This Could Use a Response

Jacob Weisberg at Slate declares that the current crisis marks "The End of Libertarianism."  Suffice it to say there is absolutely no recognition in his piece of any of the various government interventions that might have contributed to the crisis, and certainly no notion that the Fed may have played a role.  Feel free to flood Slate with letters.

Comments

[Unbathed]

It is important when responding to avoid sounding like the mirror image of those doctrinaires who attributed the failures of the Soviet harvest or the Cuban economy to the pernicious influence of The West.

[Peter Boettke]

This may be the most intellectually irresponsible article I've read in a respected source as of yet. Even the Washington Post article last Wed on the history of the regulations understood more than this.

But it does reinforce Steve's basic point about controlling the narrative.

Pete

[David Carlson]

Weisberg's ignorance is simply astounding.

http://www.davidcarlsonpolitics.com

[William B]

Unfortunately, the argument presented in the article is so weak that a response isn't really worthwhile; there's no way an intellectually honest person could be swayed by it. The only lesson here is a meta one. As Pete points out, this article was published despite being completely "intellectually irresponsible." Apparently, being anti-libertarian is a sufficient condition for publication. That's all it takes. You don't have to be interesting, thoughtful, or coherent.

I can't imagine an article of such low intellectual standards being published if it advocated a libertarian perspective. I hate to sound cynical, but the fact that this article was printed in Newsweek just shows that the cause of small government is hopeless.

[Daniel J. D'Amico]

In seems that the author would have to account for the fact that many "libertarian - free market types" have been concerned and warning against financial instability for sometime. If they were winning why all the squawking and moaning?

[John V]

what a moron.

He gets paid to write this stuff?

[PCCapitalist]

Yeah, I did. I think there isn't much to respond directly too. I believe that he is just throwing a pass with no facts.

http://pccapitalist.wordpress.com/2008/10/20/re-the-end-of-libertarianism/

[Sukrit]

The article does deserve a response, both in the form of letters to the editor and a full-length article (such as by one of the authors of this blog). Someone should point out the idiocy of comparing Marxism with libertarianism. It is beyond doubt that the former led to the deaths of millions, whereas the latter just causes recessions (if we concede the point).

I hate to sound cynical, but the fact that this article was printed in Newsweek just shows that the cause of small government is hopeless.

Milton Friedman had a regular column in Newsweek for a good many years. Anyway, I thought the article appeared in Slate?

[Ian Dunois]

What was worst to me were the comments. The attack on libertarianism is so deep that if we are to control the narrative we are going to have to stretch out farther than blogs and letters.

I think most individuals who dive into the libertarian mindset find themselves in debate with any individual who attacks the notion that markets are good. Many of us are still arguing with our families and friends to no avail.

The comments by libertarians on his post are being brushed under by the other commentors; I heard it before in Boettke's class and I'll just repeat it that blog comments or blogs in general seem to fall under Grisham's law. But unlike Grisham's law which states bad money pushes out good money, here bad ideas/comments push out good ones.

I have to agree with Sukrit that we need to respond outside of the comments and with a wider audience, although I do not share the skepticism on the fight for small government and liberty as hopeless.
So the question arises, what should be the next step to take the narrative?

[Ian Dunois]

Although, I did find this today in the Post.
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/19/AR2008101901416.html?hpid=opinionsbox1

[Matěj Šuster]

Horwitz:

Since you link to your open letter (again!), does that mean you consider it the best available libertarian take on the crisis and its causes?

If so, then it´s no wonder we (libertarians) are losing in the court of public opinion. I. e. your letter says absolutely nothing about financial regulations and their perverse effects. Which part of your letter explains how the US. housing bubble could turn into a global financial crisis? What about the demand side of the residential mortgage-backed securities business? How do you explain the fact that there were so many investors (i. e. European banks) more than eager to buy all those (subprime) mortgage backed securities? Remember, many European banks are in deep troubles as well.

If we want to influence the narrative, we must work much harder. This will not do.

Btw, in my view, it is unique opportunity for "Austrians" to show that "austrian" economics can better explain the origins and causes of the financial crisis than mainstream economics.

[Steve Horwitz]

Matej,

I linked to my piece not because I thought it was the best, but because it focused on the things missing from the Weisberg article.

As for influencing the narrative, etc, I'll just say that the letter has had over 15,000 hits, been cited in numerous high-profile blogs and columns, been translated into at least three languages, generated dozens of "thank you" emails (some from actual leftists), and has now been condensed into an op-ed that will appear in Wed's Christian Science Monitor.

It would seem I'm influencing the narrative. What exactly have you done, or are you just too busy complaining about others up there in the peanut gallery?

[Steve Horwitz]

And Will Wilkinson is mad. Check here and here for Angry Will:

http://www.willwilkinson.net/flybottle/2008/10/20/weisberg-fail/

http://www.willwilkinson.net/flybottle/2008/10/20/readings-for-jacob-weisberg/

[Oh yeah?]

Horwitz:

No fair using, like, *facts* to back up your argument. And, um, like . . . So there!

[Matěj Šuster]

Horwitz:

OK, it may well be that your open letter is influencing the narrative to some extent. The more important question is: is your diagnosis ("what went wrong") correct and does it provide a coherent story? Do you find it really believable that the main villains of the story are Fannie Mae and Freddie Mac, CRA, land use regulations and housing subsidies? Does your letter indicate what kind of institutional reform is needed in order to prevent such crisis in the future?

At this point, it is more important to get the basic story right than to (temporarily) influence the narrative "per se". If you get the diagnosis right, then it´s more likely that you´ll choose the right cure as well.

And by the way, look around you. Many mainstream economists are busy writing papers or even monographs carefully analysing the financial crisis and its causes. Plenty of that work is very useful.

