Comments (38)

• Manuel Lora

  Some weeks ago I saw this on ESR's libertarian blog:
  
  
  
  "I believe (though I cannot prove) that the most crippling and dangerous kind of ignorance in the modern West is ignorance of economics, the way markets work, and the ways non-market allocation mechanisms are doomed to fail. Such economic ignorance is toxic, because it leads to insane politics and the empowerment of those whose rhetoric is altruist but whose true agenda is coercive control."
  
  
  
  That was the only mention of economics in that post but he nails it. I agree: the way to achieve liberty is indeed economic education.

  Read the rest of the post here.

  Published: March 8, 2005 3:58 PM

• mikey

  I for one spent 12 years in school and 2 years in
  university without learning a thing about economics. It was not taught in elementary school
  at all. And in the 70s "learning" economics in
  university meant you were worse off than if you
  knew nothing at all.
  Your question of why, if free enterprise is the best system why isn't it adopted everywhere, is
  one I haven't seen properly answered anywhere,
  but a place to start would be "The Anticapitalist
  Mentality" by Mises.
  Humans seem to need leadership,perhaps dating back
  to our tribal days.We are too willing to mortgage
  our liberty for a feeling of security.

  Published: March 8, 2005 4:03 PM

• Thant Tessman

  I suspect that anyone who has an understanding of economics similar to that of the Austrians, who is also not libertarian, has no interest in the accurate dissemination of economic knowledge.

  That is, I think Keynes knew he was lying.

  Published: March 8, 2005 4:07 PM

• Pete Canning

  I have had this discussion a few times recently. The basic truth is that on the surface, economics is like all other "social sciences" in that it is entirely unscientific. Economists are initially drawn to the economists that most agree with the conclusions of. If you believe certain policy, you will reject off hand any authors who seem at odds with what you want to believe is true.

  Yet there is a common thread in Austrian economics, and libertarianism in that they are both based on axiomatic beliefs. The Austrian economic methodology appeals to people who wish to search for truth in a logical manner rather than as a method to prove themselves right. Austrian economics cannot serve its master in the same way that endless "models" and 'data' can be used.

  In final analysis, Austrian economics and libertarianism are inextricably linked because they are both right an true and are derived from logical processes.

  Published: March 8, 2005 4:17 PM

• Withheld on advice of counsel

  I offer just a word of caution. The best we can hope for from a teacher who doesn't already understand economics is taking the time to read and understand a widely used introductory economics textbook and then teaching from it. If that teacher is an employee of a public school system, that textbook will have to be one that has survived the increasingly political approval system. That is not a recipe for success.

  While I would love to have a large segment of the population learn and understand economics, I doubt that it can be taught so easily. Sadly, our greatest avenue of success is to provide sound economic answers to problems people care about. At least that gives me a ray of hope every time something like the Social Security (sort of) Privatization debates occurs. I send out links to concise, clear articles to anyone I believe will read them.

  Published: March 8, 2005 4:20 PM

• Koen Swinkels

  Mr Kinsella writes:

  (a)My first guess is that it's because the more you understand economics, you understand that property rights and personal liberties are essential if we are to have peace and prosperity--and most people are in favor of these goals.

  (b) This implies that the main reason we have socialism and statism is because the masses are simply ignorant of economics.

  (c) Which implies the greatest way to achieve liberty is economic education.

  my hunch is that (b) does not follow from (a), and (c) does not follow from (b)

  let me briefly explain: I know nothing about how computers work, what the best way is to make cars, how rockets are made, about the ultimate principles of physics and so on and so forth.

  The division of labor and the free market enable me to make a choice between several products without my knowing anything about the underlying workings of either the product or the industry behind it. I simply pick what seems to work and thrive and let the division of labor and competition do the work for me.

  Now if there were similarly a free market in ideas, including ideas about economics, I would not have to learn about economics myself, I wouldnt need no economic education, but would simply choose among the various societies organised around different economic principles and move there or vote for parties that would say: 'we're gonna do what they (the succesful societies) are doing'. If there were e.g. other societies that were based on free market ideas and that would (naturally) be prosperous, peaceful, innovative and so on, I would only look at those results and e.g. move there or demand the same thing here. I would thus let the division of labor and competition (between societies) do the thinking work for me and again I would need no economic education.

