Ramesh Ponnuru on the Austrian School
"I also prefer the Austrian school of economics -- which includes thinkers such as von Mises, Hayek, and Rothbard -- not least because it does not overemphasize the textbook model of perfect competition, especially by using that model as a stick with which to beat real-world industries. For the Austrians, the essence of economic life is not competition but co-ordination. The metaphor of the invisible hand is a way of explaining how the problem of social co-ordination can be solved without central direction. People with diverse resources and plans can cooperate in ways that leave them all better off. Hence Michael Novak's description of capitalism -- his term, not mine -- as 'a creative form of community.'"
Read the entire article: The Market's Neglected Virtues. Next step is to go beyond using these names as slogans and start applying their ideas to how he thinks.
Comments (2)
Brian Rapp
Does Ramesh Ponnuru confuse Adam Smith's "invisible hand" with Mises's ideas? The whole point is that there is nothing "invisible" guiding the market. It's simply human beings coming together and making decisions about what they want and don't want (human action in other words). He sort of points this out but doesn't make it all that clear.
I honestly think that most people on the so-called "right" and card carrying Republicans don't have a real clue as to what constitutes a "free market". I sure as heck didn't until I found out about LRC and the Mises Institute.
I also have come across this strange neoclassical-Keynesian mixture of how the economy should work or works in my conversations with students and particularly economics majors from various universities. I dare say they almost sound like articles out of the "Economist" magazine. I had one last night with my best friend's girlfriend (econ major from Mizzou). Her train of thoughts work like this: She thought Paul Krugmann was bad, but she certainly saw a need for high income taxes to stamp out excess "greed" and spending, just like a Keynesian would. The government in the long run cannot stimulate real growth via monetary or fiscal policy, but still should be used anyway as tools. Perfect competition models are unrealistic and never achievable, but that doesn't mean they shouldn't be used for government policies to promote "fairness" in the marketplace. Perhaps the Chicago School's push for efficiency in the market place is sort of bad, but eminent domain laws should be applied on occasion if it benefits the "community".
It's this line of thinking that Ponnuru emulates, as do many on the so-called "right": "Well, government is bad, but we might as well use it and control it for our purposes". I don't know whether to pull my hair out or just laugh to keep my sanity. It's basically NRO's motto, and the same goes for virtually every "right wing" policy making group in Washington D.C., from the Heritage Foundation to the NRA.
Published: June 15, 2004 8:25 PM
Steven Kane
I don't know why but this reminds me of this one time when I was listening to a lecture given by a left wing econ professor. In the lecture he said that the government should subsidize the mail industry (through the U.S. postal service) because old people in rural areas wouldn't get mail, or as much mail if it were left to the free market.
His support for this claim was that going to the post office to pick up mail is one of the few forms of entertainment these old people have. I was going to raise my hand and ask him if the purpose of government is to entertain, but regrettably I refrained from doing so.
My point is that someone could have a very good understanding of economic theory and know the fact that the free market will bring the most prosperity and efficiency, but they will retain qualms about those who get "left behind" which they then use to justify statism & collectivism. This being the case of the left wing econ prof I mentioned.
Published: June 15, 2004 9:27 PM