Education: Recent Episodes
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Education includes works on the nature and history of public and private schools, and the economics of each. References to alternative education are included.
Ineffective teaching, the enrollment cliff, stifled academic discourse, and government driving up tuition.
Download the slides from this lecture at Mises.org/MU23_PPT_34.
Recorded at the Mises Institute in Auburn, Alabama, on 28 July 2023.
Michael talks with Gad Saad about evolutionary psychology and the market, the mind parasites, and his new book.
Even though Barbados and Jamaica had more similarities than differences when they became independent of Great Britain, Barbados developed its economy much more quickly.
Original Article: "Why Barbados Advanced Economically While Jamaica's Growth Lagged"
John Klyczek joins Michael on the first episode of REKT. John (jakE) is the author of School World Order: The Technocratic Globalization of Corporatized Education. Topics include the behaviorist, collectivist, and eugenicist roots of public (and state-sanctioned private) education, the globalist organizations behind the stakeholder capitalism regime, and the making of "global citizens" through indoctrination and technocratic surveillance and control systems.
Get School World Order: Mises.org/Rekt1a
Find more work from John: Mises.org/Rekt1b
University of Rochester economist Steve Landsburg joins Bob to discuss the abysmal performance of ChatGPT on his undergraduate exam. They also discuss the importance of market prices in guiding behavior and the unexpected problems with the government handing out "free" goodies.
Bob's article "Superman Needs an Agent:" Mises.org/HAP400a Steven's Book The Armchair Economist: Mises.org/HAP400b More Economic brainteasers: Mises.org/HAP400c
Adherents of leftist dogma increasingly push the notion that teachers should be permitted to distract, confuse, or influence their students by discussing their personal beliefs, ideas, and private activities and choices in the classroom.
Original Article: "How the Woke Left Is Destroying Education"
This Audio Mises Wire is generously sponsored by Christopher Condon.
The Ralph Raico Memorial Commencement Lecture.
Recorded at the 2023 Austrian Economics Research Conference hosted at the Mises Institute in Auburn, Alabama, March 16–18, 2023.
The Austrian Economics Research Conference is the international, interdisciplinary meeting of the Austrian School, bringing together leading scholars doing research in this vibrant and influential intellectual tradition. The conference is hosted by the Mises Institute at its campus in Auburn, Alabama, and is directed by Joseph Salerno, professor of economics at Pace University and academic vice president of the Mises Institute.
There is no denying the awful history of slavery in the Western Hemisphere. However, to better understand its legacy, we must rely on truth, not myths.
Original Article: "Slavery in the Americas: Separating Fact from Fiction"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Contrary to the claim that taxpayer subsidies for higher education provide great social benefits, these subsidies actually are a wealth transfer from the less-well-off to wealthy people.
Original Article: "Subsidizing Higher Education Is Not Creating Widespread External Benefits"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Mises Institute scholar and Troy University business school Dean Allen Mendenhall is among the leading critics of woke capital. He leads a new initiative against the perverse investment practices demanded by ESG/DEI commissars, and joins Jeff Deist to discuss both the origins of "stakeholder" capitalism and what we can do to push back against ideological purity tests in capital markets and corporate America.
AllenMendenhall.com
"Troy University tackles 'woke' business practices head-on with new program": Mises.org/HAP382a
Back in January Jeff Deist joined the Austrian Economics Discord Server for a live event concerning trends in 2023. Jeff makes the case for viewing today's economy as quite unlike that of 2007—due to steady increases in CPI, more fiscal stimulus relative to monetary stimulus, and ongoing supply shock issues from COVID.
This is a far-ranging discussion of the landscape for the Fed, persistent inflation, and a looming recession. Includes Q and A from the audience.
Professor Per Bylund of Oklahoma State University, author of How to Think About the Economy joins Jeff and Bob to dissect how economics went so badly wrong. A discipline rooted in theory, axioms, and deduction has devolved into statistics, models, and hard science envy. Is the economics profession doing any good, or active harm?
Per's new book How to Think About the Economy: Mises.org/Primer
Gary North and Walter Block debate "Is it Smart to Get a PhD in Economics": Mises.org/HAP380a
John McWhorter takes on the present infatuation with wokeness and shows the real harm it is doing to our social fabric.
Original Article: "Spelling Out the Problem with W-o-k-e-n-e-s-s"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Yuval Noah Harari, who teaches history at Hebrew University in Jerusalem, denies that free will exists. However, to deny free will is to deny human action itself.
Original Article: "Objection, Professor Harari! Logic Proves the Existence of Free Will"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Woke Racism: How a New Religion Has Betrayed Black America by John McWhorter Portfolio/Penguin, 2021, xv + 201 pp.
John McWhorter is an eminent linguistics professor who teaches at Columbia. He is himself black, and he argues that “woke” racism does not help blacks and other minorities. It has, he says, become a religion, and those who question it are dealt with severely by its acolytes, to the detriment of a free society. He does not confine the book to criticism but also proposes a three-step program aimed to help blacks succeed.
What is “woke” racism? According to McWhorter, it holds that all aspects of American society are racist, having as their function the suppression of nonwhites to the advantage of the dominant white elite. Society consists entirely of a struggle for power.
It is rarely stated explicitly, but decisively steers its adherents’ perspective on existence and morality. Third Wave Antiracism’s homily par excellence would be the following: Battling power relations and their discriminatory effects must be the central focus of all human endeavor, be it intellectual, moral, civic, or artistic. Those who resist this focus, or even evidence insufficient adherence to it, must be deeply condemned, deprived of influence, and ostracized. (pp. 10–11)
A particularly insidious part of the “woke” ideology is an extension of the notion of “white privilege,” under which whites are condemned for virtually anything they do or say, and which often rejects their anxious efforts to show their antiracism as inept or “actually” racist.
To anticipate a question, yes, I do believe that to be white in America is to automatically harbor certain unstated privileges in terms of one’s sense of belonging. Figures of authority are the same color as you. You are thought of as the default category. You are not subject to stereotypes. Although, these days, you actually are subject to one—that of the menacing, anal “whiteness” monster the Elect tar you as—but we shall not quibble. But the issue here is not whether I or anyone else thinks white privilege is real, but what we consider the proper response to it. The Elect are to ritually “acknowledge” that they possess white privilege, with an awareness that they can never be absolved of it. Classes, seminars, and teach-ins are devoted to corralling whites into this approach to the matter. (pp. 30–11)
McWhorter calls our attention to a large number of incidents in which people have lost their jobs because they have said something to which a proponent of the “woke” ideology takes exception. For example, in 2020,
David Shor, a data analyst at a progressive consulting firm, lost his job. He had tweeted a study by a black Ivy League political science professor, Omar Wasow, showing that violent black protests during the long, hot summers of the late 1960s were more likely than nonviolent ones to make local voters vote Republican. Shor’s intent was not to praise this, but to disseminate the facts themselves as a glum announcement—one that had been covered eagerly by liberal media shortly before this. Certain parties on Twitter, though, didn’t like a white man tweeting something that could be taken as criticizing black protest in the wake of George Floyd’s murder. The consulting firm took heed and expelled Shor. (p. 4)
I have so far confined myself to reporting McWhorter’s account of “wokeness,” as it seems to me in large part convincing, but at one point in his analysis, he goes astray, though fortunately this does not weaken the main thrust of his argument. He says that the insistence that absolute credence be given to the “woke” doctrines, without regard to evidence, makes the “woke” movement a religion. He is free to define “religion” in this way, but he intends more than this. He thinks that his characterization applies to Christianity and other theistic religions, and from that he goes on to suggest that the separation of church and state mandated by the First Amendment should apply to the “woke” ideology as well.
He says,
Certain questions are not to be asked, or, if asked, only politely. The answer one gets, despite being somewhat half-cocked, is to be accepted. The Christian is allowed to ask why the Bible is so self-contradictory, or why God allows such terrible things to happen. But no one has had a smackdown answer for two millennia anyway, and what’s key is that you believe. One internalizes an etiquette that it stops there. (p. 25)
One could well ask McWhorter whether his account of the Abrahamic religions rests on evidence. It is my impression, for what it is worth, that some Christians and Jews do have what they take to be satisfactory answers to the problem of evil, and the many who do not usually would not say that they are commanded to believe in God despite the absence of a satisfactory explanation, in defiance of reason, though there are no doubt some who do say this. Rather, I would think the more common view of believers is that the weight of the evidence favors belief, though the existence of evil does indeed count as a problem.
When he turns from theology, McWhorter does much better, and especially so in his suggestions on how to improve the lives of blacks. He argues that the “woke” ideology impedes black progress in that that it encourages blacks to blame all their problems on racism rather than to consider what positive steps they can take their condition.
If it is objected that this is “blaming the victim,” McWhorter responds that he has a positive program that will enable young blacks to succeed, and his program has great merit. First, he calls for an end to the war on drugs because the illegal market in drugs tempts young black men to a life of violent crime. “Its eclipse would create a black American community in which even men dealt a bad hand would likely work legally, spells in prison would be rare, and thus growing up fatherless would be occasional rather than the norm” (p. 141). Second, he favors teaching reading through phonics—i.e., sounding out the letters of a word, with concentration on a word’s spelling rather than the “whole word” method, which is difficult for children who come from homes in which books are not an important part of daily life. Finally, he proposes encouraging vocational training rather than going to college, which is not suitable for everyone. “We must revise the notion that attending a four-year college is the mark of being a legitimate American, and return to truly valuing working class jobs” (p. 143).
McWhorter deserves our thanks for his thoughtful account of “wokeness.”
University of Chicago professor Martha C. Nussbaum wants to save the world by preventing animals from eating each other in the wild. David Gordon (after pulling himself off the floor) comments on her proposal.
Original Article: "You've Got to Be Kidding: Professor Demands Animals Stop Eating Each Other"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Does 2022 America still have legitimate intellectuals? Professor Paul Gottfried joins Jeff and Bob to consider the state of real and pseudo-intellectualism.
Politicians calling for student loan forgiveness or free college tuition have failed to understand the larger consequences of unlimited student lending. Henry Hazlitt would have understood.
Original Article: "College Loans and Hazlitt's Lesson: Ignoring the Larger Picture"
This Audio Mises Wire is generously sponsored by Christopher Condon.
American political, educational, and economic life is increasingly dominated by "experts." We should not be surprised that they fail most of the time.
Original Article: "Relying on Experts: A Proven Path to Failure"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Featuring Tho Bishop, Liam Metzger, Connor Mortell, Mitchell Robson, and Annika Wahlstedt.
Recorded at the Arizona Biltmore Hotel in Phoenix, Arizona on October 7th, 2022.
Ryan McMaken and Tho Bishop talk with historian Chris Calton about student loans, "the college experience," and the lack of ideological diversity on college campuses today.
Use promo code ROTHPOD for a 20% discount on Ryan McMaken's new book Breaking Away: The Case for Secession, Radical Decentralization, and Smaller Polities: Mises.org/RR_104_Book
Recommended Reading "College as an Economic and Social Problem: Dealing with the Culture" by Chris Calton: Mises.org/RR_104_A
"Higher Education Woes: Student Loans Help Fuel Higher College Costs" by Chris Calton: Mises.org/RR_104_B
"Higher Education in Crisis: The Problem of Ideological Homogeneity" by Chris Calton: Mises.org/RR_104_C
"The Perils of Higher Education: Institutional Failure" by Chris Calton: Mises.org/RR_104_D
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
College faculties historically have leaned left-of-center, but today, a rigid progressive ideology is enforced not only by faculty, but also by higher education administrations.
Original Article: "Higher Education in Crisis: The Problem of Ideological Homogeneity"
This Audio Mises Wire is generously sponsored by Christopher Condon. '
As we watch the once proud edifice of higher education in the USA crumble, we realize that we are looking at institutional failure itself.
Original Article: "The Perils of Higher Education: Institutional Failure"
This Audio Mises Wire is generously sponsored by Christopher Condon. '
Even while Americans deal with skyrocketing higher education costs, few would challenge the worth of college and fewer still question the campus culture. Yet, that is precisely where the problems lie, even if people don't recognize it.
Original Article: "College as an Economic and Social Problem: Dealing with the Culture"
This Audio Mises Wire is generously sponsored by Christopher Condon. '
While President Biden claims that forgiving student loans helps reduce college costs, it is the loan program itself that is responsible for much of the explosive growth of higher education spending.
Original Article: "Higher Education Woes: Student Loans Help Fuel Higher College Costs"
This Audio Mises Wire is generously sponsored by Christopher Condon. '
Barack Obama promised to "end child hunger" by 2015. Michelle Obama promised to end childhood obesity. Unfortunately, both increased in large part because of the Obama programs. Today, President Biden will declare war on "hunger in America." Stay tuned.
Original Article: "Obama's Forgotten Child Hunger Debacle"
This Audio Mises Wire is generously sponsored by Christopher Condon. '
Journalist Jordan Schachtel joins the show to discuss Biden's escalating rhetoric against what he terms "ultra-MAGA" semi-fascists. Is America finally past any pretense of democracy?
Clifton Duncan joins the show to discuss Joe Biden's student loan forgiveness plan, along with the broader question of whether college and student loans are still worthwhile for young people.
Jeff's Article, "Is College Worth It?": Mises.org/HAP358-1
Names like Menger, Böhm-Bawerk, Wieser, Hayek, and Rothbard are well-known to adherents of the Austrian school of economics. Emil Kauder isn't one of those names, but Murray Rothbard brings his contributions to Austrian thinking to light.
Original Article: "Emil Kauder as an Austrian Dehomogenizer"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Jeff Deist and Connor Mortell host an AMA during Mises University 2022 on the topic of "What You Can Do."
Recorded at the Mises Institute in Auburn, Alabama, on 30 July 2022.
Higher education signaling, grade inflation, federal aid and student debt, free speech, and university bureaucracy.
Download the slides from this lecture at Mises.org/MU21_PPT_34.
Recorded at the Mises Institute in Auburn, Alabama, on 29 July 2022.
Connor Boyack, author of the new Tuttle Twins book America's History: 1215-1776, joins the show to make the Rothbardian case for de-bamboozling history.
America’s History: A Tuttle Twins Series of Stories: TuttleTwins.com/History Rothbard on Historical Revisionism: Mises.org/HAP353-1
People often speak of the Constitution with reverence, as though it were infallible. However, the Constitution was a centralizing document that cast aside the decentralization of the Articles of Confederation.
Original Article: "Is the Constitution a Centralizing or Decentralizing Document?"
This Audio Mises Wire is generously sponsored by Christopher Condon.
"Repealing the twentieth century" sounds like madness to many. Yet the progressivism that came from that century will be the death knell of civilization if not stopped.
Original Article: "Civil Society and Counterrevolution against Progressivism"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Recorded in Birmingham, Alabama, on April 2, 2022.
Special thanks to Mark Walker for sponsoring this event.
Recorded at the 2022 Austrian Economics Research Conference hosted at the Mises Institute in Auburn, Alabama, March 18–19, 2022.
The Murray N. Rothbard Memorial Lecture, sponsored by Steven and Cassandra Torello. Includes audience question and answer period.
The Austrian Economics Research Conference is the international, interdisciplinary meeting of the Austrian School, bringing together leading scholars doing research in this vibrant and influential intellectual tradition. The conference is hosted by the Mises Institute at its campus in Auburn, Alabama, and is directed by Joseph Salerno, professor of economics at Pace University and academic vice president of the Mises Institute.
Jeff and Bob Murphy talk about the state of gross economic ignorance in America today.
Lessons for The Young Economist: Mises.org/YoungEcon
Understanding Money Mechanics: Mises.org/BobMoney
A recent New York Times article featuring economist Stephanie Kelton and her (disastrously misguided) book on Modern Monetary Theory garnered criticisms, but not from the usual sources. No less than economist Larry Summers, former Treasury secretary and Harvard president, weighed in to criticize the Times for giving credence to MMT (he likened it to "quack cancer cures"). Reliably leftwing economics writer Noah Smith chimed in on substack to call MMT a "fringe ideology" and lambaste its lack of macroeconomic foundations. But a backlash ensued: several female economists claimed the criticisms of Kelton (and MMT) were rooted in sexism, bemoaning the male-dominated nature of the economics profession. And as with all academic or professional disciplines, "diversity" is now not only a buzzword but an open requirement in hiring. I asked Baylor professor and Mises Institute senior fellow Dr. Peter Klein to join the show and give us his behind-the-scenes view of the increasingly politicized economics profession.
Read the Times article: Mises.org/KeltonNY Bob Murphy's review of Kelton's book: Mises.org/KeltonBook Noah Smith's review of Kelton's Times article: Mises.org/KeltonNoah
For decades, countless parents have been on autopilot when it comes to letting the state manage their child's education. But over the past two years, millions of parents have begun to take control.
Original Article: "We've Only Just Begun to See the Benefits of the New Surge in Homeschooling"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
If there’s one political fight worth seeing through, it’s the crusade against government schooling. Many parents in Virginia may have started to see just how important the fight has become.
Original Article: "The Virginia Elections Showed Some Parents Are Seeing How Bad the Government Schools Really Are"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Pursuing one’s dreams without a degree requires more self-discipline than serving four years on campus. One of Nietzsche’s best lines offers a warning: “He who cannot obey himself will be commanded.”
Original Article: "Is College Worthwhile? A Two-Time Dropout’s Take"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
This week's show features a panel discussion recorded in late October at our annual Supporters Summit. Panelists Ryan McMaken, Jeff Deist, Mike Maharrey, and Tho Bishop lay out real strategies for achieving decentralization.
Includes an introduction by Joey Clark. Recorded in St. Petersburg, Florida on October 22, 2021.
Recorded in St. Petersburg, Florida on October 22, 2021.
The weekend revolves around a discussion of strategy. Nearly 25 years ago, Professor Hans-Hermann Hoppe delivered his famous "What Must Be Done" speech on the pressing topic of how—and whether—to engage the state. Today his prescription for a bottom-up ideological revolution beginning at the local level rings more true than ever. With Hoppe's admonitions in mind, all of our speakers and panels will consider three vital questions: Where are we? How Bad is it? And what should we do now?
Recorded in St. Petersburg, Florida on October 22, 2021.
The weekend revolves around a discussion of strategy. Nearly 25 years ago, Professor Hans-Hermann Hoppe delivered his famous "What Must Be Done" speech on the pressing topic of how—and whether—to engage the state. Today his prescription for a bottom-up ideological revolution beginning at the local level rings more true than ever. With Hoppe's admonitions in mind, all of our speakers and panels will consider three vital questions: Where are we? How Bad is it? And what should we do now?
Recorded in St. Petersburg, Florida on October 22, 2021.
The weekend revolves around a discussion of strategy. Nearly 25 years ago, Professor Hans-Hermann Hoppe delivered his famous "What Must Be Done" speech on the pressing topic of how—and whether—to engage the state. Today his prescription for a bottom-up ideological revolution beginning at the local level rings more true than ever. With Hoppe's admonitions in mind, all of our speakers and panels will consider three vital questions: Where are we? How Bad is it? And what should we do now?
Recorded in St. Petersburg, Florida on October 22, 2021.
Slides used in this talk are available here.
The weekend revolves around a discussion of strategy. Nearly 25 years ago, Professor Hans-Hermann Hoppe delivered his famous "What Must Be Done" speech on the pressing topic of how—and whether—to engage the state. Today his prescription for a bottom-up ideological revolution beginning at the local level rings more true than ever. With Hoppe's admonitions in mind, all of our speakers and panels will consider three vital questions: Where are we? How Bad is it? And what should we do now?
The example of England in the Industrial Revolution suggests enormous amounts of innovation and growth can be achieved even without high levels of education among the general population.
Original Article: "Is an Educated Population Really Necessary for Innovation and Growth?"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Having branched to our first novel with All Quiet on the Western Front, the Human Action Podcast begs your indulgence for one of the works of 20th century British satire. Lucky Jim is the late Kingsley Amis's seminal send-up of campus life, and it's among your host's favorite books. The book takes place in 1951, and England is trying but failing to lose its class distinctions. The protagonist Jim Dixon is singularly unfit for the academic life he's chosen, and the opportunities for Amis to skewer both the academy and English society are manifest.
Allen Mendenhall of Troy University joins the show to discuss the academic pretenses and foibles punctured by Amis, along with great insights about Amis's background and political views. If you like satire, don't miss this show or this book!
Restoring the Promise: Higher Education in AmericaRichard K. VedderOakland, Calif.: Independent Institute, 2019, 400 + xiv pp.
Timothy Terrell (terrelltd@wofford.edu) is T.B. Stackhouse Professor of Economics at Wofford College and a Senior Fellow at the Mises Institute.
Higher education in the United States is facing a reckoning, and none too soon. Americans pay more per college student than any other country in the world, and the payoff is increasingly in doubt. The core mission of colleges and universities—teaching students—has suffered, as these institutions erect resort-like facilities, pursue politicized agendas, chase after athletic glory, and lavish resources on research of limited value. But a growing national skepticism about higher education, promising new technologies, and the rise of alternative institutions provide hope for students of the future.
Richard Vedder’s Restoring the Promise, a sequel to his 2004 book Going Broke by Degree, documents the decline of American higher education—a decline that is likely to generate not only larger numbers of poorly-served students and more wasted taxpayer dollars, but the shuttering of some hallowed institutions. Drawing on a career’s worth of research in this field, Vedder shows how the key problems facing higher education—including high cost, deteriorating learning, and mission drift—are traceable to increased government intrusion into education.
While the earnings differential between college graduates and those with less education was once rising, that gap has stopped increasing. How much of that gap is due to knowledge gained in college (as opposed to costly signaling) is in doubt, as Bryan Caplan has pointed out in his recent book The Case Against Education. But it is quite clear that many students are getting less education per dollar than did previous generations. Some of the most tragic cases are students who are enticed into pursuing a college degree but either cannot finish or perform poorly. As Vedder points out, “a large portion of new students never graduate, and those who graduate near the bottom of their class typically get jobs that pay little more than what high school graduates earn.” (p. 4)
Colleges and universities have enjoyed great success at securing government subsidies, and even private institutions are heavily dependent on government funds channeled through federal financial aid and state subsidies provided to their students. Subsidies are typically justified on three grounds: 1) that higher education creates positive externalities, 2) that lowering the education costs for poorer students can serve an egalitarian purpose, and 3) that higher education and associated research provides a higher rate of return than the what the government pays on its borrowed funds. These are problematic arguments. For instance, some of the positive spillovers are probably illusory, as the lower crime rates, better health habits, and other traits of college graduates might have been observed in those same individuals had they not chosen to attend college. Vedder points out that students who pay for their own tuition tend to perform better—more expensive private schools have higher graduation rates, for example. (p. 23) Subsidies remove some of the incentive to finish well, and finish quickly. Credential inflation, too, is a problem, as employers use the requirement of a college degree as a screening device, even though the degree itself contributes no knowledge useful to the job. Without subsidies, some of these graduates might have ended up with the same job, though without spending four years of their lives and some of their own money obtaining the credential. (pp. 84, 85) Vedder points to the 2011–17 enrollment decline as evidence that people are catching on to the lower payoff from higher education, though demographic shifts or an improving economy might have something to do with the change in enrollment.
Vedder’s exposure of the giant financial boondoggle that is higher education is one of the best features of Restoring the Promise. A university campus tends to underutilize physical resources, with classrooms, faculty offices, dormitories, and other facilities sitting idle a third or more of the year. While the fraction of higher education spending devoted to instruction and research has fallen to less than half of the total spending of colleges and universities (p. 175), spending on “overhead” such as non-teaching staff has exploded. Many of these are various staffers charged with seeing to the social, medical, mental health, and other needs of resident students, and administrative “deanlets” providing sometimes dubious contributions to the core mission of the institution. At the University of California, “there are more than 2,000 employees in the Office of the President, and that does not count the senior administrative officials and their staffs at each of the ten campuses of the institution.” (p. 192). The bloat of non-instructional staff has important financial implications—as Vedder points out, if the ratio of university bureaucrats to faculty had remained the same from 1976 to 2011, there would be over half a million fewer university bureaucrats, and tuition could have been reduced 20 percent. (p. 190)
Why are colleges and universities trying to be one-stop shops for all student needs, providing food, housing, and social, medical, and therapeutic services? American universities provide food and housing, while many European universities do not. In America, college room and board costs rose 70 to 80 percent in inflation-adjusted dollars at four-year institutions from 1976 to 2013, while in the economy at large, housing and food away from home rose only a tiny fraction of that amount. (p. 199) While the quality of room and board is clearly better than it once was on campuses, Vedder suspects that one cause is the use of room and board fee increases as a somewhat less transparent way to raise the overall price for students.
Not only are taxpayer funds being wasted, but trusting private donors hand over sums large and small to fund endowments that are misdirected. As Vedder shows, endowments generally don’t lower the cost of tuition, and the fungibility of endowment dollars allows the administration to direct funds largely as it sees fit. Only occasionally do we see a university receive its comeuppance for its malfeasance, as when the University of Missouri was forced in 2019 to turn over funds intended to support Austrian scholars to the donor’s designated watchdog, Hillsdale College.
Traditional methods of evaluating quality in higher education are dysfunctional. Accreditation might be supposed to push colleges and universities toward higher standards, but it is largely toothless and uninformative—Vedder describes it as “an expensive joke.” (p. 329) Disaccreditation is so rare that it’s not much of a threat. Outside evaluators like Forbes and U.S. News give far more information of interest to prospective students, in contrast to the binary status options for higher education institutions—they either are accredited or not. Transparency is sorely lacking in accreditation, and conflicts of interest are rampant. For instance, as Vedder points out, 12 of the 13 members of the Southern Association of Colleges and Schools (SACS) Executive Council earn income from a SACS accredited school. And rather than look at outcomes, accrediting organizations tend to look at inputs, e.g., what proportion of faculty have terminal degrees, how many books are in the library, what is the typical faculty teaching load? The connection between these and the performance of graduates is tenuous, but for accreditors who are essentially a club of administrators and faculty, protecting the value of their colleagues might come before enhancing outcomes for students. Educational innovators, such as the for-profit sector, find themselves facing multimillion-dollar barriers to entry when trying to obtain accreditation from scratch. Furthermore, with federal education dollars tied to accreditation status, the fact that accreditation agencies are themselves “accredited” by the Department of Education means that the federal government can use accreditation to force innumerable mandates and restrictions on colleges and universities. Accreditation agencies need either a fundamental shift in governance and method, or outright elimination.
Colleges and universities are under overwhelming pressure to address diversity and equity problems in higher education. And yet a widely accepted mechanism for resolving these problems—race-influenced admissions policies—may not be helping promote equal educational opportunity. “Indeed,” Vedder says, “one can plausibly argue that some colleges have deceived and misled and financially maimed minority students while sanctimoniously arguing they are sensitive and supportive of the needs of this population.” (p. 277) While some minority students are victims of “undermatching,” whereby well-qualified students attend schools that are lower quality than those they could have been admitted to, this is “relatively commonplace amongst all races and ethnicities.” (p. 277) Referencing work by Richard Sander and Stuart Taylor (2012) that examined affirmative action law school admissions, Vedder points out that mismatching, whereby students bypass good-quality schools to enter schools for which they are not prepared, has had serious financial consequences as failure to complete a degree leaves a student with significant student loans but no income-boosting degree with which to repay the debt. “It is better to be a graduate of a mid-quality law school with a job as a lawyer than to be a dropout of a prestigious law school with no legal career but a good deal of debt.” (p. 278)
Intellectual diversity, meanwhile, is not a priority with most colleges and universities. Vedder references a Higher Education Research Institute survey which shows that there were about five times as many professors on the political left as on the political right at baccalaureate institutions. In some disciplines, the political orientations are almost comically lopsided—one study showed, for example, that 72 percent of sociologists were Democrats while only 3 percent were Republicans. “Probably the most balanced of the core social science and humanities disciplines is economics, where studies show roughly equal proportions of Republicans, Democrats, and Independents—pretty representative of the American people.” (p. 281). Outside speaker invitations show further evidence of ideological imbalance: a study by Vedder and Joshua Distel (2018) looking at almost 7,000 speakers on about 200 campuses found that “for every two visitors with an identifiable distinctly right-of-center political orientation, there were seven with a left-of-center one, with the leftish orientation far more pronounced at the highest reputation schools….” (p. 281)
While, according to Vedder, “the traditional residential college is not going to die anytime soon,” (p. 302) changes are coming. But the changes are likely to come from outside traditional colleges, not from inside. While administrator power has risen, the influence of the faculty has diminished. Despite the protection of tenure, faculty who fall afoul of the administration—perhaps because of outspoken opposition to the direction of the college or because of ideological differences—can be punished and even effectively fired. “[S]enior university administrators who dislike tenured faculty members can try to use… the Star Chamber approach to hound out faculty they find annoying.” (p. 330) College trustees, Vedder says, “remain theoretically powerful but realistically usually fairly clueless and under the thrall of the administration….” (p. 297) Trustees are given the Potemkin Village treatment, presented with a carefully filtered view of the college’s situation and the concerns of senior faculty. As Vedder points out, “often the errors of omission in information reporting give the trustees a distorted view and lead thus to inappropriate decisions… [and to] rubber-stamp policies that may be inappropriate.” (p. 297)
Disruptive innovation will be the key to change. While it is difficult to predict what that will look like, there are several possibilities. Innovation is likely to entail more competition in one form or another, challenging the educational cartel that characterizes accredited higher education today. Competition could appear on multiple margins. Perhaps some colleges will retain a substantial component of non-academic consumption and socialization, as they do today, while others will drop student entertainment, athletics, residence halls, and medical services and market their laser-like focus on formal education. Private organizations may develop nationally administered exit examinations (p. 338) that allow bright and/or hardworking students a better chance to finish early while focusing on outcomes rather than inputs to education. Competing exit examinations with different emphases or difficulty could provide students with a range of possible signals to communicate to potential employers.
Maybe accrediting organizations could find a useful purpose in promoting innovation instead of stifling it—for instance, accreditors could accredit courses, not just schools as a whole. Easing transfer credit restrictions would be possible with course-level standards across institutions. And in the extreme, why couldn’t a student cobble together a degree from a variety of accredited course providers, certified perhaps by one of the universities or by a group like the National Student Clearinghouse or the ACT testing organization? (p. 336) This might not go over well with less effective faculty who take advantage of institutional limits on transfer credits, enjoying a captive market for their low-quality courses among students who were attracted to the institution by higher-quality courses taught by others. But the day may come when professors are less able to free-ride on the reputation of the institution as a whole. They could, as Vedder suggests, “be independent contractors, selling their instructional and research services to the university, which would be the course aggregator and degree certifier.” (p. 337) Shifts in this direction are already occurring, with the increase in the proportion of adjunct faculty relative to tenured or tenure-track faculty. There are some problems with this, such as the fact that adjunct faculty tend to be far less engaged in institutional governance, curriculum development, and campus socialization. An engaged, tenured faculty can push back against administrative overreach in ways that adjuncts cannot. But to the extent that tenured faculty use their influence to secure perks for themselves and push teaching loads ever lower, a model that increases competition at the instructor level and even ends tenure could produce some salutary results.
Vedder wraps up Restoring the Promise with some suggestions for changes in higher education that might reduce costs while increasing effectiveness. Among these: ending or revising federal student financial aid; increasing faculty teaching loads; instituting year-round instruction, possibly coupled with internships; ending governmental discrimination against for-profit schools; reevaluating tenure; imposing maximum average GPAs for state universities; eliminating colleges of education; ending speech codes; and requiring a core curriculum that covers the basics of civics and culture. (pp. 344–53) These are excellent ideas, though I am not enthusiastic about his proposal to encourage better use of university space by removing tax exemptions on “facilities that are not directly related to academics: Housing and food facilities, stadiums, recreation centers, and student union buildings…” (p. 345) or to end tax deductibility for “donations by wealthy alums for stadium sky boxes used perhaps eight times a year to attend contests involving throwing balls….” (pp. 345–46) To my mind, reducing tax burdens is more important than ending distortions created by preferential tax treatment.
Restoring the Promise is essential reading for those trying to wrap their heads around the many serious problems in America’s ivory towers. Colleges and universities can be saved from their politicized sclerosis, and Vedder’s engaging and thoughtful analysis shows us how.
Download the slides from this lecture at Mises.org/MU21_PPT_35.
Recorded at the Mises Institute in Auburn, Alabama, on 23 July 2021.
Professor Roberta Modugno joins the show to finish our look at Rothbard's seminal treatise on normative libertarianism, The Ethics of Liberty. Dr. Modugno elaborates on Rothbard's disagreements with Mises regarding ethical justifications for a free society, and defends his uncompromising views on the nature of the state.
Mentioned in the Episode and Other Links of Interest: Rothbard's The Ethics of LibertyDr. Modugno's Rothbard vs. The PhilosophersDr. Modugno's "How I Discovered Murray Rothbard"
Government schools have always been tools of the regime for teaching state-approved ideology and culture. The rise of critical race theory is just the latest phase for America's public schools system.
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Listed below are links to the readings that all students are encouraged to complete before attending Virtual Mises University.
All materials are available on Mises.org free of charge, and most readings are available in multiple formats (e.g., PDF, ePub, HTML, audio).
Suggested Reading Anatomy of the State by Murray N. Rothbard
The Philosophical Origins of Austrian Economics by David Gordon
Praxeology and Understanding by George A. Selgin
Profit and Loss by Ludwig von Mises
I, Pencil by Leonard Read
What Has Government Done to Our Money? by Murray N. Rothbard, pp. 1-87
From The Austrian Theory of the Trade Cycle and Other Essays, edited by Richard M. Ebeling:
"Introduction: The Austrian Theory in Perspective" by Roger W. Garrison, pp. 7-35"Economic Depressions: Their Cause and Cure" by Murray N. Rothbard, pp. 65-91"Can We Still Avoid Inflation?" Friedrich A. Hayek, pp. 93-120 From Economics in One Lesson by Henry Hazlitt:
"The Lesson," pp. 3-7"The Broken Window," pp. 11-16 From Economic Freedom and Interventionism by Ludwig von Mises
"The Elite Under Capitalism""The Individual in Society" From An Introduction to Austrian Economics by Thomas C. Taylor:
"Introduction," pp. 7-21"The Subjective Theory of Value," pp. 40-62 From Planning for Freedom by Ludwig von Mises:
"Planning for Freedom," pp. 1-17"Middle of the Road Policy Leads to Socialism," pp. 18-35 "Fundamentals of Value and Price" by Murray N. Rothbard (in The Rothbard Reader, pp. 89-126)
"Economic Calculation" by Ludwig von Mises (in Socialism: An Economic and Sociological Analysis, pp. 113-122)
"The Meaning of Competition" by F. A. Hayek
Optional Reading Penthouse Interviews Murray Rothbard
Allen Mendenhall joins the show to expand last week's discussion on the intellectual state of America. Are we living in a decidedly anti-intellectual age, or has America always been predisposed toward doers over thinkers? Have Americans simply stopped reading books? Have we lost our ability to think deeply, due to the constant distractions of the digital age? And what does the shift away from any shared baseline cultural knowledge mean for our future? Don't miss this fascinating but sobering discussion.
Listen to HAPod episode with Dan McCarthy at Mises.org/HAP63
The Henry Hazlitt Memorial Lecture, sponsored by Yousif Almoayyed. Recorded at the Mises Institute on March 19, 2021. Includes an introduction by Peter G. Klein.
The Austrian Economics Research Conference is the international, interdisciplinary meeting of the Austrian School, bringing together leading scholars doing research in this vibrant and influential intellectual tradition. The conference is hosted by the Mises Institute at its campus in Auburn, Alabama, and is directed by Joseph Salerno, professor of economics at Pace University and academic vice president of the Mises Institute.
If grocery stores were run like public schools, they'd still be in the midst of an extended covid lockdown. Fortunately, though, we have a (mostly) privatized system, with vouchers for low-income shoppers. A similar system for schools would be a far saner choice than what we have now.
Original Article: "Public Schools Refuse to Open. Give the Taxpayers Their Money Back"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Rather than representing “white supremacy,” the evolution of mathematics has been a globe-, race-, and culture-spanning collaboration of advancements, an ongoing development of more effective tools for anyone to use.
Original Article: "Is Math Racist? That Does Not Compute"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Listed below is information on accommodations, shuttle between airports and Auburn, and links to the readings that all students must complete before attending Mises University.
All materials are available on Mises.org free of charge, and most readings are available in multiple formats (e.g., PDF, ePub, HTML, audio).
Required Reading Anatomy of the State by Murray N. Rothbard
The Philosophical Origins of Austrian Economics by David Gordon
Praxeology and Understanding by George A. Selgin
Profit and Loss by Ludwig von Mises
I, Pencil by Leonard Read
What Has Government Done to Our Money? by Murray N. Rothbard, pp. 1-87
From The Austrian Theory of the Trade Cycle and Other Essays, edited by Richard M. Ebeling:
"Introduction: The Austrian Theory in Perspective" by Roger W. Garrison, pp. 7-35"Economic Depressions: Their Cause and Cure" by Murray N. Rothbard, pp. 65-91"Can We Still Avoid Inflation?" Friedrich A. Hayek, pp. 93-120 From Economics in One Lesson by Henry Hazlitt:
"The Lesson," pp. 3-7"The Broken Window," pp. 11-16 From Economic Freedom and Interventionism by Ludwig von Mises
"The Elite Under Capitalism""The Individual in Society" From An Introduction to Austrian Economics by Thomas C. Taylor:
"Introduction," pp. 7-21"The Subjective Theory of Value," pp. 40-62 From Planning for Freedom by Ludwig von Mises:
"Planning for Freedom," pp. 1-17"Middle of the Road Policy Leads to Socialism," pp. 18-35 "Fundamentals of Value and Price" by Murray N. Rothbard (in The Rothbard Reader, pp. 89-126)
"Economic Calculation" by Ludwig von Mises (in Socialism: An Economic and Sociological Analysis, pp. 113-122)
"The Meaning of Competition" by F. A. Hayek
Optional Reading Penthouse Interviews Murray Rothbard
Final Exam Mündliche Prüfung is an optional exam for students who would like to have their knowledge tested at the end of the conference. The exam is open only to students. Preliminary written testing on Thursday determines who is qualified to take the final exam on Saturday. Questions consist of general knowledge learned from required readings and plenary lectures. Results of the preliminary testing will be posted on the bulletin board in the outdoor dining area by Friday morning. If you pass the preliminary exam, you will then email a list of classes you attended or will attend this week (not including plenary sessions) to felicia@mises.org by Friday at 4:00 p.m. On Saturday, a faculty jury will engage each of the preliminary passing examinees in a 10-minute question-and-answer session based on the readings and lectures each has attended. At graduation, those who pass the oral exams will receive a graded certificate. Each faculty panel will select two students as the leading candidates from its examinations. These six finalists will then undergo a deeper examination by the entire faculty. The third and second highest scorers will receive the Kenneth Garschina Prize of $1,500 and $750 respectively. The student who emerges from the oral examinations (the Mündliche Prüfung) with the best record, as chosen by the examining committee, will be awarded the Douglas E. French Scholarship Prize of $2,500.
Accommodations, Airport Shuttle, Meals, Attire, Directions, and More Students Scholarships: Student scholarships include all sessions, refreshment breaks, social hours, and meals beginning with dinner on Sunday, July 24 and ending with dinner on Saturday, July 30, and accommodations at Auburn University Hotel with arrival Sunday July 24 and departure Sunday July 31.
Conference Registration: Registration will be at the Mises Institute, 518 W Magnolia Avenue in Auburn on Sunday, July 24 anytime between 5:00 - 7:00 p.m. central time. Registration is a very quick process of picking up your name tag. The Massey and Ward Libraries of the Mises Institute will be open for research and browsing at 4:00 p.m. on Sunday, July 24. The Institute is within walking distance of the hotel, less than a mile. The conference closes with dinner and an awards ceremony late afternoon on Saturday, July 30. Most people will depart the hotel Sunday, July 31. If you are a finalist in the optional Mises U exam, you must be present at the closing dinner to accept your award. (See Awards section.)
Attire: Sunday and Saturday are casual attire (no tank tops, short-shorts, etc. Jeans, walking shorts, and nice t-shirts are fine). Monday-Friday is business casual. The weather will be very hot and humid, but we highly recommend you bring a light jacket as the air conditioning in the classrooms can be very cool. For the group photo on Tuesday, please wear a collared shirt if possible—like a golf shirt or similar, with no large logos on it. Be sure to bring an umbrella or rain jacket!
Parking and Directions: Driving directions to the Mises Institute are here. Auburn University Hotel is located at 241 S College Street in Auburn. Restaurants and general Auburn area info is here. The Tiger Transit bus line that may be useful is here. The parking lot of the hotel is under construction, but there is free parking across the street in the Auburn University parking deck. Parking is free at the Mises Institute, but limited. There will be printed schedules at the hotel when you arrive, with walking directions as well as shuttle times from the hotel to the Mises Institute.
Airport and Shuttles: Most people coming to Auburn fly into the Atlanta, Georgia airport. Students are responsible for making and paying for reservations between Auburn and the airport. Groome Transportation provides shuttle service only from Atlanta airport. Tiger Taxi Shuttles can be reserved from Atlanta, Birmingham, Montgomery, or Columbus, Georgia airports to Auburn. Your drop off and pick up location will be Auburn University Hotel and Conference Center, 241 S College Street. Atlanta airport is on eastern time, one hour ahead of Auburn, which is on central time. The trip from Atlanta to Auburn takes about 1 hour and 45 minutes.
Mises Bookstore: Titles for sale at Mises.org/Store will be available for purchase during the conference. Faculty will be happy to autograph their books. Please ask the cashier about student discounts on certain titles.
Visiting Scholars Manual: Attendance at Mises University indicates your acceptance of the terms outlined in the Mises Institute Visiting Scholars Manual.
Dietary Restrictions: Please email our event coordinator Rachael Barefield (rachael@mises.org), before July 6 to reserve vegetarian or gluten free meals (the only alternative dietary options).
Guests: Only scholarship students may attend Mises U sessions, meals, and social hours. Exceptions are pre-approved guests of Faculty to attend the final dinner Saturday night.
Other Info: You are welcome to receive mail at the Institute to your attention: Mises Institute, 518 W Magnolia Avenue, Auburn, Alabama 36832. The packages will be held for you at the Mises front desk. International calling cards can be purchased at the front desk of the Institute for long-distance calls on telephones at the Institute. There are a number of computers and printers at the Institute for your use in research and to check email. You are welcome to bring your laptop as there is complimentary wireless access throughout the building. International students should bring a converter for 110 V.
Questions: Please contact Felicia Jones (felicia@mises.org).
Will Trump pardon these two genuine heroes? He might yet surprise me, but I doubt it because we can see from the people he has already pardoned that his values are warped and perverted.
Original Article: "Snowden and Assange: There Is Still Time for Trump to Do the Right Thing"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Students have been denied in-person schooling. At the same time, millions of women—many of whom have children—have been thrown out of work. Suddenly, homeschooling became a much more viable and necessary option.
Original Article: "Why the Covid Shutdowns of Public Schools Are Driving So Many to Homeschooling"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The government spends vast amounts of money on educational programs that aim to give “equal opportunity” to those deemed disadvantaged, but there is little or no evidence that these programs achieve anything.
Original Article: "The Cult of Smart"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Matt Spivey continues the pioneering work of Paul Cantor and Stephen Cox in bringing sound economics to the analysis of literature.
Original Article: "Marxists Dominate the Field of Literary Criticism. That's a Problem."
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
One of the silver linings to this year’s lockdowns and cultural revolution, as many commentators here and elsewhere have pointed out, is that many parents are finally waking up to the reality of our educational institutions.
Original Article: "Schools Are at the Core of the Left's Hegemony".
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Silicon Valley and the media are moving even further left. This is what is to be expected when a single ideological group controls educational institutions and major media outlets over a period of several decades.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Original Article: "How Decades of Media and Faculty Bias Have Pushed America to the Left".
Professor Saifedean Ammous, author of The Bitcoin Standard, is in the midst of writing a new textbook titled Principle of Economics. But he's writing it in open-source form: drafting, revising, and sharing the manuscript with his online students as the book is created. And unlike most lousy college economics textbooks, his offering is rooted in Austrian theory and contains numerous references to Menger, Böhm-Bawerk, Mises, Rothbard, and Hoppe. Academia is changing, and the way we learn is ripe for disruption. Dr. Ammous is at the fore of these changes, and you don't want to miss this show.
Our guest is physician and author Sally Satel, MD. Dr. Satel is a resident scholar at the American Enterprise Institute and staff psychiatrist at a local methadone clinic in the Washington DC area. She earned a bachelor’s degree from Cornell University, a master’s degree from the University of Chicago, and an MD degree from Brown University.
She has written widely in academic journals on topics in psychiatry and medicine, and has published articles on cultural aspects of medicine and science in numerous magazines and journals. She has testified before Congress on veterans’ issues, mental health policy, drug courts, and health disparities. She is the author of numerous books including The Health Disparities Myth: Diagnosing the Treatment Gap with co-author Jonathan Klick and, most recently, Brainwashed: The Seductive Appeal of Mindless Neuroscience co-authored with Scott Lilienfeld.
SHOW NOTES Sally Satel, MD: Twitter and Website
“The Hypocritical Oath” (in Persuasion online community)
The Health Disparities Myth: Diagnosing the Treatment Gap (with co-author Jonathan Klick)
Watch the episode on YouTube
Compulsory public schooling is like having the government use the taxpayers' money to set up a nationwide chain of public newspapers and then compelling all people to read them.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Compulsory vs. Free Education".
One of the worst injustices committed by states is the prevention of parental teaching of their own children. Parental instruction conforms to the ideal arrangement. It is, after all, individualized instruction.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Human Diversity and Individual Instruction".
It is sad that the contemporary American university has sunk so low from the heights of medieval Oxford, Cambridge, Paris, and Salamanca. Fortunately, private alternatives are still available.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "The Collapsing Universities—and What We Can Do about It".
Dr. Michael Rectenwald was a professor of liberal studies at NYU from 2008 to 2019. Although at one point he was a committed Marxist, he gradually lost faith, and is now an outspoken critic of campus activists. Bob asks Rectenwald about apparent contradictions in the current cultural Marxist / postmodern movement, and they discuss several themes from his new book, Beyond Woke.
Mentioned in the Episode and Other Links of Interest: The YouTube version of this episode.Michael Rectenwald’s website.Michael Rectenwald’s books Beyond Woke and Springtime for Snowflakes. #CommissionsEarned (As an Amazon Associate I earn from qualifying purchases.)Michael’s lecture on postmodernism at the Mises Institute. For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.
Jeff Deist calls in to comment on the CDC sneaking in under COVID regulations to become America’s new landlord. What are the implications of this takeover? Deist says that they are certainly radical. Deist also offers his insights on the surveillance-like supervision in children’s education, pre-existing conditions in COVID deaths, societal depression under economic shutdowns, Andrew Cuomo’s policies, and more.
Find more from David Gornoski on A Neighbor's Choice.
Thaddeus Russell, creator of Renegade University, has been arguing that libertarians should embrace postmodernism as their philosophical foundation, rather than blame it for today’s “social justice warriors” as Jordan Peterson has done. Bob profoundly disagrees, arguing that the Judeo-Christian notions of truth and morality are a much better foundation.
Mentioned in the Episode and Other Links of Interest: The YouTube version of this interview.The homepage for Thaddeus Russell and YouTube account of his Unregistered podcast.Thaddeus’ book A Renegade History of the United States. #CommissionsEarned (As an Amazon Associate I earn from qualifying purchases.)Thaddeus’ SoHo Forum debate against Stephen Hicks.The full clip on college students and identity, and Thad arguing gender identity with Joe Rogan. For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.
Reopening schools in the midst of a pandemic is a controversial topic. FREOPP, a non-partisan think tank founded by Avik Roy recently released a plan for reopening schools. We discuss some of the data from around the globe, as well as practical considerations related to opening schools.
SHOW NOTES FREOPP: Reopening America’s Schools and Colleges During COVID-19Iceland Study (NEJM)Dutch National Institute StudySupreme Court Decision on school fundingWatch this episode on YouTube
Brett Venoitte is host of the School Sucks podcast. After explaining his background in education, Brett explains how Horace Mann drew from authoritarian Prussian in designing public education in the US. He and Bob then discuss the competing experts in the debate over the coronavirus.
Mentioned in the Episode and Other Links of Interest: The YouTube version of this interview. The School Sucks Project website. Brett’s video “The American Way” on US education and Nazi Germany. The Harper’s Open Letter on cancel culture that caused such controversy. Bob’s undergrad essay for FEE on the roots of the US public school system. Bob’s Porcfest routine which featured impressions, including one of Wheels Off Liberty. For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.
Featuring Joe Becker, Tho Bishop, Kristoffer Hansen, and Antón Chamberlin. Recorded at the Mises Institute in Auburn, Alabama, on 18 July 2020.
Download the slides from this lecture at Mises.org/MU20_PPT_34.
Recorded at the Mises Institute in Auburn, Alabama, on 17 July 2020.
Rothbard fans, this is the podcast you don't want to miss! Rothbard scholar Patrick Newman joins Jeff Deist to kick off a series of shows featuring Rothbard's landmark treatise Man, Economy, and State. They discuss the history and background behind this important book, how it changed the landscape, and why the concluding chapters titled "Power and Market" proved so controversial at the time–and remain so today! Dr. Newman calls Rothbard's opus "the best book I ever read," and makes a compelling case for lay readers like you to tackle it.
Read the book free of charge in searchable HTML format here.
Use the code HAPOD for a discount on Man, Economy, and State from our bookstore: Mises.org/BuyMES
Additional Resources Dr. Joe Salerno's introduction to Man, Economy, and State: Mises.org/SalernoMES
Man, Economy, and State: Mises.org/MES
Unprofitable Schooling: Examining Causes of, and Fixes for, America’s Broken Ivory TowerTodd J. Zywicki and Neal P. McCluskey, eds.Washington, DC: Cato Institute, 2019268 pp.
Jason Morgan (jmorgan3@wisc.edu) is associate professor at Reitaku University in Chiba, Japan.
Anyone who has been on a college campus these past few decades, or even skimmed a newspaper during that time, knows that American universities are in bad shape. Voices from inside the academy have become among the most forceful detailing the shipwreck of the humanities on the shoals of political correctness. Michael Rectenwald, Jordan Peterson, Nicholas Christakis, Bret Weinstein, Anthony Kronman, Peter Wood, Jonathan Haidt, and Amy Wax—all scholars with impressive resumes and educations at top-flight institutions—are just a few of the bellwethers who have tried warning the rest of the country that something is rotten in academe. (Peterson, for his part, is an academic whistleblower in Canada, but his Harvard years give him more than enough cachet to join the Americans in crying foul on US higher education. If anything, the situation in Canada is even worse.)
A little library work reveals that critiques of colleges are hardly new. Russell Kirk, who wrote regularly on higher education for National Review, was a jolly detractor of the hypocrites and pseudointellectuals whom he saw as running many American universities. (Kirk delighted in referring to Michigan State University president John Hannah, a poultry scientist, as a “chickenologist.”) David Lodge, Evelyn Waugh, and Kingsley Amis, among a score of others, have made colleges in the US and England the scene of much satire in novel form. H. L. Mencken famously called for American professors to be hanged. Thorstein Veblen excoriated the entire business of the American academy. And even before there were more than a handful of American universities of which to speak, Karl Marx was receiving letters from his father warning him to stop brawling in the pubs and hit the books instead. (Marx eventually had to transfer schools.) Universities, American and otherwise, have always, it seems, been down in the mouth.
So, why do we keep funding them? Why has funding for universities skyrocketed in the past half century? What do we expect to get from our tuition, tax subsidies, and mammoth student loan schemes?
These questions and more are taken up with all due scholarly regard in Unprofitable Schooling, a very useful volume edited by Todd J. Zywicki and Neal P. McCluskey and commissioned by the libertarianish Cato Institute in Washington, DC. The editors of Unprofitable Schooling have sagely assembled fourteen authorities with backgrounds in education history, education policy, economics, and law. Divided into three parts and eleven chapters plus an introduction, Unprofitable Schooling is the go-to book for anyone who wants to understand, in depth, the debates raging about why, and even whether (there are dissenters from the skeptics in the book, which ironically makes it very unlike academia itself), the academy is in such a sorry state.
Part I, “Historical Perspectives on Competition and Government’s Role in Higher Education,” begins where many diachronic debates about American universities either start or wind up: the Morrill Land-Grant Act. Jane Shaw Stroup’s chapter, “What Really Spurred the Morrill Act?,” and Richard K. Vedder’s contribution, “The Morrill Land-Grant Act: Fact and Mythology,” are very good at presenting the history of the federal government’s insinuation into higher education. Vedder—an emeritus distinguished professor in economics at Ohio University and an adjunct scholar at the American Enterprise Institute—richly contextualizes the Morrill Act in the longer sweep of American history. “Expansive claims for the Morrill Act,” Vedder argues, which claim for the Act a transformative, even legendary, status in the annals of the United States, “are, minimally, greatly exaggerated.” (p. 31) Vedder shows through a bevy of facts, figures, and charts that the Morrill Act, and the general tide of federal meddling in higher education that it inaugurated, created the usual decline in quality that contact with the government elsewhere produces, along with “rent seeking…gone amok” (p. 62).
The many splendors of “rent seeking” (a phrase often repeated in Unprofitable Schooling and a practice that comes as naturally to bureaucrats as napping does to felines) are explored in great detail in part II, “The Current State of Higher Education in America.” Here Daniel D. Polsby tackles the “runaway tuition phenomenon,” Roger E. Meiners delivers the coup de grace to academic tenure, Zywicki and Christopher Koopman probe the mysteries of “the political economy of administrative bloat in American higher education” (building partly on Benjamin Ginsberg’s 2011 book The Fall of the Faculty, about “administrative blight” on college campuses), and Scott E. Masten takes an optimistic look at “shared governance” and “academic bargains.” Masten’s chapter is particularly useful, as he is trying to get at the cause of administrative inefficiency while also calling for the preservation of a system that he argues has the potential to “respond to [a] new educational environment” (p. 193). (Masten is up against some stiff competition, though: Adam Smith, another early critic of higher education, lambasted shared governance in An Inquiry into the Nature and Causes of the Wealth of Nations ([1776] 1985, 428, cited p. 191n79).
The heart of the volume, and the pivot of the debate about universities in the United States, comes in chapter eight, “All Education Is For-Profit Education,” the lead-off for part III, “Competition in Higher Education.” In this seminal essay, reprinted in Unprofitable Schooling but which “originally appeared on the website of the James G. Martin Center for Academic Renewal on June 25, 2014” (p. 197n1), the late Henry G. Manne, formerly dean of the George Mason University School of Law and eminent scholar at a dozen other universities and organizations besides, handily dismantles the myth that nonprofit education is any better than for-profit education, or that there is any such thing as nonprofit education in the first place.
In “All Education is For-Profit Education,” Manne—who in his 2014 piece was responding to a veritable onslaught by the Obama administration (which always knew how to protect enclaves of Democrat voters) against for-profit schools in favor of traditional party bastions such as state universities and private colleges—argues that what universities put in the nonfungible column of the balance sheet—tenure, cushy offices, light (or no) teaching loads, long sabbaticals, early retirement, fancy on-campus dining facilities, faculty lounges, banker’s hours, research funds, and the like—are very much profits in their own right. “There is no such thing as a non-profit organization,” Manne declares. “What there is, of course, is a well-designed system of obfuscating the distribution of…profits” (p. 199).
This reminder that “nonprofit” is a smokescreen for other kinds of rent seeking is the rub of the question and the centerpiece of the book. The other three chapters in part III—Jayme S. Lemke and William F. Shughart II’s “Assessing For-Profit Colleges,” Michael E. DeBow’s “Public Policy and the Future of For-Profit Higher Education,” and David A. Hyman’s “Nonprofit and For-Profit Enterprise in Health Care: Birds of a Feather”—as well as several other chapters in Unprofitable Schooling engage with Manne’s thesis in some way.
Indeed, another way of arranging Unprofitable Schooling would have been to divide it into just two parts, Manne’s short essay and everyone else’s writings, because so much of the rest of the debate turns about the points that Manne raises. Time and again in Unprofitable Schooling, and in the much more voluminous literature about university (mis)management overall, the question is either implicit or glaringly obvious: who is the owner of a university? The answer is the same as for anything else: if nobody owns it, then it will go to the dogs (QED).
The lack of clear ownership of universities and the rent seeking that passes for the responsible husbanding of resources that one would expect to find at other institutions have together been an unmitigated disaster for the United States, one that carries with it both obvious and not-readily-apparent social and financial costs.
For example, in the 2011 volume Academically Adrift, Richard Arum and Josipa Roksa found that most students learn virtually nothing during their undergraduate years. Graduate students, speaking anecdotally, surely learn even less. In my own experience I have found that a BA in a humanities subject is basically a certificate testifying to strength of liver and libido, while an MA or a PhD testifies to preparedness for socialist revolution. Whatever studying goes on in college is purely coincidental to the real mission, which is the perpetuation of a kind of tribe and the raising of funds to achieve it. This explains why attendance at football games generally beats attendance at philosophy classes by factors in the tens of thousands and why, when I graduated with a PhD from the University of Wisconsin in 2016, the fancy, gold-embossed black portfolio I received as I walked across the stage contained not a diploma, but an application to become a dues-paying member of alumni and boosters clubs. Like a government, a university produces nothing but more and more hangers-on, and an equal number of schemes for funneling cash to them.
And, if the Bennett hypothesis (named for Reagan-era secretary of education William J. Bennett) is correct—namely that government subsidies for higher education have produced tuition costs that long ago blew past average rates of inflation—then the political and financial consequences of saddling young people with essentially unrepayable debt will be much, much worse than the general uselessness of college itself. This hypothesis, and various opinions for and against it, are also explicated in Unprofitable Schooling, further increasing its value to the interested reader (see, e.g., p. 91). As politicians for national office float ideas of a debt jubilee for baristas with quarter-million-dollar gender and sexuality studies degrees from Swarthmore, it is vital that voters know that, according to many scholars, it is precisely the government that got us into the loan crisis to begin with.
There is much good information in this volume, but I wish that some of the chapters had been a bit more economical with the statistics and policy details. As an introduction to the literature on education and economics, Unprofitable Schooling is hard to beat—especially, I suppose, because in some places it recreates the eyelid-drooping density of specialist journal work on the subjects at hand. However, better to have too much information than too little, and the clear structure of the book and of most of the chapters makes it easy for those who wish to glean argumentative thrust to do so without getting lost in the minutiae.
Higher education in the United States, and in much of the rest of the world, is in very bad shape. My own sympathies are with Manne, who I think scores a direct hit on the university administrators and their juicy cartel with his brilliant essay on “nonprofit” colleges. But before one can engage in a real debate, one must know the lay of the land. Unprofitable Schooling is an excellent guide, and will, hopefully, be the starting point for long-overdue reform.
Indebted: How Families Make College Work at Any CostCaitlin ZaloomPrinceton: Princeton University Press, 2019viii + 267 pp.
Abstract: In Indebted: How Families Make College Work at Any Cost, Caitlin Zaloom gives a compelling anthropological vision of the struggles that families face in providing financial support to their undergraduates. But even more astounding than these heart-wrenching stories is Zaloom’s lack of economic understanding of both the causes and solutions to the difficulties that families face in funding the higher education of their children. The systems that caused the increase in prices of tuition, room and board, and textbooks—including government-backed loans and aid for higher education—need sound economic assessment.
federal aid — student loans — higher education
Jeffrey Degner (jeff.degner@cornerstone.edu) is assistant professor of economics in the Business Division at Cornerstone University.
In early spring, the scene repeats itself in households throughout America. A high school senior rushes home to open the mailbox and feverishly empties it, waiting for that fateful word from the admissions office from the college or university of their choice. This form of spring fever is filled with the an even greater level of anxiety than the “promposal” and has far reaching consequences for the future hopes, dreams, and financial standing of these students and their families. What happens after the exhilaration of receiving a favorable reply from the admissions office is the focus of Caitlin Zaloom’s Indebted: How Families Make College Work at Any Cost.
The upshot of Zaloom’s work is to describe the agonizing financial decisions that families have to make, both before and after an admissions office has sent the all-important acceptance letter. For many in the US, the most important letter they are waiting for is not from the admissions office, but rather from the financial aid office of the college or university they wish to send their precious children off to. The self-styled “economic anthropologist” (p. 203) dives into the depths of parents’ and students’ concerns as they navigate the economic environment surrounding their college experience.
Zaloom gives a compelling anthropological vision of the struggles that families face in providing financial support to their undergraduates. But even more astounding than these heart-wrenching stories is Zaloom’s lack of economic understanding of both the causes and solutions to the difficulties that families face in funding the higher education of their children.
The positive aspects of Indebted are found in the method of discovering what families are thinking as they seek to finance higher education. Zaloom admits the potential drawbacks of the interview-based approach while defending its strengths. This is a fair admission, as it describes the fundamental problems that accompany anthropological methodology. Specifically, she is concerned about the lack of communication and understanding about family finances that exists between children and parents. As a solution to what she saw as students’ lack of knowledge regarding family finance, she sought out further interviews with the parents of those students. This was certainly a good adjustment, and led to some intriguing anecdotes and data points.
In the opening chapter, Zaloom explains the anthropological method of interviewing middle-class families, whom she defines as those who “make too much money or have too much wealth for their children to qualify for major federal higher education grants, and if they earn too little or possess insufficient wealth to pay full fare at most colleges” (p. 4). What she discovers is that such families view financing higher education as both a moral and economic imperative. She rightly points out that higher education financing is a type of speculative investment which aims to keep children in the ranks of the middle class or hopefully make them better off. Zaloom calls this reality a form of “social speculation.” This form of speculation is a foundational expression of what motivates parents to send their young off to the higher education system (p. 27).
When Zaloom begins to write about the “moral mandates” surrounding higher education funding, she takes on a tone of indignation. She laments that due to the financial pressures of college funding parents are forced to remain in the households where their children live. In one section of chapter 3 entitled “Gaming the System,” she describes how some families have evaded the seemingly unfortunate cultural norm of biological parents living with their children. She recounts the story of a student whose parents divorced when the student was young. The adults parted ways and the father, who apparently wished to avoid making child support payments, produced as little income as possible. Meanwhile, the mother entered a lesbian relationship and the child lived in that household under a dual custody arrangement. When the mother and her partner suspected that they would make “too much” income to receive substantial federal aid, they agreed to falsify the child’s residency statement on the Free Application for Federal Student Aid (FAFSA) and to claim that the child was residing with the deadbeat father for the majority of the time. This falsification afforded the child a beneficial federal aid package that allowed the child to attend college. Zaloom carefully avoids making any kind of moral judgment on this sort of fraud. Instead, she describes it as an example of finely tuned and shrewd use of “bureaucratic skill” to sidestep the alleged injustice of the FAFSA’s implied expectations regarding nuclear families and savings. Furthermore, she bemoans the fact that the FAFSA form and the “student-finance complex” do not sufficiently provide for such living situations (pp. 87–89). The indifferent tone that the author takes towards such perverse incentives is one of the more remarkable features of the book.
Zaloom isn’t just frustrated by the “moral mandate” regarding family structures. She also expresses frustration that families are “subjected to moral instruction” that might require them to consume less and to save money. This surly tone reaches a crescendo at the close of chapter 3, when Zaloom claims that middle-class values regarding personal privacy conspire with the state to impose oppressive “moral mandates that press, silently but powerfully, on students and their families” (p. 94). The dramatic tone certainly befits a narrative that seeks to expose injustice. However, it fails to help the reader understand the true injustice and the true causes of the price increases that are faced in higher education.
In her chapter entitled “Enmeshed Autonomy,” Zaloom decries what she calls a shift in political morality that has put the financial responsibility on the shoulders of middle-class families. This statement raises the question: in which era in US history did families did not finance higher education? Although she never answers this question, she does begin to attack the view of education as a form of human capital formation. It is with this criticism that she begins to unveil her fundamental economic error. Decrying the idea that a college education primarily benefits the individual and their family, she claims that this view was a novelty of the 1980s and that prior to this college education was viewed as a public good. Providing no evidence that this was the case, she begins to blame the rising price of tuition on alleged cuts to state-based grants and an alleged failure to live up to this public good ideal.
Zaloom plants the seed to convince the reader that college education ought to be considered a public good in chapter 2, “Best-Laid Plans.” In it she cites a single study by the allegedly nonpartisan Center on Budget and Policy Priorities (CBPP) (Mitchell, Leachman, Saenz 2019). She claims that the study demonstrates that state-level support for colleges and universities began declining “as early as the 1960s” (p. 39), when in fact the CBPP study only records funding from 2008–18. This data set simply cannot be used to support such a sweeping claim. Furthermore, two days prior to the CBPP report’s release (which only used ten years of data), a study presented by the Texas Public Policy Foundation (TPPF) took data from the same source and traced it further back, to 1980, when Zaloom’s alleged “political morality” shift took place. What the TPPF found (using the admittedly questionable CPI-U measurement) was that for over thirty-eight years funding had increased by four dollars per student in real terms (Gillen 2019). Although the longer-range data shows little change over several decades, what is striking is that both studies agree that average per student funding had been cut by over $1,000 from 2008–12, during the recession years. Zaloom’s use of the CBPP study while ignoring the TPPF’s broader study—which was released at virtually the same time—does not lend credibility to her specific economic claims.
Chapter 5 details the challenges presented in terms of “Race and Upward Mobility.” Zaloom gives a brief historic tour of how private citizens and abolitionists began the process of educating former slaves and their children in the historically black colleges and universities (HBCUs). Zaloom surprises the reader by detailing how the introduction of the Higher Education Act (HEA) of 1965 actually served to make college less affordable for African Americans. That legislation, signed by Lyndon Johnson, further guaranteed direct federal support for HBCUs. Zaloom then describes how the HEA has actually coincided with the disproportionate debt load carried by black students today. In fact, despite the HEA’s promise of college affordability for minorities, it has saddled minority students and their parents with unprecedented amounts of federal debt (pp. 125–30)
Reflecting positively on her claim to be an economist, Zaloom admits that these promises of federal aid going toward HBCUs caused them to experience a boom. What she fails to note is that this led to HBCUs raising their tuition prices while failing to attract the endowments that traditionally white colleges experienced. So, within fifteen years of Johnson’s legislation, HBCUs had become dependent on such funding, and the need for individuals and families to borrow to meet these escalating prices (which were caused by the HEA in the first place) meant ever-increasing debt for minority families.
This phenomenon led to the introduction of the Parent Loans for Undergraduate Students (PLUS) program, introduced by the Clinton administration in 1994, which would simply exacerbate the policies set in place by Johnson nearly thirty years earlier. Although she briefly mentions this legislation, Zaloom again fails to observe the basic economic reality that when demand increases with the help of government-backed credit while supplies of enrollment spots understandably remain inelastic, the rate of increases in tuition prices will outpace the promise of the initial lending amount.
Despite her egregious lack of economic understanding, Zaloom does reveal the pain that this predictable economic phenomenon causes among minority families. This is one of the strengths of her work as she paints a vivid picture of the lack of purchasing power that is visited on these families. On the other hand, Zaloom’s fifth chapter also emphasizes her most consistent flaw. Specifically, she fails to make the connection between the federal government’s promises of affordability through aid of various types and the inevitable price increases that they incite in the factor markets for higher education. Instead, she blames the unsubstantiated shift in political morality for the fact that tuition prices outpace other prices in the economy. This sort of vague attachment of changing mores to price increases is an unfortunate feature that reckons Zaloom as a very good anthropologist but as an utter noneconomist.
“Cultivating Potential” is the chapter in which the author raises the question of the ultimate purpose of the college experience. In short, Zaloom rejects the notion that the purpose of college is to equip oneself for gainful employment. She belittles the idea, saying that it requires students to “commit to a career path and stick with the jobs that corporations need them to do,” as though this were a negative for the student or for society. On a positive note, Zaloom does identify the spurious notion that a liberal arts education prevents students from obtaining work for the fallacy that it is and hails employers’ increased demand for the “soft skills” that many liberal arts students provide in spades. Zaloom stops short of saying that the purpose of college is for young people to “find themselves.” Instead she writes with some nuance, saying that its purpose is to “liberate them to nurture the potentialities” that they might possess. In the same paragraph, she moves ever so slightly toward the real culprit of oversized college prices, concluding that “The debt loads and repayment schedules with which they contend are the result of political choices.” This tantalizing economic statement is never followed through, however, as she once again fails to identify the causal relationship between promises of government-backed loans and their causal link to inevitable price increases (pp. 162–70).
This failure to understand the economic causes and effects finds its final disappointment in the concluding chapter, entitled “A Right to the Future.” As the language suggests, Zaloom views the private good of a college education as a public good. This simple but devastating economic error has its roots in externality theory, which claims that if the benefit to society outweighs the costs to it, the public should foot the bill. Unfortunately, this form of analysis is shattered by Zaloom’s own definition of the benefit of college, which is to create the mere, “possibility of intellectual growth, solidarity among peers, and ultimately… unconstrained prospects” (emphases added). If this is in fact what the benefit of a college experience amounts to, even as an ideal, it’s no wonder that Zaloom admits that such an outcome should require forced taxation and redistribution (pp. 190–92).
The strengths in this work are found in the stories of real families and their experiences. These stories would be better used to attack the systems that have actually caused a boom in the prices of tuition, room and board, and textbooks. This requires theoretically and empirically accurate economic conclusions, which Zaloom fails to provide. What would be most beneficial is for economists to explain the causal nature of how government-backed payments for private goods that have inelastic supply (whether through taxpayer funds or by inflationary fiduciary media and lending) drive price increases. The politically motivated promises of payments that cause the heart-rending stories that Zaloom provides are the real story of “economic anthropology” that needs to be told.
For many parents, the ongoing closure of public schools will just reinforce growing suspicions that public schools just aren't worth it anymore. Maybe they never were.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "The School Closures Are a Big Threat to the Power of Public Schools"
Panic over the COVID-19 virus has led to the closure of many schools and new forays into education outside the government school system. Many will find that they don't need the state's schools at all.This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Thanks to Shutdowns, Many Will Learn That Public Schooling Isn't All That Essential After All"
We've reached the end of Human Action! Tom Woods joins the podcast to discuss Part Seven, "The Place of Economics in Society," and it's a show you don't want to miss.
Woods and host Jeff Deist enjoy an engaging and far-ranging discussion of the book's place in history, Mises's frustration with economics co-opting the methods of physical sciences, and the public's seeming inability to overcome anticapitalist propaganda. Mises concludes his great treatise with unmatched clarity and wisdom, reminding us why economics belongs at the forefront of society—and why we all should retain our unwavering sense of élan vital.
Use the code HAPOD for a discount on Human Action from our bookstore: Mises.org/BuyHA.
Additional Resources The Sociology of the Development of Austrian Economics by Joe Salerno: Mises.org/SalernoHAP
Mises's Élan Vital by Jeff Deist: Mises.org/Elan
Human Action: Mises.org/HumanAction
Bob Murphy's Study Guide to Human Action: Mises.org/Study
Imagine if we had used even a fraction of the resources spent to lock down the entire population and focused on providing assistance and protection to the most vulnerable—the elderly and those with serious medical conditions. We could have protected these people and still had an economy to go back to when the virus had run its course. And it wouldn’t have cost us $6 trillion dollars either. This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "What If the Lockdown Was All a Big Mistake?"
Experts such as Anthony Fauci are experts only in the narrow field of their expertise. They have almost no knowledge or expertise in other fields, including—apparently—the basics of how human societies function.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Anthony Fauci, the "Learned Ignoramus"
Corey DeAngelis is the Director of School Choice at the Reason Foundation, and an adjunct scholar at the Cato Institute’s Center for Educational Freedom. He talks with Bob Murphy about the studies supporting school choice, and dispels the myths around it. The interview ends with Bob raising the possibility that government voucher programs could end up hurting school independence.
For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.
Marketing guru and fund investor Hunter Hastings joins the Human Action podcast for a look at Economics for Entrepreneurs, a new platform which uses Austrian theory to teach actionable entrepreneurship.
Can business acumen be taught, or is it innate? Hunter and Jeff examine consumer sovereignty, value creation, and the theory of the firm, all from a unique Austrian perspective. Austrians have a lot to say about how entrepreneurs ought to think, while business schools fail to adjust to the new decentralized, agile world. Austrian economics provides entrepreneurs with a different set of tools than any business book or MBA program, and our new podcast series will help anyone improve their business or career bottom line.
Additional Resources Mises for Business LinkedIn page
Economics for Entrepreneurs (E4E) podcast
Jeff Deist: Professor Bylund, you grew up in Sweden. What stands out from your childhood?
PER BYLUND: I grew up in a suburb of Stockholm, separated from Stockholm by just a lot of nature. It’s close enough to be part of the Stockholm metropolitan area, but far enough away from it to be on its own.
When I grew up in the 70s and 80s, I was given a very romantic view of Sweden and how everything worked, but I only realized later it wasn’t very true. It was the happy 80s, so there was no end to public funds for anything. Everybody went to free dental care and everybody had their teeth fixed, so everybody could have good smiles. I did that as well. During the early grades — from first through sixth grade — we had a lady who was hired only for one task. She visited each class once a week with a big tray of very colorful little plastic cups with fluoride. You were supposed to just swoosh that fluoride in your mouth between your teeth and then spit it out, but the beauty was that we got to keep the cups, so that was something that all the children collected back then. We got hundreds of those different fluoride cups in different colors. That gives you sort of a taste of what growing up in Sweden in the 70s and 80s was like. No problems. More money and government takes care of everything, basically.
JD: We hear a lot about Scandinavian models of governance. What can we learn from Sweden today, a country of 10 million people?
PB: We can learn a lot. Sweden is a story that goes back more than the past 150 years — going from being the poorest country in Europe to being the world’s fourth richest in 1970. That’s totally a free market story. It’s about deregulation, it’s about limiting the powers of government. It’s about separation of powers between the king and the parliament. There was lots of investments in infrastructure, but only in the supportive sense. There was not a whole lot of welfare state. That meant the welfare state started to grow, but not as fast as the economy, which means that the economy can cover for all the inefficiencies of the welfare state before the 1970s. And then, the more important lesson — or the not-so-common lesson — would be that the welfare state was started in 1970 and it really went berserk and it completely imploded after 22 years. So, that’s how fast it goes if you try to nationalize everything and really go for socialism.
You can see policies Sweden pursued back then are policies that politicians today are promising. One of the things that was a turning point in the 80s, at least policy wise and in people’s ideological consciousness was the Employees Fund. It was this new progressive proposal that the government would tax corporations and put part of their profits into a fund that was going to be run by the national labor unions. This fund had only one purpose and it was to reinvest that stolen profit into buying stocks in those corporations. It was nationalization, not of single businesses, but of the whole free enterprise system. And that was the wakeup call for the nonsocialist part of the Swedish population. As a result, there was a huge protest. If you know anything about Swedes, Swedes do not protest. The way we tend to say it about ourselves is that a Swede is really angry if he closes his fist in his pocket. You don’t get more out of a Swede. So, when you have tens of thousands of people protesting the government, of all things, in Sweden, it is a really big thing.
