Here’s another response by an Austrian economist.

Anyone else notice the predictably snarky comments on Anderson’s article from some of Forbes’ readers? They are mostly of the type: “Anderson teaches economics at Frostburg State (rather than writing opinion pieces for the NYT); ergo, he must be right-wing nobody.” Sigh.

Yancey, that’s a regrettable thesis if true. I have often wondered why a man who once wrote for “The Objectivist” defending the gold standard would facilitate the obviously destructive policy of unbridled credit expansion. However, if you’re correct it would mean Greenspan is criminally cynical.

Bill
At the risk of appearing corny, the first thing that came to mind when I heard this was Caligua’s horse – the rear end thereof!

Congratutions Bill
Someone posted a while back, that if Krugman deserved the Nobel Prize, you deserved two! Congratulations! Your students will learn more from you than Princeton students will learn from Krugman!

The real question that needs to be asked is – what is it about Krugman that lets him achieve a well-paid post at one of the most prestigious universities in the world, while Austrian economists languish in lesser known colleges and can’t get published in the mainstream media?

This is not an insult. I really think some serious thought needs to be put into becoming more influential: how is it done? Perhaps it has to do with publishing in academic journals rather than in-house publications (e.g. Quarterly Journal of Austrian Economics, Independent Review). Perhaps it has to do with appealing to popular passions.

If more Austrian economists were in tenured positions at the Ivy league universities, it would be easy enough to have capitalised on the financial troubles plaguing America in the same manner that the Chicago School took advantage of the stagflation of the 1970s.

@Sukrit

“The real question that needs to be asked is – what is it about Krugman that lets him achieve a well-paid post at one of the most prestigious universities in the world, while Austrian economists languish in lesser known colleges and can’t get published in the mainstream media?”

This is a curious question, coming from an economist. Obviously, there is a demand for such opinions as voiced by Krugman. That such opinions do not stand the tests of logic nor of practicability is not important here. Neither did the invocations of the Pharaos’ priests. Lack of logic ans practicability merely shows that these are not among the goals of those demanding such ideas.

So, if Austrian economists wish for similar success, they merely have to determine which goals lead central bankers, social democratic journalists and readers to seek Krugman’s opinions. Then, all you have to do is corrupt yourself, get noticed and voilá: success!

My take on the Krugman thing is that a) the economics prize has become as notoriously political as the Nobel “peace” prize, which has typically been used by the leftist and statist elites to express their displeasure with the West and the US, b) the current financial meltdown is being viewed by those elites as an opportunity to demonize capitalism and promote greater state control (notwithstanding that excess government is th cause of the crisis), and c) choosing Krugman reinforces b) and gives all those calling for greater intervention and regulation a gloss of academic and scientific credibility.

I gather Krugman, particularly earlier in his career, has done some good academic work. However, it is also my impression that his work is not of the importance or had the enormous impact of a Friedman, Schelling, Merton, Scholes, Samuelson, Modigliani, Stigler, Buchanan, Coase, Tobin, Solow, Mundell, Becker, Vickrey, Lucas, etc. These winners, regardless of whether you agree with their work, were giants. Krugman, it seems to me, is not in their league (or perhaps anywhere close?).

I really wonder whether he would have been chosen in absence of the global meltdown.

With respect to Sukrit’s concern, I may be able to add some perspective. I have an MA in economics (from very good Canadian schools) and was steeped in the whole neoclassical, monetarist, equilibrium, mathematical view of the world. The formalism and math of modern academic economics is very seductive to many students (at least it was to me). However, after 25 years as a practitioner in the world of policy and (de)regulation, and grappling with the many real world issues that “modern” economics conveniently ignores, I discovered Austrian economics (about 6-8 months ago) in the course of looking for economic work on property rights. I could see immediately that they had much, much to offer. I am in the process of going through the many books I have purchased from the Mises store. It is clear that many “modern” innovations in mainstream economics, such as focus on market dynamics, property rights, information, microfoundations of macroeconomics, contestable markets, nonprice rivalry, etc. were present in Austrian economics many decades ago and have been borrowed by mainstream economists without attribution. The emphasis on banking, capital and money was also obviously very prescient.

It is a fascinating and rich academic tradition but also one that many mainstream economists are likely to (unfairly) dismiss as incredibly eccentric. In addition, there is often a somewhat cranky political tone, going beyond the simply libertarian, that is present in at least some Austrian writing and which may be perfectly valid as political commentary, but which is not necessary to a discussion of the economics. I am thinking here of some of the isolationist stuff, the antiwar stuff, the references to croney capitalism, etc. Regardless of whether it is valid polictical commentary, I would suggest that some of it makes it too easy for mainstream economist to write the Austrians off before gaining a deeper understanding.

There is understandably a huge degree of admiration for Ludwig von Mises. I have read Israel KIrzner’s excellent biography of him. One needs however to be careful not to give an impression of hero-worship or hagiography.

