Comments (13)

• Barry Loberfeld

  
  
  Published September 2, 2006 on LewRockwell.com

  
  Economics: A Trialogue

  by Barry Loberfeld

  
  
  
  

  Scene: the cafe of the BORDERS Books in Commack, NY.

  
  
  

  
  

  Adam: Whoa, John, here I am -- you nearly walked right past me! C'mon, sit down. So, tell me, how've you been?
  

  John: Okay, okay, everything's pretty much the same. Now, you tell me -- what's this discussion supposed to be about, and who's this guy who's going to join us? Is he going to show up?
  

  Adam: She already has -- she's right behind you with her latte. John, Emma. Emma, John.
  

  John: Oh -- hi, Emma.
  

  Emma: Hi yourself, John.
  

  Adam: Do you want to get something before we begin?
  

  John: No, I'm good.
  

  Adam: All right, so now that we're settled, let's start. You're both here because you're my two birds and this get-together is my one stone. Now John here had invited me to a PeaceSmiths meeting -- a kind of left-of-center political group -- and I picked up some stuff there about "religious socialism" and "Christian economics." And Emma had invited me to a meeting of Long Island Secular Humanists, where I picked up a copy of their newsletter and an issue of The Humanist magazine, which has a column called "Humanist Economics." What struck me was how the believers and the nonbelievers -- the saints and the sinners, if you will -- came to the same conclusions. And by the same means: ideological economics.
  

  Emma: I don't see where you're going with this.
  

  Adam: All right. The newsletter defined secular humanism as "the philosophy of life guided by reason and science, freed from religious and secular dogmas." My main point here is, economics is a science. If secular humanism is committed to science per se, then "humanist economics" -- that is, humanist science -- is a redundancy. It stands in opposition to what -- nonhumanist economics, that is, nonhumanist science? That should be a contradiction, according to the given definition. And John -- "Christian economics"? One is religion and the other is science. God's revelation and man's reason -- two very different things, wouldn't you agree?
  

  John: It just means a Christian perspective on the subject of economics.
  

  Adam: Exactly! You raced right to the issue. Both groups are focusing on the subject of economics but aren't looking at the science of economics.
  

  John: Which means that we should abandon all our morals and ideals to be "scientific"?
  

  Adam: No, no, not at all. Both of you, keep your convictions. What I'm suggesting is that the science of economics might show you that what you've adopted as means might not lead to your convictions' goal. You no doubt want to help the sick, but the science of medicine shows you that leeches aren't the way to do it. It's the same with economics.

  READ THE REST OF THE ARTICLE

  Published: March 31, 2009 8:44 AM

• Eric

  As is usual in cases of "proof by history", it all depends on whose "history" you read.

  How is one to convince people that Rothbard got it right vs. Friedman who tells a very different history.

  If the world believes that Hoover was a free marketeer, then as far as policy goes, he was! What evidence, other that picking and choosing one's reading material is there really? Few of us were around or old enough during the 20's to be a first hand witness. What physical proof is there really? Do we trust the author to interpret government writings, even if some can be found?

  Ok, some things, like the tariffs, seem to be agreed to by all, but people like Friedman don't even think the 29 crash had anything to do with the depression - he thinks it was the death of the FED president (Strong?) - the one who Friedman believes would have had the gonads to do the right thing - inflate more and rescue more banks than his successor did. After all, this Nobel economist said the depression was caused by deflation.

  
  If a history can be found to show we should drive over a cliff to save ourselves, then government will lead us there.

  Perhaps that's the real proof - whatever the government says we should do is the opposite of what will help. Now that's probably an axiom we can trust.

  Published: March 31, 2009 11:43 AM

• Alex Fabijanic

  >What evidence, other that picking and choosing one's reading material is there really?

  Hard facts and figures:

  http://www.cato-at-liberty.org/2009/03/12/chuck-schumer-endorses-hoover-plan/

  http://www.whitehouse.gov/omb/budget/fy2009/pdf/hist.pdf

  Published: March 31, 2009 12:23 PM

• greg

  Lets get one thing clear, bankruptcy is not a free market feature. Bankruptcy exist through the courts that allow companies or individuals to cheat debt holders out of their legal contracts. The govenment controls the whole process and that is why you can't escape that IRS bill.

  So allowing AIG to go into bankruptcy is not a free market solution.
  

  Published: March 31, 2009 1:30 PM

• Matt

  greg:

  "Bankruptcy exist through the courts that allow companies or individuals to cheat debt holders out of their legal contracts."

  I see your point, I think. The creditors take the hit for the losses taken by folks indebted to them. But, what of folks who own stock in a company that becomes insolvent? They get paid only after bond holders if at all, correct? The point I wanted to make was that AIG would not be around in its current form anymore, without willful government intervention. Hopefully, the creditors to AIG would obtain the best remaining assets in such a case.

  Perhaps I should have left 'bankruptcy' off and simply said insolvency.

