Sorry Charlie

Charlie Rose show tonight had a younger journalist (Naomi Klein) and an older journalist (William Greider) on discussing economic policy, the financial crisis, and President Obama.  Neither of them really knows much about economics, yet they kept talking about the economic model which has governed our world for the last 30 years.

Naomi Klein might be the least informed supposedly intelligent commentator in the world (and in a world of the blogsphere that is no small achievement).  In her highlight moment, she argued that so many vital issues are just too important to be left to the profit motive, including not just health care, but food. Wow.

Greider is for dispersion of power and innovativeness in all areas of life.  His shinning moment emphasized smallness -- small communities, small firms.

Sorry Charlie, not your best selection of guests to tackle the world issues today and make sense of them.

Comments

[Rico]

The popularity of Naomi Klein makes me despair for the future of humanity.

[Samantha]

"Naomi Klein might be the least informed supposedly intelligent commentator in the world" but she is pursuing her passion (see thread discussing teaching). Shouldn't we therefore be encouraging her to pursue her passion the best the best we can?

[Rico]

Samantha,

Not if her passion means that she is spouting out all kinds of mis-informed rubbish. Her passion seems to me to making money and working on her own brand - precisely the things she is supposed to be against.

Rico

[Samantha]

Rico,

I agree with you about Naomi Klein "spouting mis-informed rubbish." I'm just juxtaposing her with Marxists and other anti-market economists.

see http://austrianeconomists.typepad.com/weblog/2009/05/message-to-graduate-students-interested-in-austrian-economics-do-austrian-economics/comments/page/2/#comments

[Current]

> Not if her passion means that she is spouting
> out all kinds of mis-informed rubbish. Her
> passion seems to me to making money and working
> on her own brand - precisely the things she is
> supposed to be against.

This is why I love Naomi Klein. She is a huge gift to us.

If publishers give her enough rope she will hang herself.

We haven't had a gift like her since the fall of communism. And thankfully she will cause much less pain than that event.

[Samantha]

"If publishers give her enough rope she will hang herself." You might be right, but how exactly will this happen? It is interesting to note that Michael Moore makes the same argument about the corporate media (that HE is giving them rope to hang themselves). I don't think anyone is hanging, sadly! But, again sadly, the likes of Klein and Moore are probably most successful in influencing public opinion.

[Davo]

So is a shinning moment that moment when you want to kick him in the shins?

sounds like a Freudian misspell. I like it.

[Peter Boettke]

Samantha,

"Pursue your passion" is advice I would give anyone in any walk of life ... if you cannot wait to wake up in the morning to go to "work" you have made the right choice. However, just because you made the right choice, doesn't mean you are objectively good at it. Naomi Klein is a very bad analyst, she is passionate, but she just cannot reason well when it comes to economic issues.

There are figures on our side that are similar --- passionate, but uninformed. They need to be called out. As Bastiat supposedly argued "Never fear a harsh criticism, but always fear a weak defense of your position."

Also, please do note that I constantly refer to "tracking truth" as the top priority of the scholar.

Pete

[Samantha]

Pete

I was comparing Naomi Klein to some examples that came up in the other thread. Examples were of students being encouraged to pursue their Marxist passion. Is Klein worse than a Marxist? Marxists probably agree that food is too important to be left to the market too! Sure a Marxist with econ PhD and tenure can give you a better conversation about economics. But if they are basically have bad foundations and bad conclusions, why should we (Austrians or classical liberals) treat them differently to Klein? Hence, why not attack heterodox non-Austrians?

You correctly point out that Klein is horrible at economics. But doesn't most of her position come down to an opposition to war and corporatism? She is well-informed about facts, just bad on theory. The problem is she struggles with the idea of market economy without special favors from government.

[Michael Wiebe]

"It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a 'dismal science.' But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance." - Rothbard

Does this ever get old?

[Current]

Samantha, certainly you are write about the public. The general public though are unlikely to ever be well educated about politics or economics.

However, I think it is useful. I myself was a socialist when I was young. I was convinced out of that view not only by socialisms opponents, but also by the incompetence of it's advocates.

These sorts of things are always impossible to really know about.

[Steve Horwitz]

Samantha,

Some of us are both classical liberals and teachers. We take our role as teachers seriously enough that it must trump our role as classical liberals when the two conflict. I get paid to teach and if one of my students is a bright, well-read socialist, I will always encourage him to pursue his passion, even if I think he's dead wrong.

[K Sralla]

Steve, How can any economics professor in good conscience profess, teach, or otherwise encourage that which he understands to be false? If an engineering professor took this approach with his students, he would and should be fired. Would he tell a student who errantly holds to faulty engineering practices to "go ahead and pursue your passions"? What if, in the course of pursuing those passions, the bridge that his student designed collapsed and everyone on it plunged to their deaths? I bet the professor would wish he had taken a different approach.