Beginning in 1970, progressive policies were enacted throughout that decade, depreciating the currency numerous times in a few years, just to cover the holes and increase exports to cover the expenses of the government’s progressive policies. Then in ’92, when the Swedish currency completely imploded, they set interest rates to 500%, trying to defend the fixed currency exchange rate. They couldn’t defend it, so they let it go and it immediately dropped substantially in exchange value. Then, surprise, it became a repeat of the Golden Century — from 1870 to 1970 — when government wasn’t the main driver of the economy. After 1992, all the parties agreed to cut back on the very generous universal welfare system. That is where Sweden is right now. The government is still very big even after they cut back a lot. Now since there is a little more money, they are discussing how to expand the welfare state, as politicians always do.
JD: As a young man in Sweden did you make a conscious decision to leave for America, or to become an academic?
PB: Yes, that was a conscious decision. I always was playing with the thought of having the whole world as a platform. I was always fascinated by, and dreamt in some sense, of moving to the US. That was a dream come true. Pursuing an academic career, that was a conscious choice. I was an IT consultant in Stockholm. I had a Master’s degree in informatics and I was working as a senior software developer and business consultant. But I spent basically all my time, when I’m not in the office, writing libertarian columns online. I published around 200 columns in one year on all different websites. Mises.org was one. And my then-girlfriend, now wife, simply asked me, “you don’t like your job, all you do is just study philosophy and economics, why don’t you quit your job and go back to school and pursue an academic career?” And like any man confronted by his woman, and being young, I immediately decided to do it.
JD: But why America in particular?
PB: The reason I ended up in the US is simple. I applied for PhD programs in Sweden, for three years. But I couldn’t get into those PhD programs. Part of the reason is that they are fully funded and are in reality full-time employments with an okay salary. You can only pursue a PhD in areas where you already have previous degrees. Swedish academia works like it does all over Europe. Your bachelor’s degree is very focused, and then you study your major and minor and nothing else. After that, you can pursue a Master’s and then you can pursue a PhD in the same discipline. I had, at that point, a degree in informatics that I was sort of basing my career on. And on the side, I was studying political theory at the university. I finished a Masters degree in that too. I was trying to get into a PhD program in political theory as a libertarian, and as a white heterosexual male. That made me sort of the last applicant that they would choose. I think the best year during which I applied they had four open positions in the country. I was not going to get any of those. I had one interview in three years. Then I sent my résumé to friends at the Mises Institute. I think the very next day, I get an email from Peter Klein saying “how about Missouri?” And that’s how I ended up in the US.
JD: Fast forward to today, and you’re a professor of entrepreneurship at the business school at Oklahoma State University. You’re very active on Twitter. You write for popular outlets like Entrepreneur magazine. Do you intentionally seek out a popular audience, beyond the parameters of a normal tenured professor?
PB: To some degree. I’ve been influenced by people like Joe Salerno, who says that an economist should really see economics as a vocation and not a professional career. I think that is correct. I also recall Mises saying that a public intellectual should be just that, a public intellectual. I realized the limitations of the classroom. I remember from my college career, you studied really hard for the test and then you go and party like hell to forget everything, so you have some space in your brain for the next test. People don’t really remember what they study a whole lot. But they do remember good stories and I think they need to be reminded over and over again of what the truth really is.
My job and my role as a professor is, yes, teaching in the classroom, and yes, do research, which is the main task. The job is also to reach out with everything I know and everything I’ve come across and with everything I learn to help others understand the world better. Today, most college professors are progressives and they definitely do not hesitate to take their own “arbitrary theories” of the world and make that their starting point in what they teach. So, I don’t see why I shouldn’t be able to tell the world about Austrian economics and how free markets work. For us as Austrians, it’s not as arbitrary as it is from a progressive perspective. We start with the action axiom and then we derive truths from there. It’s not an ideological thing. I’m spreading knowledge. I’m spreading what I know and what I understand. What I’ve learned doing this, both online getting comments from readers, and especially on Twitter, is that I get a lot of pushback. But I get a whole lot of questions too, and questions that make me have to rethink some things and dig deeper into my own knowledge. I use the classroom in the same way. I teach stuff that I know, but I encourage pushback and it’s all discussion-based, meaning I want them to push back and ask hard questions because that’s how we can all learn. It’s sort of a discovery process, overall, for both me and for others.
JD: You’re adept with Twitter. Despite the character limit, you don’t use it for trite self-promotion or sound bites. You actually create substantive threads.
PB: You know that’s really odd because Twitter is supposed to be this really fast medium — just slogans and stuff like that. I found out very quickly that the really long threads consisting of 30-35 tweets, with one argument building up throughout in those tweets, those are by far the most popular ones. Those are the ones that people retweet. Those are the ones that people like. Those are the ones that people connect with you and ask questions about. They go through private messaging on Twitter itself and that’s how I get the little following I have on Twitter. It’s totally through those longer ones, and it happens over and over again. When I think I write something really clever and really cool in just one single tweet, even if I retweet it a bunch of times, it just never takes off. People don’t really like slogans as much.
JD: A recent example of your Twitter campaign is a lengthy conceptual thread concerning value. People still struggle with the labor theory and marginal utility. They think cost, time, and inputs determine value, and ultimately determine prices. Why does this still trip people up more than a century after Böhm-Bawerk explained it?
PB: It is the power of economics, and I think it was Mises who somewhere said that the power of economics is to show people that it’s really the opposite of what it looks like. I think that is at the very core: people think they see things, they think they understand things, and they just create those patterns. The patterns do exist and they do observe the patterns, but they do not recognize the actual processes that create those patterns. And the role of the economist is to point out that these are the true processes, whereas everybody thinks that those processes are very different.
The labor theory of value was debunked by Böhm-Bawerk almost 150 years ago, and yet, it’s very much alive because that is where people start. They think of value as objective and they think of value as being the creation of labor. But it is really the other way around. We invest labor because we think we’re going to end up with something valuable. I think that is the very core of the Austrian school. It’s also a core insight that completely changes how you view the world and I use that a lot when I teach entrepreneurship. That’s something that entrepreneurs figure out themselves because they make so many mistakes following the objective-labor-theory-of-value type of view of the world. They realize that it doesn’t matter what they think or what they think they have seen, but value is truly in the eyes of the consumer. They have to figure that out and that’s their task. Entrepreneurs in general, especially experienced entrepreneurs, are truly and fundamentally Austrians.
JD: Even entrepreneurs focus too much on cost?
PB: Yes, it is strange, but people tend to think of cost, which makes sense, when you’re producing something. What do you have first? Well, the thing you have first is the cost, and because you assume that cost, you have a product that you can then potentially sell and make a profit. If you think about it in technological terms, it makes sense to start with the cost because there is value. But, as Menger showed us, that’s not the case. We pursue this end because we think the end is valuable to us. We expect value from this end and therefore we are willing to assume those costs. And there we go again. It’s exactly the reverse of what we think of the world, but people are really, really sure that it’s cost that creates value. Unfortunately, they are taught that in school, too. I mean, it’s intuitive. For most of us just observing the world, there isn’t much pushback, not even in school. Not in the first 12 years, not in college, even if they major in economics. They’re not going to understand subjective value, they’re just going to look at it as money values and it’s not until they encounter a professor associated with the Mises Institute, or Austrian economics, that they’re going to get some pushback. By then they’re already old and you know about old dogs and new tricks. It’s hard.
JD: Why did you decide to specialize in entrepreneurship and theories of the firm?
PB: It happened through Peter Klein. When I started, he was an assistant professor, still not tenured, in the Department of Agricultural Economics at Missouri. But agricultural economics is not “real” economics, if you ask any economist. The department was a little bit weird and marginalized to begin with and they are, of course, very focused on farming and agriculture. But there was also a focus on regional economic development because they are an outgrowth of the land grant mission as with many public universities. In this department, they had an eclectic approach to economics because there was already a group of professors doing entrepreneurship and transaction-cost economics. It was a little more practical and applied than a regular economics department.
But in my work there, when reading Ronald Coase, I immediately realized that something is completely and fundamentally wrong with his thesis. I couldn’t figure out exactly what, so I dedicated my dissertation to, in a sense, disproving him and drafting my own theory of why there are firms and what sort of function they have in the market economy. That idea was interesting because it also has to do with the Mises Institute.
I was sitting in the second floor of the Mises campus as a Research Fellow during one of my first summers as a grad student and sifting through books by Mises. I was reading up on, and trying to figure out, what the heck is going on in the economy overall and how to understand where productivity comes from, and where wealth comes from. And it suddenly just struck me that maybe it has something to do with specialization. I remember going immediately to Joe Salerno’s office and asking him if he thought that was a good project to work on, and he looked at me and said, basically, “huh? I’ve never heard that explanation for the firm before.” That, of course, was enough for me to think that that’s something worth pursuing. If he has never heard of it, then obviously there’s got to be something there, or I’m completely wrong, and if so then I’m going to figure that out. Peter totally approved of the idea too, and I pursued that. My dissertation is, in a sense, a refutation of Coase’s concept of the firm. My position was, “how can you have firms if you don’t have the entrepreneur at the very core?” So, that became it.
And how did I get into the professional academic career as an entrepreneurship professor? Well, there’s a bunch of luck and coincidence, because both Peter and I were in the Department of Agricultural Economics. It’s not an obvious path to move into the business school and start teaching and doing research there. I mean, as competitive as it is to try to get a tenure-track position, if you have training in a completely different discipline, then you’re basically excluded. So, how do you do that?
Here is where luck and coincidence play a part. I was playing squash with friends in grad school. One of them was in the Management Department where entrepreneurship is usually studied. It happened he was also playing squash with his advisor, who turned out to be the new department chair in Management. So, I played his advisor as well and the advisor said, “oh you’re an entrepreneurship guy, right? … We need someone to teach entrepreneurship because we don’t know anything about it and no one’s really interested in entrepreneurship in our department. Do you want to teach for us?” So, my first job after graduating was one year of adjuncting, which I can’t recommend to anyone because it’s nuts, and not really paid. I made less money being an adjunct teaching seven courses that year than I did as a grad student.
That year a research position at Baylor University also opened up, and they were looking for someone in entrepreneurship and policy. The position was also associated with free enterprise. It turns out that if you want something in entrepreneurship and policy, you are in a very bad position because entrepreneurship scholars know nothing about policy and those who do know something about policy are either political scientists or they don’t know anything about entrepreneurship because economics threw out the entrepreneur from their models a long time ago.
I was the only candidate for two positions and I fit in perfectly as an Austrian economist studying and teaching entrepreneurship. I got that research position. It was a three-year position and that gave me enough time to just do research and try to get published in the journals, which is necessary to get a job in academia. And that, in turn, led to my position now at Oklahoma State. It was quite a bit of luck and lots of coincidences. The reason I have a pretty good career, and a good position now, is basically because I was playing squash with the right people and because I happened to be with Peter and other professors doing entrepreneurship stuff. And now, of course, Peter is at Baylor, so we both moved away from agricultural economics.
JD: Distill for us your theory of the role of the entrepreneur, and your theory of the firm. How does the Austrian school inform your thinking?
PB: My focus is on studying the problem of production. We know that through the more intensive division of labor, we get more productive, but we also know that the market economy is decentralized. If it’s decentralized and it is also very specialized, that means that you have to also be compatible with everything around you in the sense that if you’re specialized, you use standard inputs to produce standard outputs in any supply chain or production process. So, how do you get from there to introducing highly specialized production processes? You can’t do it individually. I can’t suddenly specialize in the standard way of thinking of specialization, which is simply cutting up an existing task into smaller and smaller, moreand more narrowly defined subtasks. If I have this standardized task that I am carrying out, if I say “well, I’m really good at this one-third in the middle,” I can’t just do the one-third in the middle because that makes me incompatible with both the other standard inputs traded in the economy and I will not produce complete outputs that someone else can use. If I do the middle third, I have to combine my efforts with the first third and the second third. I have to work collectively with them to organize and coordinate the introduction much more intensively than a specialized production processes.
I developed this imaginary construct of this specialization deadlock. The deadlock is this: if we push people to just continue specializing as much as possible, we’re going to end up at a point where no one can specialize any further because that will make them incompatible with the economy, and then whatever they’re producing is incomplete. They will not be able to be part of any existing production process. And from there, of course, the solution is, in a sense, obvious. You need someone to come up with the idea for how to replace a part of the production process or the whole production process, whatever it is and coordinate those new tasks that need to be carried out. You need to create this whole process, in a sense, with new types of specializations that have not existed before. Obviously, the whole thing stands or falls with everything working out because if anybody fails in this new chain that you’ve created, it is itself incomplete and incompatible with the rest of the economy. In order to break free from the specialization deadlock, you need to create these islands of more intensive specialized production. This must be coordinated by and led by the entrepreneur, who Mises has as the driving force of the economy.
Ludwig Lachmann talks about it as the truth function of the entrepreneur: it is to change the capital structure of the economy which is exactly what this is. This is how you make the production structure more roundabout: by splitting tasks up in more specialized subtasks, introducing capital potentially to make this happen. For me, at least, it fits perfectly in how the market economist solves that problem of specialization itself.
JD: Mises characterized entrepreneurs as “uncertainty bearers” and Israel Kirzner characterized their alertness to opportunities. Is this a distinction lay people like me should care about?
PB: I think it’s very important to understand the role and function of entrepreneurship as creation of new goods and services, and new conceptualizations of goods and services. I like to call it more the facilitation of value, since value is in consumption. The consumer can create the value by simply consuming a good or service, but where do these goods and services come from? They come from entrepreneurs trying to figure out how to better serve the consumers. That makes it very clear that the judgment necessitated by entrepreneurship — and the uncertainty-bearing function and also the imagination of it — are really core to understanding the economy overall.
JD: When Mises says uncertainty that means risk, the possible loss of capital and time. We might call it skin in the game. As you know business school critics like Nassim Taleb say entrepreneurship and business acumen can’t be taught. Professors aren’t business people with skin in the game. Give us your take: can entrepreneurship be taught?
PB: The short answer is yes and no. What I mean by that is simply I don’t think you can teach how to be a successful entrepreneur. That’s pretty obvious because if you could teach that, then obviously I, and other professors, would know how to be successful in the marketplace, and then why the heck would we be professors instead of not making money in the economy? We do not know how to actually be successful, but we know how to avoid a lot of errors that people make. What you teach first is all the tools that are either necessary or have a function: accounting, marketing, and all this stuff that business schools teach. In terms of entrepreneurship per se, learning how to think about business and where value comes from can be taught and it has to do with what we were talking about before. Understanding value and how to get to it, is very important. There really are two components to this. The first part is to understand the economy — that is, sound economics — so you don’t start investing just before the bubble bursts, so that you’re not tricked by asset bubble thinking. The other part is to understand people, primarily consumers, being able to put yourself in their shoes and understand what would create the most value for them. What are the most urgent and important problems that they have? How can you satisfy their wants or help them move away from the uneasiness that they’re feeling? Those two aspects can definitely be taught. Maybe not completely, but enough to understand how to not mess up as an entrepreneur.
JD: Austrians suggest that many entrepreneurs don’t recognize how important monetary policy really is. Professor Bryan Caplan criticizes Austrian business cycle theory on the ground that smart business people could figure out the booms and busts central banks create, rather than fall prey to malinvestment. Do you think this holds up?
PB: Entrepreneurs are not specialized in economic theory, and why would they be? Economic theory is not always super applicable to what they’re doing, and there is an opportunity cost to learning stuff and deep diving into most of the aggregate data. So theory is probably not worthwhile. There’s also this little thing called profit. During a boom — even an unsustainable boom — you can make tons of money if you are investing right. And most entrepreneurs think they are investing right and they’re following signals that are false because the interest rates are too low. Even if they know that the bubble will burst, why would they sit at home and not get that money that is available for them? They can grab the money by running a business. What they need to do is get out before anybody else. They usually think that they can do that, when they see the signs. I don’t think even if you have the time and interest in learning business cycle theory, you would be a poor entrepreneur if you just said, “well, this is an unsustainable bubble, so I’m just going to sit this one out.” Besides, it could be an unsustainable bubble that lasts for 10 years, like we’ve seen now, since the financial crisis. Are you just going to sit on your hands and not make any money for 10 years just because you know that this bubble will eventually burst? That doesn’t make any sense at all. Many entrepreneurs do get out in time, so it’s not really about learning because every actual situation is unique in many ways. Learning the theory which tells you what is going on in universal terms, theoretical terms, that definitely helps you. But it doesn’t help you to get out in time because the timing of it is not down to the theory that can help you predict.
JD: I have one last question for you. Critics on both the Left and Right increasingly seem to claim economics is not a real science or discipline. Economists just provide intellectual cover for business interests. There are no economic laws, just policies that legislatures can command. I’d like your response.
PB: I think it’s silly. That’s my short answer. What it really shows is, in a sense, economics has made its own bed because economics is not very helpful. Economists, using math and throwing out the entrepreneur, what they’re doing is providing the planning tools for the central planner and they think that they can do it. The recent Nobel Prize is just proof of this, that they’re conducting experiments thinking that they can find real truths about how to produce better policy so that they can make micro adjustments to society and the economy and create better outcomes. What they’re missing is that we’re dealing with people, so it’s not truly mechanistic. But, just because it’s not truly mechanistic doesn’t mean that there aren’t patterns to it and regularities. There are regularities to the economy. But better understanding can be directly derived from us as people, and also from what we do, and especially our actions. We’re always trying to attain some value that we think is valuable enough for us to pursue. That’s the axiom that Mises develops with praxeology, and that explains this really well. The problem in economics now is that they have completely thrown out subjective value. Now they start with using proxies by looking at money price instead of subjective value because it fits their models better.
But now they don’t even know that there is such a thing. I was fortunate, I suppose. I took my advanced microeconomics course at Missouri, and was taught in the economics department and not in the ag commerce department. That professor started by saying, “we know that value is subjective. Assuming that we could still plot it in the utility function and use utils, we should be able to maximize it as well.” Then he started filling the blackboard with one big equation and the rest of the semester was trying to maximize this equation with using partial derivatives of different variables. He was part of the old guard in the sense that he recognized that value is subjective, but he just chose to disregard it. Whereas now, I don’t think there are any economists being trained in economics programs, at least not in the classical sense, because they are now technocrats. They don’t think about economic issues. They think about how to program different statistics programs and how to check their results for biases and then they come up with some clever explanation for their findings. They use economic terminology, but there’s really no economic understanding behind that at all. They’re trying to predict and they’re trying to get into a career in government basically, trying to help policymakers produce better policy, which is very different from the type of economics that we do in Austrian economics.
We’re trying to understand the world and help people become better people. We’re not trying to push people around the way you do with policy and always create new problems because that’s what policy ends up doing. There are both large and small problems, but still problems. This is because there are unintended consequences. They assume that people are not people. In other words, we can tell a story about what is actually going on, that people can understand and learn from.Real life entrepreneurs, they understand Austrian economics, they just don’t have the tools, the terminology or the theory. They have the experience telling them exactly what we know — that is Austrian economic theory is correct in how it explains the market economy and how it works. That’s how we can explain all these problems that come out of policy and all these errors made by politicians. We can, in this sense, predict or at least foresee all the suffering that people will have to go through simply because they want these quick fixes through policy that have never worked and will never work. Economics is a social science, but it’s definitely also a tool for uncovering the true state of the world and the true dynamics of the world. At present, there are really two categories of people who understand the world and understand the economy and those are experienced entrepreneurs and Austrian economists.
JD: Is it an overstatement to say most mainstream economists have no concept or theory of the entrepreneur at all? They think individuals are interchangeable widgets?
PB: The way they treat entrepreneurship is to look at startups. For these economists, the aggregate number of businesses and jobs being created is all they’re interested in. They have no conception of the entrepreneur as a person, or the entrepreneur’s function in the economy beyond just jobs creation. It makes me think of the famous Schumpeter quote about how studying the economy without the entrepreneurs is really Hamlet without the Danish prince.
Economist Richard Vedder discusses his new book Restoring the Promise: Higher Education in America, which diagnoses what’s wrong with higher education and how to fix it.
For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.
Rectenwald argues that, just as the Gulag was the means to physically disappear dissidents and other thought criminals from normal life in the Soviet Union, powerful corporations currently preside over big data and serve as the chief arbiters of expression with power to delete "dangerous" persons from its various platforms.
Presented at the Libertarian Scholars Conference on 28 September 2019, at The King's College in New York City.
Marsha Familaro Enright founded the Council Oak Montessori School in Chicago, and is currently the President of “The Great Connections,” a gap-year program for students also located in Chicago. She has written on how education would work in a free society, and she warns that government voucher programs may backfire and ruin what independence private schools still retain.
For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.
JEFF DEIST: The last time the Mises Institute interviewed you was way back in 2001, for what was then called the Austrian Economics Newsletter. That interview discusses how you met Ludwig von Mises and read Human Action at a very young age.
PAUL CANTOR: Yes. My brother was studying with Sylvester Petro at NYU Law School and Petro was a friend of Mises, and a kind of disciple, and the only labor law professor who didn’t like unions. Anyway, he had his students read Mises and that way it filtered down to me. My brother’s eight years older than I am and so I started reading Mises. I definitely read Human Action. I know I read Socialism. I think I read The Theory of Money and Credit.
I had a friend in high school who was interested in it and we both got interested in reading Mises. At one point, he said, “let’s call him up,” as kind of a dare. “If he’s in the Manhattan phone book, we’ll call him up.” I can’t believe we did this, but Mises was very gracious about it, had us come to his office and talk to us, and then invited us to join the seminar. So, this would be fall of ’61, my senior year in high school. I actually would have been 15 at the time. I didn’t turn 16 until the end of October. I attended, I think, every meeting of the seminar for the fall and the spring semester and it was a wonderful experience.
I have vivid memories of Mises to this day. He was always impeccably dressed. He had manners which I would now describe in retrospect as Viennese courtliness. I didn’t know what a Viennese gentleman looked like, at the time, but having since been to Vienna, I can recognize the way he carried himself. He was always elegant, and I remember his sparkling eyes, which struck me very much at the time. He was 80 when I met him, but he had the eyes of a young man. They still sparkled and he was obviously the most intelligent person I’d met in my life to that point. And to this day, he remains certainly one of them, one of the best teachers I’ve ever seen. He was utterly lucid. What I admired most about him was his steel trap logical mind.
I was kind of peculiar at the time, my favorite reading was Euclid’s Elements. So, I absolutely loved logical arguments and axiomatic ones. That’s one reason I think I was attracted to Mises’s praxeology and his axiomatic approach to things. I think that comes across as very foreign to a lot of people, but to me, it seemed natural and the right way to approach things. He would, quite honestly, talk most of the time in the seminar. He would take questions, but he was so fluid in his presentation that I think people hesitated to interrupt them. Murray Rothbard, who was one of the students, he certainly did interrupt, and he and Mises had a good teacher-student relation. I think Mises enjoyed being challenged by Rothbard. I once had occasion to sit next to Mises, right next to him. I came in late. I normally, as a little kid, wouldn’t have dared to do that, but it was the only remaining seat. I was quite struck. He had one 5 x 7 index card and he had just a series of little notes and clearly he had outlined what he wanted to cover, but he basically just could speak essentially off the cuff or present his ideas in a way that was very comprehensible to everybody in the room, including a little kid from high school.
JD: And this clarity of thought impressed you, even though he wasn’t speaking in his native language?
PC: Yes, and I’m sure by then — this is 1962 — that he was utterly comfortable in English. He did have a distinct and somewhat heavy Viennese accent, but fortunately, here is where my brother came to my aid again. He had a friend whose parents immigrated from Vienna and so I’d heard that Viennese accent a long time before I met Mises. So, I was tuned into it.
JD: You read Human Action at 14 or 15?
PC: Yes, I would think so. I was kind of a child tragedy. … I guess I should say prodigy, but I just read too much as a kid. My parents had to throw me out of the house: “Go out and play.” I just loved books. I was the same in literature. I was reading things like Dante’s Divine Comedy at that time. I just loved books.
JD: Did Mises intimidate you, or did he take account of your tender age?
PC: Well, you know, he was inevitably intimidating by the mere fact that he was Ludwig von Mises and I recognized his stature and his genius. He was in no way intimidating personally. He was very genial and in retrospect, I’m struck by the fact that at age 80, he was still interested in young people and being able to teach them. I realized that was an incredible privilege I got there, to be able to sit in on this seminar. He was not an argumentative person in the sense that he liked to get into arguments. He just would present his views logically and he basically relied on the logic of the arguments to carry the day. So, he never tried to intimidate anybody. There was no way, I would say, that he tried to exert his authority. His authority rested solely on the power of his arguments. So, again, I wasn’t taking this as a course; I didn’t interact with him in that sense, as a student, and I don’t think I ever spoke up once in the seminar, but occasionally, I’d talk to him after class and I remember that with some fondness and he had a good sense of humor. He was a relatively small man, so he wasn’t physically intimidating. He had a quiet voice, but again, he did carry himself with great dignity and in that sense, he didn’t want to mess around.
JD: In this same period you met Henry Hazlitt and Friedrich von Hayek at Mises’s seminar. Give us your impressions.
PC: Again, I hesitate to use the word, “meet.” I mean, Hazlitt was at virtually every meeting in the seminar. He usually sat next to Mises. Again, I’m not sure I ever spoke to him. I’m sorry to present myself as such a wilting violet. Again, he was exceedingly well dressed. These things make an impression on a 15 year-old from Brooklyn. And he did speak up and I knew very much who he was, reading his Newsweek columns in those days and I had read his famous books, at that point, including, for example, his book on Keynesian economics.
Hayek showed up only once and I, in some ways hesitate to get into this, but I will. I do remember vividly that he got into an argument with Murray Rothbard and it’s a kind of funny story. People who have heard me tell this story have said that what I didn’t know was that Hayek was hard of hearing at this point and that probably provoked this confrontation. But basically the seminar was on international economics and the issue of foreign exchange came up and the gold standard. Murray made a hypothetical argument, in which he said, “if I could convert these dollars to gold.” Somehow Hayek thought that Murray thought that you could convert dollars to gold in 1962. We were meeting down right off Wall Street in Lower Manhattan and I do remember this, that Hayek pulled a $50 bill out of his pocket, and he said, “take this, the Federal Reserve Bank is two blocks away, go get me gold for this.” Nothing really came of this and in retrospect, I think it was just Hayek mishearing a hypothetical as a statement of fact.
But it made a big impression on me, just to see. I didn’t know how important Murray was going to grow up to be, but he definitely was the most vocal of all the people in that room and again, the one who would actually directly challenge Mises on some points. But, in any case, that’s my encounter with Friedrich Hayek. The one other thing I told people is that, I may have been reading something into this or projecting, but it did strike me that Mises and Hayek were still in a teacher-pupil relationship, even though one was in his 80s and one was in his 70s. Hayek was the more famous of the two, at that point, but I sensed the dynamic between them was that Hayek would defer to Mises. So, that’s my one comment.
JD: They were born about 18 years apart, almost a generation then. So you were a young, precocious kid who happens to rub elbows with these great economists. But you decide to go off to Harvard and study English literature.
PC: It’s actually not as simple as that, but precocity was my problem, and I was precocious in a lot of different fields. Honestly, I went to Harvard because of astronomy. That’s what I dreamed of. I wanted to be an astronomer originally and I read Harlow Shapley’s Of Stars and Men and he was at Harvard and I had to go to Harvard. But meanwhile, I discovered Shakespeare, actually, when I was about 9 years old when my mother took me to some Shakespeare plays. But by high school, I was taking Shakespeare very seriously. I wrote my high school senior paper on King Lear, studied the plays, reading A.C. Bradley and I’d fallen in love with Shakespeare. And I do remember this at the time, and this is going to sound a bit strange, but I looked at Human Action and said, okay, here’s economics. This guy, Ludwig von Mises has done it. And like I said, I don’t want to seem to denigrate every Austrian economist since Mises, but my reaction was, I don’t see where I could contribute in this field and I’ll invoke the law of comparative advantage here and say, I thought I was doing some interesting stuff on Shakespeare.
But I must say, I always regretted that I had this great training from Mises and had not put it to use, so I am very happy, in retrospect, to realize I was able to find a way to apply Austrian economics to literature. It all began with the Mises Institute’s tenth anniversary essay contest, I wrote and submitted an essay on Thomas Mann, his story, “Disorder and Early Sorrow and the German Inflation,” and won the contest. And from then on, I’ve done a lot to show how Austrian economics can be applied to culture. So, I feel now that I did not put to waste this privilege I had to study with Mises. And in a curious way, I like to say, I have opened up a new front on the war against socialism and left-wing economics and it’s appropriate in the sense that the battleground has increasingly turned to culture. Socialism lost the economic argument against capitalism, although there are an awful lot of people running for office these days who don’t seem to be aware of that fact. But really, culture became the last refuge, not just of scoundrels in general, but scoundrels on the Left. So, I feel I’ve been able to make a distinct contribution putting together what I’ve learned of Austrian economics with what I’ve learned about literature and more generally, about culture.
JD: I think you absolutely have. In the old interview I mentioned you have a great quote: “People come to literature because they’re trying to learn something about the world.” So literature and economics have that in common.
PC: Well, it’s true, although there’s not been much good economic criticism on literature going way back. I mean, most of the criticism that takes into account economics, is Marxist. So many of the literary critics in the twentieth century, especially the ones known as the New Critics, grew out of Southern agrarianism and so, they thought that the whole world of the market is debased, and we shouldn’t even talk about such things. So, it’s an interesting case where I think the hard Left and I’ll call it the hard Right, I mean, basically don’t understand the role of commerce in culture.
JD: But as you say, it’s a mistake to cede literary criticism to the Left.
PC: Oh, absolutely. And even more so in a way, pop culture criticism. I mean, that’s another thing that I began to realize in the 1990s, that the Left had a monopoly, not just on the criticism of literature, but now film and television and all the popular arts. That also came from a tendency on the Right, to have a disdain for commercial culture and especially this whole sort of T.S. Eliot-style critic, who just looked down upon movies — certainly on television — and I realized that was a huge mistake because the future was in movies. Well, the past was already in movies at that point, but I began to realize in the 1990s that the future of art was in television and I’ve been vindicated in that judgment, even though colleagues would tell me, “oh television, I don’t watch television,” or “I don’t own a television.” At this point, I would feel like saying, “well you don’t own a pair of glasses, so you don’t read?” But in any case, I sensed they were missing out on what the future would be and especially the future for young people. And again, there was this deep irony that people who were speaking out in favor of capitalism, when it came to culture, thought that commerce could only debase culture. Quite frankly, the most viable argument with capitalism, by the 80s and 90s was a cultural one. The claim has been “okay, so capitalism does better for your bodies, but it corrupts your soul.” And that’s what I wish to argue against. I don’t take single-handed credit for this, but I think I’ve had some important role to play, in the fact that libertarians and conservatives have turned their attention to popular culture and realized it’s an important battleground for ideas.
JD: There is an aesthetic critique of capitalism on the Left. Markets produce lowbrow art, crass consumerism, and so forth. Capitalism cares nothing for beauty. Aren’t these progressive articles of faith, coming mostly from the Left?
PC: Oh, no, no. I mean, it is, but it’s not the only way. Again, you just have to look at a whole tradition of conservative thinking largely associated with T.S. Eliot, and New Critics like Cleanth Brooks and Robert Penn Warren. They were called Southern agrarians and they looked with contempt on the North and its industrialization. The reason they were called agrarians, they wanted to go back — perhaps they’d never left — to a nineteenth-century way of life, based on the farm. They were very anti-urban and these people are thought of as conservatives, but they have great contempt for modern popular culture.
Now, there’s a lot that’s contemptible in popular culture, but my point is always that there’s a lot contemptible in any culture you’ll ever find. In retrospect, we single out the great achievements of any given culture and forget that every culture has had its trash. I mean, we now look back at the nineteenth-century novel and we see Dickens and Jane Austen and George Eliot and the Brontë sisters. But it was estimated there were 40,000 Victorian novels and 39,800 of them are terrible. We don’t read them anymore, we know nothing about them and they’re the equivalent of the worst television show you could ever find. It’s the same for Shakespeare’s theater. We go back and look at Shakespeare’s plays and it’s an unrivaled achievement in cultural history and we can add in the best plays of Ben Jonson and the best plays of Christopher Marlowe and a few more. But the bad stuff is unspeakably bad. The worst play I’ve ever read from the period is Robert Daborne’s A Christian Turned Turk and if you want to see something as bad as the worst TV show you’ve ever seen, read it. Its highlight is a live circumcision scene on the stage and it’s as gross as anything you see in television today and it’s presented comically, by the way. So, we have an illusion of time that we look back at the past and we only remember and sometimes only have the highlights of the period. At any point in culture, there’s a vast spectrum from the lowest to the highest. When we look at the world today, we shouldn’t be looking at these dumb reality shows we have on television or the dumb sitcoms. You look at Deadwood and you look at Breaking Bad and these are masterpieces and they will be viewed as such hundreds of years from now. And again, most people who used to condemn popular culture, did it with no knowledge of what it was. “I’ve never watched television, but I know it’s bad.” You know, it’s a strange notion, as if this is a matter of media. There are just as many bad books as there are bad television shows. You just have to walk into Barnes and Noble and see that. And people act as if the book is this high medium and television is this low medium. I will take the best show on television against the worst book in Barnes and Noble any day of the week. It’s not as if books are inherently superior to television shows. It’s just that again, we have this illusion that a lot of great books have been written, but they’re completely outnumbered by the bad books written.
We kind of forget how low the medium of a book can go and people were warning against books. It was one of my most amazing discoveries that around 1830, there were all these things being written. “Books are harmful for you. Children shouldn’t be allowed to read books.” Part of it was, they’re not doing their chores because they’re reading a book and of course, a lot of it was the standard thing, there’s too much sex and violence in books. People always say that about any medium. But then, there’s actually a sermon by Matthew Arnold’s father, Thomas Arnold, the head of Rugby School, who gave a sermon saying, oh, these books, they’re brought out in installments and our students, they just can’t wait for the next installment and it’s ruining their week. They’re not doing their schoolwork because they wanted to find out what happens next in The Pickwick Papers. That’s just the argument made about television serials and I was quite surprised. I always assumed that books were attacked on their content, but the book was actually attacked as a medium in the early 1800s.
JD: Books were going to ruin the youth.
PC: And that was not by Marxists. That was by conservative moralists.
JD: You mentioned Dickens, who wrote popular serialized novels and wasn’t afraid to make a buck off it.
PC: Yes, he was quite proud to make a buck off it. And in my book, Literature and the Economics of Liberty — which I co-edited with Stephen Cox — I have a long essay on the serialized novel as an example of how commerce improves culture. The very fact that the novels were serialized meant Dickens was continually getting feedback and he would change the plot. If the number of installments sold jumped up, he would look and see, oh, this character is the reason, the people really liked Little Nell, I have to write Little Nell more into the story. That’s supposed to be the horror of professors of aesthetics. This is supposedly a corrupt procedure — an author giving in to his audience. But my point is, that the audience often has the wisdom of crowds and can send an author in a good direction and Dickens’s career is a good example of that and we see that in modern television series. In fact, many producers of shows pay attention to what the audience is saying. I’ve seen this most recently in this disastrous last season of Game of Thrones, where the audience was clamoring for a redo. They want the last season done over because it was so bad, and I think the audience is right. So, again, there’s a kind of aristocratic pretension to a lot of aesthetic criticism that takes the point of view that only an elite can determine what culture should be like and there’s something that could be said for that. I’m not going to attack the elites in the Renaissance who helped produce the paintings of Leonardo and Raphael and Michelangelo, but on the other hand, the record of commercial cultures is quite impressive and defensible as we’ve seen in fields such as Italian opera, Victorian novels, now in television, certainly in the movies, that artists who’ve appealed to a general public have not always done lousy works of art. I’m one of the few people to argue that in fact, in many cases, their art has been improved by paying attention to the audience. I would say, for example, with contemporary music, one of the reasons it’s so bad and unlistenable is that composers end up in universities where they’re cushioned from the marketplace. They’re paid a salary and therefore, the more harsh and dissonant and incomprehensible their music sounds, the better they are judged to be and that’s how they get their grants and draw in their salaries. They have no concern whether anyone will want to listen to their music, especially now that they can’t even think that a consideration is that people should enjoy the music, that they should come out whistling a nice tune, for example, or enjoying pleasant harmonies. And so, as a result, we’ve got music that’s unlistenable and we’re forced to hear that this is the great music of the day. In my view, anyone who’s a serious composer has to go into writing movie music now, where they can get away with writing something that people would actually want to listen to.
JD: Mises makes this point in The Anti-Capitalistic Mentality. Who’s to say art should never mix with commerce? What government bureaucrat is in a position to judge what people consume as entertainment? Mises believed in consumer sovereignty.
PC: Yes. I will say, Mises seemed to have had very elite cultural taste and I don’t think he was making the argument that this popular art would actually be great.
JD: Right.
PC: I think he was just saying that we have no right to tamper with it. Maybe I’m wrong, but I think I’ve taken the argument a step further by saying that in fact, what’s dismissed as lowbrow art, is not uniformly so. You will find diamonds in the rough and indeed, that’s the nature of all culture.
JD: You’ve never been afraid to consider the merits of pop culture. Your seminal book in libertarian circles is The Invisible Hand in Popular Culture. You have a new book as well. Talk about both.
PC: OK. Let me start with the new book. It’s called Pop Culture and the Dark Side of the American Dream: Con Men, Gangsters, Drug Lords and Zombies. And it’s got a picture of Walter White from Breaking Bad in his underwear carrying a gun, on the cover. In fact, there are two Walter Whites in an effort to emulate Andy Warhol’s Elvis double portrait. This book actually is an attempt to carry on what I was doing in The Invisible Hand in Popular Culture and I must say, I start from the premise that the American Dream is a reality. The book is about the dark side of the American Dream, which implies that there is a bright side. This isn’t one of those books that just tries to trash the American Dream. I think it is real and that America has lifted more people out of poverty and to success than any other country in history and if other countries now are doing bigger numbers, the reason is they’re imitating the United States in its best respects. But I was interested in the fact that the public is interested in the dark side of the American Dream. And again, we have a long tradition in popular culture in what are called Horatio Alger stories, which is a very popular genre in the nineteenth and twentieth-century success stories. America loves the success story; America loves happy endings. We speak about Hollywood endings, how the story’s supposed to come out right and for a long time, Americans were fascinated with books, and then movies, and even TV shows that show people, as we say, achieving the American Dream. That’s having your own business, often a family business, securing the economic future of your family, getting the children a good education and again, that’s a very archetypal American story.
At the same time, though, Americans have been fascinated with what happens when that story goes wrong and some of the most famous books and movies in American culture have shown the dark side of the American Dream. The Great Gatsby is a wonderful example of this. Citizen Kane would be another, and I have in effect, five case studies in my book. I begin with Mark Twain’s Huckleberry Finn, then do the films of W.C. Fields, then I do The Godfather, parts one and two. And then Breaking Bad, and I end largely with the Walking Dead. But in general, with apocalyptic narratives in modern television. I begin with Huck Finn because this is an American classic, everyone thinks of it as this rosy story. We picture Mickey Rooney or Elijah Wood playing Huck Finn. But Huck Finn is a very, very dark book. Murders occur in it; lynchings occur in it and a great number of con men are in it, especially this “duke” and this “king” who go around bilking people along the Mississippi. And what I realized in studying and trying to account for the dark side in what ought to be a very bright book, is that America professes to be the fresh start nation, the nation that gives people a fresh start, a new beginning in life. Just forget about anything that happened in the Old World, you’re in America now. The slate is blank; you can become whatever you want to become. But, if America’s the fresh-start nation, it’s also going to be the false-start nation, that you can’t expect everybody to make it. In fact, what Twain examines is how much the good side of America blends over into the bad side. For example, identity is very fluid in America. It’s one of the great things about America. We don’t have a rigid class system. Anyone can become whoever he wants, but that means America is also the land of con men. It’s where people can masquerade. Huck Finn as a novel is just filled with people masquerading, including Huck Finn himself, who masquerades as Tom Sawyer for much of the book and the reason he can is he’s with Tom Sawyer’s relatives who live several states away and they’ve never seen Tom Sawyer. And America is this incredibly mobile nation with a fresh start around every corner and that’s great and in a way, that’s the heart of American entrepreneurship. You can build yourself up from nothing. But the flip side of that is the con man and a lot of this book turns on the easy movement from the con man to the entrepreneur and perhaps back. And what’s interesting there, from where I begin in the book is that although I’ve turned to the dark side, in some ways, you still see the bright side there.
For example, in The Godfather, it’s the nightmare tale of American immigration. American immigration is at the heart of the American Dream; it’s one of the greatest things that America offers, that you can come to this new land and prosper. And what that means, though, is that sometimes immigrants have a hard time, they encounter prejudice, they’re not given a chance and so, they swerve off into crime and that’s certainly the story of Italian-Americans, also Irish-Americans, and Jews in terms of Prohibition and other areas of crime. They were denied legitimate outlets and access to legitimate business, and so they sought out some shady outlet in business. But that can be flipped to understand that these people actually were enterprising. Norman Podhoretz wrote a very interesting essay about The Godfather novel, I think it was specifically on crime and the American Dream. I don’t know if I buy this argument entirely, but he said that by this point, the 1970s, capitalism was so despised in intellectual circles and in the media circles, that the only way you could get away with celebrating an entrepreneur in a book was by taking a gangster, and showing this criminal as a successful businessman. He saw The Godfather as the descendant of the old Horatio Alger stories. He thought people are actually fascinated by the virtues of Vito Corleone and in many ways, his virtues are the traditional American virtues. He’s a family man, he’s a hard worker, he’s trying to improve his family, he takes chances.
In that sense, these criminals are entrepreneurs, and this is an issue that comes up with the Drug War in Breaking Bad as well. In fact, there is a sequence in Breaking Bad where Walter White, the hero, as I call him, is talking with his brother-in-law, Hank, the DEA agent. Hank is brewing his own beer and Walter says to him, “you know, in 1930, you would have been doing something illegal.” And they get into a long discussion about the morals of whether something’s legal or illegal and whether it’s just something that the government is determining. I like the fact, especially since the book focuses on The Godfather movies and Breaking Bad, that I’m able to focus on those issues. The Godfather chapter has an epigraph from Frank Sinatra and I can tell you that when I was in English graduate school, I never dreamed I’d write a book where a chapter would have an epigraph from Frank Sinatra and it’s a wonderful indictment of Prohibition and everything that was wrong with it. So, again, these stories allow me to take up some very serious issues — libertarian issues — and I try to show how many of the problems that these works deal with are actually created by the federal government in the first place.
JD: You choose to write books for popular consumption, instead of writing academic journal articles like many professors.
It’s much easier to publish on popular culture, as I found out after I was approached to do my first popular-culture book, Gilligan Unbound. Steve Wrinn, who was then with Rowman and Littlefield, approached me with the idea. I basically never intended to get into the pop culture criticism business. I kind of did it first as a joke. I wrote a piece on Gilligan’s Island and wrote something on The Simpsons. I’ll never forget, the BBC was interviewing me for the 400th episode of The Simpsons and somehow, my background came up and this BBC interviewer says, “You’ve written a book on Hamlet. Why are you writing about The Simpsons?” And I said, “because when I wrote my book on Hamlet, you didn’t even dream of interviewing me on the BBC, but the minute I write on The Simpsons, you interview me.” He didn’t like that answer, actually.
JD: Great answer.
PC: By the way, I have never taught pop culture. I have never taught a course on pop culture in my life. I lecture on it at colleges and universities, but sort of outside the normal academic framework. I don’t believe in carrying coals to Newcastle — that phrase will mean nothing to the current generation — but I don’t believe in teaching a course on popular culture, to students who are thoroughly immersed in pop culture. I found when I wrote on it and lectured on it outside of regular classes, that students really could respond to it and I’d be struggling to find if they’d read even one Shakespeare play, but they could quote every episode of The Simpsons back at me. So, I found I was having productive discussions and they were about serious issues. You can talk about the decline of the family in American life from watching The Simpsons. You can talk about the role of the federal government when you look at the FBI or the IRS episodes of The Simpsons. So, I felt I actually had a kind of leverage that I could speak to students about interesting subjects and they would respond, and I thought that was good. So, I pursued it more than I would have otherwise.
JD: Give us your thoughts on the state of the humanities in higher education. We read about university administrations cutting humanities budgets, that nobody wants to major in English or history or philosophy anymore.
PC: Well, it’s certainly true. I will not attempt to cite numbers because I don’t have them accurately, but the enrollment in English departments is falling everywhere to the point where I am told that some major English departments now have majors in double digits.
JD: Wow.
PC: Yes. And triple digits were typical in my department — the UVA English major is still in triple digits — but the number is significantly lower than it was 10 years ago. And whole departments are disappearing around the country. Some of the languages, German departments, for example, are under pressure. Comparative literature departments are under pressure, and there’s no question that it’s happening. There are many reasons for it and people in the humanities will complain that it’s a result of the increasingly mercenary nature of students, that they want to study in undergraduate business schools or study economically useful subjects like economics or political science. But my answer to that is the problem is internal, that humanities departments wouldn’t be losing as many students if they still had something high minded to offer students. There’s a reason why students might gravitate toward practical subjects. After all, most colleges and universities are now advertising themselves on the idea that you will boost your income by going to college and the more they choose to raise their tuition, the more it seems imperative to students to get some payback for their money. But what the liberal arts — especially the humanities — used to have to offer is great books, great paintings, great music and you could make a deal with students. Yeah, this stuff ’s tough. It’s not easy to understand a J.S. Bach fugue, and it’s not easy to read Joyce’s Ulysses and it’s not easy to comprehend Michelangelo’s Sistine Chapel. But at the end of the effort, you will be a better human being and you will feel it; you will feel uplifted from having encountered this and you will see your life change. I mean, as recently as last week, I got an email from somebody who had been listening to my Shakespeare lectures online and said, “The lectures have changed my life.” And that’s what you want to hear as a teacher. But, it’s very difficult now that the humanities have become a species of what is known as grievance studies in the world. Now, you turn to literature, not because it’s uplifting, not because it’s in any meaningful sense “great,” but you regard literature as the expression of identity. Most of the time, it’s the expression of a bad identity. Most courses will concern themselves with whether a given author is sexist or racist or classist. The idea is to treat the artist negatively, as politically incorrect, and that gets old very quickly.
Part of the benefit of reading these works is that they take us to a very different time and place. I remember from the start, reading books because they were about a different world. I wanted to learn about Aeschylus, and I wanted to learn about Homer. I did not want to read books about a middle-class Jewish neighborhood in Brooklyn. And people were writing that.
People would say to me, “you’ve never read a novel by Philip Roth?” And I’d say “no, I lived that, I don’t need to read a novel about it.” And it’s kind of shocking that I’ve never read a book by Philip Roth. But you know, I’ve read novels by Franz Kafka and by Dickens and by Dostoyevsky, and it’s a whole different world and I find that more interesting. And that’s what we’ve lost the sense of. I noticed the favorite and most complimentary adjective my students have of a book is, “it’s relatable.” And that’s what they’ve been taught, to relate the book to — quite frankly — the little circumscribed narrow world that they grew up in. By contrast, I’ve always looked to literature to be eye opening, to take you some place you’ve never been before.
So, it’s one thing to complain that money making is exerting its magical charm on students. That’s a natural impulse, so you need something to counteract it. But now, if you really are running down most of the literature of the past and showing its limitations, well why bother to read it? And in fact, with many of my colleagues and throughout my profession, literature is seen now as a means to social justice. That’s how we have to use literature. We have to read literature to know how prejudiced and outmoded the world is and how we have to move beyond it. But if social justice is the goal of reading literature, why not just take courses in social justice? Why not take courses in the social sciences, if the goal of literature is the economic improvement of the masses. Go take a couple of economics courses and I think that’s what’s happening. In effect, literature departments have lost their comparative advantage. What they did best and what they could offer to people is to show these masterpieces in the history of human culture. These are the peaks of human achievement; these are what we look up to. And again, this is Bach’s St. Matthew Passion, this is Michelangelo’s Sistine Chapel. These are jaw-dropping things in the world, and it used to be that college would introduce people to that. Now, it doesn’t anymore and that’s why I think the students are voting with their feet. I think the mistake my colleagues have made is, they thought they had a captive audience, that we’ve been given the Western heritage and people want access to it and students will always come to our courses because we’re English professors or we teach German literature, or whatever.
But if you don’t teach that heritage, you lose the one thing that was getting students in the seats. I don’t think that’s actually sunk in to my colleagues and we seem to have fallen off a cliff in the past two years. I asked two classes this year if they’d heard of T.S. Eliot. These are English majors and not a single person in the class had heard of T.S. Eliot. Now, I’ve always thought T.S. Eliot was a tad overrated, but I won’t get into that. Still, he’s certainly one of the most important poets of the twentieth century, and to think of an English major who’s never even heard the name T.S. Eliot! You know, about three years ago, they had never heard of Matthew Arnold. Again, I can kind of understand that. He’s from the 1800s, but it’s really amazing, I had a class where no one had heard of Beethoven and it was so funny because I was teaching a play by Friedrich von Schiller and I understood none of them were going to have heard of Friedrich von Schiller. I said, you know, you’ve never heard of him, but of course, you know his poetry. And they stared at me and I say, “Freude, schöner Götterfunken, Tochter aus Elysium,” quoting the “Ode to Joy” at the end of Beethoven’s Ninth Symphony and I knew they weren’t going to understand the German, but my joke was going to be, you know: “That’s Beethoven’s Ninth Symphony.” And they stared at me. They’d never heard of Beethoven’s Ninth Symphony and I said, you have heard of Beethoven, haven’t you? And they said “No, who’s Beethoven?” And if it weren’t for Chuck Berry’s, Roll Over Beethoven, they probably wouldn’t have a prayer of figuring it out. I mean, I was stunned and in fact, I’m really annoying my students now because whenever I bring up a new subject, I feel I have to ask them, “Have you heard of X?” and they are thinking, “we have good educations, we’re college students.” But if you haven’t heard of Beethoven and you haven’t heard of T.S. Eliot it’s really amazing. You can’t teach if you don’t have reference points. I used to build my whole introductory course on comparative literature around T.S. Eliot’s The Waste Land. I assumed they all know this poem and they love it, and it’s this great poem. I basically said, “take this course and you can understand this poem.” It quotes from Shakespeare’s The Tempest and it quotes from Dante, it quotes from Richard Wagner. To understand this poem, you’ve got to go back to the past and understand all the things Eliot understood. Well, now they don’t even know who Eliot is. I’ve lost my little trick to get them interested in the course. So, I am really seeing even greater decline in what my colleague E.D. Hirsch calls cultural literacy in students and it looks to be getting only worse. Because that’s the other thing, that we’re now in a kind of cycle of forgetting. For a while, I could get great discussions going on Breaking Bad. As recently as three years ago, my class on tragedy was faltering and I said, well, if you don’t understand what a tragic hero is, let’s talk about Walter White and we had the best class all semester, but now they don’t catch Breaking Bad references.
JD: It’s been a few years since that show ended.
PC: Yes, it’s ancient history, but they live so much in the present and I don’t want to sound like an old fogey. Let me try to sound a bit like a young fogey. In many ways, the students are impressive. They are computer literate in a way I am not and that is impressive. That’s a talent, it’s a skill, it gives them a lot of access to information and even at times knowledge and I don’t want to underestimate that. I often look at a website and I don’t know which button to click and the student says, “Well of course, you click the one on the lower left hand in the corner that’s blinking” or something and I don’t want to be like some ancient medieval colleague who said to students, “I know they’ve got this thing called print now, but you learn to copy that manuscript by hand, it’s the only way to preserve a text. This print thing, it’s just a passing fad” and I’m sure if I’d lived in Gutenberg’s time, I would have said something like that to my students, so I try to be careful to avoid that. But still, you can’t help but notice these blank spaces in their minds and they are kind of unpredictable. You know, you can still refer to Stalin and Hitler, for example. For some reason, they still know who they were, and that they were not nice people, but other moments in history have really blurred for them. It’s funny, they get things out of order in history. Here’s an example: there is a recording of Alfred Lord Tennyson reading The Charge of the Light Brigade. It was one of the first recordings ever made of a poet reading and I was talking to a student about this and he said, “When did Tennyson live, around 1950?” And I kind of looked at him and I realized, he thought sound recording dates from 1950, not from Edison’s phonograph of the 1870s. So, the fact we have his recorded voice meant, to this student, that Tennyson must havebeen born after 1950. And again, they know at some point there was a poet named Tennyson (although some of them don’t even know that). They know at some point, sound recording was invented, but which century these two things happened in, and in what order, escapes them. And this was one of my best students! And again, it’s not their fault, they’re getting badly educated, so I try to be gentle with them and conceal my shock. The students are good-hearted — they really want to learn, but they’re just not being taught properly.
JD: Well that’s why the Mises Institute exists. Thank you, professor.
Auburn University professor Dr. Liliana Stern joins a special live episode of the Human Action Podcast for an unvarnished look at the state of economics education today. Why are theory and history ignored, while warmed-over Keynesian models dominate? How can Austrians reclaim their rightful place in the curriculum? Are economics students finding jobs? Why do academic publishing and textbook rackets persist? And why is actual teaching such a low priority?
If you care about how economics is taught today, don't miss this show!
This is Nathan Moore's first year at Mises University. The Auburn University student shares what he's most excited to learn about.
Without our generous supporters, Mises University would not be possible. Donate today at Mises.org/MisesU2019.
Mises Institute Research Fellow Vytautas Žukauskas first attended Mises U in 2009. Now finishing his PhD in economics, he explains why the experience at Mises U is worth the trip halfway around the world.
Without our generous supporters, Mises University would not be possible. Donate today at Mises.org/MisesU2019.
Featuring Tho Bishop, Joseph Salerno, Jeff Deist, and the Mises University Faculty.
Recorded at the Mises Institute in Auburn, Alabama, on 14 July 2019.
Mises Institute Fellow Patrick Newman discusses what originally brought him to Mises University, and what it means to now be teaching as a Mises U faculty member.
Without our generous dsupporters, Mises University would not be possible. Donate today at Mises.org/MisesU2019.
Just as people shouldn’t be forced to send their children to church, they shouldn’t be forced to send their children to a state-approved organization for secular education and training.
Original Article: "End School Compulsory-Attendance Laws"
Under Warren's plan for higher education, Warren won’t make you go to college — but she’ll make you pay for it.Original Article: "Elizabeth Warren Shows Us Why Government Must Get Out of the Student Loan Business".
The true aim of these “scholar activists,” as many academics have begun calling themselves, is to propagate socialism by redefining capitalism to encompass every evil of human history. Which means they're mostly attacking straw men.
Original Article: "How College Profs Push Students to Socialism".
The increasing importance of elite higher education is a symptom of "political capitalism" in which success is determined by political connections rather than by the satisfaction of consumer preferences in the marketplace.
Original Article: "Economic Stratification and College Admission".
What is the real state of life in America? Why are we so divided, politically and otherwise? How fragile is the economy, and how much longer can debt and deficits go unaddressed? Will culture wars destroy any remaining sense of a shared American vision? Is a cold civil war—or worse—inevitable? Recorded at "The Mises Institute in Orlando: The Real State of the Union" on February 16, 2018.
Featuring the following authors:
Patrick Newman, The Progressive Era and Conceived in Liberty, Vol. 5Connor Boyack, The Tuttle Twins and the Fate of the FutureDavid Gordon, Preview of Rothbard A – ZMark Thornton, The Skyscraper Curse
Presented at the Mises Institute's 2018 Supporters Summit in Auburn, Alabama. Recorded on September 28, 2018.
How Economics Professors Can Stop Failing UsSteven PaysonLanham, MD: Lexington Books, 2017, xiii + 372 pp.
Steven Payson, the author of this provocatively title book, is a former career federal government economist who has the temerity to argue that economics could be a useful science if mainstream academic economist theoreticians would simply adopt and employ the scientific method in a serious effort to provide an understanding of the world in which we live. Instead, he convincingly argues, the culture of academic economists encourages and rewards a mathematical modeling onanism that is not only not “seminal,” but is instead practically barren of any contributions to that understanding. Payson argues that the main purpose of such model-building exercises is to achieve publication in what are believed to be the top economics journals and, consequently, to garner citations in the published work of other academic economists.
Because the book is almost totally critical and contains suggestions for improvement only in the concluding chapter, I think a more appropriate title for it might be “Why Mainstream Economics Professors Are Not Contributing to Useful Knowledge, and a Few Suggestions for Improvement.” There is much anger and outrage expressed by the author in the course of his argument, and yet the book is not just a polemic. If Payson’s critique is on the mark, the question of what to do is certainly an important one. Economic policy makers face a host of real world problems and need guidance in the face of them. What they get instead in some important instances is uncomprehending surprise followed by excuses and panic—a prime example being the mainstream economics profession’s response to the financial meltdown now termed “The Great Recession.” The result of that Federal Reserve-fueled debacle was the most simple-minded Keynesian money dump in decades, and with no end in sight at this writing.
The cover of the book features a chessboard showing a simple “fool’s mate.” This seems appropriate as it is Payson’s main contention that mainstream model-building founders quickly when it is realized that most of this activity consists of making a few simple assumptions and then engaging in a rigorous mathematical exercise to “rediscover” them. Other equally defensible assumptions would produce different implications. Little effort is devoted to the rigorous derivation and defense of assumptions, or to assessing the reliability of the data on which they may be based.Truman Capote is said to have once remarked that some people are writers and others are typists. Those who have little regard for the reliability of the data they use or the reality of the assumptions on which they rely may be regarded as falling into the latter category. Milton Friedman argued that it was predictability of a model that mattered, not realism in assumptions which need only be “sufficiently good approximations for the purpose at hand.” (p. 64) Too many economists took this to mean that only predictability mattered. Such an approach stands in stark contrast to that of the natural science practice of using the scientific method to achieve an understanding of the objective physical world that contributes to useful knowledge—that is, an “understanding of how the real world works.” (p. 53) Payson’s purpose is to counter the academic economist mainstream by pointing out that its mathematical clothing does not cover its explanatory vacuity.
By the natural science approach, Payson means the application of methods intended to reveal “the causality behind known and observable physical phenomena.” (p. 120) Natural scientists do use mathematical models to develop their understanding of causal relations; however, the mathematics is simply a tool in this quest, not a substitute for results. In natural science culture, methodological issues are key in research designed to achieve an understanding of actual phenomena. In academic economic culture, methodology is a specialized subfield and economics students seldom address the question of the use of scientific method in research. (p. 188)
Instead, graduate students in mainstream economics programs study complicated mathematical models constructed on the basis of a few restrictive assumptions, and learn to model-build themselves with a view to future publication in economics journals. The question of the accuracy of the assumptions with respect to ordinary human action is less important than the question of how to rack up as many publications as possible in journals believed to be top ranked among all those published. The end goal is to garner citations by other economists in their own publications, rather than to advance an understanding of human action that has useful policy applications or provides an advance in knowledge of praxeological processes. [My term, not Payson’s] In support of this claim, Payson references the Presidential Lecture by David Card to the 2016 Annual Meeting of the Western Economic Association International. In it, Card advised members of his audience to write papers intended to receive a multitude of citations if they desired publication in top-ranked journals. (pp. 111–113) That same year, at the annual conference of the Southern Economics Association, keynote speaker Andrei Schleifer was introduced as the most cited economist in the world, as if this was his key accomplishment. (p. 178) In addition, Payson adds, it is considered desirable to learn to do this research under professors who are leading lights of the profession in terms of their own citation counts in “top ranked” journals.
Payson both generalizes this activity as characteristic of mainstream academic research, as well as provides specific examples of conference presentations and published research that fit the stereotype. So far as the purpose of this activity is concerned, students and newly-minted doctorates are evaluated for employability, tenure, promotion, and career advancement based on how well they play the game. The result is an academic culture that encourages and sustains the subordination of research ends to means. The mathematical tail wags the research dog. Payson terms this “literature-only discourse,” and its result is “unscientific economic theory.” Its hallmarks are assumptions that, if slightly altered, would yield different results for the model, a methodology that is “understood, valued, and genuinely studied by a very small group of other economists with advanced expertise in that highly specific topic,” and findings that possess no real world explanatory value. (pp. 51–52)
Although econometric testing might seem to corroborate such a paper’s conclusions, there are many problems here, he argues. Simple-minded and inaccurate assumptions such as that there exist “constant elasticities of substitution among factor inputs,” or that the characteristics possible for a variable’s population are normally distributed, are all too prevalent. Association may be mistaken for causation, even in very complex multivariate analysis. Imprecise or arbitrary proxies are often used for variables in the model. “Data mining” is used to narrow down results to the plausible, and “statistical significance” is often mistaken for “importance.” (pp. 58–63) As other researchers build on these models, a “theoretical literature” is accumulated that is mistakenly viewed as a growth in “knowledge.”
Returning to the question of citation counts as a measure of scholarly achievement and a yardstick of professional ranking, Payson argues that there are a number of reasons for skepticism. For one, great discoveries in natural science are known and their authors acknowledged throughout the world. Not so for economists. Another problem concerns the ranking of what are considered to be the top economics journals. Depending on the weighting rules, the American Economic Review (AER) is either first or seventeenth, or maybe another ranking entirely.As a young intelligence staff officer in the Office of the Deputy Chief of Staff for Intelligence at the headquarters of the United States Army, Europe, in the early 1970s, I was witness to a task force from Washington, D.C., whose job it was to rate our productivity. It finally was decided that numbers of pages in intelligence reports would do this. Particular tasks were to be rated by the time spent doing them. Yes, it was just that simple.
Another problem is the vulnerability of the system to be gamed. Researchers can solicit citations from colleagues, journals can solicit citations to particular scholars or to previous articles published in that journal, and scholars often cite their own work.Years ago, I reviewed a collection of articles that included one by a future Nobel laureate. Thirty-three of the seventy-five articles that he cited (44%) in his bibli-ography were his own. In addition, there is no guarantee that a citation is particularly relevant to the article in which it is cited. It may be the author is just signaling that he is knowledgeable of previous scholarship on the subject, or is trying to show that his work is related to that of top-ranked scholars. The citation may even be a devastatingly critical one.
The bottom line on this is that citations have become a substitute for serious evaluation of the importance of publications. It simplifies decision-making in hiring, tenure, promotion, and professional ranking because evaluation for such decisions is difficult, highly personal, and those engaged in it may feel inadequate to the task. This is especially the case if the publication field is highly specialized and highly mathematical, even if the economic concepts at issue are relatively simple.
At one point, Payson makes a shocking admission: he believes that college and university economics professors should be performing research and preparing lectures directly relevant to their job of teaching and mentoring students. Instead, they have very strong incentives to starve that function by devoting so much time and effort to the publication game. (pp. 88–89) The current academic economist’s culture is undercutting what should be the main purpose of the academy, in this view. Further consequences include reduced time to read what is published in one’s field and a plethora of articles that are read by only a few specialists, few of them outside academia.
A number of ethical problems in the profession are briefly treated in the book. These include the failure of authors to clearly disclose when they may have conflicts of interest. The American Economic Association (AEA) has a “disclosure policy” for articles in its journals, but it may be difficult to track down the disclosure statement, and the policy only suggests that it may be to the author’s interest to make such a disclosure if acceptance is to be assured. A serious problem for AEA journals is that since 2011, its journals switched from a “double blind” review process to a “single blind” process for submitted articles. The rationale was that search engines now make it too easy for referees to identify authors, if they so choose. So, the Executive Committee removed the blinders, thus sanctifying what was previously considered unethical behavior. (pp. 213–217) Couple this with the AER reserving the right to reject papers without review and the foundation for basic fairness and scientific integrity is significantly weakened.
One would think that if publication for citation of journal articles that essentially contribute very little, if anything, to an understanding of real world human action is what characterizes the research activity of most academic economists, it would be noticed and discussed. And, indeed, Payson cites several scholars, most notably Robert Solow, Deirdre McCloskey, and Paul Ormerod, who have been publicly critical of it. The problem is that the public discussion of this issue has led to nothing but more public discussion while few, if any, actions have been taken to change the culture.
Payson argues that a good first step would be for the profession to adopt a code of professional ethics that promotes scientific integrity and the objectivity, reproducibility, and transparency of research in economics. He notes the existence of the Berkeley Initiative for Transparency in the Social Sciences, but argues that essentially all that is being done is to discuss the questions of ethics and scientific integrity in economic research, while taking no actual actions to attempt to change existing practices for the better. Payson founded the Association for Integrity and Responsible Leadership in Economics in 2007 in an attempt to encourage economists, especially those in academia, to take actions to change existing practices that are ethically suspect. Despite many papers and training sessions on the subject of ethics in economics, at his book’s publication there was still no code of professional ethics for economists in the United States. This may change. At this writing the AEA, under the leadership of Alvin Roth, has sent to its members for comment a draft Code of Professional Conduct. It calls for “intellectual and professional integrity” in research, objectivity, the disclosure of conflicts of interest, “civil and respectful dialogue,” and equal opportunity. It also assigns to economists the collective responsibility for “developing institutional arrangements and a professional environment that promote free expression concerning economics.” I suspect that just about anything that economists do that is not obviously a matter of simple wrongdoing, like lying or plagiarism, will survive this code. Notably absent is some statement to the effect that economists have some responsibility to the public for what they do.So far (June 2018) there has been no adoption of any code of professional conduct by the AEA. Instead, a January 2018 Ad Hoc Committee on the Professional Climate in Economics was created to evaluate the proposals of the Ad Hoc Committee to Consider a Code of Professional Conduct ‘with a particular focus on the issues faced by women and minority groups.’ The result: the April 2018 creation of a New Standing Committee on Equity, Diversity, and Professional Conduct. It is charged with evaluating and implementing the recommendations of the Ad Hoc Committee on the Professional Climate in Economics.
Payson would like a lot more than this to be done to change the culture of academic economics. For example, while he was a member of the board of the Society of Government Economists and organizing conference sessions, he initiated a requirement that paper proposals include a statement explaining “how the paper contributes to a better understanding of economics.” (p. 323) He was met with considerable pushback and the requirement was eliminated in two years. His conclusion: many economists “essentially have no justification, or defensible reason, for what they are doing” and resent being asked to provide one.
Payson desires an economic research culture that promotes work that has tangible social benefits. His suggestions for improvement are directed toward that end. First, stop the funding of research that consists of mathematical onanism. Those with power and authority in governmental and non-governmental grant-making institutions should stop funding such research. Second, senior faculty should take the lead in ending citation counts for the purpose of, hiring, tenure, and promotion decisions. Third, introduce required courses for economics degree-granting programs in “professional ethics, scientific integrity, and responsible leadership.” (p. 335) Finally, he argues that it is the responsibility of prominent economists to take the lead in cleaning the stable. They don’t hesitate to vocally address important issues outside the profession; they should do the same within it.
In assessing the main arguments in the book, there is a glaring flaw that most economists in the Austrian School tradition will immediately see. Payson acknowledges that there exists a serious discussion of the ontological, epistemological, and thus methodological differences between the natural science research program and that of economics. (p. 189) He chooses not to address it, while maintaining that it is still possible to direct mainstream economic research into the discovery of true causality. I suspect that the reason lies in his belief that Paul Samuelson, “one of the greatest economists who ever lived,” and whose Foundations of Economic Analysis became the Bible of mainstream economics, “did much more good than harm.” (p. 120) Well, if functionality is not causality, and there are no laws in economics that can be expressed as constant quantitative relations, what is the point of most of what mainstream economists do? How will they discover causal relations when their prime methodology is epistemologically unsuited to the task? His critique of mainstream academic economic culture and the preoccupation with mathematical onanism, rather than with seeking an understanding of the causal relations of human action, is compelling and timely. But a car is only as good as its engine and that of the economics that sprang from Samuelson has seized. Replacing the maps on the onboard GPS navigator will not improve the situation.
In closing, it is fair to ask if this book is likely to have any effect on the practices it critiques. I doubt it. Economists are well aware of the sunk cost fallacy; however, with respect to those who populate what are widely considered to be the upper ranks of the profession, a conversion to the goals that Payson advises would have serious consequences for them. It would mean that they would have to disavow most of their life’s work and act to drastically transform academic economics. Don’t hold your breath.
Ryan McMaken joins Laura Ingraham and Chris Hahn to discuss whether America is really facing an "epidemic" of school shootings. As Ryan notes, studies indicate that the stats show otherwise, and he picks apart some of the most widely used claims made by opponents of gun rights.
Originally broadcast on "The Ingraham Angle" hosted by Laura Ingraham on the Fox News Channel, 21 May 2018.
The key issue in the entire discussion is simply this: shall the parent or the State be the overseer of the child? Text version: The Danger of "Public" Education. Narrated by Graham Wright.
DEIST: Let’s begin with your assessment of the state of Austrian economics today.
MURPHY: Well, the first thing is that it’s so much bigger than it was. I’m relatively young, but even when I was going through grad school in the early 2000s, there was still a question we asked ourselves, “If you’re a grad student in Austrian economics, do you advertise that fact or do you engage in what they were calling the stealth strategy?” With the stealth strategy, you just keep your perspective to yourself, get published, and do your dissertation on a mainstream topic. You get yourself into a school, get tenure and only then do you say “surprise, I’m an Austrian.”
Now, though, the advice that people are giving is “you want to, by all means advertise that fact because we have enough of a foothold in various places that you’ve got to let them know that you’re an Austrian because if they’re looking to hire somebody who thinks like that, you’ve got to stand out from the crowd.
And so, that’s just the most immediate thing that comes to my mind. So yes, we do have — and unfortunately it took the financial crisis to make this happen — a certain amount of recognition now. We’re definitely getting out there more.
One last thing I’ll mention: when I’m talking to a crowd of financial professionals and I show them what I think happened with the housing boom and bust, I’m using Austrian business cycle theory, but I’m not using that term necessarily. I’m just explaining how the Fed blew up a bubble, and so on. And they all soak that right up. They don’t bat an eye. That sounds perfectly plausible to them.
DEIST: Austrian economics is also becoming increasingly integrated into the larger profession. Do you think the term itself still has value, as a loose term of convenience? Or do you think we should jettison it and focus on individual Austrians and their impact?
MURPHY: It’s a tricky question. I think it was Milton Friedman who kind of flippantly said there’s just good economics or bad economics and I get that, but on the other hand, there really are schools of thought, and that’s a separate discussion as to why that is the case in economics. In physics, you don’t necessarily have it, but I think that’s partly because the social sciences are different from the natural sciences and it really does matter, and there are reasons that things that make sense in physics don’t necessarily translate over to economics.
I do think there are schools of thought and so I don’t think it’s helpful to get rid of the term. I’ll put it to you this way. The kind of people who aren’t going to like it because of the label, I don’t think you’re going to convince them by switching the label to something else like coordination economics or whatever some of the other phrases are that have been offered. I’m being a bit of a hypocrite because I just mentioned that when I speak to a crowd of financial professionals, I don’t necessarily volunteer right off the bat, “Hey everyone, this is the Austrian theory of the business cycle.” Depending on how much time I have, I might get back with them and say hey, if you want to learn more, this is coming from Ludwig von Mises and F.A. Hayek, you may have heard of them. I’ll do that because with some crowds, if you say this is the Austrian explanation, you’re kind of telling them, this is something that is an obscure theory and so they might somewhat shut down. They think that you’re lecturing them and just giving them some irrelevant hobby horse. It depends on the crowd, but in terms of being a professional academic economist and publishing, I certainly think we need journals dedicated to Austrian economics.
DEIST: What about economics as a profession. Is economics doing any good? Does it benefit society? Its models certainly seem useless at predicting or explaining anything.
MURPHY: That’s a good question. I’m thinking, if everybody just took a standard principles class on microeconomics, even on net, that makes the world a better place. I don’t necessarily mean a microeconomics class taught by one of my buddies, either.
Just seeing the arguments about rent control, just to know what tradeoffs are, to realize that there’s scarcity, that kind of stuff, I think that helps people. In general, the kind of information that would be covered, even if they used a standard textbook.
It gives them enough of a foothold, a grounding to think critically and better understand the purpose of high prices when there’s a natural disaster, and the politicians start talking about “price gouging.” It is easier to get that message across to somebody who has literally at least taken one economics class in his or her life.
But, beyond that, economics is not necessarily helpful to people. The way that macroeconomics is taught in standard courses, I think that’s actively harmful. They begin to think, “Spending’s what drives the economy.”
So, yes, I think you don’t really need that many economists walking around. There are way too many people going into the field of economics in terms of what I think is actually useful socially.
The stuff you would learn in a basic principles micro class, that’s pretty helpful because that’s what Austrians would think of as normal price theory, and it helps people to think like an economist. I guess that’s the way I’ll say it. People should know how to think like an economist. Students should know what it means to think like an economist just like a well-rounded student should know what’s utilitarianism is, what did this philosopher think, what happened to ancient Rome, and so on. These are basic things one should know to be an informed citizen, and some of them are learned in economics classes.
DEIST: What is the state of economics in terms of its place in academia? We judge professors by their ability to publish in relatively obscure journals, journals that few people read, rather than judging them by their teaching ability.
MURPHY: Yes, it’s a good question and I’m a little bit cynical on this, so take it with a grain of salt. But something’s screwed up with the system.
An example of this can be found in the so-called “replication crisis” in other areas of the social sciences where new results have been published in areas that people thought were rock solid. Now, researchers are going back and trying to replicate those results and are not able to do it in a shocking number of cases. And so, there is this growing realization in the social sciences generally — not just economics — that maybe we don’t have things figured out as much as we thought we did.
And with economics in particular, it really was an eye opening experience for the profession. It has been a crisis for the profession in the sense that there have been guys like Robert Lucas, and other heavyweights in the 2000s who had said things along the lines of “We basically solved the business cycle, we can move on now to something else.” Well, that clearly wasn’t the case, but the hubris and overconfidence is pretty shocking.
Just to go back to the distinction between the natural sciences and the social sciences, people a lot of times pooh-pooh Mises on this and state, he was an obscure person making these medieval distinctions. But it really is true that it’s important to realize that the techniques are different and that’s why it can still be the case that Keynesians and Austrians — and Chicago school, for that matter — argue about what happened in the 1930s, and why we still argue about was the Obama stimulus good or bad.
As a result, the state of the literature in economics, it’s not good. I think people would be shocked to learn the details of the economics models we were using when I was in graduate school 15 years ago.
The standard workhorse models you would learn there, they would have one consumer or one household who lived forever and they would have one representative firm. It was a very simplistic model. The profession doesn’t use these models because the scholars are lazy. It was just because the full mathematical model gets really complicated and so to be able to “solve a model,” by which they meant lay out what the equilibrium states were, it couldn’t get too complicated. Otherwise, you wouldn’t be able to solve it.
And so, you have people informing monetary policy and writing academic papers telling the Federal Reserve what it should do in certain circumstances. But the underlying model was incredibly crude.
