Wednesday, June 29, 2011

How Far is Tyler Cowen from Being an Austrian Economist?

Very far.

In a new blog post, he endorses expansionary monetary policy AND fiscal stimulus:
...structural unemployment does change the appropriate mix of monetary and fiscal policies, although the net effect is indeterminate in theory. Monetary policy should be expansionary, but structural forces behind unemployment can make traditional fiscal policy either more or less effective (it is more important to target disaffected workers, but also harder to do so) and you can think of that as the frontier policy question of the day.

Note to new readers: Austrian economic business cycle theory holds that it is money supply manipulation that causes the business cycle. No Austrian would ever call for monetary expansion. Austrians see fiscal policy as simply taking money from one group and giving it to another. No Austrian would ever call for fiscal policy.Since monetary policy and fiscal policy are both coercive in nature, they should also be viewed as anti-libertarian.

Cowen is a professor at Koch-funded George Mason University and is the Director of the Koch-funded  Mercatus Center.

6 comments:

  1. Cowen posted over 6 years ago that he doesn't believe in Austrian business cycle theory.

    http://marginalrevolution.com/marginalrevolution/2005/01/if_i_believed_i.html

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  2. Hmmm. Of all universities in the U.S., my take is that George Mason has a few of the best (albeit non-Austrian) economists. As I recall, there's Russ Roberts (who came out with those two Hatek v. Keynes YouTube videos and Walter Williams. I think they might also have something that resembles an Austrian dept. as well. Contrast that with say Columbia or Princeton which is Keynesian central.

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  3. That's the danger with Cowen being at GMU. He is not an Austrian, and spouts of all kinds of nonsense. Yet, many will think he somehow has a libertarian/free market review.

    He really belongs at Columbia, Princeton or Harvard. And certainly not the Director of the Mercatus Center.

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  4. We all have to understand the Cowen is a "thoughtful, mainstream libertarian" (unlike me) who might be published in the NYT.

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  5. Exactly, Bob. If he supported the crackpot Austrian school he wouldn't have access to the rich and powerful. He would not get any support from the Kochtopus or Cato or Reason magazine.

    They cannot have a FED heretic writing for the pages of the NYT...it would be unseemly. Why he might even support that crazy loon Ron Paul!

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  6. "Note to new readers: Austrian economic business cycle theory holds that it is money supply manipulation that causes the business cycle. No Austrian would ever call for monetary expansion. Austrians see fiscal policy as simply taking money from one group and giving it to another. No Austrian would ever call for fiscal policy.Since monetary policy and fiscal policy are both coercive in nature, they should also be viewed as anti-libertarian."

    Good to know Fredrick Hayek should no longer be considered an Austrian and a libertarian.


    Hayek:

    "The second situation in which it is true that an increase of employment requires an increase in aggregate demand is found in the later stages of a depression when in consequence of the appearance of extensive unemployment the economy frequently is subjected to a cumulative process of contraction of secondary deflation which may go on for a very long time. I am the last to deny, or rather, I am today the last to deny, that in these circumstances, monetary counteractions, deliberate attempts to maintain the money stream, are appropriate."

    "[B]ut that one measure to offset secondary depression [deflation] would be to provide ‘employment through public works at relatively low wages so that workers will wish to move as soon as they can to other and better paid occupations."

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