Let's now suppose a professional geologist working in industry were to accept payment for knowingly encouraging the propagation of false geological theories. If discovered, he would be subject to censure from his professional organization and risk losing his credentials as a professional scientist. What is the difference when one is professing economic theories? It seems to me that you are dangerously close to heresy in arguing that accepting payment in exchange for teaching (no matter what the subject matter) takes priority over teaching the truth!

[Lee Kelly]

But hasn't Naomi Klein been vindicated by the recent economic calamity? In Disaster Capitalism, she correctly predicted that the government would use any crisis to foist open markets on an unsuspecting public, and is that not just wha ... oh, wait a minute, that's not what happened, but so long as she keeps getting invited to comment on these TV shows, what does it matter?

[Steve Horwitz]

K,

Where did I say I wouldn't "teach the truth?" I didn't say I wouldn't challenge the student. I didn't say I wouldn't make him/her work hard to make the arguments he/she thinks are right. Doing so is my job as a teacher. A failure to challenge what I think is falsehood would be a dereliction of my duty... as a teacher and as a libertarian.

But after that, what? I cannot reach in and change a student's mind. If I could, the next crazy lefty or righty could do the same right back. And if he wants a letter of recommendation to go to U Mass-Amherst and study radical economics, what am I to do? Not write it? Sorry, no sale, esp. when I think the student would do very well there. Encouraging him to do that is not dereliction of duty if I've done all I can to challenge him.

As a matter of fact, the student in question (that's a real example) was very grateful for the work we did together this year and the intellectual challenges I gave him. I am equally grateful for how hard he made ME work in those conversations. I'd rather have that interaction with a smart, well-read radical lefty student than a classroom full of nodding heads who have a half-ass belief in what they think markets are *any day*.

Challenging students is what teachers do. Refusing to support students who disagree with you is what ideologues do.

Every one of you who thinks I shouldn't be supportive and encouraging to this young man better *never* complain about ideological bias and political correctness by left-leaning faculty. You're just as guilty as they are.

[Steve Horwitz]

Postscript: best final draft in my Great Depression Senior Seminar was a paper whose main argument I thought was fundamentally wrong. However, it was well-researched, well-organized, well-written, and well-argued. Yes, it ignored some counter-arguments, or underplayed them a bit, but as a paper from a senior undergraduate econ major, it was excellent.

It was far better than the one I got arguing for the gold standard, a position I'm much more sympathetic to. It was a much weaker effort, even though I liked his general conclusion and he knew I'd like it.

That's how it goes when you're a teacher: you are NOT the jury, you are the judge. You should not expect that students will persuade YOU, but rather you should judge them on how well their arguments work (largely) on their own merits. After, of course, having suitably challenged them where you think they are wrong.

I don't grade my students by whether they agree with me, but rather by how well they write, speak, research, and engage their critical thinking. Once again, to do otherwise, is to be exactly the sort of ideologue that we all would reject (I'd hope) if the shoe were on the other foot.

[Nick]

Steve. I like your approach to teaching. I have myself received some high grades on essays, and learned good stuff, from professors who had left-wing views, but who were good teachers first and left-wing people second.

I think some students are more likely to do good and careful work when they aren't expecting the professor to agree.

Anyone who thinks that pro-free-market, or for that matter anti-free-market, views have the same status as what is in an engineering or geology textbook I believe is badly mistaken. There might be some bits and pieces of a case for or against a free market that have the status of scientific truth, but it's a far cry from what is taught in engineering or physics. The arguments for (and against) free-market views are not airtight, and at the end of the day there is some amount of faith and ideology involved for the people who take either side. The ability to recognize that what I agree with isn't 100% proven knowledge, despite still agreeing with it, is something at which I wish I were better.

[Zac Gochenour]

K Sralla and Samantha hit the nail on the head.

Steve Horwitz continues to demonstrate a lack of understanding about the difference between truth and ideology, which is related to the distinction between normative and positive judgments.

It would indeed be wrong to give a student a bad grade because that student made a normative judgment you don't agree with. Only an ideologue would do such a thing. It is not wrong to give a student a bad grade because that student made a positive statement that was false. Indeed, that is what is required of a good teacher.

It would be wrong to not write a recommendation to a student to a program where the faculty make normative judgments different from your own. It would not be wrong to not write a recommendation to a student for a program where the faculty teach blatant falsehood that they claim is economic truth.

Economic relativism is the position that all economics is normative- that is, there are no economic truths, only economic opinions.

