Comments (60)

• Butler Shaffer

  Joe: Your observations are most encouraging. They remind me of the responses I have often given to libertarians who find themselves drawn to the "free state" project. Taking many libertarian-minded people and isolating them in places like New Hampshire or Wyoming only marginalizes their influence. The late Alan Watts saw the power that even one unorthodox - but intellectually sound - faculty member can have on any campus when he said that "every decent university needs at least one screwball on its faculty, to keep the others honest." My friend, the late James J. Martin, added advice that parallels yours: "get into one of the best graduate programs, stay underground, and then, upon graduating with one of their PhDs, go out and do what you want to do." It sounds as if conditions are getting better than this: students don't need to go "underground" with their core principles.

  Published: March 29, 2009 4:12 PM

• von Pepe

  But,

  Who will study pirates if we don't defer to certain departments?

  Published: March 29, 2009 4:13 PM

• Peter Canning

  Good for them. Such a trends bodes well for future students who might have the privilege to take courses from them. Here is hoping they find their way out of academia into other areas where their understanding is sorely needed.

  Published: March 29, 2009 4:23 PM

• Daniel Sanchez

  I like this approach. Spread the seeds throughout the USA and the world and, eventually, we will become one huge Austrian forest. Afterall, the Internet has allowed us to communicate more efficiently and without having to be physically present at one location.

  Published: March 29, 2009 4:24 PM

• Chad

  I'm heading to Temple next year to major in economics. I actually I just got home from an accepted student day on campus. It's nice to know that the TES is Austrian leaning, now I'm even more excited for next year!

  Published: March 29, 2009 4:25 PM

• Peter Boettke

  Joe,

  I think it is great that there are programs where students can learn economics, and become professional economists and work hard to advance the unique research program of Austrian economics.

  My only disagreement with you is your characterization of existing programs -- which I take to mean GMU and WVU at the PhD level and SJSU at the MA level.

  Let me repeat to you and everyone -- students who take my Austrian course study in-depth Mises, Human Action, Hayek, Individualism and Economic Order, Rothbard, Man, Economy and State, and Kirzner's Competition and Entrepreneurship. Those are the required books, the readings are from those books. I then supplement those readings with either classics such as Menger, Bohm-Bawerk, etc., or contemporary Austrians such as yourself, Rizzo, Garrison, White, etc.

  In my Constitutional class, students read Mises, Hayek and Rothbard as well as Buchanan and Ostrom, among others.

  In both classes students are encouraged to both be historians of economic thought of the Austrian tradition, and deeply engaged in the current literature of economics and political economy.

  Students in recent years have published papers on Mises's apriorism, Austrian definition of the money supply, Hicks/Kaldor welfare economics, and Austrian theory of the trade cycle to name just a few.

  At WVU students have over the past several years had the opportunity to study development economics from an Austrian point of view first from Pete Leeson and now from Chris Coyne. Plus both have conducted reading groups in Austrian economics for interested PhD students outside of the standard curriculum.

  Back at GMU, this year we had a record number of applicants, 75 students I believe have been admitted, and 2/3rd of whom has listed Austrian economics as their major interest. I am very excited about this. However, with Pete Leeson going to University of Chicago next year I am also nervous about how we are going to meet the educational needs of these students.

  Thankfully, we have Virgil Storr and Frederic Sautet to help out, and both Mario Rizzo and Steve Horwitz will be visiting at GMU and teaching here next year. I am also hoping that we will be hiring some more faculty who have a strong identification with Austrian economics. Combine that with our weekly workshop in philosophy, politics and economics (last week Richard Ebeling just gave a paper on Ludwig von Mises's writing prior to WWI to a packed audience -- ask Richard about it I think he might give a different impression than what you write about the "Austrianess" of our students and faculty).

  Finally, while I am completely in favor of multiple alternatives to GMU and WVU --- in fact, I want nothing more than a really good alternative to emerge in NJ and to think about hiring me since I never wanted to leave my home state. But I also think it would be responsible for you to list the placement of students in these other programs. At GMU, my students this year got tenure track appointments at Utah State and San Jose State, and research appointment at NYU (with Bill Easterly), a teaching appointment at Hillsdale, and an offer for a teaching position at St. Lawrence University.

  Last year, we placed a student at Loyola and at Hampden Sydney, the year before that at European School of Management, the year before that at Mercer, etc.

  So here is the deal. Students who come to GMU can study Austrian economics in depth, they can write a dissertation on Austrian economics, and they can find employment in a tenure track job if they meet the following requirements:

  PhD + High Teaching Evaluations + Publication(s) in recognized professional journals = tenure track job

  Absent students meeting those requirements, they will not be able to compete in the academic labor market. Plus, you have to include their personality --- the more difficult their personality, the more the publications will have to be of higher quality to off-set the problem personality.

  Our track record at GMU in teaching Austrian economics and cultivating students who in turn contribute to the literature in Austrian economics and in setting up their own research and educational centers to promote Austrian economics and encourage the next generation of students is pretty well easy to track down.

  I do hope others will have even more success than we have, please keep me posted on the actual progress of this and to students who have come out of these programs. We have 3 faculty slots right now and would love to see some names I am unaware of and point to their CV so I can see what they have done and pass their name along to the other members of the committee.

  Pete
  

  Published: March 29, 2009 4:29 PM

• Jack

  "They remind me of the responses I have often given to libertarians who find themselves drawn to the "free state" project. Taking many libertarian-minded people and isolating them in places like New Hampshire or Wyoming only marginalizes their influence."

  Could not disagree more. Given the fact that we are in a more-or-less democratic political system where numbers matter, change will only happen with a concentrated groundswell of support. Activism (political and civil disobedience) begets more activism when there is a physical community. Change is already happening in New Hampshire. The Free State Project is our best hope for Liberty in our Lifetime.

  I do agree with the advice that young Austrians should go to whatever University programs they wish, but this is far different advice than criticizing the concentration of liberty activists.

  
  

  Published: March 29, 2009 4:33 PM

• Econ Guy

  While I understand Professor Salerno's point, I disagree. The reason is opportunity cost. What's the opportunity cost of sacrificing one's time learning fallacious economic theories in a mainstream program? if "they view mathematics as irrelevant to economic theory", then why devote scarce time to developing mathematical skills that will be irrelevant in their careers? This time could be devoted to more important matters.

  I've wasted countless hours mastering useless statistical techniques for my MBA, and I wish I could have that time back (Austrians know that most statistical methods are not appropriate for business applications or the social sciences). I wish I could have devoted that time to learning material that would be useful in my career.

  Published: March 29, 2009 4:47 PM

• C. Evans

  Econ Guy makes a very good point. I spent hours and hours trying to get through a couple of chapters in some of Thomas Sargent's books and that time could have been much better spent studying Man, Economy, and State or Human Action or The Theory of Money and Credit. I understand Prof. Salerno's point as well, and this strategy maybe the only way for the Austrian school to make inroads into academia. However, if the underlying economic theory upon which these mathematical models are built is false, then it really is a waste of time to apply rigorous mathematics to foundationally flawed economic theory.

  Published: March 29, 2009 5:05 PM

• Peter Boettke

  Joe,

  One more question. "Doomed to failure" Can you tell me what failure you are referring to? Lets get specific here with regard to students who have graduated in the last decade (2000) from GMU. Who is a failure among:

  Ed Stringham (SJSU/Trinity)
  Ben Powell (Suffolk)
  Virgil Storr (Mercatus at GMU)
  Scott Beaulier (Mercer)
  Peter Leeson (GMU/U of Chicago)
  Chris Coyne (WVU)
  Robert Subrick (James Madison)
  Anthony Evans (European School of Management)
  Daniel D'Amico (Loyola University)

  And this year:

  Diana Wienert (Utah State)
  Emily Schaeffer (San Jose State)
  Adam Martin (NYU -- Development Research Institute)

  
  These are empirical claims being made, and you cannot get away with sweeping statements not backed up.

  As I said, I am all for letting programs grow all over the place. I disagree with one your characterization of GMU as non-conventional (we are a higher ranked department than Syracuse according to most studies) and also that the students that come to our program don't learn Austrian economics, and that students that come to our program to learn Austrian economics don't have a successful post-graduate career.

  I want to see the evidence you have accumulated that (a) shows the "doomed to failure", and the criteria you have on what constitutes failure, and (b) the real alternative programs out there that our first and second year students could pursue if it was such a better alternative.

  Perhaps we can get Walter in on this because he has been keeping track of this as someone who actually produces a great amount of undergraduate students who hope to pursue a PhD.

  Any other undergraduate teachers out there who actually have produced students who have gone to graduate programs and pursued their studied with the idea of becoming a professor -- speak up. Any other professors in PhD granting institutions that have supervised dissertations and tried to place their students --- speak up.