Just think, if NASA said they were going to send a manned mission to Mars, but their model didn’t include moons because they didn’t have enough computing power. That would make you think, “I don’t want to get on that spaceship.” But, that’s the kind of reasoning that’s going into what’s guiding the Federal Reserve. So, to answer your question, I understand why, if you thought economics was a science like physics, it would make sense that you wouldn’t want Einstein and Niels Bohr and such heavyweights to be bogged down by teaching undergrads basic principles about Newton’s Laws, that would be crazy. You’d want them sitting in the lab or writing the latest cutting-edge research.
But with economics, I think the latest cutting-edge research is very flawed and so that sort of analogy breaks down. The good that economists do is in teaching basic principles like scarcity and opportunity cost to the general public so they can at least evaluate political claims, even if they’re not reading the latest thing in the American Economic Review.
DEIST: As a student and a scholar you’ve spent time at Hillsdale, at NYU, and now at Texas Tech. Do you think the undergraduate and graduate education model in general — which is very costly in terms of time, debt, and money — is broken, or do you think it’s salvageable?
MURPHY: I think it’s unsustainable at the current scale and I was saying this even when I was a professor at Hillsdale. That was back from 2003 to 2006, and at that point, I felt like half of the students that were going to college shouldn’t have been there.
This isn’t a knock against those students. I’m not saying they weren’t smart enough. That’s not even the issue. You could clearly tell, there were plenty of students that were there to get a business degree or something similar and they were only taking my class because they had to check a box to get a degree. They weren’t interested in economics, and their real goal was to run the family business and get an MBA. There’s nothing wrong with that, but it just meant that half the people in class had that attitude, and that affected the way you could teach. The result was that everybody was kind of miserable. Many of the people who were there didn’t really need to be in college. They should have gone right into the workforce after high school or gone to a trade school. They were miserable. But then there were other students that were there because they loved learning for its own sake — they were also miserable because you couldn’t teach just to them because that would leave everybody else behind.
How this system is funded makes a big difference and if genuine market forces were allowed to work that could be a big part of how the problem could eventually fix itself.
The effects of the current subsidized system can be seen this way: I say to people, do you think everyone in the United States should get a PhD before they get a job? And of course that would be crazy. It would be very expensive, most people would be miserable, and it would lower the quality of what does a PhD mean if everybody as a matter of course gets one. Having a PhD would then be no big deal. By the same token, why do we just assume, “Oh, you’ve got to go to college or else you won’t get a good job.” That’s kind of crazy when you see what it means in practice. The stereotypes about students partying all the time are true. I’m not just talking about big huge state schools, but I’m including many schools I’ve visited and seen — which are somewhat elite private liberal arts schools. So the stereotype of what many students really spend their time doing is not completely made up out of whole cloth. And nowadays they’re coming out of school with tens of thousands of dollars of debt and they can’t even get a job. So, clearly that system can’t last.
DEIST: Turning back to the profession itself, what do you see as the dominant thought in economics today? Has Keynesianism led to “neo-liberalism,” whatever that is?
MURPHY: Even though we might like to make jokes about it, it is true that the average economist is generally a fan of markets. They’re not rabid laissez-faire, obviously. With most economists, though, they know socialism doesn’t work and they understand that yes, the way to bring prosperity to the third world is not just a matter of sending them aid. There’s a growing realization that yes, they need to have private property rights and solid social institutions, and that it’s not just a mere matter of technology.
So, there is a growing acknowledgement of the importance of those social institutions and that’s a good thing. But on the other hand, there is hostility toward the term neo-liberal — the critique is a little bit off with the people who rail against neo-liberalism and they complain about the World Bank and the IMF foisting free trade policies.
That’s all misguided, but the people who criticize neoliberalism are not just making all the negative aspects of it up. It is true that in many cases, this is what happens: In the stereotypical, paradigmatic case, there’s a country that maybe the military takes over. They’re in a shambles. They need foreign currency because they’ve been running their own printing press and so yeah, the World Bank or the IMF might come in and impose an “austerity” program on them. The World Bank and IMF say “yes, you have to liberalize, get rid of your state run enterprises. You need to tie your currency to gold or do these other things tied to the dollar. Open up your markets to imports.”
And some of that is coming out of a textbook for economic policies moving toward markets. But a lot of it is causing the citizens in that country to eat the losses that were imposed on them by their corrupt ruling regime as opposed to just letting the government suffer the consequences of years of mismanagement. The people again, they smell a rat and I think they’re largely correct.
They know that these outsiders are coming in and they don’t have their people’s interests at heart and they’re in bed with these big corporations and other huge nongovernmental organizations. So, I think they’re right to be suspicious. It’s just that their conclusion is “something’s wrong with capitalism per se.” Then, obviously, they come to the wrong conclusions.
DEIST: Last year, the economist Richard Thaler won the Nobel Prize in Economics for his work in behavioral economics and he’s being lauded as someone who has integrated economics with psychology. Of course, 70–80 years ago, Mises and the Austrians were talking about what humans actually do. Has behavioral economics borrowed from Austrianism?
MURPHY: It’s a difficult question to answer and I don’t know that I have enough interaction with certain regular mainstream economists who are not familiar with the Austrian tradition to be able to give a confident answer. There are two ways of looking at it and I’ve seen this reaction among my colleagues, either pessimism or optimism in reaction to the announcement that Thaler won. So, the good way to look at it is to say, “Oh, this is great, at long last the mainstream profession is admitting problems with the standard neoclassical textbook models of how rational economic man operates. That’s not how real people behave and so thank goodness, the mainstream finally kicking and screaming has been dragged to the point where they’re willing to admit it.”
So, there’s that element, but on the other hand — and here’s where the pessimist’s take comes in — it’s sort of like this: yes, the mainstream’s finally realizing what thinkers like Mises were saying long ago, that the way to model human behavior, if you will, is not to try to come up with a precise mathematical description that makes quantitative predictions.
But that’s not what the people who are embracing Thaler are saying. What they’re saying is “okay, so now we’re going to refrain from this hubris in trying to predict behavior and treat people like automatons.” But, for them, that just means updating the model. It’s not that they’re trying to get rid of mathematical modeling of people, they’re just trying to make the math model more accurate.
And so, if what you think is no, they’re fundamentally going down the wrong path here and that’s not the way to approach economic science, it’s a bit disheartening. Also, it’s unavoidable to bring up the fact that Thaler is involved with the whole “nudge” literature and using this knowledge of how people respond to incentives to say, “this is the way we can influence people, this is the way we can modify their behavior in ways that we economists desire.” In some settings, that’s pretty creepy.
DEIST: When Thaler claims that humans don’t always act rationally, he’s not refuting Mises — he’s simply not distinguishing between action and motivation.
MURPHY: Oh, absolutely, right. And this is again sort of the frustration one might have with Thaler. So, the neoclassical mainstream, when they say, as a working assumption, “we assume people are rational, that means people solve their economic optimization problems the way a mainstream economist would.” And so, number one, it means that people are experts at using calculus and solving difficult mathematical problems. Here’s your budget constraint and what’s your consumption path over time? This is stuff that grad students initially don’t even know how to solve because it’s too hard mathematically. And yet, economists routinely assume that consumers, when they go to the store, are able to unconsciously do the same problem.
Beyond that, there’s the way economists talk about what rational behavior is looking at in a strategic setting. One example of this is the so-called Prisoner’s Dilemma. Even if people play a situation like that a thousand times in a row, mainstream economists will say the “rational thing” to do is to keep screwing the other guy a thousand times in a row, even if they could be better off by cooperating.
But no, cooperating's not the way you solve the model, so it’s therefore “not rational.” There’s that element. So yes, when Thaler says “hey, people aren’t rational,” what he means is they behave in ways that this narrow economistic model would not have predicted. In contrast, when Mises says people are rational, all that means is “they’re engaging in human action to try to achieve some goal that they value.”
Assigning motives is not the approach you take when someone throws a rock up in the air and then it comes back down, we don’t say, “ah, the rock desired to be closer to the earth and that’s why it chose to do so.” No, we use a completely neutral, objective measure without any motivation or preferences involved because that’s the way that science has gone. In our minds, that’s the correct way you deal with predicting the motion of matter.
But when it comes to the social sciences, we do attribute motives to people, so that’s what Mises means by rational, there’s a reason, so that’s where reasoning comes in, not that the people are superhuman calculators, just that yes, they’re a being with an ego and they have preferences. But those preferences could be anything. It could be, you want to go get cocaine or heroin, or it could be you want to go help set up a homeless shelter. From that level of analysis, it doesn’t matter what the content of your preferences are, it’s just that you have them and then you use your reason to try to achieve it. So, the classic example that Mises offers is, you’re looking at some primitive tribe — primitive by your standards — and they’re dancing around and their crops need rain. A rain dance is perfectly rational in the Misesian framework. Because again, it doesn’t mean that “from our scientific viewpoint, we think that’s the right means to an end.” We just mean, “ah, I’m going to interpret what I’m observing by saying these beings have subjective preferences and they have this cause and effect relationship in their minds that they’re trying to invoke to change the future.”
DEIST: There are endless debates within Austrian circles about how best to advance our ideas. The two broad ideas have been what we might call a Hayekian top-down model, where we win over academics and their ideas trickle down to other intellectuals. The other we might call a bottom-up Rothbardian populist strategy.
MURPHY: It’s going to sound like I’m trying to be wishy-washy and not take a firm stand, but I really do think both are important and I mean it in the following way.
Part of why Mises, Hayek, and Rothbard were so able to influence the masses, is that they had academic posts. If Murray Rothbard had written word for word Man, Economy, and State and you found out that he was a chiropractor and he just in his spare time was this genius who had absorbed Human Action, it wouldn’t have carried the same weight. And in a sense, that’s a shame, that shouldn’t matter. Credentials shouldn’t matter, but yet they certainly do, if only just to guide people. You might just say, “this huge thick book that a chiropractor wrote on economics, what are the chances that this guy knows what he’s talking about?” So, I think it is important that Austrians, to get their message out — to change the world to use a bold goal — they can’t abandon academia.
Appealing right to the public is also a good thing, as opposed to just spending one’s whole life trying to convince academic colleagues and trying to convince the Dean of Harvard to take your business cycle seriously. I think that’s a waste of time when you’re setting yourself up for heartache and frustration. The idea of just teaching students and publishing peer reviewed papers for the rest of your life and going to conferences and talking with other economists — to some people, that sounds like the most horrible hell ever, and to some people, that sounds great. So, if you’re in the latter group then by all means do that, but again, it’s because that will give you a platform so that the public is more likely to listen to you. Also, if you get something like an op-ed published in a newspaper, you’re more likely to be able to do that if the byline says that you’re an Economics Professor at such and such university. I definitely do agree that going to the masses is the important thing to do right now, as opposed to tweaking the latest mathematical economics model. But again, that doesn’t mean you should ignore academia because I think there’s an interplay there.
DEIST: As a strategic matter, are some of the debates within Austrian economics harmful or helpful in your view? For example, there are debates about Mises versus Kirzner on entrepreneurship or Rothbard and Hoppe versus Selgin and White on free banking. Do you think we ought to spend time on these internal debates?
MURPHY: Well, I’m going to be debating Selgin on fractional reserve banking in New York at some point in the spring of 2018, so I hope that’s not a waste of time, I hope it’s useful.
I definitely understand the people who say, come on, guys, these internal battles, they’re not productive and they just make us look like a weird cult. I understand where those people are coming from and I used to be somewhat sympathetic when I was younger. But on the other hand, you could just as well flip it and say, well wait a minute, if we’re supposed to be a science, then of course we’re going to debate with each other and disagree. If we all just uniformly had the same answer on everything to put on our show for outsiders to where we’re trying to attract followers, that would be creepy too. That reallywould be a cult.
And so, I don’t think that to gain popularity, we ought to restrict our arguments — even if that strategy actually worked. I reject that in part because it means we’re sort of being dishonest to the public and I don’t want to do that. I’m not personally going down that road if that’s what we’ve got to do to gain popularity. But having said all that, I actually don’t think that that’s really the trade-off.
I think what is true, and it is true for anything in life, is you don’t need to be a jerk about it. I get the sense that sometimes there are people within the Austrian camp who genuinely just dislike some of the other people and they want to have a fight and they use these particular doctrinal differences as the pretext to have a fight with someone they don’t like. And yes, that’s probably not productive — just because in general, going around having a grudge against somebody is not helpful. I think that these debates are important and because that’s how it’s going to progress, that actually the critics are wrong. This isn’t a cult, it’s not that we look at Mises and Hayek and Rothbard as our prophets and we’re not allowed to disagree with them. No, that’s not true at all and so there is a vigorous disagreement and that’s how this thing progresses. Yes, be civil about it, but if there’s somebody you think is wrong, then it’s your job as a scholar to try to correct it.
DEIST: A few years ago, you had some run-ins with the aforementioned Paul Krugman, also Brad DeLong on issues like quantitative easing and inflation and Austrian business cycle theory. How do you assess those run-ins today?
MURPHY: For people who don’t know the backstory: After the financial crisis, a woman emailed me and she said, “I just saw Paul Krugman in a Barnes and Noble and he was on a book tour. In the Q&A period, I asked him ‘why don’t you debate Austrians on business cycle theory?’ His answer was, ‘this is going to sound elitist, but mainstream economists, the profession doesn’t listen to those guys anymore. They were big like in the 20s, but they’ve been eclipsed since then, so I wouldn’t give them a platform.’”
And so then I thought, “okay, well he’s going to ignore us that way, so I have to somehow provoke him.” I set up this goofy effort to challenge him to a debate, and then we were going to raise money to go to a New York City food kitchen, if he debated me. And so, that was kind of a publicity stunt. It was kind of funny, but I think that’s why he knew who I was and why he specifically attacked me later. Obviously, he was not happy with my shenanigans.
The official CPI did not jump as much in response to the Fed’s quantitative easing as I predicted in those years right after the Crash of ’08. Then Brad DeLong and Paul Krugman noticed people arguing on my blog and responded, “Aha, these Austrians, what a bunch of religious people here in the sense that they don’t respond to objective evidence. This guy Murphy made a prediction, he was wrong and yet he’s not updating his model.”
This shows how slippery these guys were because the economists I was busy debating about QE were not exactly in agreement with DeLong and Krugman. Bryan Caplan at George Mason is an anarcho-capitalist, for example, and Krugman and DeLong obviously weren’t about to declare Caplan right. Obviously, they didn’t say “anarcho-capitalism is vindicated because that anarcho-capitalist Bryan Caplan was right and Murphy was wrong.”
In their minds Keynesianism was right, even though there was nothing expressly Keynesian about QE. And the jury is still very much out concerning what the ultimate effects of monetary expansion willbe now that the Fed says it will reduce its balance sheet over the next few years. Admittedly, though, I should have been more careful with predictions that reflected my personal view. I mean, Austrian economists, number one, don’t make quantitative forecasts based on Austrian theory, per se. That’s one of the hallmarks of Mises’s view, if you think you’re going to predict the stock market just by using praxeology, then you’ve misunderstood what praxeology does for you.
So, there’s that element. But also, the Austrians themselves make important distinctions when it comes to price inflation. In the 1920s, the Austrians were saying just because there’s not rampant price inflation, doesn’t mean things are good. But since I had been poking Krugman and some people were learning their Austrian economics through my writings, I should have been more careful. And this is what I say to this day at Mises U and at other events with students: whether it’s fair or not, we’re in the minority, the mainstream is going to use any excuse to discredit us. And so, it’s sort of like you’re representing Austrian economics and watch yourself and don’t commit unforced errors.
That’s sort of my takeaway. Ben Bernanke, for instance, made a string of mistaken predictions, and you can go watch them on YouTube. You can see just how wrong he was time and time again going up to the crisis, and of course, Krugman, once Bernanke got reappointed was lauding him on his blog and saying, there’s nobody he would rather have at the helm of the Fed than Ben Bernanke. So, obviously Krugman doesn’t think a bad prediction disproves a theory. But when an Austrian gets caught losing one particular bet to other free-market guys, that’s somehow supposed to discredit an entire theory.
DEIST: What do you say to young people who ask you whether they ought to pursue a PhD, in economics or otherwise?
MURPHY: One thing I’ll do right away is just say, do you want to teach or at least is that acceptable to you? Could you imagine that is your day job for the rest of your life, that you’re at a college teaching the students and writing peer reviewed papers and if the answer is yes, then I say yeah, by all means, go ahead and go into it.
But if the motivation is “I really love Austrian economics or libertarianism and the free market and I guess, gee, the next logical step is to go get a PhD,” then I would say be careful and caution them that they could be wasting some valuable years of their lives.
Fortunately, a PhD in economics is more marketable beyond just academia — compared to, say, a PhD in philosophy. So, there is that element that you’re not as constrained if you get a PhD in economics as you would be in some other fields.
But, I do caution them that if you’re not sure if you want to go into academia, a PhD might be not worth the cost, all things considered. And I don’t mean money. I mean the time, the available years that you’re losing time you could have been out earning experience in industry or whatever you’re going to do with your life.
If you are going to go into it, though, be sure to work on research that you’re passionate about because that’s going to be the thing you’re known for. You’re going to be a world expert in this little thing that your dissertation’s on. You’d better be interested in it.
Another upside to the degree is there’s a huge area of overlap between financial economics and Austrian economics. A lot of the conflict between Austrians and other schools isn’t there when it comes to talking to people in the financial sector. I think there are a lot of applications that young Austrian economists in academia could do by publishing articles relevant to a financial crowd as opposed to the more official economics journals.
DEIST: Finally, you have been outspoken on your personal blog and otherwise about your own Christian beliefs. Why have you chosen to be outspoken about this and do you think that this has in any way helped or hindered you career wise?
MURPHY: It’s a great question. I’m outspoken on it just for the obvious reason that if you’re a Christian, that’s the most important thing, period. And so, why you would be focusing on other things and not talking about that is problematic if you really are a Christian. If you believe that the state of people’s souls are resting on an issue, that’s far more important than the heterogeneity of the capitalist structure. But, as far as whether it is helping or hurting, I really can’t say. My guess is that there are plenty of my colleagues who are agnostic or outright atheists who might see the things that I post on Sundays on my blog and think, “Bob’s very rational, but I’m glad he can compartmentalize because when he talks about economics, he’s real smart and rational and gee, when he starts talking about the Bible I just don’t get it.”
I’m sure there’s plenty of people who think like that, but I think probably they just say well, there’s a lot of religious people and that’s just how they were raised and they move on and they kind of give us a pass, if you will. So, to be honest, I don’t think it’s really hurt me. I do consulting work in the insurance sector, and not that anything in terms of professional relationship has anything to do with a religious litmus test, but I have noticed just as I reflect, that a lot of the people that I work the most closely with in that realm are also Christian.
I think it’s more of a worldview thing, that the kind of people who believe in the Bible, they see the world a certain way and so, if they hear me talking about the Federal Reserve, that’s going to resonate with them even if we’re not literally talking about scripture. I do think this sort of goes back to what we were saying about the state of Austrian economics. Some people might say, “You want to keep that to yourself so people don’t blackball you.” But on the other hand, if there is the remnant out there, the minority who thinks like you, they need to know who you are, so they can find you and work with you. I think there’s something like that too with my spiritual beliefs, that hiding it, that’s going to make me feel bad and I’m going to feel miserable, afraid to share my beliefs. But also, you should be a beacon of light to the other people who think like you.
The last thing I’ll say is, it wasn’t that I was worried about professional blowback. In the beginning I was worried about some pretty militant atheists in the free-marketsort-of-libertarian community, and they did hammer me in the beginning but I think they just got bored of it. Things like, “Can’t you see that the state and the church are identical?” They both tell you, you need us, give us your money or you’re going to suffer. I certainly get those superficial similarities, but like I said, it kind of went away and what really encouraged me though, was I got a lot of emails over the years from people saying, “hey, I keep my head down because I don’t feel like fighting with people online, but I’m glad you’re out there doing that.” I used to think I was one of the few Christian libertarians. Now I realize that’s not the case.
Fifteen years ago Gabriel Calzada was a Fellow at the Mises Institute who aspired to bring the Spanish Scholastics' tradition of liberty to Latin America. Today he is president of Universidad Francisco Marroquín, the truly remarkable private school in Guatemala. All students at UFM, regardless of major, take a core curriculum in libertarian thought. The board of directors and almost all professors are entrepreneurs rather than academics. And UFM's charter provides the freedom to experiment and think outside the box, resulting in projects like a business cycle observatory and MOOCs (massive open online course) on subjects like Don Quixote. If you're interested in what entrepreneurial education grounded in free-market economics can look like, don't miss this interview.
Professor Thornbury is president of a very different kind of school, The King's College in Manhattan. He joins Jeff Deist to discuss everything wrong—and everything that could be right—with universities today. Dr. Thornbury's prescriptions are radical: make education a la carte, offering a mix of degrees, certificates, and micro-certificates. Tailor programs to teach specific skills, and shorten the time undergraduates spend in school dramatically. Insist that all graduates have rigorous writing and public speaking skills. End the publishing model for academics, and replace it with a focus on classroom skills and open inquiry. Finally, make sure students still learn enough about history, philosophy, ethics, classics, languages, and rhetoric to navigate life beyond the digital world.
David Gordon joins Jeff Deist to consider the important philosophy—and philosophers—libertarians need to know. Starting with Mises's influences in Human Action, Dr. Gordon moves through the 20th century with a great discussion of John Rawls and Robert Nozick. He also suggests the books that Austro-libertarians need to read, even if they're primarily interested in politics or economics.
From Part 2 of Education: Free and Compulsory: "Compulsory Education in Europe". This audio book is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
From Part 2 of Education: Free and Compulsory: "Compulsory Education in Europe". This audio book is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
From Part 2 of Education: Free and Compulsory: "Compulsory Education in Europe". This audio book is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
From Part 1 of Education: Free and Compulsory: "The Individual’s Education". This audio book is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
From Part 3 of Education: Free and Compulsory: "Compulsory Education in the United States". This audio book is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
From Part 3 of Education: Free and Compulsory: "Compulsory Education in the United States". This audio book is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
From Part 2 of Education: Free and Compulsory: "Compulsory Education in Europe". This audio book is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
From Part 2 of Education: Free and Compulsory: "Compulsory Education in Europe". This audio book is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
From Part 1 of Education: Free and Compulsory: "The Individual’s Education". This audio book is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
From Part 3 of Education: Free and Compulsory: "Compulsory Education in the United States". This audio book is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
From Part 2 of Education: Free and Compulsory: "Compulsory Education in Europe". This audio book is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
From Part 3 of Education: Free and Compulsory: "Compulsory Education in the United States". This audio book is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
From Part 1 of Education: Free and Compulsory: "The Individual’s Education". This audio book is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
From Part 1 of Education: Free and Compulsory: "The Individual’s Education". This audio book is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
From Part 1 of Education: Free and Compulsory: "The Individual’s Education". This audio book is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
From Part 1 of Education: Free and Compulsory: "The Individual’s Education". This audio book is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
This audiobook is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
What is it about today's school system that so many find unsatisfactory? Why have generations of reformers failed to improve the educational system, and, indeed, caused it to degenerate further and further into an ever declining level of mediocrity?
In this radical and scholarly monograph, Murray N. Rothbard identifies the crucial feature of our educational system that dooms it to fail: at every level, from financing to attendance, the system relies on compulsion instead of voluntary consent. In contrast, a market-based system of schools would adhere to a purely voluntary ethic, financed with private funds, and administered entirely by private enterprise.
This audiobook is made available through the generosity of Mr. Tyler Folger. It is narrated by Graham Wright.
The full text is available online here.
Download the complete audiobook (17 MP3 files) here. This audiobook is also available on Soundcloud, Apple Podcasts, via RSS, and in .M4B format.
[Reprinted from the Lara-Murphy Report, February 2017.]
LARA-MURPHY REPORT: How did you become interested in Austrian economics?
JEFF DEIST: Fortunately Austrian economics became interested in me, through two happy developments.
First, my father had a tattered paperback copy of Hayek’s The Road to Serfdom on his bookshelf when I was a teenager. Although the book perhaps focuses more on political theory than pure economics, it makes important points about markets, imperfect knowledge, and bureaucratic hubris that had a big impact on me. So like many people, Hayek was my gateway to Austrian thought — even though as a young person I didn’t approach Serfdom as a book about economics at all, but rather a book on libertarianism and the role of government.
Second, in the early 1990s a good friend of mine heard that Professor Murray Rothbard was teaching economics at UNLV. My friend decided to obtain an advanced degree there, almost entirely because of the opportunity to study economics from an Austrian perspective. I had no idea who Rothbard was at the time, but on my friend’s advice I drove up to Las Vegas from San Diego a few times to sit in on Murray’s classes. It was quite an experience, and made me understand how little I really knew about economics. Like many libertarians I thought about economics in terms of policy rather than science. I knew the minimum wage and taxpayer-funded stadiums and drug prohibition represented bad economics, but I lacked the knowledge to verbalize how and why. When you don’t study economics as an academic discipline, it’s easy to get caught up seeking prescriptive justifications for liberty rather than accepting the descriptive nature of all honest science. Seeing Rothbard in person motivated me to learn more, and from there I eventually read Mises, Menger, and many of their contemporary fellow travelers — including Bob Murphy!
LMR: Now that Donald Trump is in office and his critics on the left are suddenly remembering the virtues of the Constitution, many libertarians can’t help but focus on the hypocrisy of people who had no problem with President Obama’s “secret kill list,” in which he could assassinate people with drone strikes without even a judicial review. On the other hand, other libertarians argue that we should forget leftist hypocrisy and focus on the abuses of power coming from the White House, as that is the clear and present danger. What’s your take?
JD: I must say we live in strange times when the left wants to resurrect a Cold War with Russia! Or when Democrats start talking about nullifying federal laws at the state and local level, or withholding taxes as civil disobedience. The obscene level of political amnesia and hypocrisy on both sides shouldn’t shock us, but it still does. The only meager advice I have is to detach yourself emotionally as much as possible from political outcomes, because at the end of the day we can be sure of only one thing: it’s absurd to imagine everyone else sees the world the same way.
As for Trump, I think libertarians fundamentally miss what his election means. It’s not about him, his behavior, his policies, or the people he surrounds himself with. It doesn’t matter what one thinks of Trump, what matters is that so many Americans were willing to go off-script and vote against the left-progressive narrative of inevitability. For all of their talk about democracy, progressives are angry and horrified to imagine that people don’t agree with them. I’m happy about this shakeup, but not hopeful that progressives will see Trump’s victory as the intervention it was. Libertarians make a huge mistake when they dismiss or even attack Trump voters, many of whom were disaffected conservatives and independents who didn’t really want to vote for him but felt they had no choice. If Rand Paul or anyone else is going to advance the libertarian message politically, insulting Trumpians is not the way forward. Disdain for the deplorables [Hillary Clinton’s term for Trump supporters — eds.] may make libertarians feel superior, but it ignores the reality that many Trump voters are not simply angry but also honestly open to a new political worldview.
Trump is the symptom of an illness we have allowed to go undiagnosed and untreated for too long. In the current landscape, populism and anti-elitism are entirely justified. Top-down political control of 320 million diverse people by technocrats is a recipe for heartache and strife. Let’s hope it’s not a recipe for something worse.
LMR: Perhaps related to the last question, do you think libertarians should try to court horrified progressives? Perhaps with a pitch of, “You see how bad it is when someone you don’t like is elected? Maybe we should limit the power of the Executive?”
JD: I’d like to think this line of argument is possible with progressives, but I’m afraid they will revert to form when their guy or gal takes back the White House. It’s the inescapable tribal nature of politics, which is why we should do everything we can to depoliticize society wherever and whenever possible. But in the short term, I think the best we can hope for is tenuous single-issue coalitions. If progressives want to oppose Trump’s wars just because he’s not Obama, fine with me. I’m happy to align with anyone who wants to reduce the size and scope of government on any issue, for any reason. So let’s find common areas of agreement with progressives, even if they’re temporary. With Trump in office, I humbly suggest we start with war, the Fed, and drug laws.
LMR: Because of the polarizing election, secession is back on the table. Last summer, some polls showed at least 40 percent of Texans would consider secession if Hillary Clinton won. Now that Trump is the president, a recent poll in California showed 1 in 3 supported secession. What are your thoughts?
JD: Ah yes, secession — bogeyman of both left and right. I recently heard Victor Davis Hanson, a conservative with the Hoover Institution and National Review, refer to Calexit [an analog to “Brexit” for California leaving the Union — eds.] as a “neoconfederate” idea. Now Hanson is a brilliant guy, a formidable intellectual and definitely not some partisan hack. So when someone of his stature is so egregiously wrong and dismissive of the issue, you know we have a real problem. It’s the old intractable idea that the Civil War somehow decided things. Throw in a couple of specious Supreme Court decisions and you’ve unfortunately poured concrete into the minds of most Americans. What a pity, because breaking up and going through an admittedly painful divorce might be much more humane in the long run than forcing everyone to stay married to an abusive spouse in D.C. Chalk it up to Manifest Destiny and the mentality that USA Inc. must only expand, never contract — because something deep in the American psyche won’t let go of a single state.
LMR: What role does Austrian economics play in the future of liberty?
JD: First, I hope we use “Austrian” as a descriptive term of convenience. It’s not a rigid school of thought that expels practitioners who stray too far, at least not in my view. But I think the Austrian contribution has been and will be enormous, even if we sometimes lack the perspective to see it. Professor Walter Block recently shared some old emails he exchanged with the late Dr. Gary Becker, the University of Chicago economist and Nobel Prize winner. Block, a former student of Becker, was lamenting the treatment of Austrian scholars in certain academic journals. In response, Becker argued that much of what is good and groundbreaking in Austrian theory has already been incorporated into mainstream economics. Becker reminded Walter that Austrians already made huge advancements by explaining the impossibility of socialist calculation, presenting a theory of entrepreneurship, and pioneering the role of time in capital and interest theory. All of this was quite illuminating, especially coming from such a famous economist who viewed the Austrian school from an impartial and somewhat skeptical vantage point. And I should point out that Becker did not mention, though he hardly needed to, how the earthquake known as the Marginal Revolution was in good part Mengerian. The point is that we often underestimate the incredible and salutary impact Austrian scholars have had on both economics and society. It’s baked into the modern cake, so to speak, so we take it for granted.
While Austrians fret that neo-liberal economists don’t understand money, or interest rates, or methodology, or the role of mathematics, it’s easy to forget that even ardent Keynesians on the left like Paul Krugman and Brad DeLong give quite a bit of lip service to markets, price theory, and capitalism generally. They certainly don’t call themselves socialists. This is not a coincidence, but rather the result of decades of work by free-market economists chipping away at the socialist edifice that held the entire profession in thrall during the 1930s and beyond. The rhetoric of modern economics is much improved today, and generally pre-supposes a value for markets.
Contributions from Austrian and Austrian-friendly economists have been very important to human liberty, and the future is begging for more. We especially need an Austrian revolution in money and monetary policy, perhaps the single biggest blind spot for otherwise pro-market economists. Whether the breakdown of fiat currencies and sovereign debt results in the imposition of an IMF global currency regime, a return to gold-backed national currencies, or a flight into purely private blockchain payment systems remains to be seen. But the Austrian school planted the flag for money as a market commodity, for interest rates as prices, and for understanding business cycles as driven by the depredations of central bankers. The Austrian view of money is the future, no matter what governments and central banks do. Central bank money will fail. Good money, which is to say private money, will drive out bad — even if it’s forced into black markets.
Finally, let me say that a growing crop of young Austrians will continue to wrest economics away from its listless, econometrics-focused cul de sac and toward an emphasis on understanding human action. Economics is a profession badly in need of a shakeup, just as the greater world of academia is trapped in outmoded, expensive, and laughably inefficient models of higher education. “Peak university” is upon us. Perhaps the greatest contribution young Austrian academics will make to the cause of human freedom will be to rebuild the way we learn economics in the first place.
(Address to the Mt. Pelerin Society, Brussels, September, 1974. Previously unpublished.)
The New Left of the late 1960s was an international phenomenon and one which manifested appropriately differing emphases in different countries. It is my impression that it was the American wing of the New Left that most often expressed a point of view with which a libertarian, or classical liberal, could have some sympathy. This situation is clearly connected with the relatively stronger American individualist heritage and the relative absence of a Marxist or even socialist tradition. In no area have the affinities between the New Left and libertarianism been more evident than in the theory of education, and it is in educational philosophy that the New Left in the United States continues even today to attract attention and to play an important role in public debate. What I propose to touch on in this brief talkAddress to the Mt. Pelerin Society, Brussels, September, 1974. The manuscript was marked "For Private Circulation Only." Previously unpublished. are the values and approaches which the New Left — at least in its American version — has in common here with the libertarian standpoint, as well as the points at which, in my view, it is open to criticism. The writers I shall be dealing with are: Ivan Illich, the author of a widely-read book entitled Deschooling Society; Everett Reimer, his friend and associate; Joel Spring; John Holt; and Paul Goodman, the outstanding thinker of the group and inspirer of nearly everyone else in the field.
That these New Left writers have anything at all to say of interest to libertarians may come as a surprise to some — especially to those who have in mind the European, not to say the German, part of the movement — but I think it is demonstrable already from this fact: that these writers are the first in many decades to have presented in a challenging way the demand that compulsory school attendance laws be abolished. This is a position which they all insist on vehemently. Holt pointing out the uselessness of all educational experimentation, of free schools, "individualized learning," etc., in a context of compulsory attendance: as he puts it, "When you threaten people with jail if they don't do what you want, the only thing you can find out is whether they like doing what you want better than going to jail." Moreover, their demand here is the outgrowth of a whole social philosophy and way of viewing human personality that has a good deal in common with the conceptions of such classical liberals as Wilhelm von Humboldt and John Stuart Mill. The crucial importance of activity which is self-initiated and whose ends are self-chosen, and the indispensability of freedom as the condition and context of such activity if such values as creativity, energy and joy in achievement are to be realized, are concepts integrally woven into the New Left approach. When Goodman attacks the current educational system, stating: "it is impossible to do creative work of any kind when the goals are pre-determined by outsiders and cannot be criticized and altered by minds that have to do the work, even if they are youngsters" — I think that the overtones of Humboldtian and even Hayekian ideas are very clear. In connection with this: the links between the ideas of freedom and laissez-faire are, as we know, close, and here, too, the New Left writers reflect elements of the older liberal view: in the idea, for instance, that order and structure inhere in free human interactions and need not be imposed from the outside; and in the notion that growing up is not a process we are called upon constantly to supervise and direct, but rather one that occurs quite naturally — what young people require is not so much "direction" and supervision, but, first of all, simply adult models that can be provided by us as a by-product of our living our own lives rationally and purposefully; and, secondly, to be left alone. So that, the by now well-known insistence of the New Left critics that the abolition of compulsory school attendance laws is the precondition for any worthwhile educational policy is, it seems to me, the tip of the iceberg of a social philosophy rooted in individualist values and an individualist philosophy of human nature.
The New Left position should be of interest to us in another respect, linked with what has just been said: the criticism of "education" (as it is currently understood) per se. Although the accusation to which these critics might seem to be most open, on a number of grounds, is that of "utopianism," they are, ironically, in many ways vastly more realistic than their left-liberal and social democratic opponents. This is particularly true in regard to their evaluation of schooling as it actually operates in the Western countries, as well as their appreciation of its necessarily limited value under any circumstances. While the supporters of the official policy justify the delirium of more and more "education;" while they would have us believe, for example, that the United States, which each year spends on schooling an amount about equal to the GNP of Great Britain, is, nonetheless, pathetically and indecently falling short of its bounden duty to provide an enormously more costly "education" to its young; while, in other words, those supporting the received views are caught up in a system of illusions the attempt to realize which would bankrupt even the United States, the New Left critics direct our attention to a few radical truths: that, for all people, most of what they learn is not learned in schools; that most really significant learning does not even require a teacher but is picked up casually in the course of functioning within environments that minimize anxiety and coercion; that "education" as currently understood — that is, that which one undergoes in schools at the hands of professional teachers — is at best by and large unnecessary for children of middle-class and upper-class parents and by and large harmful for children from lower-class families. All of these writers have been or are teachers, and the analyses they provide of what actually goes on in schools — together with their frequent insightful examples that resonate with truth and reality — have greatly contributed to de-mystifying the so-called process of "education." Most of us knew that the chief result of high-school English courses is to implant in most people an unconscious life-long antipathy to Shakespeare and that undertaking to inform half of the young people of the United States as to the thought and inner spirit of Descartes and Immanuel Kant is a game hardly worth the candle. The humanistic psychology and philosophy of education of the New Left critics brings us, I think, a long way towards understanding why this should be so.
The deadening, mechanistic quality of education as it exists today is already a blight upon society; and yet, as these writers emphasize, there is an incessant imperialism on the part of government educational bureaucracies, an attempt to extend "education" into more and more areas of life and over longer and longer periods of the individual's life. "All educators," Illich asserts, "are ready to push out the walls of the classroom, with the goal of transforming the entire culture into a school," and he adds that, "No one completes school — yet. It never closes its doors on anyone without offering him one more chance: at remedial, adult and continuing education." In this way, Illich, a former priest, proposes the analogy of the current educational establishment to the medieval Church, a suggestive analogy which he and Goodman often employ.
Because of their own special training and background, these writers are able to identify the costs involved in this delirium of ever-greater quantities of schooling — not merely the kind of costs economists tend to think in terms of, but the more subtle costs to the personality-types and general temper of society most of us would find desirable. Schooling, especially schooling under present conditions, brings with it what Illich calls a "hidden curriculum." As the first and most important adult institution (besides the family) with which children become familiar, schools are enormously influential in shaping their view of the human world. The hidden curriculum — the concepts, attitudes and roles that are instilled along with reading a writing (and generally more successfully than reading and writing) are of great significance. There is, for instance, "the myth that bureaucracies, guided by scientific knowledge, are efficient and benevolent." There is the idea that knowledge is what is acquired in the presence and under the supervision of a paid professional (which has obvious costs in terms of self-assurance and self-reliance). There is the expectation that "social entitlements depend on the rank achieved in a bureaucratic process." If the minds of young people are actually being molded in this way by the present educational system — and this seems like a reasonable enough interpretation — the New Left critics deserve credit for bringing it to public consciousness.
Moreover, these critics often direct attention to various issues of political economy surrounding education which a libertarian will not find particularly original but which are seldom broached in public debate. These would include the analysis of teacher-certification (licensing, really) as an attempt to restrict entry to the market; pointing out the obstacles presented by licensing in general and by trade-unions to opening alternatives to schooling for young people (although how compulsory schooling could be abolished and millions upon millions of teenagers thrown onto the labor market without a final reckoning with the unions and with minimum-wage laws is a problem never tackled by these authors); and, very interestingly, an emphasis, in good Benthamite and Manchesterite style, on the sinister class-interests of the tens of thousands of articulate professionals employed by the present system. Goodman refers to the "school monks" who profit by the system, "an invested intellectual class worse than anything since the time of Henry VIII," and says of the billions spent on schooling and of the proliferation of programs, bureaus and studies recommending still more programs and bureaus: "One suddenly realizes that here again is the Dead Hand of the medieval Church, that inherits and inherits and never dies."
One very important aspect of the political economy of the education system, as seen by the New Left, is its tie-in with state-capitalism, historically and at the present time. Joel Spring, in particular, has developed this point. Throughout the world, government education has always had very definite functions of political indoctrination and control. This is clearest, of course, in regard to the inculcation of nationalistic values and myths. In many cases — Latin America, for instance — it was the system of government education (together with conscription) that first created the sense of nationality among the subjects of various states. Spring demonstrates how in the United States, in the course of the twentieth century, the state-schools were the conduits for instilling the values of the corporate-state in new generations of young people. That is, as the social climate of opinion altered, around the turn of the century, to emphasize sociability, cooperativeness, and the subordination of the individual to group aims, rather than the more individualistic values that had previously prevailed, the schools were altered to reflect this change and to help bring about a new, more "up to date" American personality-type. Spring is here extending to the field of education the enormously suggestive interpretation of early twentieth century American history of such New Left historians as Gabriel Kolko, who sees it as the period of the cementing of the state-business alliance that has ruled America, in domestic and foreign policy, ever since. The shaping of personality along lines suitable for the smooth functioning of the modern corporation (Americans in the audience will remember that in elementary school we were given grades for "gets along well with others") was the chief requirement from the viewpoint of the newly-emerging system of state-capitalism; but more specific desiderata were not neglected, such as the exploitation of the schools through the grading and tracking system as a means of personnel-selection at taxpayers' expense. The fact that government education usually functions as a means of transferring wealth from the relatively poor to the relatively rich is often emphasized by these writers. There is doubtless a class-envy quality to their ideas here, a banking on unconscious hostility to the rich in general; but the fact that in this extremely important area, this particular conclusion of libertarian economists regarding the net result of most government programs has been given wide publicity by the New Left writers can only be to the good.
Turning now to the criticisms I would have of these authors: a major source of disagreement would involve their evaluation of the consumer society, which they see as linked up with the educational system in various ways. Here they are altogether negative; they look on the consumer society in the customary terms, as purely the result of a race for artificial status through possession of material goods, as a futile attempt to make good for hollow lives, etc., etc. It is a pity that someone like Goodman could not have devoted some of his unique powers of close observation of the facts of everyday life to developing the insight of the psychologist Gordon Allport, for instance, who found to his surprise that there is a genuine pleasure in driving a powerful car; or of the sociologist Raymond Ruyer, who noted likewise that shopping in a modern department store is often a genuinely pleasurable experience and that it is only the intellectual's auto-suggestion and self-hypnosis that could make him think otherwise. In any case, the rejection of the consumer society would be relatively harmless, or even useful, if it were limited to a cultural critique: it would then serve the purpose of promoting an active-performing rather than a passive-consuming attitude towards life. But with these writers, as with Galbraith, such an attack functions as a preliminary invalidation of the values and decisions of ordinary men and women, preliminary that is to the demand for the coercive re-allocation of the resources that nowadays go to producing the goods people want. (In order to ground this invalidation, they drive the notion of the omnipotence of advertising to absurd lengths.) Goodman, unfortunately, says that even more should be spent by the government on education (although not on schools) than is spent now, rather than that the money should be wasted on "piggish consumption;" and Illich, mixing contempt of the consumer society with the ecological fears and with notions of the exploitation of the Third World by the Western countries, even proposes sharp limitations on the amount that individuals and nations may consume — in other words, a vast system of (international) sumptuary laws.
Connected with this disagreement would be the central difference in outlook between the New Left and libertarianism: namely, in the appreciation or even basic understanding of the market. Illich, for instance, seems to believe that the public school system treats education as a commodity, and he contrasts this with a situation where the student's autonomy would be respected. Holt and some of the others rightly condemn the systematic attempts to demean the student that often occur in schools, to rob him of self-respect, to teach him that growing up means resigning himself to subjection to irrational and unnecessary authority. But they never ask why this is not the typical quality of encounters in supermarkets or bicycle shops, or why advertising, whatever we may think of the specific content of the message, at least projects the concept that the individual and his comfort and convenience are the be-all and the end-all of creation. The perception which Thomas Szasz has so brilliantly applied to psychiatry — namely, that a commercially-oriented free market structure in service professions will have enormously different consequences for the status and ultimately for the self-image of the person taking advantage of the service, from a structure in which the purchaser of the service is someone other than the consumer — this fact, although partially understood by these writers and implicit in their support of the educational voucher system, is never credited to the account of the free market and capitalism. More generally, as Samuel Britten has pointed out in Capitalism and the Permissive Society; there is little appreciation of the fact that many of the values which the New Left holds dear — such as the substitution for mass-culture of a more individualized culture, one that takes into account minority tastes and standards — is possible through an extension of the commercial or market principle: in this case, through pay-TV and cable-TV.
Worst of all, there is in these writers an indifference or hostility to the principle of private property altogether, a refusal to see the incompatibility, not merely of higher humane values but of civilization itself, with a state of affairs where the individual's property is at the mercy of the "need" of any passing stranger. There is an attitude, I think, that private property is too "rigid," too "exclusive," a kind of Rousseauian idea that it erects barriers to human warmth and fellow-feeling and that it must, therefore, be superseded, by force if necessary. To my mind, this attitude goes some of the way in justifying, as applied to them, what von Mises said of their left-anarchist precursors: that they propounded a social philosophy fit only for roaming bands of barbarians.
So that, in their approach to the economic order, the New Left critics are fundamentally flawed; and, in view of the importance of correct economic theory for any social philosophy, this is a serious defect indeed. But the lack of economic knowledge is a common enough failing among social philosophers; and it appears to me that, in the battle against the positivist bureaucratization of the world, the New Left can furnish us with useful allies, from whom we have much to learn.
The title of this talk, as some of you will know, is taken from a recent book by the heroic Russian dissident intellectual, Andrei Amalrik, Will the Soviet Union Survive to 1984?This talk is unpublished as far as we can find and no date or other information was attached. Raico cites a "recent" book by Andrei Amalrik, Will the Soviet Union Survive to 1984? This book was first published in 1970. The talk has been edited for typos only. What is implied is not that things will suddenly go kaput in 1984 — that would be too much of a coincidence — but that, in terms of the present discussion, for the next generation and the foreseeable future a pessimistic prognosis is in order; to put it briefly, that it is fundamentally over with the noble American experiment. What I have in mind by this is that element in the make-up of the United States which Lord Acton referred to when he said, of the cause of liberty in mid-18th century Europe:
Europe seemed incapable of becoming the home of free states. It was from America that the plain idea that men ought to mind their own business, and that the nation is responsible to Heaven for the acts of state, burst forth like a conqueror upon the world they were destined to transform under the title of the Rights of Man.
There have been, God knows, other features in the history of the United States, but there was always this also, and it has continued to serve as a reference point and refuge for the libertarian-minded in each generation; it has served to keep the United States a relatively free country.
It is the possibility of the continuation of this ideal in any meaningful sense that I am pessimistic about. This is not to say that there are not contrary signs — very important is that it seems improbable that the United states will be able to engage in more far-away military actions such as the Indo-China War for a couple of decades; to that extent, American imperialism has become politically difficult and will for a time have to retrench. So the signs are somewhat ambiguous. But considering the domestic political situation — although it would provide a contemporary H.L. Mencken with material for unending satire on all fronts — from the point of view of libertarianism, there is little cause for anything but pessimism, in regard to the Left, to the Right and to the Middle.
At first, it seemed as if the New Left held out a good deal of promise to a libertarian, particularly in the student movement. It was anti-authoritarian and individualistic; much of its background was provided by the '50's popular sociological works such as Whyte's Organization Man and Riesman's Lonely Crowd, which were basically individualistic and communicated the fear of uniformity and control of individuals by the sheer mindless weight of crowds. It was pacifistic. Not that pacifism is an unconditional principle; but in view of the propensity of governments to go to war at the drop of a hat (think of the thousands and millions who have died for "essential" national causes in the Crimea and against the Boers, in Flanders fields and in Viet Nam), pacifism is quite a good rule of thumb. The slogan of this earlier New Left was that everyone should be left to do his own thing — and with all the instant obsolescence of the ideas and catchphrases of the '60's, it would be good if this one somehow survived. Essentially, this is what Hayek was talking about in his Constitution of Liberty, although he phrased it somewhat differently.
But although a libertarian such as Thoreau was a major hero of the New Left in its earlier phase, the radical students seem never to have taken to heart the libertarian spirit that Thoreau showed in such a passage from Civil Disobedience, as the following:
the people must have some complicated machinery or other, and hear its din, to satisfy the idea of government which they have. Governments show thus how successfully men can be imposed on. It is excellent, we must all allow. Yet this government never of itself furthered any enterprise, but by the alacrity with which it got out of its way. It does not keep the country free. It does not settle the West. It does not educate. The character, inherent in the American people has done .all that has been accomplished; and it would have done somewhat more, if the government had not sometimes got in its way.
Instead, the leftist students have become statists, and Marxist statists for the most part. The enemy for them is not primarily the State, or those who make use of the State to give them an advantage over others in the give-and-take of the market, but the market and the private sector themselves. Here they simply take over and even exaggerate the ideas of the Old Left — on the omnipotence of advertising, the shamelessness of searching for a profit, the evil inherent in exchanging goods rather than giving them away, all the tedious Galbraithian pseudo-wit on consumer habits — adding the ecology business. Almost all bright students one runs across are against commerce and the principle of exchange; it often takes real courage to defend these things against the astonishing aggressiveness of many of the leftist students (more than against their professors, who to some degree continue to respect argumentation).
This was, however, more or less to be expected. Marxism is the most thoroughly elaborated left-wing ideology, and it comes — one might almost say — like second-nature to anyone who begins reflecting on social affairs from an unorthodox point of view. Once set out on the waters of opposition to "the System," the radical students wound up with Marxism almost inevitably.
This has been enormously helped along by the simultaneous emergence to wide-spread public notice of a "new sort" of Marxism — that is based on the idea of "alienation," an idea which, by its vagueness and utopianism seems to have been tailor-made for the new leftists. Everything unpleasant that exists — from political apathy to sexual frustration, from the slightest inconvenience to the limiting conditions of life itself (for instance, that men must work to live) — can be ascribed to the "alienation" caused by capitalism and the class society.
The early emphasis of the New Left on individualism has been eclipsed by a concern for ''community." As Richard Zorza, a student who has written about the Harvard strike of a couple of years ago, states: the important thing is "the right to say 'we'; that right is more precious than all others to this confronted generation. It is a right that gives us an identity and allows us dignity." In a sense, of course, there is nothing in this incompatible with individualistic libertarianism, the essence of which is anti-statism, not anti-societism. But one suspects that with many young leftists attracted by the "we" idea, it will ultimately be the political community, backed by force and revolutionary ideology, to which they will look to realize the "right to say 'we'."
Very often, the young New Left is much worse than the old line leftists were and are. A good example is a recent book by the husband of Joan Baez, David Harris; the book is titled Goliath, and is now in paperback. (Since Soul on Ice has sold two million copies — in our repressive fascist society — it is not unlikely that Harris's book will sell at least a half million copies — although Harris was imprisoned for a less interesting crime than Cleaver's, and does not benefit from that really great name.) In Goliath, in the chapter on "The Myth of Property," we read of the dichotomy of property and need:
Property dictates that we pursue ownership. The pursuit of need follows a logic of use. When you need something, you use it. Instead, of using things, America demands they be controlled. ... In fact, the person who owns a resource owns the lives of all who must use it. ... If the world were shaped according to our need of it, then its resources would be available as a function of that need: the hungry would eat, the homeless would build homes. (italics added)
And when Harris states that: "Property is the negation of the common conglomerate man," I think I can detect a strong direct or indirect influence from the Economic and Philosophical Manuscripts of 1844.
With this sort of mentality there is obviously no arguing, as there was with the old-line leftists. Property — whether private or public — is the right to dispose of things, generally material things. How the things of the world could conceivably be left up to the claims of needs is not broached — the very suggestion that a problem might exist is disgusting and unmasks the questioner as one who does not share in the mystical community of the well-intentioned. I would guess that there are not ten facts — ten hard facts — that Harris knows about the American economy, or capitalism at large. This sort of work — and it's an example in print of the kind of mindless thought that goes on among millions — is based simply on the undigested and unexamined personal impressions of the wide world on the part of the "thinker." The pathetic thing is that the model for all of economic activity — for all the things that keep people alive and keep them above the animal level — is the friendly communal passing of a joint. People like this want to legislate for the nations of the world.
A similar sort of thoughtlessness has become increasingly evident among churchmen, more recently among the Catholic clergy. Their social position, of course, has become difficult in the extreme; no one takes their religious claims seriously anymore, not even they themselves for the most part. The rationalization of the world, in Weber's sense, has proceeded too far for that, for good or bad. But the momentum of ecclesiastical institutions within society naturally continues, at least for the time being; such social formations do not suddenly disappear, simply because the ground has been taken from under them. Moreover, there are vast endowments and thousands of sinecures involved. So, deprived of their traditional raison d'être, the clergy increasingly take to politics; here they carry over the mental habits of dogmatism, contempt for rational discussion and moral authoritarianism that have always marked them as a class. Their commanding instincts are paternalistic — thus, it is only natural that their concern, as far as domestic politics go, is directed to taking the under-privileged under their wing. They are sure to prove particularly useful to the leftist mainstream in connection with the creation and dissemination of guilt, guilt for the possession of any wealth above some undefined "decent" minimum. Past masters in the art of generating guilt, the clergy will be valuable allies in the cause of transforming the traditional American pride in economic success into an anxiety-ridden defensiveness. Thus, the Christian churches, which entered modern history as the "desperate foes" of the free society — in Lord Acton's phrase — will be able to close their eyes happy in the knowledge that their old enemy has not survived them.
The out-and-out revolutionaries, the violent ones, are even worse than the people I have been considering. It is difficult not to put a bad interpretation on Bernadine Dohrn's praise of Charles Manson (whom she, and the other people of the "Movement" who consider him to be a hero, assumed to be guilty of the Tate murders). It is clear enough at this point that those who call for a violent revolution in the United States at this time do not have the interests of the American people at heart, whatever else they may be aiming at. In this connection, I think it's a good thing that my friend Murray Rothbard has given up his support of revolution. Considering the state of opinion among would-be revolutionaries, and their only potential mass-base — liberal arts students and the black under-class — there is not the slightest chance for a libertarian-oriented revolution in the foreseeable future.
(This is not to say that because a revolution is an illusion, then every law is sacred; there are obvious cases, such as Selective Service, where the existence of the law constitutes no presumption whatsoever that the law should be obeyed.)
But everywhere the radical Left is in distintegration and disarray. The gushing of the totalitarian romantics over the Cuban experiment is drying up, since it is increasingly difficult to deny its failure even in its own terms; and it doesn't seem likely that anyone on the Left will be able to secrete much enthusiasm for the incipient whitecollar and university-professor dictatorship in Chile.
By and large, it appears that the American leftist radical movement will evaporate simply into a re-enforcement of the old New Deal demand for "more programs" to deal with our problems. This will become the "compromise" solution that will demonstrate the "responsibility" of those who will still feel entitled to call themselves "radicals" simply because they push for more and larger budgets, and never let up on the hysterical note of the pain and suffering existing side by side with color TV's, motor boats, etc., etc. (The logical implication of this line of thought — of emotion, really — is that an American auto-mechanic ought to feel guilty about drinking a beer, when there are Pakistani children who go without milk, and are actually starving to death. But the people I'm talking about never carry the argument beyond a step or two. Actually, there is no argument involved here at all.)
This accommodation with New Dealism has already occurred in the case of Charles A. Reich, the celebrated author of The Greening of America, who recently wrote in the New York Times Op-Ed section:
The first affirmative requirement of a new society is a system of planning, allocation and design. Today there is no control over what any organization may invest, produce, use up, distribute. The need for planning has been obvious since before the New Deal, but we have refused to see it. It is time for us to grow up to acknowledge that the great forces of technology cannot be left the playthings of corporate expansionism and personal ambition.
Reich adds, however, that: "Planning cannot be left to the planners," and goes on to recommend a sort of long-range comprehensive planning that will still be compatible with immediate, direct decision-making by people in small groups. How these two ideals would be reconciled doesn't begin to be a problem for Reich.
Similarly, Jack Newfield of The Village Voice, writing on "The Death of Liberalism" in the current Playboy, finds the "remedies" that "are as obvious as they are radical in Galbraith's concise and precise words," which are that "the cures lie in 'taxing the rich, regulating private enterprise and redeeming power and policy from military and civilian bureaucracy!" (This last — the attack on bureaucracy — is Galbraith's concession to the Zeitgeist.) This is pretty much of a perfect example of what I'm talking about: a self-styled radical, writing on the "Death of Libertarianism" finds the cures for our problems to lie in the thought of — of all people — the old ADA'er and hater of the world of private relations!
Having accommodated themselves to the great statist mainstream of the twentieth century, these "radicals" will find their natural candidate in Ted Kennedy; all but the most "alienated" will flock to him. The Kennedy administration, if it comes into being, would probably enact a system of National service for young men — Kennedy's stated goal. Possibly the system will be extended to young women, as well; just as there are Gay Liberationists who demand the "right" to serve in the People's Revolutionary Army, or even the right to be drafted into the State's army, it may be possible for the image-builders to present the conscription of young women as a concession to Women's Lib. Thus, a labor draft for people in their late teens and early twenties — conscription into social work, nursing, as forest rangers and to eradicate oil slicks. It's hard to think what could be a more ironic ending for a movement that began by invoking Thoreau and the sacredness of the individual personality.
If we consider the Right in America, the prospects are about as dim. In regard to the mass-base, there is still some residual hope in the rhetorical opposition to Big Government and High Taxes on the part of sections of the middle and upper-middle classes. But the Rightist mass-base that the author of the Emerging Republican Majority — and those who, before the last election, listened to him — pins his hopes upon, is obviously useless to libertarians, or pretty much so. A possible ray of hope here is provided by the fact that the Catholic ethnic groups which are to furnish a crucial part of this majority do not, for the most part, share the ethic of service and moral uplift that is so important to mainstream left-liberalism. (As Edward Banfield points out, in The Unheavenly City, this is largely a WASP and Jewish trait in American politics.) It may be that these ethnic groups are more healthily materialistic, and will tend to prefer lower taxes to government programs that lack any evidence of a reasonable possibility of succeeding. The idea that we must do something — in spite of the fact that there is no reason to think that the proposed "something" will do the trick, and although similar "somethings" in the past have done more harm than good — the idea that we must do this, or fail in our duty to our own social consciences, may exert little influence on the Catholic ethnics. But the not-so-very hidden idea behind the notion that a grand Republican coalition can be formed has nothing to do with libertarianism. Rather, it banks on dislike of Negroes and impatience with the "outrageous" culture of students and liberal professionals, a dislike and impatience that will draw together Southerners, Northern working-class whites and rural types. Kevin Phillips, the author of The Emerging Republican Majority — where he outlines this strategy — has expressed his disgust that obsolete "laissez-faire" economics continues to interfere with the realization of his grand design.
Then there are the conservative intellectuals. I do not deny that some of them have a few good instincts; some of these may be activated at times, as they are with Buckley when he debates leftists. But the conservatives are neither dependable on the question of liberty, nor particularly helpful.
In the first place, because they continue to fight silly and useless battles. The very paradigm of this is Russell Kirk's little feud, in the pages of National Review, with masturbation, which he persists in calling "onanism," against scholarship — since that wasn't Onan's sin, and no doubt in order to suggest the connection of his thought on this with the Great Tradition, not to say with the Great Chain of Being itself. Their refusal to take the obvious libertarian position on the legalization of drugs and their priggish literary harassment of pornographers are further indications of this, as is National Review's obsession with the unspeakable abomination of homosexual acts. All these Puritanical views are supposed, in their ideology, to flow from their Christian commitment. But it is a not very well kept secret among those who know anything about the American conservative movement, that by rational, if not by orthodox, standards, the Christianity of these conservative intellectuals is bogus. It is not only that they have little in common with the Gospel of Jesus, but, beyond that, that many of them show that extra nastiness and viciousness in debate that seems to be common to the Right-Wing the world over, for reasons on which Wilhelm Reich had certain ideas. ( I would strongly suggest to libertarians who might suppose, because of their familiarity with the usual run of American conservatives, that Christianity has nothing of importance to offer them, to take a look at some of the writings of a real and highly intelligent Christian, C.S. Lewis — particularly his essay, The Abolition of Man and his basically libertarian novel, That Hideous Strength.)
The conservatives are of little use, also, because they have no real sense of the meaning of the market economy, of the dignity of the act of exchange and the injustice inherent in replacing exchange by force. For them, any property that happens to be in the possession of individuals is true private property. They are bitter about welfare, but not about the proposed subsidy to Penn Central — which was evidently stopped, not by any of the conservatives in Congress, but by the old populist, Wright Patman of Texas. Conservatives have never begun to make the obvious argument against most government programs — the "Chicago" argument — that they are instruments for taking money by force from the relatively poor to give it to the relatively rich. They cannot bring themselves to make this sort of argument, because for them the fact that a person is relatively rich is already near-proof of his soundness and respectability, and thus of his right to be the recipient of government money and privileges. The position of libertarianism is much more realistic here. Classical liberalism — in the form of British classical political economy — began with an attack on government privileges for the rich: an attack on the system known as "mercantilism." "Sinister interests" and "monopoly" were the names that Adam Smith, the Philosophical Radicals and the Manchesterites gave to the wealthy and powerful who used the State to exploit the rest of society. The concept of "class conflict," in this sense, is part of the libertarian's intellectual inheritance, and it helps him to make much more sense of the contemporary world than the conservative is able to do.
The attraction that power in the hands of the upper classes exerts on conservatives is shown also by their approval of exploitative military and "feudal" regimes in other, countries, particularly in the Third World. It is difficult to conceive why on earth anyone friendly to liberty should support the Brazilian and Greek dictatorships, and approve of American support of them. The bogusness of the conservatives' Christianity is evident here, too: the Brazilian dictatorship has been censured both by the Vatican and the bishops of Brazil for its systematic use of torture against political opponents, but I don't recall a single word in the American conservative press on what conservatives theoretically should regard as a vicious infringement of human dignity.
Finally, and most obviously, the conservatives cannot be depended upon by libertarians because they are almost invariably nationalists and militarists. But this is so clear that I don't think it needs any elaboration.
What then of the "Middle"? Of those who share none of the traditional ideologies, neither Marxist nor left-anarchist, conservative nor libertarian?
All indications are that the Middle will increasingly dominated by the New Class — in the sense of the French scholar, Raymond Ruyer, who applies the term comprehensively to a social phenomenon that bridges the division of the world into socialist and so-called "capitalist" countries. This is the class that lives, directly or indirectly, from government programs and subsidies — the class that has gone beyond the market and come to rest in a fairly comfortable economic position. Included in this New Class, in the United States, are the NASA scientists and engineers (temporarily on the wane); H.E.W. sociologists and psychologists; those who have received the $500,000,000 that Congresswoman Edith Green says has been spent since 1965 by the Office of Economic Opportunity on "studies conducted by experts on research and evaluation of the poor." Also included would be municipal urbanologists; the recipients of government "cultural" subsidies, which are sure to increase to European proportions and beyond; and that great portion of the bourgeoisie that has an intimate relationship to the State — through defense contracts, of course, but also by way of programs such as urban renewal, highway and mass-transit programs, and foreign aid; also forming part of the New Class would be the Medicare and Medicaid doctors and dentists.
In addition, and this should be emphasized, because it has very serious ideological implications, there is the element of the educational and mental health bureaucracies. (The second has been brilliantly treated by the psychiatrist and libertarian, Thomas Szasz, in a number of books; the most recent, The Manufacture of Madness, I strongly recommend to you.) The budgets for these, as is well-known, are sacred, taboo. One is half way to mental illness already, if one wants — like Reagan — to cut down on the mental health budget. There are parallels between education and psychiatry in contemporary America that are sociologically most interesting. In both of these fields we are witnessing the creation of a vast class of state-subsidized intellectuals (or near intellectuals), who lack any accountability to the "consumers" of their "products," and who make use of this lack of accountability to promote their own cultural ideals — which are usually those of the State, as well. Of course, they always promote these personal or social ideals in the name of "culture" or "sanity" per se. It is only the know-nothings or the emotionally disturbed who could possibly doubt the burning need for the transfer of money and power to the educators and state-psychiatrists. When the two groups are allied, the result is spectacular. This has happened, for instance, with the issue of sex-education in the public schools, and here the two groups mutually reinforce the purity and absolute unquestionableness of their cause to such a pitch to remind one of John Lindsay, or even of Woodrow Wilson himself. To them it seems perfectly obvious that the public school teachers, who have succeeded in rendering poetry an object of hatred to millions of their subjects, should now have a go at sex.
The western media's fawning treatment of Fidel Castro demonstrates the enduring mystique of socialism—while recent Harvard and Rasmussen polls suggest that perhaps half of young Americans hold unfavorable attitudes toward capitalism. No matter how many millions perish in collectivist bloodbaths, the Left remains committed to its ideology of radical egalitarianism and enamored of murderous revolutionary figures like Che Guevara.
Our great friend Yuri Maltsev, a victim of Soviet totalitarianism in his youth, joins us to explain how and why westerners still don't understand what socialism really means. He recounts his many trips to Cuba, and demolishes the myths surrounding that country's vaunted "healthcare" and "education" systems. He explains how socialism actually produces a superclass of elites and a form of socio-economic apartheid, rather than egalitarian nirvana. And he reminds us that the romantic vision held by western elites is best defeated by those who have lived through the ravages of collectivism firsthand.
Recorded at the Mises Circle in Boston, on the campus of Harvard University, on 1 October 2016.
On Mises Weekends this week, Jeff joins our friend John O'Donnell at Power Trading Radio to dive deeper into the the broken state of modern economics. Along with touching on what is really being taught in American Econ programs today, Jeff and John discuss the college federal loan scam, and the unique role the Mises Institute plays in economic education.
A private graduate seminar. Recorded at the Mises Institute in Auburn, Alabama, on 27 July 2016.
A panel question and answer period for Mises University students, featuring current and former Mises Fellows and other young Austrian scholars involved in academia.
Recorded at the Mises Institute in Auburn, Alabama, on 26 July 2016.
It’s easy to get discouraged in the Age of Obama, a man who can say, in Castro’s Cuba, that there is not much difference between communism and capitalism. And in his warped mind, I guess it’s sort of true, since his program is a mixture. That is, it’s fascist.
Combine his corporatism with envy, perpetual war, negative interest rates, the police state, fascist health care, total surveillance, vicious political correctness, and a host of other horrors, and you can wonder about the future. The other pols, with very few exceptions, aren’t much better, or even worse.
Is the cause of freedom, private property, sound money, and—to be moderate—taking a meat axe to the government and all its works—irretrievably lost? Do we have to sit back and accept a form of economic and social Marxism?
NEVER.
And why is that? Because the truth, no matter how seemingly battered and bruised, still shines through. It can never be wiped out, no matter how rotten the regime. In the end, the truth will triumph over deceit.
Our opponents are the party of lies. Lies about economics, history, and political philosophy. Lies about the Fed and other government chains on society. Lies about the nature of the state and its deeds. Lies about the heroes to be admired and emulated, and the villains to be despised.
In the media and the classroom, entrepreneurs are smeared as greedy and destructive, when in fact they are heroes, essential to human flourishing. Instead, we are supposed to worship politicians and officials who are no better than common thieves. Yet far more destructive.
Time to despair? No, because the ground is shifting under the feet of the entire establishment, here and around the world. They are panicking.
Especially among young people, we are making huge progress. Yes, some go the deadly way of Bernie. They see even more government as the answer to all the problems caused by government. And they are infected by PC.
But the smart ones, those of good brains and good hearts, the diligent and hardworking, the truth seekers, are moving our way. How heartening it is to see it. The future can be better than the present. We are not trapped on the road to Hades, no matter the corrupt news from the corrupt state and its propaganda.
This fools the weak-minded, but our young people are anything but.
To these kids, many professors might as well be wearing sandwich boards proclaiming them to be liars. The lies about capitalism, war, taxes, controls, history, and the government are endless, mixed with what Mises referred to as statolatry.
Then there is the constant political correctness, more properly called cultural Marxism. Belong to the wrong race? Then you are responsible for all the bad things in the world. Left-wing hysteria, combined with the censorship of our ideas, rules the roost. But there is an opposition. Good students, even if they don’t have the knowledge to refute all this, understand that something is drastically wrong. They love truth and freedom, and they refuse to be pigeonholed and defamed. These are the young people who flock to our selective summer Mises University. This extraordinary program is not for everyone. There are also the nihilists, who go along to get along, and the statists who see big government as the all-knowing eye, the protector and provider, god walking on earth.
But the good kids come to us, and it would do your heart good to see them. These bright-faced students are smart, principled, and hungry for the truth. They are also polite and well-mannered. As you can imagine, they’re a good teacher’s dream. No wonder Mises University also attracts the best teachers of Austrian economics and libertarianism.
This summer will be the 30th year of Mises U. Over that time, thousands of young people—including almost everyone who is anyone in Austrian economics and the freedom movement—have studied with us, and had their lives changed. They’ve come from all 50 states and 54 foreign countries, and from more than 500 colleges and universities.
The internet, especially mises.org, is our great recruiter. Just as often, good professors recommend us to their best students, and even more effective, Mises U. alumni tell their friends that their experience on our campus was the intellectual experience of a lifetime, that it is what higher education should be like, but so often isn’t.
We get young men and women majoring in economics, business, history, philosophy, theology, physics, mathematics, pre-law, pre-medicine, and other disciplines. To be admitted, they must be stars—in their grades, in their recommendations, in their dedication.
Many of our graduates are now professors themselves, and sending us their own students. Others are spreading Austrian economics and liberty in their businesses and professions.
Because of the rigorous application process, we get the smartest kids interested in our ideas. Indeed, we turn down more than we accept. That just makes Mises U. more desirable, of course.
All day and into the evening, from money and banking to entrepreneurship, from regulation to methodology, from history of thought to socialism, from fascism to Keynesianism (not a long distance), from central banking to taxation, from the free market to the hampered market. They learn, in the great tradition of Austrian economics, why freedom means human flourishing, and statism means ripping off the productive for the unproductive. Our students learn about the open and covert ways in which government intervention into the economy brings penury and injustice, and that laissez-faire equates not only to the highest standards of living, but to a moral society.
And our kids are voracious. Even outside of class, during meals and social hours, the smart discussions are nonstop. Strong friendships emerge. No one, no matter at how leftist a school, feels alone anymore.
I mentioned that our faculty is the best. Even outside of class, they continue talking and teaching as long as the kids want them to. No wonder we have to warn the students to pace themselves during Mises U. Otherwise, they are not getting enough sleep, so exciting is this kind of learning.
I am so proud of our teachers and students, of all that they have accomplished over the years, and will accomplish in the future.
This is an expensive undertaking. As with all Institute programs, however, we watch every dime, since it is the generosity of people like you that makes all we do possible. We are always aware of our fiduciary responsibility to our donors.
It’s a big job. After all, we are countering long years of indoctrination, not only from government-biased education, but from the media, Hollywood, and television, too.
It’s a big job, but isn’t it worth doing? Among all our brilliant kids, there might be another Mises or Rothbard, Ayn Rand or Isabel Paterson, Hazlitt or Hayek.
We’re determined not to let the bad guys get away with it. There’s far too much at stake, for us and our children and grandchildren, for all of society.
But though we have the truth on our side, we can’t do anything without you.
Please make a generous tax-deductible contribution to the 2016 Mises University. Help us keep changing the world.
It’s a thrill to see all that this program has accomplished over the years. Help us build on that for the next 30 years. Everything is at stake.
Warmest regards,
Llewellyn H. Rockwell, Jr.Founder and Chairman
PS: We have the privilege of carrying forward a great heritage. Please help us do so, for all the ideals we share.
PPS: Please see the comments from some of our alumni. You’ll be as impressed as I am. A scholarship for one of these young people can be named in your honor, or in memory of a loved one.
Your generosity has given me a wonderful opportunity this week to expand my knowledge of Austrian economics and libertarianism. Not only was the academic aspect of the conference refreshing and enjoyable, I was able to interact with my classmates on a level that I have never experienced in my life. For this reason I find it hard to express my gratitude. Thank you.— Andrew Heinen, Indiana University
My experience at Mises University has been life changing. I would not be libertarian without the Mises Institute. Indeed, my country, France, is not exposed enough to libertarian ideas. But the Mises Institute helps the French classical liberal tradition to survive. Thank you for making this possible.— Louis Rouanet, Sciences Po Paris
Thank you very much for sponsoring my attendance at Mises University. It has been a great experience and opportunity to learn more about Austrian economics. I am grateful to be able to learn from some of the best economics scholars. I recently graduated from Grove City College, and am now considering grad school in economics. Thank you again for your support.— Andy Herbener, Grove City College
Thank you, once again, for being the reason I was able to attend Mises U this year. Once again, it was an amazing experience that I will always cherish. I am eternally grateful.— Anton Chamberlin, Loyola University New Orleans
Thank you very much for your generous donation that helped make Mises University possible. I would not have had the opportunity to participate in this program without your support. Mises University has provided me with a solid foundation in Austrian economics that I would not have had otherwise. There is no other program like this in the world. I will work hard to advance the Austrian school of thought and hope to be in the position to sponsor a student someday myself.— Michael Malin, University of Alaska
Thank you so very much for your generosity, which has provided me with the opportunity of a lifetime. For those of us who love liberty and have discovered this beautiful science, economics, there is no nobler cause than the work of the Mises Institute. I wouldn’t be here were it not for your support, and for that I am extremely grateful. Thank you again.— Benjamin Goes, SUNY Albany
Thank you so much for your sponsorship this week. I have so enjoyed my time at the Mises Institute, and have learned so very much about Austrian economics over the course of a rigorous course load, comprised of around 30 courses on Law, Economics, and Political Philosophy. I have especially enjoyed my time in the Judge’s Constitutional Law class, and have been inspired to study law, in part due to this week.— Lucas Carroll, University of North Carolina
“Our greatest enemy today, in short, is the economic illiteracy and confusion on the part of those who insist on “planning,” “stabilizing,” and straitjacketing the economy and who have the political power to do it.” So wrote Henry Hazlitt in 1946, words that sadly retain their relevancy today. The consequences of this pervasive fallacy takes many forms. Ryan McMaken this week highlighted how soaring university tuition is fueled largely by a government fueled boom in student loans, while Paul-Martin Foss highlighted the alarming signals coming from international shipping. Around the world, people are coming to realize what Austrians have long warned, that the increasingly absurd policies of central banks offer no hope for true, sustainable economic growth. Sadly there is a firmer grasp of economics to be found in a Harry Potter novel, than the halls of the Federal Reserve.
Mises Weekends this week focuses on the true foundations for economic prosperity: innovation and entrepreneurship. At last week’s AERC, Hunter Hastings — a leading business and marketing consultant — discussed how technology breakthroughs and smart machines can power a new age of individualism.
And in case you missed any of them, here are this week’s featured Mises Daily articles and some of our most popular articles at Mises Wire:
Keynes in 1939: The Coming War Will Solve Our Unemployment Program by Carmen Elena DorobățAnd So It Begins… Negative Interest Rates Trickle Down in Japan by Paul-Martin FossRothbard: Essentials of Money and Inflation by Murray N. RothbardThe Fed's Firepower by Jonathan NewmanEconomists as Modern Astrologers by Ryan McMakenCash Banned, Freedom Gone by Thorsten PolleitDumb and Dumber – From Negative Interest to Helicopter Money by Paul-Martin FossThe Fed Can't Save Us by Robert MurphyMises: Politics and Liberty by Ludwig von MisesThe Real Meaning of Competition by Peter KleinWhat Harry Potter Can Teach the Federal Reserve by Tho BishopMill Power Is Trump's Card by Joseph SalernoDon’t Confuse the Cost of College with the Cost of Education by Ryan McMakenLiberty Defined by Ron PaulWhat Would Trump Economics Mean for America? by Mark ThorntonThe Skyscraper Index Meets the Supertanker Index by Paul-Martin Foss30 Years of Mises University by Ryan McMakenThree Lessons Learned from Tesla’s Success by Mateusz Machaj"Free Stuff" Isn't All That It's Cracked Up to Be by Louis RouanetHazlitt, 1946: Inflation, Deflation, Confusion by Henry Hazlitt
Recorded at the Mises Circle in Houston, Texas, on 30 January 2016. Includes an introduction by Jeff Deist. Special thanks to Christopher Condon, TJ and Ida Goss, Terence Murphree, and an Anonymous Donor for making this event possible.