  But alas, there is no free market in ideas and thus the division of labor cannot be trusted in this situation.

  Pardon my poor explanantion, I wrote a 100+ page draft on this question 'Why Bad Ideas Survive' in which I am a bit more precise

  Published: March 8, 2005 4:26 PM

• Jeremy

  Peter Boettke wrote a paper titled "Why Are There No Austrian Socialists?" which addresses this topic (from a slightly different angle). It was included in Calculation and Coordination and can be found starting on page 23 of the following PDF:

  http://www.gmu.edu/departments/economics/pboettke/pubs/CC_REVISES.PDF

  Published: March 8, 2005 4:38 PM

• Stephan Kinsella

  Swinkels: It seems to me (b) does follow from (a). If it is true (a) that most people are in favor of peace and prosperity, and that "property rights and personal liberties are essential if we are to have peace and prosperity," then, this implies that most people would favor property rights if they understood this truth. And if they favored it, we would have it. But since we don't have it, it can only be because they don't realize this.

  BTW, Jeff Tucked pointed me to some relevant writings: Rothbard,
  Praxeology, Value Judgments, and Public Policy;
  The Mantle of Science; "Value Implications of Economic Theory," The American Economist, vol. 17, Spring 1973, pp. 35-39, also in "The Logic of Action One".

  Published: March 8, 2005 4:39 PM

• Koen Swinkels

  Kinsella,

  the crucial point in (b) is 'the main reason', and that doesn't follow. I agree with the rest though. The main reason as far as I can see it is that there simply are no examples of other systems (such as one truly based on property rights) in the world. you dont need to know economics if you can simply see more succesful other examples. But sadly, social-democratic societies are the best we have...

  while the Soviet-Union closed the windows to the world for its citizens so that they couldnt see the superior economic system of the West, in the West the windows are wide open to the world, but there simply is not much to see...

  Published: March 8, 2005 4:44 PM

• Koen

  thanks for the links though

  Published: March 8, 2005 4:45 PM

• Koen

  in other words, yes it is true that if people knew economics they would probably favor libertarianism, but that doesnt imply that the main reason that they dont favor it is that they dont know economics.

  as I clumsily tried to show with my examples from other areas of knowledge the reason that people make the right choices is not because of knowledge of underlying things, but because of the division of labor combined with free markets.

  Published: March 8, 2005 4:56 PM

• Dan Mahoney

  I see no reason why someone can't believe in the
  truth of Austrian economics and still reject (at
  least some) classical liberal doctrines, such as
  the belief that humanity as such, and not
  particular subgroupings, is the only real or
  valid or proper social category. Put
  differently, must all Austrians be strict
  universalists, or is there room for some
  particularlism in their social theories?

  Dan

  Published: March 8, 2005 5:31 PM

• Bruce Bartlett

  The reason for this phenomenon is that present day "Austrians" exclude from their ranks anyone who is not also a libertarian. If you look at the historical Austrian School, most of its members probably would have been considered social democrats in their day. Wieser, for example, supported progressive tax rates.

  Published: March 8, 2005 5:54 PM

• Matt

  I came in not through Mises or Rothbard, but by way of Bastiat, who said, in a nutshell, "Socialism is legalized plunder." For someone who believes that all Ten Commandments are to be obeyed at all times, there was no choice but to become an Austrian.

  Published: March 8, 2005 6:37 PM

• Michael A. Clem

  "Why are Austrians libertarians?" implies that people who are Austrian school economists become libertarian in their political views. That may be true, but in my own experience, I was a libertarian first who became an Austrian. Milton Friedman's Free To Choose was one of the first books I read that really covered economics, but obviously, not the last.
  

  Published: March 8, 2005 7:20 PM

• Stephan Kinsella

  Mahoney: "I see no reason why someone can't believe in the truth of Austrian economics and still reject (at least some) classical liberal doctrines..."

  Me neither, Dan; I was just observing that most Austrians do, as a matter of fact, seem to be libertarian. Would you disagree with this?

