Peter J. Boettke of George Mason University is the emerging standardbearer for a revived Austrian school of economics. But the 50-year-old professor of economics at George Mason University in Virginia is emerging as the intellectual standard-bearer for the Austrian school of economics that opposes government intervention in markets and decries federal spending to prop up demand during times of crisis. Mr. Boettke, whose latest research explores people's ability to self-regulate, also is minting a new generation of disciples who are spreading the Austrian approach throughout academia, where it had long been left for dead. To these free-market economists, government intrusion ultimately sows the seeds of the next crisis. It hampers what one famous Austrian, Joseph Schumpeter, called the process of "creative destruction." Governments that spend money they don't have to cushion downturns, they say, lead nations down the path of large debts and runaway inflation. – Wall Street Journal
Dominant Social Theme: Finally, someone takes up the humble cudgel of Austrian finance.
Free-Market Analysis: Peter Boettke is a terrific spokesperson for Austrian economics and has been at it for years. He deserves all the credit he can get for being in the right place at the right time – and for being correct about economic history as well. We here at the Bell wish we had interviewed him already. He's a brilliant scholar and apparently a nice fellow to boot. But this Wall Street Journal article is another loopy piece of writing that shows fully – and once again – how unsophisticated the mainstream economic conversation really is. We cover elite promotions here at the Bell, but we don't see a meme here so much as ignorance, perhaps willful. We'll try to explain …
The last time we wrote about Austrian economics and the Wall Street Journal it was in the context of a series of reports about up-and-coming young thinkers grappling with issues such as why mainstream economists had failed to see the growing financial crisis. We pointed out that proponents of the Austrian school had tried for years to sound the alarm and failed. What was interesting to us was that the Journal was pondering such speculations without ever mentioning this. It might have been acceptable 20 years ago, or even 10 years ago. But one merely has to do a quick search of the 'Net to find out all about the Austrian school and those who anticipated the Great Recession.
Just recently, we wrote about an article in Time Magazine that did the same thing. In an article entitled "Is Economics Ideological by Nature?" Time's economic writer Ms. Barbara Kiviat wondered about whether economics was a "real science." She turned to a new book by economist Roger Backhouse – The Puzzle of Modern Economics: Science or Ideology? that she wrote "helped her out."
Kiviat admits in the article that Backhouse had made her see that econometric projections are wrong because "people aren't always rational." We were puzzled and pointed out in an article of our own that people take Misesian human action to avoid problems and these actions make human behavior unpredictable. But for Kiviat and Backhouse trend projections tend to be inaccurate because people are influenced by "things like advertising and a sense of fairness." Even were this true, to write about econometrics without mentioning Austrian economics is incomprehensible in this day and age. Ms. Kiviat is just beginning to think about these issues? How is that possible? You can see the article here:
And now comes this Wall Street Journal article on Austrian economics and professor Boettke. It's a great profile of a deserving subject. But on a deeper level, all it really tells us is that Rupert Murdoch, owner of the Journal and many other prestigious media properties around the world cannot ignore the subject anymore. The Journal, like any other mainstream media property, has until recently treated proponents of Austrian economics as the equivalent of academic lepers. Almost zero coverage. But now it is apparently impossible to ignore Austrian economics, the school's foundational beliefs and its overwhelming success. Rupert et. al scramble to catch up; and, yes, gradually the coverage HAS been increasing. Hence the article, and perhaps others like it.
In fact we are not surprised. The lack of prior reporting perhaps explains the current poor quality. Ignorance again. Throughout the latter part of the 20th century, the mainstream media avoided any mention of Austrian economics. FA Hayek, Ludwig von Mises – the entire Austrian school was missing in action. Today, it is just the opposite. Austrian economics on the Internet is fully the template of modern economics in America.
Congressman Ron Paul (R-Tex), one of the most influential politicians in America these days is an Austrian. His son Rand Paul, who is running for Senator in Kentucky, can probably to be considered an Austrian, or near to it. Peter Schiff who ran for Senator in Connecticut and has appeared on numerous national media programs is an Austrian. There are likely more cites of the Ludwig von Mises and his protege FA Hayek on the Internet than John Maynard Keynes. The "hard money" crowd with its hundreds, if not thousands, of Internet websites is pro-Austrian.
The Journal's corporate heart is not collectively in its work. While those who work there have commenced writing about the Austrian school, the institution as a whole is not yet up to speed. This is the only explanation that occurs to us (other than outright antipathy) given that the Journal can present an article about the modern history of the Austrian school (and Boettke) without a single mention of the global on-line Ludwig von Mises Institute or even Lew Rockwell who founded it along with his mentor Murray Rothbard. This is a little bit like writing a history of America without mentioning founding fathers. It is not just a reportorial lapse; it is a lacunae the size of a continent. We have interviewed prominent Mises' fellows at the Daily Bell and even a cursory review of the Internet would yield a plethora of information about the Institute.
And then there is this from the article: "To these free-market economists, government intrusion ultimately sows the seeds of the next crisis. It hampers what one famous Austrian, Joseph Schumpeter, called the process of 'creative destruction.'" Say what? Schumpeter is not in any sense a mainstream Austrian, free-market economist. A simple random search of the Internet would confirm this. What is it that the Wall Street Journal brain-trust doesn't understand about a keystroke? It's a kind of willful ignorance. They are generally not enthused.
Time magazine writes an article questioning econometrics without ever mentioning von Mises or Human Action. The Wall Street Journal writes an article about the history of modern Austrian economics without ever mentioning the Mises Institute – or the many free-market-oriented luminaries who are fellows there – and then turns Schumpeter into a full-fledged Austrian. This is not reporting in our view. Twenty years ago, or even ten, it might be comprehensible. But today it's … indescribable.
Note: Because we still cannot quite believe what we have read, we are adding this cautionary addendum. It may be that the versions of the Boettke article we have scrutinized (at the Journal site itself and elsewhere) are somehow truncated and that perhaps we have not seen a latter portion of the article that mentions the von Mises Institute (or other groups such as the Independent Institute, etc.) and corrects the Schumpeter Austrian error. If so, we welcome feedback on this point, though it still will not change our modest, collective mind about the general shoddiness of mainstream coverage when it comes to Austrian economics. The Journal in particular (Time, too), even if its articles have mentioned the Mises Institute and other such Austrian enterprises in the fairly-recent past, can surely do a better job, as this article shows.
These mainstream media writers and editors are paid six figure salaries. They have all the latest computer and Internet equipment. Even the briefest of Internet searches would educate them. It has to do with the culture of these media enterprises themselves. They lack practice with a free-market vocabulary. It all brings to mind Samuel Johnson's misogynistic but pithy remark in response to James Boswell's comment that he "had been that morning at a meeting of the people called Quakers, where [he] had heard a woman preach." Johnson's famous response: "Sir, a woman's preaching is like a dog's walking on his hind legs. It is not done well; but you are surprised to find it done at all."