Why is the Austrian explanation for the crisis so little discussed?

“Being associated with Mr Beck will not persuade many academics to take Austrian economic ideas seriously. Given the repeated credit booms and busts of the past 40 years, that may be a pity.”

The Economist, "Taking von Mises to pieces: Why is the Austrian explanation for the crisis so little discussed?"

The Mises Wiki

Mises Wiki
"the global repository of classical-liberal thought that anyone can edit"

the button-down individualist

From "The Freedom Fighters" by Greg Blake Miller, Vegas Seven:

We came for the freedom and stayed for the good life. We built businesses, families, fortunes, homes—so many homes—and in the first years of the new millennium we could be forgiven for believing that here, in a city built on flirtation with the forbidden, we owed our success to the glory of having been left alone. The rest of the country paid lip service to the American dream; we lived it. Lady Liberty resided in New York Harbor, but she had a floorshow in Vegas.

Somewhere between our arrival and the bruising election of 2010, Nevada gained a reputation as national ground zero for anti-government fervor. The reputation is misleading; the election was a perfect media storm of the most powerful man in an unpopular Senate facing off against brutal economic times and a nationwide nihilist movement. Traditionally, we Nevadans like government out of our business, except when it is helping us to do business. As a well-regulated land of self-made men and women, we dislike meddling but don’t mind partnership. Even in the wake of the Great Tea Party Tempest, it bears repeating that Nevada’s libertarian streak—especially here in Las Vegas—is more about lifestyle and civic self-image than about ideological consistency. We’ve always believed that the holier-than-thou elites are out to get us, but we’ve never really been out to get them.

It’s possible, of course, that this autumn of discontent foreshadowed some kind of paradigm shift, and that our inveterate frontier defensiveness is morphing into ideological libertarianism. But let’s pause to think about what that would mean. Real libertarianism (as opposed to Tea Partyism, which cribs from the libertarian playbook but hasn’t really read the thing) is an ideology of radical experimentation. It calls not only for lower taxes and gun rights, but for gay rights, an end to the drug war, and a foreign policy restrained beyond President Obama’s wildest dreams of restraint. Libertarianism’s insistence on restraining government in all its forms and supporting economic and personal freedom in all their forms creates awkward alliances and weakness at the ballot box.

The libertarian movement is diverse and argumentative; many purist libertarians will have nothing to do with the Libertarian Party, which after all wants to participate in the taboo sport of governance. But libertarians share an almost scholarly commitment to exploring the implications of 18th-century natural rights and 19th-century laissez-faire economics. The theoretical end game of libertarianism is peaceful anarchy, in which mutual interest, contractual cooperation and unfettered creativity ensure a higher standard of living.

At the heart of libertarianism is a simple and seductive logic: Governments get what they want through force. Markets, on the other hand, are networks of voluntary contractual relationships between individuals. That is, they are created by choice. A society should be built around consensual exchange rather than the unequal relationship between state power and citizen. Individuals negotiate; the state expropriates.

Libertarianism is a romantic ideology. It recognizes the unity of the haunted spirit and the audacious dreamer. The fantasies of the free man are inspired by his dark awareness that he is unfree. Like Nevada itself, libertarianism is ornery and visionary and in a state of perpetual argument with a spectral Establishment. It is an ideology of struggle. This is the story of its partisans.

(2) The Happy Warrior

In the autumn of 1990, Doug French was working in commercial real estate lending at Security Pacific Bank and pursuing a master’s degree in economics at UNLV. He needed a course to fill out his schedule, but the only one available, a classmate assured him, was being taught by a kook. Reasoning that no grad student gets through school without communing with a kook or two, French enrolled in Murray Rothbard’s History of Economic Thought class.

“I took Murray and I was struck by lightning,” says French, who is now the president of the Ludwig von Mises Institute, a libertarian think tank at Auburn University. “My life was changed forever.”

The “kook,” as it turned out, was one of the most prominent living practitioners of Austrian economics, a school of thought that had been brought to the postwar U.S. by Mises and eventual Nobel Laureate Friedrich Hayek. In the intellectual crucible of mid-century New York City, Rothbard helped put Austrian economics at the center of the emerging libertarian discourse. He was, for a time, part of Ayn Rand’s inner circle, but her tendency to seek worship rather than drop-the-gloves intellectual debate sat poorly with a man who loved rough-and-tumble argument above all else.

For Rothbard and his fellow Austrians—the followers of Mises called themselves Austrians whether they were Austrian or not—economic liberty was at once a moral category and the practical key to prosperity and innovation. Liberty creates wealth, and wealth creates. Through the power of markets, society spontaneously organizes itself without the guidance of government. If individuals, understanding their wants and needs better than anyone else, make mutual choices for mutual benefit, then any force that interferes with those choices decreases the sum of human happiness.

