Stefan Molyneux had an interview recently with economist James Smith to present the case for “hope” or economic optimism–to balance out more pessimistic interviews Molyneux’s done with Austrians. I could only get through the first half of the interview. Smith’s entire case seemed to be completely bereft of economic reasoning. It went something like this: “Well, over the last century, every time we have a recession we have a recovery, and historically, on balance, there have been more up than down quarters, and I see no reason to think that will change this time or in the future.” I mean that was it. Really, I didn’t hear a single bit of economic reasoning–for example he said you know when we are in a recession by watching what the FOMC decides at certain points. That’s economics? I was hoping for something like, well we are in a recession but it is a smaller ripple riding on top of stronger underlying real growth due to exponential technological growth that the state has been unable to kill, despite its best efforts–something like this. But no.
Moly asks him to explain why he thinks the light through the trees is not the headlight of an oncoming train–Smith says “Well let’s hope it’s not.” Hunh? Is that an argument? Then he says, “Well, I’m from Texas, and we are optimistic.” Double-hunh? Where is the argument? Does this mean non-Texans should be pessimistic about the national/world economy, but Texans should not? Do we live in different universes? More nuggest: “Trends tend to continue until they become unsustainable, at which time they stop and turn around.” And “When things get horrible enough Congress usually does the right thing.”
If this is the best case “free market” economists can come up with for reason to be optimistic, then our real economic prospects must be even worse than I feared. And according to Molyneaux’s shownotes, later in the interview Smith went on to praise Washington, Lincoln, and Bernanke. Ugh.
FDR1911 The Case for Hope – The Freedomain Radio Interview with Chief Economist Dr. James Smith – Dr. James Smith, Chief Economist, Parsec Financial, makes the case for the continued success and sustainability of the American economy, praises George Washington and Abraham Lincoln, and argues that Ben Bernanke is the greatest Federal Reserve Chairman.
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I like the look on the interviewer’s face when the Guy started going on about Texas. Total wth moment.
But he’s right.Okay, maybe he’s saying the right things for the wrong reasons, but what he says it’s true.
Since forever, governments and societies have done lots of stupid violent things to hamper creativity, innovation and the free market. Since forever, there have been recessions. And since forever, humanity has gradually evolved to a higher state of material well-being, as well as lower violence and more respect for others. In theory there has been a reduction of freedom, but in practical terms the Americans of 1890 were not very “free” considering the horrible limitations they faced in their daily life.
This progress has happened in spite of World War II, collectivization, the taliban, and arranged marriages.
Of course the economy will bounce back. It has already done so in most countries. I can guarantee you that 2030 will be much better than 2010, and 2050 will be better still. This is a millenia-long trend and I don’t see why it should reverse.
Alberto – you’re almost certainly correct – because every single smart-ass now knows we’re in the merde.
I came across this thread because out of idle curiosity i googled “economic optimism blog” and this was almost all I came up with. Anyone taking an optimistic view (I’d guess we muddle-through the next 5 years to allow e.g. energy technology to catch-up with global economic growth) is pilloried. 3 years ago the pessimists were the usual die-hards only. Now most of the bad news is already reflected in the markets because there’s no-one left who’s optimistic. From now on, only buying makes any sort of contrarian sense.
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You get through the first half?
I stopped in the description: “praises George Washington and Abraham Lincoln, and argues that Ben Bernanke is the greatest Federal Reserve Chairman”
Those who advocate optimism are delusional. There has been a sharp decline in freedom over the last century, although material standards have continued to increase. Eventually, the decline in freedom must lead to a decline in material standards. The only real case for optimism is that the people will turn on the government and demand a free society when their living standards begin to fall (this was Murray Rothbard’s view). Since almost all people desire higher standards of living, we can win in a crisis situation should we actually be willing to fight the battle. Until then, I believe in running libertarian candidates within major political parties to promote libertarian ideas and to hopefully win elections, so that we can have some hope of a soft transition instead of having to go through the economic collapse.
The idea of inevitable Progress is nothing more than a Victorian myth, which was understandable at that time when people took for granted the great accomplishments of the classical liberals. In fact, throughout most of history there was stagnation, with occasional growth and occasional decline. The people who lived in the European territories controlled by Rome in 1 AD had higher living standards than people who lived in Europe in the year 1000. There was some economic growth during the High Middle Ages, but that growth was short-lived and was followed by a severe century-long depression and the Black Death. The current trend toward economic progress began a few hundred years ago with the rise of capitalism. The rate of growth has certainly declined in recent years and decline should set in at some point during this 21st century.
“This progress has happened in spite of World War II, collectivization, the taliban, and arranged marriages.”
I think it is somewhat disturbing that a libertarian would equate a voluntary custom in some cultures (arranged marriage, which is not to be confused with forced marriage; in an “arranged marriage,” both consent, while in a “forced marriage,” at least one party does not) with World War II, collectivization, and the Taliban. But, it is to be expected that polyannas who believe in the delusion of inevitable Progress would also casually disparage voluntary choices when they are “traditional” instead of “progressive” (The pseudo-libertarians at Reason Magazine do this all the time).
His concept of history was beyond agonizing. Be happy you didn’t watch the second half and hear him talk about how dumb Jackson was for killing the prior central banks.
Well it seems the emperors new cloths are now “obvious”. They have no plan at all but stick to wrong-doing as they did for ages. So again “this time is different” not…
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