Category — Austrian School Economics
[Editor note: Austrian-School economics is at the forefront of today's pivotal debate over the limits of government, a debate that certainly includes public policy toward the master resource of energy.
Yesterday's introduction of Rothbard is joined today by a tribute to "Mr. Libertarian" by Roger Garrison, currently professor of economics at Auburn University, upon Rothbard's death. Subtitles have been added to Roger's tribute of 16 years ago, and he has graciously added a postscript for this republication. Enjoy on a hammock this hot summer with a glass of lemonade if you can!]
Murray Rothbard (1926-1995)
In the late 1960s, my interests were far removed from Austrian economics—and from any other brand of economics, for that matter. I hadn’t yet heard of Murray Rothbard and thus couldn’t even have imagined that I would be catapulted by him into the midst of what would later be termed the “Austrian Revival.”
My degree was in electrical engineering, but the hoped-for career was stillborn because of Southeast Asia and the military draft. My years in uniform taught me the importance of having a purpose by depriving me—temporarily—of the possibility of having one. I did have time to read in the military, and like many others in that period, I began reading Ayn Rand’s novels as well as her essays in moral philosophy.
Beginning with Rand
Objectivism is strong medicine, especially for those like myself who had spent their college years avoiding courses in the social sciences because of their apparent lack of structure and reason. But Rand’s Capitalism: the Unknown Ideal was full of structure and reason and provided a moral foundation for a free society.
The Austrian economists, featured in this book’s recommended readings, would show just what is—or ought to be—sitting on Rand’s foundation. Austrian economics is appealing to an engineering mind: basic principles, law-like propositions, unequivocal conclusions—all grounded in logic and applicable to the world as we know it.
Authors that Rand believed to be worthy of attention are listed in alphabetical order. I look back now at my yellowed paperback purchased more than a quarter-century ago and note the neatly drawn check marks that track the progress of my reading: books by Benjamin Anderson, Lawrence Fertig, Henry Hazlitt, and Ludwig von Mises.
Although my imperfect memory tells me that Murray Rothbard’s books were included in this list, I see now that they are not. But Rothbard had been publishing for several years and was for a time a member of Rand’s inner circle. Any enthusiastic reader would soon find his books. [Read more →]
August 20, 2011 1 Comment
Introducing Murray Rothbard to an Energy Audience (Part I: Keynesian economics down, Austrian economics up)
“The economy is not recovering…. It’s now impossible to deny the obvious, which is that we are not now and have never been on the road to recovery.”
- Paul Krugman, “The Wrong Worries,” New York Times, August 5, 2011, p. A21.
Federal energy policy is being driven by the failure of neo-Keynesian economic policy.
Stimulus spending was supposed to end the Great Recession and transform tax expenditure into additional tax revenues. Instead, we are left with both recession and broke government. Obama borrowed from the future and made the present worse. George W. did his share too.
Three Strikes: Is Keynesianism Finally Out?
Keynesian economics failed during the Great Depression (will more textbooks now admit it?). The activist approach of Herbert Hoover (the first New Dealer, according to Murray Rothbard) used the powers of government to slow the liquidation of unsound investments, narrow profit opportunities, injure international trade, and block employment.
FDR doubled down on activist government policy with new spending programs, higher taxes, and regulation and business hostility (Robert Murphy tells the story well in The Politically Incorrect Guide to the Great Depression and the New Deal).
Government spending and deficits crowd out private-sector activity that is consumer driven and thus efficient. The timeless explanation of the artificiality of public jobs by Henry Hazlitt in Economics in One Lesson applies to the U.S. experience in the 1930s and to today’s quagmire. Rothbard’s America’s Great Depression (1963) documents the artificial 1920s boom from expansionary monetary policy (the Federal Reserve Bank was founded in 1913) and the necessary bust that was not ever allowed to run its course to sustainable recovery.
Keynesianism failed again with the 1970s stagflation, which occurred during the energy crisis. The simultaneous existence of high unemployment and high inflation empirically refuted the (Keynesian) Phillips Curve, which graphed how more of one meant less than the other with the two never being high at the same time.
In the face of stagflation, neo-Keynesian leader Paul Samuelson, his guilty textbook Economics exposed, lamented:
It is a terrible blemish on the mixed economy and a sad reflection on my generation of economists that we’re not the Merlins that can solve the problem. Inflation is deep in the nature of the welfare state. Even when there is slack in the system, unemployment doesn’t exert downward pressure on prices the way it did under “cruel” competition.
But lessons were not learned, and Obama finds his third-way interventionism running on empty. The stimulus borrowed from the future and simply propped up mal-investments and created new ones, such as the government-dependent wind power industry. “Green” jobs are bubble jobs that are set to burst sooner or later.
Three strikes–is neo-Keynesianism out?
Austrian-School (Real World) Economics
Enter the ‘Austrian School’ or ‘market-process approach’ to economics. [Read more →]
August 19, 2011 6 Comments