To those who argued that the cooling hand of government was needed to tame the passions of the market, ensure the justice of its networks of exchange, and guide economic development in desirable directions, the Austrians had a simple answer: How the hell do you know? The Austrians believed that economic planning is folly; Rothbard railed against the mathematical modeling favored by mainstream economists. The hand of government neither cools nor guides nor stimulates: It can only distort the natural interplay of individual choices. No expert or committee of experts should arrogate the right to steer natural processes whose outcome is unknowable. The Federal Reserve was one of Rothbard’s favorite targets—he believed that its artificially low interest rates in the 1920s produced the Great Depression; to make matters worse after the crash, Herbert Hoover called on industrialists to keep wages artificially high. The economy couldn’t find its footing when government kept telling it where to step.

Rothbard worked on his masterpiece, Man, Economy, and State, throughout the 1950s; not until 1970 was its third and final volume published, but Rothbard’s constant flow of articles had long since put him at the center of libertarian politics. In the cultural crucible of the 1960s and ’70s, Rothbard dealt with everyone from counterculture libertines who wanted government out of their medicine chests to industrialists like the Koch brothers of Kansas, oilmen who for years poured their money into libertarian think tanks—their cash founded the Cato Institute—in an attempt to make a defiantly anarchic movement do their bidding. (The Kochs have more recently placed their bets on the Tea Party.) Rothbard, a button-down individualist, was pleased with neither the wild-eyed hippies nor the Napoleonic business executives.

“Murray never quite found a home,” says French, “but he was always searching.”

Above all, Rothbard was an intellectual happy warrior, the fun fellow who could carry on a ferocious policy argument for decades. He was a man who might have been a grand presence in some endowed Ivy League chair. But though Rothbard had earned his doctoral degree from Columbia and published feverishly, he was unable to find an academic appointment in the Keynesian-dominated economics faculties of New York City—and he wasn’t willing to leave town. For two decades he taught at Brooklyn Polytechnic Institute. And then, in 1986, UNLV came calling, and Rothbard, 60 years old and ready at last for a change of scenery, headed west.

(Jeffrey Tucker has made the relevant portion of the PDF available here.)

Remembering the Marshes

I was struck by the beauty of this still from the PBS video “Remembering the Marshes”:

Remembering the Marshes

the goldfish standard

From “8 Shocking Things We Learned From Stephen Hawking’s Book”:

5. Oppressed fish

A few years ago, the city council of Monza, Italy, barred pet owners from keeping goldfish in curved bowls. This law was meant to protect the poor fish from a distorted nature of reality, since bent light might show them an odd portrayal of their surroundings.

Hawking and Mlodinow bring up the incident to make the point that it is impossible to know the true nature of reality. We think we have an accurate picture of what’s going on, but how would we know if we were metaphorically living in a giant fishbowl of our own, since we would never be able to see outside our own point of view to compare?

the invention of the invention of childhood: a rerevisionist history

William-Adolphe Bouguereau (1825–1905), A Childhood Idyll (1900)The penultimate room in Bill Bryson’s historical tour of the home is the nursery. He opens the chapter by debunking a surprisingly successful bit of historical bunk — one I’ve heard repeatedly, both before and since reading Tuchman’s A Distant Mirror:

CHAPTER XVIII. THE NURSERY

I

In the early 1960s, in a hugely influential book called Centuries of Childhood, a French author named Philippe Ariès made a startling claim. He declared that before the sixteenth century, at the very earliest, there was no such thing as childhood. There were small human beings, of course, but nothing in their lives made them meaningfully distinguishable from adults. “The idea of childhood did not exist,” he pronounced with a certain finality. It was essentially a Victorian invention.

A Distant Mirror

Ariès was not a specialist in the field, and his ideas were based almost entirely on indirect evidence, much of it now held to be a little doubtful, but his views struck a chord and were widely taken up. Soon other historians were declaring that children before the modern period were not just ignored but actually weren’t much liked. “In traditional society, mothers viewed the development and happiness of infants younger than two with indifference,” declared Edward Shorter in The Making of the Modern Family (1976). The reason for this was high infant mortality. “You couldn’t permit yourself to become attached to an infant that you knew death might whisk away,” he explained. These views were almost exactly echoed by Barbara Tuchman in the best-selling A Distant Mirror two years later. “Of all the characteristics in which the medieval age differs from the modern,” she wrote, “none is so striking as the comparative absence of interest in children.” Investing love in young children was so risky — “so unrewarding” was her curious phrase — that everywhere it was suppressed as a pointless waste of energy. Emotion didn’t come into it at all. Children were merely “a product,” in her chilling view. “A child was born and died and another took its place.” Or as Ariès himself explained, “The general feeling was, and for a long time remained, that one had several children in order to keep just a few.” These views became so standard among historians of childhood that twenty years would pass before anyone questioned whether they might represent a serious misreading of human nature, not to mention the known facts of history.