  The conversation Joe has started is too important to not be based in fact and experience. I mean the future of Austrian economics will be impacted by decisions made today by undergraduate and graduate students.

  I promise you this, as long as I am at GMU, I will try to cultivate a culture of excellence in research and teaching among our students, and create a culture of intellectual freedom among Austrian students. If a student wants to work on apriorism, I will support them; if a student wants to work on imputation theory, I will support them; if a student wants to work on capital theory, I will support them; if a student wants to work on pure time preference theory of interest; entrepreneurial market process; business cycle theory; free banking and/or gold standard, etc., etc., I will do my best to support them intellectually and financially.

  As I tell all the students who think about coming to GMU, talk to the former graduates, and talk to current students --- they are the most reliable source of information. Look up on google the names I listed above and email them. They are a better source of information than any professor about what goes on and how they were prepared to compete in the market place of ideas from an Austrian perspective.

  None of us has a monopoly on truth, especially when it comes to strategy. I would love to see great alternatives to GMU emerge at the PhD level. And I want to encourage any new development. But when claims of "doomed to failure" are integrated with advice to go to a traditional PhD program (when actually the program in question is not what one would consider top tier PhD program --- we know those programs Harvard, Chicago, MIT, Stanford and Princeton) I think we need to ask for some empirical evidence to back up the claims.

  Pete
  

  Published: March 29, 2009 5:28 PM

• gp

  i agree with prof.salerno that austrians shouldn't hide from the mainstream. i am a phd student in a grad program that has one austrian prof in it but has a core course of hardcore mainstream economics. having to deal with the core requirements, i have completely lost my fear of mathematics and econometrics, and it only makes me much stronger as an austrian. i understand the point of opportunity cost, except that i think it is well worth the effort.

  Published: March 29, 2009 5:44 PM

• Rich Paul

  As a member of the Free State Project, I am surprised by the implication of the commenter above that I "owe it to him" to live out my life in the non-free states in order to avoid "marginalizing my influence".

  The rest of the country is doomed. I choose not to be there, unarmed, isolated, and trying to "make a difference" in their broken system. I choose to be in New Hampshire, surrounded by well armed and like minded individuals, and to make it a showplace of what free people can do. If that "marginalizes my influence" so be it. The only life I have to live is my own.

  Published: March 29, 2009 5:51 PM

• ehmoran

  Rich Paul,

  Correct: LIVE FREE OR DIE.........

  Published: March 29, 2009 5:54 PM

• Sukrit

  Walter Block provides the best commonsense advice to potential graduate students. He once wrote at Lewrockwell.com that students should choose the most prestigious PhD program in economics that accepts them. In other words, take a look at the global university rankings here, select the most highly ranked universities, and then apply to those. Forget about whether there are Austrians on faculty or not.

  PhD students can get ALL the support they need for learning Austrian economics through the programs run by the Mises Institute. There's no need to choose a less prestigious university just because it's stacked with Austrians. Salerno is right. And in any case, there's no way you can criticize mainstream economics until you've first mastered it.

  Published: March 29, 2009 6:27 PM

• Joe Salerno

  Pete,

  My blog was inspired by a long-standing dispute between myself and Walter Block on the most effective career strategy for advancing the Mengerian or causal-realist tradition within the broad Austrian economics movement. In postwar economics this tradition has found its most comprehensive elaboration in Rothbard's purely economic works, especially MES. Walter's position as embodied in his long memo on Mises.org is that strudents should apply to Ph.D. programs with self-identified Austrian economists, Austrian sympathizers, even non-Austrian free market economists on the faculty--and the more the better (I hope I am not caricaturing his position here).

  My position, as I tried to state it, is that since no program is purely or even mainly "Austrian," and that almost all are pervaded by the prevailing economic orhtodoxy, it is better for students to apply to the best program they can get accepted into and complete. There are two reasons for this. First, the students will then not be under the illusion that they are learning Austrian economics at avowedly mainstream programs. Second, they will have no false expectations that they can somehow circumvent the math requirements. I think these illusions and false expectations are fomented when someone is counselled to enroll in a program offered by GMU or other institutions because it is "Austrian" program. Indeed I point out to students who ask me about GMU that you yourself have said on record that research at GMU is a "stew" of Mises, Rothbard, Kirzner, Hayek, North, Buchanan, Tullock etc.

  So my position--as against Walter's--is that, in offering guidance to Misesian-Rothbardian students going onto grad school, we should treat GMU, WVU etc. on all fours with other mainstream programs and recommend them (or not) primarily on the basis of the student's mathematical skills, educational preparation, geographical preferences etc. For example I recently recommended Suffolk to a student with modest but adequate math skills and interested in the type of policy analysis that Ben does. The strategy that is "doomed to failure" is to try to fit square pegs into round holes by recommending schools to students primarily on the basis of the numbers of "Austrian" friendly faculty rather than on the needs and qualifications of the students. And the "failure" I speak of is the "failure" of naive students to adhere to Misesian-Rothbardian principles when they believe they are learning more sophisticated versions in grad school. Better that they go into mainstream programs with their eyes wide-open and forearmed with the knowledge that they are not going to grad school to be taught Austrian economics but to get their credentials. I do NOT think, and never said, that GMU fails on the level of placing their graduates in good jobs or in its graduates' record of getting pubs in good journals--but this is true of many other mainstream programs that may be a better fit for a particular student.

  I hope this clarifies my position.

  Joe

  Published: March 29, 2009 6:34 PM

• Joe Salerno

  Pete,

  My blog was inspired by a long-standing dispute between myself and Walter Block on the most effective career strategy for advancing the Mengerian or causal-realist tradition within the broad Austrian economics movement. In postwar economics this tradition has found its most comprehensive elaboration in Rothbard's purely economic works, especially MES. Walter's position as embodied in his long memo on Mises.org is that strudents should apply to Ph.D. programs with self-identified Austrian economists, Austrian sympathizers, even non-Austrian free market economists on the faculty--and the more the better (I hope I am not caricaturing his position here).

  My position, as I tried to state it, is that since no program is purely or even mainly "Austrian," and that almost all are pervaded by the prevailing economic orhtodoxy, it is better for students to apply to the best program they can get accepted into and complete. There are two reasons for this. First, the students will then not be under the illusion that they are learning Austrian economics at avowedly mainstream programs. Second, they will have no false expectations that they can somehow circumvent the math requirements. I think these illusions and false expectations are fomented when someone is counselled to enroll in a program offered by GMU or other institutions because it is "Austrian" program. Indeed I point out to students who ask me about GMU that you yourself have said on record that research at GMU is a "stew" of Mises, Rothbard, Kirzner, Hayek, North, Buchanan, Tullock etc.

  So my position--as against Walter's--is that, in offering guidance to Misesian-Rothbardian students going onto grad school, we should treat GMU, WVU etc. on all fours with other mainstream programs and recommend them (or not) primarily on the basis of the student's mathematical skills, educational preparation, geographical preferences etc. For example I recently recommended Suffolk to a student with modest but adequate math skills and interested in the type of policy analysis that Ben does. The strategy that is "doomed to failure" is to try to fit square pegs into round holes by recommending schools to students primarily on the basis of the numbers of "Austrian" friendly faculty rather than on the needs and qualifications of the students. And the "failure" I speak of is the "failure" of naive students to adhere to Misesian-Rothbardian principles when they believe they are learning more sophisticated versions in grad school. Better that they go into mainstream programs with their eyes wide-open and forearmed with the knowledge that they are not going to grad school to be taught Austrian economics but to get their credentials. I do NOT think, and never said, that GMU fails on the level of placing their graduates in good jobs or in its graduates' record of getting pubs in good journals--but this is true of many other mainstream programs that may be a better fit for a particular student.

  I hope this clarifies my position.

  Joe

  Published: March 29, 2009 6:34 PM

• Peter Boettke

  Can everyone tell me what they think goes on at GMU?

  1. In the Austrian courses?

  2. In the core courses?

  3. In the other electives?

  4. In the seminars?

  One of your readers states that he is taking "hard core mainstream courses". Now I have no doubt he is, but what do people think is going on in classes taught at GMU. I recently had to suggest to some "blogologists" that they should look at the CVs of my colleagues such as Dan Houser and Thomas Stratmann, not just look at the bloggers.

  Look at the syllabus online for the courses, look at CV, and look at the rankings of departments that are published in referred journals.

  At GMU, you can take a ton of math and econometric modeling IF YOU WANT. Our students who did that, have been rewarded --- Erik Kimbrough (AER publication), Ryan Oprea (UC Santa Cruz appointment), Erte Zhao (Carneige Mellon appointment). How many students at these alternative programs have published in the AER, or received tenure track appointments at schools such as UC Santa Cruz or Carneige Mellon?