Steve Horwitz claims not to be an economic relativist, but acts in such a way that is only consistent if all economics is normative. I believe him because I am sure that in his microeconomic principles class, some students get bad grades because they do not understand economic truths. I also assume he would have no problem with a biology teacher giving bad marks to a student who, on a test about evolutionary biology, steadfastly declared that evolution was a myth and that the earth, universe, and all the life forms in their current form were created by God about 3000 years ago.

And if that student came to a biology professor and asked for a recommendation to study "creation science" at Liberty University, if that professor has any shred of integrity he will say no.

So, Dr Horwitz acts as if he holds beliefs that he does not really have. They should create a word for this sort of behavior

[Steve Horwitz]

Well Zac, you're confusing several things here.

1. Students who say demand curves slope up get marked wrong. There's your truth.

2. Students who argue that particular gov't policies improved recovery from the Great Depression do not get marked "wrong." Those are interpretive-historical issues where people of good faith can disagree. If a student can make an argument for policy X, even if I disagree, and make it well, they'll get a grade appropriate to the quality of the work that they've done. Like I said, I don't grade based on whether students agree with me.

3. You are comparing the natural sciences with the social sciences in ways that don't fly. Your implicit philosophy of science has been utterly skewered by others here, so I won't rehash the arguments. Suffice it to say, there's a HUGE difference between a biologist writing a recommendation for a student to study "creation science" and me doing so for a student who wants to go to a heterodox graduate program.

There are indeed core truths in economics. But there are also issues of interpretation and judgment. If my radical student couldn't show me he understands the core theory, I wouldn't write the recommendation. But I don't believe that the core theory *automatically and necessarily* leads you to one set of normative conclusions.

I'm sorry if the real world of doing economics is much more subtle than your black-white, positive-normative, good guys-bad guys view of it. And teaching is a lot more subtle than you think it is too, but that's for another time.

[Peter Boettke]

Zac and others,

Why is it so difficult to understand the difference between pluralism and relativism? And the difference between teaching and research? Steve is not being irresponsible, he is in fact being a role model as a teacher.

BTW, Bryan Caplan wrote an article entitled "Why I am not an Austrian Economist?", yet he worked as a professor very closely with individuals such as Ed Stringham and Steve Miller despite their Austrianism. He even co-authored articles with them. I am sure he pushed them intellectually, but he didn't cast them aside in the same way a biologists might have a problem with a creation scientist. What is the difference?

Well, for one, in the sciences of complex phenomena that are more nuanced arguments than you are acknowledging. Heterodox economists, for example, might have important things to say about power, and about the military-industrial complex and the permanent war economy. We should learn from them even if we disagree with aspects of their framework of analysis.

I mean don't you read the journals in our field? How can Joe Stiglitz and Robert Lucas co-exist in the same field and both be considered at the top of the profession? How about Vernon Smith and Dick Thaler? How about James Buchanan and Robert Musgrave?

There are differences in methodology, method, and empirical techniques. It wasn't that long ago that game theory was actually viewed with great suspicion by the mainstream elite economists. Same could be said of institutional analysis. The analytic narrative form of empirical work has some major figures as adherents, but it hasn't quite caught on yet.

Anyway, pluralism is a result in the economic profession, not a position that any one scholar can hold. At least that is my position.

On the other hand, as you work with undergraduates you want to challenge them, get them excited about the study of the discipline of economics, communicate the basics of the economic way of thinking, etc. But if a student comes to you and is intelligent and wants to study hard, but is unpersuaded by the arguments you lay out and/or point them to as challenges to their perspective. As a teacher, your job is to make students think, and to push their intellectual limits. It is not about "converting" them.

Anyway, the paragraph where you bring up grading shows reveals that you and Steve are talking past each other. If a student came to Steve and told him demand curves slope upwards for no apparent reason I am sure he would grade him appropriately. But IF a student explained that demand curves slope upward and gave an argument about Giffen goods, even though there are good reasons to argue that Giffen good arguments are questionable on a variety of grounds, I am sure Steve would be glad to give the student a strong grade.

You are trying to make a controversy where these is none, unless you fail to recognize distinctions between teaching and research and the diversity of economic arguments and approaches that we "battle about".

Of course, lets remember this all started in a discussion related to Austrian economics. Mancur Olson once told me: "Look Pete, there are sins of omission and sins of comission made by economists. Focus your energies on the sins of omission and leave the sins of comission alone." This is, in general, pretty good advice. There are many sins of omission within the economics profession that I would argue can be addressed only by pursuing an Austrian agenda in research.

To deny that either requires that you provide an alternative to the Austrian approach which addresses the omissions, or you deny the omission. Both positions require an argument to be made and discussed. We haven't gotten to that yet.

This isn't about science vs ideology, it is about the scientific integrity of a discipline. When you ask a science to do something which it is incapable of doing, yet insist that it do it no matter what, what you do is cheapen that discipline.

