George Bragues is the head of the business program at the University of Guelph-Humber in Toronto, Canada.
What do you like to do in your free time? Do you have any hobbies?
Even though reading is part of my job, it is definitely something I love to do in my free time as well. I enjoy keeping up with the newspapers, magazines like The Economist, as well as books from a variety of disciplines, whether it be economics, politics, history, theology, philosophy, or finance. When I’m not reading, I enjoy watching sports, my favorites being hockey, football, and soccer. A follower of the ancient Greek ideal that one should keep both mind and body fit, I like to work out regularly at the gym and play soccer. Indeed, the latter has become a passion of mine over the last few years.
What drew you to the Austrian school and to the Ludwig von Mises Institute?
While I am no mathophobe, I have to admit that the absence of mathematics in the Austrian approach to economics was the main draw for me. I appreciate the way mathematical techniques can add rigor to the analytic task, but human affairs are far too complex and unpredictable to be of much use other than to clarify a limited set of concepts, like for example, the notion that an investment’s value is equal to the discounted value of its future cash flows. At the same time, some rigor is needed in order to avoid the impressionistic, idiosyncratic, and ideologically laden treatments all too common in the humanities. The deductive methodology of the Austrian tradition preserves the necessary rigor, while simultaneously avoiding the flights of theoretical imagination that bedevils mainstream mathematical economics. Coming to the Austrian school from a background in moral and political theory, I was very much attracted to the way Ludwig von Mises in Human Action defended his economic teaching against the challenges posed to it by various philosophical traditions, particularly historicism — which, to my mind, is the greatest obstacle in our time to the idea that the human mind can attain universal and objective truths. Economists all too often operate as if there are no other disciplines or ways of thinking that impinge on their subject-matter. With Mises, I had found someone who understood the challenge posed to economics by other philosophic traditions and the necessity of confronting them. And it is because the Ludwig von Mises Institute is dedicated to preserving and promoting this Misesian approach that I was attracted to it.
Who is your greatest inspiration?
My father. He died when I was an undergraduate at the University of Toronto. He was relatively young, only 52, when it happened. It made me recognize just how important it is not to waste any of the brief time we get in this life. So I promised that I would not let all the sacrifices he made for me be in vain and that I would accomplish as much as I can to make him proud.
Many economists look at the mechanics of the Fed but you choose to look at the ethics of the institution. What were your ethical conclusions on the institution and their policies?
Because people readily disagree in their moral evaluations, I tried to see if I could generate a moral consensus on the Fed’s policies from a set of divergent moral traditions, namely, Aristotle’s virtue theory, Locke’s natural rights teaching, Kant’s deontology, and Bentham/Mill’s utilitarianism. In evaluating the Fed’s response to the recent financial crisis, which has essentially consisted in the mass creation of liquidity, I found that three of the four moral theories rendered a negative moral judgment on the Fed’s very easy money strategy. These were the Aristotelian, Lockean, and Kantian approaches. The only approach that might feasibly provide the Fed with a moral defense is utilitarianism — which not uncoincidentally is the implicit moral philosophy of central bankers and orthodox economists. Utilitarianism states that an action is morally licit to the extent that it advances the net pleasure of individuals in society. Bernanke’s argument is, basically, that money creation is necessary to avoid a depression and all the pain that such a severe downturn causes. While I agree, in sympathy with Hayek’s position on the matter, that some liquidity infusion is required when a bubble pops, the Fed has gone much too far. It is hard to see how they will be able to avoid inflation, once the economy gains some traction and credit demand revives. Consequently, with three moral philosophies definitely against the Fed, and the other one arguably so as well, I conclude that the Fed’s current policy is immoral.
Do you have any new works on the way?
I am currently re-working a paper on L.A. Hahn’s theory of the stock market. He is very much an Austrian in his economic thinking and he offers an understanding of the financial markets that steers a middle path between the Efficient Markets Hypothesis championed by orthodox financial economists and the psychological approach originally advanced by Keynes and now advocated by Behavioral Finance. But the major project I am now beginning to pursue is a book on the confluence of politics and financial markets.
What kind of impact do you hope to make with your work?
With respect to the politics-financial markets project, I hope that people will gain a better appreciation of how political forces so often get in the way of the proper functioning of the stock, bond, and currency markets. I also hope to disseminate the idea that financial markets are a critical check on governments, if not the most powerful check available, more powerful even than the system of checks and balances originally envisioned as operating in democracies.
Are there any words of wisdom you wish to pass onto the next generation of Austrian scholars?
Since, for the foreseeable future, a scholar sympathetic to the Austrian tradition must oppose the Zeitgeist, I’d recommend the cultivation of intellectual courage above all else. Do not be afraid to challenge dominant assumptions.
If you have any recommendations for Faculty Spotlight, please contact me at Andrewcain@mises.com