Recorded at the Mises Circle in Houston, Texas, on 30 January 2016. Includes an introduction by Jeff Deist. Special thanks to Christopher Condon, TJ and Ida Goss, Terence Murphree, and an Anonymous Donor for making this event possible.
A guest panel featuring Daniel McAdams, Larry Beane, Sandra Klein, Andrew Widener, and Bill Haynes. Recorded at the Mises Circle in Houston, Texas, on 30 January 2016.
Special thanks to Christopher Condon, TJ and Ida Goss, Terence Murphree, and an Anonymous Donor for making this event possible.
Twelve-term Texas Congressman, Presidential candidate, and #1 New York Times bestselling author Ron Paul returns with a highly provocative treatise about how we need to fundamentally change the way we think about America's broken education system in order to fix it.
Whether or not you have children, you know that education is vital to the prosperity and future of our society. Yet our current system simply doesn't work. Parents feel increasingly powerless, and nearly half of Americans give our schools a grade of "C". Now, in his new book, Ron Paul attacks the problem head-on and provides a focused solution that centers on strong support for home schooling and the application of free market principles to the American education system. Examining the history of education in this country, Dr. Paul identifies where we've gone wrong, what we can do about it, and how we can change the way we think about education in order to provide a brighter future for Americans.
Two noted professors on opposite sides of the cultural wars come together and engage in "cooperative argumentation." One, a "Jewish, atheist libertarian" and the other a "mixed blood American Indian" bring to the table two radically different worldviews to bear on the role of colleges and universities in studying social and ecological justice. The result is an entertaining and enlightening journey that reveals surprising connections and previously misunderstood rationales that may be at the root of a world too polarized to function sanely.
Last Friday’s terrorist attacks in Paris has forced the world’s attention away from causes such as the plight of “white privilege” on college campuses and back to the consequences of blowback in the Middle East. The political response to these atrocities have been predictable — calls for nationalism, more war, fewer civil liberties, and greater power for the government that failed to protect its citizens. Even those politicians whose rhetoric calls for greater humanitarian efforts for ISIS’s most vulnerable victims still manage to stand in the way of private individuals who wish to help their fellow man.
Of course, the true battle of the day is greater than ISIS or any other single organization.
As Mises wrote in Human Action, “To defeat the aggressors is not enough to make peace durable. The main thing is to discard the ideology that generates war.”
As long as the ideology of statism, militarism, and interventionism maintain its hold on the world, civilization will suffer from its consequences. The desire for power and control will eclipse concern for human life. Only those guided by an ideology of peace and prosperity can offer hope for the world.
On Mises Weekends, Louis Rouanet joins Jeff Deist to discuss the fallout from Paris. Rouanet, a former Mises Fellow who studies in the French capital, talks about how his country’s government has reacted to the attack and the willingness of his countrymen to trade liberty for the theater of security.
And in case you missed any of them, here are this week’s featured Mises Daily articles and some of our most popular articles at Mises Wire:
European Borders May be Redrawn as Europe Embraces Nationalism by Ryan McMakenBlowback: The Washington War Party's Folly Comes Home to Roost by David StockmanISIS May Be Our Ally Some Day by Ferghane AzihariWhite "Privilege" Has Nothing on State Privilege by Tho BishopOpen Borders Are an Assault on Private Property by Llewellyn H. Rockwell Jr.Paris Attacks Are Just Part of the Game for Global "Leaders" by Greg MorinThe Long History of French Military Intervention in the Middle East and Africa by Ryan McMakenState-Provided Security and Market Incentives by Jeff DeistParis: More Bombs Will Not Solve the Problem by Ron PaulHey Big Spender: France's Robust Military Spending by Ryan McMakenA Private Solution to the Syrian Refugee Crisis by Tho BishopWhere the Left Goes Wrong on Foreign Policy by Murray RothbardWar and Strategic Socialism by Matt McCaffreyIs an Interest Rate Hike Overdue? by Randall HolcombeStudent Loans and Uncle Sam by Jonathan NewmanEssential Reading on Entrepreneurship by Matt McCaffreyBaylor University PhD in Entrepreneurship by Peter KleinGilmore and Sugrue On American History by David Gordon
Cultural Marxism enjoyed a victory last week when University of Missouri President Tim Wolfe resigned after members of the Missouri Tigers football team joined a student movement calling for his resignation. While I fully support the rights of these players to leverage their athletic ability to advocate a cause — as I would support their university if it decided to pull their scholarship — what is concerning is the actual list of demands shared by the cause they joined.
The top priority of the #ConcernedStudent1950 movement was not the resignation of University of Missouri President Tim Wolfe, but that he “must acknowledge his white male privilege.” While I have little sympathy for Mr. Wolfe — I agree with Lew Rockwell when he says, “Virtually all university administrators deserve what’s in store for them, especially since they’ve promoted it” — the members of #ConcernedStudent1950 would do well to understand that Mr. Wolfe’s sin was not his skin color or his gender, but his position with the state.
After all, as president of Missouri’s state university system, Tim Wolfe was complicit in the systemic fraud of modern academia. He personally profited from the tens of thousands of dollars students spend at these state institutions in exchange for increasingly worthless degrees and leftist indoctrination. The regular typos and basic grammatical mistakes by what purports to be the official Twitter account of #ConcernedStudent1950 offers amusing evidence of how poorly served students are in today’s universities.
But to explore this further, let’s first look at how the left defines the concept of “privilege.”
According to the website of the White Privilege Conference, “Privilege exists when one group has something of value that is denied to others simply because of the groups they belong to, rather than because of anything they’ve done or failed to do.” By this definition, it is clear that there is no greater privilege than that afforded to the state.
Examples of this are plentiful and wide ranging. From the failure to prosecute police officers when their criminal negligence leads to a man’s death, to the immunity granted to the EPA for their pollution of the Animas River, to the US government’s role in arming terrorist groups — government officials regularly engage in behavior that would land anyone without a badge behind bars.
While it’s true that over the course of American history, white straight men have largely enjoyed the benefits of power — the power of state privilege has proven to trump any other factor. Consider that a black man is regularly responsible for the death of innocent men, women, and children and will, like his predecessor, never face punishment for his actions. Or that a powerful gay congressman managed to avoid charges for a brothel that was operating from his home. Or that Hillary Clinton is running for president.
Of course, there are perks to power that go beyond a get out of jail free card. Be it expensive (taxpayer-funded) vacations, or (taxpayer-funded) office spaces upon retirement, or simply blatant nepotism — state privilege is the easiest way to become a “garbage rich person.”
A historical argument for collectivist white guilt is also absurd. After all, the evil institution of slavery existed throughout the world, regardless of skin color. While it is unfortunately true that white Americans fought to protect slavery’s existence in America, it’s equally true that the abolitionist movement in this country was founded by white Quakers. Slavery existed for as long as it did, not out of widespread racial agreement among whites — but due to the design of those in Federal government. Yet we still have the progressive “academics” attempt to explain to decedents of Irish immigrants the privileges enjoyed by their ancestors. I can’t help but wonder if a member of #ConcernedStudent1950 thinks Michelle Obama has it worse off in today’s world than the white wife of a West Virginia coal miner?
Unfortunately, the emphasis on skin color, gender, sexuality, and other biological factors rather than government power is intentional. The interest of those who scream “white privilege” is rarely ever about social injustice and almost always about censorship and power. The progressive left knows that the best way to pursue its agenda is by demonization and division, and they have been widely successful in this regard. This is why you’ll see Thomas Jefferson dismissed in public schools as a racist slave owner, yet see FDR championed as a great man of history.
Ludwig von Mises understood that the superficial obsession with race dangerously overlooks the fundamental importance of ideas. This is why he wrote that “it is not mankind, the state, or the corporative unit that acts, but individual men and groups of men, and that their valuations and their actions are decisive, not those of abstract collectives.” The idea that the Jewish Mises would be asked to check his own “white privilege” should be obviously absurd considering he was forced to flee his home due to Aryans obsessed with an ideology that saw him as racially inferior.
Perhaps the greatest tragedy of the left’s successful tactics of divide and conquer is the devastating consequences it has had on the very communities progressives claim they want to help. Thomas Sowell has brilliantly documented the human toll of the progressive state. Regardless of their true intentions, those who advocate for greater state intervention in our lives actively encourage the greatest threat to societal harmony in the world today.
Now that Peter Klein has left Mizzou for Baylor University, I won't be much affected even if #ConcernedStudents1950 manage to burn the University of Missouri to the ground — but doing so won’t improve their lives.
A brighter tomorrow will only come when people realize that no matter your race, ethnicity, gender, sexuality, or religion — the state is the gravest threat to all those who don’t enjoy its privilege.
Our guest this weekend is Tom DiLorenzo, a professor of economics and history at Loyola University Maryland, and also a friend and Senior Fellow at the Mises Institute.
Our topic is the PC cancer that is spreading across campuses and universities in America—not only Yale and the University of Missouri.
Tom is particularly well equipped to handle this topic, having fought the PC monster throughout his academic career. He took on the Lincoln Myth, which is one of his great achievements. He also took on and exposed the evil of the Hamiltonian Federalists as the great centralizers in American history.
This is an interesting and informative interview on what is happening with PC on campus, from an insider and academic: Tom DiLorenzo.
Featuring Bill Haynes (CMI Gold and Silver, Inc., CMI-Gold-Silver.com), Kathryn Muratore (Fresno, California), Jordan Ausman (Beyond Software, BeyondSW.com), Marc Victor (AttorneyforFreedom.com), Hunter Hastings (BHC Consulting, San Diego), Taylor Conant (Valueprax.WordPress.com), Don Printz, M.D. (Stone Mountain, Georgia), and Peter Kallman (Liberty.Menu). Includes introductions by Jeff Deist.
Recorded at the Mises Circle in Phoenix, Arizona, on 7 November 2015. Special thanks to CMI Gold and Silver, Inc., for making this event possible.
Recorded at the Mises Circle in Phoenix, Arizona, on 7 November 2015. Special thanks to CMI Gold and Silver, Inc., for making this event possible.
That’s what William Boyes says must be done to change education. Boyes makes his case this weekend as part of the Mises Circle in Phoenix on Saturday, November 7, as he joins Ron Paul, Lew Rockwell, Charles Goyette, and me to examine how to build a world where states are weak and society is strong. Watch live at mises.org/live.
Public schools at every level paint the economy as merely a machine needing tinkering. There is no free market or Austrian human action perspective. Thus, economics departments are all about modeling and mathematics. This system left Boyes with a PhD in Economics, but with no clue about the real economy. Do prospective students understand this? Are they naïve about what life is like in academia? Knowing what he knows now, would Boyes still follow that high math track to an economics PhD?
Recorded at the Mises Circle in Dallas-Fort Worth on 3 October 2015. Special thanks to Klaas and Anastasia Talsma for making this event possible.
Pope Francis made history this week when he became the first pontiff to speak before Congress. While his speech made headlines in calling for global action against the dubious problem of global warming, it became clear that Francis had not listened to the advice of Lew Rockwell or familiarized himself with the works of Tom Woods. In fact, Dr. Woods found himself attacked by Fortune magazine for his principled defense of free markets as a devout Catholic. The real question will be whether Tom’s arrival in Texas next weekend for the Dallas-Ft. Worth Mises Circle will cause fewer traffic problems than this week’s Papal visit.
Speaking of religious figures, the actions of Janet Yellen’s Federal Reserve were once again put under the microscope on a new episode of Mises Weekends. Bill Bonner of Agora Financial joined Jeff Deist to discuss what he previously called “the most anticipated move in central bank history.”
And in case you missed any of them, here are this week’s featured Mises Daily articles and some of our most popular articles at Mises Wire:
100 Years of Government's "Managed" Health Care by Dr. Michel AccadThe Economics of Hillary Clinton by William L. AndersonCollege Athletes Embrace the Division of Labor by Matthew DoarnbergerCentral Banks Don't Dictate Interest Rates by Frank ShostakYour Ideology Depends on if "Your Guy" Is in Power by Ryan McMakenDemocracy, De-Civilization, and Counterculture by Hans-Hermann HoppeVideo: Is Fed Credibility on the Line? by Ron Paul and Paul-Martin Foss
It has recently come to the attention of the media that Auburn University reversed an initial decision to eliminate the public administration major from the school’s curriculum in 2013. This reversal came as the result of resistance from Auburn’s athletic department. Apparently, the public administration major is looked down upon by much of the school’s faculty. But its popularity among athletes, specifically Auburn’s football team, is what looks to have kept it afloat.
So just how popular is being a public administration major at Auburn? Well, if you’re an athlete, quite popular indeed. Although public administration accounts for less than 1 percent of the school’s undergraduate student body, 51 percent of students pursuing this major were Auburn athletes according to 2013 statistics. Among this group were the university’s starting quarterback, running back, leading wide receiver, and several starting defensive players. In 2014, 32 percent of the football team was majoring in public administration.
The reason for having a major like public administration at an elite Division One athletic program like Auburn is pretty transparent. The unchallenging nature of the course material usually makes it easier for student athletes who are looking to focus more energy on their sport. According to an internal athletic department memo from 2012, “If the public administration program is eliminated, the [graduation success rate] numbers for our student-athletes will likely decline.”
Some will predictably criticize Auburn (and other similar big conference schools) for continuing to have these kinds of majors. But let’s stop and think about what harm is really being done by this. Are there any real victims in this whole ordeal?
Someone able to play football at Auburn, undoubtedly a great college football program, is clearly among the elite young football players in the country. Odds are, someone good enough to compete on this level is probably better at football than they are at anything else. So if this is the case, shouldn’t someone gifted in this way be able to focus as much energy as possible on the thing that they are best at? If choosing to major in public administration enables these elite football players to spend more time and effort improving their football abilities, then having this major as an option should be seen as a positive rather than a blemish on Auburn’s academics.
Without the public administration option, some of the school’s football players would be forced to choose more challenging majors. This would lead to less available time for training, practice, weightlifting and all of the other things that can improve the skills of a football player. Thus, the talent of the players and the overall football program at Auburn could suffer. Considering the amount of money Auburn brings in through the success of their football team, this kind of potential decline would indeed be problematic.
Individual players on Auburn’s football team no longer able to major in something like public administration would face more significant roadblocks en route to becoming highly paid professionals. College is supposed to be an institution which prepares someone for a professional career where they can make a living. Taking elite college football players away from improving their talents so that they might become professional football players runs counter to what college is supposed to be about. Especially since the salary of a rookie professional athlete far exceeds virtually any other salary someone could obtain immediately after college.
While it’s certainly true that not all of Auburn’s players will reach the NFL, going to college in general is no guarantee of employment in a field requiring a college degree. According to a careerbuilder.com survey, half of recent college graduates are working in jobs not requiring those degrees. And since less than 1 percent of Auburn’s students major in public administration (as previously mentioned), it’s not as if a significant portion of undergraduates are being duped into choosing an easy major that teaches them very few skills. Students at the school more or less know what public administration is there for and know enough to avoid majoring in it.
In an ideal world, amateur athletics for all sports would take place independently from colleges and universities. Young aspiring pros would advance through levels just below the professional level which would most likely be controlled by professional teams. This would look very similar to what the minor leagues are to Major League Baseball.
But of course, we don’t live in an ideal world. The NCAA would never let something encroach on its control over athletes prior to becoming professionals. So if easy classes and sham majors are the price we pay for the ability of elite athletes to specialize in what they do best, then so be it. Not only do the athletes benefit, but the university gets to make more money and the students get to watch a more talented football team. Sounds like a win all around.
Includes comments and an introduction by Jeff Deist. Recorded at the Mises Institute in Auburn, Alabama, on 25 July 2015.
A decade ago, no one had ever been told to “check your privilege.” Now it commands an appreciable “market share” in academia and social justice rhetoric. But it does so despite sharply opposed interpretations of its meaning. In fact, its expanded footprint is partly because of its ambiguity.
It Could Be an Invitation to DebateIn a sense, “check your privilege” largely amounts to “check your premises” behind your views, and many are willing to recognize that such a reminder can be useful in advancing conversations about social issues.
However, I question whether people are so bereft of concern for, or understanding of, one another that they need repetitive “check your privileges” reminders that imply they would believe more accurately and act more effectively if only they were more empathetic. I tend to agree with Adam Smith, in The Theory of Moral Sentiments, that:
How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it ... we often derive sorrow from the sorrows of others.
Further, repeatedly sermonizing to fix people as a way of “uplifting” them becomes little more than nagging, and any insight it may add gets crowded out. In the same way, repeatedly invoking “check your privilege” tends to destroy its usefulness leaving increased irritation and disharmony.
But the Phrase Could Simply Mean “Shut Up”And when does “check your privilege” become code for “be quiet” rather than “evaluate your premises”? “Check your privilege” is about shutting down discussion when the user is making the assertion that you are hopelessly confused in your understanding, and that your opinions amount to aggression (whether “micro-” or “macro-”). This position was wellarticulated decades ago by Robert Heinlein, in The Moon is a Harsh Mistress:
Where do you start explaining when a man’s words show there isn’t anything he understands about [a] subject, [but] instead is loaded with preconceptions that don’t fit facts and [he] doesn’t even know …?
The assertion of your hopeless confusion then becomes the basis for claims that, unless you are a member of some accepted victimized class, you must be part of the oppressor class. Therefore, as Max Borders put it,
Your rights and opinions are invalid and you have no real complaints or suffering because you belong to X group. Or, more to the point, you are obligated to pay because people who look like you in some ways did bad things at some point.
In other words, others assert that they don’t need to listen to you, much less respect your arguments.
The Ad Hominen AttackThat leap involves several logical failings. Included in that list is the idea that any guilt for what was true of some members of an arbitrarily defined class or group (rather than treating people as the individuals they are) at some point in time passes on to every current and future member of that class or group. In addition, it incorporates the ad hominem fallacy that because you are judged as bad or part of an oppressor class, your argument is false, while conversely, their self-defined goodness and non-oppression means theirs must be true, both of which are unrelated to the logical validity of an argument.
Given that “check your privileges” could mean either “remember to be empathetic, so we can better understand and help” or “we can disregard your beliefs and violate your rights,” how can we tell which one is intended?
Where confusion reigns, to better understand and help requires the confusion to be replaced with clear, accurate understanding. That, in turn, requires a serious, ongoing “give and take” conversation.
However, when “check your privilege” is used to preemptively cut off conversation by stopping those who disagree from any chance to be heard, much less to rebut their demonization and targeting, no improvement in either empathy or results can result. So the key to evaluating “check your privilege” is to ask what would be entailed if it was intended to advance such a serious conversation.
How Real Dialogue HappensImportantly, any conversation would not stop at “watch your privileges.” It would only begin there. By itself, the phrase says you are wrong in your understanding or views, but it leaves how completely unspecified, beyond having something to do with membership in some allegedly dominant or privileged group. Stopping the conversation there leaves “check your privileges” as an insult, without any ability to clarify understanding or reduce disagreements or disharmony.
Progress toward better understanding and results would require several more steps.
It would start by precisely specifying what faulty premises, assumptions, or arguments someone supposedly holds, either included or excluded inappropriately. Then it would explain why it is inappropriate for the issue being considered. It would lay out the correct or appropriate premise that would take its place and articulate the reasons why.
Building on that foundation, it would show how the “new and improved” premises would change one’s conclusions. Consequently, it would lay out the appropriate remedy based on the alternative analysis. In the process, it would have to explain how the proposed remedy cannot be explained solely on a narrowly self-interested “more for me” basis, completely apart from the argument offered, as part of laying out the new special privileges that would be created for those put forward as victims. It would also have to explain how others will be affected in order to address the asserted problem, including whether there would be coercive impositions on members of the supposedly dominant or victimizer class who had nothing to do with the “sins of the fathers.”
When “check your privilege” means think more carefully about others circumstances, which may be far different than yours, and to be empathetic, it can be useful in advancing our potential for mutual understanding. But it has to be only the beginning of a much farther-reaching discussion to bear fruit — a discussion which, carefully and earnestly pursued, would lead us back to the self-ownership and voluntary arrangements of liberty.
In contrast, when “check your privilege” is used as a magic phrase to peremptorily end “social justice” discussions, it is the assertion of a special privilege for some to be allowed to define themselves as white hats and those who disagree as black hats, without ever having to make a real argument. It also allows users to turn it into an epithet of social demonization to try to impose their “solutions,” always at the expense of the supposed black hats. In the process, it undermines social cooperation by undermining the rights upon which it is built.
Our guest this week is uniquely qualified to discuss modern progressives from a libertarian perspective. Jim Ostrowski, whom Murray Rothbard called "one of the finest people in the libertarian movement," is a lawyer, writer, activist, and chronicler of progressive dysfunction in his native New York. He's the author of Progressivism: A Primer on the Idea Destroying America, which explains progressivism more as personal psychology than a coherent view of the world. If you're interested in how progressives managed to capture the 20th century, stay tuned.
Modern progressives believe the state should control, or at least involve itself, in nearly every aspect of human activity. They believe countless things about government and human nature that are manifestly not true. Deeply hostile to liberty, they never accept responsibility for the disasters caused by the political, economic, legal, cultural, and social policies they advocate.
But should libertarians engage with progressives? Should we attempt to match their long march through the West's great institutions? Or should we write them off as hopelessly statist products of the dominant culture?
In this second installment of a two-part interview, Jeff Deist and Joseph T. Salerno discuss the health and vitality of the Austrian school. Joe also provides great insights into the state of academia, whether it's wise for libertarians to pursue a PhD., and the tactical advantage of targeting intelligent laypeople.
In this first installment of a two-part interview, Jeff Deist and Joseph T. Salerno discuss the health and vitality of the Austrian school, the impact of the South Royalton conference, Joe's relationship with and memories of Rothbard, and why so many factions seem to persist within Austrian economics. Joe also gives some great insights into the state of academia, whether it's wise for libertarians to pursue a PhD, and the tactical advantage of targeting intelligent laypeople.
Our guest this week is Adam Vass Gal, a recent speaker at our research conference in Auburn. Adam has degrees in economics and finance, and works as an investment advisor for the Oakley group while teaching as an adjunct professor at Belmont University in Nashville.
Adam has written a provocative new book entitled Generational Poverty: An Economic Look at the Culture of the Poor, and it takes an unabashed look at the cultural aspects of why people are poor, and why they stay poor. As you might imagine, Adam concludes that the State is a villain rather than a champion of the downtrodden.
Adam addresses the issue of poverty not only from the perspective of an Austrian economist, but also based on his experiences as a volunteer in the Big Brothers/Big Sister program. Adam's message: culture matters, and the State destroys culture.
Our show this weekend features William Boyes, Director of Arizona State University's Center for the Study of Economic Liberty. Boyes was in Auburn last week presenting a keynote speech at our Austrian Economics Research Conference. In his talk, Boyes gives the perspective of someone who has been a Keynesian in mainstream academia, but who is now a dedicated Austrian.
The Murray N. Rothbard Memorial Lecture, sponsored by Helio Beltrão. Recorded at the Austrian Economics Research Conference at the Mises Institute in Auburn, Alabama, on 14 March 2015. Includes an introduction by Joseph T. Salerno.
Recorded during the Authors' Forum at the 2015 Austrian Economics Research Conference, Roger Garrison discusses his recent book, co-edited with the late Norman Barry: The Elgar Companion to Hayekian Economics (Edward Elgar Publishing, 2014).
Frank Bruni saw a woman swoon and sway back in the 1980s, and the recent memory of it caused him to call for increased federal support for liberal arts education.
The woman, Anne Hall, taught Shakespeare at UNC-Chapel Hill back in the days when North Carolina students were more focused on beating Duke in basketball than on Hall's captivating performance of King Lear. Nonetheless, she made quite an impact on Bruni. “It was by far my favorite class at the University of North Carolina,” he wrote, “though I couldn’t and can’t think of any bluntly practical application for it, not unless you’re bound for a career on the stage or in academia."
The Purpose of a Liberal EducationToday, some thirty years later and as a New York Times columnist, Bruni recalls this memory to bemoan the loss of liberal education at the large state universities in favor of piddling concerns such as skill acquisition and job placement. Will future generations learn Lear like he did when they are instead focused on learning things that might actually land them a job?
Bruni is right to revere the liberal arts, but wrong to assume that its benefits are purely emotional. The goal of liberal education — at least before state funding diluted it — has always been about teaching students to think clearly about the world around them, develop a sense of right reason when confronting the great questions life, and grasp natural laws so as to better follow them and live happier lives. There is no question that the widespread effect of liberal ideas throughout Europe in the Middle Ages gave common man the framework within which to question the outlandish claims of kings over the people, such as those of divine rights and tribute.
From parish to pub and from family and factory, they were a major contributor to a decentralized Europe, leading to unprecedented levels of human flourishing and social freedom. Indeed, the liberal ideas had to be denigrated and then overcome in order for the modern nation-state to emerge in the nineteenth century, and we know the suffering and death this brought about in the century that followed.
The Shakespeare whom Bruni so admires was himself a product of liberal ideas still reverberating in England despite the efforts of Henry VIII, Cromwell, and others to squelch them. Furthermore, a modern-day Shakespeare would rightly ask the question Bruni avoids, which is whether one can receive the benefits of Lear and the liberal arts without also assuming $40K in debt in order to continue to feed the education-industrial complex (for which Bruni is actually lobbying).
To Bruni, such spending can never be enough, because liberal education is priceless. Whether it is or not, the irony is that the internet can now spread the benefits of liberal education at practically a zero-price, and one no longer must sit in a dank classroom of an elite university to receive its benefits. I speak with experience as a home-schooling father whose children have learned logic, Latin, the Classics, and the sciences, and whose freshman son is now nodding off in the logic class at his university that I (a public-school product) once struggled through as an undergraduate.
Do We Need Government To Fund the Liberal Arts?Bruni should take heart: Many firms desiring a talented and smart labor force recruit liberal arts graduates. But do tuition revenue-focused public universities now oversupply them, and does this contribute to the problems associated today with the Millennials who are often over-trained, unemployable, and living with their parents? And do those graduates really learn to be critical of, well, anything, as opposed to having developed a sense of (in Bruni’s words) a “rawness and majesty of emotion”?
If so, the liberal education in its modern form has become part of the problem and should no longer be left to postmodern thinkers tied to the government dole. In the 1980s, Peter Drucker predicted that firms would start hiring workers out of high school because (1) they required a lower reservation wage, and (2) they could be trained to suit the needs of the firm in ways that were no longer happening at the universities. Many firms are doing just this in 2015. Thanks in part to the state of federally-funded liberal education, such practices will become more common.
None of this is meant to deny the tremendous need for classical liberal education, as our body-politic is directly affected by the loss of critical thinking skills by the median voter underexposed to it. One might argue this was the actual intent of Progressive Era education reformers who wanted to implement a national education system — modeled after the one in Bismarck’s Germany — in which the masses would be forced into public schools to be prepared for lives in the factory or army. People like Obama or Boehner want the man-on-the-street to be compliant and unquestioning of the world around him, thinking more about Fifty Shades of Grey than perpetual war, the national debt, and the NSA. So from that perspective, it’s exciting to think about how technology is wresting liberal education from those avenues favored by the State, largely by rebels who value it more and who opt out of the system.
Liberal education and the liberal society it fosters, noted Mises in Human Action, brought about “an age of immortal musicians, writers, poets, painters, and sculptors; it revolutionized philosophy, economics, mathematics, physics, chemistry, and biology. And, for the first time in history, it made the great works and the great thoughts accessible to the common man.”
It still does. Although much of this is happening sub rosa, the liberal arts are actually flourishing relative to where they were twenty years ago, thanks to the internet and without regard to higher-education funding levels. I wouldn’t hold my breath waiting for the New York Times to acknowledge it.
Image source: iStockphoto
Jeff Deist presented this talk at the 2015 Mises Circle in Houston: "Breaking Away: The Case for Secession". He makes the case that secession starts at home with the individual.
This weekend we depart from our usual topics of money and Austrian economics to welcome Connor Boyack, the author of two brilliant libertarian books for children: one based on Bastiat’s famous essay "The Law", and one based on Leonard Read’s great essay on market cooperation, "I, Pencil".
Connor has some great insights about how we can inoculate kids against the disease of government propaganda. Even in a deeply statist society, Connor believes we can raise happy, productive, responsible young people who are knowledgeable about liberty, property, economics, and personal finance.
Whether you’re a parent now, hope to be a parent someday, or are perfectly happy not having kids, we all have an enormous interest in winning the hearts and minds of younger generations for liberty.
In this Mises View, Peter G. Klein explains how "Healthcare" would work, if it functioned in a free market.
This interview was originally published by the Rutherford Institute.
John W. Whitehead: There is no end to discussion of John Locke’s impact on the Founding Fathers, the Constitution, and the Declaration of Independence. The Declaration of Independence lists our inalienable rights to “Life, Liberty, and the Pursuit of Happiness” and the Constitution creates a relatively strong central government limited nonetheless by our fundamental freedoms. And so, Americans generally accept that our government is designed to protect our freedoms and natural rights. Llewellyn Harrison “Lew” Rockwell, Jr. challenges that assumption. An avowed anarcho-capitalist, he rejects statism entirely, believing that society would be better able to protect our freedoms if there were no government at all.
The founder and chairman of the Ludwig von Mises Institute, a libertarian organization in Auburn, Alabama, Lew Rockwell is also a prolific author and editor who regularly publishes articles denouncing government intervention in markets, war, American imperialism, and the police state. His new book, Against the State: An Anarcho-Capitalist Manifesto, he proclaims that the state need not always have the powers it presently retains. He was also Ron Paul’s congressional chief of staff from 1978 to 1982, is Vice President of the Center for Libertarian Studies in Burlingame, California, and runs a libertarian website, LewRockwell.com. Mr. Rockwell took some time from his busy schedule to speak to constitutional attorney John W. Whitehead, author of A Government of Wolves: The Emerging American Police State, and OldSpeak about his new book, his views on government, and his advice for Americans who want to know what they can do to rein in their runaway government.
JW: What is Anarcho-Capitalism?
Lew Rockwell: Anarcho-Capitalism is a term coined by the late Murray N. Rothbard. Murray coined that term to talk about an anarchism that would be free market and capitalist. So what is anarchism? The dictionary definition means without a government, without rulers. The secondary meaning in the dictionary is chaos and terrible trouble.
Now are we supposed to believe that after the horrendous crimes of government in the 20th century — after the mind-blowingly evil and monstrous crimes of the Communists, the Nazis, the Fascists, the British and the Americans and lots of other people too, and the wars.
JW: Not to mention the carnage and the death. Imperialism is what you are talking about.
LR: Yes. Now are we supposed to believe that the real danger, the real horror, would be to have no government? I mean just look: 100 million people were killed [in the 20th century], not counting the wars. If you count the wars the government caused and participated in, it is more than 200 million innocents killed. That does not even include the soldiers killed. It is quite an astounding record. We are supposed to believe that the real danger, the real horror, would be to have no government?
Anarcho-capitalists would argue that people don’t need a ruling class. Most of us in our private lives are not interested in sticking a gun in our next door neighbor’s ribs and demanding his wallet. Even if the cops would all but disappear, we wouldn’t do that.
The vast majority of us and the vast majority of our encounters — commercial, familial, whatever — everything is done voluntarily. There is no violence or threat of violence. That, of course, is government. Government is violence and the threat of violence.
Anarcho-capitalists would say it is never morally justified to initiate violence or the threat of violence against the innocent. When people hear this, they think well, of course. But they don’t actually believe it because that would mean that you can’t have one group of people calling themselves the government, telling all the other people, “We are going to take this percent of your income this year, and if you don’t agree to it, we are going to put you in jail. If you resist sufficiently, we are going to kill you. In fact, if you resist sufficiently paying a parking ticket, we reserve the right to kill you. If you sufficiently resist paying your library fine, we reserve the right to kill you.”
JW: Actually, a man was just killed recently — shot and paralyzed — for overdue parking tickets. The police shot him backing out of his driveway.
LR: They would deny they did anything wrong.
JW: The officer said he felt a threat to his own life. The guy was not armed, by the way.
LR: It is easy to think through these things if you deny to the government the idea that they are above the moral law.
JW: What do you mean by “moral law”?
LR: Well, I would say the natural law, all the things that God, in my view, writes on our hearts and we know without being told. You don’t have to be told that murder is wrong. You don’t have to be told that thievery is wrong to get the Ten Commandments. You know that certain things are wrong, so that is what I mean about the moral law.
If murder is wrong for you and me, and obviously it is, putting somebody in a government suit and sending him over to kill people in Afghanistan doesn’t make that not murder. That is still murder.
Can you use defensive force, can you use defensive violence? Yes. If somebody is invading your country, if somebody is invading your home, can you use violence in an attempt to repel them? Of course you can, but you can’t initiate violence. You can’t go into somebody else’s house. You can’t go into somebody else’s country.
JW: Because it is their property.
LR: You can’t take other people’s money. You have to have people’s consent. Again, it is never morally justified to use violence or the threat of violence against the innocent. As you point out so eloquently in your work in terms of the American police state, it goes throughout all of government. It is true of town, city, state, and federal governments, and world government if they eventually get that.
JW: I think that is the direction they are headed, that is, world government.
LR: Sure, and actually the U.S. wants to be the world government — believes itself to be the world government — thinks its laws should apply everywhere and should apply not to itself but to us. The legislative law, the edict — which is not the natural law — does not apply to the government but is used by the government against the rest of us. So the cop can speed; you can’t speed. Go down the list of all the things. They can kidnap — they call it conscription, they call it the draft — but if we do it, it is kidnapping. It is rightly condemned and punished. So again, the government is not above the moral law. It is not above the natural law. The natural law applies to people in government just as much as it applies to the rest of us, and if we want a moral society, also of course a prosperous society, that requires a free market, and the free market can actually provide everything that we think of as necessarily government. It is possible to have private protection, private defense and so on. There is nothing the government does that could not be a legitimate market service that can’t be provided better, cheaper, more efficiently, and without injustice by the free market.
JW: Is there any such thing as limited government?
LR: Well, it is something that we would all like to have. We would like to see limited government. Once you have an organization that is a monopoly and is able to decide when to use force and violence or when not to, and is able to decide how much of your money they are going to take in order to do the things they want to do, you are off to the races. It has taken us a long time in American history to get to the present point, and obviously, the trend is very bad.
We did have more limited government. Take, for example, the Articles of Confederation. The revolutionary government until the close of the American Revolution was probably the most libertarian government ever. But they soon got rid of that, and they adopted the Constitution. Unfortunately, the Constitution marked a big step up in centralization and in government power. It has been off to the races since that, especially with wars. All the various wars have resulted in massive increases in government income, power, propaganda, lies… You can go down the list.
JW: Isn’t that the purpose of war: to increase the power of control and internal government?
LR: Yes, but I think there is also something else going on. Friedrich Hayek has a chapter called “Why the Worst Rise to the Top,” and he is talking government. In private life, generally, the most monstrous people don’t rise to the top, whereas in the government, the liars, the demigods, the manipulators, the schemers, the scammers — those are the people who rise to the top. That’s one of the reasons that government is not limited, but they are constantly scheming and they like it. The people who are in government — we see it as today’s police — actually like hurting people. They get a kick out of stomping on somebody’s head because they are allegedly rude to them.
JW: Studies show that by the way. In some of the Nazi concentration camps, the guards got sexually excited by beating up inmates.
LR: There are also people who like to kill, who enjoy sending young people off to kill and be killed. They actually get a charge out of it. That is definitely the kind of person you don’t want running things. Unfortunately, due to the nature of government, that is the kind of person who is running things. Is a “less big” government better than a “more big” government? Yes, of course. Is a somewhat limited government better than an unlimited government? Yes. But is there any way to have a limited government that stays that way? Jefferson thought not. That was why he thought there would have to be a revolution every once in a while.
JW: Every 20 years he said. The American Constitution did create a more centralized government. That is why we have the Bill of Rights. When some of the so-called Founders saw the Constitution, they said, “Uh oh, this looks a bit like a monarchy. We need a Bill of Rights.” So the original Constitution we got is very much a centralized government. What would you say to that?
LR: There is some interesting recent scholarship on Madison where he was explaining to a fellow centralizer (which he was at that point) that he picked the least damaging 10 items to send out as the Bill of Rights. There had been much more restrictive stuff that had been proposed, but he blocked it. Of course, the Bill of Rights is in the process of being negated — to the extent it still exists. It is under attack in every way.
Gary North argues that the major effect of the adoption of the Constitution was the tripling of taxes on Americans versus what it had been under the King. Tripling. This is government. In my book, Against the State: An Anarcho-Capitalist Manifesto, I want people to know it doesn’t have to be this way. They don’t have to agree to this sort of life. I want people to read more, try to understand more about the real nature of government, the nature of the state, and not just salute and hand over your wallet, hand over your children to these people who do not exactly have your best interests at heart. Even though they tell us they do. They do not have their own special interests. They are just concerned with the national good, the common defense, and the public good. The government, of course, has its own special interest, and it is not the public interest — it is always opposed to the public interest. That is why the typical government employee at all levels makes double what the typical taxpayer makes.
JW: Not to mention the pensions, and all the other benefits.
LR: So many public school teachers, cops and firemen can now retire like millionaires with pensions and all that special stuff.
JW: Some of them get special flying privileges — perks we don’t get — but we pay for it. In your book, you say, “We are in the stage of late fascism.” It’s a good statement, and one I agree with. America has moved into a kind of a fascist regime.
Let’s say we have an anarcho-capitalistic society. How do we prevent turning into a society where business interests join together to manipulate and control the system? How do you prevent them from railroading over the “little guy” who really just wants to grow potatoes, for example?
LR: Just look at our own country’s history. You always have business interests that want that sort of thing. Look at J. P. Morgan and his allies in the steel industry, and other industries in the 19th century: they always wanted to get together and form a cartel where they would all agree to raise their prices and stick it to the customer. Well, you know what, they couldn’t get away with it because competitors came in and undercut them, undersold them. That is why they promoted government regulation, as is still the case today with a lot of entrenched business interests. They established the interests. For example, they wanted the railroads to be able to charge more. They couldn’t do it, because there was so much competition, so they set up the Interstate Commerce Commission allegedly for the public good. The very first act of the Interstate Commerce Commission was to say that you can’t cut your prices. If you were a railroad, you couldn’t cut your prices and try to undercut the other guy. That is what government regulation does.
Has this battle between power and market, as Rothbard put it, been in existence for all of human history? It has. There have been times when things have been better, and we are living in a time right now when things are getting worse, but all is not lost. I deal a lot with young people, and I see huge changes among young people, not only in this country but in other countries as well. They are not buying the government lies anymore. Part of it has to do with their worries about their own economic future — worries about student debt and all the horrible things that the federal government has done to them — but they are not buying the lies. They are looking for another way.
There are some very important things you can read, especially by Rothbard and others. It is possible not to give your consent. Government actually does depend on the consent of the governed. Government is a minority. They need us in order for them to live it up. If anybody has been to Washington D.C. recently — the imperial capital — everybody has a limo, fancy restaurants, mansions, and they are doing very well.
It is possible not to have that kind of a system. It is possible to have competition, market capitalism, not crony capitalism, and it is all a package. We don’t have to give consent, and indeed, if we withdraw our consent once in a while, you will see it when government is trying to do something. They can’t get away with it because people don’t consent to it. So there is a clue as to what is actually possible: it is possible to do something about government tyranny. It is possible to make ourselves freer, more prosperous, have a situation where parents are actually in control of the raising of their children — not the government.
JW: And the education process?
LR: This is why government set up public schools: to make people more stupid, or at least not think independently, not think critically. Horace Mann, the founder of American public schools, made this very specific: that you would be a good little worker, a good little citizen for the government and the businesses that the government approved of.
JW: To paraphrase Hitler, he said, “You say that I cannot have your children. I already do. They are in our schools.”
LR: That’s because Germany, even today with the Hitler-era laws, has one of the most vicious anti-home-schooling governments in the world. Homeschooling is one of the best thing parents can do for, not only for their own families and their own children, but for society at large.
JW: I won the first home schooling case in the United States in 1979. It was the Peter and Ruth Noble case. The father got arrested in the middle of the night by the police. He called me and woke me up out of bed. I asked, “What were you arrested for?” And he said, “Teaching my kids at home.”
Let me ask you this: what is it in human nature that seems to seek out an authority figure or a governing figure? I see people standing in large droves before a politician cheering. What is it in human nature that wants that? Or am I wrong about that? I think this would impede somewhat a libertarian society.
LR: You are very much right. The State would like to be God. The State hates God and is envious of God, politicians, and so forth. They don’t want people being loyal to anything above them. The State attempts to be a quasi-religious organization. They must look back on the days of the pharaohs as the glory days when the government actually was the God. That is probably their ideal.
I think it is always important to remember that everything for good — or for ill, for that matter — is done by a motivated minority. The majority of the people, God bless them, tend not to be relevant. This means we have to be a motivated minority. We have to educate ourselves and understand the fight we are in. What is the best way to save the world? All one can do is present the world with one improved unit. Learn these things yourself, and understand history, understand economics, understand politics. What is the real politics? Not electoral politics which, I would argue, is a scam and a trick to make you think we would be saved if we had Romney instead of Obama.
JW: Government is theater. Would you agree?
LR: Yeah, a bloody theater, a terrible theater, but it is a theater, and they know it. They know this is how to appease the people.
JW: Two psychologists have studied the use of words by politicians in recent years. The most used word now by politicians in America is the word “we.” The use of this word actually gets people to form into a group where essentially they stop thinking. That is connected to the theater concept of controlling people, and I guarantee you that the government hires behaviorists and psychologists, and they study how to manipulate people. What do you think about that?
LR: I remember one of the critics of the Nazis saying that it is an indication of totalitarianism when politicians refer to “our children.” They are not your children. They are God’s children, and they are the parents’ children. They are not the government’s children, but the government, of course, feels they are and they want to shape them. They want to mold them and they want parents to have less and less to do with it. They want them in the public schools from 6 to 6, eating all their meals there and that sort of thing. You know they are not that kind of villain, but they are, in fact, villains. Even if they seem like nice, decent people, they are actually not.
I was once in politics myself before going straight, and I can tell you they are not good people. I encountered only one man whom I thought was thoroughly good, and I had the honor of working for him eventually, and that was Ron Paul, and also the only person in politics I have ever encountered who did not have the lust to rule, the lust to dominate. Ron Paul doesn’t have that, so he was a very odd bird in politics. For him, politics was an educational mission, but most of them want to dominate. Again, most of us are not interested in running the next door neighbor’s family. We don’t want to run the next town. We don’t want to run the next country. We have enough to do with our own families, mowing our lawn, doing our job, earning enough money, and so forth, that is what we want to do. But there are people who want to run the family next door. They want to run the next town. They want to run the world.
JW: So they become government officials.
LR: They go into politics.
JW: Does technology change the ground rules a bit? With emerging technologies, there is the ability for certain nefarious individuals, such as the National Security Agency, to listen, watch everything we are doing, download files, etc. I have talked to NSA agents, former ones, who tell me everything we do is watched. You have the emergence of drones—the slogan now is becoming “He who owns a drone, rules.” Is this going to make it a bit more difficult to move into a society where we have more freedom because the implements of power are now so awesome?
LR: Well, I would argue that this has always been true. Technology, given the state, is always a double-edged sword. The invention of the steam engine was a fantastic thing for the growth of human prosperity, but it also could be used by governments to power war ships. It is true of modern day technology. The internet obviously has been magnificent for commerce, magnificent in many ways for liberty, but also is bent by the government to its own devices and has been essential to the growth of the National Security Agency, which is just one of many, many spy agencies. Just like there are many, many killer CIA type organizations, death squads, and so forth available at the behest of the President and the military and so on.
JW: You hit a key point. The President can murder and kill, but if I do it, I am in prison. Either they will kill me with capital punishment or put me in prison forever.
LR: Does the president okay drone attacks over his scrambled eggs in the morning at the White House? He is sending these drones off to kill people he knows nothing about. Many times, wedding parties are blown up. The famous case in Afghanistan of a bunch of kids out getting firewood, picking up firewood, and they were bombed by a drone. It is murder.
I remember when George W. Bush started his war in Iraq, the first thing he did was bomb a restaurant in Baghdad because he had been told by the intelligence people that Saddam Hussein and his kids were eating in that restaurant. Even if they had been there, it is not moral to have murdered those other people. They happened not to be in there, so he destroyed this restaurant, he killed the owner, the chef, the waiters, the customers, and so forth. That was an act of murder. Of course, Bush didn’t think it was murder. Nobody thought of it as murder. This is just war or bringing freedom to the Iraqis or whatever lies they say.
Again, just because somebody is in the government doesn’t mean he is above the law. The scales fall from your eyes and you see the government in a very, very different way. I’ll mention Murray Rothbard’s great essay, “The Anatomy of the State.” You can find it on www.lewrockwell.com.
The government is not above the natural law. When they see themselves as above the natural law, when they violate the natural law, they are criminals. It doesn’t matter that they have fancy suits and beautiful homes, or that they are wearing all kinds of medals on their chest. They are really no better than Murder Incorporated and the Mafia.
JW: How do you envision an ideal societal transition from our current state of affairs, which again you have described as late fascism, to an anarcho-capitalist system? What are the actual physical steps you think would usher in a system where we would have more freedom and would do away with government?
LR: Well, it would mean people refusing to go along. If people would stop and think, “The U.S. is sending drones to kill people in Yemen. That is not a good thing to do. It is not a good thing to take all our money. Who are these people to say you can’t have 40% of your income that you otherwise would spend on your family, for savings, on your business or whatever? We know better and we are not going to take it.”
The way the police state acts — tasering people, and the police with automatic weapons and tanks — if people don’t go along, the government can’t actually do this to us. Thus, I think the ideal course would be a nonviolent transition, maybe something like what happened in the Soviet Union and has happened elsewhere too. People just refused to go along, and when that happens, even though the government seems like an extremely impressive, extremely impregnable operation of huge walls surrounding a city of power, everything can come down.
I don’t care whether it is the secret police or the military, the spy agencies, the regular police, the tax collectors, the Environmental Protection Agency… However many federal agencies there are running our lives, working for the crony capitalists, hurting the regular person… This actually can come to an end, because government depends on the consent of the governed, and if people withdraw their consent, if they refuse to be part of the gang, if they do not approve of what the government is doing — whether it’s to people in other countries or people in this country — they do not approve of acts of injustice. They do not assume that when the police kill you, that was a good thing, and you know, you really deserved to die, or when the U.S. Army kills you, you deserved to die. So people need to question. They need to educate themselves. It is possible to have the government retreat. I think that is what we all want.
JW: Do we need mass non-violent militant resistance?
LR: I think if civil disobedience would take place, it has to be nonviolent, and it has to be the kind of situation where the government’s own people lose confidence in the government and no longer believe in the government. This happened in the Soviet Union. If soldiers, were called upon to shoot Americans, grab their guns or whatever, we may find that the government’s own agents come to oppose it. They will have come to understand that this is something immoral they are being asked to do, and they are just not going to do it. This has happened in the past, and this is what we have to hope for. I think we see some indications of that already. There are whistleblowers. There are people within the state who oppose it. We want much more of that. Again, this is a struggle. It is always going to be a struggle. But it is a struggle we have to be engaged in if we care anything about the future. We care about our children, our grandchildren and our descendants. If we care about other people, if we care about the people the U.S. Military is killing all over the world, if we care about the tyranny that is being exerted here at home, we have to do something about it. You can’t just sit back.
JW: Here’s the problem, though. The government is preparing for that. The Department of Defense is doing studies on how to put down social civil unrest. They are preparing for what they see as people getting fed up with government. You saw the Bundy Ranch situation, you saw what happened down near the border. They are preparing for this. They are armed to the teeth. They have drones and tanks. They are going to shoot and kill people. Unfortunately, most people seem clueless, because they get most of their news from television. You are not going to get the real news there. The so-called corporate media works in conjunction with the government, hiding the facts. How are we going to get people organized?
LR: Well, you touch on one very important thing. Don’t watch TV news. It is nothing but lies. I have a friend that thinks that watching FOX actually makes you stupider. I don’t know about that.
JW: I think watching TV actually makes you stupider.
LR: I don’t actually watch regular television, and I think it is very, very important to get your news elsewhere. It is possible still on the internet. That is why I have my site, www.lewrockwell.com. It is possible to get the actual facts of the situation. It is not easy, but it is possible.
It is essential not to be dumbed down by the constant government lies and propaganda. I have a friend, Yuri Maltsev, who was one of the last defectors from the Soviet Union. He said that in the Soviet Union, “we assumed that if the government said it was going to rain tomorrow, it was going to be sunny. I mean, we didn’t believe anything the government said.” One of the things that astounded him when he came to the United States was that “most people believe what the government says.” I think this is true, but more and more people don’t believe it. More and more people are withdrawing their consent. More and more people see these people in government as purveyors of lies and distortions and violence. They claim that you and your family, your salary, whatever your savings are, all belong to them if they want to take them. They would claim that there is nothing holding them back from doing whatever they want if they decide it is “good” for us.
JW: There are a lot of folks I have worked with who are starting to mistrust the government. They think it is wacky. They want to change things. They are ready to move forward. They are ready to get involved. Some of them have read your bookAgainst the State. That is a good place to start. If they asked, “What should we do next?” what would be your advice?
LR: I wish I had a 12-step program to give them. I would simply say the first thing, the essential thing, the foundational thing is to know the enemy and know the principles of freedom. You have to educate yourself. There is no substitute for reading books, whether they are e-books or physical books or whatever, because the government doesn’t want anybody learning anything in a real sense. They just want you paying attention to Bill O’Reilly or MSNBC people and so forth. You need to reject all that. You need to educate yourself. In my book I have some suggested readings. If anybody emails me at lew@lewrockwell.com, I am glad to send them a suggested reading list.
That is actually the first step to making yourself a better person, making yourself well equipped intellectually, morally to engage in this fight. It is THE fight. I would argue there is actually no escaping because of what’s happening to the government. We have to take part.
The first thing is you have to learn. Once you have learned some economics, once you have learned some history, once you have learned about the nature of politics, you can’t be fooled and other people will come to you for leadership. They will look to you for advice, and that is the way a movement is built. There are many other things going on and that will go on in the future, we hope and pray. But the first thing is you have to make yourself a better person. You have to read, you have to know, you have to be able to analyze, and inform your conscience. Reading is very, very basic to all of these good things.
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Join the Mises Institute as we welcome more than 130 students from all over the world to our Auburn campus! Mises U 2014 is a full week of Austrian scholarship that can’t be found anywhere else on the planet.
Coming tonight at 8:00 PM EST (7:00 PM Central Time), Tom Woods will give the opening lecture for Mises University. Join us online to see Woods in live streaming video. All live streams can be found here.
Then, join Judge Andrew Napolitano, Tom Woods, Walter Block, Bob Murphy, Robert Higgs, Tom DiLorenzo, and many other scholars throughout the week for numerous lectures on economics, law, history, and philosophy.
Here are just a few highlights from the schedule:
Tom Woods: “Four Things the State is Not.”Walter Block: “The Case for Privatization of Everything.”Judge Andrew Napolitano: “The Constitution and the Free Market.”Guido Hülsmann: “The Cultural Consequences of Fiat Money.”The live streams are all free, but if you’d like to participate more actively in Virtual Mises Univesity as a student, you can enroll here for $20.
Click the lecture titles below at the scheduled times to watch the live webcasts on YouTube.
July 20–26, 2014 • Mises Institute
• All times are central daylight time except where noted.
For the full PDF schedule including non-webcast sessions, click here.
Sunday July 207:00 p.m. Welcome, Jeff Deist
7:15 p.m. Faculty Introductions, Joseph Salerno
8:00–9:00 p.m. The Role of Austrian Economics in the Liberty Movement. Woods
Monday July 219:00–10:00 a.m. The Birth of the Austrian School. Salerno
10:15–11:15 a.m. Subjective Value and Market Prices. Hülsmann
11:30 a.m.–12:30 p.m. Praxeology: The Method of Economics. Gordon
1:30–2:30 p.m. The Division of Labor and Social Order. Herbener
2:45–3:45 p.m. Money. Engelhardt
4:00–5:00 p.m. Austrian Capital Theory. Garrison
6:00 p.m. An Evening with Judge Napolitano
Tuesday July 229:00–10:00 a.m. Entrepreneurship. Klein
10:15–11:15 a.m. Calculation and Socialism. Salerno
11:30 a.m.–12:30 p.m. An Austrian Critique of Mainstream Economics. Block
1:30–2:30 p.m. Monopoly, Competition, and Antitrust. DiLorenzo
2:45–3:45 p.m. The Place of Finance and Financial Markets in a Free Society. Hülsmann
4:00–5:00 p.m. The Economics of Fractional Reserve Banking. Herbener
Wednesday July 239:00–10:00 a.m. The Austrian Theory of the Business Cycle. Garrison
10:15-11:15 a.m. Everyday Logic of Economics. Gordon
11:30 a.m.–12:30 p.m. Concurrent Sessions
Contemporary Challenges to Austrian Economics. Murphy
The Time Preference Theory of Interest & Its Critics. Herbener
1:30–2:30 p.m. Hayek and Keynes: Head to Head. Garrison
2:45–3:45 p.m. FDA and Consumer Welfare. Higgs
4:00–5:00 p.m. Concurrent Sessions:
Contrasting Views of the Great Depression. Murphy
Environmental and Resource Economics. Terrell
Thursday July 249:00–10:00 a.m. How War Leads to Big Government. Higgs
10:15–11:15 a.m. The Case for Privatization—of Everything. Block
11:30 a.m.–12:30 p.m. The Robber Barons and the Progressive Era. Woods
1:30–2:30 p.m. The Corrupt Origins of Central Banking in America. DiLorenzo
2:45–3:45 p.m. Concurrent Sessions
Energy Policy. Murphy
Prediction and the Business Cycle. Thornton
4:00–5:00 p.m. Four Things the State is Not. Woods
Friday July 259:00–10:00 a.m. Common Objections to Capitalism. Terrell
10:15–11:15 a.m. Hayek and Friedman: Head to Head. Garrison
11:30 a.m.–12:30 p.m. Concurrent Sessions
Gold Standards: True and False. Salerno
Economics of Tariffs and Smuggling. Thornton
1:30–2:30 p.m. Concurrent Sessions
Anti-Market Mythology. DiLorenzo
Economics of Science and Technology. Klein
2:45–3:45 p.m. Concurrent Sessions
Issues in the Economics of Medical Care. Terrell
Errors, Business Cycles, and Government Stimulus. Engelhardt
4:00–4:45 p.m. Faculty Panels
Theory and Method: Engelhardt, Garrison, Gordon, Herbener, Klein, Salerno
Policy and History: Block, DiLorenzo, Murphy, Terrell, Thornton, Woods
Saturday July 269:00–10:00 a.m. Concurrent Sessions
Theory and History. Gordon
Applications of Austrian Economics to Business and Management. Klein
10:15–11:15 a.m. Concurrent Sessions
The Cultural Consequences of Fiat Money. Hülsmann
Game Theory. Engelhardt
11:30 a.m.–12:30 p.m. Concurrent Sessions
Political Entrepreneurship & the Economics of Wealth Destruction. DiLorenzo
The Economics of the Drug War. Thornton
1:30–2:30 p.m. Closing Lecture: My Years in the Austro-Liberty Movement. Block
Americans certainly love college sports, particularly football and basketball. After all, what is better than cheering on student athletes competing for the love of the game? Unfortunately, behind this facade the National Collegiate Athletic Association and university athletic programs are simultaneously running two seemingly diametrically opposed rackets; one taking advantage of the players and the other ostensibly giving them unfair benefits.
The NCAA is a tax-exempt, non-profit association that oversees the athletics of just under 1,300 universities. While the NCAA is not technically a government organization, it might as well be. It’s a burdensome bureaucracy that regulates the athletics of public universities, which are substantially funded and strictly regulated by the government. And like any government, the NCAA regulates in an attempt to restrict competition. As Lawrence Kahn noted, “Most economists who have studied the NCAA view it as a cartel that attempts to produce rents by restricting output and limiting payments for inputs such as player compensation.”Lawrence M. Kahn, The Economics of College Sports, IZA DP No. 2186, Pg. 4.
And don’t let the term “non-profit” fool you. Some non-profits can be quite profitable. Indeed, the NCAA recently agreed to a $10.8 billion, fourteen-year contract with CBS and Turner Broadcasting to televise games. NCAA chairman Mark Emmert was rewarded for his efforts with a cool $1.7 million last year.
And that’s just scratching the surface of the massive, government-subsidized business known as college sports. It’s not just the NCAA that makes out like a bandit. As Marc Edelman notes,
The college sports industry generates $11 billion in annual revenues. Fifty colleges report annual revenues that exceed $50 million. Meanwhile, five colleges report annual revenues that exceed $100 million. ... Head football coaches at the 44 NCAA Bowl Championship Series schools received on average $2.1 million in salaries. The highest paid public employee in 40 of the 50 U.S. states is the state university's head football or basketball coach.
Yet somehow that’s not enough and these colleges need to soak tuition-paying college students and taxpayers alike. The college game isn’t plagued with quite as much cronyism as the pros, where $32.2 billion in taxpayer money has been spent on stadiums. Still, most universities have to pull money from the students and taxpayers to subsidize their athletic programs. Gregg Easterbrook notes that despite enormous revenues, only around a half dozen college football teams are self-supporting. For example, he notes “The [state supported] University of Maryland charges each ... undergraduate $400 a year to subsidize the football team.” Cal-Berkley recently finished a $474 million stadium with most of that money coming from students and taxpayers. Various states also provide tax breaks and subsidies to the NCAA for various events. For example, Texas provided millions of dollars from a taxpayer-supported trust fund to help host the NCAA Final Four in 2013.
One would think that with $10 billion in revenue and massive support from various donors, these programs could actually turn a profit instead of leeching off the taxpayer. And this shortfall is even more ridiculous when you consider the massive salaries of coaches and administrators (Nick Saban, for example, has a base salary of $5,545,852) comes in a rather stark contrast with the players that make this industry possible.
During last year’s NCAA tournament, UConn star Shabazz Napier complained that “there are nights that I go to bed starving.” In other words, state governments, universities and donors can spend untold millions building extravagant facilities that would make Marie Antoinette blush, but can’t pay for a players’ food. And then, to add insult to injury, the NCAA will suspend players for being givenfree tattoos, or receiving $200 from a childhood friend, or getting a $4500 loan or giving out too many signatures.
It’s so ridiculous that not long ago, offering a player a bagel with cream cheese violated NCAA regulations. Offering him the bagel was fine, as was the cream cheese. But offer both and you have crossed the line. Buried away in the NCAA’s myriad of nonsensical rules was a stipulation that snacks could be provided to players, but meals could not be. Bagel = snack. Bagel and cream cheese = meal. Got it?
That rule was fortunately changed, but it highlights the degree of insanity required to suppress paying these players what the free market would bear. Indeed, the NCAA has a gargantuan 500-plus-page manual of illogical and often unenforceable rules.
Not surprisingly, such rules haven’t prevented universities from cheating to get the athletes they recruit to qualify as “student” athletes, and thus, the second racket. In what is almost certainly emblematic of an epidemic amongst this nation’s colleges, the University of North Carolina was caught giving out some rather generous grades to its student athletes. The following term paper, which I will quote in its entirety, was awarded an A minus:
On the evening of December Rosa Parks decided that she was going to sit in the white people section on the bus in Montgomery, Alabama. During this time blacks had to give up there seats to whites when more whites got on the bus. Rosa Parks refused to give up her seat. Her and the bus driver began to talk and the conversation went like this. “Let me have those front seats” said the driver. She didn’t get up and told the driver that she was tired of giving her seat to white people. “I’m going to have you arrested,” said the driver. “You may do that,” Rosa Parks responded. Two white policemen came in and Rosa Parks asked them “why do you all push us around?” The police officer replied and said “I don’t know, but the law is the law and you’re under arrest.
Other athletes at the North Carolina skipped even writing 146 word essays and simply attended fake classes to get their diplomas. Back in 2001 Georgia basketball coach Jim Harrick was caught providing players with A’s to classes they never attended. In 2007, approximately twenty Florida State football players were involved in a cheating scandal and now Notre Dame is investigating four of its athletes for academic fraud.
I went to the University of Oregon, where just after I graduated, Phil Knight bestowed on my alma mater a $41.7 million, 37,000 square foot, state-of-the-art, glass-encased monstrosity called the John E. Jaqua Center. It exists for almost the sole purpose of tutoring student athletes. Phil Knight can, of course, spend his money however he likes. But one might wonder why he would spend it on a building that can only be used by some 470 of the 20,000 plus UO students? And it becomes much more questionable when you learn that the UO spent $8.5 million out of the general fund from 2002 to 2010 to pay for academic support to student athletes.
Such buildings are about the closest philanthropists like Phil Knight can come to just paying the players, which is probably why such lavish facilities are built in the first place. Still, such a massive expenditure for an “academic center” for student athletes is telling. Virtually every university offers extensive tutoring programs for its student athletes. The word “tutor” being used very loosely and borderline euphemistically, of course. Mike Abu wrote an enlightening piece for Vice Magazine about his time at the University of Utah that echoes a similar scandal at the University of Minnesota as well as many of the rumors I’ve heard about what these tutors actually do. As he writes,
For years, I willingly did homework for a number of student athletes. ... The students would pay $10 for a "slip" from the tutoring center. They'd give me that slip at the end of each session and I'd turn it back into the tutoring center and wait for my measly check. ... After a while, I started getting more and more requests from football players. ... Then, one day, an offensive lineman cut straight to the chase. His tutoring slips were covered by his athletic scholarship, so the slips didn't have any monetary value to him. Because of this, he was more than willing to give me three hours worth of tutoring slips if I'd just do his homework. After all, it would take 15 minutes for me to do it myself, versus the two hours it would take me to explain ... I didn't even hesitate before saying yes. ... I did homework for guys like him all semester long ... [and did] the coaches know about the cheating. How could they not?”
Yet it’s hard to blame the coaches and administrators for trying to get around such academic requirements. What other choice do they have if they want to field competitive teams? In fact, it’s an absolute absurdity that the NCAA expects every college-worthy athlete is also capable of being a good college student. In 2012, 30 percent of Americans over the age of 25 had a Bachelor’s degree. Is athleticism so directly correlated with academic skills that every last college-level athlete should fall in that 30 percent? Or shouldn’t we expect that about 30 percent of athletes good enough to play in college should also be attending college? (And that assumes too many people aren’t going to college already, which they are.)
While it would seem that these scandals go in opposite directions, they are really one in the same and the ladder makes the former that much more outrageous. That’s because many of these kids get next to nothing out of their scholarship and very few make it to the next level. College sports are the highlight of most of these individuals’ career, and the government-subsidized, monopolistic NCAA cartel has made it so they earn a grand total of zero dollars. If a free market actually existed for college athletics, the mere idea that players would not be paid is too ludicrous to even merit refutation. And somehow a bagel and cream cheese just doesn’t seem to amount to a sufficient consolation prize.
Randall G. Holcombe recently spoke with the Mises Institute about his new textbook Advanced Introduction to the Austrian School of Economics.Mises Institute: Why did you decide to write this book?
Randall Holcombe: I received an inquiry from Edward Elgar, the publisher, asking me if I’d be interested in writing it, and I agreed. They wanted a short book of about 50,000 words that would introduce people to the ideas of the Austrian School, and that’s what I wrote. The text runs just 116 pages, which doesn’t count the preface, index, and an extensive list of references at the end.
Writing the book was the publisher’s idea, and I thought about it for a while before I agreed. One reason I hesitated is that, if you talk with a group of Austrian economists, they all have different ideas about the core ideas of the School. I didn’t want to write a book saying, “here are the most important ideas of the Austrian School,” and then start a debate about what I might have left out, or included that didn’t really belong. Ultimately, I decided that the benefits of writing the book would outweigh those risks, so I took on the project.
MI: Who is the target audience?
RH: Economics students, including undergraduates, are groups I am targeting with the book. The book is not an introductory economics text from an Austrian perspective, and assumes that the reader already knows some economics. But even a student who has only taken an introductory economics course will have enough background to understand what is in the book. The idea was to write a book for people who already know some economics, but are not familiar with the Austrian School. There are lots of people with some background in economics who have heard of the Austrian School, but don’t have a good idea about what distinguishes the Austrian School from mainstream economics, or from other schools of thought. So the idea was to write a book that emphasizes the ideas that separate the Austrian School from other approaches to economics.
MI: Have you noticed any increase in interest in Austrian economics among the students you see?
RH: Yes, absolutely. We don’t have a course in Austrian economics at Florida State, so I don’t teach Austrian theory directly. But we have an active student libertarian club that is interested in Austrian economics, and word gets around that I take an Austrian approach to my teaching. I often have students come up to me after class asking me about books and articles written by Austrian School economists. They find them on their own, without my referring to them in class. One of the most common places they find these ideas is on the Mises Institute website, so I have to give the Institute a lot of credit for making so much Austrian scholarship readily available.
MI: Why do you think there is more interest now?
RH: There are several reasons. One is that academic economists are increasingly looking for alternatives to mainstream ideas. Economists were probably most unified on the mainstream paradigm back in the 1970s when the neoclassical framework defined microeconomics and Keynesianism defined macroeconomics. Since then, there has been more diversity in the way that academic economists have viewed the discipline. The new institutional economics has been developed, experimental and behavioral economics has challenged neoclassical utility theory, and that has opened the door to looking at the ideas of the Austrian School too.
The collapse of the centrally-planned economies in the Eastern bloc also helped the Austrian School. The Austrian idea that rational economic planning cannot take place without markets and market prices was dismissed as wrong by many prominent economists up through the late 1980s, but it is now generally accepted. The socialist calculation debate, which worked against the Austrian School up through the 1980s is now working in the school’s favor.
Also, the Austrian business cycle theory, which emphasizes malinvestment as a fundamental cause, is increasingly seen as a credible alternative in macroeconomics. The dotcom boom and bust, followed by the similar housing market boom and bust, make it apparent that mainstream macro models, which almost always treat capital as homogeneous, are inadequate for explaining macroeconomic phenomena over the past two decades. The Austrian approach to macroeconomics, which is built on a foundation of heterogeneous capital, lends much more insight.
All the reasons I’ve just given are reasons to take the ideas of the Austrian School seriously, but one of the big reasons they have been taken more seriously is that the internet has made those ideas more accessible. As I noted before, my students are discovering the ideas of the Austrian School on the Mises Institute website and other places on the internet, and that just would not have been possible twenty years ago.
MI: What insight of Austrian economics would you say is the most valuable to someone who is interested in economics but does not necessarily think of himself or herself as “an Austrian”?
RH: The two broad areas I would cite are entrepreneurship and macroeconomics. Mainstream economics is built on a foundation of equilibrium. The mainstream competitive model depicts competitive firms after all the competition has already taken place, so the role of entrepreneurship is left out. Profit is depicted as a sign of inefficiency, either because it is a sign of monopoly or a sign that markets are not in equilibrium. In fact, profit is necessary for efficiency, because profit is both the lure that encourages entrepreneurship and the sign that entrepreneurship has been successful at creating value. I place heavy emphasis on this idea in my book. With regard to macroeconomics, the whole sub-discipline has been focused on how government policy can stabilize the economy. That’s been true for a century. But because of its aggregate nature, the destabilizing effects that interventions have because they distort relative prices have been left out of mainstream macroeconomics. The Austrian approach to macroeconomics looks at the effect of government policy on relative prices — with the interest rate being the most important price, but not the only one — to show how government policy often is destabilizing. As I noted earlier, the Austrian approach to macroeconomics lends much more insight into the macroeconomic issues of the past two decades.
MI: If someone asked you to summarize what makes Austrian economics different in one or two sentences, how would you do it?
RH: That’s a tough question, because that’s what I tried to do in my book, and it runs more than one hundred pages! The insights about entrepreneurship, the market process, and the distinctive Austrian approach to macroeconomics would have to factor in. Actually, the fact that it is difficult to summarize in a sentence or two is what makes the Austrian School different and is something that keeps Austrian ideas from filtering into the mainstream more than they do. One big motivation for my writing the book was to answer just that question, and explain how Austrian economics is different from mainstream economics that students see in their introductory classes.
MI: As a tenured faculty member in economics, have you found that your use of Austrian economics has helped you as an economist, or is it a liability?
RH: This hasn’t been an issue in my department. Nobody is critical of me because I am an Austrian economist. But then, I don’t advertise myself as an Austrian economist, and I have been fairly successful publishing in academic journals, which is a big component on how I am evaluated by my colleagues. I do what I think is good economics, using the best ideas that are available to me. The Austrian School has lots to offer, not because they are Austrian ideas but because they are good ideas.
Volume 17, No.1 (Spring 2014)Starting in 1974, the Institute for Humane Studies (IHS), based at that time in Menlo Park, California, began an ambitious plan to resurrect the then near to dead Austrian school of thought in economics. The first three steps were conferences at South Royalton, Windsor County, Vermont in June 1974, run by Ed Dolan; Hartford, Connecticut in June 1975, run by Dominick T. Armentano; and Windsor Castle, UK in early September 1976, run by Arthur Shenfield and myself (but see below for University of Delaware, June 1976).
The Windsor event was scheduled to follow immediately on the 1976 meeting of the Mont Pelerin Society (MPS) held at St Andrew’s University in Scotland to commemorate the bicentennial of Adam Smith’s The Wealth of Nations. It made sense as the Americans would fly over and do both but I recall being mildly annoyed that I was so busy preparing the latter that I could not attend the former! Indeed it delayed my attending MPS until Indianapolis in 1987.
I recently asked George H. Pearson (then working for Charles G. Koch in Wichita, Kansas but spending several days a month helping IHS), about the roots of the idea for South Royalton. He replied:
Whose idea was South Royalton? Charles [Koch] was very much interested in Austrian economics. He brought Mises to Wichita in the late ‘60s and Bob Love [another prominent Wichita businessman] brought [Hans] Sennholz every year. Charles saw [Murray] Rothbard as a “fertile mind” and was interested in getting Murray’s input at IHS after Baldy died in April 1973. Charles, Murray and I all wanted to push Austrian economics at IHS and Charles agreed to fund conferences and books. While we were searching for someone to run IHS (we pursued [George] Roche and [Ben] Rogge and finally landed [Lou] Spadaro) I was commuting and sharing the work load with Ken [Templeton]. Ken concentrated on history and I concentrated on Austrian economics. Besides the Austrian conferences, IHS had a publishing contract with Sheed and Ward, later Sheed, Andrews and McMeel. Larry Moss helped with the series, which included the two books containing papers from the South Royalton and Windsor Castle conferences and books written by Lachmann, Kirzner and others. The Charles Koch Foundation’s first activities were conferences like the one you ran in London and the speaker program that David Theroux ran in Chicago. This was 1976.
Attendance
My records show the following attendance figures:
South Royalton, Vermont: 50;
Hartford, Connecticut: 64; and
Windsor Castle, UK: 16.
A total of 71 individuals attended, and of the original 50 at South Royalton, 45 returned to Hartford.
Only nine people attended all three, namely the late Ludwig Lachmann and Larry Moss with the living in alphabetical order: Dominick T. Armentano, John Blundell, Roger Garrison, Israel Kirzner, Jerry O’Driscoll, George Pearson, and Mario Rizzo.
Below is a schedule of all those I believe attended each event. My lists are unlikely to be complete.David Henderson recalls the presence of the Wall Street Journal writer Ida Walters. He states that was where she met Harry Watson; they married soon after and still are. He also recalls the presence of Francis Hazlitt. The symbol (d) denotes deceased.
I have been asked for my recollections and have decided to give some atmosphere rather than strict intellectual/scholarly analysis of the many nuances or differences. Others are better suited to do that.
I. South Royalton, Vermont.We flew Boston, Massachusetts to Lebanon, New Hampshire with taxis to South Royalton, Vermont. This was, I think, just before airline deregulation as people commented often on the high price of the Air New England flight. It took me a while to catch on, as it was my first visit to the US.
The location was a ghost town. We were housed in otherwise empty properties that were on the market at, say, $2,000 each. Vermont had at that point lost population for every single year that century. We were there because IHS had hired Ed Dolan as conference director and he then taught at nearby Dartmouth College, New Hampshire. He had an Italian friend called something like Doria who owned an inn on the corner of the main square—the only square! So there was the broken down inn where we met and ate and socialized, all these empty houses around the square where we students and junior faculty slept, maybe two shops, a railroad track to Canada, and a river. I recall the big excitement of the day being the train headed north and the one headed south. Some of us went outside and cheered as they passed through.David Henderson recalls some attendees swimming in the White River and going down some gentle rapids.
I also vividly recall sitting out on the sagging deck of the inn with Doria one evening. We talked European to European. He pointed diagonally across the square at a medium sized building. “One day soon that will be the Vermont Law School,” he said. We walked over to it and took a good look at it. He told me that of the 50 states Vermont was then the only one without such a school. There was no Vermont Law School. He had a vision for such a facility for mature students who would sell their suburban homes and buy up these $2,000 empty properties. The price difference between the two would fund the law degree.
I thought he was mad—but it worked, and, say, by 1990 US News and World Report had that law school ranked #1 on at least one front—possibly environmental law! I’d guess those houses now go for more like $200,000, but it’s a guess.
That was the week I first met the likes of Dominick T. Armentano, Walter Block, Ed Dolan, Richard Ebeling, Roger Garrison, David Henderson, Jack High, Israel Kirzner, Jerry O’Driscoll, Steve Pejovich, Mario Rizzo, Joe Salerno, and Karen Vaughn—and I’m listing only the living with whom I’ve had a lot of later contact.
Many of course have since passed on, such as Hazlitt, Hutt, Lachmann, Lavoie, Moss, Peterson, Rothbard, and Shenoy.
Milton and Rose Friedman had a summer cabin close to us and turned up (unannounced—at least as far as I know) one afternoon. We clustered around them, naturally, and Milton, typically, announced: “There is no such thing as Austrian economics—there’s only good economics and bad economics!”David Henderson recalls it being early in the week as in “the first afternoon.” He also recalls Francis Hazlitt’s reaction to that quote as being “Does he think there’s such a thing as the Chicago School?”, David Henderson adds another memory: “It rained one night and a number of us were up late with Murray, hearing his great stories and his cackling. We started drifting off to our various rooms and I still remember seeing dear old Bill Hutt, out in the hallway, with his pajamas and night cap, looking like a character out of a Dickens novel, complaining, but not whining, that the rain was falling through the ceiling onto his bed.”
