Thursday, May 28, 2020

Tyler Cowen Takes an Odd Swipe at the Austrian School

Tyler Cowen
In a review of the soon to be published book by Stephanie Kelton, Modern Monetary Theory and the Birth of the People’s Economy, Cowen makes 12 points.

It is a roller coaster ride.

In point one he says:
1. Much of it is quite unobjectionable and well-known, dating back to the Bullionist debates or earlier yet.  Yet regularly it flies off the handle and makes unsupported macroeconomic assertions.
At point 10, he hits the hardest:
10. I am plenty well read in the “money cranks” of earlier times, including Soddy, Foster, Catchings, Kitson, Proudhon, Tucker, and many more.  They got a lot of things right, but they also failed to produce coherent macro theories.  I would strongly recommend that Kelton undertake a close study of their failings.
He ends up while attacking Kealton's argument, apparently supporting more Fed printing in his final point. Incredibly, he states that monetizing the budget deficit is desirable:
12. The real grain of truth here is that if monetary policy is otherwise too deflationary, monetizing parts or all of the budget deficit is not only possible, it is desirable.  Absolutely, but don’t then let somebody talk loops around you.
And then there is the odd swipe at the Austrian school early on in his second point:
2. Like many of the Austrians, Kelton likes to insist on special terms, such as the government spending “coming first.”  You don’t have to say this is wrong, just keep your eye on the ball and don’t let it distract you.
I don't know of any Austrian that uses a term to attempt to mislead. If anything, some Austrians use terms, such as inflation, in a very strict sense to highlight a problem (the increase in the money supply). I have never seen Kelton do anything but use terms in a way other than to obfuscate and mislead. What a nasty swipe at Austrians to compare them with Kelton.



  1. Huh?? How on Earth can Kelton be described as an AUSTRIAN?? OK, upon closer reading, it looks like the only thing she has in common according to Cowen is the use of "special terms" but I guess not the same ones. The reason I'm leaving my opening (mistaken) is to demonstrate that a busy guy can read "She's an Austrian" if they're not careful.
    Anyhow, cheap shot.

  2. When someone obfuscates instead of directly engaging an opposing argument, it's an admission that they know that the opposing argument would win the argument. That's why no one ever directly engages Austrian concepts or analysis.

  3. I honestly don't even understand if he has a point or what it is. Is there a specific criticism of a technical aspect of the Austrian School, or does he just not like the way they talk....

    David B.

    1. Cowen pussy foots around a lot. He is liberty minded enough not too be regarded as A go to guy for political power but not too liberty minded as to be dismissed from beltway regard entirely.