Best Thought for the Weekend --- Don Boudreaux's Letter to the Editor Edition of the Plea to Read Hayek

31 January 2009

Adam Davidson, National Public Radio

Dear Adam:

I enjoyed your and Alex Blumberg's January 29th report on the resurgence of Keynesian economics.  In your list of anti-Keynesian schools of thought, though, you missed an important group of scholars: the Austrian economists, whose most prominent exponent was F.A. Hayek.  Unlike Keynesians and monetarists, Austrians reject the idea that recessions are due chiefly to aggregate demand being too low.  Instead, Austrians focus on the time it takes to correct any misdirections of resources caused by distortions in the complex pattern of individual prices.

Sadly, almost no one today has heard of - and even fewer people pay serious attention to - the Austrian theory.  But it was once influential.  We have it on the authority of the late Sir John Hicks, himself a Nobel laureate economist, that in the mid-1930s "the new theories of Hayek were the principal rival of the new theories of Keynes."

Keynes's theory cannot adequately explain the experience of the 1970s.  Perhaps it's time to look again, not at Keynes's work, but at Hayek's.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030

Comments

[Doug Thorson]

Dr. Boettke,

I am encourage by Dr. Boudreaux's engagement in this critical discussion (I know that this is not a new development)...not to mention all you and your associates are doing via the "Austrian Economists" blog. I had worked on "Capital Hill" as a congressional staffer and lobbyist during the Reagan years and beyond. Coming to Washington as a newly graduated university student to change the world. (I only give my background as an example of one who "gave-up" the fight. Shame on me. Now our country is driving of the cliff of socialism...I cannot sit back and watch without engaging anymore.)

When I left the "Hill" I left discouraged...now I believe that with the advent of the "new media," most importantly the web, that the battle of ideas is where minds will be engaged in the discussion and perhaps changed. This is not to minimize or ignore the need for professors and teachers. We somehow lost that battle without even paying attention to what was going on.

I want to encourage you and your associates to keep pressing your view points into the debate. I believe that the Austrian school will not be ignored for long. I have already linked to two blogs from the "Austrian Economists my small part in helping. If we want to preserve our freedoms, for our children and grandchildren (and really for the whole world - since I believe that as America goes so goes the whole world), we must put on the "full court press." If anyone has anything to say that needs to be heard it is the Austrian economists.

I have dusted off all of my Austrian economics books and brought more from mises.org to reengage a new generation. I am encouraged that my son, who took an honors economic class from you last semester, left totally engaged. Thank you.

[Greg Ransom]

And note well. You don't have to leave your computer to learn Hayek's account of the causes of the business cycle:

http://hayekcenter.org/?p=159

[Sinclair Davidson]

The Austrian School seem to do well here in Australia. In 2006/7 there was a debate between Kevin Rudd (now Prime Minister) and Greg Lindsay and Peter Saunders (of the Centre for Independent Studies) and myself of the importance of Hayek, while Ludwig von Mises got a mention in The Australian (major national daily paper) on anti-trust (even if just to say that von Mises was wrong).

http://www.theaustralian.news.com.au/business/story/0,28124,24961161-30538,00.html

[Danny Shahar]

Hehe anyone see this yet?: http://delong.typepad.com/sdj/2009/01/in-which-we-love-some-but-not-all-stimulus-spending-skeptics.html

See, it's okay to be skeptical of Keynesian policies, as long as you're skeptical for Keynesian reasons. Questioning Keynesianism, however, is the surest route to ethics-free Republican hackdom.

[Bill R]

Well Adam Davidson certainly is not ignoring the Austrian school because he unaware of its presence.

He literally identifies and describes the school and also mentions Hayek and Mises in a November interview with Peter Schiff. Only to marginalize him as "ideological" imo...Davidson is literally holding back laughter throughout the interview! More "curious" about his "oversight" is his "journalistic" behavior in that interview versus now. "Now I know a lot of Austrian school people..." he says to qualify to his liberal audience Peter Schiff's "shocking" criticism of FDR's Keynesian New Deal. Funny how he forgets to chime in and do the same when it comes to his ushering in the "Return of the Keynesian Prodigal Son" ( http://tinyurl.com/cb6reu ). Listen to the interview yourselves here: http://tinyurl.com/5glb33 . The offending parts are @14:20 and @15:25. What prompted the Peter Schiff interview in the first place? The very fact that "Peter Schiff was Right" ( http://tinyurl.com/67otdk )and one of the few people to predict the crisis using his "laughable" Austrian framework!

So now he is more than willing to dust off the failed Keynesian paradigm of 70 years but not even mention the paradigm that informed his prescient (and popular over 1,070,000 views) guest of 3 months prior. It's hard to see how he could be anything but an "ethics free NPR hack".

[runescap power leveling]

Just wanted to say HI. I found your blog a few days ago and have been reading it over the past few days.