But what are doing the "Austrians"? It´s a great opportunity to show that they can add something "relevant and insightful" to the mainstream take on the matter.

As for my own contribution:
Well, firstly - I am from Czech Republic and our economy and banks are doing fine (as of yet). :) Secondly, English is not my mother tongue and my writing skills in English are rather poor. But I did write a few short articles concerning the crisis, bailout etc. in Czech. I intend to write more of them in the future.

1) Chybné poučení z historie ("The Wrong Lesson from History"), 16. 10. 2008, http://libinst.cz/komentare.php?id=518

2) Kdo předpověděl tento krach? ("Who Predicted the Crash?"), 7. 10. 2008, http://libinst.cz/komentare.php?id=516

3) Propaganda ve prospěch bailoutu ("Lies about the Bailout"), 2. 10. 2008, http://libinst.cz/komentare.php?id=514

4) Musíme hlavně jednat!, ("Something Must be Done!"), 1. 10. 2008,
http://libinst.cz/komentare.php?id=513

[Vedran]

Am I hearing calls for activism and writing popular op-eds???

What happened to let's change the world with serious academic research?

I'm really confused now

[Steve Horwitz]

Matej,

I've been linking to numerous other articles on the crisis by Austrians. I don't understand why you think we/they haven't been doing anything. If you think we're WRONG in our diagnosis, then fine, just say that, but this continued attempt to suggest we aren't contributing is just wrong.

I linked to Larry White's Freeman piece. Bob Murphy has a new piece up at mises.org today. I could go on.

I'm sorry you disagree with the analysis, but could you at least recognize that people are, in fact, writing things?

[Steve Horwitz]

Vedran - no one ever said those two activities were mutually exclusive. They are complements, and sometimes the intellectual structure of production has to shorten when faced with particular events. This is one of those times.

As it happens, I'm also working on a more academic treatment of the crisis as well.

[Roger Koppl]

Steve,

Vedran did not mean his comment seriously, but I'm going to give it a serious answer anyway. As Hansjorg Klausinger has chronicled impressively (in the forthcoming Advances in Austrian Economics and elsewhere), Mises orchestrated a campaign of popular writings. From 1932 to 1934 Machlup, Schutz, Morgenstern, and the others were writing furiously to save the public opinion of liberalism. Machlup, for example, had a regular column entitled "2 Minutes of Political Economy" or something like that. They saw the campaign as a part of the same effort they were engaged in with their scholarly work. They were trying to save civilization from self destruction. (Vienna was the "proving ground for world destruction.") The scholarly stuff and the popular stuff are complements, of course, not substitutes. Indeed, popular stuff uniformed by scholarship is likely to be erroneous and counterproductive.

In my intro to the volume I say:

Mises (1933, p. 202) warned at the time that we will have ‘‘progress on the road the western civilization has taken for thousands of years, or a rapid plunge into a chaos from which there is no way out, from which no new life as we know it will ever develop’’ depending on whether the voice of the economist is heard. It was not heard. Klausinger notes that in this effort, ‘‘the liberal cause had to rely on shifting coalitions and fragile personal relations, which in the end turned out too weak for sustaining the policies envisioned by the Austrian economists.’’

The earlier episode Klausinger chronicles shows us just how difficult a job we have ahead of us to convince others that the current crisis (ever so mild by comparison to interwar Vienna!) is no failure of capitalism.

[Vedran]

Steve and Roger,

Agreed the two are complementary. It seems writing op-eds often has been denegrated around here and the pursuit of all things academic has been celebrated as an objective end for Austrian scholars. I'm glad to see some new found appreciation for trying to spread the message of Austrian economics directly to the public.

I've been pretty busy at work as of late but I managed to turn out one piece on the crisis as well http://www.lewrockwell.com/vuk/vuk25.html

Not my finest, but in times like these you have to write something.

[Matěj Šuster]

I didn´t say that Austrians are doing nothing. It´s just that they could and should do MUCH MORE than they are presently doing. If you are working on a more academic treatment of the crisis, then that´s exactly the kind of work I have on my mind. I look forward to reading your paper.

These days you can read a tremednous amount of op-eds expressing very different and often contradictory views on this crisis. How does the "man on the street" evaluate the soundness of their claims etc.? You have to be very careful not to sound like an ideologue. In my view, Charles Calomiris´ recent op-ed in WSJ could be a role model how to sound like a disinterested scholar who has both deep knowledge of economic theory and great command over the relevant empirical facts:
http://online.wsj.com/article/SB122428270641246049.html

By comparison, your open letter reads more like an ideological manifest than open-minded and balanced short analysis.

Btw, Bob Murphy´s article is superb.

[Roger Koppl]

New found? The bloggers on this site have been popular stuff all along. Me too, BTW, though only for the last few years.

[Vedran]

http://austrianeconomists.typepad.com/weblog/2008/08/page/2/

"5. Inspiring serious study and encouraging research should take priority in economic education over inspiring students to activism due to a sense of "injustice'

6. However, you can employ the sense of injustice to ignite the intellectual passion to figure things out"

[Matěj Šuster]

How does the "man on the street" evaluate the soundness of their claims etc.?
----

I mean:

Is the "man on the street" capable (or even willing) to decide, which claims are sound and which unsound? On what basis does he evaluate the soundness of the op-ed? Perhaps the most importnat thing to the reader is the rhetoric of the op-ed: is it ideological or from more "disinterested" POV (i. e. based on facts (or at least "facts")?

[vedran]

Matej has a good point. Macroeconomics is beyond the grasp of even econ majors. Maybe there should be two different guys to target with two different kinds of articles. Perhaps guy on street articles that just make this a bailout morality responsibility issue and a guy on wall street articles dealing with technical matters. I think if you combine the two you fail at both