Here is Niklas Blanchard's take on Tabarrak and Landsburg, as I mentioned yesterday.
I love this:
. . . doing economics from accounting identities leads to patently absurd conclusions. There are no concrete relationships between savings and investment. They are both dependent variables. Neither is there a concrete relationship between I and C. Both depend on other economic variables, as well. But, zero-sum accounting would get you this result.
I am validated!
And, since I have absolutely no compunction about piling on egregious right-wing idiocy, here's Noah Smith.
OK, clever readers, your assignment is to reread the above blog post very carefully, and think of four reasons why Landburg's post is utter nonsense. That's right, four. I don't want to make it too easy for you.
Noah wraps it up with this.
"Economics by accounting identity" is dubious at the best of times, but "economics by patently false accounting identity" is just inexcusable. You can get economic theory to say damn near anything you want. But by Adam Smith and all that is holy, you just cannot get it to say that consumption is constant by definition! You just...can't!!!
This is about a snarky as Noah gets, which is really a shame. I think he has the gift. (sigh.)
Update: Krugman has something to add; it is a serious and well-deserved indictment of his profession.
Discussions like this really disturb me; they indicate that there are a lot of people with Ph.D.s in economics who can throw around a lot of jargon, but when push comes to shove, have no coherent picture whatsoever of how the pieces fit together..