Monday, December 13, 2010

Five Things You Shouldn't Mention at a Kochanack Christmas Party

Okay, so you got the big invite this year to a Kochanack Christmas party. What to wear? What to say? What to do?

Fortunately, there is a new resource that can act as a guide..

The Daily Bell, under the shrewd questioning of Anthony Wile, was able to drag the answers out of Peter Boettke. Boettke, who seems to be a decent enough guy, is a Senior Research Fellow at the Kochanack-controlled  Mercatus Center, and a professor in the economics department at the Kochanack-controlled George Mason University.

This, is of course, a key indication he knows what words should and should not be mentioned at a Kochanack Christmas Party. So now let us take a look at the interview.

Wile asks:
Is gold money? How about silver? Why?
Boettke answers:
Don't know. The market will determine what is money today. Historically that is a different question and varies over societies. We want "honest money" and we want "sound money" – that might be gold (we have good reasons to believe that), but it might also be something else that we simply lack the imagination to know until we see the free market process of discovery in operation.
Notice the extreme reluctance by Boettke to use the word "gold." And to call it "sound money". Yes, technically, he can argue that it will be the free market that will determine what is money, but why no mention that over history gold has evolved as money?

Are the Kochanacks about to throw gold under the bus? Boettke's a sharp guy, if there is reluctance by him to spit up the word, "gold", it is best you do not mention your gold coin collection at the Kochanack Christmas Party.

It also appears that you can't mention that Austrian economists forecast the recent financial crisis, even though many did. I'm sure this has nothing to do with the failure of the Kochanack-Austrians to forecast the crisis.

Here is this amazing exchange where Boettke attempts to move the entire forecasting success of the Austrians, away from the Austrians!

What is the predominant economics discipline in the West today – and why is it so bad at predicting monetary crises? Why were the Austrians the only school to predict what has happened?

Peter Boettke:
Well the claim to Austrian exclusivity is not right. The crisis originally was often discussed as a Minsky moment. Readers should read David Prychitko's recent Review of Austrian economics article on this. I don't find the Minsky discussion persuasive. And I certainly don't find Krugman's explanations persuasive. The dominant economics theory in the West in macro prior to the crisis was one of formal models employing rational expectations, etc. I don't believe we have seen where economics is going to head due to the crisis yet.
He tells us that he doesn't find Minsky persuasive and Krugman persuasive, but fails to discuss the success of the Austrian forecasts. Yet, as Bob Murphy points out, Krugman didn't know how bad the economy was going to be, when he wrote in early 2009. And finally when he did start to see the problems in the housing market, it was only after he was for the bubble in the first place. Boettke prefers to discuss Krugman nonsense rather than the success of the Austrian forecasters. Amazing.

Obviuosly, DO NOT, at the Kochanack Christmas Party, mention Austrian forecasting success.

The clever Wile then tries to get Boettke tied down on gold, pro or con, once again, he asks:
What kind of money would YOU like to see?
Boettke responds:
I would certainly back a return to the gold standard, or any mechanism that would tie the hands of the monetary authorities. In my perspective, the biggest problem we face is the proclivity of governments to engage in an endless cycle of deficit, debt and debasement. We have to cut off this cycle.
That hedging about gold is still there, even when Wile pushes. What the hell other "mechanism" is Boettke thinking about?

Boettke then cleverly tells us:
BTW, I am very involved with three organizations outside of the academy: the Foundation for Economic Education, the [Kochonack-influenced] Institute for Humane Studies and [the anti-Rothbardian] Liberty Fund. I personally think these are the most important institutes for the advancement of economic and political liberty in the world today. That statement undoubtedly reflects my myopic perspective on ideas rather than policy.

Notice, he is quick to label this his "myopic perspective." He has to because the Mises Institute has done far more to advance economic and political liberty in recent years than those three organizations combined. Not that FEE, especially, hasn't done great work in the past. Much of my early knowledge about Austrian economics came about through FEE.

Obviously, though, you shouldn't bring up Lew Rockwell or the Mises Institute at the Kochanack Christmas party, either.