Israel left so late on Friday—or maybe his plane was late—that he checked into a motel at the airport for religious observation.
The first time I met Israel at South Royalton, our conversation went as follows:
Kirzner: You are from London.
Me: Yes.
Kirzner: Where in London?
Me: North London.
Kirzner: Where in North London?
Me: Willesden.
Kirzner: Where in Willesden?
Me: (Very exasperated by now). Well if you must know, 100 Brondesbury Park Road.
Kirzner: Oh, opposite the synagogue?
Me: (stunned) Yes, right opposite.
Israel’s uncle had run the synagogue opposite my house, hence his knowing the road so well—right down to the house numbers! His parents had lived some miles away in Stamford Hill until Israel was 10 years old, when they moved first to South Africa and later the USA.Back then South Africa (RSA) was a very attractive spot for would be emigrants. Among Austrian economists one thinks of Hutt and Lachmann as well as Kirzner. In 2002 at MPS London which I organized I discovered that the Manne family, as in Henry Manne of Law and Economics fame, had moved UK to RSA to USA. Henry used that visit to go to London’s East End to research his grandfather, a local rabbi. Arnold Plant also spent most of the 1920s at the University of Cape Town.
The late Sudha Shenoy was one of only say three women present other than Mrs Dolan who would drop by of course. Sudha caused an uproar one evening early in the week when she got up from a big discussion group, turned to O’Driscoll and said: “Please come by and knock me up in the morning” meaning “please knock on my door to make sure I’m awake as I just flew in from Australia.” There was a great deal of laughter. Sudha had no clue. Jerry was momentarily speechless but of course recovered.
Gosh! What a week, meeting all those young future stars under the tutelage of Rothbard, Lachmann, Kirzner, and Hutt. I would later welcome all but Lachmann to events in London. And then see Lachmann in South Africa.
Dolan’s The Foundations of Modern Austrian Economics came out of the meeting with chapters by Dolan, Rothbard, Kirzner, Lachmann, O’Driscoll, and Shenoy.
II. Hartford, ConnecticutThis second gathering was run by Dominick Armentano and was more upmarket. I’d virtually slept on the floor in South Royalton—now I was in a student dorm! And Hayek had won the Nobel between the two events—and he was there with us. The literature for South Royalton had advertised him as “a distinguished guest” but I assume that means he was invited but did not accept. That is understandable, as he often told me later in the 1970s in London, that in the years running up to the 1974 Nobel he was very depressed indeed.
There was a much more upbeat air at Hartford, a real camaraderie as 45 out of 50 of us came back from South Royalton with our newly minted Nobel Laureate. We were on a wave.
Significant first time meetings for me included Bill Campbell, Richard Fink, Walter Grinder, John Hagel, Stephen Littlechild, Karl Peterjohn, Gary Short, Larry White, and Leland Yeager.
Roy Childs crashed the party sleeping outside in his car. One evening he tripped on a step and would have gone flat on his face but his tummy intervened. His nose never hit the concrete! We ran over to help him up. On reflection it was very good of IHS and Armentano not to ban him. He literally crashed a private meeting.
I recall two more Shenoy issues. First she had prepared a paper, I think on Austrian capital theory. When it came to her session, her commentator was Professor Leland B. Yeager who said something on the lines of: “This paper is not worth any comment.” He just stood up, said it, and sat down. Stunned silence. My own paper was not much better I must say but I was not so harshly treated. I think my commentator was Percy Greaves but he is not listed as attending. I welcome correspondence from those who would like to add to my lists.
My second Shenoy recollection comes I think from the closing dinner. She approached Hayek and asked if she could be his official biographer.
Now Hayek was very fond of Sudha having known her father B. R. Shenoy the great Indian economist through MPS. The Membership Committee of the Society was initially very suspicious of B. R. Shenoy, and he was ruthlessly grilled before admission, but he could point to long spells of house arrest for opposing India’s 5-year plans. Hayek was so fond of Sudha that when she married in Australia he sent her an antique British hallmarked silver creamer as his wedding gift, which was really generous. Incidentally, she married a mature student called Dennis, the Chief Archivist of New South Wales, who approached her at the end of her first lecture to him and said he had not understood a single word she had spoken and would she go for coffee with him and try again. “Great pick-up line,” I once told him. “No,” he replied, “it was true!”
I heard Hayek reply to Sudha, “yes, you may be my official biographer, but on one condition, and one condition only: namely, you must first become fluent in German.” Sudha accepted, but never even learned to count from eins to zehn, thus leaving open the door in the early 1980s for W. W. Bartley III, who started the Hayek Collected Works Project, began work on the biography as well as Popper’s, and then, so sadly, died. The Collected Works moved to Stephen Kresge but has blossomed under Bruce Caldwell now at Duke University. I have no idea what happened to the enormous time line of Hayek’s life or the many hours of taped interviews Bartley made with Hayek’s generation, because they were passing on at an alarming rate, but I assume Kresge has them.As by then a Director on the IHS staff, in the mid-1980s I raised the $30,000 needed to send Bartley around the world doing that series of interviews. Bartley, who lived close to HIS, had reported that Hayek’s close friends and colleagues were passing on at, say, four or five a year.
When Hayek asked Bartley to do the biography he said: “There are only three things that sell books namely sex, money and violence. As to sex, well, I left my first wife for my first girlfriend. As to money, well, I never had any. And as to violence, let me tell you how I came to bayonet a man to death in World War One!”
Hartford was also memorable for a real team-building afternoon when we were bused to some resort about an hour away. The bus had a pretty young female guide who kept pointing out the area’s many wonderful buildings. When it was a government building we all booed deeply and when it was private we all cheered heartily. She was utterly clueless and totally unnerved. The penny never dropped and she never realized the correlation.David Henderson recalls: “I remember this clearly and I have a much more negative impression, not just directed at others but also directed at myself. Murray started it and then we all piled on. She kind of did figure out that we were an unusual group but couldn’t figure out what we stood for. So after she became exasperated at our negative reaction to government projects, she justified one of them, reclaiming, if I remember correctly, the Mystic River from pollution. Who could object to that? Well, Murray did, and started chanting, ‘We want externalities.’ Many of us, including me, picked up on that chant. I stopped on a dime when I looked at that old, gentle, sweet man, Emil Kauder. He was shocked and disgusted. I date some of my steps to becoming a responsible man to that one event. Emil, by the way, knew Schumpeter, and when a few of us were asking him about Schumpeter, he started talking about Schumpeter’s beautiful daughter. He talked about her beauty like a connoisseur noticing the details of a beautiful painting.”
III. Windsor Castle, UKYes, we were inside the walls of Windsor Castle, a Royal Palace, where Queen Elizabeth II often resides as it is her preferred weekend spot. Indeed, when she is there her Royal Standard is raised on the flagpole and planes into London’s Heathrow International Airport are diverted to minimize noise pollution for Her Majesty. From South Royalton, Windsor County to Royal Palace in Windsor Castle!
Inside the walls there is a 15th century chapel named after St. George and behind it, in an area closed to the public, there is a Georgian mansion called St George’s House; say 100 yards below that, there is the Chapter Library which dates back to 1348 and is where Shakespeare is reported to have first produced The Merry Wives Of Windsor for Queen Elizabeth I. We were told that the then-monarch wanted to see more of Falstaff—hence the play with its author no less in the lead. We ate and socialized and slept in the House with some overspill (luckily for them!) across the road at a decent hotel and we met in the Chapter Library where Hayek fell asleep every day after lunch and snored gently while Lou Spadaro kept us on course. See New Directions In Austrian Economics, which has chapters by Lachmann, Egger, Rizzo, Kirzner, Littlechild, Armentano, O’Driscoll, Rothbard, Moss, Garrison, and Spadaro himself.
We were there at the longest occupied palace in Europe because IHS had asked Arthur Shenfield where to go. He lived in Windsor and, like my late father, belonged to a select group called The Friends of St George’s Chapel, which gave us some entrée to booking the big house for an educational retreat. It was very cozy and we all shared bathrooms, a lot like South Royalton. When we went out at night to local pubs, we had to be taught how to re-enter after 9 PM through the Henry VIII Gate without breaching security. This was very important as the IRA was then very active in bombing folk and we were, after all, inside a Royal residence. There were uniformed, heavily armed men all over the place who were very serious indeed. If you took a wrong turn you were barked at—I know!
Shenfield and his wife Barbara had been on the faculty of the University of Birmingham when it was a Brit version of Chicago. Pop star Elton John moved in next door to their Windsor home about the time of the IHS event, and Barbara was worried about the noise this “Mr. John Elton” might create, as she wrote to friends.The Shenfields were also right then deeply involved in the founding of Britain’s only private university as in the University of Buckingham. Ronald Coase, a few years before passing on, donated a six figure sum for student scholarship places, and the best student at every graduation receives a gold medal named after the Shenfields.
This was the first time I met Charles and Liz Koch, then quite recently (I think) married. There were many spouses present at Windsor and indeed we ran a separate program to keep them entertained. I had organized boat trips on the Thames and so on. I think Carnaby St. featured. That dates us.
My then girlfriend Christine—we became engaged that fall and married 11 months later in August 1977—was our chauffeuse with her little green Mini. Murray Rothbard quaked at the offer of a ride to nearby Heathrow airport but accepted—finally. Charles and Liz had so many matching suitcases we had to call for a much larger vehicle!They were on quite a major European adventure, I believe. Garrison and Rizzo piled in the back of that little green Mini with knees up to their chins while I was up front with Christine as we rocketed at 70 mph into central London. That evening Mario took us to dinner at an Indian restaurant in Regent’s Park near the American School in London, which our elder son Miles much later attended (1993–2000). We must have passed it many times and always pointed at it and shouted aloud MARIO RIZZO 1976!
It would be great if IHS could tell us what those three meetings cost so we could inflation adjust to today and reflect on the investment made and the return it produced.
For me and for nobody else can these events be called Damascene moments. We were all converts already. It was more a forming of a clan. I’d already read Mises, Hayek, Friedman, Rand, Bauer, Popper and others by then. But even with the handful of folk around the IEA and a few faculty around the UK, one did feel isolated. Indeed, I think the Americans felt more isolated than I did. At least the IEA had as Editorial Director one Arthur Seldon who’d been at the LSE with Hayek in the 1930s and who gave a distinctly Austrian touch to many of his publications.
Karen Vaughn wrote in an article I commissioned 15 years ago for the IEA journal Economic Affairs in March 2000, soon after the 25th anniversary of South Royalton:
Perhaps all dated beginnings are arbitrary, but surely some are less arbitrary than others. An excellent case can be made that the official rebirth of the Austrian school took place in June of 1974. That was when the Institute for Humane Studies sponsored a week-long conference on Austrian economics held at South Royalton, Vermont. The purpose of the conference was to bring together economists who, in those dark days of Keynesian hegemony, had demonstrated some interest, however fleeting, in the Austrian school. The speakers were to be Murray Rothbard, Israel Kirzner, and Ludwig Lachmann who would lecture on the nature of Austrian economics. Rothbard and Kirzner had both studied directly with Mises and were, each in his own way, striving to keep Mises’s ideas alive within a hostile profession. Lachmann, although less likely to assume the mantle of leadership, nevertheless had been a student of Hayek’s; was an admirer of Mises and had been in correspondence with leading Austrians for decades from his relatively isolated position in Witwatersrand, South Africa. The 40 or so participants were mostly young faculty and graduate students, with a smattering of more established professionals also in attendance. Whether all the participants came out of enthusiasm for Austrian economics, or whether some were merely curious or, perhaps, fancied the idea of a fully paid week in Vermont at the beginning of summer, I cannot say. However, if anyone did come along simply for the holiday, he or she was likely to be disappointed.
There is a lot to learn from South Royalton, Hartford, and Windsor Castle. The strategists at IHS identified a potential pool of talent, brought it together with its heroes, bonded them, and then followed up with news and introductions and opportunities—and all before faxes and emails and social media even existed. Imagine that!
In addition to the three meetings (four—see below) and the publishing efforts, there was a third element to the IHS plan, namely to try to build a group of faculty and cadre of graduate students around the Economics Department at NYU.
Kirzner was there and was joined by O’Driscoll and then, through the Moorman Foundation of Quincy, Ill., Ludwig Lachmann. Funds were raised for graduate student scholarships from not just Charles Koch but also others. The obvious candidates would be the Scaife, Olin, and Earhart Foundations, but that’s a guess.
This was definitely the third part of the IHS plan (a fourth is mentioned below) and it would be interesting to see an account of those years at NYU from somebody closely involved. A definitive list of who passed through and where they are now would be fascinating.
Further Note on the Rebirth of Austrian Economics
An early draft of this note was shared with George H. Pearson and Israel M. Kirzner, as well as David Henderson. John D. Chisholm was also included in discussions following a chance meeting with Pearson at Atlas Network in NYC in November 2013. Kirzner was able to clarify some things about the conversation with him that I related above.
A fourth element in the IHS strategy also became clear. In addition to the week-long programs, much shorter “booster” meetings were run as follows:
These dates, locations and numbers come from correspondence of that era between Kirzner and Pearson. Average attendance equals 98.
As I write, IHS is in the middle of relocating within GMU, meaning its staff is focused elsewhere and its files are locked down. However, Chisholm has provided evidence of another week-plus-long program run by IHS at the University of Delaware, June 6–19, 1976. Until the relevant file is available I hesitate to be remotely definitive on this as Chisholm’s notes are strewn with lines crossing out names; notes such as “he never came”; two names added in handwriting, namely, Gary Short and James Cowen; and six listed as “no show 6/7.” However, the program clearly went ahead and the following familiar names jump out at me:
Burton Abrams
Robert Bradley, Jr.
John D. Chisholm
Susan Cole
John B. Egger
Roger W. Garrison
Jeffrey Rogers Hummel
Israel Kirzner
Ludwig M. Lachmann
Laurence S. Moss
Gerald P. O’Driscoll Jr
George H. Pearson
Murray N. Rothbard
Louis M. Spadaro
Kenneth S. Templeton Jr. and
Leland B. Yeager.
Another twenty or so names were not as familiar, but until the IHS file is opened I hesitate to go further on this front.
Let me conclude.
The IHS strategy clearly had four components:
• Reach out worldwide through the four week-long seminars;
• Add six booster mini events with attendance of very close to 100 on average;
• Create a publishing program; and
• Build a major presence at NYU.
Looking at the now 50+ years of IHS history, this is in my view Phase II of its development. Phase I was about saving the “remnant”—see Isaiah’s Job by A. J. Nock. IHS founder F. A. Harper was massively influenced by Nock—see his papers in the archive at Hoover donated by IHS in the summer of 1985 prior to the GMU relocation. While this notion of saving the “remnant” is also there with Hayek’s founding of the Mont Pelerin Society in 1947, his 1949 article The Intellectuals and Socialism is much more positive and forward looking, urging us to find and challenge bright young minds.
At some point (possibly after Harper’s death in April 1973) IHS moved away from the remnant concept and began four programs to reach out on different fronts as follows:
• Austrian economics (George H. Pearson and Charles G. Koch);
• History (Kenneth S. Templeton, Jr. and Leonard P. Liggio);
• Law (Davis E. Keeler); and
• Education (George H. Resch and George H. Pearson).
Templeton, Keeler and Resch were full time employees at IHS in Menlo Park, California.
Pearson worked in Wichita, Kansas for Charles G. Koch, who served on the IHS Board.
Liggio was a history professor in New York, but flew out every summer.
Although Pearson was an employee of Koch Industries, Inc., my recollection is that he was in Menlo Park 10 days a month and that he and Koch were the clear prime movers on Austrian economics; Pearson was a thoroughgoing Austrian from his years at Grove City College with Hans Sennholz.
Templeton was more the history man (as well as COO/acting CEO) and worked with Liggio. Keeler had a huge grant from the Moorman Foundation of Quincy, Ill. for five years and did pioneering outreach to law faculty and students.
Finally, Pearson worked with Resch on their shared interest in education.
I believe all are still with us and healthy.
So while the Austrian economics initiative was very important, and today the best known of the four, it was part of a wider portfolio.
In case the reader is wondering, Phase II came to an end in 1982 when IHS ran out of money. I will write elsewhere of Phases III, IV and today’s V.
Volume 8, No. 2 (Spring 2005)Symposium: On the Occasion of the Eighteenth Edition of Paul Samuelson's Economics
Paul A. Samuelson's legendary textbook, straightforwardly titled Economics, most famously exemplifies Samuelsom the writer. To mark the release of the eighteenth edition in July 2004, this paper briefly considers the textbook, and celebrity (and criticism) it attracted.
Volume 8, No. 2 (Summer 2005)Symposium: On the Occasion of the Eighteenth Edition of Paul Samuelson's Economics
It is no wonder that the vast majority of Americans do not know whom, if anyone, they should believe regarding economic pronouncements. Much of the credit for this intellectual legacy can be laid at the feet of Paul A. Samuelson, the Nobel Prize-winning economist, who took the public mind by storm with his phenomenally popular textbook, Economics: An Introductory Analysis.
Samuelson, through the popularity of his brew of historicist, Walrasian, and Keynesian analysis, paved the way for the current dismal reputation of the dismal science, Rothbard, by developing his theory within the praxeological tradition of Menger, Böhm-Bawerk, and Mises, established an economic edifice that is both thoroughly realistic and universal, providing both students and professional scholars a consistent antidote for the contemporary interventionist mish-mash of free-market rhetoric and statist economic policy.
Volume 5, No. 2 (Summer 2002)Here we discuss briefly Mankiw’s ten principles of economics and offer a critique of these principles à la the Austrian School of economics. A textbook in economics completely based on principles of modern Austrian economics is yet to be written. When such a textbook is written, perhaps this discussion will help the author design the text. We would strongly recommend to the author that the first chapter of the yet-to-be-written textbook be devoted to the ten or so basic principles of economics, with the rest of the book simply enhancing the explanation and application of these principles.
If the payoff is high enough, universities are happy to award degrees based on political connections, writes Predrag Rajšic. This audio Mises Daily is narrated by Robert Hale.
Volume 9, No. 4 (Winter 2006)Editorial:Our hope in publishing this symposium is to assist other instructors in teaching Austrian macroeconomics at the intermediate level and to inspire those who are inclined and equipped to contribute publications which will advance this under-developed field of economic pedagogy. The publication of this symposium also reflects a strong and continuing commitment by the editors of this journal to encourage and improve academic education in all fields of Austrian economics and we welcome future submissions that advance this mission.
Volume 9, No. 4 (Winter 2006)Joseph T. Salerno (2004) has presented us with the choice of pursuing economics as a vocation or profession. The focus of the vocational economist is the pursuit of truth whereas the professional economist works primarily to earn an income, enhance his reputation, or influence political decisions. This dichotomy also presents itself when economics professors seek to instruct courses for economics majors, but in the case of education, the question is do we want to train our students to be vocational or professional economists. For Misesian professors teaching intermediate macroeconomics, there is a tension between leading students in the development of sound economic theory and providing them with a working knowledge of the multitude of macroeconomic models they will encounter in graduate studies. Should teachers of undergraduate economics focus more on economic truth that helps students understand the way things really are or more on various macroeconomic models and hot research topics and techniques they may see if they choose to go on to graduate study? What follows are suggestions for meeting the challenge of intermediate macroeconomics by providing intermediate undergraduate students with a working knowledge of the disarray we call modern macroeconomics, evaluated with sound economic theory one derives within the Misesian tradition.
Volume 10, No. 1 (Spring 2007)
The efficacy of the decentralized market process is perhaps the foremost contribution of Austrian economics. But if Austrians are correct about the performance of spontaneous order processes, the paucity of Austrian economists in academic positions seemingly undermines their methodological critique of neoclassical economics. Whether Austrian economics has faced a valid market test remains an issue of continuing controversy. In this paper I examine when a market can be appropriately said to offer a “test” of products and whether Austrian economics has faced a meaningful market test. In essence this paper explores the question of inefficiency in spontaneous orders.
Volume 11, No. 3 (2008)
Teaching Microeconomic Principles well, a blend of good pedagogy and good economics, is the professional obligation of many economists. Since such courses are conventionally grounded in neoclassical theory, professors who embrace the theoretical perspective of the Austrian School may seem to confront a dilemma unfamiliar to other teachers: Teach the course well, or teach good economics? The thesis of this paper is, simply, that there is no such conflict. Incorporating properly chosen attributes of Austrian theory makes one's Microeconomic Principles course better. This conclusion would be rejected by those who identify Austrian economics as adding complex disequilibrium propositions to an equilibrium analysis indistinguishable from that of neoclassical theory, or who think it dismisses equilibrium entirely, but both positions misunderstand the School's nature. Among Austrian theoretical attributes that enrich a Microeconomic Principles course are methodological individualism, ordinal subjective utility and cost, future orientation, entrepreneurship, a process view of competition, and consideration for market participants' knowledge. In this paper these characteristics—many ostensibly shared, but not consistently respected, by neoclassical theory—are applied by developing conventional smooth supply and demand curves, and their interaction in markets, from individuals' value comparisons of discrete units. The paper concludes that an Austrian foundation is simultaneously more theoretically accurate and closer to the student's everyday life, a combination that means a better Principles course.
Volume 14, Number 3 (Fall 2011)Laband and Tollison (2000) warn that specialized Austrian journals encourage excessive within-group communication at the expense of exchanges of ideas with the broader economics profession. I evaluate this possibility using publications by authors of papers in the Quarterly Journal of Austrian Economics (QJAE) and the Review of Austrian Economics (RAE). QJAE and RAE authors displayed no tendency to publish more frequently in these journals over the decade 2000-2009, either in absolute terms or as a proportion of their total economics journal publications. The most frequent publishers in the Austrian journals successfully published in mainstream journals, including Public Choice and the Journal of Economic Behavior and Organization. Papers by top publisher in the QJAE and RAE are cited less often in the Social Sciences Index than these authors' papers in other journals, but a handful of papers drive the citation averages. Overall I find little evidence that Austrian economists merely preach to the choir.
Volume 3, No. 1 (Spring 2000)Persons with an Austrian perspective must evaluate the probability that an Austrian message will reduce their publication chances in mainstream journals. Since historically the discrimination against Austrian scholarship has been high, a new Austrian academic infrastructure has emerged. We have a Dual Academy: mainline journals and universities, and an alternative Austrian–classical liberal research and teaching infrastructure. Institutions evolve to meet needs prompted by human action. Very often today, the costs of publication to the author are increased by the convention of making editorial decisions by groups of persons. One has to satisfy not one editor, but a group of scholars. Presumably this is done to assure quality control, and to balance the supply and demand for papers using non-price methods. While this raises the cost of publication in general, it particularly hurts those whose ideas deviate from the ideological mainstream, including Austrian economists. This, has led to the Dual Academy. As the Internet and other forms of electronic communication grow, it may well be that the conventional modes of communication (academic journals and university classrooms) may lose some of their importance. While much Internet academic discourse is qualitatively lacking, at least it is not censored. The Austrian infrastructure and technological change, then, have reduced the ability of mainstream economists to submerge views that vary dramatically from their own perspective on the world. This bodes well for the
continued growth in the early twenty-first century in the Austrian “market share” in the world of ideas.
Volume 3, No. 2 (Summer 2000)Both the Quarterly Journal of Austrian Economics and the Review of Austrian Economics are now publishing regularly and have been doing so ever since their respective inceptions. These periodicals have featured path breaking research from dozens of Austrians, and have managed to attract the contributions of several notable mainline economists such as Leland Yeager, Richard Timberlake, Harold Demsetz, Gordon Tullock, and Bruce Caldwell. To be sure, the goal “to completely displace the crisis-ridden but entrenched positivism (of the mainstream) by a vital and full-blown praxeological paradigm” has not yet been attained, but it is undeniable that the neoclassicals have been put on notice that their previous unchallenged preeminence is no more.
Volume 3, No. 1 (Spring 2000)It is much more likely that firsthand inspection by journal editors and reviewers who are relatively more familiar with the subject matter in question will place an appropriate value on the prospective scholarly contributions. The values will be reflected by the quality of journal that publishes each contribution. The fundamental question is whether the error attributable (for whatever reason) to relatively more knowledgeable appraisers with a reputational stake in the outcomes is greater or less than the error attributable to relatively less knowledgeable appraisers with no stake in the outcome.
Volume 3, No. 1 (Spring 2000) What the author objects to is assertions about morality linked to misconceptions and word games concerning money and its functions, property, and titles. Modern money does not consist and does not pretend to consist of commodities. Ban knotes, demand deposits, and the new means of payment being multiplied by modern technology do not even purport to be titles, whether valid or false, to underlying property. What money is and what functions it performs are far better described by elaborating on the concept of record-keeping and clearing device. HHB’s present style of argumentation parallels, by the way, Hans Hermann Hoppe’s well-known claim to derive the whole libertarian policy stance from his so-called logic of argumentation and Murray N. Rothbard’s attempt to derive the same stance from the Lockean axioms of self-ownership and first appropriation. All are attempts to derive sweeping conclusions essentially from one or a very few moral axioms. Moralizing does have its place, but it is no substitute for detailed economic analysis of existing institutions and of the likely operating properties of contemplated reforms.
Volume 19, Number 1 (Spring 1999)An Interview With Richard K. VedderRichard K. Vedder is professor of economics at Ohio University and an adjunct scholar of the Ludwig von Mises Institute. He is the author of Out of Work: Unemployment and Government in Twentieth-Century America and Poverty, Income Distribution and the Family, and Public Policy (both with Lowell E. Gallaway); The American Economy in Historical Perspective; and articles in The Journal of Economic History and The Review of Austrian Economics. He has taught at the Mises Institute's summer Austrian economics seminar, the Mises University.
AEN: It's obvious that you love teaching.
VEDDER: It's true. I teach everything from introductory economics classes to undergrads, to PhD students. I enjoy working with the advanced knowledge of graduate students, though given the state of economics these days, they sometimes have unlearning they need to do.
But I truly love the enthusiasm of the undergraduates. They start out with little or no understanding of economics. When they leave my class, they know the rudiments. I feel I have made a real contribution to the way they view the world.
AEN: What do you consider to be the rudiments?
VEDDER: I emphasize the all-round meaning and implications of scarcity, and the central place of market mechanisms, primarily property and prices, in dealing with this reality. This is usually considered a microeconomic approach, but you cannot begin to think about my area of macroeconomics without discussing these fundamentals.
Conventional wisdom is that there are two branches of economics, and you can take one without the other, and it doesn't matter which you take first. I disagree with this fundamentally. In Austrian economics, there are not two branches of economics. There is only one theory, applied in different areas. Any Austrian macroeconomist, like Joe Salerno or Roger Garrison, using the same tools, could give a powerful lecture on micro theory at the drop of a hat.
None of the main textbooks stress this point. Not even the market-oriented textbooks concentrate enough on the Austrian point of view for my tastes. I make up for this in my lectures by discussing Mises and Hayek, hoping to spark some interest. Like all professors, I am under constraints, but I try to offer a different perspective nonetheless.
AEN: Do you emphasize the history of economic thought?
VEDDER: Even graduate students are abysmally ignorant of the subject. Most graduate schools do not require the course any more and others have stopped teaching the subject altogether. I consider this terrible. This subject is crucial, unless you think all necessary truth is in the recent literature, which it is not. For this reason, I have volunteered to teach the course next term. I'll be using some of Murray Rothbard's History of Economic Thought.
The greatest insight you gain from the class is that there are a variety of ways to look at economics. It is not enough just to say "here is the neoclassical synthesis" and be done with it. Members of the profession do not agree in a wide range of theoretical and political areas. Realizing this can spark a student's interest. In the typical economics class, you fail to pick up this diversity of thinking.
AEN: What does absence of intellectual history imply about the profession?
VEDDER: History of thought doesn't connect with the agenda of modern mainstream economics. Economics has become extremely technical and narrow in its approach. It has lost sight of broader issues. Many economists have lost sight of how to communicate with students and the general public.
Economists are speaking this specialized language that apes physics and trying to make themselves out to be practitioners of the queen of the social sciences. They want to be seen as smarter and more scientific than sociologists and psychologists. And yet the reality of this approach is to make economics too abstract, and even meaningless in places, dealing with tiny improvements in a small body of theory that has little resemblance to the real world.
Students also get very little basic information about economic structures and institutions. If you ask a typical grad student to describe the operations of the Federal Reserve System most of them will do a pretty poor job of it. Now, I don't love the Fed. In fact, I have argued that we should get rid of it. But a grad student ought not complete a degree in economics without some working knowledge of what it is and how it operates.
AEN: Why would a student study economics if not for a greater understanding of how economies work?
VEDDER: Well, students seem to be going in two directions. There are the standard academic students who aspire to be college professors. They see themselves as theorists and mathematicians who happen to be working with economic phenomena. And there's another group that has a completely different orientation. They want to get their degrees and get out into the business world to make money. Or perhaps they aspire to be like those Nobel Laureates who thought they had discovered the magic formula for investment before their hedge fund nearly went belly-up.
Those two categories sum up nearly all the existing students. But the ones I am interested in do not fit into either category. Those in this third group are interested in economics because they want to discover, from a philosophical and scholarly standpoint, how the world works. They are interested in events, history, institutions, places, law, and policy. They ask probing questions about real phenomena, and seek to understand a general theory to explain it. They care about the history of thought, the workings of central banking, the intersection between economics and other disciplines, and a wide range of real issues.
If you think about it, the truly great economists of the past--Mises being the most impressive example, but also including Hayek, Friedman, and even Keynes and Marx--fit into this third category that is so rare these days. They spoke to the issues of the day.
Most current economists are ill-equipped to do that, because they work only in math and econometrics. They don't know the details of how the world works. They learn the technical material, but don't have a solid grounding in basics, like scarcity and prices.
AEN: This problem undoubtedly affects the way economics is taught.
VEDDER: It is appalling that so many students consider it a dreary subject. Economics can be beautiful. It can be exciting. But emphasis solely on mathematics and technique robs economics of its inherent power. It makes economics dull. I think that explains why more students do not persist in economics.
The American Economic Association established a commission on graduate study several years ago that included economists of all stripes. There was fairly widespread agreement that the profession had become too narrowly technical. For example, it was found that many graduate students couldn't teach a principles class because they were so wrapped up in esoterica.
Most economists today are trained in state universities. They work in state universities or in government. Their income is subsidized, directly or indirectly, by government. There is a pro-state bias built into the system. Most economists have had very little contact in their professional lives with the private sector. They haven't worked in jobs in which consumer service is the priority. They are isolated from the principle and consequences of scarcity.
That would not be a problem if their business was physics, literature, or even history. But economists are writing and thinking about this thing called the economy that they have never actually experienced. That's what accounts for the leftist bias indicated in surveys showing that 80 to 90 percent of economists vote for the Democrats. The growth and popularity of Austrian economics represents a good sign. But still a large majority can be counted on to favor leftist positions.
AEN: Do you think this bias has affected the reception of your own work?
VEDDER: The view advanced in Out of Work is that free markets are the best means to avoid extended periods of high unemployment; prolonged joblessness is most closely associated with a variety of interventionist schemes. This thesis alone guaranteed that we would not get the most respectful hearing within mainstream circles. But we had an additional problem: most of the book is a narrative that tells a story, one that even a lay person can find interesting.
Now, I have probably had more success than most Austrians in reaching the mainstream. I write for mainstream journals and give papers at mainstream conferences. Without compromising, I generally try to approach the discipline in ways that mainstreamers will not find excessively jarring. This is reflected in the book, which includes low-tech regressions. Incidentally, Murray Rothbard loved it. He would always say to me, if you can tell the Austrian story with regressions, go ahead and do it.
The establishment backlash didn't come for a long time. But eventually, we irritated enough Keynesians that it finally came, in the form of an attack from Brad DeLong, a well-known Keynesian at Berkeley. He wrote a slashing attack on the book. Most of his criticisms would be dismissed out of hand by Austrians. Nonetheless, in the new edition of Out of Work, we added 50 pages of econometrics to go along with the descriptive history. We have done even more technical analysis, and it hasn't changed the message one bit. It is still not going to please everyone.
AEN: Can the essential message of your book be conveyed by econometrics alone?
VEDDER: You cannot reduce economics to equations, not even economic history. Ironically, in the course of doing all this math, I have become more and more skeptical of the efficacy of these techniques. There are all kinds of problems with them which cannot be overcome. At the same time, the more I understand about the Austrian literature, the more I marvel at the theoretical sophistication and subtlety of argument you find in the works of Mises and Hayek.
I'm not entirely against econometrics. Neither do I see it as just a way to raise my Nielsen ratings. For all of its imperfections, econometrics can add some rough support for agnostics who cannot see truth through any other means. But you cannot convey ideas like the discovery process in econometrics.
AEN: In fact, you have written a strong critique of relying exclusively on government data sets.
VEDDER: The most popular statistic in economics is the Gross Domestic Product, but the whole thing is problematic. The idea that we can "add up" the national output is fraught with peril in a society in which government is so heavily involved in the economy.
My article with Lowell Gallaway on The Great Depression of 1946 [PDF format] (Review of Austrian Economics, Vol. 5, No. 2) illustrates this. The official statistics at the time we wrote that article (1991) had GDP crashing in 1946, in real terms, by 17 percent. If you believe that statistic, that is the worst year for national output in our nation's history, worse than any year in the 1930s.
And yet, the stock market was rising. Unemployment was low. Ten million people were leaving government employment from the war and entering the job market. The Keynesians were all predicting massive joblessness. It just didn't happen. In fact, there was no Great Depression except in the government's own data sets. Our title was tongue-in-cheek.
The reason is that the government didn't do anything. The soldiers were sent home and that was it. We moved resources from public to private use. We went from a command economy back to a mixed-market economy. And the power of the market reasserted itself after a long time in which it laid dormant during the war.
The official statistics ignore the fact that prices were being controlled in 1945 and 1946, and didn't really reflect real scarcity. Businesses reported the value of goods and services as the price the government paid for those goods and services. Yet no rational human being would pay those prices if they had to purchase them on the market.
After the war, resources were being spent, not on tanks and bombs, but washing machines and cars. Government statistics showed this as a sharp drop in output. But it was total fiction. In fact, this year was a triumph of markets over planning. Ironically, this occurred the very year of the Employment Act of 1946, which enshrined Keynesianism in American life.
The really odd thing is how the numbers keep changing. When the numbers first came out in 1946 and 1947, they said that the economy had fallen 5 or 6 percent. But due to some problems with index numbers that I won't go into, by the early 1990s, the data showed a 17 percent drop for the same period. More recently the data has recorded a 20 percent drop. The government kept revising the figures to suggest it was even a worse depression. Since then, the government has gone to chain-link price indexes, which gets rid of the some of these distortions. The bottom line is that it's all nonsense.
AEN: How much credit does Truman deserve?
VEDDER: Very little or none. In 1946, Truman wanted to keep wage controls on. Congress passed a bill that retained them but not as vigorously as Truman wanted. Truman vetoed it because it didn't go far enough and Congress didn't override the veto. The effect, however, was that wage controls expired statutorily. We went to zero-wage controls, not because of a political commitment to free markets but because of a strategic miscalculation.
Also, when the bomb was dropped and the war was ended, the planners were caught off guard. They had talked about erecting a vast apparatus of peacetime planning after the war. But the war ended so suddenly, they didn't have time to mobilize and put it into place. That was marvelous because it meant that government was not meddling as much as it had been.
Government spending fell more than 70 percent over a two-year period. In fact, if you look at the numbers alone, you might think that Murray Rothbard was president of the United States. He wasn't working on getting rid of government completely, but he was moving in that direction! In fact, the whole thing was a fluke but a very fortunate one for the American economy. We entered into a long period of prosperity. All of this is submerged in American economic history because it isn't obvious from the data, which are highly misleading.
AEN: What other examples of statistical manipulation have you found?
VEDDER: You can support any theory of economics you want to depending on how you manipulate the data. Consider the great controversy over whether we have been richer or poorer since 1973. To support Malthus's position, I could cite data showing the average hourly wage falling 13 percent since 1973, showing that wages are moving toward subsistence. Or I could show that Marx was actually right, by pointing out that output per hour has risen even as wages have fallen. Or I could cite real compensation per hour in the business sector and show wages outpacing profits, which suggests business is being exploited by workers, sort of a reverse Marxism. If you add to this the adjustments made by those who claim the CPI is not being measured properly, matters become even more complicated. You can even show what both neoclassical and Austrian economists would expect: real-wage data and productivity data are moving in the same direction.
I'm not suggesting that the truth is not out there somewhere. I just doubt that government statistics are the magic means for finding it out. Data are highly subject to manipulation. Mainstream economists do this all the time. As Mises warned us, it is a mistake to let the data determine your theory instead of using data to illustrate a principle of economics you can explain through good sense. In pursuing this path, I would say Austrians are more intellectually honest and more straightforward than most mainstreamers.
AEN: Do you worry about what today's students will regard as the economic lessons of the 1990s?
VEDDER: To some extent. I can just see historians of the next decade putting their spin on matters. The 1980s have already been called the Decade of Greed, and that moniker has stuck. I can imagine the 1990s boom being regarded as the consequence of Clinton's mixed economy, while blaming the financial crisis on the Republicans. This is a distortion.
In some ways, of course, Clinton has been better than Bush. Under Clinton, government spending as a percentage of total output has fallen. In 1992, the government spent 22 percent of the GDP. In 1998, the government spent 19.5 percent of the GDP. My interpretation of the prosperity of the 1990s is in this single statistic. The overall size of government fell. (By the way, these numbers may be fundamentally erroneous, but since the distortions occur every year, certain patterns emerge over time that can be useful to examine.)
Clinton's philosophy of government has always been: do whatever is necessary to retain power. The one mark he attempted to make on the country was through his health-care proposal, and he was beaten back pretty badly. When that happened, the stock market was 3,800, about what it was when he took over as president. Since then the stock market has more than doubled.
After the health-care fiasco, the crazies fell out of favor within the administration, and the Republicans took control of Congress. Clinton began to give speeches proclaiming the era of big government to be over. He didn't mean it, of course. But political forces were pushing him in the right direction. The result was a government gridlock, with government growth suddenly lacking that ideological push it needs in order to outpace economic growth. The economy grew at 5 percent and the government at 3 percent, and the result over time has been a relative shrinkage in the government's take.
Two-and-a-half cents of every dollar got taken out of the public sector and put into the private section. This is no revolution but it is a step in the right direction. It provided some impetus for the boom. By the way, the boom is overstated: we haven't had a year of four or more percent of real increases in output. This is the first long-term expansion where this has been the case. Nonetheless, we've been reasonably prosperous, and I think it's been because the big-government liberals have been spooked.
AEN: What about efficiency gains from dramatic technological changes?
VEDDER: Technological changes have always been around. I think the difference may be that the government has been relatively unsuccessful in trying to regulate the new technologies in computers and information. Regulation in some areas has declined. For example, the Interstate Commerce Commission is gone.
The best thing the Republicans did was shut down the government in 1995. The stock market rose three days in a row. I wondered in an article I wrote at the time: since the market went up 100 points with a third of the government shut down, how much would it rise if the whole thing were shut down? In any case, some progress has been made.
I'm not optimistic that this will continue. This notion that we have moved into a free-market age is wildly overstated. The reality is that the forces of interventionism are very much on the march. You can see it in regulatory activity and you can see the political left gaining in Europe. Germany practically has a communist as a foreign minister.
Many of the worst aspects of American regulatory law--for example, the Americans With Disabilities Act--were approved by George Bush, who, I think, was a worse president than Clinton in terms of the economy. There's more to being president, of course. I do think issues of moral turpitude are relevant. Nonetheless, we're talking about economics, and Bush was very bad on that front.
AEN: What do you make of the Commerce Department's data showing historically low savings?
VEDDER: It is true that the rise in equity prices have made people seem wealthier. And there is a well-known rule in economics that people's consumption and income depend not only on their income levels but also on their perceived well-being. If people perceive themselves to be well-off, they feel they don't need to save out of current income.
The way the government defines savings is subject to some debate and scrutiny. Economists usually think of savings as the changes in the flow of wealth minus consumption over a period of time. Well, that's not the way the Commerce Department looks at it. The government says savings is the residual income that isn't consumed. That creates all sorts of inaccuracies. That's why the Fed's superior data diverge sharply from the Commerce Department's.
Again, aggregate statistics have to be handled with care.
AEN: You're not suggesting that the savings decline is entirely artificial.
VEDDER: I think we can still grant that our savings rate is low. I think the main reason is that we tax savings as capital at punitive rates in this country. The double, triple, and quadruple taxing of capital punishes savings because savings is converted into investments and financial capital in the process of creating real physical capital. If you tax capital high, the incentives to save are going to be reduced.
We have corporation income taxes at 35 percent, on top of state income taxes. If the corporation makes $100, $40 are taxed away. Let's say half of the remainder is given to the shareholders in the form of dividends, leaving only $30 to keep as retained earnings to build new machines and expand production. The shareholders will pay a tax of about a third on those earnings. If the shareholder sells the stock, the capital is taxed again.
If you somehow survive all of this with some money intact, you get taxed again if you try to pass wealth on after your death. The federal estate tax table starts at 37 percent and runs as high as 55 percent.
Remember too that some of these gains are mythical because they are brought about through inflation. Let's say your aunt bought $10,000 in stock in 1971. She kept it until 1997, when the stock was now worth $40,000. She then decided to sell it. The government tells her that she made a $30,000 profit, and 20 percent is due to the federal government. After the state government gets its cut, she ends up paying about $7,000 in taxes.
The reality is that because of inflation, the price of everything has quadrupled since 1971. The purchasing power of the initial value is nearly identical to its purchasing power in 1997. There are no real capital gains, and yet she pays the government anyway. Under these conditions, why save? Why not consume?
Many other countries have higher taxes than we do. But they don't have as high taxes on capital as the U.S. does. As a consequence--again granting the problems with this data--most every developed country has higher savings than we do. Until recently, we have saved about a nickel on the dollar. Well, France and Germany save over 12 cents. Italians save 14 cents--three times as much as Americans. Japan and Britain save between 10 and 15 cents. The reason: taxes on capital are very high in the U.S.
AEN: What about indirect taxes on capital and savings?
VEDDER: Certainly, there is the regulatory tax. OSHA regulations require companies to spend billions, not to expand output, but to meet some government mandate. This is a disguised tax. If you add these taxes, you've got something on the level of quintuple taxation on capital. This is gross over-taxation.
Forced savings programs like Social Security end up discouraging savings too. Martin Feldstein, who has limitations, has nonetheless made his reputation demonstrating that this program directly reduces personal savings. The aggregate national savings rate is not increased in the way that people think. I think he is right. There's this fiction that companies don't really pay the Social Security tax, but in fact they do.
The tragedy for younger people is that the money taxed for Social Security is not going to be given back at any respectable rate of return. One solution, that of diverting revenue to higher-return investments, could potentially lead to a government takeover of the stock market. This would be a disaster. The devil is in the details of these plans.
Ideally, I would like to see a total opt-out option: young people surrender their claim to future benefits in exchange for no longer paying the tax. That would eliminate a huge portion of the liabilities in the system. It's possible to do it without a costly transition.
A quick warning: take all predictions about Social Security's future with a grain of salt. If you change assumptions modestly--such as assumptions about the growth in future benefits--the numbers change dramatically. All these calculations you read about in the newspapers are very sensitive.
AEN: To your mind, is there a preferred level of savings?
VEDDER: The Austrian position is that there is not, which is why I am a little uncomfortable with warning about declining savings. Mises and Rothbard were right: there is no optimal level of savings. I believe that Americans save too little, not because I in my wisdom think people ought to save more, but because it is manifestly clear that the government discourages savings, causing them to be below what they otherwise would be.
The optimal rate of savings depends on human action as it operates through the subjective notion of time preference. Whether people want things now or later determines how they allocate their consumption and savings decisions. Part of the idea of the free market is that we allow the price system to signal people to make their own choices. The prices in this case are interest rates, which variously reward and discourage the saving-consumption choice.
This is where Austrians have so much to contribute. A lot of the problems we have in macroeconomics are due to mainstream economists' lack of understanding in this area. When the central bank manipulates the interest rate, it creates distortions very much like those that are created by price controls. The Federal Reserve interferes as much with the market system as a price-control board.
AEN: How does international trade affect economic data?
VEDDER: It causes great difficulties. How can you tell where dollars are earned these days? With economies integrated at all levels within the structure of production, it is hard to know. The Gross Domestic Product statistic measures all output by Americans within a given year, including those living overseas. How do you value what's going on in Japan?
When you consider a company like Daimler Chrysler, you are left to wonder: what nation does this company belong to? Germany or the U.S.? I think the right answer is neither. Corporations are taking on an identity of their own, and part of the reason is that companies are fleeing the tax state as best they can and playing different jurisdictions off each other. They are trying to become transnational. I think all this is wonderful, but it does cause administrative difficulties for corporations.
The great example of skewed data in international economics is the balance of payments data. Within this data, there is something called "errors and omissions," which signals where the bureaucrats couldn't get the numbers to balance out. Well, some years, the errors and omissions reach $50 billion.
Then there is the problem of grey and black markets. I'm not just talking about drug lords in Colombia. This includes people who go to Europe and buy a $10,000 diamond and bring it here in a sock because they don't want to declare it at customs. As the state has grown, we have become a world of liars and thieves. This makes all this data suspect.
AEN: Do you see mergers among international corporations affecting union power?
VEDDER: Internationalization accelerates the decline of labor unions. From a company's perspective, if unions get too strong, it will just move its operations to another region or country. The unions are not really in a position to stop them because union power is seriously on the wane.
In the private sector, union membership is down to about 10 percent of the labor force. That is below the number in 1920, a decade before the Wagner Act and the New Deal and its labor-protection laws. The only argument that could be made for them pointed to the lack of labor mobility in company towns and the like. But now, even the poorest of Americans can afford a jalopy. Anyone can move today, so the notion that a person is "trapped" is absurd.
Americans now realize that we don't need labor unions. However, there is one area where the union thrives, and that is in the public sector. For the first time in U.S. history, one half of union membership is not in the private sector.
AEN: Is your work in labor economics influenced by W.H. Hutt?
VEDDER: He was influential in Out of Work. He once told me that the Depression in the 1930s was in part due to the artificial propping up of wages. I couldn't believe that was true, but as I looked into it, I realized he was exactly right. Murray Rothbard's book America's Great Depression helped me in this regard too. That book was an important precursor to a whole new revisionist school on Herbert Hoover. I think Murray was the first to argue that Hoover was an early New Dealer. Even mainline historians now agree.
Oddly, I never set out to be a labor economist. It was not my focus in graduate school. As I became interested in macroeconomics, I realized that unemployment is a key factor in sorting out the theoretical issues. That's when I read Hutt, as well as Hayek, and the early writings of Edwin Cannan, Lord Beveridge, and Lionel Robbins. They all pointed to the fact that markets are the way to deal with labor problems.
AEN: Labor economics frequently intersects with moral issues, like justice and equality.
VEDDER: I have never understood the appeal of a goal like "equality." People are inherently different. They have different talents, different interests, different degrees of marginal productivity. This is what makes exchange possible. It's what makes life interesting and complex. Variety is the spice of life. Cindy Crawford makes much more money than I do, but I don't resent it. I don't think everyone in the world ought to be forced to look like Richard Vedder.
This obsession with equality is very destructive for the human race. Mises is correct that free societies need to learn to deal with and even celebrate the existence of enormously wealthy individuals. They are a driving force behind rising wealth of the whole society.
By the way, I could give a two-hour lecture on the fallacies inherent in income-equality statistics. In brief, what is the point of taking a snapshot of a one-year period as opposed to a ten-year period? Some people who win the lottery one year are digging ditches the next year. Some people who are college students go from $3,000 to $100,000 per year.
AEN: You seem to have a talent for cutting through the conventional story.
VEDDER: This is what I mean about economics being powerful and interesting. For example, on the Great Depression, there was no need for there to be this decade of mass suffering. It was a consequence of massive government intervention in the economy. This is not just a story of data and number crunching. It is a tragic human drama and ought to be taught that way.
AEN: Certainly the students at our summer program come away from your classes with that feeling.
VEDDER: The great thing about the Mises University is that I feel liberated to teach the way I want to, without fear of reprisal. Like all professors these days, I feel somehow limited in what I can say in my own university, even though I have never been threatened. I have just finished reading The Shadow University, a book by Alan Charles Kors and Harvey A. Silverglate (The Free Press, 1998). I could only read 25 pages per night because it made my blood pressure too high.
What the authors describe is an overall atmosphere on campus of intimidation, brainwashing, political indoctrination, and browbeating, of both students and professors, by an entrenched university bureaucracy. The biggest surprise is how oppressed the students themselves are, with disciplinary boards, dormitory social police, etc. My university is better than most, but even here you worry about taking particular positions on affirmative action and the like.
When I am at the Mises University, I get to say whatever I want to. It has the feel of academic freedom. I go to all those social functions in the evening, and I find it exhilarating. The students want to talk about ideas and concepts. They want to learn. I wish we could have a whole university that operates this way.
Volume 20, Number 2 (Summer 2000)An Interview with Gene EpsteinGene Epstein, former chief economist for the New York Stock Exchange, is economics editor at Barron's, where he writes a regular column from the perspective of Austrian economics. He delivered the Hazlitt lecture at the Austrian Scholars Conference 6, March 25, 2000, and was interviewed the day of his lecture.
AEN: Reading your column, one gets the sense that you love your subject.
EPSTEIN: I really do. Writing about economics is a joyride. A boss once told me that I?m the only person he?d ever met who reads fat tomes on economic theory for fun! But economics is fun. If you read the right books, you find out that economics offers wisdom that helps solve the great mystery of how society goes about creating prosperity.
I haven?t always loved economics. My mother was a communist and my father was a capitalist, so I was always consumed by this great ideological drama while growing up. After college, I started going to the New School for Social Research to find some answers. I became Robert Heilbroner?s prot?g? and I wrote for his textbook. I don?t want to criticize him because he helped me, but, candidly, I must say there wasn?t a lot of substance there. But there wasn?t a lot of substance in any of these economics classes.
I began teaching economics while at the New School, but at some point I just couldn?t face the class any more and teach the models which seemed to have so little to do with real people and their economic decisions. My lack of enthusiasm came through in my teaching. So I quit. I had decided that I was not a socialist, and, in those days, there didn?t seem to be much room for non-socialists teaching economics.
I decided to get a real job on Wall Street. I became a commodities analyst, and in that way, I began to develop an intuition about markets and how they worked. Those were tough times of rising inflation. I recall housewives boycotting rising beef prices. Not knowing that they should have been attacking the Fed, they went after mythical price gougers at the local grocery store.
AEN: At what point, then, did you develop a passion for economic theory?
EPSTEIN: I noticed a book called Man, Economy, and State by Murray Rothbard in the library of the New School. I browsed through it briefly, then bought it. I read it and began to get excited about economic science, realizing that I was an Austrian. The theory connected with what I knew from my profession in the commodities industry and that there was such a thing as economic science.
Later I read virtually all of Mises. But Rothbard, to my mind, is the greatest Austrian of them all. And yet he stood on the shoulders of Mises. The Austrians were very lucky to have had two great geniuses working in one century. This is very unusual in the history of thought.
Trailing after Mises and Rothbard, to my mind, is Hazlitt, who was also a great genius. My favorite Hazlitt book is The Failure of the New Economics. I wish it had a racier title because it sure is a lively book. It yields an enormous amount of wisdom about economics. I recall when a book attacking Wall Street came out by Doug Henwood (who has another book attacking information technology on the way). It was a complete misunderstanding of Wall Street and what it is supposed to do.
As often happens, you cannot find an answer to people like Henwood in the conventional literature, and yet his brand of anti-capitalism is very powerful. The Austrians, and Hazlitt in particular, have done important work by dealing with these people in great detail.
Later I took a job as senior economist at the New York Stock Exchange, and was there for 13 years. That?s where I learned about statistics and mainstream economics. But what I brought to it was an Austrian skepticism. And today I use the Austrian theoretical framework to inform my work. I once received a letter from a reader that I treasure: it said ?you are the best economics columnist since Henry Hazlitt.? Imagine that!
AEN: What about history? Have you read Rothbard?s 4-volume history of colonial America?
EPSTEIN: I love history, but I?ve not yet tackled Conceived in Liberty. How did he have the time or the intellectual energy to pull something like that off?
I loved his History of Economic Thought. My great regret is that he wasn?t able to cover the period he was most interested in, from Carl Menger up to the present. My favorite part of the two volumes he did finish is his chapter on Adam Smith. Robert Heilbroner loved Adam Smith, and I was supposed to teach Smith?s work in seminar. I remember thinking that Adam Smith?s treatise was a mess. I was appalled at the chaos I was confronting. It?s true that Smith had a magisterial style, but otherwise I was thrilled when Rothbard ripped into him.
I hear people say that Rothbard was not fair to Smith, and failed to give him credit for what Smith did well. Maybe, but part of the glory of that book on the history of economic thought is that it is all so fresh, and Rothbard?s personality shows through in the prose. Praising Adam Smith is old hat; Rothbard gives a completely different view with definitive judgments.
AEN: In writing your column, you have the chance to talk to more economists than most economists do. Any observations?
EPSTEIN: This is actually one of the great advantages of my job. Everyone is anxious to explain his or her perspective. When a new report or statistical release comes out I like to call Wall Street economists and give them a hearing. But I also call academic economists, including Austrians, and even economists working for statistical bureaus, who are often quite knowledgeable. These three groups rarely speak to each other, so I see part of my job as alerting each group as to what the other group is thinking.
I try to be a jack of all trades and a semi-expert on at least some. I talk to the Wall Street economists for insight on the developing drama of the economy. What?s been going on for the last few years is a case of high drama, and the Street economists know more about it than the academics. But from academic economists, particularly Austrians, I can discover the underlying rationale for deeper trends. I want to use their insights in a way Street economists do not.
I must say that some money-market economists I know have recently been taking a deeper interest in questions like: how does the Federal Reserve affect economic trends? One man I know, Lewis Crandall, worked on the desk at the New York Fed, and now he covers the central bank as an independent analyst. He knows how money is created, which is unusual. He understands that the ISLM model is nonsense. He has a far more realistic view of markets than most academic economists. So there are some people out there who are able to draw wisdom from news reports and academic treatises.
AEN: And what of mainstream economists in the universities?
EPSTEIN: They often exasperate me. They have an absolute obsession with working solely with government statistics to derive their insights. They believe the numbers, never question them, and completely refuse to draw on other evidence. Not all, but far too many.
For instance, let me cite the case of the national income accounts, which refers to interest plus consumption plus government plus net exports. The part of the consumption component of the national income accounts, which is two-thirds of the gross domestic product, that applies to food consumption has been declining in real terms throughout the 1990s. If you take the nominal estimate of food consumption and you whack it, the way they always do, with the price index, food consumption was indeed declining in real terms on a per capita basis.
Are we really supposed to believe that through the 1990s, the average American was eating less, even though it didn?t seem to show up in any other statistic? The normal pattern is that when an economy expands, waistlines expand with it. I was perplexed that this wasn?t happening, and called the US Department of Agriculture. They, of course, happily work on a much lower level of abstraction than most academic economists. They don?t deal with nominal sales numbers and then whack it with a price index. They have pretty good figures, for example, on pounds of meat sold?on or off the bone. And their numbers showed meat consumption increasing.
Then I called the Bureau of Economic Analysis, which keeps these big numbers. The guy who is in charge of the food numbers was indeed willing to grant that there might be something wrong. He wasn?t aware of the numbers from the Department of Agriculture. He just instinctively figured they were wrong. I wanted to say, ?look, you know they are wrong, so why not apply a little ad hoc escalator and make them increase?? But he couldn?t do that because it would throw everything into chaos.
Well, about a year later, in two consecutive quarters, the Bureau suddenly found that the American citizen was feasting. But there was no backward revision. Even to this day, the figures from 1992 to 1998 show a decline in food consumption, and a sudden spike in 1999. Now, you can?t take these numbers too seriously, and mainstream economists are deluding themselves so long as they do. If you want to describe reality?and that?s a big if?you have to look deeper than macroeconomic data to find out what is really going on.
AEN: You find that the statisticians in the government will privately admit this?
EPSTEIN: Yes, they will, particularly as regards the effect of information technology (IT) on productivity. They have no means whatsoever to account for it. If you think about it, microchips have made it possible for business to be far more efficient now than even ten years ago.
Websites offer instant price comparisons. Computers help oil producers find oil. Our cars run much better than they used to. Medical technology has exploded. Consumers are much more informed in their buying decisions than in the past. These are huge advances, and they beautifully illustrate the power of free enterprise. But all this is missed in the official statistics.
The government and economists who rely on its numbers are still working with 1992 models. They try to tease out of the numbers the effect of IT on productivity. I don?t dismiss the exercise out of hand. But it requires that you separate the production of computers from the use of computers. Well, to one degree or another, most of the economy is using IT now.
This means you have to get out of the straitjacket of official statistics. If a car is more durable and lasts longer, and has fewer repair problems, the official statistics have to adjust. Maybe you are getting twice as much car for your money as you did ten years ago, but there is no way to account for this.
AEN: Is this a critique of aggregate statistics or a critique of how they are collected?
EPSTEIN: It?s both. At best, any set of aggregate statistics is going to be a very rough approximation of what?s going on. As Hazlitt said, they cannot record huge amounts of wealth creation, like quality improvements, and they cannot record huge amounts of wealth destruction when it is caused by government statistics. Because they are rough, they cannot be used for some of the purposes for which mainstream economists try to use them.
Despite that, they are worth having, if only so that we can have a blurring snapshot of some basic information, like whether the economy is in recession or recovery, or whether prices are going up. Statistics are useful for telling a story about history, but they are not useful for gaining a full picture of reality, and they certainly don?t make anyone an expert in predicting the future.
Another problem with statistics rests with the reality that they are gathered by bureaucracies. They cannot easily reallocate resources to place new emphasis on this or that sector. Inevitably, these bureaus do not reallocate resources in light of dramatic economic changes; they merely ask for more money.
The people in these bureaus can be pretty bright. But the purpose of government is always to do less with more, and these bureaus excel in this job. Why economists would bank their theories on being tested according to the data they crank out of these bureaus is beyond me. A good rule of thumb is to put more stock in numbers that reflect the lowest possible level of abstraction: for example, a number telling you that a certain number of people applied for unemployment benefits last month.
AEN: Do you keep up with the prediction industry?
EPSTEIN: Certainly, and the last decade and a half provides ample evidence that the establishment?s ability to forecast the future is wildly overrated. Look at the semi-annual Wall Street Journal poll of 50 economists, all associated with Wall Street. Their constant refrain was to predict a future of moderate growth, tame inflation, and an upwards tick in unemployment. Greenspan, year after year, predicted the same thing.
However, it is clear that since 1985, Wall Street economists and Greenspan have consistently underestimated the boom. They predicted that the economy would soon settle down and it didn?t happen. They were right about inflation but wrong on everything else.
Why were they wrong for so long? Part of the answer is that they have a Street-centric view of the economy, and mistakenly think it serves as a proxy for the whole economy. They don?t look beyond the Potomac and the Hudson River. They need to realize that the stock market is a relatively minor player, and not nearly as important a factor as Street economists think it is.
By the way, Street-centrism also accounts for why Greenspan pursued an easy monetary policy over the past 24 months. It?s not that he was tolerant toward inflation. Instead, he predicted that his interest-rate increases would slow the productivity growth rate. But they did not, much to his shock. Lately, Greenspan has realized his error and is a little bit more impressed by the economy.
If you are called on to predict the future, and you have no great imagination about where economic growth is going to go, your natural fallback position is to a middle course. Moderate growth is the safest thing to forecast. But it bespeaks a lack of insight.
AEN: Does better research make for better forecasts?
EPSTEIN: Consider what Mises said on the subject. The potential to forecast the future does exist. Businessmen and stock traders do it every day. That?s what entrepreneurship is all about. Recall the story about the movie mogul Harry Cohn. He said he would know that a movie would be a hit if it made his backside squirm. Another movie exectuive made fun of that method: ?Harry Cohn imagines that the whole world is wired to his backside.? But, there is a sense in which it was!
But Mises also pointed out that the Sword of Damocles is always hanging over the forecasts of economists. Mathematical relationships between historical events are always subject to change in the future. They are never fixed and are constantly subject to revision based on the behavior of consumers and other entrepreneurs.
In recent years, some people on the fringe have been right about the direction of the economy. But will the same people be right about timing the downturn? We?ll see. In any case, I like to grill economists about their lousy forecasting abilities. One actually made a point Rothbard liked to make: if he really could know the future, he wouldn?t tell me. He would use the information to become rich!
AEN: Which is likely to be more accurate: micro-forecasts about particular goods or industries or macro-forecasts on the entire economy?
EPSTEIN: On the one hand, particular entrepreneurs are often right about their particular markets. There?s not always a good rationale behind the reasoning, but he or she has a strong sense of identification with the product and an intuition about future market conditions. The ability of these people to predict is sometimes born of that kind of emotional connection. Macroeconomic predictors can?t be said to have that kind of intuition.
Predicting the particular price is another matter, because you are competing with the market. The futures market is always anticipating price, and it can be very difficult to be more correct than the market itself. In that sense, it is easier to forecast the macro-economy because there is no market for the GNP against which you are being judged.
I would say this about all predictions from economists. Just because someone has been right for the last year, and is suddenly a star, doesn?t mean that he will be right about the next year. You have to look at the underlying logic. My favorite forecasters are those who make the mostsense.
AEN: What other kinds of questions cannot be answered through statistics?
EPSTEIN: I don?t believe we can say whether the economy grew more or less quickly in the 1990s versus the 1980s versus the 1970s. To make a distinction between 0.5 percent in a rate of growth, when the numbers themselves are such broad approximations, is really pointless. We don?t really know what growth rates are with a great deal of precision. We are just blind men touching the elephant.
Robert Solow tries to base his growth models on these aggregate numbers, but this is just a fool?s game. His joke that ?computers are everywhere except in the productivity statistics? inadvertently gives the game away: the problem is with the statistics, not the reality. We may not be measuring it right.
Not even the unemployment rate is infallible. It is currently defined as those who are without work and are willing to tell the interviewer that they have actively looked for a job over the prior four weeks. I suspect that people drawing unemployment insurance will say they looked for a job even though they?re actually bumming around. And why the last four weeks? Why not the last three or last six? Moreover, you can?t really measure wage rates since payments in kind are excluded, not to mention stock options.
Finally, you cannot measure the effects of taxation or antitrust or any other kind of government intervention because the real effect is that wealth that would otherwise be created is not created. You cannot measure what is prevented from coming into existence. At the same time, many Austrian theories, and the writings of Mises generally, are vindicated by the numbers concerning price inflation and the business cycle. Data can be useful weapons in our arsenal.
AEN: And yet the price indexes are also used to play what you call fools? games.
EPSTEIN: Certainly that is true. I would like to know, for example, whether median income in this country is higher or lower than 20 years ago. If all you have are nominal figures, and you apply either a CPI or a personal consumption deflator to those numbers, you will find that median incomes are higher.
But if you want to know whether the median wage is higher, the official numbers tell different results. Adjusted by CPI, real wages have remained pretty much the same since 1973. But if you do the same using the personal consumption deflator, you find rising wages. In fact, you find that they are 8 to 9 percent higher, which I find much more realistic.
So which is it? I would love to read a decent account of the basket of goods a single paycheck would buy today as versus the 1950s. It should cover meat, medical, housing, and all the rest. I think you would find that a paycheck today buys much more. Sure, you got house calls from doctors in the 1950s, but would you trade that for the CAT scans of the 1990s?
Which data are we to use? Ultimately we use that data that conforms most closely to our intuition, or, in the case of many economists and political writers, the data that conforms most closely to our politics.
AEN: We are a far cry from achieving the original purpose of government data collection.
EPSTEIN: Of course National Income data began to be assembled for the purpose of economic planning. Nowadays, nobody believes that is feasible. The CPI had a slightly different purpose. It came about in World War I. There was a concern about shipyard strikes. The Wilson administration said that the only way to fix this was to develop an index of prices and raise wages in accordance with the index. In that way, they hoped to prevent a strike. That is why the CPI is still assembled by the Department of Labor.
As you know, the government? meaning Alan Greenspan?still uses all this data for a form of government planning. Some of the bits and pieces of data that he obsesses about are truly laughable. For example, he used to express concern over the ?quit rate??that portion of the unemployed who said they left a job voluntarily. He believed that a rising quit rate meant that workers, feeling secure, would start pressing for higher wages. In truth, the ups and downs of the quit rate are far too small to be of any real significance.
More recently, he has developed a fixation on the so-called ?pool of available labor,? which measures the unemployed plus those who say they would accept employment but are not actively looking for a job. The idea is that if the pool of available labor dwindles, wages are going to start to rise.
But the surveys that produce these categories are heavily flawed by the strange language in the survey itself. Economists at the Bureau of Labor Statistics admit that these surveys don?t distinguish deadbeats from people with an attitude problem from people who really want to work. Besides, if your concern is rising wages, the regular unemployment data are just as reliable, if not more so, in determining labor demand and supply.
But for everyone else, the original purpose of data has been completely betrayed, and thankfully so. We have a Democratic president in the White House who brags about fiscal surpluses. Whatever happened to ?fiscal drag,? for Pete?s sake? I love to tease Street economists and mainstream economists about this one. Back in 1992, everyone was saying that it was essential to boost spending to spur the economy.
But there?s been a change in attitude. Aside from the Federal Reserve, the government has given up on the dream of managing the economy. Yes, the Federal Reserve has a lot of power, but we?ve even seen progress there, since even the folks at the Fed know they cannot control 95 percent of the decisions that affect the economy.
AEN: In what way does the Fed attempt to manage anything but the money supply?
EPSTEIN: Greenspan is the head price fixer of a price-fixing agency. He fixes the price of short-term credit. It?s amazing when you think about it: this agency is able to get people to buy and sell at the prices it fixes. For instance, when Greenspan cut the federal funds rate to 3 percent, that was a pretty low price, not at which to buy, but at which to sell. And he did choke off some selling. But he did get six-month CDs down to 3 percent.
So he has that power. On the other hand, markets can take that power away in an instant. Markets could start dealing only with the price of long-term credit that he cannot directly control. But people do not, at least not yet. In terms of the so-called real economy, his biggest power is the power to break the housing market. That is where his price fixing can be most effective. If he worked at it hard enough, he could also break the entire economy. But Alan Greenspan came out of the Austrian tradition and he respects that to some extent.
AEN: And yet it was he who was behind the bailouts of Mexico, Asia, and Long-Term Capital Management.
EPSTEIN: And he?ll do it again. Those were cases of true panic. Because the economy lives on credit, it is clearly prone to panics. So far, and partly because Greenspan has so much charisma, the Fed has been able to keep its fingers in the dike. The LTCM story is an incredible story, but it has never been adequately told.
The oil price collapsed, Russia got in trouble, and LTCM is long on Russia and short on Treasuries. It turned out that other banking houses had similar investments. The capital markets ?seized up,? in Greenspan?s words. Today, people minimize what was going on by saying it was no big deal. In fact, it was a huge deal. There was a possibility that some houses were going to go belly-up, and that might have cascaded throughout the rest of the economy. Greenspan intervened with interest-rate cuts and it all worked out.
An analogy with the stock market would be a violent one- or two-day crash. He would certainly step in and start buying on the futures market. The plunge protection team would swing into action. But they can?t do this forever. I would love to see a soft-landing of the stock market, but this is by no means guaranteed.
AEN: Didn?t Greenspan recently admit that he doesn?t know what the money supply is?
EPSTEIN: Yes, and while I agree with Frank Shostak that there is something called the money supply, and I agree that it may be knowable, that?s not the same as saying you can target it. The proof that Greenspan doesn?t care about money aggregates is that the Open Market Committee recently said that it no longer believes any aggregate is a guide to what is going on in the real economy, price inflation, unemployment, or economic growth. It is no longer an indicator of those things, which is why the Fed has abandoned it.
In addition, there is no way for the Fed to target any aspect of the money supply. Some credit transactions increase the money supply, while others don?t, and if the mix between the two keeps changing, then the pursuit of a ?monetary policy? is another fool?s game. And as for trying to redefine ?money? in order to track it all, even the monetarists have given up that idea. In this ever-changing economy, any new definition will soon become no better than the ones that are currently in use.
Perhaps this is why Greenspan seems to follow everything under the sun except the money aggregates. This is not a big source of concern to me. He should concern himself with curbing the expansion of credit for which the Fed is responsible and with trying to identify where the malinvestment is in the economy.
AEN: How much artificiality is there in the system?
EPSTEIN: It?s hard to know how much but not hard to know where it is: in the Nasdaq and the New Economy generally. I have mixed feelings about this. On one hand, the tech stocks are the future. On the other hand, they are benefitting from too much optimism exacerbated by credit expansion.
A lot of dot coms are about as useful as tulip bulbs, but others are real and socially beneficial. It?s to the point that when the credit expansion unravels, and a sudden shock is delivered to the New Economy, the entire economy could really fall apart. Ideally, an unraveling will just kill the boom and we will return to a modest pace of expansion. On the other hand, it could be much worse.
Certainly, the optimism is due to the boom, and the credit expansion has brought the boom. When jobs go begging, when salaries are fat, when there is such a firm sense of security about one?s personal circumstances, when times are so good, people are prone to getting crazy. We have the lowest unemployment rate in 30 years.
I think we can assume that the Fed has a lot to do with this. But it is a mystery to what extent the boom is poisoned. That?s the purpose of an economic downturn, to reveal this kind of information and clean the artificiality out of the system.
AEN: You got in hot water once for praising the Austrian trade cycle theory in a column.
EPSTEIN: The episode began when I interviewed MIT economist Paul Krugman, now a columnist for the New York Times, for a Barron?s article. In the interview, he claimed that the economics profession was in a state of ?arrested development? before John M. Keynes came out with his General Theory. Wasn?t Krugman familiar with Mises?s theory that booms are caused by central-bank credit expansion and lead inevitably to busts? It not only predated Keynes but was elaborated upon by F.A. Hayek and Murray N. Rothbard.
Krugman?s initial response was revealing. He said he was not familiar with it, and further implied that because Austrian theory was not expressed in mathematical terms, it was off his radar screen. Well, in my article on the interview I used some column inches to explain the theory and offer some reasons why it is important, particularly in the case of Japan, where reflating the economy could end up creating more structural imbalances on the supply side.
AEN: Do you think you touched a nerve?
EPSTEIN: I must have, because Krugman struck back in an article in Slate. Having done some research into the idea, and I?m sure not much, he concluded that the theory is ?as worthy of serious study as the phlogiston theory of fire.? He then went on to characterize it as an ?overinvestment? theory, which he then renames a ?hangover theory? of recession. His attack on the hangover theory was later expanded into a big article and then a book.
Now, anyone who has read the Austrians knows that the cycle theory is not, strictly, an ?overinvestment? theory; it is a malinvestment theory. In one case, there is too much investment, which is the view he criticized; in the other case, the investment is misdirected as a result of improper interest-rate cues. There?s a difference, though I admit that the difference has eluded many commentators on this issue, even the great economist Gottfried Haberler.
Also, Krugman understands that the Austrian theory poses something of a threat to conventional government policy. If a recession needs to be permitted to run its course, most of what government does to spur an economy on during downturns can actually end up being counterproductive. Realizing this, Krugman came to the defense of old-style Keynesian measures like boosting government spending and inflating the money supply, while attacking Austrians (wrongly, it turns out) for not wanting to do anything during downturns.
But the policy concerns were only part of the story. He honestly seems to believe that no economic theory can be worth its salt unless somebody has expressed it in math. The Austrian economists insisted that all good theory must be put in words; ergo, they aren?t worth listening to. That?s truly a pity, because Krugman himself has a gift for words. I wrote that "he?d probably find the Austrians to be kindred spirits, if he?d only make some attempt to overcome the limitations of his training."
AEN: In that sense, he is like most economic journalists.
EPSTEIN: Yes, but some of us struggle hard to overcome those limits. And that?s more than can be said about many academic economists. ?
Volume 22, Number 3 (Fall 2002)William L. Anderson, Christoper Westley, and Gregory Dempster are interviewed about their experiences and study of the Austrian School.
Volume 13, Number 1 (1991)This fall 1991 edition of the Austrian Economics Newsletter discusses the success of 1991 Mises University at Stanford University.
Volume 22, Number 2 (Summer 2002)Edward Stringham, Shawn Ritenour, and Peter Calcagno are interviewed about their experiences and study of the Austrian School.
Volume 9, Number 1 (Fall 1987)This edition of the Austrian Economics Newsletter celebrates its 10th anniversary and discusses the progress Austrian Economics has made over the past ten years.
Jeff Deist and Guido Hülsmann discuss Hülsmann's years spent writing Mises's biography (Mises: The Last Knight of Liberalism), the serendipitous discovery of Mises's papers in Moscow that made the book possible, how Mises endured and kept working as Europe burned, and how Mises's personal sacrifices helped pave the way for Austrian academics working today.
Jeff Deist and Yuri Maltsev discuss not only his defection from the former USSR, but also his defection from the Marxist economic mindset, the crime of reading Hayek, why so many westerners still have a naïve, uninformed, and romantic view of socialism, how the Ruble was nothing more than a fiat rationing coupon, and why people with contempt for consumerism never visited a Soviet grocery store.
The first teach-in developed at the University of Michigan. It was held on March 24, 1965 in response to the sustained bombing of the Democratic Republic of Vietnam by the US government. This teach-in was organized by the students and faculty at the University of Michigan.
Volume 3, Number 2; Spring-Summer 1967
Many Christians call for legislation to regulate, control, and ban activities that they deem as social vices, writes Bryan Cheang. This audio Mises Daily is narrated by Clay Barnett.
It is not an exaggeration to say the current reputation of economists is probably just below that of a used car salesman. The recent failures of economic policies to boost growth or employment have tarnished this image even more. This, however, is in sharp contrast to the past when economists were seen as the intellectual roadblock to popular misconceptions, bad ideas, or more importantly, government policies sold to the public on false assumptions. Popular slogans such as “protecting American jobs” play on nationalism, but in reality only serve special interests. The economist of the past would never have hesitated to highlight the fallacies in such reasoning.
Most economists today, however, have sold themselves to the enemy. They work for government agencies such as the IMF, OECD, World Bank, central banks, or academic institutions where their research is heavily subsidized by government agencies. To succeed they have to “toe the line.” You don’t bite the hand that feeds you.
Today, these economists and bought-and-paid-for journalists inform us of the dangers of deflation and the risks of “ low-flation,” and how the printing press will protect us from this catastrophe. Yet there is no theoretical or empirical justification for this fear. On the contrary, a stable money supply would allow prices to better serve the critical function of allocating resources to where they are most needed. The growth resulting from stable money would normally be associated with rapidly falling prices as was the case during most of the nineteenth century.
When President Obama first talked about raising the minimum wage, Paul Krugman, a Nobel Laureate in economics, quickly published an article supporting such an increase. Yet, even a first-year student in economics knows price controls distort the resource allocation function of prices, thus benefiting one group or special interests at the expense of the rest of society. Although some will receive a higher minimum wage, many others will simply be thrown under the bus. A political pundit should not be masquerading as an economist.
