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Source link: http://archive.mises.org/14781/you-cant-keep-a-good-man-down/

You Can’t Keep a Good Man Down

November 28, 2010 by

Ruchir Sharma of Morgan Stanley writes in Newsweek about the Triumphant Return of Hayek.


Robert November 28, 2010 at 6:02 pm

OK, I’ll bite. How does this reference to Hayek signify a triumphant return of anything remotely resembling sound economic policy in the U.S.? I agree that Professor Hayek’s ideas regarding government intervention explain much of the current morass. Unfortunately a “triumphant return” suggests that Hayek’s ideas, specifically, and the Austrians in general, once held sway against Keynesian thought and deeds. I must be missing something in my understanding of the U.S. economic policy history of the past century, if F.A. Hayek’s ideas are experiencing a triumphant return. On further consideration, I think not.

I am happy to acknowledge that the Austrians may be gaining ground, of late, in the debate and vindication of their ideas may eventually come. Unfortunately, the fruits of that vindication will not reverse the lasting effects of the pyrrhic victory won by the proponents of central banking and Keynesianism run amok. The inertia within the central banking system, coupled with the pervasive ignorance of the electorate, portends only further economic deterioration and continuing obsfucation by the MSM.

The last two years have the hallmarks of circumstances necessary to steer common people toward unsettling conclusions about their lives. Hayek (The Road to Serfdom) and Hoffer (The True Believer) understood this soft under belly of society; Hayek from an economic perspective and Hoffer from a sociological one. Rather than a triumphant return, I suggest an accelerating ascendency of rational thought, honorable deeds and great men.

BioTube November 28, 2010 at 9:47 pm

The article makes it out to be an unfortunate outcome of perverting Keynes’s doctrine, rather than the logical outcome. Kinda misses the point.

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pravin November 29, 2010 at 9:12 am

people like scott sumner insist that even Hayek would have supported QE2 -to prevent secondary deflation .i am not even sure what we are having is a secondary deflation. i hope bob murphy or someone like that answers scott on this one

William P November 29, 2010 at 10:14 am

It’s been my experience that only so many people are actually capable of understanding the Austrian argument. That may sound elitist, but very rarely have I found anybody who can grasp the essential tenets of the Austrian school and avoid the most obvious traps. Can someone here offer evidence to the contrary? Have you found ready acceptance of Austrian ideas? Do your friends, colleagues, families (whoever you converse with re: economics) seem to understand the debate?

This Newsweek piece was pretty depressing. I’m happy they mentioned Hayek’s resurgence, but the author does not come across as well-versed in the Austrian school (to say nothing of his views of Friedman and Keynes).

The right message is not necessarily the popular one. It is imperative for Austrians to develop a plan to seize key levers of power. In this regard, I am very pleased that Ron Paul will be overseeing the House Committee on Financial Services. On a further positive note, it is very good to hear Republicans sounding more and more Austrian. The party and the country owe a huge debt of gratitude to the Mises Institute.

J. Murray November 29, 2010 at 10:42 am

I think the main problem with grasping Austrian economics is that people are conditioned into thinking in terms of the collective, which Austrian economics tends to reject.

Bill Millikin November 29, 2010 at 10:37 am

William P says: “It’s been my experience that only so many people are actually capable of understanding the Austrian argument.” — In my experience, it isn’t a matter at all of people being incapable of understanding, but overwhelmingly they are unwilling to think about the question enough to open their minds to a different philosophy. I believe people are so invested in holding their ‘beliefs’ and protecting them from outside influence that they can’t afford to even attempt to understand.

In most discussions I’ve seen or been a part of where there is a rabid liberal and a rabid conservative in the same room, one or the other will refuse to hear the other’s argument, and I believe it is, almost without fail, because they are extremely defensive of their position, and afraid to allow their ideas to be challenged.

The Austrian argument is so counter to what 2-3 generations of people have now been taught, that opening that argument is tantamount to asking for “a punch in the nose.”

William P November 29, 2010 at 11:28 am

I used to think that way. This attitude slowly changed as I became more and more aware that even honest, intelligent, and well-meaning activists were highly skeptical.

Among the libs (I use this as a derogatory term), the frankest answer I received, at the end of a long (and at times heated) conversation was that the fellow mainly agreed with me, but found it difficult to accept that he “couldn’t do anything about [the problems we face].” Totally lost on him was that more liberty would alleviate the most pressing societal ills. For this young man, all that seemed to matter was the emotional attachment to a professed political solution – in this case, single-payer healthcare.

One can almost appreciate this sentiment in the specific case of healthcare. If one believes that people are being denied life saving care, or pain saving therapy, a single-payer system seemingly provides a ready solution. Back it up with some statistics from Canada and the U.K. and you have a dedicated healthcare statist.