Pete

[Lee Kelly]

Zac Gochenour,

You're not serious, are you?

That whole positive-normative distinction is so ... well, it's naive.

[Nick]

"When you ask a science to do something which it is incapable of doing, yet insist that it do it no matter what, what you do is cheapen that discipline."

As it happens, I do agree entirely with this statement quoted above, as I think any reasonable person would.

This is an unfair generalization, but if you're involved in Austrianism, there's a decent chance that you cling to rather dubious assumptions as to the nature or motives of non-Austrian economics, and as to how it is done.

I have argued with Austro-libertarians who tell me very weird things about "mainstream economics". Then, when I go look at the books and lectures of so-called "mainstream economists", after reading carefully, I tend not to actually find confirmation of the Austrianist portrayal.

If you think that modern conventional economics professors are trying to do impossible things because they insist that economics do these things no matter what, you should do a blog post explaining specifically and clearly what you think those things are.

[TGGP]

Greider was a favorite pinata of Krugman back in the 90s.

Lee Kelly, elaborate on what's wrong with the positive normative distinction.

[K Sralla]

There are two separate issues here. Since the Great Depression is argued by monetarists, Keynesians, and Austrians alike, in such cases, there is obviously no consensus among the economics community. In these kinds of debated historical questions, obviously the best constructed papers win the best grades. There is no argument here.

The situation with the senior applying to grad school is a different case entirely. I am quite certain that after many years of economic research, that professors Horwitz and Boettke are fully pursuaded that the U-Mass Amherst program is heterodox in every negative sense of the word. I therefore struggle to find justification that the Horwitz letter of recommendation was in the best interest of a bright economics student. Now, it may be argued that the student had already made up his mind to turn left and attend graduate school there. Still, there is absolutely no compelling professional obligation to complicity endorse a program that one is convinced is (for the most part) teaching bunk economics. What if my 15-year old son told me that he had decided to go to a party and get drunk. Why should I be compelled to endorse his bad decision? Now what if I said to my son, "please let me drive you to the party, and better yet, on the way, I will stop by the liquor store and buy you the booze of your choice". I bet many fellow parents might strongly question my parenting ethics. This is just the sort of action that is confusing to young people (smart and dumb alike), and I personally reject the tactic.

Neither teaching nor research (like parenting) are some sterile practices removed from all value judgments. Indeed, teachers often have a professional responsibility to exercise value judgments.

P.S. Full professors do not "work with" undergrads. They teach them. Professionals "work with" fellow professionals. The former is like saying adults party with kids. It is absurd and perverse.

[Peter Boettke]

Nick,

First, who are the Austro-libertarians you refer to? Israel Kirzner, Mario Rizzo, Larry White, George Selgin, Peter Leeson, Chris Coyne, Ben Powell? Who? And what precise propositions are you objecting to?

Did you ever read Ed Leamer's "Lets take the Con out of Econometrics" article? Or McCloskey's argument on the difference between statistical significance vs. economic significance? How about Greg Mankiw's honest assessment of the difficulties in econometric analysis of the "Growth of Nations"?

As for excessive formalism, how about Leontief's critique, or Boulding's?

Or on the sterility of equilibrium always analysis found in Joan Robinson, or Nicolas Kaldor, and the necessity to deal with disequilibrium found in Shultz or better yet Fisher. Read Sam Peltzman's review of the Handbook of Industrial Organization, or again Franklin Fisher's review of that same book --- provides a critique of current game theoretic treatments of the subject.

See you don't have to read Austro-libertarianism (whoever those individuals might be) to get a sophisticated critique of much of current practice.

Does good economics still go on? Of course. Is it the exclusive domain of Austrians? Of course NOT. But the general teachings of Mises, Hayek and Kirzner are either consistent with the work being done that is breaking new ground, or they are the inspiration. You don't have to endlessly cite Mises, Hayek and Kirzner to have the ideas of Mises, Hayek, and Kirzner advance.

BTW, you want to read a really strong indictment of current practice, read James Buchanan's critique of law and economics and cost/benefit analysis in the CK Rowley, ed., The Origins of Law and Economics.

[Roger Koppl]

Professors are teachers. The teacher’s first duty is to help the student to think, to learn how to learn. To achieve that end, the student must be encouraged to think his own thoughts and have the courage to pursue free inquiry. That creates in the teacher an obligation to be tolerant of disagreement from the student. The professor’s supposed possession of truth cannot override this open attitude. The truth supposedly possessed by the teacher was arrived at and is sanctioned by a scholarly process of open inquiry. The university professor is introducing the student to that process and cannot, therefore, override the process in a mistaken attempt to defend the truth as he sees it. It is possible, moreover, that the professor is wrong and the student is right. I am a liberal in part because I think human reason is weak; I am a fallibilist. But if I am to be true to that epistemological perspective, I must not pretend my scientific opinions are beyond critical scrutiny. I might cite Mill’s defense of free speech in “On Liberty” or Max Weber’s great essay “Science as a Vocation.” Mill points out the role of free inquiry. Weber points out, among other things, that a teacher is not a political leader. The professor must profess his ideas and frankly state the truth as he sees it. But he must also try to be sure the student feels free to disagree.