  Go back a few years, and one of our students Jon Klick now has a chaired professorship in law and economics at University of Penn. How many of these students have that sort of job?

  So as far as "hard core" mainstream --- I think if students want it, they can get it here --- they just have to look for it.

  On the other hand, if they don't want to pursue that, but pursue instead a broader program in philosophy of economics and political economy, then they can do that too. Heck, one of my students Sahar Akhtar is now in a tenure track position at UVA in philosophy. Any of those students going "mainstream" been able to pull that off?

  I guess I would like to know how we are telling people to "hide from the mainstream" and obviously pursuing a "doomed to failure" educational strategy.

  The divorce between perception and reality in this thread is something that must be challenged if we need to really make progress in graduate education and research in Austrian economics that can address the mainstream discourse in the econoimc profession.

  
  

  Published: March 29, 2009 6:36 PM

• gp

  just a clarification...my post was not meant to imply anything about gmu. i was just responding to 'econ guy' and concurring with what i think is prof salerno's main point.

  Published: March 29, 2009 6:59 PM

• Gary

  For reasons not yet entirely clear to me, I am reminded of a passage that I read from the book "Why Big Fierce Animals are Rare - An Ecologist's Perspective"

  So, I will share with the readers of this thread:

  "Animals and plants in nature are not after all engaged in endless debilitating struggle, as a loose reading of Darwin might suggest. Nature is arranged so that competitive struggles are avoided. This is apparently why separate species are the result of natural selection. A species lives triumphant in its own special niche from which none can displace it. Only the stragglers into the niches of others must be removed by brutal struggle. Natural selection designs different kinds of animals and plants so that they avoid competition. A fit animal is not one that fights well, but one that avoids fighting all together.
  Gause declared that his results illustrated a general principle: that no two species could live together indefinitely in the same niche, or, more simply, "one species: one niche.' We call this the "exclusion principle," because the owner of a niche excludes all others from it." (Colinvaux, 144)

  Published: March 29, 2009 7:16 PM

• Lester Hunt

  My son is an undergraduate econ major and I hope he reads this article and discussion!

  Published: March 29, 2009 7:39 PM

• Joe Salerno

  Pete,

  Certainly my point was not to suggest that GMU was telling people to hide from the mainstream, but quite the opposite, that GMU is basically a mainstream program with an eclectic philosophy of economics and political economy track appended. Your last post eloquently supports my contention. Thus we should both agree that students who enroll in the GMU program should not be under the impression that they will receive rigorous instruction and be guided to do research in Austrian economics. This is by no means a criticism, but a clarification of the nature of the program that is needed by those who are charged with counseling undergraduates in their choice of graduate schools.

  Joe

  Published: March 29, 2009 7:44 PM

• Nick

  I must admit that it is a shock to read an article treating math-based economics as a minor nuisance that is a tool for advancement instead of the hell-bent mania that it is portrayed by hard line praxeologists. I personally have felt for a long time that more empirical work should be done to make crucial Austrian insights mainstream, and it seems like maybe Austrian opinion is more open to that view.

  Published: March 29, 2009 7:57 PM

• jeff

  Dr. Salerno, tsk tsk, it's now called "Richard Stockton College of New Jersey", not "Stockton State College". It changed its name sometime between 1990 (when I enrolled) and 1995 (when I graduated).

  I believe you used to teach there? I wish I had had you, because I had back-to-back unreconstructed Marxist econ professors there that basically drove me away from econ for a decade. Young and naive, I assumed all of econ was like that. Sweet guys, but still....
  

  Published: March 29, 2009 8:04 PM

• Brian

  But what will we do with all these PhD's and such once the 'ed-bubble' bursts?

  Published: March 29, 2009 8:18 PM

• Joseph Mises

  Why are two giants in Austrian academia fighting publically?!?

  Published: March 29, 2009 8:25 PM

• matt

  How about this:

  1)Go to a prestigious and mainstream university(UW-Madison) for undergrad double majoring in econ/math

  2)Go to Grove City to get a masters in econ

  3)Go to another prestigious and mainstream university (such as University of Chicago, Stanford, NYU) to get a phd in econ.

  How does that sound? It's kind of a mixture of both strategies.

  Published: March 29, 2009 8:34 PM

• Keith

  I disagree with Butler Shaffer on a couple points.

  I don't think it's fair to call New Hampshire isolated as much of it is part of one of the largest metros in the nation - the Boston metro, and the liberty capital of the world, Keene, is less than four hours from New York City. Free Talk Live with over 50 affiliates and a popular podcast is located in Keene, as is Free Minds TV and Radio with 8 TV affiliates and 5 radio affiliates. The Ridely Report is nationally known in the liberty community. Free State Project members help organize events such as the Boston Tea Party and Boston End the Fed Rally in one of the nations largest metros.

  About liberty activists being marginalized in NH, I think the opposite would be a more accurate representation of what is happening in NH. Civil disobedience activists for liberty get much more attention from the underground and mainstream media in NH than anywhere else in the nation.
  Liberty activists are much more likely to get elected to government office in NH, also. If anything, there seems to be a synergy and liberty activists are able to accomplish more in NH than where they moved from.

  Published: March 29, 2009 8:56 PM

• Peter Boettke

  Joe,

  I respectfully disagree yet again. IF a student wants to study Austrian economics in depth, GMU students beyond their first year requirements can do so. On the other hand, IF a student wants to pursue technical economics, GMU students can pursue that by both taking classes with my colleagues, taking courses in the other divisions at GMU (such as Rob Axtel in Center for Social Complexity), or through the consortium at U of Maryland. So GMU gives students options.

  But if they want a RIGOROUS course of study in Austrian economics they can in fact receive that --- currently taught by myself and Pete Leeson. This course sequence is certainly as thorough as the course sequence taught by myself and Israel (which was the Austrian course teachers at NYU throughout the 1990s).

  And then as I said we supplement this with field specific courses --- such as Pete's development course, or my comparative systems course.

  But Joe, the Austrian students who come through the program and work under me did study in depth Mises, Hayek, Rothbard and Kirzner. Have read the debates over socialism with Lange and Lerner, but also your work, Yeager's work as well as my own response. Have read the work of de Soto on money and banking, as well as White and Selgin. So I don't really understand your claim.

  Again, I suggest you ask the products of the program --- I am biased since it is my class we are talking about. But ask guys like D'Amico, or Stringham, or Coyne, or Stringham, and ask them if they were able to get a "rigorous" training in Austrian economics during their time at GMU.

  But I must admit that I stress the Mises/Hayek/Kirzner tradition of the Austrian school in my classes and in my own research, so perhaps I am not quite qualifying in your book as the causal-realist from Menger to Rothbard. And this might be the cause of my confusion over your post.

  I would argue that I am getting my students to work in a manner consistent with the praxeological, or genetic-causal tradition (as laid out in Rizzo and Cowan's Kyklos paper). This is why there is so much stress on "mechanism" in their work --- a word I am sure will confuse many on this board but it relates to the interaction with the literature many of us are trying to address in our work.

  Pete, Chris and I have a paper under review (revise and resubmit actually) at the Cambridge Journal entitled: Comparative Historical Political Economy, which lays out the research program as we see fit -- the way to take the Mises/Hayek/Kirzner paradigm in economics into the literature on political economy. The piece we would argue is thorough-going Misesian -- the Mises of Socialism, Liberalism, Interventionism, Omnipotent State, etc. And also the Mises of Epistemological Problems.

  Isn't this Austrian economics?

  Published: March 29, 2009 9:36 PM

• Bill R

  Interesting debate that may have parallels to the conflict between two theories of future world growth (and the evolution/synergy examples given above). It reminds me of Richard Florida's "spiky world" where professionals specialize in an area and have synergy by being closely clustered and more motivated vs Thomas Friedman's "flat world" where all innovation can occur from anywhere in the world that is open, connected and competitive.
  http://edgeperspectives.typepad.com/edge_perspectives/2005/10/the_world_is_sp.html

  I lean toward Florida's view on economic growth and I now also lean toward Dr. Boettke's view toward academic influence for Austrians. Look at the GMU crowd.... they are all colleagues that lunch together but have who knows how many online blogs they each maintain regularly. History is also on Dr. Boettke's side ie the "Chicago School" "Austrian School" Saltwater vs Freshwater schools etc. Pretty interesting phenomenon actually...I'm sure there's a prospective paper that could link Florida's work to geography of economic schools. Maybe Dr. Salerno and Dr. Boettke should contact Richard Florida to see if there's something there...