Less understandable is that strong emotional attachment that people have with the Federal Reserve. Living as I do in New York City, I find most “right thinking” financial minds are in favor of the Federal Reserve. No – this is no conspiracy theory. They honestly do believe that the Fed can “help” or “save” the “market.” I’m not talking of CEOs, obviously. I can only surmise this is a status thing… Ben Bernanke being the most powerful and influential banker, and his predecessor being viewed as godlike, it is not so surprising that Wall Streeters have an undeclared love for Ben, if not a very strong envy for his power. Seem odd for the financial raiders to be so cultish? Although it is certainly true that the egos of the people I speak of are oversized, generally, one should not forget that they are awfully sycophantic as a group.

Psychoanalysis aside, I do think this may be a classic case of emotion supplanting reason. I believe F.A. Hayek came the closest to explaining this phenomenon in The Fatal Conceit. The planners believe, with all their heart, in rational constructivism. They do not grasp the subtle working of the monetary system, of profit/loss, and the effects of monetary distortion. They do not understand how the extended order differs from the familial or tribal order. If they fail to think outside the box, it is because they view the outside of the box as barbarous and cold, unworthy of decent and moral person. Business ethics really do differ from personal ethics, and we’re better for it; I would not like my parents treating me like a client, nor would I want my business associates treating me like a child.

I say all this to qualify my original statement. If it is not lack of intellect, then perhaps it is that these timid souls are truly afraid of letting their intellect examine a hypothetical scenario which they, and the vast majority of their peers, view as a non-starter. For example, although nearly everybody views the Holocaust as a uniquely horrible tragedy, how many people actually are comfortable examining how such a thing could occur in the first place? This makes many people very uncomfortable, and I’m sure some even feel morally perverted or violated contemplating the ruthless machinery and lack of humanity that under-girded mass human extermination.

To the extent that the thought occurs to them at all, I can only hypothesize that the vast majority of intelligent and thinking people view consider a Fed-less world as simpleton solution to allegedly complex economic problems. If my example of the Holocaust stretches things too far, I hope it conveys my point: that if people are very uncomfortable with an idea on its very face – when the idea is ridiculed from all sides of the political spectrum – when the “best” financial minds deride the cause as untenable – when the idea flies in the face of the entire academic apparatus – those people will never truly consider the argument, much less learn the nuances. Hence, it is dismissed before it’s given a fair examination.

The solution for this is already in the making: 1) Continued malaise resulting from Keynesian policies. 2) The gradual adoption of Austrian ideas from “respectable” persons & institutions 3) Better, more creative marketing for Austrian economics 4) The truly astounding Mises Institute for educating the masses through their anti-IP platform.

While I’m at this, I’ll add: I think Libertarians are too quick to believe in enduring peace, if only the government would “get out of this” or “do less of that.” I strongly disagree. There has always been and always will be a constant fight for liberty, domestically and internationally. Freedom fighters have existed under the rules of monarchs, autocrats, czars, strongmen, communists, fascists, kleptocrats, etc. Libertarians should not be afraid to be partisan and should not view themselves as above the fray. Being an ambassador and activist for freedom in our declining democracy is a worthy cause, and not nearly as risky as sitting on the sidelines. If you don’t like the candidate, run yourself!

William P November 29, 2010 at 11:40 am

I suppose I should also add…

There’s a part of me that truly believes that even otherwise intelligent people really cannot grasp the Austrian “worldview” (to use that hackneyed neologism). I say this because they cannot accurately describe it in words. I can describe the basic mechanisms and theory of Keynesianism and Monetarism, but only very rarely do I find a cogent description of the Austrian school written by a formal detractor.

I submit as evidence Bryan Caplan. Obviously an intelligent man, but after listening to his debate with Peter Boetke (on youtube) I can’t say he summarized the Austrian adequately.

Ohhh Henry November 29, 2010 at 11:28 am

In most discussions I’ve seen or been a part of where there is a rabid liberal and a rabid conservative in the same room, one or the other will refuse to hear the other’s argument, and I believe it is, almost without fail, because they are extremely defensive of their position, and afraid to allow their ideas to be challenged.

Recently at a dinner party I came out with a couple of mild observations about one or two government programs when they came up in conversation. The criticisms were not based on the usual, “safe” complaint that “government should try to run its monopolies efficiently”, but were more along the lines of, “how could you possibly expect a monopoly to be run well – to seek their own gain is what practically anyone would do if they held that much power.” The guy who was a federal government employee turned purple with suppressed rage at these remarks and started clenching and unclenching his fists, as if I had assured him that I would be hoisting the Jolly Roger and declaring my house to be an independent, sovereign state at midnight.

Possibly this means that people are not so dumb, and once a libertarian idea is introduced they become aware of the weak and illogical foundations on which the entire state edifice is constructed. If you were to persist in your arguments (and they stayed around to listen long enough) you would probably see them go through all of the five stages of grief over their lost Utopia (i.e. annual salary increases above inflation, indexed government pension and free, deluxe health care for life).

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