If “Austrian economics” is basically right, it is because the liberal theory of society (that of Hume and Smith) is basically right. That theory teaches us the importance of free inquiry and the dangers of obedience. To forbid our students to disagree with us, to throw obstacles in their paths of inquiry, to do anything other than support them on those paths negates free inquiry and asks the student obey rather than think. I accept the risk that my students may wrong just as I accept the risk that I may be wrong. I stand by free inquiry and independent thought. As a teacher, I have a strict moral obligation to do so.

[K Sralla]

My question to all professors. If you had been teaching in Vienna in 1932, and one of your students had desired to study in a program known to advocate fascist corporatism, would you just as willingly have written the letter of recommendation?

[Steve Horwitz]

What Roger said.

I'll only add that THIS full professor very much "works with" his undergraduates. "Working with" them is not in contrast to "teaching" them; it is HOW one teaches the more advanced among them.

K's analogy to parenting gives away the game: it fails because undergraduates are, in fact, adults and are, in fact, capable of "working with" faculty as a near-peer *if one does not infantilize them by assuming they can't* as K does. Perhaps, K, we know different populations of undergraduates, but the best among my students here are fully capable of interacting with me as a "near peer".

I supervised or co-supervised three honors theses this year (two in Econ and one in Psych I might note), and in all three cases those students were in charge of their own work with me along for the ride as a guide and mentor. Along with a number of my students in American Econ History in the fall and the GD senior seminar this spring, I *learned from them*. That is what is means to "work with" undergraduates.

I can't think of a more contemptuous view of undergraduates than what you've put forward, nor one that is more antithetical to what I think real teaching involves.

[Steve Horwitz]

K,

If I was in Vienna 1932 and I had a very bright student who had worked with me and who I had challenged and who had demonstrated that he or she really knew the literature etc and wanted to *study* fascist economics (as opposed to actually run the state), I would certainly write such a letter.

Let's also make another distinction here. Econ grad programs with a left-heterodox identity do not corporately "advocate" particular positions. Like GMU and other places, they have a collection of faculty whose views fall into one place or another along the spectrum of ideas, but also involve much disagreement among themselves. Sending a student there is no guarantee that she will turn out like them.

Pete and others who blog/comment here can think of the two examples I'm thinking of now. We know two economists of our generation who did their PhDs in that program but who also have, and continue to, challenged the ideas of their teachers in very serious ways, and in ways that have brought them very much into the orbit of Austrian economics in the last 5 to 10 years.

Smart people with the right values can be trusted to think for themselves and to follow their passions in constructive ways.

Finally, I have no *moral obligation* to write a letter for a student who wants to attend such a program. I don't even have a professional obligation. I *can* say no. I think it's bad teaching to say no. I think it would be to place my own politics above doing what's best for the student, and I think that's a violation of my own notions of "good teaching."

(The funny thing about this whole discussion is that while the student I've been discussing is very real, the letter of rec was hypothetical. He didn't ask me to write one as I didn't know him well enough when he needed it. However, I would have said yes, and after working with him for a year, I would now do so enthusiastically. And, FWIW, my department - which is reasonably free market - were all very impressed by his work and all would, and some did, write for him as well.)

[K Sralla]

Steve, I greatly appreciate your clarification of your teaching philosophy. While I do not completely agree with your approach on all the subtle aspects involved (I am a geologist and not an economist), I certainly agree with you that good teaching should not discourage students from disagreeing, thinking, nor freely searching out the best approximation of reality, even when it conflicts with the views of the teacher. Many of us have problems with the legacy of Ayn Rand because it appeared that she circled the wagons too much when her own orthodoxy was not adheared to perfectly. I agree with you that we must guard against this type of teaching. Thanks for the lively discussion.

[Lee Kelly]

TGGP,

A word is an arbitrary sign, and its intended meaning is a matter of personal discretion. But once a word is defined, its truthful application is not arbitrary.

"My hometown of Chopwell is near Rowlands Gill".

I call my hometown Chopwell; someone else could call it by an entirely different name. However, the truth of my statement depends not on what someone else could mean by the word Chopwell, but what I actually do mean.

