This page has been archived and commenting is disabled.

On Attacking Austrian Economics

Tyler Durden's picture




 

Submitted by James Miller of the Ludwig von Mises Institute of Canada

Josh Barro’s and David Frum’s Pathetic Attack on Austrian Economics

Josh Barro of Bloomberg has an interesting theory.  According to him, conservatives in modern day America have become so infatuated with the school of Austrian economics that they no longer listen to reason.  It is because of this diehard obsession that they reject all empirical evidence and refuse to change their favorable views of laissez faire capitalism following the financial crisis.  Basically, because the conservative movement is so smitten with the works of Ludwig von Mises and F.A. Hayek, they see no need to pose any intellectual challenge to the idea that the economy desperately needs to be guided along by an “always knows best” government; much like a parent to a child.  CNN and Newsweek contributor David Frum has jumped on board with Barro and levels the same critique of conservatives while complaining that not enough of them follow Milton Friedman anymore.

To put this as nicely as possible, Barro and Frum aren’t just incorrect; they have put their embarrassingly ignorant understandings of Austrian economics on full display for all to see.

First off, no conservative, besides perhaps Michele Bachman, has shown any interest in the Austrian school as of late.  In most aspects, Ron Paul can hardly be considered a conservative.  If Frum, with all his political credentials, can show me another true blooded conservative that has read through Human Action or Man, Economy, and State, I am all ears.  The fact remains that traditional conservatives aren’t brushing up on their Mises when they aren’t attending Tea Party rallies or asking their Congressman to nuke Iran into smithereens.

On the subject of Austrian economics itself; the school isn’t against empirical evidence per say.  What it opposes is methodological positivism which is using empirical data by itself to formulate theories about how an economy functions.

Austrians don’t see the social sciences as one in the same with the physical sciences like chemistry.  Closed experiments can’t be conducted on humans that will always yield the exact same results.  Because humans posses the ability to make choices, there are no constants in human behavior.  As economist Robert Wenzel puts it

In the science of physics, we know that water freezes at 32 degrees. We can predict with immense accuracy exactly how far a rocket ship will travel filled with 500 gallons of fuel. There is preciseness because there are constants, which do not change and upon which equations can be constructed.

There are no such constants in the field of economics since the science of economics deals with human action, which can change at any time.

Austrian economics relies on deductive reasoning and one a priori law that Ludwig von Mises worded as “human action is purposeful behavior.”  That is, man acts to achieve ends or otherwise he would not act.  This statement is what Murray Rothbard, considerably the most known Austrian economist next to Mises and Hayek, called “radically empirical” since it is absolutely self evident to any observer.  A few subsidiary axioms can then be derived from the human action axiom such as “individuals vary” and that people “regard leisure as a valuable good.”

Austrians don’t reject empirical evidence but look at it with the theory of human action in mind.  They don’t see an increase in ice cream sales coinciding with an increase in kidnappings and automatically assume that as people eat more ice cream, they become more prone to abducting people.  They may consider that because warmer weather tends to result in more people going outside for leisurely activity, the opportunities for kidnappings to occur increases as does the appetite for ice cream.  This isn’t a rejection of empirical evidence but merely viewing the world with a theory to help explain the complex happenings of society.

As for the financial crisis which should have changed the minds of the true believers, if Barro or Frum were paying even the slightest amount of attention to the Austrian school during the run up to the housing bubble burst, they would have seen a number of warnings from those versed in Misean economics.  This includes Gary North, Robert Wenzel, Doug FrenchJim Rogers, Hans Sennholz, Frank Shostak, Ron Paul, and Peter Schiff.  Austrian economist Mark Thorton even wrote this back in 2004:

It has now been three years since the U.S. stock market crash. Greenspan has indicated that interest rates could soon reverse their course, while longer-term interest rates have already moved higher. Higher interest rates should trigger a reversal in the housing market and expose the fallacies of the new paradigm, including how the housing boom has helped cover up increases in price inflation. Unfortunately, this exposure will hurt homeowners and the larger problem could hit the American taxpayer, who could be forced to bailout the banks and government-sponsored mortgage guarantors who have encouraged irresponsible lending practices.

So how did so many observers that understood Austrian economics see a crisis on the horizon?  Unbeknownst to Barro and Frum, the school has a theory that explains why economic booms and busts are a product of money supply manipulation by a central bank and fractional reserve banking.  The Austrian Business Cycle theory stipulates that as credit expansion occurs unbacked by real savings, an inflationary boom takes hold where many are deceived into believing themselves richer than they truly are.  As the money supply is increased by a central bank, so too are banks enticed to expand credit.  As Rothbard explains:

Businesses, in short, happily borrow the newly expanded bank money that is coming to them at cheaper rates; they use the money to invest in capital goods, and eventually this money gets paid out in higher rents to land, and higher wages to workers in the capital goods industries. The increased business demand bids up labor costs, but businesses think they can pay these higher costs because they have been fooled by the government-and-bank intervention in the loan market and its decisively important tampering with the interest-rate signal of the marketplace.

This credit expansion is fully sanctioned by the government that not only provides a public backstop to banks that may find themselves insolvent but also join the bandwagon of taking advantage of cheap borrowing costs.  As the inflationary boom wears on, capital is consumed as more and more of the public get caught up in the exuberance.  When the money supply expansion inevitably ends (as it must less the complete destruction of the currency takes hold), the market and prices must readjust accordingly as malinvestments finally come to light.  During the boom the production structure of the economy is distorted to the point where both increased investment in capital goods and increased consumer spending tend to take place.  Put simply, credit expansion throws off what would otherwise be a natural rate of consumption and saving.  Once it is realized that producer goods have been bid up far too high to be purchased with existing savings, prices must fall and losses are felt.  This is precisely how the recent housing bubble played out as the price of homes, which are generally considered good investments, reached a point too high to be mass marketable.  As economist Joseph Salerno documents:

The events of 9/11 led the Fed to ratchet up its expansionary monetary policy. From the beginning of 2001 to the end of 2005, the Fed’s MZM monetary aggregate increased by about $1 billon per week and the M2 aggregate by about $750 million per week. During the same period the monetary base, which is completely controlled by the Fed, increased by about $200 billion, a cumulative increase of 33.3 percent.

The Federal Funds rate was driven down below 2 percent and held there for almost three years, pegged at 1 percent for a year (Figure 5). The result was that the real interest rate, as measured by the difference between the Federal Funds rate and headline CPI, was negative from roughly 2003 to 2005. Rates on 30-year conventional mortgages fell sharply from over 7 percent in 2002 to a low of 5.25 percent in 2003 and, aside from brief upticks in 2003 and again in 2004, fluctuated between 5.5 percent and 6.0 percent until late 2005 (Figure 6). Perhaps, more significantly, 1-year ARM rates plummeted from a high of 7.17 percent in 2000 to a low of 3.74 percent in 2003, rising to 4.1 percent in 2004 and to slightly over 5 percent in 2005. In addition, credit standards were loosened and unconventional mortgages, including interest-only, negative equity, and no-down-payment mortgages, proliferated.

When housing prices began to fall, so did the perception of wealth by homeowners, mortgage lenders, and house flippers.  Because the global economy is so interconnected, the unemployment that occurs in just one industry has a devastating ripple effect.  When the housing bubble finally popped, recession set in as the economy contracted.

Barro and Frum have given no indication that they are familiar with the Austrian theory of the trade cycle.  Where they come off as critical of the school is its preferred solution to economic recession.

Austrians stress the importance of prices as signals to all economic actors.  Because prices are so vital to market coordination, they must be allowed to adjust to a new normal defined by the new spending and investment patterns.  Anything the government does to prevent the painful but necessary readjustment from occurring (such as bailing out politically favored industries, enacting price and wage controls, subsidizing the unemployed, or providing loans in the form of taxpayer dollars to businesses that would otherwise be unable to afford their borrowing costs) puts the brakes on the recovery.  This is why Austrians are against all government interference in the marketplace to prevent a much needed correction following a bust caused predominantly by the government’s own inflationist agenda.