  Now with the Salerno plan of teaching at business schools you have a better chance of training the next Warren Buffett, Peter Schiff, Jim Rogers etc and that could be a bigger boon for the general society and lead to broader influence of the Austrian school.
  This reminds of this interesting observation by Rothbard I'll conclude with:
  "So I think that Kristol and the rest are weaving pretty legends about the cosmic importance of the debates between Trotskyites and Stalinists in alcoves A and B at the City College cafeteria. As far as I'm concerned, the only Trotskyites were a handful of academics. By the way, there is a perceptive saying in left-wing circles in New York: that the Trotskyites all went into academia, and the Stalinists went into real estate. Perhaps that's why the Trotskyites are running the world." http://www.lewrockwell.com/rothbard/ir/Ch1.html

  Published: March 29, 2009 9:59 PM

• Joe Salerno

  Pete,

  I do not wish to quibble with you over the meaning of the term "Austrian economics," which is why I specified "the Mengerian or causal-realist tradition within the broad Austrian economics movement." The difference between us , I think, is summed up in your differentiation between "technical economics" and "Austrian economics." Austrian economics IS technical economics, and highly technical economics at that. Or do you believe that Menger, Boehm-Bawerk, Strigl, Fetter, Hayek, Hutt, Mises, Rothbard and Kirzner were mere philosophers of economics or political economists? Two courses in basic Austrian economics and a few courses in applied economics taught by Austrians does not constitute an Austrian graduate program.

  I am afraid that we will just have to agree to disagree on this point.

  Joe

  Published: March 29, 2009 10:16 PM

• Sukrit

  Here's what Walter Block thinks:

  My "philosophy" on this is to go to the most prestigious university that will take you, either assuming equal financial considerations, or ignoring them.

  Because the top 25 uni's in the world tend to be more selective - higher GRE scores, etc - there is a general impresson (whether accurate or not) that by being admitted you are smarter than most. Hence, there is a better placement record for fresh PhD grads and more "prestige". You also get to interact with the current crop of "intellectual leaders". Going to a top uni might not be better in terms of getting a well-rounded economics education (i.e. coursework that includes a variety of different perspectives, including Austrian), however it's a signalling device.

  But I think Pete Boettke makes a number of great points too; it's really up the individual to decide. There's no right or wrong answer, because nowadays there are so many opportunities outside of formal university to learn Austrian economics.

  Published: March 29, 2009 11:51 PM

• Peter Boettke

  Joe,

  Of course I think Austrian economics IS technical economics. By that I meant, mathematical modeling economics, and or refined statistical techniques economics. I thought we could agree on a common language. Standard curriculum in economics is highly "technical" in this formalist sense, while Austrian economics is highly "technical" in the logical sense (and I would add "demanding" in the scholarly sense, and "rigorous" in the philosophical sense).

  We DO NOT have a disagreement on our characterization of Austrian economics; we do disagree on points of emphasis within the tradition.

  Again, I suggest you not talk to me, but instead talk to my former students. Did they get a "rigorous" training in Austrian economics? Are they now contributing (or attempting to contribute) to the advancement of thought within the Austrian tradition? Are they failing or succeeding in publishing their work in the professional journals? Are they failing or succeeding in terms of influence as measured by citation in other professional journals? Are they failing or succeeding in terms of professional placement?

  What alternative models are we to follow? In your generation Joe we had the following: Rizzo (Chicago), White, High and O'Driscoll (UCLA), Lavoie (NYU), Block (Columbia), Holcombe (VPI) and Salerno (Rutgers). Only Lavoie was a product of an "Austrian" program, and one that was situated within a very technical (in the meaning I used) PhD program in economics. How did that group do in terms of publication, placement, influence?

  Now we come to the current generation? How does it compare in terms of numbers, placement, publication, influence?

  What lessons do we learn from this?

  Are there any lessons to be learned?

  I was intimately involved in the graduate student recruitment and selection at GMU for close to 7 years -- 2 years ago I backed off. For 4 of those years I was the DGS.

  I know the GRE scores, GPA and other factors that get students into GMU and also top universities. The bottom line --- 3.8 GPA, and 780Q as a minimum to be competitive, and even with that placement in a top shelf PhD program is difficult to achieve. Many of the top PhD programs will not admit students unless they are funded. The funding by the way can be very lucrative now-a-days (perhaps not now due to the economic situation).

  I agree 100% with the proposition --- go to the best PhD program you can get into that will pay your full way. If you are not on fellowship, then I would argue you will not get the benefit of being from a top flight program because you will be at best like a "walk-on" athlete at a D1 basketball program. GMU is slightly different as we follow an older Chicago School model --- we let a large class in, we fund very few first year students as a percentage of the first year class. Students compete against each other in their classes, and many will find funding in their 2nd and 3rd years as they impress faculty with their hard work and creativity.

  Just not sure how many people (a) make a realistic assessment of what it takes to compete in the discipline of economics, and (b) self-knowledge of their own aptitude to be able to compete. I think we should be steering more students into fields such as history, political science, and law. The idea Joe that applied economics PhD programs at good programs are more open to Austrian economics is laughable simply because to the extent their is a discipline of "applied economics" it means econometrics full time. Also one should understand the professional implications of such a move --- especially as professional patience with instrumental variable approaches is waning so that now we have a return to theory that more or less mimics the world you grew up in intellectually in the 1970s and 1980s ---- theory, not econometrics, will be the key to competing in the 2010s and beyond is my prediction.

  Students should look at placement record of graduates, they should look at average time to complete degree, they should look at CVs of faculty, they should know what departmental research seminars faculty are being invited to present in (not conferences, not the libertarian club, but invitations to present in faculty research seminars --- this is the signal of professional engagement), they should know awards professors have won, they should know co-authorship opportunities for graduate students, etc.

  Choosing the right graduate school is a very important decision for an aspiring economist. The decision needs to be based on facts not perceptions. Most of this information is now readily available on the web for anyone who takes the time to find it. It is important for the aspiring economist to actually take the time to investigate.

  I think a useful project for the Mises Institute --- since the world-wide community of Austrian economists always goes to this site first for information --- would be to post a list of professors by decade, and then produce a family tree for each on their students (formally) and what they have done for the "movement" in the broadest possible sense. See which branches are productive, which ones seem to die out -- try to explain why.

  To give you an idea of what I mean consider 3 undergraduate professors --- Hans Sennholz (Grove City College), Richard Ebeling (U of Dallas and Hillsdale) and Walter Block (Holy Cross, Central Arkansas, and Loyola). How many of their students went on to earn PhDs and/or decided to go into Austrian or free market related lines of work in think tanks or policy groups, etc.?

  Develop this family tree method to look at all the people who are teaching undergradutes, who is successful and who isn't on this dimension of producing those who commit to the "cause".

  Do this same thing for those teaching in PhD programs? Mises, for example, produced a great stream of PhD students in Vienna and at NYU, compare that to Hayek's output at LSE and Chicago. What did those students do after? How about Kirzner at NYU? Lavoie at GMU? Selgin and White? Garrison? Huelsmann and de Soto? Klein?

  What does the family tree look like, what branches are alive and producing, what ones are dying and why?

  A careful and detailed empirical study along these lines would be very useful to students deciding how to decide what steps to take for their future.

  Even if we had disagreements about the reasons why this branch was growing and that branch was not, it would be useful information and it might get those who are dedicated to the branches that are dying to figure out a way to not let them die. Or perhaps such an empirical study would reveal that what we think is so ain't so, in which case optimism for the positive growth in Austrian economics in the larger profession of economics would swell and we would be made better off.

  The bottom line --- we have to agree on the criteria of success or failure. I take it to be (a) truth tracking in economic science, (b) the advancement of Austrian economics (as the best paradigm for tracking truth) within the profession of academic economics, (c) that advancement within the profession is defined clearly as appointment in PhD programs, publications in high impact journals, increasing influence as measured by citation pattern, etc.

  If we agree on (a), (b), and (c), then we do the family tree thing, then we can have some empirical basis for us to make judgments about strategies "doomed to fail" versus those that are "guaranteed to succeed".

  Let a thousand flowers bloom in our movement, but we do need to know what a rose is, as opposed to a weed.

  Published: March 30, 2009 8:14 AM

• Josh

  To paraphrase: I've never let school get in the way of my education. I'll take the top 25 program and learn Austrian economics outside of school.
  

  Published: March 30, 2009 8:35 AM

• George Donnelly

  Why do you assume that people in NH and/or WY are 'isolated'? We can be just as connected there as anywhere. In fact, by building organizations and networks based on the principles that underpin liberty, perhaps we can be more connected there than anywhere else.

