Sometimes Bobbing and Weaving Just Isn't Enough

I have acknowledged on multiple occasions the great abilities of Milton Friedman in debate.  Clearly in the 20th century Milton Friedman was the most important public figure in the debate over the power of the market and the tyranny of political control.  He had a great command of the facts whether the debate was on prohibition or on monetary policy.  He also had a great ability to devastate an intellectual opponent while retaining a smile on his face and a friendly and engaging manner.

But Friedman was a bobbing and weaving counter-puncher.  He stepped inside of the system of his opponent and tried to nick and cut his opponent until they bleed and accepted the TKO.  But his opponents often survived the exchange, and could argue in retrospect that while Milton might have won the fight, but his arguments weren't "knock outs".  His monetaristism, for example, didn't knock out Keynesianism, though it did rock the system to its knees.  But analytically and methodologically Friedman was working within the Keynesian system.  He didn't offer an alternative intellectual system, he offered a different perspective on that system.

I heard Paul Krugman on TV over the weekend actually utter the phrase "We are all socialists now" in discussing the government plans to take over financial markets.  Paulson's "plan" is an intervention into the operation of the financial markets that is beyond belief.*  McCain and Obama are tripping over one another to claim they have a PLAN.  Everyone wants a plan to fix the financial markets.  But the bottom line is that we do not need a government plan, we need a free market unhampered by government intervention.  Instead, we are going to get government control, budget deficits and debt, and inflation in double-digits as the government attempts to pay for their inept policies that fueled the current and future crises.

We do need careful boxers, who can bobb and weave against the Krguman's of the world.  But we also need those who are capable of delivering the knock out punch.  Ludwig von Mises was one who packed such a punch as an economist.  Easy credit, distortions to the pricing of assets, the attenuation of property rights, and the abbrogation of the profit and LOSS system do nothing but bring an economy farther away from market realities and market discipline and closer to economic catastrophe.  As Mises said, the denial of the teachings of economics by political leaders doesn't impact the truth content of economic science, but it can lead to the stamping out of civilzation.

Only a forceful and effective "endogenous public choice theorist" can help stop the march toward this conclusions. 

Who among the world's leading economists today will step up and play the role Mises did in 1922?

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*We had an earlier blog entry claiming that George Bush is arguably the worst President in my lifetime, and these recent events only reinforce that claim and might argue that his name will go down on a rogues list of figures in US history.

Comments

[Adam Gurri]

Friedman's contributions to economics, while noteworthy in themselves, are quite distinct to his contributions to the public discussion.

He came at the public debate as an avid free-marketer; he was willing to compromise (such as with the notions of vouchers or tax credits) but he always stressed that it was a compromise where his beliefs were concerned (IE, he would have preferred entirely private schools and a flat or nonexistent income tax).

He wasn't "bobbing and weaving", he was just actually out there and in the public debate; making his position clear but offering to meet people in the middle.

Mises was a great thinker but he could never have had the impact that Friedman did.

What you need is someone who can make a case for their principles without being dogmatic; someone who is willing to get their hands dirty the way that Friedman did.

[Miley Cyrus]

Naomi Klein?!?

[Brian Pitt]

Adam,

Mises did not have the intellectual effect, in the United States, that Friedman did in the U.S. not because he was dogmatic, but because he was perceived as being dogmatic. Though perception is reality, there is little dogmatism in the Mises that I have come to love. Moreover, Mises was quite aware of "the facts;" remember, Mises was more interested in history than economics, early on in his intellectual development. Economics (and sociology I would argue), however, provided him with the theoretical lens to do good history. Theory and History and The Theory of Money and Credit testify to this.

[DPrychitko]

The most hilarious quote I've heard so far comes from McCain:

"Obama is at the center of this crisis!"

PETE: EMAIL ME ASAP -- TEXTBOOK CONCERN

[Ludwig van den Hauwe]

"Who among the world´s leading economists"? I would think "Nobody". Within the context of this civilization, the chances for freedom and liberty may be gone forever...
As to Friedman, I still tend to think he was a great price theorist.

[PKS]

Please would someone explain what an endogenous public choice theorist might be.

Thanks

Also: "His monetaristism"

I've never heard it called that before - funny.

[Adam Gurri]

Brian,

I apologize for my wording, as I did mean that Mises tended to be perceived that way rather than being that way. You wouldn't know it from the comment I just wrote but I too am a fan of his :) I just don't think it's fair to diminish Friedman's contributions

[Peter Boettke]

Adam,

I never tried to diminish Friedman's contributions, hard to say you are diminishing someone when you claim him to be the best debater of economics.

But it is a fact that Friedman did not knock opponents out because he worked from within their system of ideas. He outwitted opponents.

Both Mises and Hayek used a more transcendent strategy against Keynesianism --- which explains why they were "rejected" during the Keynesian hegemony and were "accepted" once again after the Keynesian system fell apart.