None of this is a blind allegiance to an ideology.  The laissez faire attitude among Austrians is rooted in an understanding of the complexities of the marketplace and the vital importance of capital and production.  Perhaps more importantly, many followers of the school see modern day banking for what it really is: a racket based on fractional reserve lending that is held together by both the government and its central bank’s promise to guarantee its solvency.  Barro claims that his own opinions on monetary policy and banking regulation have changed since the financial crisis.  Unlike many Austrians, he never saw the crisis coming.  He has no systematic theory to explain why the bubble occurred and what steps are needed to prevent it from happening again.  Hilariously, Barro has admitted to attempting to read Mises’ grand treatise Human Action but that he couldn’t understand it and therefore claims “it actually makes no sense.”  Upon reading select chapters from Human Action, even the most casual reader would see that Mises doesn’t completely reject the use of empirical data as Barro claims.  What the economist needs, according to Mises, is “the power to think clearly and to discern in the wilderness of events what is essential from what is merely accidental.”  That means looking at historical data with a correct understanding on market functions to be able to interpret it so it makes sense and provides a possible explanation for outliers.

When it comes to conservatives “dumping” Milton Friedman as David Frum laments, all this writer can say is good riddance.  Friedman was as statist as they come.  From his advocacy for the dreaded “withholding tax” while employed by the U.S. Treasury to his comfortableness with the Federal Reserve, Friedman was hardly the liberty fighter he is often made out to be.  Yes, he has provided some eloquent defenses of capitalism and the morality of free choice.  But as Rothbard made sure to point out way back in 1971:

And so, as we examine Milton Friedman’s credentials to be the leader of free-market economics, we arrive at the chilling conclusion that it is difficult to consider him a free-market economist at all.

At the same time, we find Friedman calling for absolute control by the State over the supply of money – a crucial part of the market economy. Whenever the government has, fitfully and almost by accident, stopped increasing the money supply (as Nixon did for several months in the latter half of 1969), Milton Friedman has been there to raise the banner of inflation once again. And wherever we turn, we find Milton Friedman, proposing not measures on behalf of liberty, not programs to whittle away the Leviathan State, but measures to make the power of that State more efficient, and hence, at bottom, more terrible.

And while Friedman famously argued, along with Anna Schwartz, that blame for the Great Depression should be laid on the Federal Reserve’s reluctance to offset the declining money supply, Rothbard (alone at the time) argued that it was because of the Fed’s previous inflationary policy in the latter half of the 1920s that a stock market bubble and real estate really took off.  Because the inflation was hidden in the rise of certain asset prices and overall increases in productivity, many economists missed the Fed’s role in the boom.  Additionally, Rothbard concluded in his much overlooked book America’s Great Depression that the Depression really became great because of Herbert Hoover’s unprecedented interventionist policy of massive increases in government expenditures, the propping up of wages, price supports, and the enactment of protectionist tariffs.  Though Friedman’s view is still held as the conventional explanation for the Depression, especially by Federal Reserve chairman Ben Bernanke, Rothbard’s explanation is attracting more followers by the day.  Back in 2009, eminent UCLA economist Lee E. Ohanian even published a working paper for the Journal of Economic Theory that supported much of Rothbard’s explanation for the Depression.

In the end, all Josh Barro’s attack on Austrian economics shows is his utter lack of knowledge on the subject.  To claim that conservatives are devout followers of the school is incredibly misleading.  Mitt Romney isn’t brushing up on his Mises or Hayek during campaign stops.  Rush Limbaugh isn’t reciting essays by Rothbard on his radio show.  And Sean Hannity isn’t lecturing his viewers on the nuances of the Austrian Business Cycle theory.  The Federal Reserve only became a topic of discussion during the past Republican primary race because of Ron Paul’s ability to make it a relevant issue.

Barro claims to have a bookshelf of Austrian literature.  He would do well to crack open a book sometime as he desperately needs a refresher course.  David Frum would be just as wise to check out the Austrian school for himself rather than learn it second hand from someone who clearly doesn’t have a firm grasp on the subject.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 07/10/2012 - 23:22 | 2604707 ghenny
ghenny's picture

Someone with a trillion dollars can rig a free market, buy politicians to weight it in their favor and restrict competition.  

Tue, 07/10/2012 - 23:33 | 2604742 A Lunatic
A Lunatic's picture

Money doesn't have a will of it's own you know. Someone with a trillion dollars could just as well invest in the economy by creating jobs, building infrastructure, providing the environment for research and development which leads to greater technological innovation, etc, etc ,etc.

Tue, 07/10/2012 - 23:39 | 2604765 Bohm Squad
Bohm Squad's picture

Yes, that's one argument.  However, the Austrian view is that all human action has consequences.  For example, such a one-sided environment will ultimately result in people side-stepping both the market and government or revolting and creating a new government without such evil people.  This is one reason that Mises noted evil should never be tolerated.  It could be then argued that the cycle would repeat itself...but not if evil is not tolerated by those with the real power, the majority.

Tue, 07/10/2012 - 23:46 | 2604783 adr
adr's picture

That is a good point, one that I use in arguments often. Government allows for the expansion of evil, because the job of eradicating evil is handed off to the authority of someone else.  A city of just people, without a central police force, will allow individuals to punish criminal activity far more harshly than a central authority.

The further wehave concentrated the power of punishment, theless effective punishment has become.

Tue, 07/10/2012 - 23:41 | 2604770 adr
adr's picture

The point is that under a free market there would never be enough politicians that control enough of the system for oneperson to buy a controlling interest. It would also be very hard for one person to accumulate that much wealth. Eventually maintaining the wealth costs more than the ability to create more.

Walmart has actually hit the point where just the business of maintaining the corproation costs as much as the amount it can take in.

In a free market, this is the point of failure, the heart fails and the patient dies.

Wed, 07/11/2012 - 09:44 | 2605690 Mitzibitzi
Mitzibitzi's picture

I was actually told that by a Walmart manager.

His opinion was that having totally colonised all the out of town places and big inner city locations, their only way forward was to start franchising - let small business owners start up high street stores, use the brand name and benefit from ordering from the 'economy of scale' procurement system to get good buy-in prices; but the franchisee has to bear the overhead, not Walmart itself.

Apparently, in some regions, Walmart have opened stores recently that they knew going in would never pay for the construction costs in any economic climate even remotely like the current one. But management is still stuck in the inevitable corporate paradigm of crowding out all the competition, in the hope that they'll eventually make money when there is nowhere else to go buy shit.

Tue, 07/10/2012 - 23:50 | 2604797 Saro
Saro's picture

You're arguing that in a free market, a rich man will buy the non-existant politicians and get them to exercise the power they don't have in order to restrict competition.

...

Not a big thinker, are you?

Tue, 07/10/2012 - 23:37 | 2604753 catch edge ghost
catch edge ghost's picture

Diana Moon Glampers comes into the studio and kills Harrison and the empress with a shotgun. Training the gun on the musicians, she orders them to put their handicaps on. The Bergerons’ screen goes dark. George, who has left the room to get a beer, returns and asks Hazel why she has been crying. She says something sad happened on TV, but she can’t remember exactly what. He urges her not to remember sad things. A noise sounds in George’s head, and Hazel says it sounded like a doozy. He says she can say that again, and she repeats that it sounded like a doozy

 

You think you're Robin Hood but you're just a thug.

Tue, 07/10/2012 - 22:52 | 2604612 Bear
Bear's picture

It is exactly this kind of "logic" that has brought us to this parched desert road ... I can borrow my way to prosperity along the yellow brick road but my creditors will not let me stay there very long as all the green turns to brown and Death Valley looms ahead and it's July and we're in a drought.

Tue, 07/10/2012 - 22:53 | 2604621 potlatch
potlatch's picture

Just speaking professionally, but your sentence "Austrians don’t reject empirical evidence but look at it with the theory of human action in mind" merits clarification.