  Published: March 30, 2009 8:40 AM

• Ben Powell

  Joe,
  Thank you for recommending a student to Suffolk and I'm glad you clarified your original post because your article implies students shouldn't come to Suffolk just because I'm there (and other free market people).

  However, your restated position as I understand it is:
  "So my position--as against Walter's--is that, in offering guidance to Misesian-Rothbardian students going onto grad school, we should treat GMU, WVU etc. on all fours with other mainstream programs and recommend them (or not) primarily on the basis of the student's mathematical skills, educational preparation, geographical preferences etc. For example I recently recommended Suffolk to a student with modest but adequate math skills and interested in the type of policy analysis that Ben does. The strategy that is "doomed to failure" is to try to fit square pegs into round holes by recommending schools to students primarily on the basis of the numbers of "Austrian" friendly faculty rather than on the needs and qualifications of the students."

  It's unobjectionable that recommending schools by "needs and qualifications of the student" is a good idea. But why include, math, geography, apparently a style of policy analysis, among these needs and qualifications but not include desire to learn more Austrian economics or work with free market faculty?

  I am a basically a supporter of Block's strategy and in particular for a reason that's not mentioned in this thread so far. Much of what is learned in a Ph.D. program is through a sort of apprenticeship rather than in formal classes. Working with successful austrian/free market professors who make their austrianism part of their professional work helps mentor new Ph.D.'s to do the same. Austrian's who attend mainstream Ph.D. programs without any Austrians or free market guys on the faculty miss out on that type of mentorship. As a result they have to learn how to integrate their radicalism with their research in a way that is publishable own their own. Of course it can be learned, but it's easier to learn from someone already doing it. Students often underestimate the difficulty of transforming from a consumer of economics to a producer of economics, especially while making that work true to their non-mainstream beliefs but simultaneously appealing to the economics profession. I think this is a major reason for students to attend a Ph.D. program with Austrians or free market people on the faculty. By going to a program without such mentors it's too easy to fall into letting your Austrianism be a hobby and your research mimick the methods of the faculty at your program.

  I'd also like to weigh in on a couple points raised in the debate with Pete. I think Pete is right, if a mainstream education is what you want you can basically get it at GMU IF YOU CHOOSE TO. Everyone gets a minimum of mainstream in their first year but it's up to the student after that. Difference at Suffolk is that all students HAVE TO take a more mathmatical mainstream 1st year than the GMU students. If a GMU student elects to they can take as much math/metrics as is taught at Suffolk and as Pete points out, by well published faculty members.

  Pete and Joe seem to have reached an agreement to disagree about learning Austrian at GMU given their different emphasis. I'll only add that Rothbardians aren't discouraged at all there.

  On the empirical questions I have two for you Joe:

  1) Please name the Austrian's who were "misled by the charisma, reputation or rhetoric of particular professors into thinking that what they are being taught is "Austrian" economics when in fact it is almost always a potpourri of different approaches combined with a libertarian bias toward policy analysis" I think every austrian knows they are learning a Virginia School Potourri at the GMU program on the whole and they know what parts are austrian and what aren't.

  2. Can you name successes in the last 10 years of dedicated Austrians going to a mainstream program with no Austrian or free market mentors and then maintaining their Austrian beliefs, making those beliefs part of their research, AND becoming successful in the profession? I can think of one, Andy Young. Pete has named bunches in the Block strategy from GMU and we could include many others from Auburn (when they had a Ph.D. program) and NYU too. Other than Andy can you name any others who have followed your strategy and been successful? This is an empirical question.

  Ben
  

  Published: March 30, 2009 9:05 AM

• Mark Thornton

  Pete:

  The thing I worry about is that so many of the GMU faculty are "former Austrian" types. For example, I would characterize Don Boudreaux, Alexander Tabborok, Dan Klein, Tyler Cowen and Bryan Caplan as economists who have either renounced their Austrian roots or have at least failed to renew their membership in any significant way. GMU seems to be the hotbed of former Austrians. Then you also have some fellow travelers at GMU who have only spoken (to me) about Austrian economics in the negative, with ridicule and scorn. I have no problem with people finding problems in Austrian economics, hiding your Austrian beliefs, finding interesting topics outside of Austrian economics, or seeking more status within the economics profession, but such an awesome lineup of former Austrians within one department must have an effect on graduate students. Most won't discuss this issue in any detail. What impact does this have on their desire to become real Austrian economists? I have got to believe that it has a tangible negative impact.

  Published: March 30, 2009 10:41 AM

• Sammy

  I was tending to think that Boettke had a much stronger case, and moreover that Salerno's case was in false*. But Mark Thornton's point is very important. However it seems that "defecting from the Austrian School" was not necessarily to do with being at GMU. e.g. Caplan wrote critiques of Austrians as a student. Second, in general it is reasonable (at least plausible) to assume that being would develop in similar ways in slightly different environments. In fact, following Salerno, I might point out that it is ludicrous to claim that being at or not at GMU is an important factor in defecting from Austrianism in this age of the Internet - the intellectual factors which inform these decisions are not largely geographical.

  * Salerno has made a habit of attacking Boettke, as in his review of Radicals for Capitalism!

  Published: March 30, 2009 11:40 AM

• Peter Boettke

  Mark and others,

  First, let me be clear --- I am not saying GMU is the only place to do Austrian economics ... it is clearly not, and I wouldn't want that to be the case. I was making the much weaker claim, that students can receive a rigorous training in Austrian economics at GMU as well as a very conventional training in neoclassical economics. Austrian students can study Austrian economics in depth at GMU if they want.

  Second, the fact that we have so many faculty who have knowledge of the Austrian tradition is both a curse and a blessing. But the one thing that is true is that NONE of these faculty tell students that they shouldn't do Austrian economics. Instead, they routinely tell the students their criticisms and the students must test their convictions against some pretty darn good debaters. I have had public debates about Austrian economics with both Bryan Caplan and with Dan Klein --- me defending the uniqueness AND importance of Austrianism against the critique.

  As for students doing "real" Austrian economics --- look at the list of students that I have provided, everyone of them is in fact doing Austrian economics --- not necessarily just history of thought, but work similar to Mark your Economics of Prohibition.

  BTW, I am sure many students become convinced of the argument by especially Bryan Caplan (who is a very smart guy), but the one thing I do want to stress is that Bryan never discourages a student who is interested in Austrian economics from being an Austrian. He tries to argue with them, but he never belittles them. He has worked with both Steve Miller and with Scott Beaulier, as well as Ed Stringham. Tyler Cowen co-authored a paper with Chris Coyne. So I think you have a wrong impression --- even those ex-Austrians support and encourage the students at GMU to do Austrian economics IF they want to --- they just ask them to think hard about what they are doing with it.

  I really think with respect to GMU and Austrian economics, the best source of information will come from guys like Stringham, Powell, D'Amico, Martin, Snow, etc. for this crowd.

  But let me end with a story, last Thursday Richard Ebeling was in town discussing Mises's writings prior to WWI. At his talk there were over 40 people in attendance, then our undergraduate economics club sponsored a talk by Richard on Austrian Theory of the Trade Cycle and the Current Crisis, which was a public talk. After that Richard went to dinner with a group of PhD students and myself and Pete Leeson and we stayed for close to 5 hours discussing Mises, rational choice theory, the current crisis, interventionism in general, etc. It was a great day for Austrian economics and for GMU --- it was also not atypical (except that Ebeling is special in my opinion). This is what goes on at GMU. It is why I have chosen to stay here when I have had multiple offers to leave --- it is a very exciting environment for students interested in Austrian economics. And that excitement is rewarded by our students getting very good academic placements all over the US and Europe.

  Is it for everyone? Of course not. We need alternatives, lots of them preferably. But it is also the case that students can come here and get a conventional education and a very thorough education in Austrian economics. That is all I have said. I certainly never claim GMU has exclusive monopoly on Austrian graduate training. We are just one option, but we have a track-record of success that should be taken into account. And I think it is a mistake of tremendous proportions to claim it as "doomed to failure".
  

  Published: March 30, 2009 1:34 PM

• Kevin Dean

  If moving to New Hampshire makes me marginalized, does that mean staying where I am right now puts me ENTIRELY off the page?

  People have stayed apart for the past two decades. It hasn't worked. Perhaps the Free State Project isn't the best route to liberty but I promise you, it's already working better than everything else.

  I'll be marginalized and free in New Hampshire. You're entirely welcome to join me and 20,000 of my friends. :)

  http://freestateproject.org/

  Published: March 30, 2009 2:46 PM

• Steven Horwitz

  One quick response to Mark.