It seems that conspiracy theories are out, also:

And speaking of the state, Rothbard believed in money power, though he did not write about it a lot. Is there room in Austrian economics for conspiratorial history – the idea that there is a small elite group of banking families that have conspired to create a one-world government and used the levers of mercantilism and central banking to do so?
Peter Boettke:
I fully believe that interest groups attempt to manipulate government to benefit themselves at the expense of others. I just don't know the value-added intellectually of calling that a conspiracy theory as opposed to following Mises's lead in the clash of group interests. Conspiracy theories seem to imply something more than moneyed interests and attempts at manipulation. And not all conspiracy theories are correct, right?
This probably has nothing to do with the fact that there are secret Kochanack meetings, which might be considered conspiratorial.

So in other words, here are the five things you shouldn't bring up at the Kochanack Christmas Party: Your gold coin collection, success of Austrian economists to forecast the crisis, Lew Rockwell, the Mises Institute, and, probably, that you read EPJ.

I don't know Anthony Wile but he is obviously very well read on Austrian economics. He knows the questions to ask. There is much more in the interview. He gives Boettke a chance to bury himself early on in the interview about ditching the term, "Austrian economcis", and Boettke falls right into the trap of explaining why the term, "Austrian economcis" needs to be replaced.  Boettke then goes on for the rest of the interview using the term, "Austrian economics."

Wile even closes asking Boettke about the Koch brothers and GMU.
Finally, how do you respond to the issues of the Koch Brothers involvement at GMU and in your career? Do you see any problems with it? Why do some others? What influence has Koch Brothers' funding had on your career and GMU?

And Boettke responds:

We receive financial support from a multiplicity of sources, the Koch Foundation being one among the many.... I have met many of our donors through the years and they are wonderful individuals who care passionately about liberty and economic education and economic scholarship. Both Charles and David Koch are the same way...I have had many conversations with Charles over the years, including about research priorities for a free society. He has never once tried to influence what I was working on, or the way I was working on it. He is a man of great intelligence and intellectual curiosity...
Yes, Peter, but did you bring up with Charles the great work the Mises Institute is doing, or some new great insight you found in the writings of Murray Rothbard?

UPDATE: Whoops, I thought Peter was doing something outside the Kochanack orbit when he mentioned FEE. It has been brought to my attention by a FEE follower that Koch has taken over FEE in the last year or two.


  1. RW, did your kindergarten teacher say you played well with others?

  2. This can't be a serious critique...

  3. Not all conspiracy theories are correct? Are all conventional theories positing lone gunmen and the influence of multiple competing interests and random historical forces correct?

  4. Anonymous @ 12/14/10 4:38 AM:

    Why not?

  5. based only on the quotes you provide here, it looks like "extreme reluctance by Boettke to use the word 'gold.'" is solely in your imagination, each time you mention it. he's to genuflect? looks like his worst on gold here was to not give a quick an unequivocal "yes" when asked if gold is money. ridiculous position, that "Don't know."

  6. I certainly think that Boettke is a waffler and tries to play with the 'cool' kids by staying out of the rather more strident MU circle, but I really don't read his replies as being that evasive or anything. Most of what he said was pretty reasonable as an answer to your questions.

  7. Also, I think given modern population figures and the great uses for gold in industrial production, silver might actually be a more plausible commodity money. There is a hell of a lot more of it, and a piece of it the size of your fingernail isn't worth $100.

  8. @FreeZoneThetan: It seems like you're falling prey to the idea that there is some "optimum quantity" of any commodity used as money and that there is "too little" gold in the world for it to be used as money.

  9. Uh, isn't Boettke the guy who didn't like the term "austrian economics" and kept trying to come up with a "better term"??

  10. Boettke sounds (and has always sounded, to these ears) like one of the good guys. He doesn't emphasize the same things as LRC or the LVMI (also good guys), but so what? One doesn't have to have the personality of a Rothbardian bombthrower to talk about these topics, and I say that as someone who loves Rothbard. I think we need more Boettkes in academia, just as we need more ""s on the Internet, and less internecine warfare and fretting over the Kochtopus. Even the typical beltway libertarian (who is far more objectionable than the anarcho-capitalist Boettke) is often a breath of fresh air compared to anyone who wields any actual power in our society.