 

An idealistic, speculative, or ideological system functions by viewing data through a dominant and organizing theory, just as you say.  That I am guessing, is the point.  You need to come to terms with your view of economics being ideal or speculative in nature.  There is no crime in that.  Marxists can talk to you all about your issues; they suffer from the same affliction.

 

But if you try to weasel word your way around "empiricism," and about how -- according to you -- Austrian economics "uses" empirical data, but isn't "using empirical data by itself" blah blah blah, I will shoot you down.

 

Look, every system of knowledge is imperfect including its alternatives.  Just deal with it.  There is no silver bullet in reality, for anything.

 

Wed, 07/11/2012 - 02:25 | 2605082 NidStyles
NidStyles's picture

The problem is that Austrian economics is not a system of "Knowledge" like you have assumed, and therefore does not worry about a single over-arching theory. It's a system that starts from the basis that you know nothing.

It merely is a methodology to to examine a situation or set of circumstances to get a rough idea of the outcome. Yes, it can use Empircism, but it's not designed to be strickly used with Empiricism. 

 

This is the problem most people have when first looking at it, they assume much about it without actually reading what it really says. That's why it's laughable that Frum would push his blatant BS here. 

 

Tue, 07/10/2012 - 22:56 | 2604631 SqueekyFromm
SqueekyFromm's picture

I imagine Mr. Mises would believe since cops can neither predict nor prevent crimes, that laws attempting to do so are not worthwhile. I am not just being silly. Many of these people hold very bizarre beliefs, such as Murray Rothbard:

"[I]n the free society, no man may be saddled with the legal obligation to do anything for another, since that would invade the former's rights; the only legal obligation one man has to another is to respect the other man's rights. Applying our theory to parents and children, this means that a parent does not have the right to aggress against his children, but also that the parent should not have a legal obligation to feed, clothe, or educate his children, since such obligations would entail positive acts coerced upon the parent and depriving the parent of his rights. The parent therefore may not murder or mutilate his child, and the law properly outlaws a parent from doing so. But the parent should have the legal right not to feed the child, i.e., to allow it to die."

http://mises.org/daily/2568

Squeeky Fromm, Girl Reporter

Tue, 07/10/2012 - 23:10 | 2604673 ghenny
ghenny's picture

All these libertarian loons assume human beings are isolated free agents who do not depend on social networks, political networks and economic networks to survive, learn and produce wealth.  This is wacko.  We are all embedded in these preexisting networks and they need to be maintained and strengthened.  The market is only one part of that process. It is like an optimizing algorithm or filter but it needs the state, the family and cultural institutions that are not necessarily market based to function.  It is part of an interacting and complex adaptive ecosystem with multiple feedback loops. Libertarians think we live in an atomistic Newtonian world when we actually live in a Quantum field with a Higgs mesh underneath it.

Tue, 07/10/2012 - 23:22 | 2604709 SqueekyFromm
SqueekyFromm's picture

Very true. Plus, the Libertarian types lump all government actions into the same pot. This is absurd. Many regulations are relatively governmental "hands off", such as minimum wage laws. The government sets the floor, or minimum, and you never see them on this issue unless an employee complains that you are breaking that particular law.

Other regulations, such as environmental regs, are much more "hands on" and entail monitoring. Other regs are much more subjective, such as the rare woods stuff and Gibson Guitars. Yet to the Libertarians, they are all an equally personal affront to them. What a bunch of selfish little cry babies.

Squeeky Fromm, Girl Reporter

Tue, 07/10/2012 - 23:28 | 2604725 fuu
fuu's picture

Squeeky Fromm, Civis Mundi

Wed, 07/11/2012 - 13:30 | 2606688 akak
akak's picture

Squeeky Fromm, Anti-Aureus Profundi.

Wed, 07/11/2012 - 13:47 | 2606752 TheFourthStooge-ing
TheFourthStooge-ing's picture

SqueekyFromm has, by way of his recent trollery, exposed his inherent Chinese citizenism eternal nature.

The real Lynette "Squeaky" Fromme, even at age 63, could probably kick his ass.

Tue, 07/10/2012 - 23:25 | 2604719 Nid
Nid's picture

Hmmm, so which of the two currently exists in excess? How's that working' out?

Tue, 07/10/2012 - 23:32 | 2604740 CrockettAlmanac.com
CrockettAlmanac.com's picture

You're interpretation of the libertarian view is a complete fabrication.  We believe that working with people on a voluntary basis is more rational and effective than forcing people to obtain sub par services at the point of a gun. Considering the fact that you believe that human interaction should be controlled by the use of violence doesn't that make you the wacko?

Wed, 07/11/2012 - 06:33 | 2605218 Catullus
Catullus's picture

 It is part of an interacting and complex adaptive ecosystem with multiple feedback loops.

Libertarians call this the market.  The market is not just where you go to just buy stuff.  You exchange ideas, knowledge, and influence the behavior of others through this interaction.  And the interactions in the market are separate and distinct from the individual.

Family and cultural institutions are based on the individuals within those groups coming together amicably because of their common interests.

Libertarians do not have the view that individuals are on their own and that there's no need for social institutions or groups. What you recognize through an analysis of methodological individualism is the individual is separate and distinct from the groups that he or she associates with.  What's more, nearly all libertarians would agree that without the division of labor and the gains from trade, life would be short and brutish. This is not to say that you need others, but life is a hell of a lot better when other people peacefully engage in trade. 

Tue, 07/10/2012 - 23:32 | 2604713 GoodMorningMr.V...
GoodMorningMr.VanRumpoy...'s picture

I think you are missing the key distinction between a legal obligation and what is morally right.

 

Do you not murder, rape, or steal, because some group of people in a political  body wrote words on paper saying murder,  rape, and theft are illegal or do you not murder, rape or steal because it’s not a moral thing to do?

 

Or, maybe you do,  do these things inspite of the (*gasp*) almighty power of the written words in your state's  criminal code making them illegal?

 

The law, a moral man it does not make and the actions of an inherently immoral man it does not brake.

 

Wed, 07/11/2012 - 02:24 | 2605062 Temporalist
Temporalist's picture

That is exactly the same argument that many religious people use, i.e. that if there wasn't a god or the fear of god and his judgement and hell that people could not have morals and would not be able to control themselves.  In reality it is because they themselves would be out of control and immoral so they project their "evil" desires onto other people and wish to oppress them for fear you also think "evil" thoughts as they do. 

 

In other words, I need someone/something to tell me how to control myself because otherwise I would be as immoral as possible and be a raging psychopath as what is moral is not obvious to me and if I would do it everyone else must be immoral as I. 

 

I noticed this in an ethics class once; the majority had no idea what ethics were.

 

Tue, 07/10/2012 - 23:55 | 2604809 adr
adr's picture

Police can not prevent crime and a greater number of police actually breed more crime. More police lure people into a false sense of security, thinking that the police will be there to protect them.

The criminals know a population living under more supposed protection will be less likely to have the means to protect themselves. It doesn't matter if there are 100 cops in your town if a man breaks down your door and holds a gun, if you have no means of defense.

The police will come later and find your dead body, claiming if there were more police they could have prevented the crime. The real truth, is if there were no police the responsibility of protecting yourself would have fallen on you. Criminals are afraid of a situation if there is the posibility they may not come out on top.

It also doesn't help that the police in most cases are mere tools of the authority to collect revenue in order to maintain the bureaucracy of failed protection.

Tue, 07/10/2012 - 23:01 | 2604643 Rastamon
Rastamon's picture

 

 

 

 

now THIS is hypocritically hysterical .... libertarians complaining about the PERVERSION of the austrian school.

 

if there's ANY peabrains that have hijacked the austrian school and its fundamental founder: Carl Menger .... it's the LIBERTARIAN CULT. Friedman, Rosenbaum (a.k.a. Ayn Rand) and the rest of these FRAUDS have been discredited AROUND THE WORLD

 

please SHUT UP .... you're embarrassing yourselves in public.