  Bartlett: "The reason for this phenomenon is that present day "Austrians" exclude from their ranks anyone who is not also a libertarian."

  I am curious what is your evidence or the reasoning behind this statement? I don't think this is true at all.

  CLem: """Why are Austrians libertarians?" implies that people who are Austrian school economists become libertarian in their political views. That may be true, but in my own experience, I was a libertarian first who became an Austrian."

  I did not imply this. I only imply that most Austrians seem to actually be libertarian. I didn't mean to imply anything about the order.

  Published: March 8, 2005 9:01 PM

• Dan Mahoney

  Stephan:

  I certainly agree w/you re the close affinity
  of Austrians and libertarians. I was being
  somewhat rhetorical, I guess.

  This is not really your question, but I will say,
  though, that I don't exactly see any reason why
  Austrians *should be* classical liberals. To use
  but one example, Austrians do not establish the
  propriety of methodological individualism as the
  *sole* means for understanding society, only that
  one *can* understand society by reference to the
  individuals constituting that society. It does
  not follow, though, that there are no other
  relations besides the ones between individuals by
  which one can understand society, such as the
  relation between an individual and, say, God, or
  race, or in general entities that are independent
  of the will of any individual actor. (Actually
  even human rationalism would fall into this
  category so not even Misesians are entirely
  consistent here.)

  Yet, many Austrians seem to conflate the
  extreme version of MI with the more
  moderate (and true) version of MI. This former
  position, IMO, is baggage inherited from
  classical liberalism and really has nothing to do
  with proper (that is to say, Austrian)
  understanding of economic science, or the
  social sciences in general.

  Dan
  

  Published: March 8, 2005 9:53 PM

• Dan Mahoney

  Actually, Stephan, to answer your question
  succinctly in light of my previous post,
  I would say that most (all?) Austrians are
  libertarians because of intellectual error,
  to some extent (namely, the conflation of
  extreme with moderate MI).

  Dan

  Published: March 8, 2005 9:56 PM

• David Heinrich

  Not all Austrians are libertarians; look at Allan Greenspan. Those Austrians who aren't libertarian, however, are simply evil.

  Published: March 8, 2005 10:36 PM

• Tracy Saboe

  I wouldn't call Greenspan a libertarian.

  He was an objectivist, but I don't believe he understood economics any better then Rand did.

  Tracy

  Published: March 8, 2005 11:07 PM

• Tracy Saboe

  Sorry I ment Austrian. I wouldn't call Greenspan an Austrian. (libertarian yes, Austrian no.)

  Published: March 8, 2005 11:07 PM

• Peter Wright

  Is it not the praxeology. Because the conclusions are drawn by inference then one is drawn inevitably to complementary conclusions in economics and politics?

  Published: March 8, 2005 11:33 PM

• Illuminatus

  See http://pcpe.libinst.cz/nppe/2005/nppe2005-swinkels.pdf, http://www.econlib.org/library/Columns/y2003/CaplanMises.html,
  and http://www.buildfreedom.com/tl/tl07d.shtml

  Published: March 9, 2005 5:13 AM

• Arnold Kling

  In this essay, I argue that the reason has to do with the different way of looking at the economy.

  The standard heavy-math paradigm asks how well the economy allocates a given set of resources. Since perfect competition's assumptions are never satisfied, it gives scope for government intervention.

  The alternative paradigm asks how well the economy discovers and implements new ideas. This approach does not argue for government intervention in every imperfect market, and in fact it suggests that government is often the impediment to economic improvement.

  Published: March 9, 2005 7:33 AM

• tz

  Austrian economics goes a bit farther to praxeology which touches on why people do what they do.

  When it comes to the state, it predicts Acton's maxim - power corrupts. And you will end up collectively worse off. And most policy analyses show this to be true, but in such a way that you have concentrated and visible benefits but dispersed or invisible harm (e.g. minimum wage - the employed will get more - visible, but there will be fewer people employed - invisible).

  So theoretical discussions on the state (or lack thereof) are reduced to a few rights such as life and property ownership, or in deeper discussion, what to do about those who aren't competent to act in the marketplace.