We need someone now it is my contention that takes on all the presuppositions of modern economic policy. And I am wondering who that is going to be: Andrei Shleifer, Ed Glaeser, Jesse Shapiro, who???? Who is going to be the new "economist of the country" as Mises was called in 1920-1930 Austria?

[Richard O. Hammer]

On a subject that seems related to me, I am interested in the stance of a man in debate. I want to write more than I've written already, and God willing I will. But I need to find a better voice, more like Uncle Milton Friedman's, not laced with anger.

Gandhi is credited with saying "Love the sinner. Hate the sin." That gives me a real challenge because I hate the left. Probably I hate the left because I grew up in it and have not grown fully out of it -- insofar as I can aspire to fix other peoples' things.

I study Uncle Milton, trying to understand where he has his soul parked. He provides an excellent example for a good stance in debate.

[Richard Ebeling]

In answer to Peter's question as to which prominent economist will step up to the plate and speak out in defense of allowing the market to correct and recoordinate in this time of financial crisis, the answer is: most likely no one.

The mainstream of the profession is a "victim" of the Keynesian and Monetarist revolutions that "proved" that the Great Depression was caused by either a "failure" of effective demand or a dramatic 30 percent decline in the money supply.

Virtually all of the profession believes that it is necessary to have an activist central bank to stem the financial collapse -- and thank God there is an economist at the head of the Fed who has studied all the "errors" of monetary policy in the early 1930s and won't allow that to happen again!

And most certainly price and wage deflation must be prevented at all costs -- especially during a financial crisis during which it could snowball into, well. . . the end of civilzation as we know it!

In the 1930s there were certainly many economists who believed that easy money and political intervention were needed to "cure" the Great Depresssion -- in both Cambridge and Chicago, as well as many other places.

But what did exist then, unlike now, were a signficant number of economists who believed that depressions were caused by prior monetary mismanagement that resulted in misdirections of resources and capital malinvestment. And that the downturn was an inevitiable and necessary process of adjustment and recoordination.

In England there was Edwin Cannan and T.E Gregory, along with Lionel Robbins and F.A Hayek at the LSE. Indeed, in 1934, A. C. Pigou delivered a series of lectures at the LSE in which he argued against "reflation" as a hindrance to the needed ajustment of the wage and price structure, which would only delay and distort the process leading to a rebalanced economy.

In Sweden, Eli Heckscher and Gustav Cassel were strong free market advocates against the interventionist and reflationist policies of other Swedes like Gunnar Myrdal and Bertil Ohlin.

In Germany, while Wilhelm Ropke may have warned against the warmful affects of a "secondary depression," his general analytical framework was one that argued that monetary mismanagement created the distortions that required real adjustment. And Ropke was joined in this by other German economists like Waltet Eucken, Moritz J. Bonn, Gustav Stolper, and others.

In France, Jacque Rueff, Louis Baudin, Louis Rougier and others were also arguing for allowing the market to self-correct for the most part.

In the United States, the voices for a truly laissez-faire policy were fewer. But there was Benjamin Anderson, who in his regular "Chase Bulletins" (that were widely read in business and political circles) wrote true "gems" of analysis on the cause of the depression and the need for price, wage and production adjustments for a restoration of balance.

Indeed, in the early 1930s Anderson was already refuting Keynesian-type argument about "effective demand." He explained that balanced production and "right prices" generate sustainable purchasing power and economic stability wtih full employment.

And, of course, in Austria Mises, Machlup, Mogenstern, and Strigl were making the clear "Austrian" case about these matters.

Also among many of these economists there was a strong belief that a commodity-based monetary system -- a gold standard -- was essential to economic stability and prevention of future inflationary booms.

Today, there are virtually no members of the mainstream of the profession who consistently understand and defend such ideas.

Oh, yes, there are many admitting that Fed policy had been too easy over the last ten years. That regulatory policies and that Fannie Mae and Freddie Mac distorted the mortage industry, creating the housing crisis, etc.

But there are basically no mainstream economists calling for (as a positive and desirable policy)the government to get out of the way. A "Do Nothing" policy as, for example, Simon Newcomb (the early developer of the "equation of exchange" before Irving Fisher)called for in the 1870s with that as the title of an article that he had in "Atlantic" monthly.

And none of them seem to understand Hayek's point that no one had the knowledge, wisdom, or ability to "centrally plan" an economic recovery. The knowledge of how, where, and to what extent is divided among all the minds of the market in their own corners of society.

In the early '30s, Mises reminded people that what they were living through was not the crisis of capitalism, but the crisis of the interventionist state. We are about to have another lesson in what Mises meant by that.

Richard Ebeling

[Brian C. Nickerson]

Any competent Austrian is perfectly justified in taking a crack themselves. If said Austrian should fail they tried, didn't they?