Tue, 07/10/2012 - 23:37 | 2604755 CrockettAlmanac.com
CrockettAlmanac.com's picture

You should be embarrassed by the paucity of factual information in that post. For example, Ayn Rand was not a libertarian.

 

Q: What do you think of the Libertarian movement? [FHF: “The Moratorium on Brains,” 1971]

AR: All kinds of people today call themselves “libertarians,” especially something calling itself the New Right, which consists of hippies, except that they’re anarchists instead of collectivists. But of course, anarchists are collectivists. Capitalism is the one system that requires absolute objective law, yet they want to combine capitalism and anarchism. That is worse than anything the New Left has proposed. It’s a mockery of philosophy and ideology. They sling slogans and try to ride on two bandwagons. They want to be hippies, but don’t want to preach collectivism, because those jobs are already taken. But anarchism is a logical outgrowth of the anti-intellectual side of collectivism. I could deal with a Marxist with a greater chance of reaching some kind of understanding, and with much greater respect. The anarchist is the scum of the intellectual world of the left, which has given them up. So the right picks up another leftist discard. That’s the Libertarian movement.

 

http://www.aynrand.org/site/PageServer?pagename=education_campus_liberta...

 

You should also be embarrassed by telling people who are far more intelligent and educated than you are to shut up. It's unseemly.

Wed, 07/11/2012 - 01:14 | 2604984 JOYFUL
JOYFUL's picture

Crockett -

while it's factual to say that Rand was not a "libertarian," the statement hides more than it reveals. Rand & the Libertarians hated each other because they were kompeting for the same customer base...and like most ideologically-driven "free marketers," despised real competition...

but yuv done us all a favor by quoting this choice morsel

The anarchist is the scum of the intellectual world of the left, which has given them up.

Like the tru Trotskyite bolshi that she was, Rand reserved her most intense scorn for those she feared the most...the anti-statist elements which had no subsidies from the Kriminal Kartel Kapitalist Klass to back up their mountains of rhetoric with...

Anarchism...the road not taken, by those who reject the State, and it's Kapitalist puppeteers.

Wed, 07/11/2012 - 03:51 | 2605130 AnAnonymous
AnAnonymous's picture

For power matters, US citizenism forces to at least a two option decision.

You've got at least the champion and the contender. It is a necessity.

But as US citizenism has been decreasing diversity big time since its inception, the decision is not made about alternatives, but rivals.

Rivals want the same, wish for the same and conduct matters of power the same.

They are simply two distinct entities who cant merge.

And therefore have to eliminate the other to be the one exerting leadership.

Wed, 07/11/2012 - 13:00 | 2606550 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous spewed forth:

They are simply two distinct entities who cant merge.

And therefore have to eliminate the other to be the one exerting leadership.

Roadsides and Chinese citizenism citizens are simply two distinct entities who can't merge.

And therefore Chinese citizenism citizens have to eliminate on the roadside to perceive themselves as the ones excreting leadership.

Wed, 07/11/2012 - 01:16 | 2604988 Peter K
Peter K's picture

Just like all sorts of people are calling themselves conservatives.

But the word "liberal" in the progressive sense, is STILL a dirty word :) I guess when FAILURE becomes institutionalized, no amount of words can get rid of the stench.

Tue, 07/10/2012 - 23:01 | 2604644 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Where's Geopol?

Tue, 07/10/2012 - 23:41 | 2604774 Vic Vinegar
Vic Vinegar's picture

Trying to make it as a celebrity judge on 'America's Best Dance Crew'. 

Tue, 07/10/2012 - 23:05 | 2604651 disabledvet
disabledvet's picture

Ah, the Edward Bernay's crowd speaks. When do they ever not have something to say? Perhaps when speaking less if not at all is what is called for? Anywho this a very SPECIFIC crisis not some "general malaise in need of their guiding hand." As such in order to begin a discussion a simple acknowledgement of an INVISIBLE HAND ("bitch slappin' the evil doer's" it would appear) is where we all must begin whether we like it or not. Not that the Health Care Act isn't accelerating the process of bankrupting every State and Local government in the country of course. Nawwwww. That would never happen!

Tue, 07/10/2012 - 23:13 | 2604678 ghenny
ghenny's picture

Go Austrians. You did such a great job in the 1930's.  Remember the Kredit Anstallt?  I thought not.

Wed, 07/11/2012 - 00:14 | 2604865 Ropingdown
Ropingdown's picture

Creditanstallt did not fail because of Austrian economic theory. It collapsed because it over-leveraged itself buying one bank too many. The Rothschilds were among the founders and later among the revivers of the failed bank.  Austria needed to borrow gold from France, a non-Keynesian place at the time.  France insisted, as a term, that Austria call off their pending trade union with Germany.  That, in tern led to a loss of confidence in Bank Danat in Germany.  The rest is history, as the loss of trade and spreading bank failures led to a sudden loss of international trade and consequent manufacturing declines.  The banks had pushed the bubble.  In the US an intentional easy-money policy was put in effect, apparently to ease the British return to the gold standard at too high a rate for the Pound.  Easy money led to asset bubbles, investing and speculating mania, and onward to the collapse.

Wed, 07/11/2012 - 00:33 | 2604909 CrockettAlmanac.com
CrockettAlmanac.com's picture

 

 

In Austria, economist Ludwig von Mises saw the problem developing in its early stages and predicted to his colleagues in 1924 that the large Austrian bank, Credit Anstalt, would eventually crash.

 

http://wiki.mises.org/wiki/Austrian_predictions

 

 

Several years earlier, Mises had refused a job with this bank. His widow described the scene in her autobiography, My Years With Ludwig von Mises (1976).

One day Lu told me he had been offered a high position at the Credit Anstalt, the foremost banking institution in Vienna, but that he had decided not to accept it. When I asked him the reason for his refusal, he told me that a great "crash" would be coming and that he did not want his name in any way connected with it (p. 24).

http://www.lewrockwell.com/north/north861.html

Tue, 07/10/2012 - 23:14 | 2604681 msjimmied
msjimmied's picture

They'll hold up all these theories and schools of thought trying to fool you they have a belief. They don't. It's all a distraction, this bandying of words. No matter what anyone says, the process that is underway continues. Laissez faire at the top, austerity at the bottom, till it is all sucked dry. Words words words...is that all these blighters can do?

Wed, 07/11/2012 - 07:25 | 2605253 Winisk
Winisk's picture

Very true.  Sociopaths believe in nothing.  They put their finger in the air, latch onto the prevailing opinion of the people they wish to impress, adopt it as their own with false vigour, and reap the praise, attention, power that such a position provides them.  Press them on it and you will see how skin deep their understanding truly is.  If the mood of the people change, I`m convinced the false prophets will swiftly switch idealogy and hope the past does not haunt them.  This is when we will hear shit like, Let`s move forward. or Don`t get stuck in the past.  The slimeballs will attempt to weasel out of their prior position.  At heart, they are control freaks who possess little imagination.  They fear the unknown so they want to control it, whereas many of us here cheer a collapse because we are willing to live with some uncertainty, and set a different course with the conviction it will be better.  

Tue, 07/10/2012 - 23:17 | 2604686 dragoneyes74
dragoneyes74's picture

Great article.  I hold out hope that anyone who doesn't realize the Austrian school is right has simply not been properly exposed to the ideas.  Thank God for ZH and Capital Account and everyone else out there trying to unravel, discover, and express the Truth.  I feel like your work is humanitarian in nature, regardless of your motivation or intent, and regardless if it seems at times like your voice is a tree falling in a forest with no one around to hear.  

Tue, 07/10/2012 - 23:18 | 2604689 deflator
deflator's picture

Left-Right,  whatever, they all believe the past 150 years of persistent economic growth, which is an anomoly in contrast to the rest of human civililzation is entirely attributable to our greater understanding of economics. (Krugmans thesis)

 My thesis is the past 150 years of persistent economic growth is entirely attributable to the surplusses of energy from the abundance of crude oil, natural gas and coal.  I believe that the global financial crisis is entirely attributable to the plateauing and decline of daily sustainable production,refining and distribution of energy.