  I can't see how that makes matters worse Mark. Yes, students at GMU have "former Austrians" as "role models," but each and every one of those guys knows the Austrian tradition inside and out. As Pete says, they also provide good challenges for students who want to study Austrian economics rigorously.

  How are students *better off* someplace else with people who have no knowledge of the Austrian tradition, no set of former graduate students and peers in AE who can help them get jobs, and no mentors of the sort that Ben mentions? Yes, "former Austrians" could, I suppose, work as a sort of "gateway drug" to non-Austrian ideas.

  But that's a funny argument from a guy who wrote a book on prohibition. ;)

  Lastly, to mention one more GMU faculty member, Russ Roberts' "The Price of Everything" is an extraordinarily Austrian book, as its debts to Leonard Read and Hayek, among others, are clear throughout.

  Published: March 30, 2009 3:52 PM

• Daniel J. D'Amico

  I'd like to parallel Ben's post that reminded readers as to the importance of mentors in graduate school. I agree entirely with Ben. If Pete's "family-tree challenge" were engaged, I suspect that mentor-ship would be the major explanatory variable.

  A strong compliment to mentoring is peer-group support, and another aspect that I find lacking in Joe's advice.

  GMU is big and diverse. For me, engaging with fellow graduate students - Austrian or not - was a wonderful learning experience. Perhaps I learned more from my fellow students than from my formal coursework. Though peer-groups probably should not be THE major factor in deciding where to go to grad school, they are NOT insignificant in explaining the successes or failures across graduate programs and across graduate students.

  Lastly, I can only speak from my personal experience, but I feel compelled to say that I could not disagree with Joe any more than I do as to his general perceptions of GMU and graduate school today. When applying to graduate school I considered myself a die-hard Rothbardian, and still do today - though I'm sure that there are a litany of things that I would disagree with Rothbard on and I'll admit that maybe Joe or others would be skeptical of deeming me a Rothbardian.

  In short, I loved GMU and did not feel betrayed by any false impressions, nor was I persecuted or prejudiced against for holding the beliefs or desires to investigate Rothbardian ideas. Instead, GMU was a smorgasbord of intellectual opportunity. I could talk, debate and research alongside like minded and un-likeminded peers and faculty. On the other hand, the programs that Joe describes sound bland, boring and uninspiring especially from the perspective of my inner-Rothbardian. The mini-Murray in my head would rather hone his teeth reading Buchanan, Coase and Friedman than he would reading "Management and Business Planning for the 21st Century" (a mock fictional title). If someone's take is the other way around so be it - again I'm just giving my perspective.

  Published: March 30, 2009 4:15 PM

• Nostradumbass

  If I was an impressionable young grad student at GMU and witnessed the Caplan-Boettke debates, I definitely would not be an Austrian economist.

  Published: March 30, 2009 6:03 PM

• Vanmind

  I shiver when I hear the term "intellectual maturity." The father of an ex-girlfriend of mine was a cop, a loving father and charitable Catholic who nonetheless told me once that (to paraphrase) "...my job might very well require me to fill the ICU with people staging legitimate protests, but I would do so with a clear conscience because I have the intellectual maturity to understand that this is the best way for me to put food on my family's table and help society's less fortunate."

  Not the same thing as choosing a grad school, granted. Still, I wonder where the encouragement is for students to vote with their pocketbook by refusing to help a school of ideological enmity become a trans-generational interventionist mill. IMO, these undergrads might do as much good in the world by attending Harvard's School Of Government before trying to "change the government from within."

  I have read Block's piece about choosing grad schools. It failed to impress me in the way that "Defending The Undefendable" impressed me. Perhaps he should use a similar argument to persuade people why entering the academic lion's den in order to maximize career potential is something other than moral cowardice.

  Some undergrads appear to be saying: "I'll pretend to be interested in statism, but only for a little while because deep down I know better." To that I say: meet the next generation of Greenspans.

  Published: March 30, 2009 6:11 PM

• Nostradumbass

  This is good:

  http://www.gmu.edu/departments/economics/bcaplan/capdebate.htm

  A total butt-kicking.

  Published: March 30, 2009 7:20 PM

• Andy

  Can we sum this up as "if you can get into Harvard, go there"? If Stanford accepts me into their econ program, am I supposed to turn that down and go to GMU? Seriously? Nothing wrong with GMU. Honestly, it's great and has a strong department. However, if I were an academic advisor for kid who could get into an elite school, then I'd tell her go for it. Their career path will be greatly improved. Rothbard went to Columbia for goodness sake!

  Published: March 30, 2009 9:49 PM

• David H. Miller

  I’m a theoretical physicist (Ph.D, Stanford) who has a forty-year interest in Austrian economics: I read Human Action, and a good deal of Rothbard and Hayek while in high school, and later got to know Rothbard and other Austrians personally while in grad school.

  It seems to me that the debate over math vs. non-math which is implicit in much of the discussion here is overdone.

  Yes, many economists clearly suffer from “physics envy” and try to use math when it is unnecessary or actually obfuscates the central point. But, in truth, the same happens in physics. I could give many example – for instance, some years ago a colleague, highly regarded in physics, wrote a paper in which he “analyzed” the physical meaning of what turned out only to be his failure to consistently carry out his calculation to the order he intended (I pointed out the error before the paper actually got submitted to a journal, fortunately).

  Economists are not the only professionals to misuse math!

  On the other hand, even Austrians do in fact use math: simply to talk about the rate of interest is to refer to a mathematical concept, and even Rothbard’s MES has some (fairly simple) math scattered within it.

  Given that the economics profession is indeed currently over-obsessed with math, it seems to me that young Austrians had better learn the relevant math, or their dissenting views will simply be dismissed as being a result of their lack of mathematical ability.

  And, if they really understand Austrian economics, they should be able to reveal the conceptual/logical errors in the mathematical economics without simply complaining about its being in math.

  After all, Keynes’ General Theory does not have any sophisticated math in it, but it is nonetheless wrong.

  Mathematics may hide conceptual errors and it may give a false sense of exactitude to analyses that are inherently uncertain or simply wrong. But I would suggest that the fact that some economic analysis is in mathematics is never in itself the root source of an economic error. Math (if there are no mathematical errors) is neutral: it merely reproduces whatever conceptual errors are fed in.

  If Austrians wish to expose those conceptual errors, they had better become literate in the relevant mathematics.

  It goes beyond which grad school they go to: wherever they go, they had better learn to speak the math language preferred by so many of their colleagues.

  “Mainstream” economics, when it is wrong (and it is not always wrong!), is mistaken not because it is mathematical nor because it is non-Austrian but simply because it disagrees with reality.

  Besides, it is actually kind of fun to try to analyze Coase’s theorem, the MV = PQ equation, rat-ex models, Fischer Black’s work, etc. and figure out exactly where the analysis is flawed.

  Dave Miller in Sacramento
  

  Published: March 30, 2009 10:07 PM

• ehmoran

  Dave,

  Do you think that one of the problems with Economic Mathematics is the inability to explain the equation in human action/psychological terms?

  Published: March 30, 2009 10:17 PM

• J.K. Baltzersen

  A lot of people seem to think math is irrelevant to Austrian economics.

  It is not.

  Let's take the issue of fractional reserve banking. I listened to a talk by Professor Hülsmann in Copenhagen a few years ago on fractional reserve banking. There was no explanation as to why the "multiplier" was 10.

  If you compute SUM(0.10^n) [n=0->infinity], that gives 10. It's the sum of all the loaned out money finding its way into the banks again, every time 90 per cent of it being loaned out again.

  If you can provide a general mathematical proof that SUM((1/p)^n) [n=0->infinity] equals p, that indeed is relevant to the issue of fractional reserve banking, and thus to Austrian economics.

  Moreover, you need math to "annualize" inflation rates. If the inflation rate is b % over the course of ten days, what would that be over a year? (hint: it's not just to multiply by 36.5)

  Mainstream economists try to use math to prove that they're right. In fact, they try to prove that 2 plus 2 equals 40. And you need knowledge of math to put them in their place.

  Mathematical models is not something you "do" in Austrian economics, but if you understand math, you can counter claims that you're opposed to mathematical models just because you don't understand math.

  Math is indeed relevant to Austrian economics.

  Published: March 31, 2009 2:19 AM

• David H. Miller

  ehmoran,

  I think I’d just say that it is not productive to try to explain something using mathematics unless you first have some relatively clear idea and then further conclude that math is a necessary means to express that idea: you do not, after all, use higher math to write out your grocery list.

  Too often, economists (and, as I said, even physicists) use math to hide the fact that they do not really have any idea what they are talking about. Math looks so impressive, after all!

  I think there may also be a deeper issue here involving the fact that the things economists are trying to study – human beings – are themselves information-generating and information-evaluating systems: indeed, anything an economist can do to analyze the behavior of economic agents can also be done by the economic agents themselves (since they are all human beings).

