Monday, February 10, 2014

WaPo Columnist: The Austrians Are Winning

Wow, Washington Post columnist E.J. Dionne Jr. has put out a column that says this.
An economic school has led to gridlock in Washington

One of my favorite moments during the 2012 Republican presidential contest came when Ron Paul, fresh from his strong showing in Iowa, triumphantly told his supporters: “We’re all Austrians now!”

I imagined many Americans scratching their heads and wondering: Why do we want to be Austrians? They live in a nice country with stunning mountains and all that, but aren’t we perfectly happy to be Americans?

Of course those in the know, particularly Paul’s enthusiasts, understood the libertarian presidential candidate’s reference: that Americans were rejecting the economic ideas of John Maynard Keynes that encouraged government intervention and provided intellectual ballast for the New Deal. Instead, they were coming around to the principles of the anti-government economics of Austrians Friedrich A. Hayek and Ludwig von Mises.

Hayek and Mises perceived little difference between democratic governments that used their power to plan against recessions and dictatorships that did the same thing. In this view, the policies of Franklin Roosevelt led down what Hayek called the “Road to Serfdom” and were thus objectively comparable to those of Hitler or Stalin.

At the time, Paul offered some context for his Austrian journey. He was quoting a supporter who had noted a line attributed to President Richard Nixon that “we’re all Keynesians now.” Paul observed that back then, even Republicans “accepted liberal economics.” Those days are gone.

Paul’s words are worth remembering not only because they are entertaining but also because he has a point. To a remarkable degree, our politics are haunted by the principles of Austrian economics and their sweeping hostility to any actions by government to keep downturns from becoming catastrophes or to promote greater economic fairness.

This is, indeed, an enormous change. When Nixon declared his allegiance to Keynesianism, he was reflecting an insight embraced across partisan lines. Government’s exertions, both during the New Deal and more completely during World War II, helped rescue the U.S. economy from depression[..] today’s conservatives are in thrall to Austrian thinking, and this explains a lot of what is going on in Washington. Broadly popular measures such as raising the minimum wage and extending unemployment insurance — normal, bipartisan legislation during the Keynesian heyday — are blocked on the assumption that people are better off if the government simply keeps its mitts off the market.

It is now difficult for Congress to pass even the kind of spending that all sides once saw as necessary public investment in transportation, research and education. It’s that “road to serfdom” again: Anything government does beyond enforcing contracts and stopping violence is denounced as the first step of a fox trot toward dictatorship.

So let’s give Ron Paul credit for unmasking the true source of gridlock in Washington: Too many conservatives are operating on the basis of theories that history and practice have discredited. And liberals have been more reluctant than they should be to call the ideological right on this, partly because they never fully got over the shell shock of the Reagan years and also because they have a strange aversion to arguing about theory. When it comes to government policy, the Austrian economists paved the road to paralysis.
Make no mistake, Dionne is not attempting to promote the Austrian school. The column also says a lot of nasty things about the Austrian school, including this:
Those who follow Hayek and Mises would have us forget this history or rewrite it beyond comprehension.
But the overall theme of Dionne's column is about the Austrians winning, so there are going to be a lot of people googling, "Austrian economics" and finding this in the number 2 and 3 spots after the Wikipedia entry and that's awesome:

  1. What is Austrian Economics - Ludwig von Mises Institute

    Ludwig von Mises Institute
    The story of the Austrian School begins in the fifteenth century, when the followers of St. Thomas Aquinas, writing and teaching at the University of Salamanca in ...

  2. What is Austrian Economics? - Ludwig von Mises Institute

    Ludwig von Mises Institute
    The story of the Austrian School begins in the fifteenth century, when the followers of St. Thomas Aquinas, writing and teaching at the University of Salamanca in ...

For the record, although Dionne's column is an attempted attack on Austrians and he points a finger at Austrians for being responsible for the current gridlock, most Austrians are also libertarians and, as such, view gridlock as a good thing, since it slows the expansion of government. The real problem, from a libertarian perspective, is that gridlock won't last very long!