  Practical discussions follow something similar, but generally if the state creates 20 distortions in an area, is it better if one is removed, or does that create an imbalance in the corruption? For example, copyrights and patents (which create artificial monopolies) v.s. antitrust (which seeks to limit the damage).
  

  Published: March 9, 2005 10:43 AM

• bill wald

  The Libertarians I personally know as a class think they are smarter, harder working, and better educated than the average person. A superior person. The general working class person probably considers himself to be an average person who prefers consensus - two heads being better than one.

  In other words, Libertarians confuse economics with Social Darwinism and they are the "master race?"

  A financial survey would be interesting. I guess that the median Libertarian is not doing better than the median R and D.

  Published: March 9, 2005 11:57 AM

• Andy

  bill wald,
  Thank you for your incredibly off-topic post.
  So libertarians are a "race" now?
  What libertarian makes economic arguments that have a connection to Social Darwinism? I've read more than a little Austrian economic theory and I haven't seen any appeals to Social Darwinism.

  A financial survey would be completely irrelevant.

  I've also noticed you spell libertarian with a capital "L". A "Libertarian" is not the same as a "libertarian". Perhaps this is the source of your confusion--though I suspect it goes a bit deeper than that.

  Published: March 9, 2005 12:58 PM

• Andy

  I think that intellectually honest social democrats could be "cured", or at least improved, in a week's time if they were given a copy of "Economics in One Lesson". The simplicity and clarity of that book would be a tremendous boon to world economic freedom if it were given a larger audience.

  Published: March 9, 2005 1:02 PM

• Vache Folle

  If value is subjective, it follows that the most value may be realized by permitting actors to pursue their own happiness without let or hindrance by the state.

  Published: March 9, 2005 2:11 PM

• Vanmind

  billwald,

  My actions have made me very cash-poor indeed. Tilting at windmills, and all that.

  My integrity is still (mostly) intact, though--a value that is priceless to me.

  Gewgaws be damned...

  Published: March 9, 2005 3:12 PM

• Alex

  Are you talking about Big L Libertarians, Mr. Wald? No offense, but so far I've found many libertarians to be of the nice sort of type..

  Actually, they're usually somewhat less outspoken than most political parties, in my views (I know I am.) I don't know if this could be just me or the (few) libertarians I've known in real life, but I think the tons of State advocacy from both the left and the right has kind of crushed them (and me, I must admit) into a state of submission. There's just no use to arguing with some people. I've found conservatives cling to their own brand of base anti-market idealism as do the liberals.

  Just some personal points I wanted to make.. you're free to disagree Mr. Wald..

  Published: March 9, 2005 7:34 PM

• Lowell R.

  Not to beat a dead horse, but contrary to Bill Wald, libertarians are actually richer, on average, than those with other political affiliations:

  From "American Government: Institutions and Policies", 8/e, by Wilson and DiIulio: "Libertarians are more likely than the average citizen ... to have higher incomes" (p. 123).

  -- Lowell R.

  Published: March 9, 2005 8:59 PM

• matt

  We're richer? I wish some one would tell my bank.

  Published: March 10, 2005 2:50 AM

• Illuminatus

  Not to beat a dead horse, but contrary to Bill Wald, libertarians are actually richer, on average, than those with other political affiliations:

  
  From "American Government: Institutions and Policies", 8/e, by Wilson and DiIulio: "Libertarians are more likely than the average citizen ... to have higher incomes" (p. 123).

  "The average citizen" is not the same thing as "those with other political affiliations". It is the case that people who are actively involved in political ideologies (libertarian or otherwise) have higher incomes than average people, because they are better educated.

  Published: March 13, 2005 7:49 AM

• gene berman

  Koen and Kinsella:

  You're talking past one another, not actually making opposing arguments.

  Swinkels comes closer to exposing the weakness in the idea that what is lacking is simply economic education; on the other hand, I doubt whether Mr. Kinsella believes that the cure lies in starting out our youngsters with "Economics in One Lesson" (or even "I, Pencil") rather than "Winnie the Pooh."