Economists also have “physics envy” and are enamored with empiricism and mathematical models. To work in a central bank you have to be familiar with, if not a quasi-expert on, DSGE models. The problem with these models, or any economic model, is that the parameters are not constant, most of the variables are interrelated with constantly changing interrelationships and omitted variables, like expectations, some of which being immeasurable, are conveniently assumed away as unimportant. That is like taking a road map of shipping lanes and omitting the islands.
Economics is a social science and techniques borrowed from the physical sciences are simply inappropriate. Since we do not have a laboratory to conduct economic experiments, it is difficult to distinguish between association and causation or correctly determining the direction of causation. Economic activity is based on human actions, with very little empirical regularity. It may be a sunny day, and you have skied for three days. This does not mean you will go skiing on the fourth day. Your actions simply cannot be modeled like the reactions of lab rats in a biology experiment. Unlike the reaction to noise from the zombies in the walking dead, humans do not react necessarily to the same events in the same way. Economists at the Fed must be scratching their heads as to why businesses did not react to lower interest rates as it did after the dot-com bubble. It’s the old adage of “fool me once, shame on you; fool me twice, shame on me.”
When one attains a Ph.D. in physics or medicine, he does not spend time understanding theories from 200 years ago. The profession is always moving forward, right? In economics, we wrongly take the same attitude. Macroeconomics as a profession has not advanced but has regressed. We had a better understanding of macroeconomics 80 years ago. Politicians put Keynes on a pedestal because he gave them the theoretical foundation to justify policies that had been justifiably ridiculed in the past by the classical economists.
These economists such as Smith, Say, Ricardo, and Mill fought hard to dispel the popular misconception that the problem was overproduction and a lack of money. Today, the leading economists are telling us everything will be fine if we can boost demand (hence, too much production) or have more money through quantitative easing. These are the same popular misconceptions promulgated by mercantilists 250 years ago. The difference, today, is that economists are the mercantilists’s ally instead of their enemies.
The role of the economist should be to explain not only the direct effects, but also the indirect effects of economic policies. The economists should not only tell us what is seen, but what is not seen, and more importantly what should be foreseen. Economists in unison should have informed the public that the massive government spending after the crash of 2008 would have created more growth and employment if the money had been left in private hands. To fund “cash for clunkers,” the government borrowed money that would normally have been used to build plants and equipment or capital goods, the real source of growth in an economy. As Murray Rothbard eloquently said, this is a transfer of “resources from the productive [private sector] to the parasitic, counterproductive public sector.”
We live on a planet with a constraint called gravity. We can adapt to the law of gravity by creating innovations such as airplanes, but we cannot defy the law of gravity by jumping off a building without a parachute. The same is true in economics and of the law of scarcity. We falsely believe that somehow if government legally counterfeits intrinsically worthless paper or spends someone else’s money we will be able to upend the law of scarcity.
J.B. Say once said that economists should be “passive spectators” who do not give advice. He could have added, “and do not sleep with the enemy.”
It is becoming substantially less difficult these days to convince people that college is not a sure fire way to the good life. Even Paul Krugman has conceded that “it’s no longer true that having a college degree guarantees that you’ll get a good job.” You can say that again: 53 percent of recent graduates are either jobless or underemployed. Unfortunately, myths die hard. Many people still believe as Hillary Clinton once said, “Graduates from four-year colleges earn nearly an estimated one million dollars more [than high school graduates].” This may sound convincing, but this figure — based on a Census Bureau report — is about as true as it is relevant.
After all, isn’t it true that the most hard-working and intelligent people tend more to go to college? This is not a nature vs. nurture argument, the factors behind these qualities are unrelated to the discussion at hand. If one grants, however, that the more ambitious and talented go to college in greater proportion than their peers, Mrs. Clinton could have just said “the most hard-working and intelligent earn nearly an estimated one million dollars more than their peers.” I think the presses need not be stopped.
For one thing, the Census Bureau estimate includes super-earners such as CEO’s which skew the average upward. Although some, such as Mark Zuckerberg and Bill Gates, didn’t graduate college, most did. This is why it’s better to use the median (the middle number in the data set) than the mean or average. It’s also why Hillary Clinton and other repeaters of this factoid don’t.
Furthermore, just because most smart people go to college doesn’t mean they should. They may earn more money, but what they keep is more important than what they make. Financial columnist Jack Hough created a very illuminating hypothetical scenario with two people, one who chooses college and one who enters the labor force after high school. Hough then uses the average cost of college as well as U.S. Census Bureau data for the average income of college graduates and non-graduates, adjusted for age. He assumes both save and invest 5 percent of their income each year. By the age of 65, how does the net worth of each look?
College Graduate: $400,000High School Graduate: $1,300,000When one thinks about the common narrative of college vs. no college, it truly becomes absurd. Indeed, who exactly are we comparing? We’re not only comparing Jane-Lawyer to Joe-Carpenter, but we’re also comparing financial analysts with the mentally disabled, medical doctors with welfare dependents, building engineers with drug addicts, architects with pan handlers, marketing directors with immigrants who can barely speak English, and university professors with career criminals (whose earnings, by the way, are rarely reported). Many of these troubled people didn’t graduate high school, but it is shocking how they shuffle kids through the system these days. Some 50 percent of Detroit high school graduates are functionally illiterate and it isn’t that much better for the country on the whole. And something tells me that these particular non-graduates need something other than four years of drinking and studying Lockean (well, more likely Marxian) philosophy.
It certainly could be a good thing to earn a college degree. If one wants to be an accountant, engineer, or doctor, a degree is required. And those jobs have very high incomes. But can one really expect to make a killing with a degree in sociology or Medieval-African-Women’s-Military-Ethnic Studies? Pretty much the only jobs those degrees help one get, in any way other than the “hey, they got a college degree” sort of way, are jobs teaching sociology or Medieval-African-Women’s-Military-Ethnic Studies. And that requires an advanced degree as well (i.e., more money down the tube).
Furthermore, a college degree does not even guarantee a particularly high income. CBS News ran an article on the 20 worst-paying college degrees. The worst was Child and Family Studies with a starting average salary of $29,500 and a mid-career average of $38,400. Art History came in 20th with a starting average of $39,400 and a mid-career average of $57,100. Other degrees in between included elementary education, culinary arts, religious studies, nutrition, and music.
These are decent salaries, but are they worth the monetary and opportunity costs? With the wealth of information on the Internet, many skills can be attained on one’s own. Alternatives to college such as entrepreneurship and apprenticeship programs are often ignored. Indeed, apprentices typically get paid for their work while they are learning. The average yearly wage of a plumber and electrician are $52,950 and $53,030 respectively. That’s better than many college degrees and comes without the debt.
And that debt is getting bigger and bigger as college tuition continues to rise. In the last five years, tuition has gone up 24 percent more than inflation. Including books, supplies, transportation and other costs, in-state college students paid an average of $17,860 for one year in 2013 (out-of-state students paid substantially more). And despite all of that, many students don’t even finish. According to US News & World Report,
Studies have shown that nonselective colleges graduate, on average, 35 percent of their students, while the most competitive schools graduate 88 percent. Harvard’s 97 percent four-year graduation rate might not be that surprising ... [but then] Texas Southern University’s rate was 12 percent.
12 percent is simply ridiculous, but the 35 percent for nonselective schools is extremely bad as well. Even the 88 percent for competitive schools leaves 12 percent of their students with no degree, but plenty of debt.
Given all of that, it can’t be surprising that the default rates on student loans (which cannot be wiped away in bankruptcy) appear to be much higher than is typically reported. According to The Chronicle,
[O]ne in every five government loans that entered repayment in 1995 has gone into default. The default rate is higher for loans made to students from two-year colleges, and higher still, reaching 40 percent, for those who attended for-profit institutions ...
[T]he government’s official “cohort-default rate,” which measures the percentage of borrowers who default in the first two years of repayment and is used to penalize colleges with high rates, downplays the long-term cost of defaults, capturing only a sliver of the loans that eventually lapse ...
College is good for some people. If you want to go into a field that has high earning potential (engineering, medicine, accounting, etc.) or you really like a certain subject and want to dedicate your career to it even if it may not be the best financial decision, go for it. But don’t go to college just because as Colin Hanks says in Orange County, “that’s what you do after high school!”
The fall of the Soviet Union should have spelled the demise of central planning, yet the socialist mentality thrives — albeit in a diluted form — in all governments in the so-called “free world.” No one explained the failures of pure socialism and of (the more moderate) interventionism better than Ludwig von Mises. Whether we want to understand why people are starving in North Korea, why minimum wage laws lead to teen unemployment, or what caused the boom and then crash in the U.S. housing market, the answer is in the Austrian School of economics. As the Obamacare disaster unfolds before our very eyes, it is critical for the average person — both adults and young people alike — to understand how economic science makes sense of these heartbreaking outcomes, and shows the way to solve them.
In this context, I am pleased to announce that on April 24, we will begin a six-week Mises Academy course that offers an introduction to the Austrian understanding of both pure socialism and of interventionism (or what is often called “the mixed economy” though Mises himself didn’t use that term). This course, titled “How Government Wrecks the Economy,” is the final installment of a three-part series that uses my Lessons for the Young Economist as the main textbook. (The first installment, “Action and Exchange,” gave an introduction to economic science and studied isolated individuals as well as a simple barter economy. The second course in the series, “Introduction to the Free Market,” explained money, comparative advantage, savings and investment, profit and loss, the stock market, and other topics in the setting of a pure market economy free from government interference. Both are available as independent study courses at the links provided, but they are not necessary to take the present course.) Specifically, in “How Government Wrecks the Economy” we will cover chapters 15 through 23 of Lessons for the Young Economist, finishing our coverage of the book.
The Scope of the CourseThe weekly lectures will run from April 24 through May 29. At the conclusion of the second installment, we had just finished our study of the pure market economy. Therefore, we start this second installment by looking at pure socialism, or what is sometimes called “the command economy.” Although we will rely primarily on my Lessons as the text, the lectures will also bring in discussion from more advanced Austrian readings. For example, in the online class we will discuss in greater detail the important elements of the socialist calculation debate, in which Mises and Hayek distinguished the Austrian approach from the neoclassical mainstream. This opening section will cover both the pure theory of socialism and the (awful) empirical record of actual socialist regimes in the twentieth century. Although these are well-documented facts about the immense body count of socialism, you would hear nary a word about it in a conventional education, even in many private schools, let alone government-run institutions.
In the middle weeks, we will cover topics that are common in many introductory economics courses, but with an Austrian spin (where applicable). These topics include price controls, sales and income taxes, and tariffs and quotas. Here again, even though these results are standard among fans of the free market, they are not things students hear in typical programs, particularly in junior high or high school. For example, we will show that alleged “excesses of capitalism” such as the dreaded “slumlord” are really the outcome of government intervention — in this case, the result of rent control.
Once the standard free-market analysis is covered on these familiar subjects, we can generalize the findings to explain Mises’s point that a limited interventionist state is not stable; each intervention causes problems that inexorably lead to calls for further government interference in the economy.
Finally, we will cover the economics of drug prohibition, inflation, government debt, and the business cycle. Here the analysis will be distinctly Austrian, because the standard treatment in these subjects often leaves out important nuances in the argument. For example, the violence of the cocaine market is often blamed on the lack of government enforcement of property titles, which is a very odd move from a Rothbardian perspective. In this article at Mises.org I gave a better answer, more consistent with the rest of the Austro-libertarian approach. In this section of the online course, we will have plenty of opportunities to draw on other readings besides the textbook.
At the end of this six-week course, the student will have a thorough understanding of the myriad ways in which government interference with the market economy leads to human misery, and ironically causes the very problems that invite demands for government “solutions” in the first place.
Structure of the CourseIn a typical week of the course, I will give a live video broadcast on Thursday from 5:30 – 7:00pm Eastern time. I will spend the first 75 minutes lecturing on that week’s material, and then I will field questions from students for the remaining 15 minutes. In addition, on Saturday I will have “office hours” at a varying time of day (in order to cater to different students each week), meaning that I will be available on a live video broadcast to answer questions from any students who tune in.
Note that the Saturday sessions are purely for the students’ convenience, and are not mandatory. Also, all broadcasts will be recorded and available to enrolled students, so that people who have a scheduling conflict can still take the class if they wish.
If a student wishes, he or she can simply “audit” the class. This has been a popular option for many adults who take Mises Academy classes to watch the lectures but, because of their work schedules, can’t keep up with the reading.
However, students may also take the class for a grade. These students will take a multiple-choice quiz each week, in addition to a final exam. Although the Mises Institute is not accredited, we will present certificates of completion and a formal grade at the end of the class to those students who desire it. Homeschooling parents in particular may decide that their child will receive excellent instruction in economic principles through this class.
ConclusionThe Mises Academy’s three-part series on “Basics of Economics” is appropriate for both working adults and homeschooling children. This final section, titled “How Government Wrecks the Economy,” provides an understanding of the failures of pure socialism as well as the more common menace, interventionism. Taking this class will allow the student to suddenly make sense of the apparently senseless chaos pervading the world, as well as show the path to a solution for so many of life’s woes which are completely unnecessary.
Jeff Deist, president of the Mises Institute, recently spoke with The Free Market about his introduction to the Austrian School and his work with Ron Paul.
Mises Institute: How did you become interested in Austrian economics?
Jeff Deist: My journey with Austrian economics and the Mises Institute began in 1992. I was fortunate to have a good friend, Joe Becker, studying in the graduate economics program at University of Nevada, Las Vegas. Joe was a burgeoning Austrian scholar, and of course had chosen the program strictly because Murray Rothbard was on the faculty. At the time a small group of Austro-libertarian students had assembled in Las Vegas to study under Murray. With the addition of Hans Hoppe, UNLV clearly had become the top economics program in the US for graduate students interested in Austrian training. I was able to attend a few of Murray’s course lectures, which not surprisingly (to those familiar with his lifestyle) were held in the evening! Needless to say the lectures were fast-paced and filled with references beyond the mainstream, giving only a hint of Murray’s vast range of knowledge. Encouraged by Joe and his excitement for Rothbard’s teaching, I decided to explore further.
At the time I was already a committed libertarian, but lacked any real intellectual framework to integrate free market economics with ethics, philosophy, law, and political liberty.
Remember that much of what passed for free-market or libertarian thought at the time remained mired in 1980s Reaganite clichés. Supply-side economics was still the focus of the Right, with many otherwise sensible people talking about the Laffer Curve and maximizing tax revenue! Quasi-utilitarian arguments flourished in the economics mainstream, ceding the intellectual high ground in favor of arguments that free markets merely “worked” better. “Law and economics” theories were trendy, with strict liability tort models offered as the supposed remedy to judicial overreach and externalities. Tax cuts and enterprise zones typified the weak-tea fiscal policy ideas coming from the political class, even as Clinton outfoxed the elder Bush by co-opting limited government rhetoric. Of course both Alan Greenspan and the Fed were wildly popular across the political spectrum, with some pundits promising not only an end to poverty (through monetary policy) but an end to history itself. Democracy, so we were told, had triumphed.
Against this backdrop Austrian economics opened up a whole new world for me. It became clear that antipathy toward government and support for free markets was not enough: it was necessary to understand and explain the harm caused by all kinds of government intervention in economic terms, which is to say, human terms. Reading breezy libertarian books and articles could never substitute for more rigorous academic self-study.
MI: Describe how your interest in Austrian economics evolved.
JD: Like so many before me, I began reading the great works of Mises, Hayek, and Hazlitt. These works demolished, point by point, the case for communism and socialism, while warning against the abandonment of the old liberal order. They also effectively predicted the failure of social democracy models that had replaced monarchies in Europe and constitutionalism in America. Once one understood and accepted Austrian teaching regarding the fundamental choice between laissez-faire and statism, the conclusion became clear: there was no “third way.”
Traditional Austrian explanations of capital, interest, and time preference refuted the tired yet sometimes subtle fallacies and class arguments underpinning not only Marx and Keynes, but even most neoclassical schools. The subjective theory of value showed that consumers, not intrinsic material or labor components, determined value. Austrian business cycle theory explained not only particular booms and busts (such as the S&L bust), but also the broader need for commodity money and the inherently destructive effects of central banks. Meanwhile, Austrian methodology taught that markets are not mysterious, anonymous, or inhuman: on the contrary, they simply reflect human action, however imperfect, in economic terms.
Perhaps most importantly, the Austrian School helped me understand the impossibility of socialism as an economic system. By demonstrating the critical need for price signals and profit/loss feedback among business owners, Austrians demolished the entire range of modern arguments for state economic planning.
Reading Murray Rothbard took my Austrian education to another level. He literally laid out the ethics of liberty, explaining the legal and political conclusions necessarily flowing from self-ownership, the natural rights tradition, and the principle of nonaggression. He made the clear case for property rights as the foundation of a free society, applying the same standards to government and private actors. The state, Rothbard argued, is virtually always an aggressor. Only the willing blindness and inertia of individuals in society allow the state to mask this aggression as benevolence, and tax us for the privilege.
Of course Rothbard also produced a staggering array of books and articles on the topics of money and banking, the Great Depression, history, philosophy, law, and anarcho-capitalism, just to name a few. Yet his work was always highly accessible to me as a layperson, and readable in a way earlier Austrians sometimes were not.
In short, Austrian economics provided the exposition and defense of capitalism I had been looking for. Austrianism transcended individual vs. utilitarian arguments, explaining the destructive nature of state intervention for the whole of society. It provided the intellectual and conceptual foundation for a consistent defense of freedom, a foundation that seemed lacking among so many conservatives and libertarians.
MI: How did you end up working with Ron Paul?
JD: In the early 2000's, I joined Ron Paul’s congressional staff in Washington,rdd4 DC. Ron had been involved with the Mises Institute since its founding, and in fact made his initial decision in the 1970s to run for Congress largely based on his interest in the Austrian School. Ron had the opportunity to see Mises speak in 1972, and of course later he became well acquainted with Murray Rothbard and Henry Hazlitt, among others. Lew Rockwell had been an early supporter and confidant, serving as Ron’s first congressional chief of staff.
Many of Ron’s staff at the time already were dedicated Austrians, and at his urging we all attended Mises Institute events in Auburn. All of us shared Ron’s view that his role was to educate people, and the Austrian message played a central part in that mission.
MI: How did this work lead you to the Mises Institute?
JD: Mises.org became an invaluable resource for us, and we made a concerted effort to add Austrian content to Ron’s speeches, statements, and articles. As a result, C-SPAN viewers sometimes were amazed to hear Ron quoting Mises, Rothbard, Rockwell, or Tom Woods in the middle of otherwise laughably nonintellectual congressional debates! We also developed great relationships with many of the academics associated with the Mises Institute, often inviting them to provide testimony before the monetary policy subcommittee Ron chaired. In many ways the Institute served as the intellectual home for Ron’s congressional office.
Through Ron’s growing popularity, thousands of Americans, especially young Americans, were exposed to the great scholarship of Mises, Hayek, Hazlitt, and Rothbard. Equally important, the Austrian School gave Ron the intellectual ammunition to explain the great calamities of those years: Greenspan’s tech stock bust; the Enron accounting scandal; the terrible folly of a Fed-financed war in Iraq; the enormous malinvestment in the housing market; and ultimately the global crash of 2008/2009. In all of these instances Ron Paul laid down historical markers, using the principles of the Austrian School. For this the world owes him a debt of gratitude.
On a personal level, working for Ron Paul enabled me to develop friendships far and wide with libertarians around the world. It was through Ron that I became acquainted with Lew Rockwell, and it is because of Ron that I now find myself joining the Mises Institute at a time when the Austrian School is growing rapidly. I am deeply humbled and honored to work with the Institute’s staff, donors, and supporters as we take the Austrian vision of a truly free society forward in 2014.
Mises Institute Senior Fellow Thomas Woods in October launched The Tom Woods Show, which quickly became a top-rated podcast on iTunes. Woods recently interviewed Mises Institute Chairman Lew Rockwell on the show, and toward the end of the interview, Woods asked Lew about his vision for the future of the Institute. The following is adapted from the interview:
Thomas Woods: What would you like to see the Institute doing that it isn’t doing today?
Lew Rockwell: I think the Mises Institute represents the future of higher education. Thanks to federal subsidies, the price of an education at the brick-and-mortar universities has become prohibitive for so many people. Decades ago, Ron Paul worked his way through college but that sounds like science fiction today. Almost no one can work his way through college anymore.
So what the state has done, as with medical care, is made it impossible for students to pay for college with the wages and savings that young people can muster, so the students take on these horrendous debts to receive instruction at institutions that are, by and large, either teaching error, or they’re teaching the official boring views of official academia.
There has been so little innovation in the mainstream higher education industry. Peter Klein points out that colleges and universities still use the same production model that Aristotle used, with someone lecturing students from the front of the room while students sit quietly at their desks.
There are, of course, different ways to do this, and the Mises Institute is at the cutting edge of those different ways. Many young people are sick and tired of these long five- and six-year terms necessary to complete college. The universities and colleges so often make it difficult to get all the courses needed at times that work for the students, and of course, the longer it takes to get the degree, the bigger the student’s debts will be.
But there’s another way to do it, and as we see with the online courses of Mises Academy, and with our in-person programs such as Mises University the Rothbard Graduate Seminar, there is much greater respect for the student and his or her time. Depending on the program, students can complete them quickly, and often on a schedule tailored to the student’s needs, and the Mises Institute then issues certificates to those who successfully finish the programs.
Meanwhile, we’re finding that employers are often treating these certificates as something equivalent to college credit when considering employment for our alumni. This makes sense, of course, since the Mises Institute teaches students how to engage in true economic reasoning and to think like someone who truly understands economics; the type of economics described by Mises.
But of course it’s not just our online education that is paving the way for a new kind of education. Back in 2011, when Sebastian Thrun, then a professor at Stanford, decided to begin offing online courses on robotics and artificial intelligence, 160,000 people enrolled in the first class. After that, Thrun decided to leave behind his tenured position and founded a new online education operation through which he believes he can reach half a million students with low-cost higher education taught by some of the world’s best faculty.
The demand for these online educational programs illustrates just how useful they are in the marketplace, and the Mises Institute is already part of this new world of higher education.
At the same time, many colleges or universities are trying to jump on the bandwagon, and for many of them, it is already too late. Many small colleges and universities will be going out of business in coming decades because the costs are high and the benefit to students is low at those institutions. It’s true that the elite schools aren’t going to go out of business, and the big state universities aren’t going to go out of business, but much of the higher education world is feeling the ground moving under its feet, and they’re worried. They should be worried.
So what I’d like to do is continue turning the Mises institute into this private online and campus-based university of the future, for Austrian economics and libertarianism, history and political science, and all the related areas. We can’t give government-approved degrees because government control of the old system of higher education makes that impossible. But we can certainly provide certification to our successful students, and as the new world of online education shows, so many employers already regard this as a mark of true education, in contrast to so many college programs that provide so little of value.
Naturally, I’d like to keep up what the Institute is doing right now in terms of educating students, publishing books, publishing journals, bringing back the classics that have been unavailable, and make sure that is all available at either low cost of for free. And we will continue doing what we’ve always done with traditional academia and ensuring that our students who wish to pursue graduate degrees in economics and related fields will continue to benefit from our academic conferences, fellowships, and academic journals. But for so many more students who simply want to study and understand economics, history, and philosophy, as they truly should be studied, we will seek to provide a top-quality education.
I have built my career on the belief that all students can benefit from learning how to start and maintain a small business, reverberating on a grand scale by helping to grow our economy and encouraging at-risk toward economic success. Of course, I am not alone in this effort, as one can see in organizations like YE and Empact, among many others. What has unified us is the practical approach to teaching entrepreneurship; but without understanding the theoretical underpinnings of this movement, we lose some of its significance. Recently I talked with one of America’s top entrepreneurial education advocates and thinkers, Peter Klein, a well-known professor of Austrian economics.
I first met Peter at the Mises Institute. He is a professor at the University of Missouri and Carl Menger Research Fellow at the Mises Institute, where he focuses on entrepreneurship, organization, and business strategy. Peter also co-founded the management blog Organizations and Markets and travels around the world to speak about economics.
Steve Mariotti: So, can you tell our readers why entrepreneurship is so important, particularly from your academic standpoint?
Peter Klein: The terms “entrepreneur” and “entrepreneurship” are used in many different ways, and not always consistently. Typically people mean a specific kind of business, like a startup company, a small company, or a high-growth company. But we also use the word “entrepreneurial” to describe a particular kind of thinking — being creative, showing initiative, being alert to opportunities, exercising responsibility.
Following the American economist Frank Knight and the Austrian Ludwig von Mises, I think that the entrepreneur peers into the uncertain future, trying to anticipate what goods and services consumers will want, and trying to meet those demands by investing in the present. As such, judgment is deciding and controlling, the responsibility held by all business owners, as they try to make a profit by creating economic value. Entrepreneurial judgment is essential to a market economy — it’s what creates and sustains firms, introduces and develops new technologies, brings untold benefits to ordinary people, and underlies all the creative genius of a market economy. Startups require judgment, of course, but judgment is about more than just startups or high-tech companies.
SM: What, in your opinion, can a government do to promote entrepreneurship?
PK: Government officials talk about giving us more and better entrepreneurship, but what they usually do is pick particular firms, industries, or technologies they like, and give those firms subsidies and other benefits. There is of course nothing inherently wrong with having more of these kinds of firms, but the market should decide which firms, and which types of firms, succeed and fail. What entrepreneurs need is secure property rights, the rule of law, and sound money. The best government can do for entrepreneurs is get out of their way.
SM: Are there particular government policies that are hurting entrepreneurship?
PK: Our current monetary regime, with hyperactive central banks that create booms and busts, creates a terrible climate for entrepreneurs. Artificially low interest rates distort market incentives, leading to what Mises and Hayek called “malinvestment.” Taxes and regulations make it harder to start and to run companies, favor some companies at the expense of others, and hamper bargaining between firms, financiers, employees, and customers. Think of the uncertainty caused by the Affordable Care Act or the heavy reporting burdens imposed by Dodd-Frank. Mises once wrote that in an economy such as ours where the state plays a huge role in all aspects of business, entrepreneurship degenerates into “bribery and diplomacy.” Instead of focusing on creating value for customers, entrepreneurs spend their time lobbying for favors or to avoid penalties, trying to discern the government’s next move, anticipating or adapting to the newest regulations.
SM: Have you experienced any obstacles in your career related to these challenges?
PK: Business entrepreneurrship is the kind that drives the market economy but, in a sense, we are all entrepreneurs — life is uncertain, and we are always investing our time, energy, and reputation in search of one outcome or another. I’ve been entrepreneurial in that my perspective on entrepreneurship is not the “mainstream” one, in economics or management, and that my work blends insights from Oliver Williamson’s transaction cost economics, the “Austrian” School of Mises, F. A. Hayek, Murray Rothbard, and Israel Kirzner, and other scholars. It’s sometimes been a tough sell — despite the popular image of the university as an open, tolerant, and innovative place, academia is actually very conservative, and ideas that don’t fit within the dominant paradigm — as Thomas Kuhn famously explained — are often marginalized.
SM: Who have been the major intellectual influences in your career?
PK: Professor Williamson, my PhD thesis advisor, has been a major influence. His own work is an idiosyncratic blend of insights from different traditions, and he is a super thoughtful, creative, and careful scholar. Murray Rothbard, the brilliant polymath who built on Mises’s economics and largely founded the modern libertarian movement, had a huge impact on me, professionally and personally. Rothbard had this amazing energy, and more charisma in his pinky than most economists have in their whole bodies. I’ve never met anyone quite like him. I’m also quite fond of Hayek, whom I didn’t know personally, but whose works I came to know very well as an editor of his Collected Works early in my career.
SM: You teach entrepreneurship courses. Can entrepreneurship really be taught?
PK: We can teach practical skills related to starting and operating a business — accounting, marketing, finance, and so on. We can study the great entrepreneurs of the past and try to generalize from their experiences. We can explain to students — whether they go into business or not — the role that entrepreneurship plays in a market economy and what kinds of public policies harm or help entrepreneurship. But entrepreneurial judgment is, ultimately, not something we can teach. Judgment involves intuition, or understanding, or gut feeling; if we could break it down into simple rules or mathematical formulas, then it wouldn’t be judgment, it would just be rational decision-making, and everyone would do it the same way and make the same decisions.
SM: What tips you would give a young entrepreneur just starting a business?
PK: First, remember that entrepreneurship is hard! Exercising judgment means taking chances, experimenting, and learning from your mistakes. Second, go with your instincts, and don't listen to “experts” who tell you this idea or that won’t work. Third, entrepreneurship takes not only great ideas, but also resources, including risk capital, so treat your input providers — especially funders —with respect. Fourth, don’t feel like a failure if you don't achieve commercial success right away. Be persistent, pay attention, and learn.
SM: What should low-income countries and communities do to increase the rate of successful entrepreneurship?
PK: Same as wealthier countries and communities — don’t constrain entrepreneurs with bad policies, but don’t try to subsidize them either. Let the market sort it out. Of course, startups and self-employment are important for economic growth, but they aren’t necessarily superior to large enterprises and other forms of commercial activity.
SM: There are globally over 300 million young people that are unemployed. Do you think entrepreneurship can help create the jobs of the future?
PK: Absolutely! Entrepreneurship — in the broad sense of responsible stewardship over productive resources — is what makes a market economy tick. A healthy, entrepreneurial economy is the best solution to unemployment, and the remedy for broader social problems as well.
This article originally appeared at The Huffington Post.
In the final section of Human Action, Ludwig von Mises stressed the importance of all citizens to acquaint themselves with the findings of economic science. Unlike physics or engineering — where the scientists could safely continue with their advancements, whether or not the average person understood how they worked — economic policies as enacted by governments will ultimately rest with public opinion. No matter how decisively the great classical economists destroyed the case for mercantilism centuries ago, we still suffer from tariffs because most people want to “save jobs” by keeping out “cheap foreign imports.”
Indeed, just about all of the “public issues” of today are crucially dependent on an understanding of sound economics, including ObamaCare, Bitcoin, quantitative easing, the trillion-dollar platinum coin, so-called “green” energy initiatives, and the “sequester.” To understand whether government intervention in a particular sector will bring desirable effects, the first task is to learn how the market economy works.
In this respect, I am pleased to announce that on January 9, we will begin a six-week Mises Academy course that offers an introduction to the Austrian understanding of the free market, unhampered by government regulations and taxes. This course, titled “Introduction to the Free Market,” is the second installment of a three-part series that uses my Lessons for the Young Economist as the main textbook. (In December we wrapped up the first installment, “Action and Exchange,” which gave an introduction to economic science and studied isolated individuals as well as a simple barter economy. This earlier course is not necessary in order to take the current offering, but it’s available for independent study if a student wishes.) Specifically, in “Introduction to the Free Market” we will cover chapters 7 through 14 of Lessons for the Young Economist, finishing its treatment of the pure market economy.
The Scope of the CourseThe weekly lectures will run from January 9 through February 27. At the conclusion of “Action and Exchange,” we had just finished studying the formation of barter prices in a simple economy with just a few individuals. Therefore, we start this second course by looking at indirect exchange and the emergence of money. Although we will rely primarily on my Lessons as the text, the lectures will also bring in discussion from more advanced Austrian readings. For example, we will discuss the specific contributions that Ludwig von Mises made to the theory of money; this is material that was just a bit too technical to be included in the textbook.
In the middle weeks, we will cover important features of the market economy such as the division of labor and comparative advantage (why would a specialized doctor hire a nurse who was inferior at performing medical tasks?), entrepreneurship and competition (what “directs” activities in a market without a central planner?), and the importance of saving and investment. Although these are standard topics, we will give a specifically Austrian flavor to them, as the Austrian School has many important nuances to add that the mainstream approach neglects, particularly when it comes to entrepreneurship and capital accumulation.
As another “standard” topic, we will also thoroughly cover supply and demand, to be sure that students understand the difference between a shift in supply versus a movement along the supply curve. Although pedantic, such emphasis ensures that no student will ever say something silly such as, “The Arab nations cut back oil production, causing prices to rise. But this made demand fall, causing prices to fall.” Such circular arguments are typical even in reporter’s articles on energy issues; this course will teach the student to be more precise and avoid this type of sloppiness.
Finally, we will cover the advanced topics of “Profit & Loss Accounting” and “The Stock Market.” As mainstream economics texts often utterly neglect profits and losses altogether, this will be a very “Austrian” treatment, in line with the importance Mises placed on economic calculation in his own writing. Finally, we will introduce students to the stock market, not (of course) with the aim of giving investment advice, but just to explain what the stock market is and the process by which stock prices move.
Structure of the CourseIn a typical week of the course, I will give a live video broadcast on Thursday from 5:30–7:00pm Eastern time. I will spend the first 75 minutes lecturing on that week’s material, and then I will field questions from students for the remaining 15 minutes. In addition, on Saturday I will have “office hours” at a varying time of day (in order to cater to different students each week), meaning that I will be available on a live video broadcast to answer questions from any students who tune in.
Note that the Saturday sessions are purely for the students’ convenience, and are not mandatory. Also, all broadcasts will be recorded and available to enrolled students, so that people who have a scheduling conflict can still take the class if they wish.
If a student wishes, he or she can simply “audit” the class. This has been a popular option for many adults who take Mises Academy classes to watch the lectures but, because of their work schedules, can’t keep up with the reading.
However, students may also take the class for a grade. These students will take a multiple-choice quiz each week, in addition to a midterm and final exam. Although the Mises Institute is not accredited, we will present certificates of completion and a formal grade at the end of the class to those students who desire it.
ConclusionThe Mises Academy’s three-part series on “Basics of Economics” is appropriate for both working adults and homeschooling children. This second section, titled “Introduction to the Free Market,” provides an understanding of the operation of a pure free market economy. In this day and age, virtually every major “public” or “social” issue involves proposals for government interference with the market. That’s why it’s crucial for lovers of liberty to understand how a voluntary economic marketplace works, in order to explode the myths and lies of its enemies.
The Free Market 31, no. 12 (December 2013)Mary Sennholz, wife of Austrian economist Hans Sennholz and friend of Margit and Ludwig von Mises, recently spoke with Senior Fellow Jeffrey Herbener and Associated Scholar Shawn Ritenour about her long career as a writer and editor, and as a friend and colleague of many other giants of the Austrian School. The interview was recorded as part of the Mises Institute’s Oral History Project for release in 2014.
Mary Sennholz has never been one to sit on the sidelines watching life pass her by. Although the decision to climb on board was not always in her hands. After being forced by a violent storm to land their private plane on a small, grass runway in the highlands of Colorado, her husband and pilot had made two unsuccessful attempts to take off in the heavy, wet grass. Before the third attempt, Hans had told Mary that if it failed, she and her luggage would have to be left behind to catch up with him and their young son, Robert, on the west coast where Hans, the important Austrian economist and student of Mises, was scheduled to deliver a lecture. As Mrs. Sennholz relates the story in her interview, the relief in her voice is palatable as she recounts the moment she felt the wheels become airborne.
Even before she met Hans, Mary Homan was living an interesting life. A few days after Pearl Harbor, she was hired to manage a pool of secretaries in the executive office of the president. She worked in that capacity for the administrations of both Franklin Roosevelt and Harry Truman. After the war, she was part of Adlai Stevenson’s committee of American officials in London working to establish the United Nations. She resigned in 1947 to join Leonard Read at the Foundation for Economic Education. Her admiration for the founder of FEE was clear. In the forward to her biography, Leonard Read: Philosopher of Freedom, published in 1993, she wrote, “Leonard Read, the offspring of New England pioneers, was to become the leader who, at a crucial moment in American history, rallied the demoralized and tired forces of individual freedom and the private property order. This book is dedicated to his memory, which will live as long as the Foundation for Economic Education or one of its offshoots carries his message to anyone willing to listen.”
One of her duties at FEE was to organize the seminars at which Mises and other luminaries would speak. In her work, she rubbed shoulders with Frank Chodorov, Baldy Harper, Henry Hazlitt, Israel Kirzner, Edmund Opitz, Gary North, Benjamin Rogge, and Murray Rothbard among others. The only unpleasant encounter she mentions in the interview was with Milton Friedman.
Like Read, however, Mises was more than a casual acquaintance. She faithfully attended his NYU seminar with her friend Bettina Bien. The fruits of the seminar were not merely intellectual for Mary. It was there that she became acquainted with her future husband. Margit von Mises played matchmaker for Leonard Read’s assistant and her husband’s Ph.D. student. What began as a contractual relationship, Miss Homan editing the manuscript that would become Dr. Sennholz’s dissertation, blossomed into a beautiful partnership.
The friendship between the Miseses and the Sennholzes lasted a lifetime. Margit became a devoted godmother to Mary and Hans’s son, Robert. The couples traveled together to Guatemala and Mexico. As Mary tells it, the calm, cerebral Lu found his complement on the lecture circuit in the passionate, inspiring Hans. Margit and Lu visited Grove City several times over the years. The most memorable was in June of 1957 when Hans arranged for Grove City College to award Mises an honorary doctorate degree at commencement. Hans and Mary hosted a post-commencement reception for Mises at their home.
In 1956, the fruits of Mary’s labor in soliciting the 19 contributions for, and editing the resulting Festschrift volume for Mises, On Freedom and Free Enterprise, were born. After all the hard work, she took delight in playing host to Mises in March 1956 at a banquet in his honor held at the University Club in NYC.
In addition to Leonard Read and Ludwig von Mises, another luminary of the liberty movement whose life intertwined with that of the Sennholzes was J. Howard Pew. He was a trustee of FEE and chairman of the board of trustees at Grove City College. Pew was responsible for Hans being hired as chairman of the department of economics at GCC. Mary entertained him as a guest at the Sennholzes’s reception for Mises in June 1957. As with Leonard Read, her admiration led her to write a biography of Pew from material gathered by the Pew family, Faith and Freedom: The Journal of a Great American, published in 1975. In the acknowledgements, she wrote that writing the book, “has been much more than an enjoyable experience. For almost a year it has meant living with the thoughts and actions of a great man who, as was said of Saul, son of Kish, ‘From his shoulders and upward he was higher than any of the people.’”
FEE served as bookends for Mrs. Sennholz’s professional activity in the liberty movement: starting just after its founding in 1946 working with Read for nearly a decade and returning to work with her husband who served as president from 1992 to 1997. Her last book to date is a collection of The Freeman articles she edited, Faith of Our Fathers, published in 1997.
Mrs. Sennholz reached her 100th birthday on November 2, and it is the hope of many that for a third time she will be driven by her admiration to write a biography: one of her husband, Hans.
The Free Market 31, no. 12 (December 2013)Mises Institute Senior Fellow Thomas Woods in October launched The Tom Woods Show, which quickly became a top-rated podcast on iTunes. Woods recently interviewed Mises Institute Chairman Lew Rockwell on the show, and toward the end of the interview, Woods asked Lew about his vision for the future of the Institute. The following is adapted from the interview:
Thomas Woods: What would you like to see the Institute doing that it isn’t doing today?
Lew Rockwell: I think the Mises Institute represents the future of higher education. Thanks to federal subsidies, the price of an education at the brick-and-mortar universities has become prohibitive for so many people. Decades ago, Ron Paul worked his way through college but that sounds like science fiction today. Almost no one can work his way through college anymore.
So what the state has done, as with medical care, is it has made it impossible for students to pay for college with the wages and savings that young people can muster.
So the students take on these horrendous debts to receive instruction at institutions that are, by and large, either teaching error, or they’re teaching the usual boring views of official academia.
There has been so little innovation in the mainstream higher education industry. Peter Klein points out that colleges and universities still use the same production model that Aristotle used, with someone lecturing students from the front of the room while students sit quietly at their desks.
There are, of course, different ways to do this, and the Mises Institute is at the cutting edge of those different ways. Many young people are sick and tired of these long five- and six-year terms necessary to complete college. The universities and colleges so often make it difficult to get all the courses needed at times that work for the students, and of course, the longer it takes to get the degree, the bigger the student’s debts will be.
But there’s another way to do it, and as we see with the online courses of Mises Academy and with our in-person programs such as Mises University and the Rothbard Graduate Seminar, there is much greater respect for the student and his or her time. Depending on the program, students can complete them quickly, often on a schedule tailored to the student’s needs, and the Mises Institute then issues certificates to those who successfully finish the programs.
Meanwhile, we’re finding that employers are often treating these certificates as something equivalent to college credit when considering employment for our alumni. This makes sense, of course, since the Mises Institute teaches students how to really engage in economic reasoning and to think like someone who truly understands economics—the type of real economics described by Mises.
But it’s not just our online education that is paving the way for a new kind of education. Back in 2011, when Sebastian Thrun, then a tenured professor at Stanford, decided to begin offering online courses on robotics and artificial intelligence, 160,000 people enrolled in the first class. After that, Thrun decided to leave behind his tenured position and founded a new online education operation through which he believes he can reach half a million students with low-cost higher education taught by some of the world’s best faculty.
The demand for these online educational programs illustrates just how useful they are in the marketplace, and the Mises Institute is already part of this new world of higher education. At the same time, many colleges and universities are trying to jump on the bandwagon, and for many of them, it is already too late. Many small colleges and universities will be going out of business in coming decades because the costs are high and the benefit to students is low at those institutions. It’s true that the elite schools aren’t going to go out of business, and the big state universities aren’t going to go out of business, but much of the higher education world is feeling the ground moving under its feet, and they’re worried. They should be worried.
So what I’d like to do is continue turning the Mises Institute into a private online and campus-based university of the future, for Austrian economics and libertarianism, history, and political science, and all the related areas. We can’t give government-approved degrees because government control of the old system of higher education makes that impossible. But we can certainly provide certification to our successful students, and as the new world of online education shows, so many employers already regard this as a mark of true education, in contrast to so many traditional college programs that provide so little of value.
Naturally, I’d like to keep up what the Institute is doing right now in terms of educating students, publishing books, publishing journals, bringing back the classics that have been unavailable, and make sure that is all provided at either low cost or for free. And we will continue doing what we’ve always done with traditional academia and ensuring that our students who wish to pursue graduate degrees in economics and related fields will continue to benefit from our academic conferences, fellowships, and academic journals. But for so many more students who simply want to study and understand economics, history, and philosophy, as they truly should be studied, we will seek to provide a top quality education.
Ron Paul, Distinguished Counselor to the Mises Institute, recently released his new book The School Revolution: A New Answer for Our Broken Education System. Dr. Paul spoke with us about his new book and how decentralization, competition, and online instruction are revolutionizing education.
Mises Institute: Your books in the past have tended to address issues such as hard money, private property, and central banking. Why are you now looking at education?
Ron Paul: People during the presidential campaigns spoke of a Ron Paul Revolution. But without a revolution in education, there can be no Revolution. If people get to learn about the freedom philosophy only in caricature, if at all, and they never get exposed to the Austrian economists, it will be difficult to impossible to sustain our present momentum over the long term.
Don’t misunderstand me: I am thrilled at our progress and more optimistic than I have ever been. But as for the long term, I am concerned all this excitement could fizzle if the infrastructure doesn’t exist to keep it going. And that means we can’t ignore education.
MI: How would you describe your own education? How has the state changed the way that we are educated now compared to then?
RP: I was fairly happy with my education. I went to a public school, yes, but in fairness it was about as good as a government institution can be: we had full local control, no fashionable but silly pedagogy was forced on us, and the students came from solid family backgrounds. We had our troublemakers, but really none of the pathologies we encounter so often today.
MI: You mention Leonard Read more than once in your book. How has he shaped your views of education and freedom?
RP: From Leonard Read, whom I greatly admired, I took a commitment to educating the public in the principles of liberty at every opportunity. Leonard couldn’t have imagined the opportunities we’d have today — with the Internet, homeschooling, and the extraordinary combination of the Internet and homeschooling.
MI: Are online resources for education making it easier for people to educate themselves and others?
RP: That’s putting it mildly! Having the great works of the great thinkers of our tradition, plus articles, speeches, books, and materials of all kinds at our fingertips, simply astonishes me. Even without an organized curriculum to guide someone, anyone who craves knowledge will find it. That’s how so many people wind up discovering the Mises Institute, isn’t it?
I’m managing a lot of projects these days. In some ways I’m busier than I was when I was in Congress. But what could be more important than handing on the great, life-changing ideas of liberty to future generations, and giving these students the educations you and I could only have dreamed of getting?
The curriculum I’ve designed (RonPaulCurriculum.com), and which I refer to in the book, is more than just history and economics, though. It’s math and the sciences, it’s literature, it’s writing, it’s public speaking, it’s learning how to start your own business, and above all, it’s learning how to learn. All of these are skills that will serve a young person well. If a substantial number of libertarian young people have these skills, I believe things begin to change.
MI: How can competition in education provide a better experience for students?
RP: The same way competition in anything provides a better experience for consumers. Competition in education is going to be especially fierce. If the government’s schools are spending $10,000 to $15,000 per student annually, and I can get students a better education for, say $750, how does their business model survive? Inertia, to be sure, but with state and local budgets under increasing strain, how does business as usual persist in education for much longer?
MI: You clearly take a positive view of homeschooling in the book. But when it comes time to go to college, won’t students need some kind of formal certification from an accredited school?
RP: These days, with homeschooling more and more mainstream, and with the academic skills of so many homeschooled students no longer seriously in question, colleges are less strict about this. Someone with strong standardized test scores, or who gets college credit via CLEP exams, has proven the merits both of his curriculum and of himself. My own homeschool curriculum, the Ron Paul Curriculum, makes passing the CLEP exams a priority. This is a feather in the student’s academic cap, and it’s a ton of money in the parents’ wallets when a student can skip courses, or even whole grades.
MI: Even with all the growth in homeschooling, the vast majority of students still go to public schools. So is it possible to make a difference with so many still receiving conventional, state-directed education?
RP: We don’t need to convince everyone. Most people take no interest in the issues that drive you and me. We need to persuade a dedicated minority. We need to reach the intellectual leaders of tomorrow from our ranks. If even 5 percent of the American public were truly conversant with the great thinkers and classics of the freedom philosophy, it would be a very, very different situation.
Remember, too, that the transmission of news and information is becoming decentralized. One no longer has to be part of the media establishment in order to get a hearing and even a following. I am looking to train the coming generations of libertarians to take up this role. That way, we can have an influence out of proportion to our numbers.
One last thing, if I may: I think many parents who like the idea of homeschooling lack the confidence to do it. That’s an understandable fear. Few parents feel comfortable with the idea of answering their children’s questions about calculus and physics. I explain in The School Revolution why this problem need not be insuperable. Parents can get their children a top-notch education without themselves having to do much teaching in the upper grades, or hire expensive tutors.
We are living through a period of rapid change, in so many areas of life. The mode of education may be the most important of these changes. We need to be ahead of the curve. That’s why I wrote this book.
The Free Market 31, no. 10 (October 2013)Ron Paul, Distinguished Counselor to the Mises Institute, recently released his new book The School Revolution: A New Answer for Our Broken Education System. Dr. Paul spoke with us about his new book and how decentralization, competition, and online instruction are revolutionizing education.
The Free Market: Your books in the past have tended to address issues such as hard money, private property, and central banking. Why are you now looking at education?
Ron Paul: People during the presidential campaigns spoke of a Ron Paul Revolution. But without a revolution in education, there can be no Revolution. If people get to learn about the freedom philosophy only in caricature, if at all, and they never get exposed to the Austrian economists, it will be difficult to impossible to sustain our present momentum over the long term.
Don’t misunderstand me: I am thrilled at our progress and more optimistic than I have ever been. But as for the long term, I am concerned all this excitement could fizzle if the infrastructure doesn’t exist to keep it going. And that means we can’t ignore education.
TFM: How would you describe your own education? How has the state changed the way that we are educated now compared to then?
RP: I was fairly happy with my education. I went to a public school, yes, but in fairness it was about as good as a government institution can be: we had full local control, no fashionable but silly pedagogy was forced on us, and the students came from solid family backgrounds. We had our troublemakers, but really none of the pathologies we encounter so often today.
TFM: You mention Leonard Read more than once in your book. How has he shaped your views of education and freedom?
RP: From Leonard Read, whom I greatly admired, I took a commitment to educating the public in the principles of liberty at every opportunity. Leonard couldn’t have imagined the opportunities we’d have today—with the Internet, homeschooling, and the extraordinary combination of the Internet and homeschooling.
TFM: Are online resources for education making it easier for people to educate themselves and others?
RP: That’s putting it mildly! Having the great works of the great thinkers of our tradition, plus articles, speeches, books, and materials of all kinds at our fingertips, simply astonishes me. Even without an organized curriculum to guide someone, anyone who craves knowledge will find it. That’s how so many people wind up discovering the Mises Institute, isn’t it?
I’m managing a lot of projects these days. In some ways I’m busier than I was when I was in Congress. But what could be more important than handing on the great, life-changing ideas of liberty to future generations, and giving these students the educations you and I could only have dreamed of getting?
The curriculum I’ve designed (RonPaulCurriculum.com), and which I refer to in the book, is more than just history and economics, though. It’s math and the sciences, it’s literature, it’s writing, it’s public speaking, it’s learning how to start your own business, and above all, it’s learning how to learn. All of these are skills that will serve a young person well. If a substantial number of libertarian young people have these skills, I believe things begin to change. T
FM: How can competition in education provide a better experience for students?
RP: The same way competition in anything provides a better experience for consumers. Competition in education is going to be especially fierce. If the government’s schools are spending $10,000 to $15,000 per student annually, and I can get students a better education for, say $750, how does their business model survive? Inertia, to be sure, but with state and local budgets under increasing strain, how does business as usual persist in education for much longer?
TFM: You clearly take a positive view of homeschooling in the book. But when it comes time to go to college, won’t students need some kind of formal certification from an accredited school?
RP: These days, with homeschooling more and more mainstream, and with the academic skills of so many homeschooled students no longer seriously in question, colleges are less strict about this. Someone with strong standardized test scores, or who gets college credit via CLEP exams, has proven the merits both of his curriculum and of himself. My own homeschool curriculum, the Ron Paul Curriculum, makes passing the CLEP exams a priority. This is a feather in the student’s academic cap, and it’s a ton of money in the parents’ wallets when a student can skip courses, or even whole grades.
TFM: Even with all the growth in homeschooling, the vast majority of students still go to public schools. So is it possible to make a difference with so many still receiving conventional, statedirected education?
RP: We don’t need to convince everyone. Most people take no interest in the issues that drive you and me. We need to persuade a dedicated minority. We need to reach the intellectual leaders of tomorrow from our ranks. If even five percent of the American public were truly conversant with the great thinkers and classics of the freedom philosophy, it would be a very, very different situation.
Remember, too, that the transmission of news and information is becoming decentralized. One no longer has to be part of the media establishment in order to get a hearing and even a following. I am looking to train the coming generations of libertarians to take up this role. That way, we can have an influence out of proportion to our numbers.
One last thing, if I may: I think many parents who like the idea of homeschooling lack the confidence to do it. That’s an understandable fear. Few parents feel comfortable with the idea of answering their children’s questions about calculus and physics. I explain in The School Revolution why this problem need not be insuperable. Parents can get their children a top-notch education without themselves having to do much teaching in the upper grades, or hire expensive tutors.
We are living through a period of rapid change, in so many areas of life. The mode of education may be the most important of these changes. We need to be ahead of the curve. That’s why I wrote this book.
Editor's Note: This selection is taken from Chapter 5 of Ron Paul's new book, The School Revolution: A New Answer for Our Broken Education System.
The free-market principle of open entry is challenged by governmental restrictions on access to consumer markets. There are many official justifications for these restrictions, but the main one is this: “Customers do not know what is good for them.” They do not know what products to buy, what prices to pay, or what arrangements to negotiate with respect to return and replacement. Customers are in fact woefully ignorant of what they really need, so the state enters the marketplace to restrict what customers are legally allowed to purchase. The idea here is that state officials know what customers really need as distinguished from what customers are willing to pay for.
One of the justifications for this is that advertising deludes customers. This means that customers are considered not able to sort out fact from fiction when they read or see an advertisement. It is interesting that the same advertising agencies hired by businesses to sell products are also hired by politicians to produce advertisements in election years. In other words, advertising is accepted as a legitimate way to motivate people to take action during election years, but is placed under suspicion when it comes to advertising products and services. People in their capacity as voters are supposedly perfectly capable of making accurate decisions based on advertising. On the other hand, those same people in their capacity as customers supposedly are incapable of making accurate decisions based on advertising. This is utterly illogical, but it is basic to understanding all modern governments in the West ...
Whenever the state intervenes in a market to restrict entry by sellers, it results in higher prices. Customers are not able to buy the kinds of goods and services they want, at a price they are willing to pay. So the producers who would otherwise have entered the market are forced to enter other markets. These markets are less profitable than the restricted markets. Customers in the regulated markets are worse off, and so are marginal suppliers who leave those markets.
We can see this principle at work in the market for education. The supply of education is limited by government restrictions on academic certification. Teachers must go through a specified regimen at the college level in order to be eligible to teach in the nation’s tax-funded school systems. This reduces the supply of teachers who can legally be hired by local school districts. Furthermore, restrictions on school construction by private entrepreneurs limit the amount of competition tax-funded schools face.
So, parents are compelled to send their children to school, but the state restricts the number of schools available to parents. This creates a near monopoly of education, kindergarten through twelfth grade, for the state. The state uses tax funding to build schools, and it uses the regulatory system to restrict the creation of rival schools. This is the classic mark of a monopoly.
The free-market solution is open entry and competition. Competition may be in the form of quality. Some parents want very-high-quality education for their children, and are willing to pay a great deal of money to purchase it. They would not have to pay as much money if there were open entry into the local market for schools. Other parents cannot afford the best education for their children, because they do not have enough money. So, they want price-competitive education. This is also made available by entrepreneurs in the field of private education. These entrepreneurs can decide which programs are affordable for which parents, and which programs will meet the demands of specific parents. As more schools come onstream, the range of choice for parents increases. This is the standard definition of what constitutes economic growth. Economic growth takes place when customers can buy more goods and services than they were able to buy prior to the increase in economic growth ...
Bureaucrats in the field of education, which is almost exclusively nonprofit education, have a bias against price-competitive academic programs. They assume that these programs are of low quality. They think it is a good idea to close the market to sellers of any kinds of curriculum not certified by educational bureaucrats. They have greater control over the content and structure of education when they can restrict entry into the marketplace. In the name of helping children, these promoters of self-interested restrictions on entry conceal the fact that they are able to exercise greater power over education and then charge more for the privilege of doing so.
This is why libertarians believe that there should be open entry into the field of education. They do not trust state bureaucrats to act on behalf of parents, especially parents who have a particular view of the best methodology and content for the education of their children. The bureaucrats operate in their own self-interest, which is to expand their power and income.
This raises the issue of government regulation of schools. First, the government requires compulsory attendance. Second, in order to keep control over the content of the curriculum, governments establish rules and regulations governing those schools. Parents are not allowed to send their children to schools that do not meet these qualifications. The qualifications are set very high, so that not many schools can be established to compete against the public school system. This increases the power of the public school system, and the power of the bureaucrats who run the system.
An example of this kind of regulation can be seen in the requirement that private high schools have libraries of at least 1,500 books. States around America had this requirement or something similar to it in the 1990s. But a student in the early 1990s was able to carry a CD-ROM with 5,000 books on it: the Library of the Future. No matter. A CD-ROM and computer stations did not count as meeting the 1,500-book requirement. The books had to be physical, so tax money had to go toward that. Today students have access to hundreds of thousands of books by means of the cell phones in their pockets. But accredited high schools must still have physical libraries. These libraries must be run by someone with a degree in library science. Conclusion: The library requirement has nothing to do with the number of books in the library. It has everything to do with increasing the cost of building a facility that qualifies as a school that meets the government’s regulations.
The goal of academic regulation is to limit the supply of schools that compete against public schools. This is done in the name of guaranteeing the educational quality of the school, thereby protecting the students. Yet the academic performance of the public schools continues to decline, and has done so since the early 1960s. The scores on the SAT and ACT exams continue to fall. The high point was in the early 1960s. So, regulation has not been successful in guaranteeing the quality of education. But it has been quite successful in restricting entry into the field of education.
In the 1980s there was a great battle over homeschooling. States around the nation passed laws prohibiting parents from substituting homeschooling for schooling in either a tax-funded school or a private school. The private schools were so expensive that only a handful of parents could afford them. This meant that parents would simply have to send their children to the public schools. The appearance of homeschooling in the 1970s and ’80s represented a threat to this strategy of restricting the supply of competing educational programs. States prosecuted parents for teaching their children at home.
A major case was tried in Texas in 1985, Leeper v. Arlington, in which a coalition of homeschool advocates brought a class-action suit against the state. The state lost the case in the state supreme court in 1994. The court required school districts to compensate the parents of the children who brought the suit. This case sent a clear message to local school districts in Texas. Overnight, they removed most of the restrictions against homeschooling. The state of Texas became very friendly toward homeschooling. But it took a court case to achieve this goal ...
There should not be anything resembling a government monopoly of education. Standards that govern the public school system locally should not be imposed on parents who decide to remove their children from that system. Without freedom of parental choice in education, the state will pursue a policy of extending its monopoly over education. Tenured, state-funded bureaucrats will then use this monopoly to screen out ideas that call into question the legitimacy of government interference in many areas of life, including education. The government does not have to burn books in order to persuade the next generation of voters of ideas that favor the government. The government need only screen out books and materials that are hostile to the expansion of the state.
Few political ideologies are as misunderstood as anarchism. Confusion is so widespread, in fact, that those ignorant of this intellectual tradition often use the word “anarchism” as a synonym for “chaos.” Some of the confusion may arise from the fact that anarchism is today often solely associated with the anti-private-property anarchists of the nineteenth century, such as the followers of Mikhail Bakunin.
Indeed, this variety of anarchism was so dominant through the first half of the twentieth century that Ludwig von Mises, writing in Liberalism, mockingly asked “[c]an it, then, be assumed, without falling completely into absurdity, that, in spite of all this, every individual in an anarchist society will have greater foresight and will power than a gluttonous dyspeptic?”
Writing in 1927, Mises’s experience with anarchists was with those who sought to tear down every form of human institution, from the market to the family to religious groups. Not surprisingly, Mises was somewhat skeptical that a society scraped bare of all tried and true human institutions would enter a phase of utopia.
In the libertarian tradition, however, the anarchist society is merely the society in which individuals are not governed by a state built on monopolized violence and coercion, but instead govern themselves through organizations into which they have entered voluntarily. Among such institutions can certainly be found churches, schools, families, professional associations, markets, and tribes.
Anarchists and others may debate the value of such institutions, but the libertarian anarchist does not by force oppose a person’s membership in any such institution or organization. What is opposed by the anarchist libertarian is the type of civil government known as “the state” which exercises a monopoly on the means of coercion. It is this monopoly, perhaps more than anything else, which characterizes the state, its lack of voluntary association, and its claim of a right to employ unchallenged force over all individuals who just happen to live within a certain geographical area.
Indeed, anarchists do not even necessarily oppose the use of coercion, for certainly a criminal who has stolen from someone else could rightly be forced to pay restitution.
At this point, the student of anarchism will begin to ask himself: “Fair enough, the state is bad, but what would a legal system look like under an anarchic system? How would property owners and employees interact? What would be the role of parents and families?”
Fortunately for us, these are not questions we have suddenly come up with ourselves, but have long been asked by libertarian theorists. And as we begin to look more deeply into the anarchist tradition, we find that it is not new, nor is it undeveloped in its thought.
While we can look back to Étienne de La Boétie to find some early writings on the subject, the nineteenth century produced numerous serious anarchist thinkers from Molinari to Proudhon in Europe and Spooner and Tucker in the United States. These nineteenth-century theorists would eventually be popularized and employed by Murray Rothbard in what has come to be known as anarcho-capitalism, the anarchist tradition of private property and free association.
To offer a truly detailed exploration of the answers offered to these questions, David Gordon will next week offer a new course through Mises Academy on the history of anarchist thought, and will examine for six weeks the intellectual tradition of anarchism, and the tradition’s importance to the political debate today.
Indeed, anarchism’s importance in the political realm is perhaps greater than ever, and its continued relevance again came to the fore in May when Kelefa Sanneh, writing in The New Yorker, discussed the influence of anti-capitalist anarchist David Graeber who has become prominent in the Occupy Wall Street Movement. In his article, however, Sanneh, could not ignore Murray Rothbard, whom Sanneh describes as “one anarchist who could be considered influential in Washington” and as “Ron Paul’s intellectual mentor, which makes him the godfather of the godfather of the Tea Party.”
One can certainly debate Rothbard’s anarchist influence among Tea Partiers themselves, but the importance of Rothbard’s anarcho-capitalist thought within the larger libertarian movement is noteworthy.
And yet this divide between the pro-private-property anarchists like Rothbard, and the anti-property-anarchists of David Graeber’s school continues to cause confusion about what anarchism is.
Writing in the upcoming September issue of The Free Market, David Gordon notes:
Graeber does not agree that if we got rid of the state, people would live under free enterprise capitalism. He follows Karl Polanyi’s contention in his book The Great Transformation (1944) that the free market depends on a rigid framework of laws and institutions to force people into the behavior that the capitalist system requires. In particular, Graeber thinks that capitalism is based on debt peonage and slavery and views debt cancellation favorably.
If some anarchists believe that the free market cannot exist without the state, and others believe that the state is the great enemy of free markets, then what is anarchism?
If all anarchists truly are united by opposition to a coercive state, then perhaps the question is irrelevant. For as libertarian anarchists know, a stateless society is likely to naturally produce widespread, complex, and successful markets. The anti-capitalist anarchists will simply be proven wrong, although they might perhaps be thanked for their service in opposing the state.
Thomas DiLorenzo’s Mises Academy class on imperialism and anti-imperialism begins tonight, September 9, and continues for five weeks. Register now.
After the American “Civil War,” the Republican Party, which for the succeeding half century would enjoy monopolistic political power matched only by the Bolsheviks in Russia, set about to deify Abraham Lincoln. During his own lifetime Lincoln was the most hated and reviled of all American presidents in history, as historian Larry Tagg has shown in his book, The Unpopular Mr. Lincoln: America’s Most Reviled President. Several decades of propaganda by the Republican Party and its associated lapdog media changed all of that. The deification of Lincoln led to the deification of the presidency itself, and eventually to the entire federal government.
The renowned novelist Robert Penn Warren (author of All the King’s Men) wrote in The Legacy of the Civil War that Official State Propaganda asserted that the Civil War left America with “A Treasury of Virtue” so powerful that it was henceforth assumed that anything the U.S. government did from then on was virtuous by virtue of the fact that it was the U.S. government that was doing it. All any American had to do to remind the world of “our” virtue was simply to recite a few lines from one of Lincoln’s political speeches about “the last best hope of earth,” or our alleged desire to “make all men free.”
The Official State Propaganda line was supplemented by the political clout of the “Progressives” of the late nineteenth century and early twentieth century, many of whom were postmillennial pietists. As Murray Rothbard wrote in his essay, “World War I as Fulfillment: Power and the Intellectuals,” many of these influential writers, journalists, politicians, preachers, scientists, and political activists “possessed an intense messianic belief in national and world salvation through Big Government” (emphasis added).
Woodrow Wilson was a Progressive pietist of the most extreme sort. After he delivered his “war message” on April 2, 1917, wrote Rothbard, he received a letter of congratulations from his son-in-law “and fellow . . . pietist and progressive, Secretary of the Treasury William Gibbs McAdoo.” “You have done a great thing nobly!” wrote McAdoo. “I firmly believe that it is God’s will that America should do this transcendent service for humanity throughout the world and that you are His chosen instrument.”
American foreign policy has not changed one iota to this day. It is still based on the premise that American presidents still possess that “treasury of virtue” handed down to them by “Father Abraham” himself; and that they are God’s chosen people to rule the world and remake it in their image. Or else.
Wilson declared that “I will not cry ‘peace’ so long as there is sin and wrong in the world.” This was perhaps the clearest statement of America’s foreign policy of imperialism ever made, and is not significantly different from President George W. Bush’s declaration more than eight decades later that his purpose in the “War on Terra,” as he called it, is supposedly to eradicate tyranny from the planet. This insufferable sanctimony has always been married with the clout of profit-hungry defense contractors in the Big Business/Big Government Alliance that defined Progressivism in the early twentieth century and which has defined American foreign policy ever since.
Wilson got his war to eradicate sin and wrong in the world by staging the sinking of a British pleasure boat called the Lusitania. Before the ship was sunk, Wilson knew that it was carrying arms and ammunition from the U.S. to the British but he refused to issue warnings to the 100 or so American passengers. The sinking of the ship worked like a charm in exciting anti-German hysteria and swaying American public opinion in Wilson’s belligerent direction. (A 2008 diving expedition discovered more than fourteen million rounds of rifle ammunition in the Lusitania, much of which was in boxes labeled “cheese” or “butter”).
Although Wilson’s War was fought to supposedly spread “democracy” throughout Europe, he presided over and enforced a totalitarian government in his own country.
The Espionage Act of 1917 imposed $10,000 fines and as much as 20 years in prison for anyone saying or doing anything the state construed as “discouraging enlistments” in the military. The Sedition Act of 1916 imposed similar criminal penalties for any type of criticism of the government. All printed materials were censored; thousands were deported without due process of law; and state-sponsored vigilante groups conducted warrantless searches and seizures. The author Upton Sinclair was arrested for reading the Bill of Rights in public; the poet E. E. Cummings was imprisoned for three-and-a-half months for writing a letter to his mother saying that he did not necessarily hate Germans; and in New Jersey one Roger Baldwin was arrested for reading the Constitution in public. Such were the ways of the American “democracy” that Woodrow Wilson sought to impose on Europe at gunpoint.
The Pearl Harbor DeceptionRobert Stinnett, author of Day of Deceit: The Truth About FDR and Pearl Harbor, is a World War II veteran who had a career as a journalist with the Oakland Tribune and the BBC for several decades after the war. He researched his book upon discovering in 1993 that the U.S. Naval Security Group Command had decided to place into public archives at the University of Maryland hundreds of thousands of Japanese military messages obtained by U.S. monitoring/spying stations prior to Pearl Harbor. These records had not been seen by anyone since 1941.
What Stinnett found was that President Franklin D. Roosevelt had implemented an Office of Naval Intelligence plan to provoke the Japanese into attacking Pearl Harbor with an eight-point plan, the most important part of which was keeping most of the U.S. fleet docked like sitting ducks in Pearl Harbor. When the commander of the U.S. fleet, Admiral James Richardson, objected to allowing his sailors to be Japanese target practice, FDR fired him and replaced him with an obscure naval officer named Rear Admiral Husband E. Kimmel.
Stinnett showed in his book that Kimmel and General Walter Short, the commander of U.S. Army forces in Hawaii, were kept in the dark about Japanese activities prior to the attack. After the attack occurred, they were blamed for it and stripped of their commands.
The U.S. government’s spying apparatus and its minions have viciously attacked Robert Stinnett ever since his book was published, but his interpretations were validated by an act of Congress in 2000. In that year President Bill Clinton signed the Defense Authorization Act that acknowledged that Kimmel and Short were denied “crucial military intelligence” about the Japanese fleet prior to the Pearl Harbor attack. Like Wilson, FDR got his war, which he prosecuted with the help of his new ally and friend, Joseph Stalin.
The Gulf of Tonkin “Incidents”Shortly before his assassination in November of 1963 President John F. Kennedy had begun recalling U.S. military “advisors” from Vietnam. His successor, Lyndon Johnson, was hell bent on waging total war in Vietnam. Once again the American public had little interest in a civil war thousands of miles away in Asia but were easily duped into acquiescing in one that would eventually kill some 55,000 Americans.
The U.S. government began “covertly” supplying gunboats to the South Vietnamese army which were used to attack the coast of North Vietnam. This was acknowledged in 1964 by Defense Secretary Robert McNamara. In addition, there were American warships hovering around North Vietnamese ports. This included the USS Maddox. Placing the ships in harm's way was Johnson’s FDR-style strategy to provoke an attack by the North Vietnamese, and it succeeded.
Johnson falsely claimed in a speech to the nation that there was not one but two attacks on the USS Maddox but that is generally acknowledged today to have been a lie and a hoax. Naval sonar picked up American propeller noise, and radar detected bad weather, which Johnson claimed was North Vietnamese warships. He announced to the nation that there was a “second attack” and called for military retaliation. Soon thereafter he ordered air strikes on North Vietnam and the Vietnam War was off and running. In the 2003 documentary The Fog of War Robert McNamara admitted that the “second attack” on the USS Maddox “never happened.”
The War on “Terra”Today’s campaign for war with Syria by the Obama administration is being based on the same kind of dubious tall tale that the George W. Bush administration used to “justify” the Iraq War, and such tactics are reminiscent of George H.W. Bush’s first war on Iraq which was based partly on the U.S. government’s discredited claims that Iraqi soldiers were pulling the plugs on Kuwaiti incubators holding prematurely born babies.
The Syrian government is said to have used “chemical weapons” (i.e., weapons of the sort the U.S. government used to murder more than 80 people, including dozens of children, in Waco, Texas during the Clinton administration) on “its own people.” Saddam Hussein is also said to have used chemical weapons “on his own people.” Those weapons, Americans were told, might someday end up in the hands of “terrorists” who will use them on Americans. Therefore, “we” must invade, destroy, and conquer Iraq.
Even the CIA long ago admitted that there never were any “weapons of mass destruction” in Iraq that threatened the U.S. The same can be said of Syria, despite the latest attempts to lie Americans into another war of imperialism. It may seem trite, but it is nevertheless true that those who fail to learn the lessons of history are bound to repeat its mistakes. The American government is currently hell bent on squandering more blood and treasure on yet another military adventure that has nothing to do with defending American freedom — or anyone else’s.
In his famous 1898 essay, “The Conquest of the United States by Spain,” the great Yale University libertarian scholar William Graham Sumner argued that America had crossed the Rubicon, so to speak, and had become an imperialistic empire. It had become the Spanish empire. But Sumner was only half right. The conquest of Cuba was an imperialistic war, but so were all other American military adventures since the American Revolution. Apparently, even a man as brilliant and astute as Sumner was somewhat befogged by the endless and pervasive drumbeat of war propaganda.
“War is the health of the state,” Randolph Bourne explained in his famous essay of that title. But to the average citizen war means heavy taxation, conscription, censorship, dictatorship, and death. War enriches the state like nothing else can, while impoverishing, enslaving, and ending the lives of many of its citizens. Hence lies, myths, superstitions, and propaganda have always been the essential ingredient of the warfare state. Without them, the public would never acquiesce in the never-ending wars of conquest and imperialism that have long characterized the American state.
The War of 1812Barely twenty years after the U.S. Constitution was ratified there arose quite a few American politicians who believed it was their “manifest destiny” to invade and conquer Canada. One of the congressional leaders of the early nineteenth-century war party, Henry Clay, celebrated the declaration of war against Great Britain on June 4, 1812, by declaring that “Every patriot bosom must throb with anxious solicitude for the result. Every patriot arm will assist in making that result conducive to the glory of our beloved country” (David and Jeane Heidler, Henry Clay: The Essential American, p. 98).
Among the “official reasons” for the invasion of Canada in 1812 were the alleged “impressment” of American sailors by the British government, but that had been going on for decades, as Justin Raimondo has pointed out. The tall tale was also broadcast that the “evil” British were encouraging Indians to attack American settlers. The real reason for the War of 1812, however, was an impulse to grow the state with an imperialistic war of conquest. The result of the war was a disaster — the British burned down the White House, the Library of Congress, and much of Washington, D.C. Americans were saddled with a huge war debt that was used as an excuse to resurrect the corrupt and economically destabilizing Bank of the United States, a precursor of the Fed.
The Mexican-American WarWhen James K. Polk became president in 1845 he announced to his cabinet that one of his chief objectives was to acquire California, which was then a part of Mexico. As he wrote in his diary, “I stated to the cabinet that up to this time as they knew, we had herd of no open act of aggression by the Mexican army, but that the danger was imminent that such acts would be committed. I said that in my opinion we had ample cause of war.”
Thus, long before the presidency of George W. Bush, James K. Polk advocated the neocon notion of the “pre-emptive war.” Polk recognized that the Mexican army had not committed any “act of aggression,” so he set out to provoke one by sending American troops to the border of Mexico in territory that historians agree was “disputed territory” at the time because of a very dubious claim by the U.S. government. None other than Ulysses S. Grant wrote in his memoirs that, as a young soldier serving under the command of General Zachary Taylor during the 1846-1848 Mexican-American War, he understood that he had been sent there to provoke a fight:
The presence of United States troops on the edge of the disputed territory furthest from the Mexican settlements, was not sufficient to provoke hostilities. We were sent to provoke a fight, but it was essential that Mexico should commence it. I was very doubtful whether Congress would declare war; but if Mexico should attack our troops, the Executive [President Polk] could announce, ‘Whereas war exists by the acts of, etc.’ and prosecute the contest with vigor.
Polk’s gambit worked; he did provoke the Mexican army. In his war message to Congress he then declared that “Mexico has passed the boundary of the United States, has invaded our territory and shed American blood upon the American soil. ... As war exists ... by the act of Mexico herself, we are called upon by every consideration of duty and patriotism to vindicate with decision the honor, the rights, and the interests of our country.” This con game of provoking a war by showing up on another nation’s border, heavily armed with weapons aimed at the hoped-for belligerent, would be repeated many times in subsequent generations, right up to today’s provocation of a war in Syria.
The invasion and conquest of Mexico enabled the U.S. government to acquire California and New Mexico at the cost of some 15,000 American lives and at least 25,000 Mexican casualties. It was an aggressive war of conquest and imperialism.
The American “Civil War”In his first inaugural address on March 4, 1861, Abraham Lincoln threatened “invasion” and “bloodshed” (his exact words) in any state that refused to collect the federal tariff tax on imports, which had just been more than doubled two days earlier. At the time, tariffs accounted for more than 90 percent of all federal tax revenue, so this was a gigantic tax increase. This is how Lincoln threatened war in his first official oration:
The power confided in me will be used to hold, occupy, and possess the property and places belonging to the government, and to collect the duties and imposts; but beyond what may be necessary for these objects, there will be no invasion, no using of force against or among the people anywhere.
But of course the states of the lower South, having seceded, did not intend to “collect the duties and imposts” and send the money to Washington, D.C. Lincoln committed treason (as defined by Article 3, Section 3 of the U.S. Constitution) by levying war upon the free and independent states, which he always considered to be a part of the American union. By his own admission (and his subsequent actions), he invaded his own country over tax collection.
The Republican Party of 1860 was the party of protectionism and high tariffs. The Confederate Constitution had outlawed protectionist tariffs altogether. The result would have been a massive diversion of world trade to the Southern ports which would have forced the U.S. government to reduce its desired 50 percent average tariff rate to competitive levels (10-15 percent), depriving Northern manufacturers of this veiled form of corporate welfare, and depriving the government of the revenue it needed to pursue its manifest destiny of a mercantilist empire complete with massive subsidies for railroad corporations (among others).