Wed, 07/11/2012 - 00:28 | 2604900 CrockettAlmanac.com
CrockettAlmanac.com's picture

 

 

 My thesis is the past 150 years of persistent economic growth is entirely attributable to the surplusses of energy from the abundance of crude oil, natural gas and coal.

 

Other factors are at work. The ancient Greeks built steam engines but rather than use them toward productive ends they used them to create illusions for entertainment and pagan worship. Hero of Alexandria was not James Watt although he had comparable technology and access to petrochemical resources.

Wed, 07/11/2012 - 04:06 | 2605141 AnAnonymous
AnAnonymous's picture

Acquisition of knowledge is an accumulative phenomenum.

The Greeks missed way too many elements to hope anything.

They missed a crank rod connecting system, the knowledge of furnace for example.

But hey, volunteerism is an important part of the US citizenism creed so why?

Wed, 07/11/2012 - 07:33 | 2605304 prole
prole's picture

Genocidalism is an important part of the Chinese citizenism creed so why?

FREE TIBET!!

Wed, 07/11/2012 - 13:14 | 2606570 akak
akak's picture

Insanitation of autistic and retarded Chinese trolls is an important part of AnAnonymousitizenism creed, so why?

Wed, 07/11/2012 - 13:14 | 2606606 AnAnonymous
AnAnonymous's picture

FREE TIBET!!
FREE TAIWAN!!
FREE THE UNITED STATES OF AMERICA!!

Wed, 07/11/2012 - 13:07 | 2606575 TheFourthStooge-ing
TheFourthStooge-ing's picture

Dropping another pantload, AnAnonymous delivered:

Acquisition of knowledge is an accumulative phenomenum.

Deposition on roadsides is an excretive phenomenum.

But hey, volunteerism is an important part of the US citizenism creed so why?

But hey, defecationism is an important part of the Chinese citizenism screed so why?

Wed, 07/11/2012 - 13:14 | 2606609 AnAnonymous
AnAnonymous's picture

That is grand.

Wed, 07/11/2012 - 13:25 | 2606659 akak
akak's picture

Nothing but the best for blobbing-up denialistic Chinese Citizenism agents for all their hard work in monolizing the speeching means and throating of their hypocritical and self-indicting ideas!

Tue, 07/10/2012 - 23:18 | 2604692 Poor Grogman
Poor Grogman's picture

WTF.. is a real economic debate actually starting?

 

Tue, 07/10/2012 - 23:20 | 2604700 Stuck on Zero
Stuck on Zero's picture

James Miller omits to mention "goals."  The Friedmanites and the Austrians are both right because they have different goals.  Before you can state which point of view is correct you have to ask where you're headed.  The statists want a powerful central government that controls every aspect of it's subjects lives.  The Austrians value individual freedom.  Don't bother arguing who is right or wrong about the methods.  Argue about what the parties are attempting to achieve.

 

Tue, 07/10/2012 - 23:33 | 2604743 Atomizer
Atomizer's picture

 

 

Bifurcation : Chaos is coming and your agency matters 

Hiccup.. FUCKING CUNTS, my social media is down and I cannot find my TV remote control. Hiccup.. Honey, bring me another 35.5 calorie beer and 10g Protein & 5g Fiber potato chip bag.. Hiccups...

/sarc

 

Tue, 07/10/2012 - 23:40 | 2604744 Solon the Destroyer
Solon the Destroyer's picture

I wonder why the American school of the Austrian school always fails to mention Carl Menger as one of the Austrian School's Founding Fathers.

Mises was likely the greatest of the 20th Century economists, but there are three areas where I believe he has errors:

1. He accepts the Quanitity Theory of Money (or rather, he uaccepts it as broadly as the rest of economics when really it is only useful when applied in a very narrow context)

2. He categorically denied the idea that interest is a market phenomenom

3. He doesn't understand the importance of Adam Smith's Real Bills Doctrine to an economy.

Menger, his mentor, wouldn't have made the first two errors.

#2 is so obviously wrong by now, I don't understand why any acolyte of Mises would hang onto it. For Pete's sake, he's not infallible.

#1 is becoming more and more evident to the world, and eventually will be blatantly obvious too.

But very little is being done about #3, which is a real shame. Real Bills needs a much stronger voice in the American School of the Austrian School. They can play a valuable role in future economies and they need to be better understood.

Wed, 07/11/2012 - 01:02 | 2604969 Poor Grogman
Poor Grogman's picture

 

Any future gold standard or hard money standard, cannot be allowed to be rigidly controlled by the PTB.

If it is then you can rest assured that it will be sabotaged from the outset, just like Breton Woods was with built in obsolescence.

A future sound money standard must be allowed to contain such market based elements as Real Bills which allow the flexibility of immediate trade settlement,while at the same time outlawing such fraudulent "market based initiatives" such as (Fractional reserve banking).

Critics often accuse the market based gold standard of inevitably leading to Fractional Reserve Banking if left solely to market forces.

This is a criticism that must be faced up to.  Obviously a fraudulent practice like fractional reserve banking would quickly undermine and become the dominant force in any monetary system.

Therefore it should be treated as what it is. FRAUD, pure and simple

Real bills on the other hand are not fraud because they are openly agreed to by two free and informed market participants, who have exactly the same expectation of the end result.

These two arguments alone form a crucial part of any future monetary standard IMHO.

Tue, 07/10/2012 - 23:34 | 2604747 JR
JR's picture

David Frum is the liberal token columnist posing as a conservative. And he can be counted on to attack every truthful fundamental of free markets and liberty. In this instance, he reminds one of the John Akass comment on the hypocrisy of Britain’s Labor Party: “The Labour Party Marxists see the consequences of their own folly all around them and call it the collapse of capitalism.”

Just this morning Zero Hedge quoted a fitting comment by Spanish Austrian Economic Professor Pedro Schwartz in The Ultimate Krugman Take-Down:: “Keynesians got us into this mess and now we have to sacrifice our principles so that they can get us out of this mess."

http://www.zerohedge.com/?page=3

BTW, Mitt Romney, Rush Limbaugh and Sean Hannity hardly espouse traditional conservative values. For one thing, they are definitely Big Government when it comes to war and war materials, and that’s the opposite of conservative values. In short, they are Norman Podhoretz neo-cons.

Wed, 07/11/2012 - 00:08 | 2604842 prole
prole's picture

Hey that is what I said!

Wed, 07/11/2012 - 01:11 | 2604979 JR
JR's picture

Right oh! prole. And well said it was, too.  But, then, I'm always the last one to arrive at the party. ;-)

Wed, 07/11/2012 - 07:19 | 2605283 prole
prole's picture

Just kidding JR! By the timestamps you posted before me, but I read your post after I made mine.

For being first, you win a lifetime free subscription to "The New Republic"

Tue, 07/10/2012 - 23:41 | 2604772 world_debt_slave
world_debt_slave's picture

One of my favs for the uninitiated

Fight of the Century: Keynes vs. Hayek Round Two

http://www.youtube.com/watch?v=GTQnarzmTOc

Tue, 07/10/2012 - 23:53 | 2604808 world_debt_slave
world_debt_slave's picture

Good post, I've been out of the market after the tech bubble, started buying precious metals in 2004 (after reading "Creature from Jekyll Island"), now going back to my credit union from Wells Fargo.

imho, pull your money out of the stock market and commercial banks, brokerages. The sooner we crash this corrupt system the sooner we can start over.

Wed, 07/11/2012 - 02:11 | 2605063 headless blogger
headless blogger's picture

It's all playing right into the Globalist's hands this way. We should not HAVE TO crash anything. What needs to happen is the criminals need to ALL BE ROUNDED UP, whether it is a thousand of them or one million of them, and have their HEADS CUT OFF!!!