Bottom line: I am not sure that Austrians are doing all they can to be persuasive and to make their ideas accessible to others. I understand that Austrians have been banished to the wilderness and that it was necessary to their survival as a distinct school of economic thought to become more insular. I believe however that Austrians could be much more influential than they currently are – their ideas are fascinating and very appealing. The key is not to turn people off with what they may consider to be “wacky” or idosyncratic ideas before they have an opportunity to grasp the rishness and subtlety of the Austrian academic tradition.

Some ideas?

- a primer for neoclassical economists on Austrian economics in terms mainstream economists can immediately understand,

- making it clear that Austrians have been great innovators and that many recent ideas in mainstream economics have in fact long been present in Austrians’ work.

- getting wealthy followers of Austrian economics to fund chairs or institutes in prominent mainstream economics departments

- championing a greater emphasis on the history of economic thought in economics education – I am shocked by how little I really know or understand about the evolution of economic theory and the work of the great economists of the past – any emphasis on history of thought is bound to work o the benefit of Austrians

- a greater separation between the economics and at least some of the politics.

Just my two (increasingly devalued) cents

Hi Heathroi.

My understanding is that Hazlitt’s book is not written for the academic. I am talking about a book written for the economist with mainstream training that will address all those questions that spring to a neoclassical economist’s mind when reading about Austrian economics. Also, Hazlitt’s book was published 50 years ago. It may be an excellent book but it obviously hasn’t been successful in giving Austrians the influence in policy circles that they deserve.

My larger point is that Austrians are unhappy with their level of influence, they need to do something different than they have been doing for the last 70 years. The ideas are all there – it’s the presentation and the advocacy that perhaps could be different. Being right is not enough, particularly when humans are are hardwired to be collectivists.

Hopefully we do not fall into the same vicious cycle as Japan in the 1990s, unfortunately if we have inflationists such as Bernake, and Those militanty hostile to the Austrian theory of the business cycle, such as Krugman, getting Nobel Prizes, I am very afraid that we will.

thank you Dr. Herbener for the link to the article

All you have to do is ask yourself who stands to gain the most from these actions? This is Social/Political engineering at its finest. Why are’nt the austrian economists getting noticed by the mainstream? Well for one the “mainstream” media/print is decidedly leftist/socialist/marxist or at the very least anti-capitalistic.
It does not take a degree in economics however to see what is happening.

“what is it about Krugman that lets him achieve a well-paid post at one of the most prestigious universities in the world, while Austrian economists languish in lesser known colleges and can’t get published in the mainstream media?”

Just a guess on my part, but if you were create a graph of “government dollars given to a university” against some sort of measure of “economic leanings that help the state” I would think you’d see a relationship.

After all, mises.org would be at 0,0 on this. Rothbard talked about the court intellectuals and their symbiotic relationship with government. If I’m not mistaken, it was he who called them the useful idiots.

Besides, what pro-government-power official is going to put up with a court economist that doesn’t say, “Go ahead, spend all you want”. So, naturally, funding, grants, etc. all gravitate towards the pro bigger government universities.

I’m sure that the MSM would somehow fit snugly on this chart as well. They, above most, are owned by government. Owned in the sense of control. As Mussolini demonstrated, it doesn’t matter whose name is on the company, as long as the government controls it.

Is the Socio-Political machine so ingrained in our culture that we are powerless to stop it. That the only argument keyensians put against Austrians is a “post hoc ergo post procter hoc” regarding the great depression.

“The Austrian school authored the same anachronistic theories which were responsible for the monetary contraction causing the great depression (as no less an authority than Milton Friedman would conclude, confirmed by the foremost scholar on the great depression today, Ben Bernanke)”

Yet they ignore the fact their had to be a monetary deflation in the first place. If the fiat paper money supply had not grown substantially there would have been no need to bring it back to equilibrium with market demand.

The attempt to stabalize prices in the economy by open market opperations induced by governement spending fuled by debt only increases the time required for capital to be redistributed to those with the greatest efficency of use.

Simply put, if the goverment is going to buy your goods, but no one else will, why go out of business when you are making a profit.

This was what caused the recession to become the great depression. Needless to say, the governemnts schizophrenic policys during the depression, of letting banks fail then propping up prices did not allow individual actors time to do economic calculation and put their time to its most highly valued uses.

Sadly, I tend to agree with Eric,

“As Mussolini demonstrated, it doesn’t matter whose name is on the company, as long as the government controls it.”

Today, the governement intervened, investing 250 billion in banking stocks. I just cant wait to have an liberal elected offical sitting on the board of these corporations. that should be interesting.

Hope all is well everyone.

Benjamin

“post hoc ergo post procter hoc”

isn’t that the fancy latin tag for the nonsense of ‘we are only in hock to ourselves so if we go deeper into hock well we only owe our clever little selves more’

or something like that, my latins a little rusty

There is a huge difference between science Nobel prizes and the econ prize. Science Nobels are given to people who have had an influence on many lives. The econ Nobel is arbitrarily given to people who will now have an influence on many lives.