The words good and bad, or right and wrong, are used to describe situations which satisfy moral criteria or not. Like the word Chopwell, whether such words truthfully describe a situation depends on how they are meant. It is, therefore, possible to correct another on their application of such a word. For example, if I point to Rowlands Gill and call it Chopwell, you can correct me, even though you may use entirely different words to describe both. The ability to adopt another's definitions of good and bad, or right and wrong, is invaluable to ethical discussion.

Normative statements have positive content. If our evaluation of a situation as good or bad can change with the facts, then, logically, it must be possible to derive positive statements from normative judgements. All that is required is to know what criteria someone is using to demarcate the good from the bad, and the same is true when using words like Chopwell or Rowlands Gill, blue or yellow, near or far, etc.

There is nothing special about normative statements, and they certainly should not be put in opposition to so-called positive statements.

[Nick]

Peter. I have not argued with any of the names you listed there. I have read McCloskey's argument about statistical significance, the others no.

One fairly common Austrian belief I've encountered over and over again is the fantasy that Austrian work is done as if "assumptions matter" and that non-Austrian work is done as if "assumptions don't matter". This is false. Modern economics is clearly presented and done as if assumptions, and how realistic they are, DO MATTER.

It is also done as if one should state their assumptions. If you thought assumptions were very important, as every economics instructor I've heard did, you'd probably insist that the assumptions be stated. And, if you saw economics work written without stating the assumptions or hand-waving around them, then you might wonder if whoever did that work values the assumptions as much as they say they do.

A related idea I've heard is that the 1953 Milton Friedman essay "The Methodology of Positive Economics" and the Paul Samuelson book "Foundations of Economic Analysis" describe the foundations for modern economics. The 1953 Friedman essay is not even a description of the methodology of the writings of Friedman himself, let alone those of somebody other than Friedman. The same is true of Samuelson. So, if some Austro-libertarians have an argument against what is written in those two documents, that's great. (I'm very happy for them). But they haven't undermined the economics work of even Friedman or Samuelson alone, let alone anything beyond that.

The real methodology of modern economics varies from one paper to the text, and is some combination of real-world intuition, empirical facts, logical extrapolation, plausible guesses and other things. There is no document anywhere that states the entire methodology of modern economics and lets you critique it and try to undermine it, because all you get to see is what is written in the final draft, not how the writer arrived at those statements.

Other ideas I've heard:
- non-Austrian economists have a higher level of power in society than Austrianists do.
- non-Austrian economists have a privileged position in society
- non-Austrian economists believe they can plan society, and their work is about how to do this
- non-Austrian economists believe they can forecast the future, and their work is about how to do this

The level of power of the economist in society is already about as low as it could be. Economists have the same level of power as the people who pick up the garbage or deliver the mail.

Mainstream economists regularly teach things that are aimed, not at convincing people to repudiate or declare war on statistics, economics, or math, but how to use them better. Consequently, articles about the problems of excessive formalism or poor use of statistics and econometrics ARE THEMSELVES EXAMPLES of mainstream economics, not criticisms of mainstream economics.

I've heard mainstream economists tell me that reading more intuitive books is a better way to develop economic intuition than algebraic problem solving. So, that idea IS ITSELF an example of a mainstream economics view, not a critique of mainstream economics.

I don't want to keep writing about this stuff forever. But, to make a generalization: Austrianists tend to annoy non-Austrianists by accusing them of believing the exact opposite what the non-Austrianists believe and have been saying.

[Roger Koppl]

Nick,

Who are these “Austrian economists” that you refer to? Are they tenured professors or amateurs claiming the Austrian mantle? I’m a little anxious about even asking the question as it might suggest that I want “outsiders” to pipe down. That’s not the issue here as far as I can see. The issue is whether we should say “Austrian economists” say XYZ based on what we get from Pete Boettke and co. or based on what we get from a business owner with an “Austrian” blog. Indeed, you speak of “Austro-libertarians,” whereas I am Austro, but not libertarian. Are you talking about libertarians who dig Austrian economics and read Rothbard? That hardly seems the right pool to survey to learn how “Austrian economists” think! How many tenured professors of economics in US colleges and universities are Austrian economists who say the things you claim we say? I don’t suppose the number is zero, but I think it’s a minority. Change the universe of discourse to professors at research universities and I think you’d be hard pressed to come up with one example.

Your list of things Austrians say is sort of weird, too. For example, “non-Austrian economists believe they can plan society, and their work is about how to do this.” Said like that, it’s at best a silly remark. Red hot socialism is still in eclipse among academic economists in the West. And yet the median non-Austrian economist is less plugged into spontaneous order than the median Austrian economist.

[Peter Boettke]

Nick,

First, I suggest you start talking to a different group of Austrians about the economics profession. A good suggestion would be talk to Austrians who have PhDs (not activists) and who teach in PhD programs and have published in non-Austrian journals (either mainstream or heterodox). These aren't perfect indicators but they might solicit discussion with people that might have a little more on the ground knowledge about the economics profession.