They don't understand ANYTHING else. I say we start with Greenspan, Rubin, Summers, and Levitt. First they get a fair trial, and if found guilty (in a non-corrupt system they will) they get a public execution. What they did was worse than treason and they need to pay the price. Having their heads removed is more compassionate than hanging...much quicker and no pain.

Wed, 07/11/2012 - 03:18 | 2605119 Inthemix96
Inthemix96's picture

Headless blogger,

I like the cut of your jib, I vote you for president, +1

Wed, 07/11/2012 - 02:57 | 2605103 cpt crash
cpt crash's picture

Hope your plan is better than the last plan.

Wed, 07/11/2012 - 00:03 | 2604828 Peter K
Peter K's picture

Friedman and the Austrian school are as far apart as Obama and Marx. 

Just sayin......

Wed, 07/11/2012 - 00:03 | 2604832 adr
adr's picture

If I believe my services are worth $100 an hour, but nobody is willing to pay me $100 an hour, then I have obviously priced myself too high.

However if I convince the government to pass a law requiring my services to be worth $150 an hour, not only do I make more money, but I also make it possible for anyone else providing the same services to make the same, regardless of the quality of the service.

Isn't that the free market vs government controlled market argument right there?

Wed, 07/11/2012 - 00:11 | 2604849 newengland
newengland's picture

Blah.Blah.Blah.

If this Barro barrow boy had his own blood and money in the game, then he would say differently. Jerk off, precious pet of useless 20th century politics, and eCONomist failed theory.

Wed, 07/11/2012 - 00:11 | 2604856 zen0
zen0's picture

First they ignore you, then they laugh at you, then they fight you, then you win.

 

Now it has entered the 3rd stage.

Wed, 07/11/2012 - 05:41 | 2605170 falak pema
falak pema's picture

Now that is awesome!

Hayek was pet theoretician of both Maggie and Ronny! He even got a Nobel like that other awesome twit, pardon genius, Milton Friedman! 

They were NOT ignored, they were the blue eyed boys of Reaganomics and Maggie's Big Bang. They were not laughed at, they were LAUDED!

So the fourth stage as established by the FACTS of the last twenty year slide is : Then you lose! 

Just remember, the two Bibles of Libertarian theory as PRACTICED by Reaganomics and Maggie were : Atlas shrugged and The road to Serfdom. They were seminal in defining economic mindset and free individual initiative of that NEW capitalist age, as leading theoretical beacons of modern first world thinking; as opposed to collective minded, democratic, majority first thinking of old Keynesian mantra of demand side, central planning and government interventionism, aka FDR to Peanut Carter days.

And these leading lights built what ?

Their John Galt, the iconic inventor of the New Perpetual Motion Machine; that Ayn Rand had dreamt of in her 'Atlas humped and dumped' bookie!

All to the glory of entrepeneurial initiative in a global deregulated free market without government intervention!

And who was this iconic John Galt? The financial world called it FIRE, their derivatives fed darling; all so sparkling!

 

http://www.harpers.org/archive/2008/02/0081908

 

IT WAS THE RISK ASSET BUBBLE MODEL THAT WAS SUPPOSED TO CREATE A NEW FRONTIER EVERY TEN YEARS BUILT ON FRONT-END HI-TECH AND FINANCIAL INNOVATION! We could even outsource the "shit industrial stuff" to the third world serfs, not part of our uber world ! That was the theory of the NWO ride into Chindia! Extension of Uber-John Galtism.

That is EXACTLY what big bang achieved. Creating this John Galt monster of bubble-o-nomics on which the Sun would never set and which required ZIRP and revocation of Glass-Steagall to free the creative uber-John Galt world of the shackles of government and regulatory constraints even further as they rode into the red, red global sunrise in east, sunset in west. That baby really took off like the Apollo space shuttle to the financialised moon. RIGHT ON THEORETICAL SCHEDULE AS THE MASTERS OF HAYEKIAN-AYN RANDISH INSPIRED ECONOMIA SAID IT WOULD...Oh boy, Destry rides again! 

 And we are here NOW, ...twenty years down the road of bubbleonomics sham hopium, dystoped into steroid pumped fiat dopium; in this damning twilight zone of an experiment gone haywire, trying to EFFACE the traces of that time line and ALL the responsibility of those who invented this John Galt dream which can be summarised in one realistic scream : greed is good for the Oligarchs but it kills the people! 

History is a bitch for those who are in denial of the legacy of this FIRE model John Galt past experiment. 

Man up, or stop spouting that theory is truer than facts! 

 

Wed, 07/11/2012 - 05:53 | 2605194 GeneMarchbanks
GeneMarchbanks's picture

Someone put up this Steinbeck quotation that seems appropriate here:

“Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”--Steinbeck

The simple truth of the matter is that we've had State Capitalism from the onset of the industrial 'revolution'. Of course, it's been in varying degrees but the "State Put" has always been there. Once you realize that this very fact is negated by 'Austrians', you can expect nothing from them.

“If they can get you asking the wrong questions, they don't have to worry about answers.”--Thomas Pynchon

Wed, 07/11/2012 - 00:14 | 2604866 Elmer Fudd
Elmer Fudd's picture

Paycheck from Mike Bloomberg? Nuff said. Hope that paycheck keeps up with that ctrl-p button, asshole.

Wed, 07/11/2012 - 00:52 | 2604943 JOYFUL
JOYFUL's picture

Apparently Miller is beginning to wise up to the fact that his repeated attempts to bluff ZH readers with 'libertarian' platitudes is going to meet choppy waters...which he attempts to proactively smooth by throwing out 

"None of this is a blind allegiance to an ideology.  The laissez faire attitude among Austrians is rooted in an understanding of the complexities of the marketplace and the vital importance of capital and production."

Sorry. Yur stuff reminds me of nothing so much as the kind of neo-socialist journal type writing from back in the day which idolized the hackneyed reasonings of the Marx-Engel variety and relied upon the tru-believers to lap it all up unquestioningly....

...Austrian economics relies on deductive reasoning and one a priori law that Ludwig von Mises worded as “human action is purposeful behavior...

that kind of stuff is i-de-o-logic to the bone, Jimmy, and all yur 'laws' n 'reasoned deductions' ain't gonna change the fact that "Austrian economics" has relied for far too long on it's ability to Krush Klownish Keynesians in verbal Kombat without having any other real accolades to Krow about! It remains an adjunct subset of neo-classical economics designed to inveigle honest seekers away from their natural home under the non-dialectical banner of anarchism!

Similarly, in this puff piece, he relies on using klownish straw men of the most discredited kind to try to score points for the Mises faction...kind of like putting Abdullah Farouk in the ring with a 110 pound myopic book-keep, and calling the resulting bloodbath a Kollossal Victory for truth n reason!...E-Konomics =

no longer just the dismal science, but now a spectator sport with all the Kredibility of a "WORLD WRESTLING FEDERATION" title belt! Friedmann? Frum? and this other Klown? Give it up Chumly! That card wouldn't draw an audience even with a Monster Truck Rally thrown in with the price of admisssion!

No matter how big a bookshelf of Austrian school books yu got there Jimmy, yur just another "Sideshow Bob" until yu can get out on the mat with enough real skills to wrestle with real life~Kartel Kapitalist sponsored monsters   tag-teamers like the infamous "Koch Bros" "Obama-Holder" or the dreaded "Bush\Cheney" Duo!

http://youtu.be/vkRl_nLLoVg [ 

 - Sumthin' Sumthin'\Maxwell]

 

 

Wed, 07/11/2012 - 00:55 | 2604958 jimmyjames
jimmyjames's picture

 

It's not that complicated--

It should never take that many words to explain your side-

http://grooveshark.com/s/Road+To+Hell/3U2BPS?src=5

 

Wed, 07/11/2012 - 02:01 | 2605051 headless blogger
headless blogger's picture

This guy keeps insinuating that hardly nobody knows what Austrian economics is  What's there really to know? It's not that hard to figure out. But these people want everyone on-board their particular ideology, and when people are not 100% faithful they become an unreasonable "enemy". So Friedman was a free-markerter? I don't see where he was one at all. It was his economic model people like Kissinger lauded for countries like Chile, which had influence on the Coup in the 70's and thousands massacred. That's not free-market.