Lincoln’s dilemma was that he knew he would be condemned worldwide for waging a bloody war over tax collection. Another excuse for war had to be invented, so he invented the notion of the “mystical,” permanent, and non-voluntary union. He did not want to be seen as the aggressor in his war for tariff revenue, so he hatched a plot to trick Southerners into firing the first shot by sending American warships to Charleston Harbor while steadfastly refusing to meet with Confederate peace commissioners or discuss the purchase of federal property by the Confederate government. He understood that the Confederates would not tolerate a foreign fort on their property any more than George Washington would have tolerated a British fort in New York or Boston Harbors.
Quite a few Northern newspapers recognized the game Lincoln was playing. On April 16, 1861 the Buffalo Daily Courier editorialized that “[t]he affair at Fort Sumter ... has been planned as a means by which the war feeling at the North should be intensified” (Howard Cecil Perkins, Northern Editorials on Secession).
The New York Evening Day Book wrote on April 17, 1861, that the event at Fort Sumter was “a cunningly devised scheme” contrived “to arouse, and, if possible, exasperate the northern people against the South.” “Look at the facts,” the Providence Daily Post wrote on April 13, 1861. “For three weeks the [Lincoln] administration newspapers have been assuring us that Ford Sumter would be abandoned,” but “Mr. Lincoln saw an opportunity to inaugurate civil war without appearing in the character of an aggressor.” The Jersey City American Standard editorialized that “there is a madness and ruthlessness” in Lincoln’s behavior, concluding that Lincolns sending of ships to Charleston Harbor was “a pretext for letting loose the horrors of war.”
After Fort Sumter, on May 1, 1861, Lincoln wrote to his naval commander, Captain Gustavus Fox, to say that “You and I both anticipated that the cause of the country [i.e., a civil war] would be advanced by making the attempt to provision Fort Sumter, even if it should fail; and it is no small consolation now to feel that our anticipation is justified by the result.” He was thanking Captain Fox for his role in duping the Confederates into firing upon Fort Sumter (where no one was either killed or wounded). Lincoln responded with a full-scale invasion of all the Southern states and a four-year war that, according to the latest research, was responsible for as many as 850,000 American deaths with more than double that number maimed for life. Standardizing for today’s population, that would be the equivalent of roughly 9 million American deaths in four years.
The Spanish-American WarImmediately after the “Civil War” the U.S. government waged a twenty-five-year war of genocide against the Plains Indians “to make way for the railroad corporations,” as General Sherman declared. Then by the late 1880s, American imperialists wanted to kick the Spanish out of Cuba where American business interests had invested in sugar and tobacco plantations. An American warship, the U.S.S. Maine, was sent to Havana in January of 1898 to supposedly protect American business interests from an insurrection. On February 15, 1898, a mysterious explosion sunk the ship, killing 270 sailors. The Spanish were blamed for the explosion despite a lack of incriminating evidence. “You furnish the pictures and I’ll furnish the war,” newspaperman William Randolph Hearst famously said to the artist Frederic Remington, implying that, armed with the artist’s illustrations, his newspapers would generate war propaganda. The U.S. government waged war with Spanish-occupied Cuba for the next four years, making the world safe for American sugar and tobacco corporations.
The president gave a speech on August 22 in Buffalo outlining his proposal to “reform” the student loan program. He acknowledged that the program has some problems, but assured the audience they are easily fixed. Just take the principles behind Obamacare and apply them to education. The president personally “guaranteed” that his proposals would make college more affordable.
Here’s the plan. The government will rate colleges based on fees (the lower the better) and graduation rates (the higher the better) and student success in finding a job. Then student loan funds will be allocated to schools according to the rating. Students will also be guided to the best-rated schools via government web sites. And schools will get more funding if they set up demonstration projects to reduce costs. This will all encourage more “competition” among schools. Yes, you heard that right: more government control of colleges will increase market “competition.”
We don’t have a 2,000 page bill in Congress yet, but it’s all quite familiar: government will take even tighter control of higher education just as it has taken even tighter control of medicine, and use Obamacare as its operating manual. Of course, Obamacare not only rated medical insurance policies; it mandated what would be in them at what prices, which in effect put government in charge of defining what healthcare is. Presumably, the government rating of schools will in due course also lead to mandates and the government defining what higher education is. Obamacare also set up government sites where people would be steered to buy government approved policies, and set up demonstration projects, even though the history of government-inspired healthcare demonstration projects has been dismal.
There is a lot more in common between Obamacare and Obamaschool than these superficial characteristics. Obamacare came into being because of a crisis in medical care. As usual, that crisis had been caused by earlier government interventions in medicine, especially price controls. At present, Medicare price controls about 7,500 medical procedures. Because payment varies by location and practitioner (e.g., doctors employed by hospitals get paid more than other doctors), it has been estimated that Medicare price-controls six billion medical transactions at any one time. As government has come to dominate medicine and price-control it, prices have inevitably risen at a rate that threatens to bankrupt the economy. Obamacare has doubled down on the price controls, mandating allowed price increases under Medicare and installing a price control board. All of this will no doubt lead to the kind of legislation recently passed in Massachusetts where any “material” change in a medical practice, in either prices or services, must be approved by the state.
Obamaschool is coming into being for similar reasons. In this case, the government set up a student loan program which was ostensibly designed to subsidize students. But whenever government subsidizes demand without increasing supply, prices inevitably rise, and this was no exception.
As President Obama pointed out, “Over the past three decades, the average tuition [and fees] at a public four-year college has gone up by more than 250 percent. 250 percent. Now a typical family’s income has gone up 16 percent. That’s a big gap.” Yes it is.
In reality, both the 250 percent and the pitiful 16 percent have been caused by government policies, especially price manipulations and controls. The 250 percent increase in fees (mitigated somewhat by increases in student aid) has specifically been driven by government’s mistake in flooding schools with student loan money. That money did not help students; it enabled schools to keep raising fees. What students mostly got out of the loan program was an early initiation into massive debt. If leaving school with heavy debts is not exactly slavery, it certainly represents some kind of indentured servitude.
Obama was more than a bit mendacious about this debt burden. He took credit for keeping student interest rates down. He even said that “government shouldn’t see student loans as a way to make money; it should be a way to help students.” But the reality is that his administration is currently borrowing money at negligible interest rates and then relending it to students at much higher rates. The difference is booked elsewhere in the federal budget under “deficit reduction.” If that isn’t a clear case of using student loans as a way to make money, then what is?
What will really happen if the federal government completes its takeover of higher education pricing? The certain result will be even higher prices, which will then lead to calls for a complete federal takeover, just as advancing prices under Obamacare are now leading to admissions by Senator Reid and Congresswoman Pelosi that it was only intended to be a stepping stone to a “single payer” system in which government in effect nationalizes all healthcare. Nationalizing healthcare would make the crisis worse, not better, but Reid and Pelosi don’t understand that.
The president’s specific proposals for student loans will have some other presumably unintended effects as well. If schools get more federal money as their graduation rate increases, they will simply stop taking students who are more likely to drop out. That of course means they will stop taking disadvantaged students who need help the most.
The administration says that it will get advice from schools in devising the rating system. This is all we need: closed door meetings in Washington between the government and special interests with the consumer excluded. This is exactly how Mussolini ran Italy and Roosevelt tried to run the U.S. with the National Recovery Act. The results of dismantling a consumer-driven market economy will be no better now than they were then.
Beginning on September 9, Mises Academy presents “Imperialism and Anti-Imperialism,” a five-week course taught by Dr. Thomas J. DiLorenzo.
Prof. DiLorenzo discusses the class and the nature of American imperialism:
For generations, American students have been taught that their government was a constitutional republic and, as such, is truly “exceptional.” So-called American exceptionalism is contrasted in the classroom first with the imperialistic British Empire from which the original colonists rebelled. From there, the student learns that a war was fought against the Spanish Empire in the late nineteenth century, and against the monarchical empires of Old Europe in World War I. The fascist empires of Germany and Japan were defeated in World War II, after which the U.S. government commenced a new war against the Soviet empire. With the demise of the Soviet Union, American exceptionalism was once again invoked to impose democracy at gunpoint all over the world in the name of peace. Through all of this, the United States government selflessly pursued nothing more than peace and freedom for the peoples of the world.
This standard narrative, in which the United States is the perennial instrument of liberty, is a lie. We must ask ourselves how the world’s biggest opponent of imperialism (supposedly) has become the biggest imperialistic empire the world has ever known. How does an “anti-imperialistic” government end up with hundreds of military bases spanning the entire globe, with “military command centers” on every continent, even including an “African Command” operated out of Germany?
Was William Graham Sumner right when he argued in is 1898 essay, “The Conquest of the United States by Spain,” that America itself had finally evolved into an imperialistic empire not unlike the Spanish Empire? The answer to this question is “yes and no.” Sumner was right about the nature of the U.S. government as of the turn of the twentieth century, but his timeline was off. The road to imperialism began many decades earlier.
The War of 1812 ignited what Justin Raimondo has called “the virus of imperialism” in America. It was not a defensive war but an attempt to conquer Canada. The American Secretary of War predicted that no soldiers would be needed, that the appearance of a few American military officers would be met with cheers and flowers. The real result was a war in which the British burned down the White House and much of Washington, D.C. It also created an excuse to resurrect the hated Bank of the United States, impose massive taxation, high tariffs, and corporate welfare. “We never really did get back to the pre-War level of minimal State power,” wrote Rothbard.
The 1846 Mexican War was an imperialistic attack on Mexican sovereignty that was so bold that it even motivated the one-term Congressman Abraham Lincoln to speak eloquently in defense of secession.
In 1860 the Republican Party had plans for a continental empire (and beyond) funded by high tariffs and a national bank and littered with corporate welfare for railroad corporations, among others. Their first legislative success, during the 1859-60 Congressional session, was to more than double the average tariff rate at a time when tariff revenue accounted for more than 90 percent of all federal tax revenue. After the lower South seceded, threatening to foil the Republican Party’s imperialistic designs, Lincoln threatened “invasion” and “bloodshed” (his exact words) in any state that failed to collect the newly-doubled tariff tax in his first inaugural address. And he kept his word.
Then there was Woodrow Wilson, who “set the entire pattern for foreign policy from 1917 to the present,” according to Rothbard, with his utopian plans to recreate Europe at gunpoint in the name of “democracy.” If today’s neocons, who control American foreign policy, are anything, they are Wilsonian fanatics.
Beginning on the evening of Monday, September 9, I will be teaching a five-week online Mises Academy course on Imperialism and Anti-imperialism featuring the writings and ideas of such scholars as Ludwig von Mises, Murray Rothbard, Hans-Hermann Hoppe, Joseph T. Salerno, Thomas E. Woods, Jr., Randolph Bourne, Robert Higgs, William Graham Sumner, Joseph Stromberg, and Justin Raimondo, among others (including myself). The economic and political nature of imperialism will be discussed, followed by discussions of American imperialism in action. The fallacies of the contemporary arguments for never-ending war — that “democracies” supposedly never fight wars with each other — will be exposed and the consequences of this philosophy and policy examined.
An important element of the course will be the study of the anti-imperialistic tradition in America — and in the world. This tradition acknowledges that, as Rothbard once wrote, “The State thrives on war ... expands on it, glories in it” as “the aggrandizement of State power crosses national boundaries into other States pushing other people around” as a sort of “foreign counterpart of the domestic aggression against the internal population.”
Or as Ludwig von Mises wrote, under imperialism, “the individual no longer has value. He is valuable to [the state] only as a member of the whole, as a soldier of an army.” And as a payer of ever-increasing taxes, I would add. The “imperialistic peoples’ state,” Mises wrote, has a “lust for conquest” that is “unlimited,” and “foreign peoples are in its eyes not subjects but objects of policy.” Is there a more precise definition of American foreign policy over the past century?
[As reprinted in Left and Right, Spring 1966, edited by Murray N. Rothbard.
Rothbard’s Editorial Note: Education is a perennially important and controversial subject, especially in a country as child-centered as the United States. Within libertarian ranks, an unlimited diversity of viewpoint prevails, ranging from rigorous traditionalists to ultra-progressives. Among the numerous libertarians in the Los Angeles area, a controversy is now raging between the Cardin and Montessori methods of education. We believe that the views of Herbert Spencer, the great nineteenth-century English social philosopher, can provide a much-needed but totally neglected contribution toward a rational solution to many of these disputes, a solution grounded on education in cause-and-effect. The following article is condensed from the chapter on “Moral Education” in Herbert Spencer’s Education: Intellectual, Moral and Physical (A. L. Burt Company, n.d.).]
While it is seen that for the purpose of gaining a livelihood, an elaborate preparation is needed, it appears to be thought that for the bringing up of children, no preparation whatever is needed. In the absence of this preparation, the management of children, and more especially the moral management, is lamentably bad. Parents either never think about the matter at all, or else their conclusions are crude, and inconsistent. In most cases, and especially on the part of mothers, the treatment adopted on every occasion is that which the impulse of the moment prompts: it springs not from any reasoned-out conviction as to what will most conduce to the child’s welfare, but merely expresses the passing parental feelings, whether good or ill; and varies from hour to hour as these feelings vary. Or if these blind dictates of passion are supplemented by any definite doctrines and methods, they are those that have been handed down from the past, or those suggested by the remembrances of childhood, or those adopted from nurses and servants — methods devised not by the enlightenment, but by the ignorance of the time.
Let us go on to consider the true aims and methods of moral education. When a child falls or runs its head against the table, it suffers a pain, the remembrance of which tends to make it more careful for the future; and by an occasional repetition of like experiences, it is eventually disciplined into a proper guidance of its movements. If it lays hold of the fire-bars, thrusts its finger into the candle-flame, or spills boiling water on any part of its skin, the resulting burn or scald is a lesson not easily forgotten.
Now in these and like cases, Nature illustrates to us in the simplest way, the true theory and practice of moral discipline. Observe, in the first place, that in bodily injuries and their penalties we have misconduct and its consequences reduced to their simplest forms. Though according to their popular acceptations, right and wrong are words scarcely applicable to actions that have none but direct bodily effects; yet whoever considers the matter will see that such actions must be as much classifiable under these heads as any other actions. Note, in the second place, the character of the punishments by which these physical transgressions are prevented. Punishments, we call them, in the absence of a better word; for they are not punishments in the literal sense. They are not artificial and unnecessary inflictions of pain; but are simply the beneficent checks to actions that are essentially at variance with bodily welfare — checks in the absence of which life would quickly be destroyed by bodily injuries. It is the peculiarity of these penalties, if we must so call them, that they are nothing more than the unavoidable consequences of the deeds which they follow; they are nothing more than the inevitable reactions entailed by the child’s actions.
Let it be further borne in mind that these painful reactions are proportionate to the degree in which the organic laws have been transgressed. A slight accident brings a slight pain, a more serious one, a greater pain. When a child tumbles over the doorstep, it is not ordained that it shall suffer in excess of the amount necessary, with the view of making it still more cautious than the necessary suffering will make it. But from its daily experience it is left to learn the greater or less penalties of greater or less errors, and to behave accordingly. And then mark, lastly, that these natural reactions which follow the child’s wrong actions, are constant, direct, unhesitating, and not to be escaped. No threats: but a silent, rigorous performance.
Still more significant will these general truths appear, when we remember that they hold throughout adult life as well as throughout infantine life. It is by an experimentally-gained knowledge of the natural consequences, that men and women are checked when they go wrong. After home education has ceased, and when there are no longer parents and teachers to forbid this or that kind of conduct, there comes into play a discipline like that by which the young child is taught its first lessons in self-guidance. If the youth entering upon the business of life idles away his time and fulfills slowly or unskillfully the duties entrusted to him, there by and by follows the natural penalty: he is discharged, and left to suffer for awhile the evils of relative poverty. On the unpunctual man, failing alike his appointments of business and pleasure, there continually fall the consequent inconveniences, losses, and deprivations. The avaricious tradesman who charges too high a rate of profit, loses his customers, and so is checked in his greediness. And so throughout the life of every citizen. In the quotation so often made a propos of these cases — “The burnt child dreads the fire” — we see not only that the analogy between this social discipline and Nature’s early discipline of infants is universally recognized; but we also see an implied conviction that this discipline is of the most efficient kind.
Have we not here, then, the guiding principle of moral education? Must we not infer that the system so beneficent in its effects, alike during infancy and maturity, will be equally beneficent throughout youth? Is it not manifest that as “ministers and interpreters of Nature” it is the function of parents to see that their children habitually experience the true consequences of their conduct — the natural reactions: neither warding them off, nor intensifying them, nor putting artificial consequences in place of them?
Probably, however, not a few will contend that already most parents do this — that the punishments they inflict are, in the majority of cases, the true consequences of ill-conduct — that parental anger, venting itself in harsh words and deeds, is the result of a child’s transgression. But observe that the discipline on which we are insisting is not so much the experience of parental approbation, or disapprobation, which, in most cases, is only a secondary consequence of a child’s conduct; but it is the experience of those results which would naturally flow from the conduct in the absence of parental opinion or interference. The truly instructive and salutary consequences are not those inflicted by parents when they take upon themselves to be Nature’s proxies; but they are those inflicted by Nature herself. We will endeavor to make this distinction clear by a few illustrations, which, while they show what we mean by natural reactions as contrasted with artificial ones, will afford some directly practical suggestions.
In every family where there are young children there almost daily occur cases of what mothers and servants call “making a litter.” A child has had out its box of toys, and leaves them scattered about the floor. In most cases the trouble of rectifying this disorder falls anywhere but in the right place: if in the nursery, the nurse herself, with many grumblings undertakes the task; if below stairs, the task usually devolves either on one of the elder children or on the house-maid; the transgressor being visited with nothing more than a scolding. In this very simple case, however, there are many parents wise enough to follow out, more or less consistently, the normal course — that of making the child itself collect the toys or shreds. The labor of putting things in order is the true consequence of having put them in disorder. Every trader in his office, every wife in her household, has daily experience of this fact. And if education be a preparation for the business of life, then every child should also, from the beginning, have daily experience of this fact. If the natural penalty be met by any refractory behavior, then the proper course is to let the child feel the ulterior reaction consequent on its disobedience. Having refused or neglected to pick up and put away the things it has scattered about, and having thereby entailed the trouble of doing this on someone else, the child should, on subsequent occasions, be denied the means of giving this trouble. When next it petitions for its toy-box, the reply of its mamma should be — “The last time you had your toys you left them lying on the floor, and Jane had to pick them up. So that, as you will not put away your toys when you have done with them, I cannot let you have them.” This is obviously a natural consequence, neither increased nor lessened; and must be so recognized by a child. The penalty comes, too, at the moment when it is most keenly felt. A new-born desire is balked at the moment of anticipated gratification; and the strong impression so produced can scarcely fail to have an effect on the future conduct. Add to which, that, by this method, a child is early taught the lesson which cannot be learned too soon, that in this world of ours pleasures are rightly to be obtained only by labor.
Take another case. Not long since we had frequently to listen to the reprimands visited on a little girl who was scarcely ever ready in time for the daily walk. Of eager disposition, and apt to become thoroughly absorbed in the occupation of the moment, Constance never thought of putting on her things until the rest were ready. The governess and the other children had almost invariably to wait; and from the mamma there almost invariably came the same scolding. Utterly as this system failed it never occurred to the mamma to let Constance experience the natural penalty. Nor, indeed, would she try it when it was suggested to her. In the world the penalty of being behind time is the loss of some advantage that would else have been gained: the train is gone; or the steamboat is just leaving its moorings. And every one, in cases perpetually occurring, may see that it is the prospective deprivations entailed by being too late which prevent people from being too late. Is not the inference obvious? Should not these prospective deprivations control the child’s conduct also? If Constance is not ready at the appointed time, the natural result is that of being left behind, and losing her walk. And no one can doubt that after having once or twice remained at home while the rest were enjoying themselves in the fields, and after having felt that this loss of a much-prized gratification was solely due to want of promptitude, some amendment would take place. At any rate, the measure would be more effective than that perpetual scolding which ends only in producing callousness.
Again, when children, with more than usual carelessness, break or lose the things given to them, the natural penalty — the penalty which makes grown-up persons more careful — is the consequent inconvenience. The want of the lost or damaged article, and the cost of supplying its place, are the experiences by which men and women are disciplined in these matters; and the experience of children should be as much as possible assimilated to theirs. We do not refer to that early period at which toys are pulled to pieces in the process of learning their physical properties, and at which the results of carelessness cannot be understood; but to a later period, when the meaning and advantages of property are perceived. When a boy, old enough to possess a penknife, uses it so roughly as to snap the blade, a thoughtless parent, or some indulgent relative, will commonly forthwith buy him another; not seeing that, by doing this, a valuable lesson is lost. In such a case, a father may properly explain that penknives cost money, and that to get money requires labor; that he cannot afford to purchase new penknives for one who loses or breaks them; and that until he sees evidence of greater carefulness he must decline to make good the loss. A parallel discipline may be used as a means of checking extravagance.
These few familiar instances, here chosen because of the simplicity with which they illustrate our point, will make clear to everyone the distinction between those natural penalties which we contend are the truly efficient ones, and those artificial penalties which parents commonly substitute for them. Let us note the many and great superiorities of this principle over the principle, or rather the empirical practice, which prevails in most families.
In the first place, right conceptions of cause and effect are early formed; and by frequent and consistent experience are eventually rendered definite and complete. Proper conduct in life is much better guaranteed when the good and evil consequences of actions are rationally understood, than when they are merely believed on authority. A child who finds that disorder lines entails the subsequent trouble of putting things in order, or who misses a gratification from dilatoriness, or whose want of care is followed by the loss or breakage of some much-prized possession, not only experiences a keenly-felt consequence, but gains a knowledge of causation: both the one and the other being just like those which adult life will bring. Whereas a child who in such cases receives some reprimand or some factitious penalty, not only experiences a consequence for which it often cares very little, but lacks that instruction respecting the essential natures of good and evil conduct, which it would else have gathered. It is a vice of the common system of artificial rewards and punishments, that by substituting for the natural results of misbehavior certain threatened tasks or castigations, it produces a radically wrong standard of moral guidance. Having throughout infancy and boyhood always regarded parental or tutorial displeasure as the result of a forbidden action, the youth has gained an established association of ideas between such action and such displeasure, as cause and effect; and consequently when parents and tutors have abdicated, and their displeasure is not to be feared, the restraint on a forbidden action is in great measure removed; the true restraints, the natural reactions, having yet to be learned by sad experience. As writes one who has had personal knowledge of this short-sighted system: “Young men let loose from school plunge into every description of extravagance; they know no rule of action — they are ignorant of the reasons for moral conduct — they have no foundation to rest upon.”
Another great advantage of this natural system of discipline is, that it is a system of pure justice; and will be recognized by every child as such. Whoso suffers nothing more than the evil which obviously follows naturally from his own misbehavior, is much less likely to think himself wrongly treated than if he suffers an evil artificially inflicted on him; and this will be true of children as of men. Take the case of a boy who is habitually reckless of his clothes, scrambles through hedges without caution, or is utterly regardless of mud. If he is beaten, or sent to bed, he is apt to regard himself as ill-used; and his mind is more likely to be occupied by thinking over his injuries than repenting of his transgressions. But suppose he is required to rectify as far as he can the harm he has done — to clean off the mud with which he has covered himself, or to mend the tear as well as he can. Will he not feel that the evil is one of his own producing? Will he not while paying this penalty be continuously conscious of the connection between it and its cause? And will he not, spite his irritation, recognize more or less clearly the justice of the arrangement?
Again, the tempers both of parents and children are much less liable to be ruffled under this system than under the ordinary system. Instead of letting children experience the painful results which naturally follow from wrong conduct, the usual course pursued by parents is to inflict themselves certain other painful results. A double mischief arises from this. Making, as they do, multiplied family laws; and identifying their own supremacy and dignity with the maintenance of these laws; it happens that every transgression comes to be regarded as an offense against themselves, and a cause of anger on their part. Add to which the further irritations which result from taking upon themselves, in the shape of extra labor or cost, those evil consequences which should have been allowed to fall on wrong-doers. Similarly with the children. Penalties which the necessary reaction of things brings round upon them — penalties which are inflicted by an impersonal agency, produce an irritation that is comparatively slight and transient; whereas, penalties which are voluntarily inflicted by a parent, and are afterward remembered as caused by him or her, produce an irritation both greater and more continued.
Just consider how disastrous would be the result if this empirical method were pursued from the beginning. Suppose it were possible for parents to take upon themselves the physical sufferings entailed on their children by ignorance and awkwardness; and that while bearing these evil consequences they visited on their children certain other evil consequences, with the view of teaching them the impropriety of their conduct. Suppose that when a child, who had been forbidden to meddle with the kettle, spilt some boiling water on its foot, the mother vicariously assumed the scald and gave a blow in place of it; and similarly in all other cases. Would not the daily mishaps be sources of far more anger than now? Would not there be chronic ill-temper on both sides? Yet an exactly parallel policy is pursued in after years. A father who punishes his boy for carelessly or wilfully breaking a sister’s toy, — and then himself pays for a new toy, does substantially this same thing — inflicts an artificial penalty on the transgressor, and takes the natural penalty on himself: his own feelings and those of the transgressor being alike needlessly irritated. If he simply required restitution to be made, he would produce far less heartburning. If he told the boy that a new toy must be bought at his, the boy’s cost, and that his supply of pocket-money must be withheld to the needful extent, there would be much less cause for ebullition of temper on either side; while in the deprivation afterward felt, the boy would experience the equitable and salutary consequence. In brief, the system of discipline by natural reactions is less injurious to temper, alike because it is perceived on both sides to be nothing more than pure justice, and because it more or less substitutes the impersonal agency of nature for the personal agency of parents.
At present, mothers and fathers are mostly considered by their offspring as friend-enemies. Determined as their impressions inevitably are by the treatment they receive; and oscillating as that treatment does between bribery and thwarting, between petting and scolding, between gentleness and castigation; children necessarily acquire conflicting beliefs respecting the parental character. A mother commonly thinks it quite sufficient to tell her little boy that she is his best friend; and assuming that he is in duty bound to believe her, concludes that he will forthwith do so. “It is all for your good”; “I know what is proper for you better than you do yourself”; “You are not old enough to understand it now, but when you grow up you will thank me for doing what I do”; — these and like assertions, are daily reiterated. Meanwhile the boy is daily suffering positive penalties; and is hourly forbidden to do this, that, and the other, which he was anxious to do. By words he hears that his happiness is the end in view; but from the accompanying deeds he habitually receives more or less pain. Utterly incompetent as he is to understand that future which his mother has in view, or how this treatment conduces to the happiness of that future, he judges by such results as he feels; and finding these results anything but pleasurable, he becomes skeptical respecting these professions of friendship. And is it not folly to expect any other issue? Must not the child judge by such evidence as he has got? And does not this evidence seem to warrant his conclusion? The mother would reason in just the same way if similarly placed. If, in the circle of her acquaintances, she found someone who was constantly thwarting her wishes, uttering sharp reprimands, and occasionally inflicting actual penalties on her, she would pay but little attention to any professions of anxiety for her welfare which accompanied these acts. Why, then, does she suppose that her boy will conclude otherwise?
But now observe how different will be the results if the system we contend for be consistently pursued — if the mother not only avoids becoming the instrument of punishment, but plays the part of a friend, by warning her boy of the punishments which Nature will inflict. Take a case; and that it may illustrate the mode in which this policy is to be early initiated, let it be one of the simplest cases. Suppose that, prompted by the experimental spirit so conspicuous in children, whose proceedings instinctively conform to the inductive method of inquiry — suppose that so prompted the child is amusing himself by lighting pieces of paper in the candle and watching them burn. If his mother is of the ordinary unreflective stamp, she will either, on the plea of keeping the child “out of mischief,” or from fear that he will burn himself, command him to desist; and in case of non-compliance will snatch the paper from him. On the other hand, should he be so fortunate as to have a mother of sufficient rationality, who knows that this interest with which the child is watching the paper burn results from a healthy inquisitiveness, without which he would never have emerged out of infantine stupidity, and who is also wise enough to consider the moral results of interference, she will reason thus: “If I put a stop to this I shall prevent the acquirement of a certain amount of knowledge. It is true that I may save the child from a burn; but what then? He is sure to burn himself sometime; and it is quite essential to his safety in life that he should learn by experience the properties of flame. Moreover, if I forbid him from running this present risk, he is sure hereafter to run the same or a greater risk when no one is present to prevent him; whereas, if he should have any accident now that I am by, I can save him from any great injury; add to which the advantage that he will have in future some dread of fire, and will be less likely to burn himself to death, or set the house in a flame when others are absent. Furthermore, were I to make him desist, I should thwart him in the pursuit of what is in itself a purely harmless, and indeed, instructive gratification; and he would be sure to regard me with more or less ill-feeling. Ignorant as he is of the pain from which I would save him, and feeling only the pain of a balked desire, he could not fail to look upon me as the cause of that pain. To save him from a hurt which he cannot conceive, and which has therefore no existence for him, I inflict upon him a hurt which he feels keenly enough; and so become, from his point of view, a minister of evil. My best course then, is simply to warn him of the danger, and to be ready to prevent any serious damage.” And following out this conclusion, she says to the child — “I fear you will hurt yourself if you do that.” Suppose, now, that the child perseveres, as he will very probably do; and suppose that he ends by burning himself. What are the results? In the first place he has gained an experience which he must gain eventually, and which, for his own safety he cannot gain too soon. And in the second place, he has found that his mother’s disapproval or warning was meant for his welfare: he has a further positive experience of her benevolence — a further reason for placing confidence in her judgment and her kindness — a further reason for loving her.
Of course, in those occasional hazards where there is a risk of broken limbs or other serious bodily injury, forcible prevention is called for. But leaving out these extreme cases, the system pursued should be not that of guarding a child against the small dangers into which it daily runs, but that of advising and warning it against them. And by consistently pursuing this course, a much stronger filial affection will be generated than commonly exists. If here, as elsewhere, the discipline of the natural reactions is allowed to come into play — if in all those out-of-door scramblings and in-door experiments, by which children are liable to hurt themselves, they are allowed to persevere, subject only to discussion more or less earnest according to the risk, there cannot fail to arise an ever-increasing faith in the parental friendship and guidance. Not only, as before shown, does the adoption of this principle enable fathers and mothers to avoid the chief part of that odium which attaches to the infliction of positive punishment; but, as we here see, it enables them further to avoid the odium that attaches to constant thwartings; and even to turn each of those incidents which commonly cause squabbles, into a means of strengthening the mutual good feeling. Instead of being told in words, which deeds seem to contradict, that their parents are their best friends, children will learn this truth by a consistent daily experience; and so learning it, will acquire a degree of trust and attachment which nothing else can give.
Bear constantly in mind the truth that the aim of your discipline should be to produce a self-governing being; not to produce a being to be governed by others. Were your children fated to pass their lives as slaves, you could not too much accustom them to slavery during their childhood; but as they are by and by to be free men, with no one to control their daily conduct, you cannot too much accustom them to self-control while they are still under your eye. Aim, therefore, to diminish the amount of parental government as fast as you can substitute for it in your child’s mind that self-government arising from a foresight of results. In infancy a considerable amount of absolutism is necessary. A three-year-old urchin playing with an open razor, cannot be allowed to learn by this discipline of consequences; for the consequences may, in such case, be too serious. But as intelligence increases, the number of instances calling for peremptory interference may be, and should be diminished; with the view of gradually ending them as maturity is approached. All periods of transition are dangerous; and the most dangerous is the transition from the restraint of the family circle to the non-restraint of the world. Hence the importance of pursuing the policy we advocate; which, alike by cultivating a child’s faculty of self-restraint, by continually increasing the degree in which it is left to its self-constraint, and by so bringing it, step by step, to a state of unaided self-constraint, obliterates the ordinary sudden and hazardous change from externally-governed youth to internally-governed maturity.
Lastly, always remember that to educate rightly is not a simple and easy thing, but a complex and extremely difficult thing: the hardest task which devolves upon adult life. If you would carry out with success a rational and civilized system, you must be prepared for considerable mental exertion — for some study, some ingenuity, some patience, some self-control. You will have habitually to trace the consequences of conduct — to consider what are the results which in adult life follow certain kind of acts; and then you will have to devise methods by which parallel results shall be entailed on the parallel acts of your children.
We’ve just completed another successful Mises University, the summer instructional seminar for students hosted by the Ludwig von Mises Institute. Interest in Austrian economics continues to grow: we could accept fewer than one-third of qualified applicants.
Although the students are widely read, they share a particular fascination with the works of Mr. Libertarian, Murray N. Rothbard, whose books and articles are far more widely read today than they were in his lifetime. Rothbard — economist, historian, philosopher — produced an astonishing body of work in defense of liberty. Why are these young people so captivated by him? Read him yourself and see.
With Mises University 2013 behind us, I thought this was an opportune moment to look at Rothbard’s major works and suggest a program for reading them. It is not strictly necessary that you read them in my recommended order, of course, but I think in terms of difficulty level and subject matter, the following program makes sense.
- What Has Government Done to Our Money? This little book, which has been translated into countless languages, has been the entry point into sound money for more people than any other work. It’s also an excellent entry point into the writings of Rothbard, because it showcases so many of his outstanding qualities. You discover not just the range of his economic and historical knowledge but also the clarity of his prose and his ability to explain complicated matters simply and briefly.
In fewer than 100 pages, you will learn what money is, where it comes from, how government comes to monopolize its production, and how government debases it. You’ll learn some American economic history as Rothbard reviews the twentieth-century process by which the gold standard in the US was transformed into the fiat paper system of today.
You may want to read it in the Mises Institute’s special edition, which also includes Rothbard’s essay The Case for a 100 Percent Gold Dollar.
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Economic Depressions: Their Cause and Cure. This is not so much a book as a lengthy essay, but Joe Salerno, our academic vice president at the Mises Institute, credits it with getting him interested in Austrian economics. It is a layman’s overview of the Austrian theory of the business cycle — in other words, it’s a free-market explanation of why the economy experiences booms and busts. The theory has undergone some development and elaboration in the decades since this essay, but it will give you a good grounding in the basics of the business cycle and the role of the central bank in causing it.
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Making Economic Sense. This is a punchy and entertaining collection of Rothbard’s short articles on economics, covering a wide-ranging series of topics. Rothbard is at his most entertaining when doing this kind of writing. By showing you how economic insights can shed light in so many different areas, these articles can help train you to think like an economist.
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The Anatomy of the State. This essay appeared in Rothbard’s collection Egalitarianism as a Revolt Against Nature and Other Essays, and the Mises Institute has since released it as a stand-alone publication. Now that you’ve read Rothbard on basic economics and have seen the sharpness of his mind and the persuasiveness of his arguments, it’s time for something more challenging. Here Rothbard explains the true nature of the state.
I’ll give you a hint: the state isn’t a benign institution that provides for the common good.
Once you’ve read this essay, you may also enjoy the other essays in the Egalitarianism book, particularly “War, Peace, and the State,” Rothbard’s derivation of nonintervention from libertarianism’s nonaggression principle.
- For a New Liberty: The Libertarian Manifesto. Intended for a general audience, this is Rothbard’s case for libertarianism. He shows how the libertarian framework applies to welfare, the environment, foreign policy, and much more.
But Rothbard goes beyond the traditional introduction to libertarianism by extending his analysis to the provision of security and dispute resolution, and indeed to the production of all goods and services in society. Much specialized literature has been published since that time in support of stateless approaches to matters like these, but Rothbard was the pioneer.
[product:301]
- America’s Great Depression, 5th ed. Rothbard wrote this book half a century ago, in 1963. It remains the definitive Austrian work on the Great Depression in the United States. (For an Austrian look at the European side of the Depression, see Lionel Robbins’s book The Great Depression.) The conventional wisdom that blamed “capitalism” for the Depression is systematically dismantled.
Rothbard accomplishes several important things with this book.
First, he explains the Austrian theory of the business cycle to the general public, and discusses the shortcomings of alternative theories.
Second, he shows that the 1920s really were an inflationary period in terms of money creation. The price level remained stable, he said, because the monetary inflation prevented it from falling, which is what it should have been doing at a time of great productivity increases. Focusing on the price level, as opposed to the level of money creation, gives a misleading picture.
Third, Rothbard’s historical work on the presidential term of Herbert Hoover makes quick work of the claim that the Depression was prolonged because of the chief executive’s dogmatic adherence to laissez-faire. Hoover was an interventionist from whom Franklin Roosevelt’s New Deal would later extrapolate.
The non-specialist should not be concerned if chapter 4 seems technical or difficult. Scholars will want to examine Rothbard’s evidence in this chapter, but the layman does not need to master the details regarding the process of inflation and various features of the financial world of the 1920s in order to absorb the book’s thesis.
Note, finally, that Milton Friedman, too, says the Fed caused the Great Depression. But Friedman’s view is that the Fed didn’t do enough — hardly a free-market analysis. Rothbard’s position is that the Fed did too much, and that the 1920s, a period in which Friedman perceives no fundamental problems that should have yielded a depression, were the years in which the Fed sowed the seeds of the later catastrophe.
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The Irrepressible Rothbard. This is a collection of Rothbard’s commentaries on politics and culture from late in his life. In these writings we encounter Rothbard at his most joyous — and, when necessary, at his most biting and devastating.
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The Mystery of Banking. This is Rothbard’s textbook in money and banking. It’s a systematic, Austrian-inspired overview of money and banking, along with copious doses of political, legal, and economic history. If time is at a premium for you, The Case Against the Fed, Rothbard’s shorter book covering similar material, can substitute for The Mystery of Banking.
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Man, Economy and State: A Treatise on Economic Principles. This is Rothbard’s magnum opus. It takes you from the most basic principles, involving an economy with only a single person, all the way through production, consumption, monopoly, interest rates, money, and much more. It is a systematic treatise on economics from the Austrian perspective.
This is a long book. It’s even longer if you read it the way it was intended to be read: with Power and Market. Power and Market originally formed the last part of Man, Economy and State, but the publisher feared it was too radical and urged that it be published as a separate work. In our Scholar’s Edition of Man, Economy and State, the Mises Institute has integrated Power and Market back into Man, Economy amd State, so you can read the text the way Rothbard himself envisioned it.
Again, reading Rothbard’s treatise is a major undertaking, if only because of its great length. But Rothbard is an outstanding teacher, writing in clear prose that the intelligent reader can understand. I recommend using our Study Guide, which can help you understand complicated issues and which explains the significance of Rothbard’s insights and advances within the context of the history of economic thought.
- The Ethics of Liberty. Here Rothbard derives and defends the principle of self-ownership, and applies it to a host of important issues, including animal rights, lifeboat situations, and criminality and punishment.
Rothbard wrote numerous shorter works and thousands of articles, and edited the journals Left and Right, The Libertarian Forum, The Journal of Libertarian Studies, and The Review of Austrian Economics (now the Quarterly Journal of Austrian Economics). His short books Education: Free and Compulsory, and Wall Street, Banks, and American Foreign Policy may be read at any time and without any prior knowledge.
- Economic Controversies. Formerly the two-volume Logic of Action, this is a collection of Rothbard’s articles in scholarly journals, from the American Economic Review to the Review of Austrian Economics. This book may be read either before or after Man, Economy and State. Some of the material is accessible to the intelligent reader without any prior background, while some of the economic articles assume some grounding in the Austrian School.
Can academic articles really be so interesting to read? When they’re Rothbard’s, absolutely.
Check out the tremendous scope of material covered in this book.
Let me conclude with a couple more titles, neither of which requires prior knowledge, and which people interested in American history may find especially valuable.
Conceived in Liberty, originally a four-volume history of colonial America and now available from the Mises Institute as a large single volume, was Rothbard’s spare-time project in the 1970s. His command of the historical literature is clear, and his interpretations challenging and exciting. As he indicates in the introduction, he tells the story of history through the lens of the ongoing struggle between liberty and power.
A History of Money and Banking in the United States: The Colonial Period to World War II. Published posthumously, this book collects articles and book chapters by Rothbard that cover the monetary history of the US. Do not skip over the important introduction by Professor Joseph Salerno.
The Panic of 1819 was Rothbard’s doctoral dissertation at Columbia University. It applies Austrian insights to the first of the nineteenth-century panics. It was very well received in the scholarly community and received excellent reviews in the professional journals.
Don’t forget, too, the Rothbard archive at LRC.
A tremendous intellectual experience awaits you. Enjoy!
Mises University or Virtual Mises University—the best of both worlds.
If you can’t come to Auburn to attend Mises University in person, watch it live on YouTube with VMU.
Virtual Mises University launched last year and was a huge success. This year, more than 50 lectures will be streamed live on YouTube for anyone to watch for free. These lectures will also be recorded and posted for viewing later at a time of your convenience.
We’ve recently expanded Virtual Mises University for those seeking more in-depth learning. By enrolling in VMU, besides watching the live lectures, you can:
Access a hyper-linked list of the assigned readings for the courses;Download the same lecture slides and materials that on-site attendees receive throughout Mises University; andEarn a Certificate of Participation by participating and discussing topics from the lectures with fellow virtual classmates in an Academic Forum.Mises University is a unique opportunity for motivated students who think outside of the box to get answers their mainstream professors cannot provide. These students gather and interact and learn from the top Austrian economists in the field, as well as historians and libertarian thinkers. Students often remark on their MU evaluation forms that one of the greatest appeals of Mises University is the spirit and pursuit of truth. With VMU, you too can be a part of this pursuit of economic truth.
Thanks to the Mises Institute’s generous donors, we are able to offer VMU for only $25—less than 50 cents per lecture.
In American culture, public schools are praised in public and criticized in private, which is roughly the opposite of how we tend to treat large-scale enterprises like Walmart. In public, everyone says that Walmart is awful, filled with shoddy foreign products and exploiting workers. But in private, we buy the well-priced, quality goods, and long lines of people hope to be hired.
Why is this? It has something to do with the fact that public schools are part of our civic religion, the primary evidence that people cite to show that local government serves us. And there is a psychological element. Most of us turn our kids over to them, so surely they must have our best interest at heart!
But do they? Murray N. Rothbard's Education: Free and Compulsory explains that the true origin and purpose of public education is not so much education as we think of it, but indoctrination in the civic religion. This explains why the civic elite is so suspicious of homeschooling and private schooling: it's not fear of low test scores that is driving this, but the worry that these kids aren't learning the values that the state considers important.
But to blast public schools is not the purpose of this article. There are decent public schools and terrible ones, so there is no use generalizing. Nor is there a need to trot out data on test scores. Let me just deal with economics. All studies have shown that average cost per pupil for public schools is twice that of private schools (here is a sample study).
This runs contrary to intuition, since people think of public schools as free and private schools as expensive. But once you consider the source of funding (tax dollars vs. market tuition or donation), the private alternative is much cheaper. In fact, the public schools cost as much as the most expensive and elite private schools in the country. The difference is that the cost of public schooling is spread out over the entire population, whereas the private school cost is borne only by the families with students who attend them.
In short, if we could abolish public schools and compulsory schooling laws, and replace it all with market-provided education, we would have better schools at half the price, and be freer too. We would also be a more just society, with only the customers of education bearing the costs.
What's not to like? Well, there is the problem of the transition. There are obvious and grave political difficulties. We might say that public education enjoys a political advantage here due to network effects. A significant number of "subscriptions," etc. have been piled up in the status quo, and it is very difficult to change those.
But let's pretend. Let's say that a single town decided that the costs of public schooling are too vast relative to private schooling, and the city council decided to abolish public schools outright. The first thing to notice is that this would be illegal, since every state requires localities to provide education on a public basis. I don't know what would happen to the city council. Would they be jailed? Who knows? Certainly they would be sued.
But let's say we somehow get past that problem, thanks to, say, a special amendment in the state constitution that exempts certain localities if the city council approves. Then there is the problem of federal legislation and regulation. I am purely speculating since I don't know the relevant laws, but we can guess that the Department of Education would take notice, and a national hysteria of some sort would follow. But let's say we miraculously get past that problem too and the federal government lets this locality go its own way.
There will be two stages to the transition. In the first stage, many seemingly bad things will happen. How are the physical buildings handled in our example? They are sold to the highest bidder, whether that be to new school owners, businesses, or housing developers. And the teachers and administrators? All let go. You can imagine the outcry.
With property taxes abolished, people with kids in public schools might move away. There will be no premium for houses in school districts that are considered good. There will be anger about this. For the parents that remain, there is a major problem of what to do with the kids during the day.
With property taxes gone, there is extra money to pay for schools, but the assets have just fallen in market value (even without the Fed), which is a serious problem when it comes to shelling out for school tuition. There will, of course, be widespread hysteria about the poor too, who will find themselves without any schooling choices other than homeschool.
Now, all that sounds pretty catastrophic, doesn't it? Indeed. But it is only phase one. If we can somehow make it to phase two, something completely different will emerge. The existing private schools will be filled to capacity and there will be a crying need for new ones. Entrepreneurs will quickly flood into the area to provide schools on a competitive basis. Churches and other civic institutions will gather the money to provide education.
At first, the new schools will be modeled on the public school idea. Kids will be there from 8 to 4 or 5, and all classes will be covered. But in short order, new alternatives will appear. There will be schools for half-day classes. There will be large, medium, and small schools. Some will have forty kids per class, and others four or one. Private tutoring will boom. Sectarian schools of all kinds will appear. Micro-schools will open to serve niche interests: science, classics, music, theater, computers, agriculture, etc. There will be single-sex schools. Whether sports would be part of school or something completely independent is for the market to decide.
And no longer will the "elementary, middle school, high school" model be the only one. Classes will not necessarily be grouped by age alone. Some will be based on ability and level of advancement too. Tuition would range from free to super expensive. The key thing is that the customer would be in charge.
Transportation services would spring up to replace the old school-bus system. People would be able to make money by buying vans and providing transportation. In all areas related to education, profit opportunities would abound.
In short, the market for education would operate the same as any other market. Groceries, for example. Where there is a demand, and obviously people demand education for their kids, there is supply. There are large grocery stores, small ones, discount ones, premium ones, and stores for groceries on the run. It is the same for other goods, and it would be the same for education. Again, the customer would rule. In the end, what would emerge is not entirely predictable—the market never is—but whatever happened would be in accord with the wishes of the public.
After this phase two, this town would emerge as one of the most desirable in the country. Educational alternatives would be unlimited. It would be the source of enormous progress, and a model for the nation. It could cause the entire country to rethink education. And then those who moved away would move back to enjoy the best schools in the country at half the price of the public schools, and those without children in the house wouldn't have to pay a dime for education. Talk about attractive!
So which town will be the first to try it and show us all the way?
[This article was originally published April 7, 2008]
According to the official White House website, the end goal of schooling is to “help restore middle-class security.” Such a stance is a surprisingly honest one in a political environment built on deceit. The Obama administration makes no attempt to hide the fact that mandatory public schooling is a state tool for manipulating class structure. This is both a historical and economic fact.
Modern American schooling stems from two sources. First the Prussian school system which was used by the Nazis to limit and control legal access to information while psychologically training students in order to promote fascist ideology. The second is the free state-run schools which were an important part of the caste-structure that has existed in India for thousands of years. Here, the menial and “untouchable” classes, approximately 95 percent of the population, were subject to the rule of the Hindu Brahmin priest (Gatto 39). Each class had its own forms of education, all of them placing an emphasis on “truth,” which referred to the superiority of the Brahmin priest and the proper subservient role of the student in society.
The core principle of education for the two lowest classes in India, was ignorance. By filling up the free time of children with repetitive tasks of little educational value, students were transformed into thoughtless followers of the Brahmin. One would believe such a process would drive away any man of God who sought to help children, but such was not the case with Anglican missionary Andrew Bell who was able to see the “good” in what he referred to as the Madras system of education. In 1790 he wrote, “In every instance under my observation in this kingdom, and in every report with which my brethren have honored me of the effects produced by the Madras System in their parishes, the improvement in the subordination, orderly conduct, and general behavior of the children, has been particularly noticed, and must be regarded as infinitely the most valuable feature of its character” (Bell 10).
Bell enthusiastically took over the Hindu schools and adapted them to raise impoverished children into loyal subjects of the Anglican Church. In 1797 he opened up the Aldgate Charity School in England. In his own words, “Its ultimate object, the ultimate object or end of all education, is to make ... good subjects ...” (Bell 7). He was heavily influenced by the zeitgeist that it was God’s will that the impoverished remain in their present state of existence.
Joseph Lancaster, a Quaker in London, took what was once a systematic approach to subjugating peasants and turned it into a method of affordably teaching thousands of students, from his own home no less, so as to empower them to rise to a greater glory. Lancaster’s school did not last long before it attracted the attention of Bell, who saw his philosophy of pedagogy being defiled by the Quaker. Quickly, King George III began funding Lancaster’s school, and with it began regulating curriculum by requiring that students learn the Bible (Gatto 41-42). In 1807 Bell contested the perversion of his system and, with the support of the Anglican Church, replaced Lancaster’s school with his own. However, with Lancaster’s school being more popular than the Aldgate Charity School, it was his name and not Bell’s that came to define the Anglican version of the Indian Madras system.
Amid fears of non-Anglican values destroying the newly formed republic of the United States, English-Americans adopted Lancaster and Prussian schooling (Liggio and Peden). Today the English traditions that go back over a century in America continue to promote inequality. The main purpose of school in an industrialized economy is to signal productivity to employers. Government funding of education whether by public, charter, or private voucher schools incentivizes students seeking a competitive edge to spend more time in school. For the middle and lower classes the results are greater economic inefficiency. Middle class students who may have otherwise obtained only a high school degree, now must deplete more savings or go into debt to get a college degree that signals the same amount of productivity. For the poor the results are even worse. They must spend more time in school to signal that they are capable of higher productivity. The high opportunity cost of going through school keeps low-income students from being able to afford to display their productivity, limiting them to lower paying jobs.
Government schools serve to both mentally and economically restrict students and history makes it clear that is what they were designed for.
This op ed is a shortened version of the following refereed journal article: Jordan Reel and Walter E. Block, 2012. “Public Education: Who is it for?” The Scientific Journal of Humanistic Studies, Vol. 7, No. 4, October, pp. 66-72; this article may be found here, or here.
All cites to the present article may be found there.
Despite being stretched for time in just about every aspect of life, I just can’t seem to help continually signing up for the great classes over at The Mises Academy. But after a lifetime of being “educated” by the “public” (government) education system, I’ve got a lot of catching up to do. Our nation’s schools veer away from any controversy over the most revered figures of the State, and you’d be hard pressed to find anyone more revered than “The Great Emancipator”, Abe Lincoln.
The standard tale of “Honest Abe” is that he was just a hard-working honest fella who made an unlikely run for the Presidency, freed the slaves and united the country before being brutally murdered while watching “Little Orphan Annie” (I may be foggy on some of the details.) This tale may provide us with warm and fuzzy feelings, but it doesn’t quite provide us with the truth about Lincoln’s presidency. Let’s see what Wikipedia has to say:
Abraham Lincoln (February 12, 1809 – April 15, 1865) was the 16th President of the United States , serving from March 1861 until his assassination in April 1865. Lincoln led the United States through its greatest constitutional, military, and moral crises—theAmerican Civil War—preserving the Union, abolishing slavery, strengthening the national government and modernizing the economy. Reared in a poor family on the western frontier, Lincoln was self-educated, and became a country lawyer, a Whig Party leader, Illinois state legislator during the 1830s, and a one-term member of the United States House of Representatives during the 1840s.
Well how could anyone argue with that! He “led the United States” through it’s greatest crises – the Civil War. He “preserved” the Union! He abolished slavery! And “modernized” the economy! What’s not to celebrate?
Is it possible Lincoln wasn’t all he was cracked up to be? Did he really free the slaves? Did he “lead” America through its greatest crises – or cause it? And why should all of this matter to libertarians?
There have been countless articles, speeches and books published about the Abraham Lincoln that run contrary to the standard stories we are told about the 16th President. Luckily, the Mises Academy has one of the best – Thomas DiLorenzo, author of The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War and Lincoln Unmasked: What You’re Not Supposed to Know About Dishonest Abe to help guide us along the way. While I highly recommend both of these books, the opportunity to learn from DiLorenzo himself is to good to pass up.
So if you want to be armed with the knowledge to refute the myths about Abraham Lincoln, look no further than this great Mises Academy course, Lincoln: Founding Father of the American Leviathan State, starting today, Thursday May 9,2013! And if you can’t attend live, fear not as all material will be online shortly following the live lectures. Five weeks of solid education from Tom DiLorenzo, all for only $59!
And no, I have no vested financial interest in anyone signing up for this course. I receive no commissions, only the commission of having more informed minds as allies in the never ending battle of tyranny vs liberty, of power vs market. So sign up today, and see myself and Lions of Liberty contributor Joe Beck in the virtual classroom!
In an essay entitled “Lincoln, the Declaration, and Secular Puritanism: A Rhetoric for Continuing Revolution,” the late Professor Mel Bradford explained the ideological genesis of American foreign and military policy that has existed since 1861. Abraham Lincoln’s “erroneous understanding of the Declaration of Independence” as espoused in his Gettysburg Address, wrote Bradford, established “a rhetoric for continuing revolution” and “set us forever to ‘trampling out the grapes of wrath.’”
Professor Bradford was referring to the way in which Lincoln used the “all men are created equal” phrase from the Declaration and reinterpreted it to have meant that it was somehow the duty of Americans to stamp out all sin in the world, wherever it may be found, so that ALL MEN EVERYWHERE could supposedly share in equal freedom. Hence the “rhetoric of continuing revolution” is a rhetorical recipe for perpetual war for perpetual “freedom” everywhere in the world.” It was cemented into place as the new cornerstone of American policy thanks to the deification of Lincoln after his death, which in turn led to the virtual deification of the presidency, and of government in general. The modern-day rhetoric of “American exceptionalism” is just the latest expression of Lincoln’s rhetoric of continuing revolution.
Washington and Jefferson vs. LincolnPrior to 1863, the year of the Gettysburg Address, American foreign policy was based mostly on the Washington/Jefferson ideology of commercial relations with all nations, entangling alliances with none. It was considered to be a virtue to remain neutral in disputes between two other countries. As Murray Rothbard wrote in an essay entitled “Just War,” in those days “neutrality was considered not only justifiable but a positive virtue.” In the old days “he kept us out of war” was a great tribute to any American political leader, and “standing idly by” while other nations warred with each other was “a mark of high statesmanship,” according to Rothbard.
The Lincolnian rhetoric of “continuing revolution,” by contrast, has been the ideological cornerstone of all American wars ever since the “Civil War” (a.k.a. War to Prevent Southern Independence). It is routinely used to disguise the fact that war is always and everywhere a “racket” as General Smedley Butler, the most highly decorated Marine in U.S. history, declared in his book, War is a Racket. War is invariably waged over some hidden economic agenda for the benefit of the politically-connected class. As Rothbard further pointed out, in the past “interventionists were more correctly considered propagandists for despotism, mass murder, and perpetual war, if not spokesmen for special-interest groups, or agents of ‘the merchants of death.'’” Scarcely a high ground.
Today we “are obligated to take up the sword and wage a perpetual war to force Utopia on the entire world by guns, tanks, and bombs,” said Rothbard. We are “humanitarians with a guillotine,” as Isabel Paterson wrote in her book, The God of the Machine. We go about “pursuing freedom and equality” for other people in other countries, supposedly, even if we must kill them by the hundreds of thousands and wreck their entire societies. “The humanitarian in theory is the terrorist in action,” she wrote.
The False Virtue of “American Exceptionalism”Professor Bradford was not alone in recognizing the catastrophic implications of Lincoln’s “rhetoric of continuing revolution.” In 1960, Life magazine invited the Pulitzer prize-winning poet and novelist Robert Penn Warren (author of All the King’s Men and nineteen other novels) to record his thoughts on the meaning of the American “Civil War” for the 1961 centennial of the war. He produced a short book entitled The Legacy of the Civil War, a major theme of which is that the war left the North, which is to say, the Republican Party, with what it perceived to be “a treasury of virtue.” This is the “psychological heritage” left to the North, wrote Robert Penn Warren. “The Northerner, with his Treasury of Virtue, feels redeemed by history. ... He has in his pocket not a papal indulgence peddled by some wandering pardoner of the Middle Ages, but an indulgence, a plenary indulgence, for all sins, past, present, and future ...” (emphasis added).
This “plenary indulgence for all sins” would allow the U.S. government to conduct a twenty-five year campaign of ethnic genocide against the Plains Indians commencing just three months after Lee’s surrender; to plunder the South for more than a decade with heavy taxes and debt during “Reconstruction”; to murder more than 200,000 Filipinos who opposed being ruled by an American empire after having jettisoned the Spanish empire; and enter the European war “to make the world safe for democracy.” This “moral narcissism,” wrote Robert Penn Warren, is “a poor basis for national policy” but is the “justification” for “our crusades of 1917-1918 and 1941-1945 and our diplomacy of righteousness, with the slogan of unconditional surrender and universal spiritual rehabilitation for others” (emphasis added).
Much of actual history has to be “forgotten,” wrote Warren, in order for the Treasury of Virtue scam to succeed. For example:
[I]t is forgotten that the Republican platform of 1860 pledged protection to the institution of slavery where it existed, and the Republicans were ready, in 1861, to guarantee slavery in the South as bait for a return to the Union. It is forgotten that in July 1861, both houses of Congress, by an almost unanimous vote, affirmed that the war was waged not to interfere with the institutions of any state but only to maintain the Union It is forgotten that the Emancipation Proclamation ... was limited and provisional: slavery was to be abolished only in the seceded states and only if they did not return to the Union before the first of January.
It must also be forgotten, wrote Robert Penn Warren, that most Northern states “refused to adopt Negro suffrage” after the war. It must be forgotten that Lincoln, “at Charlestown, Illinois, in 1858, formally affirmed in one of the Lincoln-Douglas debates that: “I am not, nor ever have been, in favor of bringing about in any way the social and political equality of the white and black races.”
In other words, so-called “American Exceptionalism” is based on a mountain of lies. The lies, however, create a situation whereby “the man of righteousness tends to be so sure of his own motives that he does not need to inspect consequences.” Thus, when the U.S. military bombs a city in a foreign land that results in the death of dozens or hundreds of innocent civilians, it is nevertheless a virtuous act by virtue of the fact that it was done by virtuous Americans.
“The effect of the conviction of virtue,” moreover, “is to make us lie automatically and awkwardly ... and then in trying to justify the lie, lie to ourselves and transmute the lie into a kind of superior truth.” Most Americans are content in living this Big Lie, said Warren, for they “are prepared to see the Civil War as a fountainhead of our power and prestige among the nations.”
Obama’s Continuing Rhetoric of RevolutionThe so-called Neo-conservatives who own the Republican Party have been the chief proponents of Lincoln’s rhetoric of continuing revolution. Their financial benefactors even finance “think tanks” such as the Claremont Institute to keep repeating over and over again in books, articles, and on the internet the above-mentioned historical lies. The Democratic Party is not much different. For example, in a September 25, 2012 speech before the United Nations President Obama eulogized the American “representative” to Libya, Chris Stevens, who had been murdered. He praised Stevens for going to Libya as his representative and having “crafted a vision for a future” for Libyans. It’s hard to imagine anything further from the Washington/Jefferson foreign policy philosophy than the notion that it is the duty of an American president to “craft a vision for the future” for people in Libya, of all places.
Obama then boasted of all the recent military aggressions in the name of humanitarianism, including wars and bombings in Iraq, Afghanistan, Egypt, Yemen, and Libya, while threatening future military intervention in Syria and Iran. “We again declare that the regime of Bashar al-Assad must come to an end” in Syria, he pronounced. Then came the classic Lincolnian rhetoric-of-continuing-revolution “justification,” for endless military interventionism, complete with a direct quote from the Declaration of Independence:
We have taken these positions because we believe that freedom and self determination are not unique to one culture. These are not simply American values or Western values — they are universal values. And even as there will be huge challenges that come with a transition to democracy, I am convinced that ultimately government of the people, by the people, and for the people is more likely to bring about the stability, prosperity, and individual opportunity that serve as a basis for peace in our world.
Obama then promised more never-ending war by declaring that “America will never retreat from the world” and that “No government or company; no school or NGO will be confident working in a country where its people are endangered.” Wherever there is “danger” anywhere in the world, the U.S. military reserves the right to bomb, invade, occupy, and conquer, in other words. (One is tempted to suggest such interventions, then, in Chicago, Washington, D.C., Miami, New York, Boston, Los Angeles, etc., where there are indeed some very dangerous neighborhoods.)
A little more than fifteen months later, Obama repeated the continuing revolution theme in his inaugural address. “What makes us exceptional,” he intoned, is “our allegiance to an idea, articulated in a declaration made more than two centuries ago ...” He then promised “a never-ending journey, to bridge the meaning of those words with the realities of our time.” Never-ending military aggression in the Middle East and elsewhere, in other words. More specifically, “We will support democracy from Asia to Africa; from the Americas to the Middle East, because our interests and our conscience compel us to act on behalf of those who long for freedom.”
With the help of Lincoln’s rhetoric of continuing revolution, the American government has transformed itself from “humanitarians with a guillotine” to “humanitarians with weapons of mass murder and destruction.”
[Beginning on Thursday, January 3, 2013, Thomas DiLorenzo, author of The Real Lincoln and Hamilton's Curse, will be teaching the five-week online course “Hamilton, Clay, Lincoln and the Curse of Economic Nationalism."]
One of the themes of Murray Rothbard’s writings on the nature of the state is that state power ultimately depends on the perpetuation of a body of beliefs and superstitions about the benevolence and necessity of the state, and the alleged evils of private property, free enterprise, individual liberty, and the civil society. Because the citizens always outnumber any ruling class by many orders of magnitude, they must somehow be made to acquiesce in the ruling class’s plundering of their society in the name of “progress,” “nationalism,” “the greater good,” “socialism,” or whatever.
Beatings, imprisonment, torture, and mass murder are time-tested tools of the state, but they can be very costly and can instigate a revolution. Therefore, relentless propaganda is often relied upon instead to secure the power and privileges of the state and statists.
Once the people of the Soviet empire finally understood that socialist propaganda was all a big lie, the regime was doomed. At that point it was always just a matter of how much beating, imprisonment, torture, and mass murder the thugs and criminals who ran the Soviet government could get away with to keep the system going.
American history is vastly different from the grotesque history of Soviet Russia, but in some ways it is similar. Until recently, there has never been much of a movement to bring full-fledged socialism to America. The ideological battle was not so much capitalism versus socialism but capitalism and freedom versus interventionism and paternalistic regulation and taxation. The interventionists eventually won out, so that today’s political/economic system (in the U.S. and in many other copycat countries) can be described as “participatory fascism,” to borrow a phrase used by Robert Higgs. It is a system of crony capitalism financed by a central bank, government borrowing, and pervasive taxation. It is a system that is of plutocratic elites, for plutocratic elites, and by plutocratic elites (to paraphrase Abraham Lincoln, the true founding father of this system). The massive welfare state is merely used to buy enough votes to maintain the “legitimacy” of the system.
Like Soviet socialism, this system is grounded on a particular ideology or collection of superstitions about the evils of private, competitive markets and the supposed benevolence and necessity of state intervention. The ideology is not socialism but goes under several different names, such as “economic nationalism” or “Hamiltonianism.”
Beginning on Thursday, January 3, I will be teaching a five-week online course under the auspices of the Mises Academy on the historical evolution of this interventionist ideology, and on what it means for Americans (and others) today. The course will be entitled “Participatory Fascism: Hamilton, Clay, Lincoln and the Curse of Economic Nationalism.” This system was almost entirely cemented into place during the American “Civil War,” and was the ultimate victory of a political movement that was led at first by Alexander Hamilton, and then by Henry Clay, and then Lincoln. A tentative week-by-week outline is as follows:
Week 1: Hamilton, Jefferson, and the Debate Over American Mercantilism
Week 2: The Hamilton/Clay “American System”
Week 3: Abraham Lincoln and the Triumph of Hamiltonian Mercantilism
Week 4: Hamiltonian Hegemony
Week 5: The Importance Today of “The Revolution of 1913”
Each online class will consist of a 45-60 minute lecture followed by 30-45 minutes of Q &A. There will be two online exams for those who wish to take the course for a grade. See you in January!
The Free Market 30, no. 10 (Fall/Winter 2012)This has been a time of anniversaries for the Austrian School of economics. One hundred years ago, Ludwig von Mises began his career as an intellectual leader and creative genius with his groundbreaking The Theory of Money and Credit. Fifty years ago, Murray Rothbard took his own place in the ranks of creative geniuses, and inaugurated the modern Austrian movement with his great treatise Man, Economy, and State. And thirty years ago, Lew Rockwell, with the help of Margit von Mises, Murray Rothbard, F.A. Hayek, Henry Hazlitt, Ron Paul, and heroic donors, created the first institution solely dedicated to Austrian economics, the Ludwig von Mises Institute.
We are honoring the centennial of The Theory of Money and Credit with a new book, The Theory of Money and Fiduciary Media: Essays in Celebration of the Centennial, edited by Senior Fellow Jörg Guido Hülsmann. We also celebrated the book with a scholarly symposium at this year’s Austrian Scholars Conference, including 10 lectures from top Misesian scholars. And we published Gary North’s Mises on Money, which serves as an excellent guide to the ideas contained in this great work.
Man, Economy, and State’s semi-centennial was also celebrated at the Austrian Scholars Conference with an academic roundtable, including Mises Institute scholars Peter Klein, Joseph Salerno, David Gordon, Shawn Ritenour, Guido Hülsmann, and Jeffrey Herbener. And Robert Murphy wrote an excellent essay commemorating the milestone.
Our thirtieth anniversary was celebrated at our annual Supporters Summit, at Callaway Gardens, Georgia, in October. At a time in which other free-market institutions are becoming more hawkish, we spent our thirtieth birthday denouncing war. The title of the conference was “The Truth About War: A Revisionist Approach.”
The great libertarian author and news analyst Judge Andrew Napolitano kicked off the conference with the Louis E. Carabini Distinguished Lecture, a passionate speech on liberty and just-war theory. The Judge professed relief to be among so many like-minded friends, and to be able to truly speak his mind. And boy did he! At one point he proclaimed, “I agree with Lysander Spooner. As the country had the right to secede from Great Britain, we have the right to secede from the government!”
Senior Fellow Tom Woods gave the Jerry Pogue Lecture, an inspiring talk about how reading Rothbard converted him from neoconservatism to anti-war libertarianism. Tom closed by saying, “There are a lot of places on this earth that will generically cheer on the free market. And that’s wonderful. But how many of them are going to stand up to the entire regime, to its intellectuals, to its media, when the chips are down, and the war propaganda is flying? The number is vanishingly small. But right here, we are celebrating 30 years of the Mises Institute, which is among that very small number.”
At the conference, Butler Shaffer was awarded the Gary G. Schlarbaum Prize for 2012, which is awarded for a “lifetime defense of liberty in the tradition of Ludwig von Mises.” In his thoughtful acceptance speech, Shaffer talked about how “revisionism” can be thought of as another word for learning itself: the process of continually revising our understanding of the world.
In the Donald and Linda Miller Lecture, a moving speech reflecting on the past 30 years of the Mises Institute, Lew Rockwell said:
“We have flourished for these 30 years thanks to your help. But this is truly a critical moment in the history of the Austrian School. Thanks to Ron Paul, more young people than ever are interested in this venerable tradition of thought. More of them than ever are skeptical of what their professors are teaching them. And more of them than ever want to absorb everything they can of the Austrian School, even to the point of becoming teachers and professors themselves.
“Will we be able to help this huge cohort of budding Austrians? Will the renewed interest in Austrian economics continue and strengthen, or diminish and fizzle out?
“These are questions we have to answer together.
“A tremendous opportunity, greater than anything I have seen in my lifetime, lies in our hands. Many of the brightest young kids are committed to the world that Mises and Rothbard worked so courageously and without fanfare to bring about.
“We have already witnessed so many early victories. Help us build on them, and make the dream of these men a reality.”
And on a cool Southern evening, our Distinguished Counselor Ron Paul, surrounded by a host of friends, wrapped up the conference with the Harry and Anna Teasley Distinguished Lecture reflecting on the just-ended presidential campaign that he turned into a libertarian teaching moment for the whole country.
You can find video recordings of all the above speeches and more at youtube.com/misesmedia.
Earlier in the conference, as he was talking to his fans, Ron Paul had this to say:
“I’m delighted to be here for the 30th anniversary of the Mises Institute. I was delighted to help start this Institute with Lew Rockwell many years ago. Let me tell you, the work of the Mises Institute is crucial. This is important. This is more important than all political action. We have to change people’s hearts and minds, and their understanding of free markets and individual liberty. That’s how we can change the world.”
And in an October interview with Lew Rockwell, Ron Paul said this about the Mises Institute, Murray Rothbard, and the prospects for liberty:
“The groundwork has to be laid by the intellectual community. And that’s been done by the Murray Rothbards of the world and what the Mises Institute has done. And that has to happen. There may be a political figure that delivers the message, but you have to have an intellectual groundwork first. And that has been done.
“The Founders were good. They did their best, and they understood property rights better than any other group, and moved things along. But our understanding of liberty is much more advanced than the Founders had. Even some who objected to our Constitution had predicted that it probably wouldn’t work out all that well. So I think they made a great attempt. I think basically the intellectual community today in the libertarian camp have a much better understanding about what government shouldn’t be doing, and what responsibilities should be on the individuals.”
At a United Nations meeting in the year 2000, the world's governments agreed on the goal of enrolling every child on the planet in primary schooling by 2015. Universal primary education is goal #2 of the Millennium Development GoalsStrangely, this lofty plan does not say anything about the quality of schooling; the whole idea is to get children into government-approved classrooms, apparently regardless of what happens there.
The reports of UN agencies like Education for All (EFA) are full of ideas on how to get kids to come to school in third-world countries: making education entirely taxpayer funded (commonly by taxpayers from richer countries), providing free medication or food to students who show up, or even just paying cash to the parents in return for kids' attendance.
But are the pupils who spend more time at these schools actually learning more as a result? MIT's Abdul Latif Jameel reports, "Several programs which have raised participation, from providing worm medicine to free meals, show no evidence that children are learning more as a result."Jameel, "Primary Education for All," Fighting Poverty: What Works, Fall 2005.
And EFA's Fast Track Initiative admits that
In nearly all developing countries the levels of learning achievement are shockingly low.… In many low-income countries students learn virtually nothing and end up functionally illiterate.Fast Track Initiative, "Learning for All: An Educational Case for Financial Replenishment of EFA FTI."
In fact, the situation is so bad that Jameel says one area to be improved is "more regular attendance of teachers."
Public education has been a slowly degenerating disaster throughout the West, and now it seems we're exporting it to the rest.
A Crucial FallacyThe international education agencies seem to have been duped by what the great Austro-libertarian Murray Rothbard calls, "A crucial fallacy … confusion between formal schooling and education in general."
Promising to educate every child in every culture through primary schooling is a bit like promising to clothe every child in every climate by giving them a parka.
In fact, until recently, nearly all children learned the important skills of life largely outside of schools, through observing and joining in with the activities of adults.In India's Andaman Islands, when the indigenous Jarawa people were asked if they would like their kids to go to government school, they responded, "you and your children constantly rely on doing something with paper, look at you … listening and working on paper. Our children do not need to do so, they need to know about finding and locating things in the forest. It is work! It has to be learned!" See Vishvajit Pandya, "From Dangerous to Endangered." Rothbard writes with respect to American education,
Education is a lifelong process of learning, and learning takes place not only in school, but in all areas of life. When the child plays, or listens to parents or friends, or reads a newspaper, or works at a job, he or she is becoming educated.
All the medicine handouts and free school lunches proposed by EFA are attempts to offset the direct economic opportunity cost of the child spending a day at school instead of working on the farm or factory. This does take into account the child's economic contribution to the family's labor. But what about that labor's educational contribution to the child? What about the educational opportunity cost?
If students in many schools are learning very little and graduating "functionally illiterate," if attendance doesn't actually produce real education, and if teachers sometimes don't even bother to show up, perhaps the parents and children feel that they would learn more outside the schools than in.
Sadly, this important educational opportunity cost doesn't seem to be on the global pedagogical philanthropists' radar. Jameel speaks only of the
complex relationship between school quality and participation. It might seem reasonable to expect that families are more likely to bear costs like fees, uniforms or lost income for a good quality education.
And, he says,
There is no consensus on why so many poor children don't attend school, or the best way to increase participation. If children's labor is crucial to their family's welfare … it may prove very difficult to attract more children to school.
There is no mention of any learning that might happen while the child is outside the classroom.
So for a moment, let us grant this assumption: Only schooling is education. No learning happens outside of schools.
Under this assumption, not only do children's minds profit nothing from a day spent at home or in the bush, but most of the parents of children in the third world are themselves totally un-"educated" — benighted savages whose heads are filled with cobwebs.
Thus, for our benevolent pedagogical overlords, it could make sense to get those kids away from their parents and into schools as soon as possible, even if, as EFA acknowledges,
in some countries nearly every aspect of the schooling system is seriously deficient — infrastructure, teaching materials, teacher availability and qualifications, lack of student assessments and lack of incentives for improving learning outcomes.Fast Track Initiative, "Learning for All."
Obedience for AllSo, if kids aren't learning to work and play in their traditional cultures, but they aren't learning to read or do math in these atrocious schools either, what are they learning? In a word, obedience.
To the extent that the schools are operated and authorized through the national states, the children are taught to identify with those states. All the tests are in the national language, and children must memorize the state-approved version of history.
Oh, there is often a grand effort to make schools receptive to local cultures, but so long as the state pays the piper, the state calls the tune. And the sound every state wants to hear is children singing its national anthem.
Rothbard writes of
a conscious scheme to coerce the mass of the population into a mould desired by the Establishment. Recalcitrant minorities were to be forced into a majority mould; all citizens were to be inculcated in the civic virtues, notably and always including obedience to the State apparatus.
Perhaps, some might hope, this force is counterbalanced by the influence of the international aid agencies that support the schools. And what do these organizations hope to inculcate in the children? Take a look at what the EFA Global Monitoring Report claims as a major benefit of schooling:
Education has a key role in fostering national and international support for the multilateral governance needed to address problems such as finance, trade, security and environmental sustainability.Education for all Global Monitoring Report, Policy Paper 04, June 2012.
That is to say, kids who go through schools funded by international bureaucracies are likely to approve of the other programs run by such bureaucracies. Even if you do believe that more "multilateral governance" is needed for finance, trade, etc., isn't it a little disturbing that one stated benefit of UN-sponsored schools is more support for UN-sponsored activities?
Finally, regardless of whether states or NGOs fund the schools, to succeed in schooling means to win the approval of your teachers. Each child's grades tell him how well he has met his masters' expectations. Innovation is rewarded rarely, and defiance never. This is perfect preparation for a world of the total state, where cops and bureaucrats lay out rules for everyone, and there is no way to succeed except to obey their commands.
