Adverse Selection, Gresham's Law, and the Austrian School

I asked earlier why critics of Austrian economics tend to focus on the least charitable reading of the position held within the school.  But today I'd like to ask why the Austrian School of Economics often appeals to individuals who lack the intellectual prowess to make scientific contributions and the good sense to get along with others rather than antagonize them.

Adverse selection refers to processes where less than desirable characteristics (characters) are selected for rather than weeded out due to the incentives of the situation.  The classic example is health insurance and those of ill-health.  But the idea can be applied to a variety of circumstances where the incentives impact the population pool and skew the distribution of characteristics of that population.  Do the incentives within the Austrian school and its relationship to the larger community of professional economists --- lower barriers to entry at the level of technical capabilities within the Austrian school; the vast layman following; the close association with libertarianism; the everyman his own economists syndrom; etc. --- geneate a problem of adverse selection?

Gresham's Law refers to processes where under regulation of the exchange rate bad money will drive good money out of the market.  The key here is the regulation which provides a false exchange rate between say gold and silver.  If we apply the principle to economic argument, what we find is that under certain circumstances bad argument drives out good argument.  I would suggest that the internet represents that context.  Those who have a high opportunity cost of making economic argument are overtaken by those who have a lower opportunity cost.

Part of the rules we have asked commentators to follow on our blog is to set incentives such that higher quality economic argument is encouraged, rather than weeded out by less than serious economic argument.  However, individuals repeatedly fail to follow the rules.  They post anonymous comments, they make personal attacks, they go way off topic, and they make uninformed assertations about the ideas they are talking about and the positions that people supposedly hold. 

WHY?  Because it is cheap entertainment?!  Is this a case where Gresham's Law combines with Adverse Selection and destroys any chance for a decent set of ideas in economics to get advanced.

So I come back to my question I asked a few days ago --- does NIE or Public Choice or New Classical or Monetarism have the same problems?  I don't think so and I really wonder why.  I cannot figure this out.

We have critics who read the worst possible reading of the Austrians. And we have others who claim to be Austrians who are promoting the worst possible reading in the school.  Thus, these are mutually reinforcing to condem the Austrian school to a fate of non-influence.

On the other hand, charitable readings of the main insights of the Austrian school have influenced perhaps more Nobel Prize winning economists than any other contemporary source (e.g., Hayek's influence on thinkers such as Buchanan, Coase, Lucas, Phelps, North, Schelling, and Smith).

As we head into 2008 (more on that later this week), it is important for those of us who want to take the powerful insights of Mises-Hayek and develop them along with other ideas in modern political economy and push for better (not worse) argument, more sophisticated (not less) presentations, carefull (not careless) readings of others in the social sciences, and civil (not angry) enagement with our peers.  In short, we must break the mutually reinforcing 'mechanisms' of adverse selection and Gresham's law, and instead push for processes that will lead to better writing, more logical argument, deeper analysis of the empirical facts of the matter, and wider acceptance among professional peers.