Potpourri
==> This is one odd webpage. Talk about anti-carb!
==> “Stickman” makes fun of a bunch of us econ bloggers.
==> I need to break into the IRS speaking circuit.
==> Now we know why every Seinfeld episode features a reference to Superman.
==> Tom Woods vs. E.J. Dionne on US economic history. I don’t like E.J.’s chances.
==> I can’t decide if I’m flattered or annoyed that Noah Smith links to me in his piece on those flawed-but-lovable mainstream economists, when he writes:
Finally, though mainstream economists may not have it all figured out, they are far better than most of the groups who lurk outside the mainstream. For example, spend an afternoon reading the ideas of so-called “Austrian” economists, who believe that we only need logic to understand how the economy works, and that data and evidence are useless. Absurd. But that’s the kind of alternative that’s out there, and some people really believe that stuff.
I found another central bank official who is obviously openly ignorant of economics: Mr Andy Haldane, Director of Bank of England:
“Let’s be clear. We’ve intentionally blown the biggest government bond bubble in history,” Haldane said. “We need to be vigilant to the consequences of that bubble deflating more quickly than [we] might otherwise have wanted.”
At least “the Bank of England” later issued a statement, which is in no way personal, that this view of Mr Haldane is totally personal. Thank god that we don’t need to take personal views of government officials serious.
http://www.guardian.co.uk/business/2013/jun/12/bond-bubble-threatens-financial-system
How many ‘mainstream’ economists are there who actually have an argument to offer against Austrian economics? It never seems to amount to anything more meaty than loud in-credulousness that anyone could believe such a silly thing. You really get the impression that many of these guys have never thought seriously about method and are worried to start.
*raises hand*
(although you’ll have to be more specific – obviously there’s a lot good about Austrian economics too).
You need to actually understand Austrian economics, DK, to have an argument against it.
In all fairness Daniel even has serious thoughts about method:
http://factsandotherstubbornthings.blogspot.co.at/2010/07/guttenberg-and-synthetic-priori.html
Man, I really wish Noah Smith had let us know what he means by “data and evidence.” I’m sure he must be talking about the carefully selected data sets and the output of complex models that mainstream economists use to justify their positions. If so, it would have been great to read him essentially try to convince his readers that the conclusions of mainstream economists is the “data and evidence” that their adversaries should basing their arguments upon.
Also, I like they way he acts like Austrians use logic in a vacuum. Doesn’t logic require data and evidence as input? Don’t the Austrians need some underlying assumptions from which they can logically extrapolate? Reading that paragraph makes me think the Mises Institute must look something like the Mad Hatter’s tea table: a bunch of lunatics deriving logical conclusions from nonsense. It’s a good thing mainstream economists don’t get caught up in that crazy, stupid logic stuff. Their conclusions are pure… evidence?
It is insulting to scientists everywhere to discount the value and necessity of logic in the scientific method. All science is logical. Why do people keep disparaging logic as if it’s something only backward kooks in Medieval monasteries pay any attention to?
In addition to the basic axiom of existence that no anti-Austro/libertarian understands either basic Austrian concepts and/or the NAP, Mr. Dionne suggests that they know no actual history either. Dionne and Smith spout this type of nonsense because they have nothing else to say. They’ve lost the debate and have to make things up.
Rothbard: It should be noted that for Mises it is only the fundamental axiom of action that is a priori; he conceded that the subsidiary axioms of the diversity of mankind and nature, and of leisure as a consumers’ good, are broadly empirical.
and
Whether we consider the Action Axiom “a priori” or “empirical” depends on our ultimate philosophical position. Professor Mises, in the neoKantian tradition, considers this axiom a law of thought and therefore a categorical truth a priori to all experience. My own epistemological position rests on Aristotle and St. Thomas rather than Kant, and hence I would interpret the proposition differently. I would consider the axiom a law of reality rather than a law of thought, and hence “empirical” rather than “a priori.” But it should be obvious that this type of “empiricism” is so out of step with modern empiricism that I may just as well continue to call it a priori for present purposes.
Why doesn’t E.J. Dionne have a copy of “The Triumph of Conservatism” by Gabriel Kolko? Laissez faire did not cause Robber Baron monopolies. It prevented them. I bought my copy in 1973. The price on the cover is $2.95. What’s up with all of those low prices back then anyway?
http://www.flickr.com/photos/bob_roddis/9032874405/
Rothbard’s “Panic of 1819”, based upon his Columbia doctoral dissertation in economics, seems full of “facts”. Aren’t these “facts”, Mr. Smith?
Virginia was a leading stronghold of hard-money opinion. Its leading statesmen, such as Thomas Jefferson, attacked any issue of bank paper beyond the supply of specie. As we have seen in the case of the Crawford Report, Thomas Ritchie, editor of the Richmond Enquirer, used sophisticated economic arguments to attack any suggestion of inconvertible paper schemes. Typical of Virginia opinion was an Enquirer editorial laying the blame for the crisis squarely at the doors of the banks. The only remedy was for the parasitic banks to be eliminated, with industry and economy allowed to effect a cure. Ritchie also urged that if bank paper be permitted to continue in existence, there at least be vigorous restrictions on all banks, whether state or national, private or incorporated. Small denomination notes must be prohibited and paper must always be convertible into specie. The least reluctance to do so should forfeit the bank’s charter.
From a 1990 interview with Rothbard in the Austrian Economics Newsletter (AEN):
AEN: How was your dissertation, The Panic of 1819, received?
MNR: Very well. In fact, much better than any other of my books. Maybe that’s because I didn’t analyze the causes. I only wrote about how people wanted to cure it. I could have done much more work on it, and there is still more to say, but I am pleased with it. Plus, it remains the only book on the subject.
http://en.wikipedia.org/wiki/The_Panic_of_1819
When Bob Murphy uses government statistics to show that Ireland is still spending greatly in excess of tax receipts, doesn’t that count as “data and evidence” per Mr. Smith?
http://consultingbyrpm.com/blog/2011/12/the-rumors-of-irish-austerity-are-greatly-exaggerated.html
Thanks for the props, Bob.
Grant / “Stickman”
In regards to Noah Smith’s comments, one thing that always amazes me is the hubris of many Keynesians. They take their idea of evidence as proof which makes them just as guilty of confirmation bias as everyone else.
For me, Austrian economics is based on the morality of allowing people to make their own choices. It is understood that not all of those choices will be optimal.
“economics is apolitical or nonpolitical … it is perfectly neutral with regard to judgments of value, as it refers always to means and never to the choice of ultimate ends.” -LVM
To echo valueprax, a argument only qualifies as true if and only if the assumptions are sound and the statements in the argument are valid. Otherwise the argument is untrue.
Its appears that Mr. Smith has failed to provide soundness in his argument. First, Austrian Economics DOES rely on a posteriori, as Bob Roddis quotes Rothbard above, but it is not the root of AE. Further, if an priori method were unscientific, then mathematics would be unscientific.
This is all to ignore the fact that Mr. Smith seems to have conflated “the economy” with “economics”. From what I can tell, he assumes that a statement about economic phenomena must be about the real-world; that a theoretical argument must be identical to an argument about the world as it exists, existed, or will exist in the future (i.e. economic history, econometrics, and economic prediction). This is a serious conflation, assuming he has purposefully made it. Thus, I question his assumption.