For Project Syndicate, the most connected economist in the field of economics, Nouriel Roubini, has a new commentary out, Ten QE Questions. Coming right out of the gate he writes:
First, while a purely “Austrian” response (that is, austerity) to bursting asset and credit bubbles may lead to a depression, QE policies that postpone the necessary private- and public-sector deleveraging for too long may create an army of zombies: zombie financial institutions, zombie households and firms, and, in the end, zombie governments. So, somewhere between the Austrian and Keynesian extremes, QE needs to be phased out over time.I must first comment, as I have in the past, that I don't see Austrian economics and austerity as the same things. Austerity currently means what is going on in the eurozone: bankster handpicked economic technocrats who are attempting to protect sovereign debt of eurozone governments by doing everything possible to cut non-bankster related government spending, while at the same time designing programs that will increase revenues going to the state (to help pay the debt).
Further, while Austrian economists, as economists, recognize the policy neutrality of economics as a science, when they do don policy hats, they tend to take a libertarian view, since they view freedom as the approach that will lead to the highest standard of living. Thus, they would reject austerity programs.
That said, Roubini, although a Keynesian, does occasionally provide a slight nod to Austrians. As I reported in November:
In his book, Crisis Economics, he had some nice things to say about Austrian economics. He devotes a number of pages to AE and while its clear he doesn't fully grasp AE and offers up some straw man attacks of AE, in the book he also writes, "...in the medium to long term the Austrians have something to teach us."I'm willing to bet that in his formal training, Austrian economics was never mentioned to Roubini beyond, perhaps, a brief mention of the Austrian-lite economist, Joseph Schumpeter. His undergraduate degree is from Universita Luigi Bocconi, in Italy and is Ph D is from Harvard. Neither is known, to say the least, as a bastion of Austrian economic thinking.
That he mentions Austrian economics at all in a positive sense, given his background, is really pretty impressive. He has a career invested in Keynesian economics. That said, his understanding of AE, as I say, appears quite cursory. He seems to get that Austrians somehow have a detailed business cycle theory, but there is no indication he understands it in any depth. Still it is interesting. I suspect that the Austrian movement outside of academia was instrumental in making him aware of Austrian economics and, specifically, that there is an Austrian Business Cycle Theory.
It could be of perspective to know what they teached fifteen years ago at Political Economy I and II in Pavia Economy Faculty Università degli Studi a little reality very near Milan and obviously in contact with Bocconi: never..I say never they just mentioned to me the name Mises or Rothbard but for sure I had to know what Hicks or Sraffa or Pareto had to say..but at the introduction of one of this exam, I clearly remember, the author of one of the chief school book mentioned to me that the political aspect of the Political Economy clearly meant that a political system had to be assumed to make sensible any successive and scientific discovery and our assumed political system ..never defined clearly ..suggested a keynesian approach to be the best integrating that with so much equilibrium theory..they never questioned the possibility of a non keynesian approach! in all the years I stayed there.
ReplyDelete