_ columnist for the New York Times. His “Dismal Science” column covered everything from puzzling economics of ticket scalping to the tenacity of supply-side economics in presidential campaigns. One particular favorite, which was included in Slate’s 10th-anniversary anthology, is "Baby-Sitting the Economy," a column about what a failed baby-sitting cooperative in Washington, D.C., can teach us about a global economic crisis.

2

Bob murphy did an article about this not too long ago I think.

He doesn’t so much as create a counter-analogy as correct krugman’s.

3

One obvious problem with the analogy leaps to mind, which is that these “scrip” were issued at a fixed price: each corresponding to one hour’s baby sitting. Thus the price of baby sitting, as measured in scrip, was fixed for all eternity and thus was unable to adjust to account for whatever quantity of scrip were in existence relative to the total quantity of goods and services (i.e. available couples).

As such, minimum/maximum wage laws were once again responsible for the “recession” in the baby sitting economy. Rather than printing more scrip, all they really had to do was let the price of scrip fluctuate freely… but I doubt this ever occured to Krugman.

4

I believe Gene Callahan addressed it in “Economics for Real People”, page 141-142. It’s available somewhere on this site in a PDF, do a search for it.

5

I hate slate! My teacher reads slate all the time and it pisses me off. They published this article at one point called, “The End of Libertarianism.” My teacher decided to print it off and give it to me. It was trash.

6

Thanks for the suggestions everyone.