Austrian Economics is like the latest Economic trend and fad, picking up steam and popularity, particularly by the "tribe". One of their main targets is the Federal Reserve...."end the fed". That's great, except for one small problem that nobody is thinking about (deductive reasoning?)....The Globalist Agenda.

The Globalists will gladly back the demise of the Federal Reserve, when the time is to their choosing. They will replace it with an International Version. There already is an International version, it just doesn't have the ultimate power yet, although it will when they do-away with the current reserve currency.

Free market is great, but it can't be possible in a high-tech society, which depends on public money for research. The Conservatives of today are really just conservative in social themes, but economically they are just as liberal and socialist as the "liberal" democrats and progressives. They all want money from the Gov; it's just who gets that money and for what reason that makes for any difference in these people. Frum, Friedman, Limbaugh, etc, are all liberals in reality. Limbaugh, Wolfowitz, Bush, Pearl, Krystal, love the war machine and spending tax money for Contractors and bombs; while some liberal might prefer to spend billions on public projects. But all of it is liberal economics.

Wed, 07/11/2012 - 09:14 | 2605556 i-dog
i-dog's picture

I was going to give you a +100 ... until I hit this astounding non sequitor:

"Free market is great, but it can't be possible in a high-tech society, which depends on public money for research."

A "free market", by definition, cannot have a government interfering in it. If there is to be a government at all, it should concern itself only with coordinating self-defense and protecting property rights through maintaining records and facilitating arbitration. Nothing else. No "public money for research" ... No staffing hospitals ... no building roads....

There are plenty of private investors who would fund reaearch if there were no government alternative! Similarly, there are plenty of private investors who would build competing hospitals, roads, fire departments, local security forces, schools and transit systems ... if there were no government alternative! Aaaaand...they'd all be cheaper, more innovative, more efficient, more effective, and more likely to be tailored to local needs.

Just sayin'.

Gave you a +1 anyway for starting out on the right foot. ;)

Wed, 07/11/2012 - 02:22 | 2605076 dvfco
dvfco's picture

I'm late to the party, but I'd like to express my never-ending stupidty by being a permanent member of the Austrian-Economic facts.  I'd call them theories and theorums, but they are not; they are facts. 

I'd also like to suggest to the dumbphucks at the TNT Covention (also known as the Nobel Prizes) that they get over the practice of not giving awards to those who have already died. (Maybe their heirs can find a good place for the money you should have awarded sooner.)

More importantly, I'd like every 'NOBEL' winner to sign a pact saying they'll 'never touch the interest.' 

I'd like this guarantee so we could do a little 'claw-back' at Obama's shit medal.  This fuck-pod is awarded a peace prize for what?  "Uhm, well, (move those readers over) because i've founda way to kill everyone - even US Citizens who have never been tried - with Drones - YEAHH - MUTHAFUCKAAAAAAZ - I KILL ALLL THE BITCHEZZ I HATE - AND HOLDER HOLD'EM AT THE GATE.  FUCKIN'A!!

(If that aint worth a 'thumbs-up, what is?)

Wed, 07/11/2012 - 02:24 | 2605080 Peter K
Peter K's picture

Austrians don’t reject empirical evidence but look at it with the theory of human action in mind.  They don’t see an increase in ice cream sales coinciding with an increase in kidnappings and automatically assume that as people eat more ice cream, they become more prone to abducting people.  They may consider that because warmer weather tends to result in more people going outside for leisurely activity, the opportunities for kidnappings to occur increases as does the appetite for ice cream.  This isn’t a rejection of empirical evidence but merely viewing the world with a theory to help explain the complex happenings of society.

I would just replace "Austrians" with "educated, intelligent, rational people", and this passage could adequately describe your average run of the mill conservative.

In my humble opinion, of course.

Wed, 07/11/2012 - 02:38 | 2605091 Peter K
Peter K's picture

And one more thing.

The "staged" in-fighting between the Austrian and Chicago schools of economics is silly. The core principals of both schools are positivist (as opposed to normative) in nature. They may disagree on the margins, but the core is solidly founded in the view that the individual has the right to "life, liberty, and the pursuit of happiness" to barrow a phrase from our founding document.

 

 

 

Wed, 07/11/2012 - 06:06 | 2605199 Catullus
Catullus's picture

http://www.youtube.com/watch?v=Rf75CpWaQ_Q

The Jacobins used the same rhetoric, but they were notably proto-communist and Bolshevik.  The political economy of the Chicago School was based in egalitarianism which not consistent with Austrian Political Economy

Wed, 07/11/2012 - 06:39 | 2605226 Peter K
Peter K's picture

As a product of said school, I can assure you that any egalitarianism is the furthest thing from its underpinnings.

Try Rational Expectations, yes? :)

Wed, 07/11/2012 - 08:10 | 2605350 Peter K
Peter K's picture

Yes.

Wed, 07/11/2012 - 03:07 | 2605115 forrestdweller
forrestdweller's picture

bad educations makes people believe instead of think and reason.

if you only get taught one economic theory, even in universities, it will make you al believer.

that's why most americans believe in a laisseq faire capitalism a la friedman and are not willing to question this theory.

the market has to be guided, like a child.

Wed, 07/11/2012 - 07:51 | 2605321 prole
prole's picture

And thank goodness we have Monsatan and the police state to guide us to our chosen dinner plate, and likewise we have Paid thugs to guide us into our family molestation and radiation booths at airports, and what would we be without the military industrial complex and Blackwater/Lockheed/etc war companies guiding us into the latest aggression overseas.

Guide us oh Godlike Masters!

Wed, 07/11/2012 - 10:50 | 2605999 shovelhead
shovelhead's picture

Absolutely.

We can't have people engaging in mutual trade based solely on their needs and expectations of satisfaction.

They might make a mistake and fail to meet those expectations without a wise forceful hand (with a bow-tied Ivy clad pedigreed economist in tow) of gentle Govt. coercion to guide these benighted fools.

Guess I'm not a fan of your Economic Theory of Arrested Adolescence.

If I want to invest in a badly run, poorly supervised flat broke insurance Co. I would do so. Why should I be forced by taxes to fund a Govt. version of USA Bailouts for Buddies Program?

Your 'guided market' is what we now have. Not exactly a smashing sucess, in my book.

Wed, 07/11/2012 - 03:32 | 2605126 AnAnonymous
AnAnonymous's picture

US citizens are going to get infatuated with many unproven predicaments, among which is Austrian economics.

Everything to buy time and avoid facing an analysis of 'Americanism'

And propaganda/fantasy land is the right place to get your breath of fresh air.

Austrian economics? Fine but where have they been applied? How to compare?

So more kicking the can. New sophistry will be input in the system to buy time.

US citizens go for Austrian economics, it will buy a few decades before seeing that it is all hogway.

Up to a new salvation fantasy to kick in and so on...

Wed, 07/11/2012 - 05:10 | 2605173 writingsonthewall
writingsonthewall's picture

They vote you down - not because you are wrong - but because they have already pinned their hopes on it!

 

 

Wed, 07/11/2012 - 05:01 | 2605166 writingsonthewall
writingsonthewall's picture

Austrians don’t see the social sciences as one in the same with the physical sciences like chemistry.

...and there lies the flaw....

 

It's all well and good Austrians calling for the 'purge' of assets values - like Mellon did in the Great depression - the human cost causes instability which they then conveniently walk away from.

 

You will find no Austrian prepared to admit that the adhesion to the free market causes the instability which sparks centrally planned Governments (as desperate people cling to perceived hope) which eventually leads to war.

 

By this measure - Austrian school economists are inhuman.

