Several Austrian professors have said that they appreciate Greg Mankiw’s principles text on economics, as a solid intro to mainstream thinking (it is mercifully free of most Keynesian anachronisms) and a good foil for Austrian perspectives. Certainly one has to appreciate his honesty in saying that he never read any Austrians in grad school and hasn’t read any Mises at all since, but he did read Hayek’s Road to Serfdom and liked it, and is adding a note on Hayek for the 4th edition. David Skarbek provides a nice summary of Mankiw’s post. The comments on Mankiw’s blog are particularly interesting, with lots of links back to Mises.org.
Source link: http://blog.mises.org/4871/mankiw-on-the-austrians/
Mankiw on the Austrians
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Interesting.
I’ve read almost all of Mankiw’s Principles of Micro (3rd edition, I believe), and my text for intro to Macro this semseter is his Principles of Macro (3rd edition).
I’d agree that it is not hardcore Keynes, but it’s still – to me – a book of the mainstream. I like his Micro book better than his Macro book.
His macro – sadly – has seemed to have been peppered (unfortunately) with a smuggled norm, here and there, but it is far better than any other mainstream text I’ve read.
Overall? Tolerable, in my opinion. Better than most.
Oops. That sentence above should have read, “His macro sadly – has seemed to have been peppered (unfortunately) with smuggled norms, here and there, but it is far better than any other mainstream text I’ve read.”
Apologies.
I like Mankiw, who proposed a $0.50 hike in federal gas taxes in the May 1999 Fortune:
Cutting income taxes while increasing gasoline taxes would lead to more rapid economic growth, less traffic congestion, safer roads, and reduced risk of global warming–all without jeopardizing long-term fiscal solvency. This may be the closest thing to a free lunch that economics has to offer.
http://post.economics.harvard.edu/faculty/mankiw/columns/may99.html.
We’ve cut income taxes; now it’s time to fill the fiscal gap (and enjoy the side benefit of responding to externalities).
If you like someone because they proposed a tax hike, you’re an evil bastard.
How about cutting government spending? Why do people always propose plugging the fiscal gap with tax increases? I bet these same people would not put their money where there mouth is. I mean, there is no law preventing pro-tax people from paying the IRS more than they owe in taxes.
Of course, they will say that greedy people will be getting a free ride. And that is the true charisma of their position; they don’t realize that taxes are not voluntary and some people do not necessarily consent to the government spending money.
I wish the government to force someone else to pay taxes to support my much loved public services.
http://www.gmu.edu/departments/economics/bcaplan/whyaust.htm
“http://www.gmu.edu/departments/economics/bcaplan/whyaust.htm”
I am admittedly a novice of Austrian economics but was nevertheless easily able to find something wrong with essentially every argument made in this article. I can only assume that it was written ironically in order to more easily secure employment for the author.
Ryan, thanks for the “if”, which saves me from the rest of your post, which I take to be tongue-in-cheek. My position is a little more sophisticated (hint: the Mankiw article I link to).
Tom
“Cutting income taxes while increasing gasoline taxes would lead to more rapid economic growth”
How does one come to this conclusion? How does food get from a hole in the ground to my gullet? How does one even measure economic growth? With respect to what?
Better question. If everyone pollutes and pays a pollution tax, then what happens to that money? Does it go to government? If it just goes back to everyone else who is affected by everyone else’s pollution, what the hell is the point of paying the pollution tax since it nets to zero? Unless you live in a cave and eat cockroaches I fail to see how anyone does not end up paying pollution taxes either directly or indirectly.
Well, I’m gonna play the devil’s advocate and say that it is true that taxing a low price-elasticity good is probably less trade distorting then an income tax…
banker, I think the theoretical concept is that mechanisms that improve the ability of markets to function (if the improvements exceed the costs of making them) add to net wealth by eliminating negative externatilities and leading to a more optimal consumption and supply of resources. If the fine-tuning is enhanced by cutting income taxes, then we’ve just added fuel, which gets the engine going faster.