Second, you have a lot of broad sweeping statements about what Austrians argue. Perhaps if you addressed my first point, you would have a different impression.

Third, I think your last paragraph you should substitute the word Austrianists with the word uninformed critic and you would have the same impact. The real question is how much more anonyed someone who accepts without question current practice becomes when questioned by an informed critic.

BTW, where are you having all these conversations with mainstream economists? Are you talking to the guys teaching at Harvard or Chicago or Princeton and publishing in the AER, JPE or QJE? If not, perhaps what you are dealing with is uninformed defenders of the status quo, and uninformed critics of the status quo and the upshot is a rambling uninformed conversation.

Read the best writers in the neoclassical tradition --- Andrei Shleifer is the most cited economist for the past decade or so --- and read the best Austrian writers --- guys like Selgin, or even Caldwell if you want to think about methodological issues. Wrestle with them.

Perhaps then you can "stop" rather than "keep" writing about stuff like this but do so from a position which is informed by the best of both worlds not the least developed arguments from both sides.

I think you might be surprised if you were in the PhD seminars at NYU or GMU and what was actually argued as to the value added of the Austrian approach to economics for contemporary economics.

Pete

[Lee Kelly]

Austrian economics attracts conspiracy nuts. That's the problem. It provides a very satisfying narrative for anyone who just knew from the beginning that the government was out to get them.

[Peter Boettke]

Lee,

Who precisely are these conspiracy nuts? Mises? Hayek? Kirzner? Rizzo? White? Selgin? Who?

Austrian economics is a label that is associated with a set of propositions held and a set of common research questions asked by a sub-group of professional economists.

Substitute the word Monetarist, or Keynesian, for Austrian -- can you say the same thing, would you say the same thing? That is my major objection with this thread. Just because someone has read Milton Friedman and become convinced of his work, they don't go around saying I am a Chicago economist (even though they have no formal background in economics). And then when people on internet discussion lists say "This is what the Chicago position is" they then don't hold them to that and indict the school of thought. Why is this acceptable in the treatment of the Austrian school today?

Judge a school of thought by its BEST representatives, not by the people who find the argument persuasive but are not professional economists.

Look I am very thankful that Austrian economics can be read by many laymen, and I also think that we would be better off as a society if the main lessons of the Austrian school were more deeply appreciated by the general public. But the general public and laymen is NOT where one goes to find out the fine points of the position that the Austrian school economists adhere to and the reasons why.

The professional economists through the years that have made up the Austrian school have had at times quirky personalities and held positions on some subjects that were clearly out of step. But many others have held prestigious appointments, been internationally recognized as leading economists and social thinkers, and even held high positions of power such as Finance Minister or the equivalent of the head of the council of economic advisors, etc.

Judge the school by its best, not its worst. This is what you should do for Marxism, Keynesianism, Monetarism, classical, new Classical, Institutionalism, etc.

So who are these conspiracy nuts among the professionally trained economists? And if you can name them, then ask is it Austrian economics that "causes" the nutiness, or is it just that within any population of professionals you will have a tail of the distribution that adheres to way out of sync positions?

[Lee Kelly]

Peter,

There is no need to be defensive. I like Austrian economics and economists.

My comment had in mind the non-professionals who appropriate the mantle of Austrian economics. Just spend a little time at the Ludwig von Mises Institute and you will see what I mean. For the most part, it is entirely in the forums and comments, but even some of the official contributors lean that way occasionally, (check out Oliva's anti-GMU rants: apparently GMU is not pure enough).

[Nick]

Peter. Your basic reaction in this thread is correct. I have been behaving as an unfair internet pest.

My arguments with Austrianists have not been with academic economists. Some of them are younger folk who adopted rigid Austrian Supremacist views through being political supporters of Ron Paul.

We should bear in mind, though, that in recent decades, the idea of a so-called "Austrian School of Economics" has been in large part an outside-of-academia phenomenon. I don't think there have been think tanks and organizations trying to convince people to write stuff patterned after the intellectual style of Paul Samuelson, because that was being covered in the academic departments. However, the situation for Mises and Rothbard has been quite different, and Austrianism has been kept alive in good part by think tanks and organizations of the libertarianism movement. Some of the stuff that is now called Austrian Economics was funded and done where loyalty to the pro-free-market political bottom line was expected, and that may have had an influence on the content. It might be that things should not have progressed this way, but they have.

So, as things have happened, the non-academic Austrianism crowd can be more representative overall of "Austrian Economics" thought than what is done at your department, even if it's not the highest quality work labeled Austrian, and not as good as whatever is being done at your department, or at the NYU, or with these other people names you keep bringing up from the academic world.

