Coordination Problem

Hayek in the classroom

A few years ago Virginia Postrel circulated a letter requesting information on the use of Hayek in the classroom and in different disciplines?  Does anyone ever know what happened with the results of her inquiry?

Last week I received a similar, but slightly different inquiry and I promised to pass it along.  This one has more to do with the substantive content in Hayek's writings and their use for a specific purpose. Philospher Matt Zwolinski writes:

Hi Peter,

I was hoping you and your readers at the Austrian Economists blog might be able to help me out with a difficulty. Perhaps you could pass this on to them?

I'm putting together an anthology in political philosophy, and want to have a reading by Hayek in the section on distributive justice. The problem is - I'm not sure which reading to use.

The most obvious choice seems to be his chapter on "social justice" from LLL. But I really want something that will convey the core Hayekian concepts -- diffused knowledge, spontaneous order, the market as an information-conveying process -- and I'm not sure this reading does the best job of that.

If you were teaching a course on the subject, with students reading Rawls, Nozick and all the other standards, and had room for only one piece by Hayek to fit into this larger debate - what would it be, and why?

Thanks so much. I look forward to the advice!

-Matt

I recommended "Competition as a Discovery Procedure" --- what would you recommend?

I will be teaching Rawls and Nozick very shortly in my Constitutional Economics class, but in the context of that course Hayek's chapter is LLL is used and the bulk of the discussion centers on Buchanan's contributions to the justice as fairness debate.  But I am also using David Schmidtz's outstanding work Elements of Justice in the class as well.

The Good Old Days

Over at Marginal Revolution, Tyler Cowen points to Paul Krugman's new blog.  And Krugman doesn't surprise, as he focuses once again on how things were much better in America during the 1950-1970 period when we were more egalitarian due to union membership, relatively high minimum wages, and a progressive tax system.

  This is the image he uses to illustrate his position.

But how wonderful were those old days really?

Is Jon Stewart the most insightful political pundit on TV?

Larry White discusses the interview between Stewart and Alan Greenspan.  Stewart got Greenspan to admit that Central Banking is not consistent with Free Market Capitalism!

McCloskey on Schumpeter vs. Galbraith

Deirdre McCloskey provides a review essay of both Thomas McGraw's outstanding biograpahy of Schumpeter and a reprint of Galbraith's New Industrial State.  McCloskey makes important points about the context in which thinkers come to their ideological position and its durability through time, and also the nature of entrepreneurial capitalism.  Both Schumpeter and Galbraith (especially Galbraith) emphasized what Baumol refers to as "Big Firm" Capitalism, but their assessment of workings and desirablity of such "Big Firm" Capitalism diverge.

Megan McArdle meet George Selgin

Megan McArdle, one of the original movers in the economic blogosphere and a bundle of intellectual curiosity and insight, has raised the question of private currencies.  She raises a rather standard criticism which is if private currencies are so desirable why don't we see their wide spread adoption.  One could read her criticism as being consistent with the criticisms some raised to Hayek's scheme for private currencies in the 1970s within Austrian circles, namely that issuing a private currency out of the blue would violate Mises's regression theorem.  But there has been a lot of research done since that time on free banking and the evolution of money (Megan --- take a look at Tyler Cowen and Randy Kroszner's Explorations in the New Monetary Economics, and yes that is Tyler before he became the blogging icon and NYT columnist he now is, and Randy before he rose to Fed fame).  Obviously, Larry White and George Selgin, the world's leading researchers on this topic, can address these issues better than anyone and they need to meet Megan and talk to her about free banking.

George, in fact, has written quite a bit on the history of private coinage.

Megan and George should get together for some intellectual gains from exchange.

Atlas Shrugged at 50

Chris Coyne points to this NYT article on Rand's classic work.

Political Capitalism

The revisionist historian Gabriel Kolko coined the term "political capitalism" to describe the behavior of big industry to align with the state to secure profits.  In September 16th edition of the New York Times, there is an article about the desire of some within industry to seek regulations, which they will then be able to control.

Thanks to Rob Bradley for this pointer.

The Evolution of the Rankings of Economists

Greg Mankiw mentions a new study on the rankings of economists.  The interesting note by Mankiw is how Google Scholar does as good a job as the more traditional SSCI in ranking economists.

BTW, Karl Marx has long held a strong citation ranking.  At The Economist's View the fate of Karl Marx is discussed.

Thanks to John Valerio for the pointer.

Hard Work Pays Off

Alex Tabarrok has a nice post entitled "Advice for Graduate Students" that emphasizes (through the example of Steve Levitt) the value of hard work in establishing a research career in economics.  As Alex highlights, it takes years to get a really good paper in shape and published. What is the longest time you have worked on a paper from start to final publication?

The first paper I wrote in graduate school was originally written in the summer of 1984, revised probably 25 or more times and was published in 1989.  Another paper was thought up in 1987, written in 1992, finally published in 1997.  As you write more papers, the production process can become more efficient and you can produce papers in a shorter span of time.  But from the original idea through the drafts papers do not appear overnight.  Scholars who write a lot of papers do so because they write everyday, day after day, for years.  There is no secret formula.  Hard work pays off.

Here is some of the best advice I ever received.

James Buchanan -- "Keep your ass in the chair.  If you work 6:00am to 6:00pm, you will outwork all the other academics around you."