You did not even answer the question. If the government keeps the tax money, then nothing has been accomplished except for the fact that now politicians have more money to pay off voters. If the money is redistributed (after gov. employees take their cut) back to private citizens, then what is the point of paying the tax in the first place?
How do you improve the operation of markets by confiscating wealth? Do you even know what a market is? Hint, it involves voluntary trade…
banker, do you deny the possiblity of externalities, that by definition are not captured by voluntary trades?
Why hasn’t anyone taken it upon themselves to write an ‘austrian’ textbook following the basically same structure as mainstream textbooks, but setting forth the austrian views and contrasting them to the mainstream? This would be great for a student of introductory economics courses (micro and macro introductory and intermediate). I have read Economics For Real People, which is great, but it falls in to the same category as other books written for the intelligent layman. How about a textbook?
I am using Mankiw’s Macroeconomics for my econ course. There is not a single reference to an Austrian economist or theory in it, unlike Sloman’s textbook. Nonetheless, it is a good book for one willing to learn neoclassical macroeconomics.
Hayek provides a great chart on page 47 of “Pure Theory of Capital” contrasting Austrian econ with the Anglo-American tradition in econ. Though 60 years old, it appears relevant today.
I’m glad that Mankiw has the humility to admit he doesn’t know Austrian econ. But his assumption that anything 20 years old or more has been either refuted or incorporated into mainstream econ naive. Mainstream econ today is neo-keynesian. Even monetarist and neo-classical econ are just variations on Keynes. Yet as Hayek points out in Pure Theory, Keynes set economics back a century. Hayek has some good and important criticisms of Keynes in the book. Keynes’ thinking caused a violent rupture in the study of econ. He essentially denied that anything that went before him was valid and that people should listen to him and him alone. Mainstream econ took Keynes at his word and instead of trying to incorporate insights from older economics and Austrians, created a whole new world and simply ignored critics.
By the time Mankiw studied undergraduate econ, mainstream had been promoting Keynes’ errors for half a century and completely forgotten the insights of the Austrian school.
Brian Caplan, on the other hand, has no excuse. He has read enough Austrian econ to be able to sling around catch phrases, but unlike Mankiw, is too proud to admit his ignorance. His essay on why he is not an Austrian is so full of error and fallacies that I couldn’t finish it.
Anyone who wants to compare mainstream econ with Austrian should read Roger Garrison’s book and essays.
My main problem with Mankiw is with his Pigou Club in which he promotes carbon taxes. He loves Pigou’s idea of using taxes to micromanage the economy and force stubborn people, like Austrians, to act the way the Pigous think they should act. Mankiw has swallowed the GW hysteria completely and sees a carbon tax as a great way to stop CO2 emissions. But a Pigou style tax will not stop CO2 emissions, though it may slow them. If something is as harmful as GW promoters claim CO2 is, then we should simply outlaw it all together; make CO2 production illegal. What Pigou-style taxes will do is make people poorer and the Federal gov richer and more powerful. And contrary to what Mankiw claims, it won’t reduce the Fed deficit because that depends on limiting spending, not increasing income. History proves that increased income from taxes only leads to increased Federal spending.
Fundamentalist, thanks for the information. I agree with you on Caplan. I think Mankiw is a bit naive, but honest… Caplan, on the other hand, seems to be seeking to craft himself an ‘image’. Apparently it irritates Keynesians, btw, to mention that Keynesian economics might merely be a specific case of Classical economics. Changing topics a little, have you read anything on Pierro Sraffa? He wrote some devastating critiques of neoclassical marginalism… it’s a bit worrying that Austrians haven’t devoted more time to him.
What a coincidence… I’m in micro this semester and we’re using the 5th edition of that book. He’s mentioned on 2 pages, and on one of them his name is spelled “Frederic” Instead of Friedrich. Both spellings are listed separately in the index…
Both pages talk about advertising… there’s a little “Galbraith versus Hayek” section, which contains this Hayek quote
“It is because each individual producer thinks that the consumers can be persuaded to like his products that he endeavors to influence them. But though this effort is part of the influences which shape consumers’ taste, no producer can in any real sense ‘determine’ them.”
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