So, the frustration you appear to have had with being tied to non-academic and crackpot material is unfortunate, but not entirely surprising. If academic departments had done almost no Samuelson-style work, and there were think tanks busy convincing non-academics that Samuelson-style work is better than what is being taught at the universities, then it might be the followers of Samuelson today who would be having similar frustrating experiences.

There are some writings by Rothbard, and maybe to a lesser extent Mises, that strike a chord with feverish minded conspiracy nutjob guys. However, for some of the other writers who consider themselves Austrian that is not the case.

For fairness and clarity, I should try to get out of the habit of even referring to such an entity as “Austrian Economics” or “Austrianism”. I should try to refer to specific documents and notions.

For example, Socialism by Mises is an elegantly written book whose basic argument about information problems in government I think is probably correct. It is now mainstream, including among those who are ideologically the left by the standards of an economics department.

[Peter Boettke]

Nick,

My source of frustration with our "conversation" runs a little deeper than just the association with crackpots. It is that you have an impression on the status of Austrian economics in the profession which I think is slightly distorted by your association of the school with outside of academic writings.

First, Austrian economics was NOT primarily kept alive by think tanks, etc. They were good educational tools and outreach for public policy. But scientific Austrian economics was done in the universities. Economists such as Fritz Machlup, Ludwig Lachmann, W. H. Hutt, G. L. S. Shackle, Stephen Littlechild, Brian Loasby, Duncan Reekie, Jack Wiseman, James Buchanan and of course Israel Kirzner all strove to keep the Austrian school alive and engaged with the profession in the aftermath of Mises and Hayek in the 1950s, 1960s, 1970s, etc.

Mises and Hayek were themselves very established economists -- world famous actually.

Which brings me to the second point of frustration, you have the habit on insisting that everything valuable has been absorbed. While I recognize that people acknowledge the contribution, I don't think the ideas have been fully absorbed, and thus there is a lot of work yet to be done in engaging in the professional dialogue and steering it in a Mises/Hayek direction.

One final point of historical fact --- there were institutions and think tanks that were involved in pushing Samuelson's agenda --- did you ever hear of the Cowles Foundation, or Rand Foundation? I recommend reading Mirowski's Machine Dreams: How Economics Became a Cyborg Science (Cambridge 2001).

[Nick]

Peter. I have heard of Cowles and Rand but I don't know anything about them. Haven't read Mirowski. Whatever is done there is probably quite different from what has been done at Mises Institute, F.E.E. or Liberty Fund.

You said "you have the habit on insisting that everything valuable has been absorbed". This is a remark I've heard from others before, and I am guilty of this. My reaction to it usually is to ask the Austrianist:
- show me something in classic Austrian writings that is good, and that is absent from, or contradicted by, the currently most popular modern econ textbooks.

Until I am shown the counterexamples to my view, all I can do is keep asking to be shown them, rather than just told that they exist. You might respond by saying something like "you aren't talking to the best Austrians of the academic world", and you'd be right.

However, the overwhelming majority of people in this world who would say that there is an "Austrian Economics" whose good ideas are lacking in modern economics are not in this small select group of academics. Most of the Austrianists have learned about the idea of a so-called "Austrian Economics" through outside-of-academia organizations. And, in the world in which we do live, the materials of these organizations do dictate what Austrianists say about "Austrian Economics". If what you and your favorite academics teach is much different from what the non-academia organizations teach, then it might be a good idea to adopt terminology that reflects this.

[liberty]

"show me something in classic Austrian writings that is good, and that is absent from, or contradicted by, the currently most popular modern econ textbooks" - Nick

Wow. There is plenty. Unfortunately, while some is slowly being absorbed over the years, much has yet to be absorbed. I will let Pete provide you examples in a post, which he will hopefully be willing to do (or point you to a post where he has already done it) as he is more qualified than I am to do so.

I can really only speak to undergraduate textbooks, but I will say that the macro undergraduate textbooks (e.g. Mankiw) have not learned the Austrian lessons regarding knowledge, complexity, aggregation, scientism, and other Austrian lessons, and because of this are full of models so ridiculous that any bright student can see right through them, and the text is forced to admit their weaknesses and that they have largely been abandoned.

Undergraduate micro is, in my opinion, somewhat better. Yet, once the textbooks go beyond the individual firm's decision-making, and begin to deal in equilibrium terms, they start to go off course. Of course, even before that they fail in their ideas on indifference curves, so that they can produce welfare analysis. These textbooks could gain a lot from Austrian praxeological reasoning, but at the very least, in the areas of market analysis, they could gain from an understanding of the shortcomings of equilibrium analysis, and some recognition of market dynamics.