  
  

  Published: March 31, 2009 2:16 PM

• Doug Thorson

  Bravo Matt -

  Sometimes it takes a simple examination of the evidence to answer the critics of free-market capitalism. Thanks for investing the time to point those facts and resources out to the inquiring public. I will be sharing your letter on our blog, since I believe it has the potential to stimulate our readers interest in the Austrian School of Economics.

  Published: March 31, 2009 3:17 PM

• gregw

  Matthew Novak:
  
  
  There is ample contrary historical evidence that shows that Hoover and the Republicans were actually quite a bit more involved in the affairs of the economy than supporters of the New Deal realize. Some of the best evidence I've come across is America's Great Depression by Murray N. Rothbard. If you have not had a chance to read it, I highly recommend it as a fascinating and insightful book. In this work, Rothbard shows that FDR simply extended policies put in place by Hoover — after running on a platform for decreased spending and less government interference.
  
  
  
  Um, didn't coverage in Rothbard's America's Great Depression end roughly at the end of Hoover's term?
  
  
  greg:
  
  Lets get one thing clear, bankruptcy is not a free market feature. Bankruptcy exist through the courts that allow companies or individuals to cheat debt holders out of their legal contracts.
  
  
  
  Sure. Okay. Bankruptcy is a State sanctioned legal arrangement. So are laws against murder. Would there be no law against murder in a polycentric or anarchic legal order? Could there be laws against murder in polycentric or anarchic legal orders? You have to go further than to simply say a legal arrangement is wrong because The State is involved.
  
  
  There is some risk of of non-repayment of debt regardless of the legal order present. (That is one of the bearing factors in the interest rate paid. It is a premium placed onto the the debt in addition to the time preference rate, which is the base rate.) The body of law used to peacefully handle non-payment of contracts/debts can exist in various legal orders, both State sponsored or polycentric/anarchic "sponsored." So "bankruptcy law" per se does not need to be unique to The State. Now if you were to say bankruptcy and credit law is quite distorted by The State, then I would have little argument.
  
  
  I suspect debt would cost more without the State sponsored credit pyramid, and so less of it would be held without a State. But not zero, and never zero risk of non-payment for legitimate reasons. It is my belief that civilized people in a polycentric or anarchic legal order would find peaceful ways to resolve non-payment when the reasons are realized by the various parties and arbitrators to be legitimate.

  Published: March 31, 2009 4:26 PM

• Matt

  gregw

  "Um, didn't coverage in Rothbard's America's Great Depression end roughly at the end of Hoover's term?"

  Yes, you are correct. But, the extension of policy I was referring to is clearly put forth by Rothbard in Chapter 12 of his book, regarding the closure of banks. I realize now the structure of the sentence makes it seem like I intended to say Rothbard shows more; an error in presentation on my part, it certainly could have been said more clearly.
  

  Published: March 31, 2009 4:43 PM

• Matt

  gregw:

  As a related aside - Rothbard explains many of the things that Hoover did with respect to spending and coaxing of industrialists in his book, without ever directly stating that FDR extended particular policies. I will be reading more as time goes by (these types of questions and problems never cease to interest me), so I'll be looking for direct extensions. Anyone have that knowledge already at hand and care to enlighten?

  Published: March 31, 2009 4:54 PM

• Fred

  Kudos to Dr. Novak. This open letter is a model of intellectual engagement and outreach: courteous, respectful, and firm. Would that all defenders of the market follow a similar approach.

  Published: March 31, 2009 11:09 PM

• Jake Taylor

  @Fred:
  I don't know-- I think I would have preferred "Your dumb". :)

  J/K, I couldn't agree more.

  Published: April 1, 2009 3:33 PM

• Befree

  In the end each individual is going to believe what his nature leads him to believe. Mises said history does not prove or disprove economic theory. You can listen to Keynesian logic or Austrian logic and draw your own conclusions. You can't save fools from themselves, you can only save yourself from becoming a fool and use that knowledge to reduce the damage to youself that an environment created by fools causes to everyone.

  Published: April 1, 2009 7:41 PM

• joebhed

  central government planner here -

  Regardless of where Rothbard's book ends, there can be little doubt but that the description of Hoover is correct, and that FDR continued many of Hoovers programs, while adjusting many others.
  Importantly, the writer states clearly that this is bipartisan in fault.
  There is no Republican or Whig or Democratic villainry.
  The FED pays everybody's bills.
  The problem is the federal reserve - period.
  And when I say federal reserve, I mean the private federal reserve banking system.
  I don't mean the government.

  But, this is a good essay on how the politics of the day are skewing the discussion away from truly substantive matters, with drivel aplenty.

  Mises folks should declare a truce with the progressive anti-FED, full-reservist crowd.

  Things are really cooking right for both of us right now. Abolish the FED.
  Put money creation under Treasury- debt free at issue paid into banks that lend on a 100 percent reserve basis.
  We're halfway there.
  By destroying the power structure of the money-creators, we can create the fair playing field to decide free banking, or NOT, and gold-standard, or not.
  Ever upward.

  Published: April 1, 2009 7:52 PM