  The rat-ex folks realized this fact, but, if I understand their work correctly, they could never fully grapple with it. The possible models are so complex, and it is so difficult to fully characterize the universe of possible models, that you just cannot really pull off the task of allowing your agents to be as smart as (or smarter than) you yourself in the mental models they have of economic reality (which means you are not really that smart after all)!

  There is also a serious question here involving self-referentiality: Godel and many others have shown that a mathematical theory that tries to talk about itself can get into trouble. It seems to me that a mathematical economic theory that takes into account that the economic agents have their own (often implicit) economic theories may fall into that sort of trap.

  There is of course also the well-known fact that one cannot, in reality, measure economic “variables,” etc.

  Anyway, the bottom line is that math has not been as successful in economics as in physics. Personally, I’m open to the possibility that someone will figure out a way to apply math in economics: perhaps, clever use of information theory, networking theory, or something of the sort could do the trick.

  Based on past experience, I am not optimistic. (I actually hold some patents based on applications of information theory in some computing and communication systems. I wish I could see how to apply information theory in a clever way to economics. Alas, I don’t.)

  Nonetheless, since so many economists insist on communicating in a mathematical language, I think anyone who wishes to communicate with them had better acquire the same skill.

  Dave
  

  Published: March 31, 2009 3:00 AM

• Daniel J. D'Amico

  Joe,

  This claim of yours, "students who enroll in the GMU program should not be under the impression that they will receive rigorous instruction and be guided to do research in Austrian economics," is false. Students should be under the opposite impression.

  Published: March 31, 2009 7:45 AM

• David H. Miller

  JKB,

  Here is another example. I suppose everyone here is comfortable with the idea that the present value of a financial asset is equal to the discounted value of the future income stream.

  That is a mathematical concept, and, indeed, a concept that I have found, to my surprise, that most people who are not trained in economics – even many technically trained people and people in business management – are quite ignorant of.

  A more advanced example along the same lines is the old debate about capital “reswitching” as a result of changes in the interest rate. Without trying to revive that debate here, I think I can safely assert that it is difficult to address that issue one way or the other without approaching it mathematically.

  And the reswitching debate is relevant to Austrian economics, specifically to the concept of “roundaboutness” of production processes: see, e.g., Bob Murphy’s discussion at. http://mises.org/daily/1148 . (For whatever it is worth, I myself independently reached the same conclusion as Bob reaches: reswitching shows that a naively physicalistic concept of “roundaboutness” is mistaken, but it does not vitiate the Bohm-Bawerkian/Hayekian analysis as applied to the real world.)

  Math is not bad. Sometimes, even in economics, math is necessary.

  The misuse of math, which occurs in many disciplines besides economics (consider the naïve faith in computer models in so many fields!) is of course bad.

  Dave
  

  Published: March 31, 2009 3:04 PM

• Andy

  David H. Miller,

  Well put. I would clarify that Austrians don't have problems with the use of math in economics per se. The issue is the belief that human action can be derived from/explained by/predicted by mathematical models based upon data (i.e. historical prices, past behaviors etc.). The erroneous assumption is that there is some implicit quantitative/fixed (or mechanical) relationship between observable economic phenomena. Value scales exist. But we can't observe them. How do we know they exist? From surveying market participants? Nope.

  Published: March 31, 2009 4:17 PM

• David H. Miller

  Andy,

  Yeah, I know there is no logical reason for Austrians to hate mathematics: after all, Rothbard’s undergraduate degree was in math, and, indeed, in his later years, Murray evidently retained an interest in math (I was surprised to find out that he and I shared an interest in the foundations of set theory – of course, Murray was a polymath who was interested in pretty much everything!).

  On the other hand, the Austrian criticism of the misuse of math in economics is often taken to be an attack on math per se in economics: as JKB and I have pointed out, even Austrians do, and must, use some math in economics. And, I do have the impression, reinforced by some of the discussion here, that some young Austrians are disinclined to learn the math needed to communicate with “mainstream” economists. (I realize that no one here is saying that such a refusal to learn the relevant math is a good thing.)

  I just wanted to add my “two cents” to what I think is the consensus here: that young Austrians had better learn the math needed to communicate with their non-Austrian peers.

  There is, also, I think, a broader point here: in some sense, there is really no such thing as “Austrian economics.” I do not mean of course that Hayek and Keynes (or Rothbard and Friedman) are indistinguishable: in a historical and sociological sense, the Austrian school does indeed exist.

  However, in an ultimate, logical sense, there is only good economics and bad economics. Keynes was wrong because his reasoning and analysis were deeply flawed: he ignored how price level changes (specifically deflation of the price level) can adjust the nominal supply and demand for money, he ignored the effects of expansions of the money supply via the credit markets on the value of financial assets and the real structure of production, etc.

  Any competent economist should be able to understand this: it should not be necessary to “convert” to Austrianism or somehow “buy into” Austrianism to understand such things.

  That’s one of the reasons I endorse Joe Salerno’s main point: intellectually and logically, there is no reason for Austrians to consider themselves part of a ghetto (I understand that sociologically it may often seem that way!).

  In my own field of physics, there is no “Einsteinian school.” Einstein simply was correct (by and large – e.g., on relativity), and it is simply taken for granted that any competent physicist recognizes that fact: it is “non-Einsteinian” physicists, if any exist, who would be the weirdos.

  In the same way, on the central points of dispute that involve the Austrians – the disruptive effects of active monetary policy, the socialist calculation debate, the futility of a good deal of mathematical economics, etc. – reality is simply on the side of the Austrians. Austrian economics is just economics.

  I know enough of the history (and indeed I had the experience myself of making “Austrian” points in high school and college classes almost forty years ago) to understand why Austrians tend to feel themselves to be separate from the mainstream of economics.

  But in an ultimate sense, it is the Keynesians, Marxists, neo-Ricardians, etc. who are out of the historical mainstream of economics. It is they who are the flaky crack-pots.

  Austrians need to remind themselves that they are not some strange little sect: they are simply real economists trying to do economics right. I think that is part of the point of Joe’s initial post.

  Dave
  

  Published: March 31, 2009 6:11 PM

• ehmoran

  Dave,

  In my opinion, I find that mathematics applied in the search to explain a phenomenon of interest only provides an insight to the same, but the equation representing the occurrence is not the holy grail. That often seems to be forgotten. Through mathematics, many individuals gain a false sense of security.

  I find when the phenomenon begins to deviate from the math designed to model the same, then is the time to re-evaluate the chosen variables, if not, the parameters of the equation, but many times this is not done....

  But as is attempted today, Many scientists (Psychologists) assume that human behavior can be explained by math, if not, ignored and many appear to forget about the Copenhagen Interpretation as applied to human intervention and bias. If human behavior purely could be explained using math, then no Free Will exists and we are all ROBOTS with no Free Thinking. In this case, human growth and advancement would be impossible.

  "Socialists assert that all human actions and reactions depend upon environment. The theory is that human beings are mere robots, responding only to "external stimuli", and that heredity and the accumulated experience of countless centuries, should be disregarded. This is part of what socialists call the "pragmatic approach...."

  Published: March 31, 2009 6:40 PM

• David H. Miller

  ehmoran wrote:
  >In my opinion, I find that mathematics applied in the search to explain a phenomenon of interest only provides an insight to the same, but the equation representing the occurrence is not the holy grail. That often seems to be forgotten. Through mathematics, many individuals gain a false sense of security.

  Yes, I think we all agree on that: although math has its uses even in economics, as JKB and I have pointed out, it is not a magic wand that can substitute for thought. As computer programmers say, “Garbage in, garbage out”: feed some bad ideas into math and you still only have some bad ideas.

  You also wrote:
  >If human behavior purely could be explained using math, then no Free Will exists and we are all ROBOTS with no Free Thinking. In this case, human growth and advancement would be impossible.

  I’m not sure that is true; indeed, I am not even sure exactly what “free will” means – philosophers have spent a lot of ink on that topic over the centuries without yet even agreeing on a definition!

  On the other hand, quantum physics appears not to be deterministic (I emphasize “appears”: we physicists have been arguing about this for eighty years now!), and, yet, mathematics works very nicely indeed for describing quantum mechanics.

  And, as JKB and I have emphasized, there are parts of economics in which pretty much everyone, even Austrians, find some use of math to be necessary.

  The issues of free will vs. determinism and of the use of mathematics in economics seem to me separate issues.

  The real problem of the misuse of math in economics is that it has been used when complicated math was unnecessary or, so often, when the underlying economics is simply wrong. No amount of math can correct for false economics (or physics or whatever), but it can serve nicely to hide one’s errors.