James Buchanan -- "All work is work in progress.  Don't get it right, get it written."

James Buchanan -- "Writing is research."

James Buchanan -- "The best dissertation is a done dissertation."

James Buchanan --- "It takes varied reiterations to force alien concepts upon reluctant minds."

James Buchanan --- "It is not the courage of convictions that matters, but the courage to withstand the critique of your convictions that matters."

James Buchanan --- "Dare to be different."

Kenneth Boulding -- "At some point in your career you will be confronted with the following dilemma -- should you read or should you write. I chose to write."

Bob Tollison -- "Never consider a criticism as lethal, but instead as an opportunity for another line on your CV."

Don Lavoie -- "Why are you doing this?  Don't ever forget your answer to that question."

Israel Kirzner -- "A scholar needs a quiet life for serious contemplation. Don't say yes to everything otherwise you will never have the quiet needed to make the contributions you are capable of."

Andrei Shleifer -- "Why be boring?"

Gary Becker (about what he learned from Milton Friedman) --- "Economics is not just a game to be played by clever people, but a discipline for thinking about the world and addressing the real-world of public policy."

The best advice I can give to students is:

"Look out the window rather than on the black board for your questions. Strive to find puzzles where it appears that history defies what logic dictates and then solve the puzzle by demonstrating with the tools of rational choice theory and institutional analysis the the defiance was only an illusion."

"Strive to become a productive input into the scholarly production process of the leading scholars in your field."

"Think like a Misesian (deductively), but write like a Hayekian (inductively).  Or in other words, use praxeology to think about economics and political economy, but write up your results in the language of conjectures and refutations."

"Listen to everything that James Buchanan has to say about pursuing an academic career as an economist and political economist."

What is the best advice you have heard from your professors on how to be a productive scholar in economics?

Where were you on September 11th?

I was actually teaching an economics class, and as luck would have it I was describing to my Econ 100 students how airline deregulation has led to increased safety in air travel.  Pete Leeson was my TA.

At a lunch conversation a month of so after that day, Vernon Smith was discussing the difference between risk and uncertainly.  He described an urn filled with ping pong ball, some white, some black.  Risk is about the probability of pulling a black ball or a white ball from the urn.  Then he looked to the group and said, but what if you pull out a green ball!  That, he explained, was September 11th.

The other day in the Washington Post, I believe, there was an article on those in the security business who try to prepare for days like September 11th, and the person described their job as "pay me money you don't have to provide you preparation for events you don't believe will occur."  That is some job description.  But, of course, there are such jobs in a variety of walks of life that attempt to shield us from the downside of a variety of behaviors.

I was asked recently what I considered the 10 biggest threats to the future of liberty were, and the 10 biggest opportunities for the advance of liberty.  On the opportunities side, let me say that in my textbook with David Prychitko and Paul Heyne, The Economic Way of Thinking, we actually have a section making fun of a variety of famous people for their wildly off-the-mark predictions about future progress.  I am a Julian Simon type on this --- things are getting better all the time and the march toward greater freedom and prosperity is almost inevitable.  The key word there is "almost".

The way I see things, as long as Smithian gains from trade and Schumpeterian gains from innovation outpace statist stupidity, tomorrow's trough will be higher than today's peak.  We will not be as prosperous as we could have been, but we will be more prosperous than our parents and amazingly more prosperous than our grandparents.  However, there are times when statist stupidity can outpace Smithian gains from trade and Schumpeterian gains from innovation, and in those historical circumstances countries and their people are forced to live a miserable existence.  This was the problem in the Soviet Union, and it is the problem today in the poorest regions of Africa.  And, it could happen here in the US.  Bad ideas lead to bad policies lead to bad results.  Economics is not rocket science folks.

So what are the biggest threats?  I would argue that there are no threats to the future of liberty outside of the responses to events by government.  If government chooses to respond to an event by moving away from liberty in order to wrest more power in the name of the emergency, then the threat becomes real.  There are exogenous shocks to the system (e.g., 9/11) that require some response --- but it is the response, not the shock that has the potential to cause real damage to a society of free and responsible people.

So here is my tentative list of 5 shocks that could threaten our future IF the government chose to respond with more centralized power:

1. Terrorist attack on US soil.

2. Aging population and the financial promises that have been made which cannot realistically be met.

3. Bird Flu or some other disease that spreads easily between humans.

4. Severe weather changes (non-committal as to the cause, perhaps just due to natural variation in climate conditions as has been recorded in the past) that results in more and more declarations of emergencies.

5. Financial collapse of the US economy due to decades of excess credit.

Are these "black", "white" or "green" balls?

What others would you add to the list?  If we can list them does that mean they are no longer "green balls"?

Keep in mind that in the way I see things, exogenous shocks be they terrorism, disease, weather will only cause a lasting problem IF they are used as a excuse for increased statism.  Even endogenous problems like the financial promises made to our aging population, or the consequences of excess credit, can be addressed effectively if statism is restrained and voluntary means are employed to address the problem (both in the non-profit and for-profit sectors).

But when statism demands that liberty cede ground to power, economic deprivation and political tyranny are soon to follow.  And the sad reality is that the US is not immune to the problem of bad ideas leading to bad policies leading to bad results.