Milton Friedman must be rolling over in his grave as the whole world embarked on a crusade against laissez-faire economics and deregulation. Bloomberg News recently ran a lengthy article on the Chicago school of economics' declining reputation. It's a quite comprehensive article, examining the different aspects of this renunciation--especially the question of how this would affect the policies of president-elect Obama, who himself taught constitutional law in the University of Chicago for 12 years. Worth reading.
Meanwhile, FT's Martin Wolf wrote an interesting piece on the growing need to return to Keynesianism:
The ghost of John Maynard Keynes, the father of macroeconomics, has returned to haunt us. [...] He wished to preserve as much liberty as possible, while recognising that the minimum state was unacceptable to a democratic society with an urbanised economy. He wished to preserve a market economy, without believing that laisser faire makes everything for the best in the best of all possible worlds.
+ Even Posner, who's famous for using free-market economic ideas to explain law, is in favor of Keynesian measures:
[...] the public-works expenditure program that President-elect Obama is proposing, though anathema to economic libertarians, resisted by the Bush Administration, and bound to be wasteful, as all such programs are, may be the most sensible response to the depression and one clearly superior to a tax cut. A tax cut or rebate, like the bank bailout, is unlikely, unless very large or credibly promised to be permanent, to stimulate consumption greatly; most of the money is likely to be used to rebuild savings or, in the case of the banks, to rebuild their equity cushion so that they can make loans, bound to be risky in a depressed economy, without courting bankruptcy. In other words, to stimulate economic activity the government will have to step in and “consume,” in lieu of reluctant or impoverished consumers by spending money on road repair and other public goods. A critical variable, however, is the length of time it will take for public-works projects actually to be begun. American government tends to be extremely sluggish.
An ad-lib question: I'm just curious about the position of Mongolian hardcore Friedmanites on this matter.
Essays and articles I'm planning to read tomorrow: "The Great Slump of 1930" by John Maynard Keynes, "Wall Street Lays Another Egg" and "The age of obligation" both by Niall Ferguson
Addendum: Time Series for Macroeconomics and Finance by John Cochrane + don't forget to check his course materials + Eric Zivot's Time Series Econometrics course webpage
"An imaginary retrospective of 2009" by Niall Ferguson + "What we will remember from 2008" by Gideon Rachman
The Return of John Kenneth Galbraith - as far as I know, Krugman hates him so much :P
Niall Ferguson - Geopolitical Consequences of the Credit Crunch