As for Austrian economics taking over Washington D.C., I wish. There are a few Austrian posers, but that is all. For the most part, the current gridlock is a battle between Democrats and Republicans over how to divide up the lucre.

But Dionne has correctly spelt the names of Mises, Hayek and the Austrian school and discussed all three in a manner that will make many curious about all three. That is a victory for the Austrians.

What's going on here, if we are considering things from a broader perspective ? The Austrians are getting into the heads of the elitist establishment. First, NYT and now this. Excellent.


  1. Ahahhaahhaa, these punks are scared to death of mentioning Rothbard. Ahahahahhahaha. At least they mentioned Mises.

  2. Dick Nixon says:

    "We're all Keynesian now"

    I got the cartoon from one of my late 70's issues of The Libertarian Review.

  3. Someone beat me to it: they wouldn't dare mention Rothbard's name.

  4. Read some of the comments to the column. The complete and total ignorance of our opponents regarding even the subject matter of our ideas is creeping me out. And you cannot shame them into actually inquiring into the nature of our ideas. The public schools have been a success.

    1. Well Bob, the simple minded will NEVER think for themselves. Stupid is as stupid does. This worthless idiots are a complete waste of flesh.

    2. Hayek was wrong on a few points (mainly his concessions to statism), but he was spot on here:

      "...he will be able to obtain the support of all the docile and gullible, who have no strong convictions of their own but are prepared to accept a ready-made system of values if it is only drummed into their ears sufficiently loudly and frequently. It will be those whose vague and imperfectly formed ideas are easily swayed and whose passions and emotions are readily aroused who will thus swell the ranks of the totalitarian party."

  5. I have long suspected that the Austrians have been in the heads of the elitist establishment for quite a while, at least for some of them. For instance, Warren Buffet's father personally wrote to Murray Rothbard about obtaining a copy of Man, Economy and State for his son. I understand that George Soros studies at the London School of Economics, which at least has had some exposure to the Austrian school. We know that the Koch brothers are intimately familiar with the Austrian school.

    I suspect that their partial knowledge of Austrian thinking, together with their close personal relationships with elites who hold government positions, has helped them to make fortunes through a sort of "insider trading". Just because they publicly promote Keynesian or Monetarist ideas, does not mean that they necessarily believe them. It could very well be that they prefer a dumbed down public and a confused academia. A realistic understanding of the economics together with advances knowledge of government policies could be quite profitable.

    On the other hand, it does seem that some, like Bernanke, truly believe the gibberish that they spout. However, we should keep in mind that just because someone understands economics does not mean that they will use that knowledge to do good.

  6. So sick to death of these collectivist rants.

    "We're all Keynesians now."
    "We're all socialists now."
    "We're all Austrians now."

    NO, we're not. Just because a state or its cheerleaders are spreading some meme doesn't mean it is objectively true.

    1. They certainly are all idiots. Both then and now.

  7. We are all Keynsians now was said by Milton Friedman and not Richard Nixon who said instead ""I am now a Keynesian in economics" after taking us off the gold standard.It was more tongue-in-cheek way to refer to the US's being unable to stay on the Gold standard thanks in large part to a government built upon Keynesian policies. I wonder if this twit and revisionist actually think that Milton Friedman really believes that the left has figured out "economics". That should get him spinning in his grave. LOL

  8. For what it's worth, I think Dionne has mentioned Rothbard in the past more times than any other MSM type. For example:

  9. Since we know of Hayek's pro-social democratic proposals, this statement is nonsense:

    Hayek believed, Judt said, that “if you begin with welfare policies of any sort — directing individuals, taxing for social ends, engineering the outcomes of market relationships — you will end up with Hitler.”

    The Road to Serfdom concerned large scale economic planning.

    Of course, Hayek was wrong about his social democratic proposals. They do lead to a police state and we are almost there.

  10. No surprise there. They are utterly TERRIFIED of him that's why.