Wed, 07/11/2012 - 05:21 | 2605177 Lebensphilosoph
Lebensphilosoph's picture

Austrians don’t see the social sciences as one in the same with the physical sciences like chemistry.

...and there lies the flaw....

Neither of you is correct, the Austrian for his belief in the possibility of social science, and you for your belief in the equivocation of social and physical science. From social anthropology to mathematical economics, there is and can be no such thing as a 'social science', but only social pseudoscience.

Wed, 07/11/2012 - 06:02 | 2605198 Catullus
Catullus's picture

So "adhesion" to free markets => Instability ==> Central Planned Governments => War.

So the free market, which is the antithesis of a centrally planned government, inevitabily leads to a centrally planned government and war?

That's quite a stretch.

Wed, 07/11/2012 - 05:09 | 2605171 writingsonthewall
writingsonthewall's picture

the school has a theory that explains why economic booms and busts are a product of money supply manipulation by a central bank and fractional reserve banking.

 

So which central bank interfered to cause the tulip bubble in 1637?

 

You cannot simply have a respectable theory where there is evidence contrary to that theory.

 

The TRUTH is that bubbles happen due to speculation - it's nothing to do with central banks - they are merely a 'failed fix' for what is a unfixable problem.

 

Austrians are clearly confused by credit - they incorrectly see it as the cause and not a symptom of the problem (which is what it is)

 

In this regard Austrians have it all backwards

Wed, 07/11/2012 - 05:16 | 2605176 writingsonthewall
writingsonthewall's picture

This is why Austrians are against all government interference in the marketplace to prevent a much needed correction following a bust caused predominantly by the government’s own inflationist agenda.

 

Much needed correction? - what an ass - you make it sound like it's a walk inthe park.

 

My dear Austrian - you are confused - bubbles occur, surplus value is extracted and eventually the worker can no longer afford the very good he is producing. Banks fill this demand fall by issuing credit (advancing future wealth which has not been created yet) - sooner or later they borrow "too far into the future" and BAM - the whole stack of shit falls.

 

Central banks have little to do with it - Austrians are blaming the parachute for not saving them. they were wrong to bail out the banks - but by then it had gone too far.

Austrians would have seen the banks collapse and then blamed the ensuing violence and revolution on 'other factors' - ignoring the economic plight of those revolting (much as mellon did)

Wed, 07/11/2012 - 06:28 | 2605215 TWSceptic
TWSceptic's picture

Why can't I junk this guy? Something wrong with the arrows.

Wed, 07/11/2012 - 05:31 | 2605178 TWSceptic
TWSceptic's picture

"It is because of this diehard obsession that they reject all empirical evidence and refuse to change their favorable views of laissez faire capitalism following the financial crisis."

 

 

Funny, that's exactly how I feel about Keynesians (and their government friends). Austrian economists actually have the evidence to prove their case.

Wed, 07/11/2012 - 06:22 | 2605211 Steve in Greensboro
Steve in Greensboro's picture

So conservatives and libertarians no longer listen to Keynesians, eh?

After listening to "economist" Austan Goolsbee for as long I could stand, I can confirm that in my case. The reason is that I have better things to do with my time than listen to lies.

Wed, 07/11/2012 - 06:58 | 2605245 Freewheelin Franklin
Freewheelin Franklin's picture

conservatives in modern day America have become so infatuated with the school of Austrian economics that they no longer listen to reason.

That's funny, because Austrian Economics is based on deductive reasoning (AKA praxeology), not econometric models based on statistics.

 

 

http://www.quotegarden.com/statistics.html

Wed, 07/11/2012 - 07:14 | 2605271 dcb
dcb's picture

Oh, please the stated reasons for what these people are saying has nothing to do with why they are saying it. get rid of excessive credit growth, and it will solve many of america's problems. the people it will hurt the most are the elites since their excess money comes directly from the=at excess credit growth. it reduces retruns for them, it will therefore reduce the money that can be used to buy the politico's.

this isn't anything to do with what's good for the country, it's to do with maintaining the established order and the structural advantages that order confers on a select group of individuals. it's about cultural hegomony.

Wed, 07/11/2012 - 07:22 | 2605286 tony bonn
tony bonn's picture

david frum and his national review sponsor are paleo-nazis which is why he loves milton friedman, one of the absolute worst disasters to ever contaminate latin america - worse than the spanish....

Wed, 07/11/2012 - 07:53 | 2605323 HEHEHE
HEHEHE's picture

Typical "elite" bs.  The FED has caused way more problems than it has solved.  The concept of a benign unattached Wizard behind the curtain sounds good on paper but the reality is 99% of FED governors including chairman are playing their role seeking the big pay day when they enter or re-enter jobs at TBTF banks, hedge funds etc.  Next all they need to do is run out the Ann Rand canard and claim laissez faire economics caused the 2008 crisis when it was the FEDS actions that caused the whole mess.  Moreover, if you actually read her writings it's highly doubtful Ann Rand would ever have supported bailing out the Wall Street douchebags.

Wed, 07/11/2012 - 07:53 | 2605324 HEHEHE
HEHEHE's picture

Typical "elite" bs.  The FED has caused way more problems than it has solved.  The concept of a benign unattached Wizard behind the curtain sounds good on paper but the reality is 99% of FED governors including chairman are playing their role seeking the big pay day when they enter or re-enter jobs at TBTF banks, hedge funds etc.  Next all they need to do is run out the Ann Rand canard and claim laissez faire economics caused the 2008 crisis when it was the FEDS actions that caused the whole mess.  Moreover, if you actually read her writings it's highly doubtful Ann Rand would ever have supported bailing out the Wall Street douchebags.

Wed, 07/11/2012 - 08:04 | 2605334 overmedicatedun...
overmedicatedundersexed's picture

a strong economy should be the goal of any economic system, yes?. we have one system that says debt management is the goal and one that says wealth is the goal..can you name them?

Wed, 07/11/2012 - 08:28 | 2605407 michigan independant
michigan independant's picture

Listen when they never have signed the front of a check?  Just another talking head with out a nickel added to the earnings report. Even a fool can see the signs of the times unleashed from his masters. For the inclined who need to survive these idiots start here.

 http://mises.org/pdf/

Wed, 07/11/2012 - 08:49 | 2605480 Seize Mars
Seize Mars's picture

OT

Apparently there are -millions- prtesting in Mexico, about there obviously rigged elections. (Total media blackout!)

Ya know what? I am actually starting to think that TPTB may actually be losing their grip on things. This is a reason for hope.

Wed, 07/11/2012 - 09:17 | 2605575 Seize Mars
Seize Mars's picture

Oops sorry this was pointed out elsewhere.

Anyways, important nonetheless

Wed, 07/11/2012 - 11:28 | 2606170 Totentänzerlied
Totentänzerlied's picture

All you need to know about that revolting sycophant Frum:

http://www.lewrockwell.com/manion/manion20.html

Wed, 07/11/2012 - 12:23 | 2606408 Duck
Duck's picture

You actually read that nutso website?  Doesn't take long to see through that nonsense.

Wed, 07/11/2012 - 12:21 | 2606398 Duck
Duck's picture

The quack Austrian Tyler is back!

Frum is right.  Pseudo-intellectual Austrian Economics is a faith-based, avoid-the-facts-at-all-cost-based, fringe idea that will never, ever be anything other than fringe.

If you're a true believer and never read any of the widely available Austrian critiques, don't bother replying it's not worth my time to guide you around the internet.

When the depression is eventually over, Austrian Economics will move back to its rightful place in the fringe dustbin of history.

 

Wed, 07/11/2012 - 14:25 | 2606942 Seize Mars
Seize Mars's picture

No. In true Krugman style you are saying the exact opposite of what's the case. The Austrian school is the only school that understands interest rates and what central planning does to the structure of capital. Read 'em and weep. The Austrian school requires no "belief systems," just common sense.

Do NOT follow this link or you will be banned from the site!