A History of London

There is no doubt that children once died in great numbers and that parents had to adjust their expectations accordingly. The world before the modern era was overwhelmingly a place of tiny coffins. The figures usually cited are that one-third of children died in their first year of life and half failed to reach their fifth birthdays. Even in the best homes death was a regular visitor. Stephen Inwood notes in A History of London that the future historian Edward Gibbon, growing up rich in healthy Putney, lost all six of his siblings in early childhood. But that isn’t to say that parents were any less devastated by a loss than we would be today. The diarist John Evelyn and his wife had eight children and lost six of them in childhood, and were clearly heartbroken each time. “Here ends the joy of my life,” Evelyn wrote simply after his oldest child died three days after his fifth birthday in 1658. The writer William Brownlow lost a child each year for four years, a chain of misfortune that “hast broken me asunder and shaken me to pieces,” he wrote, but in fact, he and his wife had still more to endure: the tragic pattern of annual deaths continued for three years more until they had no children left to yield.

No one expressed parental loss better (as no one expressed most things better) than William Shakespeare. These lines are from King John, written soon after Shakespeare’s son Hamnet died at the age of eleven in 1596:

Grief fills the room up of my empty child,
Lies in his bed, walks up and down with me,
Puts on his pretty looks, repeats his words,
Remembers me of all his gracious parts,
Stuffs out his vacant garments with his form.

These are not the words of someone for whom children are a product, and there is no reason to suppose — no evidence anywhere, including that of common sense — that parents were ever, at any point in the past, commonly indifferent to the happiness and well-being of their children. One clue lies in the name of the room in which we are now. Nursery is first recorded in English in 1330 and has been in continuous use ever since.…

I’ve had Shorter’s The Making of the Modern Family on my bookshelf for a couple of years now. I’ve not been especially quick to get to it. I may be even slower to do so now.

Persecuted minority, indeed!

Stephan Kinsella illustrates this point with these two paragraphs from Rothbard’s “Confessions of a Right-Wing Liberal”:

This is the general view on the right; in the remarkable phrase of Ayn Rand, Big Business is “America’s most persecuted minority.” Persecuted minority, indeed! Sure, there were thrusts against Big Business in the old McCormick Chicago Tribune and in the writings of Albert Jay Nock; but it took the Williams-Kolko analysis to portray the true anatomy and physiology of the American scene.

As Kolko pointed out, all the various measures of federal regulation and welfare statism that left and right alike have always believed to be mass movements against Big Business are not only now backed to the hilt by Big Business, but were originated by it for the very purpose of shifting from a free market to a cartelized economy that would benefit it. Imperialistic foreign policy and the permanent garrison state originated in the Big Business drive for foreign investments and for war contracts at home.

Murray Rothbard on big business

I was very glad to see this point made so well at Wikipedia:

Rothbard was equally condemning of relationships he perceived between big business and big government. He cited many instances where business elites co-opted government’s monopoly power so as to influence laws and regulatory policy in a manner benefiting them at the expense of their competitive rivals. He wrote in criticism of Ayn Rand’s “misty devotion to the Big Businessman” that she: “is too committed emotionally to worship of the Big Businessman-as-Hero to concede that it is precisely Big Business that is largely responsible for the twentieth-century march into aggressive statism…”[49] According to Rothbard, one example of such cronyism included grants of monopolistic privilege the railroads derived from sponsoring so-called conservation laws.[50]

when the government fears the people

“When the people fear their government, there is tyranny; when the government fears the people, there is liberty.” – Thomas Jefferson

liberty is the theme, but …

Jeffrey Tucker was up early this morning to blog about election results:

Once again, voters went to the polls to reject overweening government, responding to waves of rhetoric that decried the government takeover of health care, the bailouts and spending, and the arrogance of power. And again, domestic economic issues dominated. And so the “Obama regime,” as the Republicans have started calling it, got a much-deserved smack on the nose.

Strangely, it was a similar set of themes that brought Obama to power: resentment against the outrageous power abuses and wars of the Bush regime, and fear that the Republican Party represented more of the same. Looking back further…

[read more]

Follow

Get every new post delivered to your Inbox.

Join 261 other followers