  There are in fact good reasons which we all know and some of which I have alluded to above why math has been shown to have limited uses in economics – the inherent complexity and unpredictability of human action, the inability to measure economic “variables,” the fact that economic actors are themselves always trying to come up with new “models” for explaining the economic reality around them, etc.

  But the bottom line is that math has tended not to be too productive in economics, whatever the reasons. In truth, everyone, of all economic persuasions, knows this: how many econometric models predicted the economic events of the last year?

  The real problem is that despite this universal knowledge of the failure of pseudo-math in economics, too many economists have a quasi-religious belief that the misuse of math will somehow make their bad economics better.

  Given that everyone actually does know that mathematical economics has not done very well in explaining the real world, the real problem here is not intellectual but psychological and sociological.

  Dave
  

  Published: April 1, 2009 2:42 PM

• ehmoran

  Dave,

  That was Beautiful, Dave.

  But Free Will pertaining to humans might be what some would call an "unpredictable person". Like an ex-boss expecting me to hide, miss-represent, and/or change the results of the data as he sees fit because he knows I need a job to pay my bills, but I tell him to go to hell and QUIT on the spot.........

  Now, that's free will, granted if he knew I had a strong sense of integrity and morals he wouldn't have done that, or even better, he wouldn't have hired me. But he did. Likely being the arrogant individual he likely was, he probably thought he could change me due to circumstances and force the issue.... Guess Again.....

  I'll think of a few more examples.

  Published: April 1, 2009 3:13 PM

• ehmoran

  Dave,

  "But the bottom line is that math has tended not to be too productive in economics, whatever the reasons. In truth, everyone, of all economic persuasions, knows this: how many econometric models predicted the economic events of the last year?"

  A little diddy, economic downturns like the one during the past year have occurred at every change in U.S. President.......

  So, someone knows what's going on!

  Published: April 1, 2009 4:34 PM

• David H. Miller

  ehmoran wrote:
  > But Free Will pertaining to humans might be what some would call an "unpredictable person". Like an ex-boss expecting me to hide, miss-represent, and/or change the results of the data as he sees fit because he knows I need a job to pay my bills, but I tell him to go to hell and QUIT on the spot.........

  Well, actually, I had a boss like that too, and I too quit, and, yeah, he was probably surprised that I had the integrity to do so.

  But people who knew me well would not have been surprised. And I suspect the same is true for people who know you well.

  For people of good character, their “freest” acts may actually be their most predictable acts, at least for those who know them well.

  I’m not arguing against free will. I simply, really do not know what “free will” means, and I am doubtful that anyone else does either. I suspect our knowledge of the human mind and of consciousness (and, for that matter, our knowledge of physics) is still too primitive to really answer questions such as this.

  The real point, on which I think that you and I agree, is that human beings are far, far too complicated for anyone to realistically believe that he can accurately, definitively predict human behavior in general.

  We cannot, after all, even predict the weather out a month in advance, and we think we understand the physical laws underlying the weather quite well. To think we can accurately predict the behavior of a few hundred million (or a few billion) human beings, considering that humans are enormously more complicated than cold fronts, clouds, etc., is simply bizarre.

  This is especially true since those human beings are constantly trying to come up with new ideas, new plans, etc. that no one has ever thought of before. In a sense, they are trying to outwit any analysis or prediction anyone might come up with.

  You do not need to appeal to any complicated metaphysical analysis of free will, etc. The truth is that everyone who follows economic forecasts, anyone interested in the historical predictions of various futurists, etc. knows that attempts to predict the future have been laughably unsuccessful.

  It just has not worked.

  Will someone someday come up with a predictive approach that will work? Maybe… but personally, I really doubt it for reasons I have mentioned earlier.

  The empirical case against the general predictability of human behavior is so enormous that I am content to rest on that empirical evidence.

  Dave
  

  Published: April 5, 2009 4:44 AM

• ehmoran

  Thanks Dave.

  Well, only those that are arrogant didn't have the skill to predict our next move: but was it "the arrogance of ignorance or the ignorance of arrogance".

  I do have somethings on human behavior.

  I guess if you think about human behavior on a 2-dimensional level, greed and fear, human action could be predicted for the majority or the masses.

  Have you noticed while watching a Rock concert when the audience joins in with the band, the audience sings in harmony, in tune with the song. We know that many couldn't hold a note with a bucket and many have a perfect singing voice. The average human tone of the audience, however, is in TUNE.

  I have found a natural phenomenon that models human behavior of greed or fear, although I assume it's more like exuberance and depression.......

  Published: April 5, 2009 11:41 AM

• Joe Salerno

  I think this thread has been very useful and revealing and warrants a few summary thoughts.

  1. I was very surprised--but not at all unhappy--that my initial post, which was a general reply to Walter Block's memo on Mises.org and mentioned neither GMU nor Pete Boettke stirred up such a hornet's nest of controversy. My intention was to offer an alternative to the conventional wisdom of advising students regarding the best way to pursue a career in Austrian economics. But many carried on as if I had just spat out the consecrated communion host and invoked Satan in the midst of a packed Easter Mass in a Cathedral in medieval Europe. I must confess it is exhilarating to have one's ideas on such a mundane matter taken so seriously.

  2. One interesting revelation was that there seems to exist an Orwellian doublethink in GMU circles to the effect that the GMU program both is and is not a program dedicated fully to Austrian economics. As I noted early in the thread Pete stated in his podcast interview with Russ Roberts that "research at GMU is a stew of Menger, Boehm-Bawerk, Mises, Hayek, Rothbard, Kirzner, Lachmann, Alchian, Buchanan, Coase, Demsetz, and North." Also, in this thread Pete himself referred to the program as "a broader program in philosophy of economics and political economy." All well and good—GMU is an interestingly eclectic program in political economy with some Austrian influences. But then later in the thread Pete went on to say that GMU students may, if they want, "study Austrian economics in depth." I fear that these are mutually contradictory positions, only one of which can be correct. Either the GMU program is a full-blown dedicated Austrian program or it is not. It may well be true that the GMU Ph.D. program integrates more elements of Austrian economics into its curriculum than any other program currently extant. But this is a far cry from an Austrian Ph.D. program as often advertised. So I am not against what GMU really is; I am against it claiming that it is something that it is not. I am arguing for is truth in advertising so that we all can more accurately advise our students on graduate schools. As John Lennon sang: "All I want is the truth. Just gimme some truth."

  3. In this vein, I look forward to the publication of the paper by Boettke, Coyne and Leeson on “Comparative Historical Political Economy,” which in Pete’s words “lays out the research program as we see fit [it?]-- the way to take the Mises/Hayek/Kirzner paradigm in economics into the literature on political economy.” This will finally reveal the core research program of Masonomics in black and white. This will be an extremely useful document for those such as myself who advising Austrian-oriented students of the alternative grad programs available to them. It will also lead to more substantive and academic discussions of what constitutes Masonomics.

  4. The one new argument that was brought up and merits serious consideration concerns the fact that students who enroll in a standard mainstream program do so without the benefit of an Austrian "mentor." By mentor, as Pete and Walter use the term, is meant an intellectual (and material) caregiver who, cash in hand, actively recruits a student, takes him under his wing, carefully molds his research program to reflect contemporary trends and, above all else, assists him in finding a job. But this New Age concept of mentor as glorified sugar daddy/job counselor sharply conflicts with the classic understanding of a mentor as a master of his discipline who is eagerly sought out by the aspiring student. In the classic model the student MAY after a time be accepted by the master as his protégé if he shows a spark of creativity; if not he is cast aside as a nuisance. The mentor offers nothing to the student but the opportunity to observe and familiarize himself in an intimate setting with the mentor's thought and work. He is not often a warm and fuzzy drinking buddy but a stern and aloof, and even curmudgeonly, taskmaster. Thus Boehm-Bawerk and Wieser sought out Menger; Mises sought out Boehm-Bawerk (who was always lukewarm at best toward Mises's work); Rothbard sought out Mises and Dorfmann (his dissertation adviser at Columbia); Huelsmann sought out Hoppe and so on. The classic mentor-protégé model is intended primarily to foster protégés who are ruggedly independent thinkers and are expected to go beyond and even contradict the work of the mentor--after fully absorbing his body of thought. New Age mentorship is designed primarily to procure careers for as many students as possible, some of whom do and some of whom do not become independent thinkers and contribute to the discipline. Whichever model one prefers, the point is that the classic model can and does exist in the absence of the formal professor-student relationship in a common academic institution. (For those who are interested, a very good recent film depicting the classic mentor-student relationship is "Copying Beethoven.”
  

  Published: April 6, 2009 10:54 AM