  As with goods and services, there is also a "market" for ideas--but the dynamics of the markets are decidedly different: in the market for ideas, there is simply a far greater place for what would be considered (in the market for goods and services) poor offerings.

  By and large, people want what works and works well. And, in the main, they get it because of the competition of the market and the relative ease in making comparisons between satisfactions ensuing through use of the (better) products. Even here, there is room for the continuance of useless contraptions, quack remedies, etc. (and the world is full of those skilled and eager to exploit the gullible).
  But physical reality is a harsh judge; bad ideas (or even older, less effective ones) tend to be discarded as people come to see (and measure) the results of the better.

  In the sphere of social ideas, however, the market is far more similar to that for nostrums, fortune-telling, and 100-mile-per-gallon carburetors (or additives). The "sellers" of these things have only to establish themselves as leaders--whether actual (as politicians) or merely intellectual (as teachers, writers, activists, etc.)--in order to carve a niche for their continued existence. Where in the sphere of physical reality, better ideas replace poorer with great regularity (and rapidity), it would be fair to say that, in the social sphere no bad idea ever dies.

  The problem has no solution, insofar as I can
  see. It is bound up with the psychological development of humans--particularly males--especially during puberty and adolescence. It is a simple fact that the normal human condition is one of specific, identifiable (to the individual concerned), almost measurable inferiorities. All must compete in many contests and on many levels: the adult persona is the result of inferiority-recognition, ego-compromise, and healthy integration to reality and society. But there are some--a fairly sizable "some"--who perceive, to one degree or another, that their easiest path to success (and here, we're basically talking about "getting laid") is to adopt one or another of the myriad countercultural poses available in which to achieve distinction; it's simply easier than achieving a starting spot on a championship football team, being valedictorian, the best-looking, fastest, richest, or toughest. When one competes in these arenas, the rules are established (by others), the competition fierce, and inability to attain the top a nearly foregone conclusion. But in espousing, seeking to lead in, or otherwise becoming identified with specific political aims (particularly the oppositional), one gets, to a certain extent, to tailor the ground rules, choose the competition, and employ a wide variety of what, in other pursuits, would be considered illegal weaponry--half-truths, outright lies, distorted historical interpretation, etc. The "left," in general (and its eternal devotion to unsound social theory--particularly economic) is merely the summation--the public face--of individual inadequacy adjusted, though improperly, to reality.

  The tendency I've described is indwelling, human nature, ineradicable. You can't beat it but you've got to fight it--that's part of human nature also. It's a battle of ideas that will go on forever.

  Published: March 18, 2005 7:11 AM

• arielb

  I do not believe education is the answer. You put out an economics textbook, so does Paul Krugman. Whose textbook will be used in universities?
  Rely on markets. Competition. Get a small country like Estonia to adopt a low flat tax and Russia quickly follows. Then this country and that country and before you know it, Germany is losing jobs and dying because these other countries are freer and better. Germany will have to adopt the right policy not because they want to but because they MUST
  

  Published: March 22, 2005 4:58 AM

• Lowell R.

  Some food for thought -- Could it be better if Austrians simply called themselves Austrians and dropped the "libertarian" label altogether? The Libertarian Party doesn't have much respect, and "left-libertarians" like Michael Otuska are confusing what the word means anyway. Even if the political arm of Austrianism loses public credibility, in other words, Austrian economics can still be respected in the academy. For example, the socialist idea of Social Security lives on even while the word "socialist" still repels people.

  Just a thought,

  -- Lowell R.

  Published: March 22, 2005 12:35 PM

• Paul Edwards

  Peter Wright,

  “Is it not the praxeology. Because the conclusions are drawn by inference then one is drawn inevitably to complementary conclusions in economics and politics?�

  Yes! I agree. I think that people arrive intuitively and/or formally at the fundamental interconnectedness of the libertarian and Austrian lines of thought, each at root, founded in praxeology and concerns falling from the fact of scarcity of means.

  To me it seems the connection between the two is similar to the connection between jumping in a lake and getting wet. The one follows from the other. If you’re about to jump in, your about to get wet.

  Published: September 5, 2006 2:17 PM