In the world of free commerce, the way to make a profit is to do something that other people think cannot be done. Success comes from taking risks, from seeing what others miss, and from convincing others to join you — not from hanging on every word uttered by benevolent authorities.
In fact, in many poorer countries, the office jobs (the only ones for which schooling is actually required) are nearly all government and international NGO jobs. So those kids who do succeed in school end up moving to the capital and writing reports on the importance of international funding for schools.
The kids who do not do well in school go back home to the farms or the factories, having spent years of their lives learning, in some cases, "virtually nothing." But since the bureaucrats seem to believe that the traditional cultures the children might have spent those years immersed in held no knowledge anyways, this might not be seen as much of a loss.
Setting Young Minds FreeNo doubt, some kids who would profit from schooling are being kept out of it by very bad things: wars, forced prostitution, and outright poverty. EFA's programs to make schooling more accessible could have a huge positive impact on such children's lives.
But instead of focusing on gimmicks to get kids into the classes governments want to teach, educators should focus on materials that kids want to learn, or that their parents are willing to invest in.
That cannot happen until we break the chain between government and education. It cannot happen until we once again, in Rothbard's words, "give children their head," and let them seek out "a genuine and truly free education, both in and out of formal schools."
Of course, the quality of instruction tailored to individual children and communities might not be easily measurable by states and statisticians. But if schooling someday provides a service that fits their needs, the students will come.
"English should be the official language of this country" has become something of a mantra for the Republican Party, uttered to raucous cheers in nearly every Republican debate or speech. Moreover, today several organizations exist to lobby for English as the official language, including U.S. English, ProEnglish, and English First. Though the aims of these organizations and politicians vary, they all agree on one central objective: to make English the official language of the United States.
Advocates of official English, however, have given insufficient thought to what they mean by the terms they use, the unseen effects such policies entail, and whether the means they choose are in fact fit to attain the ends aimed at. No good praxeological analysis can do without addressing all three of these concerns, each best summarized by some of the great thinkers in liberal philosophy and economics: It was Voltaire who said "If you wish to converse with me, define your terms"; and it was Claude Frédéric Bastiat who first articulated the core principle of economic analysis in his famous essay "That Which Is Seen, and That Which Is Not Seen," later summarized by Henry Hazlitt in his book Economics in One Lesson:
The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.Henry Hazlitt, Economics in One Lesson (Auburn: Ludwig von Mises Institute, 2008), p. 5.
Finally, it was Ludwig von Mises who established the most important aspect of any praxeological analysis in his magnum opus, Human Action:
In this sense we speak of the subjectivism of the general science of human action. It takes the ultimate ends chosen by acting man as data, it is entirely neutral with regard to them, and it refrains from passing any value judgments. The only standard which it applies is whether or not the means chosen are fit for the attainment of the ends aimed at.Ludwig von Mises, Human Action, Pocket. (Auburn: Ludwig von Mises Institute, 2010), p. 21.
It is important to recall these insights when treating social issues like language, because so much of the previous commentary on official English strays far from any sort of objectivity. Because language is so intimately tied up into our identities and how we perceive ourselves, even Austro-libertarians can forget Mises's methodological individualism when language is involved. So in the spirit of these great thinkers, let's take a praxeological look at what "English as the official language" really means.
Defining "the Problem"Official English movements have been cropping up in the United States for longer than there's been a United States. The colonial statist Benjamin Franklin penned in 1753,
They come in droves.… Few of their children in the country learn English.… Advertisements intended for to be general are now printed in Dutch and English, the signs in Our Streets have inscriptions in both languages, and in some places only German, they began of late all their bonds and other legal writings in their own language, which (tho' I think it ought not to be) are allowed good in Our Courts.Benjamin Franklin, The Writings of Benjamin Franklin, Vol. 2: Philadelphia, quoted in Robert Lane Greene, You Are What You Speak: Grammar Grouches, Language Laws, and the Politics of Identity (New York: Delacorte Press, 2011), 227.
Later, in 1868, the Indian Peace Commission (whose policy suggestions were anything but peaceful) recommended that "schools should be established which children should be required to attend; their barbarous dialects should be blotted out and the English language substituted."Indian Peace Commission, "Report to the President by the Indian Peace Commission" (Washington, D.C., 1868). Mike Reid writes about the Canadian version of these schools in "One Race to School Them All," Mises Daily, September 7, 2012. And in 1907 President Roosevelt famously wrote, "We have room for but one language in this country, and that is the English language, for we intend to see that the crucible turns our people out as Americans, of American nationality, and not as dwellers in a polyglot boarding house."Theodore Roosevelt, Works. Vol. XXIV, Memorial ed. (New York: Charles Scribner's 11 Sons), p. 554.
Most recently, in December of 2011, Republicans in both the House and Senate — including cosponsor Ron Paul — introduced HR 99 to declare English as the official language of the United States. Rep. Steve King (R-Iowa), who sponsored the bill, stated on the topic that "A nation divided by language cannot pull together as effectively as a people."
How then do we define the problem that official English legislation is supposed to solve? What is the crisis that has had so many people worried throughout history? It is necessary to answer this question if we are to assess whether the proposed solution solves this problem effectively. Ostensibly, the most pressing concern is that citizens aren't learning English, and that this deprives them of certain opportunities. In the last Republican debate in Florida, for example, Mitt Romney remarked, "We don't want people to be limited in achieving the American dream because they don't speak English."
But is it really true that immigrants and their children aren't learning English? It turns out this is just blatantly false. A study conducted in 1998 showed that 93.6 percent of all children of immigrants spoke English well or very well.Alejandro Portes and Lingxin Hao, "E pluribus unum: Bilingualism and loss of language in the second generation," Sociology of Education 71 (1998). As I detailed in my Mises Daily "Why Languages Die," this is the standard process of language shift. By the third generation, all trace of the heritage language is gone. If this were not the case, it would be difficult to explain why Dutch, German, Italian, or other major immigrant languages in the States haven't spawned lasting communities of monolingual speakers. Even places like Chinatown in New York City only retain a persistent heritage language presence because they are continually resupplied by new immigrants. But the children of those immigrants continue to learn English, and their children continue to never learn the heritage language in the first place, making them English monolinguals.
In his book You Are What You Speak: Grammar Grouches, Language Laws, and the Politics of Identity, which is filled with excellent praxeological insights on language politics, Robert Lane Greene explains the situation well:
It is, to put it simply, nearly impossible to raise a child in the United States without the child learning English; it would require isolation from the outside world bordering on child abuse. Children born in America, and even those arriving at a young age, inevitably pick up English.
Of course, members of this bridge generation will typically speak the old country's language, too, learning it in the kitchen from their parents. But it is the bridge generation's own behavior as parents that eventually, and inevitably, dooms the "heritage" language. Parents are not stupid, nor do they typically perform cruel tricks on their children. Parents of children in the United States know that wherever they live, however many bilingual signs surround them, however many phone menus offer "Oprima dos para español," and however many fellow speakers of their language surround them, their children will need English to survive and thrive in America.Greene, You Are What You Speak: Grammar Grouches, Language Laws, and the Politics of Identity, p. 234.
So much for immigrants not learning English. What then of other "problems" with multilingualism? One perspective that is often implicit in the arguments of official English proponents is that English will become a threatened language in America. But this is a strange insecurity to have. Do conservatives really fear that liberals will find a way to ban English? Unless such a thing were to happen, it seems likely that English will continue to be the language of primary interaction in the States, even if only a minority of people speak it as their native language. In many places of the world English has become a lingua franca, despite nobody speaking it as a first language. Even in the Republicans' worst-case scenario, the United States would hardly be any different. And should Spanish ever become the primary language of significant swaths of territory in the States, one only has to look as far as developed countries like Switzerland — which has no less than four official languages — to see that such multilingualism is largely unproblematic.
The most common charge leveled against multilingualism is that it is "inefficient." Why waste millions of dollars translating ballots, legislation, censuses, and other government documents into multiple languages when we can just publish it all in one? Is this not more efficient? However, this seemingly common-sense argument faces a serious praxeological objection, which is that "efficiency" is a purely subjective notion.It is important to note that "subjective" is not the same as "arbitrary." A person makes their decisions based on rational deliberation and individual preferences. The fact that the cost of an action has its origins in an individual's preferences is what makes the notion of efficiency "subjective." For more on the precise sense and use of subjectivity, see Ludwig von Mises, Human Action, chapter 1, section 4, "Rationality and Irrationality; Subjectivism and Objectivity of Praxeological Research," pp. 19–22. What does it mean for something to be efficient? Efficient for whom? For the millions of people who do not speak English well, having a ballot translated into Spanish — which takes perhaps half an hour of a translator's time — is a far more efficient option than spending hundreds or thousands of dollars and hours on learning English. Part of why efficiency is subjective is because the notion of efficiency depends on the notion of costs, and cost is a psychic phenomenon, not a monetary one. So when the organization English First supports legislation to "lower healthcare costs by using English only and removing the translator mandate," they are interested only in costs to healthcare providers, and ignore costs to Spanish-speaking individuals — a classic broken-window fallacy. These advocates have failed to take heed of Bastiat and Hazlitt's important admonitions.
In the same vein of "efficiency," official-English advocates are concerned about an unnecessary reduplication of effort, but reduplication of effort is one of the cornerstones of a free market — we call it "competition." To claim that translating documents into Spanish is a wasteful reduplication of effort is no different than claiming that having multiple producers of shoes is a wasteful effort. It misses the crucial point that the only reason someone would reduplicate effort in a market is because they expect the benefits to exceed the costs. In the case of language, there are many people — namely, those who speak Spanish as a first language — for whom the additional cost in tax dollars is minor compared to the relative benefit. Of course, this argument is complicated by the fact that these language services are likely on net funded by somebody else's money. This is the insoluble problem of every government-funded service. What this problem reveals, however, is that the argument from "efficiency" is not really about efficiency at all but rather about preferences, namely, the preference as to how other people's money should be used.My thanks to Jacob Hill for elucidating this point for me.
Another ideology undergirding conservative apprehensions about language is the misguided belief that languages and cultures are largely equivalent. Therefore, the rise of Spanish constitutes — so the logic goes — a decline in American culture. Yet Franz Boas, the founder of American anthropology, debunked this ideology over a century ago, and it's easy to see how. Imagine if you will that everybody in America started speaking Spanish overnight. Would that make us all less American? Would our values change, our cultural heritage become undone? Of course not. We'd simply be an America that speaks Spanish. Yet Spanish is vilified because it serves as a symbol of a perceived encroachment on the core of American values. Anecdotally, I find this very strange, since the majority of Hispanic immigrants I know work very hard so that their children can live better than they did; this drive to advance oneself through one's own efforts is a central tenet of American values. More importantly, even if it were true that American culture were on the decline, and Latin American culture on the uptick, official-English or even English-only legislation would hardly prevent this. A Latin American culture that speaks English is still in most respects a Latin American culture. Language is then, at least in this regard, entirely the wrong target, a symptom rather than a cause, and thus cannot be seen as part of "the problem" as seen by most conservatives.
A final problem pointed out by English-language advocates is the "lack of national unity" caused by multilingualism. But we have already noted that there are prominent and successful multilingual countries that do not seem to be particularly lacking in national unity. Furthermore, to deviate from our value-free assessment for a moment, it should be clear to any libertarian that "national unity" implies increased state centralization in an attempt to overcome economic-calculation problems, and thus should be opposed in principle. But the objective point is that these activists have fallen prey to a pernicious conceptual fallacy, what Benedict Anderson called "imagined communities" in his book by the same name. Simply put, this is the notion that a country is a single, culturally homogenous unit, and that its citizens exhibit certain common traits. However, this is nothing more than a classic fallacy of composition, and it runs afoul of Mises's various critiques of collectivism, most significantly his principle of methodological individualism, which denies that entities like "nations" and "society" exist other than as collections of individuals, who each act individually and toward distinct ends.Mises, Human Action, pp. 41–44.
This mistaken ideology was expressed by Newt Gingrich in a presidential debate when he asked,
How do you bond the country together? How do we create a unified country? To unify ourselves in the future, it is essential to have a central language that we expect people to learn and be fluent in.
HR 997 is in fact even titled the "English Language Unity Act." The ideology is also expressed in the text of HR 997 itself, which says, "Throughout the history of the United States, the common thread binding individuals of differing backgrounds has been the English language." In addition to the critiques already noted above, there are two other scenarios that illustrate the absurdity of such statements: First, there are billions of speakers of English all over the world, most of whom feel no fraternal bond towards the United States (in fact in many cases quite the opposite). While language is often an important mark of cultural unity, this is hardly always the case. Second, it would seem rather ridiculous to imagine that college students at Berkeley, Navajos in Arizona, and evangelicals in South Carolina share some mythical communal bond by virtue of living in an arbitrary set of forcibly imposed political borders called America. Anderson was quite correct to call such a community "imaginary."
An extreme example of how tightly bound language and nationalistic concepts of culture are perceived to be comes from this rant published at DailyPaul.com, expressing righteous indignation at 33 senators who voted against making English the official language of the United States: "Your vote reflects betrayal, political surrender, violates your pledge of allegiance, dishonors historical principle, rejects patriotism, borders on traitorous action."
The false perception of an imagined community is also clearly embedded in common claims like "The language of America is English, and so people should learn English to be a member of this country." This statement is not just false, but self-contradictory. If English were really the language of America, then it would hardly be necessary for people to learn it. A correct statement is to say that English is the first language of the majority of Americans but that there exist plenty of people for whom Spanish is the primary language of everyday use, or for whom English is a second language. For these individuals, living in communities where they can buy their groceries in Spanish, send their children to school in Spanish, and even interact with their local government in Spanish, English is far from being a necessity. It may be true that knowing English would be beneficial to these individuals, but this fact does not justify the statement that they ought to learn it, or that they even need it.
The official-language movement, then, for all the reasons given above, is merely another example of activists and the government conjuring up nonexistent problems just so that they can solve them. Let us now see what ends English-language proponents have selected to fix this non-problem.
"To say that we should all speak English is a little like saying we should all drive a Prius."Defining "Official Language"What do advocates mean when they suggest "making English the official language"? There seem to be two ends of a spectrum — those who focus primarily on seeing English adopted as the language of the federal government, thus eliminating "waste," and those who would like nothing more than to eradicate every language other than English. The English First organization appears to be closer to the latter end of this spectrum, noting proudly that it lobbied against bilingual ballots and bilingual education. Likewise ProEnglish tells us that "Official English would also reinforce America's historic message to new immigrants — that we expect them to learn English as the first step in their assimilation."
Others like U.S. English go to some lengths to clarify that they do not advocate "English only," merely English in the government. Nominally, they attempt to adopt a private-property stance. U.S. English states, for example, that "Making English the official language of the United States refers solely to the language of the government, not of the people, private business, classrooms, etc." They further clarify that "U.S. English, Inc. has never and will never advocate for any piece of legislation that bans the use of languages other than English within the United States" — unless, of course, that use is to interact with a government official. Such advocates do not see this contradiction in their own terms.
The actual legislation on this issue, HR 997, falls closer to the first approach, but has elements of the latter as well. The primary focus of the legislation is to declare that "The official language of the United States is English." On its face, this seems innocuous enough. English is, after all, the de facto language of the US government already. Such a gesture would seem largely symbolic, but this would be a dangerously naïve misconception. As Jeffrey Tucker astutely quips, "all laws have teeth." Immediately following the above proclamation comes the following statement:
Representatives of the Federal Government shall have an affirmative obligation to preserve and enhance the role of English as the official language of the Federal Government. Such obligation shall include encouraging greater opportunities for individuals to learn the English language.
The document also notes that "the term 'official' refers to any function that (i) binds the Government, (ii) is required by law, or (iii) is otherwise subject to scrutiny by either the press or the public."
The immediate conclusion here is that official-English advocates themselves have not adequately or precisely defined the policies they propose, with the result that official-English legislation is so vague that its scope could be interpreted without limit, much like the commerce clause of the Constitution. Jeffrey Tucker, in his wonderful book It's a Jetsons World: Private Miracles and Public Crimes, brilliantly captures the function of such vagueness in legislation:
When dealing with the state, we need certain rules, not grey areas — the less discretion the better. But the state doesn't like certainty. There is an obvious advantage to vagueness for the government. It keeps everyone living in a state of fear. The arbitrariness of it all makes us nervous and constantly aware of who or what is in charge.
But to what end? It's not like [the free market], where rule ambiguity is concocted with the final goal of serving us. When the state creates legal ambiguity — and it does so with deliberation — it is for the purpose of allowing them to trap us, tax us, coerce us, keep us on edge and living in fear.Jeffrey A. Tucker, It's a Jetsons World: Private Miracles and Public Crimes (Auburn: Ludwig von Mises Institute, 2011).
To add to this confusion, HR 997 also lists numerous "common-sense" exceptions to the legislation, including
teaching of languagesspecial considerations for individuals with disabilitiesactions, documents, or policies necessary for national security, international relations, trade, tourism, or commerceactions or documents that protect public health and safetyactions or documents that facilitate the censusactions that protect the rights of victims of crimes or criminal defendantsusing terms of art or phrases from languages other than Englishmembers of the government from communicating un-officially in other languagesthe preservation or use of Native American languagesany person learning a languageAs Per Bylund points out, all these exceptions are an attempt by the government to approximate "market-like" solutions to otherwise simple problems. Rather than simply letting the preferences of individuals determine how much of a certain good will be present on the market — in this case, who speaks a certain language, how often it's spoken, and to whom — a bewildering array of rules and exceptions is put in place instead. I believe it's also worth pointing out that in practice, once all the various exceptions are taken into consideration, really only two activities are vigorously targeted by this law — voting in a foreign language, and translating "nonessential" government documents. As there is no mention of bilingual education in this legislation, it can also be assumed that HR 997 would also be interpreted to prohibit that activity at some point in the future as well.
Thus the answer to the question of "How do official-English supporters propose to solve the non-problem of multilingualism?" is that they advocate dangerously vague prescriptions that create unnecessarily complex solutions and burdensome regulations, with no discernible direct actions to be taken. Their solution, like their problem, is a non-solution — a mere prohibition on the actions of individuals. This is precisely analogous to minimum-wage laws, which don't in fact create a minimum wage at all; rather, they simply prohibit any activity that falls under some arbitrary minimum number. In the same way, official-English laws merely prohibit a certain kind of arbitrarily chosen activity.
That Which Is Not SeenIt should hardly be necessary at this point to list the unseen effects of official-English policies, as so many of those effects were brought to light even in our initial analysis. Yet there is still much more that can and should be said. I will note a few final points here.
By far one of the biggest mistakes that official-English advocates make in their economic reasoning is that they neglect the influence of the past on action. This insight is of course due to Ludwig von Mises, whom I quote here in somewhat modified form:
We may picture to ourselves the image of how things would be if, equipped with our present knowledge of natural resources, geography, technology, and schooling, we had arranged all the languages of the world accordingly.… The writings of the socialists are full of such utopian fancies. Whether they call themselves Marxian or non-Marxian socialists, technocrats, or simply planners, they are all eager to show us how foolishly things are arranged in reality and how happily men could live if they were to invest the reformers with dictatorial powers.
The fundamental error involved in this rationalistic romanticism is the misconception of the character of capital goods available and their scarcity. The languages spoken today were passed down by our ancestors and ourselves. The plans which guided who learned what language and who taught what language to whom were an outgrowth of the then prevailing ideas concerning ends and the usefulness of various languages. If we consider aiming at different ends and choosing different languages to speak, we are faced with an alternative. We must either leave unused a great part of the linguistic knowledge acquired by individuals and start afresh with new education, or we must adjust our educational processes as far as possible to the languages which are actually spoken. The choice rests, as it always does in the market economy, with the consumers.
The fact that English is not instantly adopted by every speaker is not more conspicuous than the fact that not everybody throws away his old car or his old clothes as soon as a better car is on the market or new patterns become fashionable. In all such things people are motivated by the scarcity of goods available.The original passage in its entirety is as follows: We may picture to ourselves the image of how things would be if, equipped with our present knowledge of natural resources, geography, technology, and hygienics, we had arranged all processes of production and manufactured all capital goods accordingly. We would have located the centers of production in other places. We would have populated the earth's surface in a different way. Some areas which are today densely inhabited and full of plants and farms would be less occupied. We would have assembled more people and more shops and farms in other areas. All establishments would be equipped with the most efficient machines and tools. Each of them would be of the size required for the most economical utilization of its capacity of production. In the world of our perfect planning there would be no technological backwardness, no unused capacity to produce, and no avoidable shipping of men or of goods. The productivity of human exertion would far surpass that prevailing in our actual, imperfect state. The writings of the socialists are full of such utopian fancies. Whether they call themselves Marxian or non-Marxian socialists, technocrats, or simply planners, they are all eager to show us how foolishly things are arranged in reality and how happily men could live if they were to invest the reformers with dictatorial powers. It is only the inadequacy of the capitalist mode of production that prevents mankind from enjoying all the amenities which could be produced under the contemporary state of technological knowledge. The fundamental error involved in this rationalistic romanticism is the misconception of the character of the capital goods available and of their scarcity. The intermediary products available today were manufactured in the past by our ancestors and by ourselves. The plans which guided their production were an outgrowth of the then prevailing ideas concerning ends and technological procedures. If we consider aiming at different ends and choosing different methods of production, we are faced with an alternative. We must either leave unused a great part of the capital goods available and start afresh producing modern equipment, or we must adjust our production processes as far as possible to the specific character of the capital goods available. The choice rests, as it always does in the market economy, with the consumers. Their conduct in buying or not buying settles the issue. In choosing between old tenements and new ones equipped with all the gadgets of comfort, between railroad and motorcar, between gas and electric light, between cotton and rayon goods, between silk and nylon hosiery, they implicitly choose between a continued employment of previously accumulated capital goods and their scrapping. When an old building which could still be inhabited for years is not prematurely demolished and replaced by a modern house because the tenants are not prepared to pay higher rents and prefer to satisfy other wants instead of living in more comfortable homes, it is obvious how present consumption is influenced by conditions of the past. The fact that not every technological improvement is instantly applied in the whole field is not more conspicuous than the fact that not everybody throws away his old car or his old clothes as soon as a better car is on the market or new patterns become fashionable. In all such things people are motivated by the scarcity of goods available. (Human Action, pp. 505–507)
In the particular case of language, decisions on which languages to learn and to teach are motivated by the scarcity of educational resources available, and their perceived potential future value. In their utopian fantasizing, English advocates hear the phrase "English as the official language" and envision a world where everybody magically speaks English, businesses and government agencies are required to conduct transactions in English, and all this happens at no cost whatsoever, much as left-liberals imagine a world where everybody has "free" healthcare without wondering who pays for it. Not only does education for ESL students require special training and funding, but poorly educated and immigrant populations are precisely those that are least capable of spending the additional time and money to acquire English, thus disenfranchising the very individuals that official-English legislation is supposedly meant to help. Therefore, in their own terms, the results of policies advocated by official-English proponents are a failure, and inappropriate to the ends aimed at.
I expect that few Spanish speakers in America would disagree that English is extremely useful, but there is a reason that not all of them have learned English, and that is because the cost was subjectively too high for them or for those who would provide language services to them. To say that we should all speak English is a little like saying we should all drive a Prius. To ignore the existence of scarcity and to ignore the present state of capital goods is to blind oneself with a utopian vision of how the economy of language ought to be arranged. That which is not seen is the real cost in capital goods that official-English policies require to bring about.
Another unseen effect of promoting English as the language of success is that often immigrant children go to school with a poor grasp of English but are forbidden or simply unsupported in using their heritage language as a means for acquiring English, and so proceed to fall behind in both languages. As Ana Celia Zentella details in her book Growing Up Bilingual, this is precisely the case for Puerto Rican immigrants in New York City, who because their parents were told by school administrators not to speak Spanish to their kids at home, grew up unable to socialize well in either English or Spanish, and are now at a distinct social and economic disadvantage in both.Ana Celia Zentella, Growing Up Bilingual (Wiley-Blackwell, 1997). Today, this segment of the immigrant population remains statistically among the most impoverished in the country, for largely this reason. Yet no one predicted this pernicious and unseen effect of such language policies.
The only thing that is accomplished by making English the official language is a complete disenfranchisement not just of immigrant populations but of anybody who doesn't speak the particular dialect of English arbitrarily chosen as the standard. Such policies divide society into two classes of people: those who have access to the kind of upper-tier education available to the ruling elite in Washington, and everybody else. The only way to enter into this upper echelon of society is to learn this special register of English, which practically nobody grows up speaking; yet the only way to learn this particular set of language practices is to be a member of the elite in the first place. Many conservatives cry foul when they see President Obama engaged in class warfare, but they fail to recognize the same tendency within themselves, realized through more subtle means.
Such are the insidious effects of official-English policy, and yet the majority of its advocates have ignored Bastiat's and Hazlitt's admonitions. Moreover, even by their own stated goals — the pronounced goal of providing greater economic opportunity and cultural integration to immigrants — it has been shown that official-English policies in fact lead to quite opposite effects.
ConclusionThere is one final argument that must be made, now that our value-free praxeological analysis is complete, and that is the argument from natural rights. Official-English policies constitute nothing more than a blatant intrusion on people's natural right to interact with others in the manner and language they please, and to not have their modes of interaction dictated by the state. Just as you shouldn't be forced to interact with me in Spanish or Ojibwe, I shouldn't be forced to interact with you in English. Incentives and a free market will determine what language we ultimately converse in, whether we converse at all, or whether conversation is even necessary for our exchange. It's difficult to see how declaring English as an official language and mandating its use is conceptually any different from legislating that all my transactions must be conducted in fiat money instead of gold, or that all businesses must check for a national ID card before hiring or contracting with someone.
If English really is the language of success, the language of free enterprise, of global markets and job opportunities, as is so frequently touted, then it's hardly necessary to force anybody to learn it. As long as the market incentive is there, people will learn. But if we insist on this idea of linguistic nationalism — this socialist vision of one language, one country, one people — the result will be nothing short of English for all, and freedom for none.
"Taxation is theft, purely and simply, even though it is theft on a grand and colossal scale which no acknowledged criminals could hope to match. It is a compulsory seizure of the property of the State's inhabitants, or subjects."Murray Rothbard, The Ethics of LibertyThe recent explosion of interest in the writings of Murray Rothbard (and of Austrian economics in general) has focused on Rothbard's work on money, banking, and business-cycle theory. The reason for this is the increasingly widespread understanding that it was the Greenspan Fed — and other government policies — that created the housing bubble and, subsequently, the Great Recession. Only the Austrians recognized the bubble and predicted its bursting. Mainstream economists such as Paul Krugman were totally in the dark about it, and remain so.
But Murray Rothbard was much more than a student of money, banking, and business-cycle theory. He was deeply educated in history and political philosophy (among other disciplines) as well as economics, and he developed a body of literature that Hans-Hermann Hoppe calls "Austrian social theory." Austrian social theory is an indispensable tool for understanding the nature of the state and all of its activities, a subject that occupied Murray Rothbard's mind for his entire adult life. That is why I am offering an eight-week online course called The State: The Rothbardian Analysis under the auspices of the Mises Academy, beginning on Monday, September 17.
Rothbard's work challenges the notion of the Public Choice School that the state is somehow a voluntary organization (the main theme of the work of Nobel laureates James M. Buchanan and George Stigler). His work also demolishes the theory held by mainstream economists that taxation, too, is somehow voluntary. Relying on more than just narrow economic theory, Rothbard's work explains such phenomena as the role of the state's "ideological minions" (i.e., the Paul Krugmans and Doris Kearns-Goodwins of the world), the role of ideology, the role of intellectuals, the nature of state coercion, and much more.
We will study libertarian class theory as it has developed over the past several hundred years, which was an important element of Rothbard's analysis of the state. Rothbard also had a much richer understanding of the role of government bureaucracy than the Public Choice School (or any other school of thought), and that will be another subject of study.
Murray Rothbard was a top-flight economist and one of the few Austrians to contribute a substantial body of literature to the subdiscipline of public finance. Consequently, several classes will be devoted to the Rothbardian analysis of government taxing and spending, and all of its consequences. The political economy of interventionism, socialism, central banking, and war are other topics that will be studied, utilizing the writings of Rothbard and various Rothbardians (such as Robert Higgs on war, for instance). The week-by-week topical outline will be as follows.
Weekly Topics Rothbard's "Anatomy of the State"
John C. Calhoun and Libertarian Class Theory
Rothbardian Analysis of Bureaucracy
Rothbardian Analysis of Government Spending
Rothbardian Analysis of Taxation
Interventionism and Socialism
Central Banking and the State
War and the State
What I hope students will get out of this class is a solid understanding of how to analyze the behavior of the state, based on sound principles of Austrian economics, supplemented by some aspects of Murray Rothbard's lifelong study of history and political philosophy.
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The great antifascist scholar Ludwig von Mises warned that government schools are an inevitable source of ethnic conflict, because dominant nationalities can use them to indoctrinate children from other cultures, pulling them away from their parents and communities.See his discussion of dialect and standard language in Nation, State, and Economy beginning on p. 46, and his discussion of the role of government schools a couple of pages later. In Canada, this was explicitly the aim of the Indian residential schools, which sought to "kill the Indian in the child."They Came for the Children: Canada, Aboriginal Peoples, and Residential Schools. Truth and Reconciliation Commission of Canada. This useful report collects the testimony of many written and oral accounts from eyewitnesses of the residential schools.The Canadian government began the schooling of aboriginal children in earnest by setting up the residential-school program in 1883. The goal was to take kids away from their disobedient, barbarian parents and make them into submissive, civilized British subjects.
By the time the last of the Indian residential schools closed its doors in 1996, they were infamous for rock-bottom standards of education and sky-high rates of physical and sexual assault against children. In Canada, many aboriginal people consider the word "Indian" a derogatory slur. It is also a legal category of persons in federal law. Thus, an insult is written into the statutes.
But the source of the brutality in residential schools was essentially the same as that of other public schools in multicultural states. Mises, an Austrian Jew, was probably thinking about the ethnic strife in his homeland when he wrote,
In those extensive areas in which peoples speaking different languages live together side by side … [t]he school can alienate children from the nationality to which their parents belong.… Whoever controls the schools has the power to injure other nationalities and to benefit his own. (Liberalism, p. 114)
In Canada, the cultural gulf between the ruling English, French, and Scottish cultures and the dozens of subjugated aboriginal cultures was exceptionally wide. Many Europeans believed it was their own destiny to dominate this wild land, and the natives' destiny to disappear or assimilate. But the natives were not going away quietly.
In 1886, one year after armed Métis and Cree uprisings in the western prairies, Indian-school inspector John McRae remarked, "It is unlikely that any Tribe or tribes would give trouble of a serious nature to the Government whose members had children completely under Government control."Quoted in They Came for the Children, p. 13.
Come for the Food. Stay for the Shackles.The state hired clergymen to run the schools (partly because they were cheap to hire), and as a result many former students identify their awful experiences with missionary Christianity rather than with coercive government. Certainly, many supposedly Christian teachers in the residential schools have foul crimes to answer for.
But the state appointed the principals; it built the schools; it paid for the system. Most importantly, the state corralled the children through the school doors.
The government schools were compulsory for all Indians under age 16. State agents enforced this rule only sporadically at first, but the government had other methods of persuasion.
Most aboriginal people in Canada were by the late 1800s subject to massive state regulation. The state confined them to reserves and forbade them to sell any produce to non-Indians without written permission from a government "Indian agent." Aboriginal people also could not (and in most cases still cannot) privately own any real estate on the reserves.
There is no liberty without economic liberty. Some aboriginal parents wanted their children to get a Western education. But because they were economically trapped in reserve life, such parents couldn't travel around, much less shop around for good options. They were stuck with the monopoly provider, the residential schools.
In other cases, families were simply starving because of the socialistic control of their lives. They figured that at school their children would at least be well fed.In this, they were often mistaken.
Still other parents kept their kids out of the government officials' hands however they could. One girl remembers that her father "sent me to hide in the woods. He told the Indian agent I wasn't home, which was true. I was hiding in a hollow stump."Quoted in They Came for the Children, p. 55.
The schools themselves were often located many miles from any child's reserve, partly to save costs by operating at central locations and partly to make running away difficult. Several children died trying to make it back home through the wilderness.
When the teachers caught a runaway, they might horsewhip him in front of the other students as an example. Or the teachers might lock him in solitary confinement for days, or simply chain him to his bed at night.
One father who travelled to visit his daughter at school saw a girl with her legs shackled together to keep her from getting up enough speed to escape.
ReeducationIn his introduction to Separating School and State, Misesian scholar Richard Ebeling wrote of public schools in general that
The parent has been viewed — and still is viewed — as a backward and harmful influence in the formative years of the child's upbringing, an influence that must be corrected for.… The public school, therefore, is a "reeducation camp." (p. xiv)
In the residential schools, reeducation was taken to its logical extreme. The teachers believed that every aspect of an aboriginal child's upbringing was a threat to his chances of becoming a loyal British subject.
Most of the cultures these kids were being snatched from were largely anarchic, voluntary societies. There was warfare, but no conscription. There was trade, but no taxation. There were leaders, but no rulers.
There were elders to give advice, but there were no kings or presidents to give commands.In many cases, even the institution of "chiefs" was merely a European fantasy later coded into government law. Each man and woman decided for himself what to do each day.
Traditionally, the whole point of a child's education in such a culture was to prepare him to make smart decisions on his own to help his family survive and grow. For Cree hunters of the boreal forests, for example, the most challenging moments in a man's economic life came when he was stalking an animal in the bush, with no one around for miles to tell him where to go or what to do next.
So these cultures' methods of education prepared kids to be radically independent. Parents almost never used corporal punishment. They taught children to handle their own emotions and make their own decisions.
No wonder the government teachers thought these people were unruly savages. They had never learned to obey.
The famous Indian Affairs bureaucrat and poet Duncan Campbell Scott worried that "without education and with neglect the Indians would produce an undesirable and often dangerous element in society."Quoted in They Came for the Children, p. 33.
To neutralize this dangerous element, the residential-school teachers set out to destroy every symbol of a child's membership in his home culture. Teachers cut off the children's long, braided hair and confiscated their furs and beads. They dressed all their pupils in school uniforms instead.
The following before-and-after pictures of the Cree pupil "Thomas Moore" (ca. 1897) show the intended transition from threatening savage to obedient student.
Yes, in the "before" picture, he is carrying a revolver. John Milloy drew my attention to these pictures, which he used on the cover of his shocking, erudite book A National Crime: The Canadian Government and the Residential School System, 1879 to 1986.
The teachers also took away the names that parents had given their children, and called them by new names, ones the teachers could pronounce. (In some schools, they simply used numbers instead.) And teachers used the strap or worse on any child who spoke a word in his native tongue — often the only language he knew.
Indeed, the school staff used corporal punishment for almost every conceivable offense. One Indian agent remarked in 1896 that the teachers' violent methods "would not be tolerated in a white school for a single day in any part of Canada."Quoted in They Came for the Children, p. 38.
But the children of savages needed to learn what it meant to obey under threat of force. They now entered a world of total control: the teachers told them, as one former pupil said,
when to go to the bathroom, when to eat, when to do this and that, when to pray. We were even told when to yawn and cough. Children can't help themselves when they cough, but we were told, "Stop your barking!"Quoted in They Came for the Children, p. 24.
These schools were meant to irrevocably separate each child from his family's culture. One student, Charlie Bigknife,
recalled being told, after his hair had been sheared off at the File Hills school in Saskatchewan, "Now you are no longer an Indian."They Came for the Children, p. 22.
On top of all this, teachers — and older students who had already been warped by the schools — sexually abused many, many boys and girls. The victims' shame and confusion only compounded the psychological attack on their identities.
"This Must Never Happen Again"Students devised elaborate means of resistance. They used sign languages to communicate with each other, staged raids on the kitchens to steal the teachers' superior food, banded together to protect themselves from abuse, tried repeatedly to escape, and sometimes even set fire to the schools.
But in the end, the residential schools were often successful in crippling their pupils' ability to function in their parents' cultures. Forbidden to speak their home languages for ten months at a time, children often found when they came home for the summer that they couldn't understand their parents or elders, nor could they explain what had happened at school. The children also hadn't learned any of the skills they needed to succeed economically or socially or even emotionally in their parents' communities.
In Canada, this is how the West was won.
For many children, the schools also failed to give them the skills that could have helped them function in the mainstream Canadian economy (even if all the regulations on Indian life had been repealed). Unsurprisingly, as a monopoly provider to an incarcerated population, the school system maintained very, very low standards of education. The abuse, the isolation, and the lack of real education left many graduates unable to be healthy members of any society.
It is fashionable now in Canada to say that the main cause of this nightmare was the racist European belief in Indian inferiority. That is a comforting thought; explicit racism has been in retreat for much of the last century.
But the real danger remains. So long as I have the power to take your children away from you for ten months of the year, teaching them what I believe and treating them how I see fit, you and your way of life can never be safe. If you have that power over my children instead, then I and my traditions can never be safe.
As Mises taught us,
In all areas of mixed nationality, the school is a political prize of the highest importance. It cannot be deprived of its political character as long as it remains a public and compulsory institution. (Liberalism, p. 115)
The Canadian government's recent Truth and Reconciliation Commission report on these horrific schools concludes, "This must never happen again."
The best way to ensure it does not is to heed the words of Mises:
There is, in fact, only one solution: the state, the government, the laws must not in any way concern themselves with schooling or education.
[This article is excerpted from chapter 8 of The Theory of Education in the United States (1931).]
We may now take a rapid glance at the actual state of things which all these influences have combined to bring about. The procedure in the secondary school is perhaps sufficiently open to common observation so that we need say nothing about it here, leaving it for a remark or two later on some special point. Let us speak of the university and the undergraduate college.Traditionally, the university was an association of scholars, grouped in four faculties: literature, law, theology, and medicine. When I say an association of scholars, I mean that it was not quite precisely what we understand by a teaching institution. The interest of the students was not the first interest of the institution.
Putting it roughly, the scholars were busy about their own affairs, but because the Great Tradition had to be carried on from generation to generation, they allowed certain youngsters to hang about and pick up what they could; they lectured every now and then, and otherwise gave the students a lift when and as they thought fit.
The point is that the whole burden of education lay on the student, not on the institution or on the individual scholar. Traditionally, also, the undergraduate college put the whole burden of education on the student. The curriculum was fixed; he might take it or leave it, but if he wished to proceed bachelor of arts, he had to complete it satisfactorily. Moreover, he had to complete it pretty well on his own; there was no pressure of any kind upon an instructor to get him through it or to assume any responsibility whatever for his progress, or to supply any adventitious interest in his pursuits. The instructor usually did make himself reasonably helpful, especially in the case of those whom he regarded as promising, but it was no part of the institution's intention or purpose that he should transfer any of the actual burden of education from the student's shoulders to his own, or contribute anything from his own fund of interest in his subject by way of making up for any deficiency of interest on the part of the student. I ask you, with your permission, to remark this point particularly.
In speaking now of the present-day university, I shall cite the one of which I am a very humble and unconsidered member. I do this not because of its prominence, or because I can so conveniently lift some references to it from Mr. Flexner's recent book, and thus save trouble. I do it because one may always, as a matter of good taste, use oneself or one's own for purposes of illustration in cases where by any chance that kind of service might be thought disagreeable.
To begin with, then, we have Mr. Butler the other day expounding, and in extremely fine rhetoric attempting to justify what he calls "the newest type of university organization and influence." Well, of course, if one wishes to call that type of organization a university organization, one may do so; and if one can induce others to regard it as a university organization, one may also do that. It must be pointed out, however, that in so doing one acts very arbitrarily, even violently. This type of organization is not a development, but something entirely different from the traditional type of university organization; it is entirely different in structure, entirely different in intention, entirely different in function.
In structure, the four "learned" faculties have been superseded by all manner of "departments" and "schools." In intention, the newest type of university organization and influence is not primarily that of an association of scholars, but that of an association, more or less loose and sprawling, of pedagogues, of persons on whom, as we shall shortly see, the whole burden of education has been shifted.
In function, this type does not contemplate education, in the traditional sense of the word; it contemplates training. In fact, of all our institutions, the university gives perhaps the most conspicuous example of the complete working out of our general theory; it is perhaps the most conspicuous example of what a popular doctrine of equalitarianism and democracy comes to in practice.
The undergraduate college, however, is in this respect no great way behind the university. It has degenerated into a curiously anomalous affair, exhibiting changes in structure, intention, and function that correspond to those exhibited by the university. Its repertory — one is rather put to it to find a name for its schedule of organized pursuits — at one end reaches back far into the secondary school, and at the other reaches forward into the technical and vocational schools, while at the middle, apparently by way of lagniappe, but actually for reasons that we shall look into a little later, it carries on some kind of formal dealings with literature, chiefly English. I never think of an undergraduate college without being reminded of a story that I heard you, Mr. President,The late president of the University of Virginia, Mr. E.A. Alderman, who was presiding at the delivery of these lectures. tell in public 20 years ago, the story of an overassiduous mother who insisted on her boy's eating some asparagus, on the notion that it was good for him. When asked how he liked it, he said mournfully that it tasted raw at one end and rotten at the other.
In support of this view of the modern undergraduate college, I may cite some observations made by Mr. Flexner. A student in Columbia College (which is an undergraduate college controlled by Columbia University) may complete the requirements for a bachelor's degree by including in his course of study such matters as these: the principles of advertising; the writing of advertising copy; advertising layouts; advertising research; practical poultry raising; business English; elementary stenography; newspaper practice; reporting and copyediting; feature writing; book reviewing; wrestling and self-defense. By availing himself of some sort of traffic arrangement with a sister institution belonging to Columbia, he may also count as leading to a degree, courses in the fundamental processes of cookery; fundamental problems in clothing; clothing decoration; family meals; food etiquette and hospitality; principles of home laundering; social life of the home; gymnastics and dancing for men, including practice in clog dancing; instruction, elementary or advanced, in school orchestras and bands.
Without the least wish to be flippant, one cannot help remarking points of resemblance here between the newest type of institutional organization and the newest type of drugstore. Perhaps the term "drugstore education" is even more closely descriptive than either Mr. Flexner's "bargain-counter education" or the term "grab-bag education," which I proposed a moment ago, for one goes to drugstores nowadays for nearly everything but drugs. Really, this type is so new and so startling that no ready-made term fits it very well. But if one is thus somewhat at a loss in surveying the comprehensive prospectus of Columbia College, one simply throws up one's hands and capitulates before the advertised program of another smaller undergraduate institution that, according to an announcement in the press, proposes to make up a special curriculum for each student, apparently a sort of hand-tailored affair, adapted to individual intentions, aptitudes, and deficiencies.
This strikes me as more than a counsel of despair; it is a counsel of desperation. Yet really, the only thing that differentiates this college from many other colleges, in this respect, is that it has the commendable forthrightness to say plainly what it means to do.
The Free Market 30, no. 7 (July 2012)At a United Nations meeting in the year 2000, the world’s governments agreed on the goal of enrolling every child on the planet in primary schooling by 2015. Strangely, this lofty plan does not say anything about the quality of schooling; the whole idea is to get children into government-approved classrooms, apparently regardless of what happens there.
The reports of UN agencies like Education for All (EFA) are full of ideas on how to get kids to come to school in third-world countries: making education entirely taxpayer funded (commonly by taxpayers from richer countries), providing free medication or food to students who show up, or even just paying cash to the parents in return for kids’ attendance.
But are the pupils who spend more time at these schools actually learning more as a result? MIT’s Abdul Latif Jameel reports, “Several programs which have raised participation, from providing worm medicine to free meals, show no evidence that children are learning more as a result.”
And EFA’s Fast Track Initiative admits that, “in nearly all developing countries the levels of learning achievement are shockingly low. . . . In many low-income countries students learn virtually nothing and end up functionally illiterate.”
In fact, the situation is so bad that Jameel says one area to be improved is “more regular attendance of teachers.”
Public education has been a slowly degenerating disaster throughout the West, and now it seems we’re exporting it to the rest.
A Crucial Fallacy
The international education agencies seem to have been duped by what the great Austrolibertarian Murray Rothbard calls, “A crucial fallacy . . . confusion between formal schooling and education in general.”
Promising to educate every child in every culture through primary schooling is a bit like promising to clothe every child in every climate by giving them a parka. Snowsuits are nice, but they aren’t the best attire for every occasion.
In fact, until recently, nearly all children learned the important skills of life largely outside of schools, through observing and joining in with the activities of adults. Rothbard writes with respect to American education, “Education is a lifelong process of learning, and learning takes place not only in school, but in all areas of life. When the child plays, or listens to parents or friends, or reads a newspaper, or works at a job, he or she is becoming educated.”
All the medicine handouts and free school lunches proposed by EFA are attempts to offset the direct economic opportunity cost of the child spending a day at school instead of working on the farm or factory. This does take into account the child’s economic contribution to the family’s labor. But what about that labor’s educational contribution to the child? What about the educational opportunity cost?
If students in many schools are learning very little and graduating “functionally illiterate,” if attendance doesn’t actually produce real education, and if teachers sometimes don’t even bother to show up, perhaps the parents and children feel they would learn more outside the schools than in.
Sadly, this important educational opportunity cost doesn’t seem to be on the global pedagogical philanthropists’ radar. Jameel speaks only of the “complex relationship between school quality and participation. It might seem reasonable to expect that families are more likely to bear costs like fees, uniforms or lost income for a good quality education.”
And, he says, “There is no consensus on why so many poor children don’t attend school, or the best way to increase participation. If children’s labor is crucial to their family’s welfare . . . it may prove very difficult to attract more children to school.”
There is no mention of any learning that might happen while the child is outside the classroom.
So for a moment, let us grant this assumption: Only schooling is education. No learning happens outside of schools.
Under this assumption, not only do children’s minds profit nothing from a day spent at home or in the bush, but most of the parents of children in the Third World are themselves totally un-“educated”—benighted savages whose heads are filled with cobwebs.
Thus, for our benevolent pedagogical overlords, it could make sense to get those kids away from their parents and into schools as soon as possible, even if, as EFA acknowledges, “in some countries nearly every aspect of the schooling system is seriously deficient—infrastructure, teaching materials, teacher availability and qualifications, lack of student assessments and lack of incentives for improving learning outcomes.”
Obedience for All
So, if kids aren’t learning to work and play in their traditional cultures, but they aren’t learning to read or do math in these atrocious schools either, what are they learning? In a word, obedience.
To the extent that the schools are operated and authorized through the national states, the children are taught to identify with those states. All the tests are in the national language, and children must memorize the state-approved version of history.
Oh, there is often a grand effort to make schools receptive to local cultures, but so long as the state pays the piper, the state calls the tune. And the sound every state wants to hear is children singing its national anthem.
Rothbard writes of “a conscious scheme to coerce the mass of the population into a mold desired by the Establishment. Recalcitrant minorities were to be forced into a majority mold; all citizens were to be inculcated in the civic virtues, notably and always including obedience to the State apparatus.”
Perhaps, some might hope, this force is counterbalanced by the influence of the international aid agencies that support the schools. And what do these organizations hope to inculcate in the children? Take a look at what the EFA Global Monitoring Report claims as a major benefit of schooling: “Education has a key role in fostering national and international support for the multilateral governance needed to address problems such as finance, trade, security and environmental sustainability.”
That is to say, kids who go through schools funded by international bureaucracies are likely to approve of the other programs run by such bureaucracies. Even if you do believe that more “multilateral governance” is needed for finance, trade, etc., isn’t it a little disturbing that one stated benefit of UN-sponsored schools is more support for UN-sponsored activities?
Finally, regardless of whether states or NGOs fund the schools, to succeed in schooling means to win the approval of your teachers. Each child’s grades tell him how well he has met his masters’ expectations. Innovation is rewarded rarely, and defiance never. This is perfect preparation for a world of the total state, where cops and bureaucrats lay out rules for everyone, and there is no way to succeed except to obey their commands.
In the world of free commerce, the way to make a profit is to do something that other people think cannot be done. Success comes from taking risks, from seeing what others miss, and from convincing others to join you—not from hanging on every word uttered by benevolent authorities.
In fact, in many poorer countries, the office jobs (the only ones for which schooling is actually required) are nearly all government and international NGO jobs. So those kids who do succeed in school end up moving to the capital and writing reports on the importance of international funding for schools.
The kids who do not do well in school go back home to the farms or the factories, having spent years of their lives learning, in some cases, “virtually nothing.” But since the bureaucrats seem to believe that the traditional cultures the children might have spent those years immersed in held no knowledge anyway, this might not be seen as much of a loss.
Setting Young Minds Free
No doubt, some kids who would profit from schooling are being kept out of it by very bad things: wars, forced prostitution, and outright poverty. EFA’s programs to make schooling more accessible could have a huge positive impact on such children’s lives.
But instead of focusing on gimmicks to get kids into the classes governments want to teach, educators should focus on materials that kids want to learn, or that their parents are willing to invest in.
That cannot happen until we break the chain between government and education. It cannot happen until we once again, in Rothbard’s words, “give children their head,” and let them seek out “a genuine and truly free education, both in and out of formal schools.”
Of course, the quality of instruction tailored to individual children and communities might not be easily measurable by states and statisticians. But if schooling someday provides a service that fits their needs, the students will come.
Just about everyone is drawn to the libertarian respect for property rights. Yet most people draw back from fully embracing property rights and taking libertarianism to its fulfillment in "anarcho-capitalism" or free-market anarchy. "Sure," the cynics say, "it would be great to live in a society without the government and taxes, but who would write the laws? Who would protect it from foreign invasion?"
We will provide detailed answers to these and other questions in my online class, Anarcho-Capitalism. It is a six-week course, starting on August 1, with summer pricing of only $59. After taking this class, you will realize that the Founders who called government a "necessary evil" were only half right.
The Scope of the Class The weekly topics are
Private Law I,Private Law II,Private Defense,Common Objections,Historical Applications, andHow We Get There. In the first three weeks, we'll sketch an outline of how a truly free society — with no agency holding the power to tax or monopolize any type of service — could codify and defend property rights, and how it could defend itself from foreign conquest. (Click on the image to the right for the course syllabus.) Naturally we can't say exactly what a free society would look like — libertarians don't have the hubris of central planners. Even so, we can explain how market forces would lead to a much more peaceful and prosperous society than one plagued by a parasitical and violent state.
In the fourth week, we will deal with common objections to the mechanisms we had earlier described, including "Wouldn't the mafia take over?" "The biggest defense agency would turn into a de facto state!" "Why couldn't a convict appeal his case indefinitely?" and so on.
In the fifth week, we will discuss several historical episodes that illustrate the power of voluntary communities to solve conflicts in a relatively peaceful manner. We will see that not just in theory, but in practice, you don't help a group of people by anointing a small fraction of them "the authorities" who get all the guns and make all the rules.
Finally, in the sixth week we tackle what may be the toughest challenge of all: after seeing the elegance and feasibility of a society with no institutionalized coercion, people want to know, "How can we make this a reality?" Relying on insights from Étienne de la Boétie, Murray Rothbard, and even Gandhi, we will explore various possibilities.
The Structure of the Class The live video lecture will be on Wednesday nights. (All video events will be recorded in case you have a scheduling conflict.) On a typical night I will provide a prepared lecture from 6:30 PM ET until 7:45. The remaining 15 minutes will be devoted to live Q&A (with any leftover questions answered in written form in the online forum).
In addition to the main lecture on Wednesday, on Saturday I will hold "office hours" at various times of day, to cater to different students. This is an optional block of time where I will be on call to provide live video answers to the questions posed by students who want to tune in. To repeat, this is optional, meaning it is not necessary to attend the "office-hours" Saturday sessions in order to do well on the quizzes or final exam.
Each week I will assign 1–2 hours of readings to accompany the lecture. I will also provide optional readings for advanced students who want to push the analysis deeper than the introductory level that we will provide for newcomers.
For those who want to receive an official grade, there will be a multiple-choice quiz every week, as well as a final exam. Of course, students who merely want to watch the lectures can audit the course without having to take any tests.
Conclusion The vision of a truly free society, in which no one could legally violate the property rights of anyone, is one of the most exciting topics in libertarian analysis. (Read my essay "But Wouldn't Warlords Take Over?" for a quick taste of the issues involved.) If you want to explore anarcho-capitalism further, I encourage you to join us for the first class on August 1.
Over the course of 27 years, Mises Institute scholars have crafted and perfected a world-class week-long intensive program in Austrian economics: Mises University. This program has changed the lives of thousands of undergraduate students. Now, thanks to the support of our generous donors, it can change your life too, even if you cannot make it to Auburn. You can enroll in Virtual Mises University, and partake in the intellectual feast over the Internet.
Virtual Mises University offers live broadcasts throughout each day of the conference of all the core Mises University lectures. But you DON’T have to be available during the broadcast times to take the course. Video recordings of the core lectures, and audio recordings of all the lectures will also be posted to the course page afterward, and will remain available long after the course is over. The course provides all of the readings that are required for the on-site attendees, as well as dedicated social and academic forums for students to discuss what they are learning and network with others who share their passion.
The online course also provides digital copies of any lecture materials (powerpoints, handouts, etc.) used by professors during their presentation.
Students who post in the course academic forum at least 10 times will be able to download a Certificate of Participation.
We are very excited to be able to offer this unmatched educational experience to anyone in the world, without being limited by physical space or geographic proximity.
Thanks to our generous donors, we are able to provide unlimited access to Virtual Mises University for only $20!
(No refunds. All registrations for this program are final.)
Broadcast schedule (All times are Central Standard):Sunday, July 22 — 8:00 p.m.Monday, July 23 — 9:00 a.m. – 12:30 p.m.; 1:30 – 5:15 p.m.Tuesday, July 24 — 9:00 a.m. – 12:30 p.m.; 1:30 – 5:00 p.m.Wednesday, July 25 — 11:30 a.m.; 4:00 p.m.Thursday, July 26 — 9:00 a.m.; 4:00 p.m.Friday, July 27 — 2:45 p.m.Saturday, July 28 — 1:30 p.m.
The FacultyMises University faculty are among the finest scholars of Austrian Economics and libertarian political theory in the world.
Joseph Salerno (MU Director), Pace University & Mises InstitutePhilipp Bagus, University Rey Juan CarlosWalter Block, Loyola University, New OrleansThomas DiLorenzo, Loyola University MarylandLucas Engelhardt, Kent State UniversityRoger Garrison, Auburn UniversityDavid Gordon, Mises ReviewJeffrey Herbener, Grove City CollegeRobert Higgs, The Independent InstituteGuido Hulsmann, University of AngersPeter Klein, University of MissouriRoderick Long, Auburn UniversityRobert Murphy, Consulting by RPMGary North, GaryNorth.comTimothy Terrell, Wofford CollegeMark Thornton, Mises Institute & Auburn UniversityThomas Woods, Mises InstituteLeland Yeager, Auburn UniversityVirtual Mises University 2012 ScheduleSpecial thanks to the generous donors who made Virtual Mises University possible.
All times are central daylight time.
Green events will be broadcast live, video recorded, and audio recorded.
Orange events will be video recorded and audio recordedonly.
Red events will be audio recorded only.
Sunday July 228:00 p.m.Welcome Thornton (Wolfe Lecture Hall)
8:15 p.m. Warfare, Welfare, and the State Higgs
Monday July 239:00 – 10:00 a.m. The Birth of the Austrian School Salerno
10:15 – 11:15 a.m. Subjective Value and Market Prices Herbener
11:30 a.m. – 12:30 p.m. Praxeology: The Method of Economics Gordon
1:30 – 2:30 p.m. The Division of Labor and Social Order Hulsmann
2:45 – 3:45 p.m. Money Bagus
4:00 – 5:00 p.m. Austrian Capital Theory Garrison
6:30 p.m. An Evening with Tom Woods (optional)
Tuesday July 249:00 – 10:00 a.m. An Austrian Critique of Mainstream Economics Block
10:15 – 11:15 a.m. Calculation and Socialism Salerno
11:30 a.m.-12:30p.m. Production and the Firm Klein
1:30 – 2:30 p.m. Monopoly, Competition, and Antitrust DiLorenzo
2:45 – 3:45 p.m. Banking and Financial Markets Bagus4:00 – 5:00 p.m. The Austrian Theory of the Business Cycle Garrison
Wednesday July 259:00 -10:00 a.m. Concurrent Sessions
- Market for Security Murphy
(Explains how a free market could provide defense and legal services without a government monopoly.) * 2. Errors, Business Cycles, and Government Stimulus Engelhardt (Highlights the role of error in the Austrian Theory of the Trade Cycle, gives some justification for this role, and highlights how the most “effective” government stimulus will also be the biggest waste of resources.)
10:15 – 11:15 a.m. Concurrent Sessions
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Everyday Logic of Economics Gordon (Explains how economic reasoning applies to some current problems and discusses common fallacies.
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Hayek and Keynes: Head to Head Garrison (Graphical demonstration that relaxing three critical-but-implausible assumptions underlying Keynes’s theorizing allows the Keynesian framework to morph into the Austrian framework.)
11:30am-12:30pm The Market for Quality Assurance Higgs
1:30 – 2:30 p.m. Concurent Sessions
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Contrasting Views of the Great Depression Murphy (Explains the Austrian, Keynesian, and monetarist explanations of the Great Depression.)
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Environmental & Resource Economics Terrell
2:45 – 3:45 p.m. Concurrent Sessions
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Economics and Property Rights: Alternative Approaches Block
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- Financial Markets in a Free Society Hulsmann (The nature and scope of financial markets.)
4:00 – 5:00 p.m.Mises and Rothbard: Differences on Economic Theory and Political Economy Faculty Panel with Q&A (Block, Gordon, Herbener, Higgs, Hulsmann, Klein, Salerno)
Thursday July 269:00 – 10:00 a.m. The Case for Privatization — of Everything Block
10:15 – 11:15 a.m. Concurrent Sessions
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Political Entrepreneurship and the Economics of Wealth Destruction DiLorenzo (Economics of political trickery and its wealth-destroying effects.)
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Common Objections to Capitalism Terrell
11:30am-12:30pm Concurrent Sessions
- The Economics of the Drug War Thornton (Many people oppose the “war on drugs” but only Austrian economic analysis shows why it is economically irrational.) * 2. The Economics of Deflation Hulsmann (Advanced lecture on the causes and consequences of deflation, highlighting the liberating impact of deflation.)
1:30 – 2:30 p.m. Concurrent Sessions
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The Corrupt Origins of Central Banking in America DiLorenzo (The real purpose of central banking was to enlarge the state and destroy constitutional limitations on government.)
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- Entrepreneurs vs. Game Theory Engelhardt (Questions some common applications of game theory, such as the Prisoners’ Dilemma, by highlighting how entrepreneurs can change the very structure of the “game” being played – leading to different outcomes than a more traditional, static view of game theory suggets.)
2:45 – 3:45 p.m. Concurrent Sessions
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The Problems with Keynesian Solutions to the Current Depression Murphy (Focuses on the specific commentary of Paul Krugman and other Keynesians regarding Obama stimulus and Bernanke’s inflation.)
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Prediction and the Business Cycle Thornton (Ever wonder why Austrian economists have called every major economic crisis while mainstream economists have not?)
4:00 – 5:00 p.m. The Austrian School in the Present Crisis Tom Woods
Friday July 27 9:00 – 10:00 a.m. Concurrent Sessions
- The Eurocrisis Bagus2. Mises and Friedman on Method Long (Explains how Milton Friedman’s rejection of Austrian realism and his rejection of Austrian apriorism are both rooted in a confusion over the nature of abstraction and the relation between logic and psychology.)
10:15 -11:15 a.m. Concurrent Sessions1. Hayek and Friedman: Head to Head Garrison (Contrasts Chicago school’s focus on “macroeconomic variations of substantial size and frequency” with Austrian school’s focus on “market forces hidden from the untrained eye” to demonstrate superiority of Austrian theory.)
- Issues in the Economics of Medical Care Terrell
11:30am-12:30pm Concurrent Sessions
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International Monetary Systems Salerno
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Apriorism and Positivism in the Social Sciences Gordon (Compares and contrasts Mises’s praxeology with Positivism.)
1:30 – 2:30 p.m. Concurrent Sessions
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Theory and History Gordon (Discusses Mises’s views on historical explanation and his criticism of Marxism.)
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- Time Preference Theory of Interest & Its Critics Herbener (A restatement of the pure time preference theory advanced by Frank Fetter, Ludwig von Mises, and Murray Rothbard and defense of the theory from its critics.)
2:45 – 3:45 p.m. Uncertainty and Entrepreneurship Klein
4:00 – 5:45 p.m. Panels
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Philosophy & Theory: Garrison, Hulsmann, Long, Herbener, Gordon, Salerno, Bagus
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History: DiLorenzo, Klein, Thornton, Terrell, Woods, Engelhardt, Murphy
Saturday July 29:00 – 10:00 a.m. Concurrent Sessions
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- Microeconomics of Central Banking Klein (The organization, management, governance, and incentives of central banks.)
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Anti-Market Mythology DiLorenzo (The phony mythology of “natural monopoly,” “asymmetric information,” “path dependence,” antitrust, and other anti-market fables)
10:15 – 11:15 a.m. Concurrent Sessions
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The Ethics of Money Production Hulsmann (Advanced lecture presenting the economic and moral case against fiat money.)
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- On the Impossibility of Central Planning Engelhardt (Describes the Information and Computation problems.)
11:30am-12:30pm Panel on Monetary Policy: Salerno, Hulsmann, Thornton, Garrison, Bagus, Engelhardt, Murphy
1:30 – 2:30 p.m. Economics: Job vs Calling Gary North
——-* Recommended for economics majors.
As a teacher in a public high school, I am daily confronted with the lamentable realities of state-monopoly education. Student apathy, methodological stagnation, bureaucratic inefficiency, textbook-publishing cartels, obsessive preoccupation with grades, coercive relationships, and rigid, sanitized curricula are just a few of the more obvious problems, attended by the cold-shower disillusionment and gradual burnout among teachers to which they almost invariably lead.
While outcomes such as these are certainly tragic, the process that produces them is not exactly the stuff of Greek theater. There is no climactic battle, no cathartic denouement, no salvific moral lesson to be taken home when the curtain falls, and seldom are there any readily identifiable heroes or villains. It is not a single, epic calamity but a thousand trivial defeats a day, each too mundane and too quickly obscured by its successor to be considered noteworthy. Like a bad movie, public education somehow manages to be both tragic and boring. It is only its cumulative result that would have impressed Sophocles.
Oddly enough, although there is overwhelming public support for compulsory, tax-funded schooling, enthusiasm for what actually goes on in public schools is noticeably lacking. Not only are they generally acknowledged to be falling short in their efforts to produce an enlightened citizenry, but it is even conceded that they have failed in what is ostensibly their most exalted mission: the provision of equal opportunity for all via a standardized system of mass instruction in which all students receive the same basic set of knowledge and skills. Nor has this indictment originated solely from among the ranks of those opposed to egalitarianism on principle. To the contrary, it is largely the refrain of embittered progressives for whom "free" universal education has long been the desideratum of social justice, and who cannot understand how the behemoth they so vigorously midwifed into existence and then wet-nursed for a century could have so thoroughly betrayed their loftiest and most cherished ideal.
Yet ironically, it is the unassailable faith in the achievability of precisely this ideal of universal equality that immunizes public education against every reasonable argument advanced in opposition to it. Notwithstanding its manifest shortcomings, none of which has found a remedy despite decades of legislative reform, hardly anyone is prepared to see this system replaced by anything resembling a real market in education due to the deeply held conviction that that those of lesser material means either would not be able to afford market-based schooling or, in the very best case, would receive only substandard services inadequate to the task of ensuring equality of economic opportunity later in life. It is a further irony, though hardly surprising, that neither the economic knowledge nor the analytic discernment necessary for an examination of these claims has ever been or will ever be taught in a public school. No emperor willingly trains his own subjects to recognize nakedness when they see it.
Given this state of affairs, it devolves on individuals, both within and outside of the school system, to educate others about education. In what follows I will attempt to address what I see as the three primary objections raised against the idea of market-based education:
that educational services on the market would be at a premium, with prices high enough to exclude at least the lowest-income strata of society;
that even if the less affluent could afford some market-based education, it would be of a substantially inferior quality to that received by wealthier consumers of educational services; and
that the lack of a universal curriculum and standardized criteria of achievement would render the market incapable of providing the equality of opportunity that public education, however unsatisfactorily, at least aims in principle to ensure.
We will examine each of these arguments in turn. As will be shown, the first two rest on a misunderstanding of markets, while the third stems from a grossly distorted concept of education from which, if they took the time to examine it closely, probably even most progressives would recoil in horror.
Argument 1: Affordability In order to understand why educational services on a free market would as a rule be priced well within the reach of the vast majority of income earners, we must first ask why the market produces anything at all for such persons. Since it is obvious that the wealthiest few have far more purchasing power per capita than those in the middle- and lower-income strata, why does the market not produce only for the former group and leave the latter two homeless and starving? Why is sugar, once a luxury of the rich, today a household item so widely and cheaply available that the US government feels called on to impose tariffs on imports and buy up domestic surpluses to keep the price artificially high? Why is the same kilobyte of computer memory that cost around $45 twenty years ago today priced at a fraction of a cent?
The simple answer is this: competition. When a good first appears on the market, the supply of it is strictly limited. To the extent that consumers value it highly, they will bid against each other for the minimal stock available, causing the price to rise until all but the wealthiest consumers drop out of the market. As long as there is no expansion of supply, and assuming the consumers do not change their valuations, the good will remain a luxury of the rich.
However, it is precisely this condition that provides producers with the incentive to increase production of the product. The high price yields supernormal profits that draw venture capitalists and entrepreneurs into that line of production, thereby increasing the supply, lowering the price, and most importantly, bringing exponentially greater numbers of consumers into the market. This process continues until that portion of profits that exceeds the general rate prevailing in other industries disappears, bringing the expansion to a halt. But by that time, the good has long since ceased to be a toy for the rich. To paraphrase Mises, yesterday's luxury has become today's necessity.
Of course, while this process works in essentially the same way for all goods, some goods — diamonds, for example — tend to remain luxury items indefinitely due to the high cost of producing them. It is, after all, the consumers who, in the aggregate, must ultimately pay for any lasting expansion of industry. If the capital expenditures necessary for the production of a good exceed the willingness or ability of the consumers to offset them, no sustained increase in the supply of that good will be possible.
So how would this dynamic work on a market for education? Assuming that educational services as such would be given high priority on the value scales of most consumers, would the cost of producing them keep them priced beyond the means of the typical wage-earner? Here we must be particularly careful not to engage in what psychologists call static thinking. We must ask ourselves, not how much it would cost for private entrepreneurs to produce curricula and instruction as these are presently constituted, but rather to what extent and in what ways schooling in its current form squanders resources, and how it might be streamlined and otherwise improved in the crucible of free competition.
One point is clear: the greater and more numerous the inefficiencies of the current system, the more radical its transformation by the market would be. And just how inefficient is the present system? Well, who runs it? On what principles does it operate? Does it allow students the freedom, for example, to take courses in what they are most interested in and eschew subjects they do not wish to study? Or does it rather saddle them with a bloated, one-size-fits-all curriculum prodigiously crammed full of skills and information they neither need nor want, thereby creating artificial demand for teachers and administrative staff, stimulating construction of needlessly large (or simply needless) facilities, boosting energy consumption and capital maintenance costs, and so forth? To get an idea of the sorts of "practical competencies" students in today's public and state-regulated high schools are expected to (pretend to) master and retain for use in later life,[1] here is a randomly-selected excerpt from the scintillating epistle "Texas Essential Knowledge and Skills for Mathematics," issued by the Texas Education Agency:
§111.35. Precalculus (One-Half to One Credit).
Knowledge and skills.
The student defines functions, describes characteristics of functions, and translates among verbal, numerical, graphical, and symbolic representations of functions, including polynomial, rational, power (including radical), exponential, logarithmic, trigonometric, and piecewise-defined functions. The student is expected to:
describe parent functions symbolically and graphically, including f(x) = xn, f(x) = 1n x, f(x) = loga x, f(x) = 1/x, f(x) = ex, f(x) = |x|, f(x) = ax, f(x) = sin x, f(x) = arcsin x, etc.; determine the domain and range of functions using graphs, tables, and symbols; describe symmetry of graphs of even and odd functions; recognize and use connections among significant values of a function (zeros, maximum values, minimum values, etc.), points on the graph of a function, and the symbolic representation of a function; and investigate the concepts of continuity, end behavior, asymptotes, and limits and connect these characteristics to functions represented graphically and numerically.
Got all that?
[product:449] Of course, administrative costs and restrictions on entry and labor-market flexibility also impact cost-efficiency. How do public schools hold up in these areas? Are their operational rules and procedures clear, concise, and easy to follow? Or does it take, say, 670 pages and whole cadres of lawyers, consultants, and administrative support staff just to implement a single program? Regarding entry, how easy is it to qualify as a member of the academy? Is anyone who demonstrates a potential aptitude for meeting the educational demands of students given the opportunity to try to do so? Or is club membership restricted by legal quotas and licensure requirements necessitating lengthy and expensive formal training?
And how flexible is the labor market? Can an underperforming or incompetent employee be readily replaced? Or does even a mere suspension require a hearing before a three-member commission?[2]
We do not have space here to speculate on all the optimizing innovations creative entrepreneurs might come up with, and to do so would be presumptuous in any case. As John Hasnas has pointed out, if we could forecast the future market accurately, our very ability to do this would be the greatest possible justification for central planning.[3] Suffice it to say that today's public and government-regulated private schools dissipate resources with a profligacy that would have made Ludwig II blush. We can hardly claim, then, that these institutions — whose costs are externalized onto the whole society — are paragons of affordability. Yet education is not a capital-intensive industry, and market competition would surely eliminate most of this waste in short order, allowing educational entrepreneurs to reduce their costs, lower their prices, and take advantage of economies of scale. As for those few who might still be unable to pay, lower prices would mean that private scholarships, grants, and student loans would be available in greater abundance than they are today, and the latter would no longer require ten years of indentured servitude to pay off.
Just as with sugar, automobiles, civil aviation, and cell phones,[4] so too in education high initial profits would draw competition, increase supply, reduce cost, and multiply innovation. There is no reason for market-driven educational services tailored specifically to the desires of those who consume them to be prohibitively expensive.[5]
Argument 2: Quality A second argument against leaving education to the market is that to do so would result in grave disparities in quality of service. The rich, it is said, would get steak, while the poor got rump roast. Of course, there is a kernel of truth in this. The more you are prepared to offer for something, the more quality you are in a position to demand. The market is indeed a place where the principle embodied in the cliché "You get what you pay for" prevails.
But what exactly do you pay for? The answer to this question is not necessarily obvious. To illustrate, I offer a personal example.
Many years ago, I worked at a tavern-style restaurant that was part of a nationwide chain. With its eclectic menu, modest prices, and dollar-a-mug draft beers, it was a place where families could go on a budget, and weekend drinkers could go on a binge. Not exactly Alain Ducasse, but we did offer a steak (T-bone, as I recall) for around $10. What is interesting about this is that right next door was a more upscale steakhouse that also served T-bone; only this one went for something like $22. Nothing unusual about that, but here's the catch: both restaurants were owned by the same company and both served exactly the same T-bone steak.
At first blush, this seems absurd. Why would any company compete with itself? And why, for that matter, would anyone in his right mind pay $22 for a steak he could get for less than half that just by walking across the parking lot? Situations like this have led to calls for governments to step in and "protect" consumers from their own "irrationality." But there is nothing irrational going on here. The two restaurants were not in competition, because they served different clientele, and patrons had definite reasons for the choices they made about which restaurant to patronize. Ours wanted to cut the frills, sit at the bar, and save money; theirs were willing to pay more than double the price for the plush seats, subdued ambience, and tuxedoed waiters. The essential thing, however, is that both were eating the same steak.
The relationship between price and quality is therefore not as straightforward as we might imagine. It is certainly true that you get what you pay for, but it is equally true that you pay for what you get. To be sure, on the education market, those with the wherewithal could attend schools equipped with indoor swimming pools, tennis courts, amphitheaters, and state-of-the-art IT. But this does not mean that everyone else could not make do with less extravagance and still get the same basic service.
Of course, all this in no way suggests that quality of educational services would be identical. Such a conclusion would be absurd. What we have demonstrated is simply the fallacious reasoning behind the common assumption that where price is low, product must be unsatisfactory. What does not satisfy is not profitable. Products and services that do not meet the needs of consumers — rich and poor — will soon have, not a low price, but no price.
Argument 3: Opportunity We now turn to a final argument for public education that goes beyond economics, though even here there is a parallel. Deeply rooted in the belief that justice means equality and equality means identical circumstances, this view holds that educational standards and curricula must be essentially uniform for everyone if all students are to be given the same opportunity to succeed in life. Here, the anticipated failure of the market lies, not in its high prices or disparate quality, but in its presumably excessive flexibility and diversity. In essence, this argument is really nothing more than a special case of the more general socialist contempt for the division of labor. But what is the "division of labor" in education? What is its meaning, and why should we fear its emergence?
We are accustomed to conceiving of education, not as an abstraction, but as a "real thing" existing in the world outside; a commodity possessed by some people whom we call "teachers" and transferred, more or less mechanically, to other people called "students." This habit of thought is reflected in our language: it is far more common to talk about getting an education than about becoming educated. Yet the greatest thinkers in this area have repeatedly emphasized that education is, in fact, a process of becoming. This is what Maria Montessori meant when she said that if our definition of education proceeds
along the same antiquated lines of a mere transmission of knowledge, there is little to be hoped from it in the bettering of man's future. For what is the use of transmitting knowledge if the individual's total development lags behind?
Montessori urged an approach to pedagogy that would "help toward the complete unfolding of life," and "rigorously … avoid the arrest of spontaneous movements and the imposition of arbitrary tasks."
John Dewey expressed similar views. In his seminal work Democracy and Education, Dewey places the onus of responsibility for education squarely on the shoulders of the individual student:
One is mentally an individual only as he has his own purpose and problem, and does his own thinking. The phrase "think for oneself" is a pleonasm. Unless one does it for oneself, it isn't thinking. Only by a pupil's own observations, reflections, framing and testing of suggestions can what he already knows be amplified and rectified. Thinking is as much an individual matter as is the digestion of food. [Moreover], there are variations of point of view, of appeal of objects, and of mode of attack, from person to person. When these variations are suppressed in the alleged interests of uniformity, and an attempt is made to have a single mold of method of study and recitation, mental confusion and artificiality inevitably result. Originality is gradually destroyed, confidence in one's own quality of mental operation is undermined, and a docile subjection to the opinion of others is inculcated, or else ideas run wild. (p. 311–12)
For both Dewey and Montessori, education starts from the inside and moves outward.[6] Its purpose is to stimulate discovery and development of the personal resources latent within the self by allowing the student to experience the myriad possibilities for bringing them to bear creatively on the external world.
This means that becoming educated is not a matter of passively acquiring what is given, but of actively discovering what one has to give. It means that education does not create opportunity; opportunity creates education.
Regimentation and uniformity must therefore be jettisoned entirely; the individual must reign supreme within the sphere of his own development. The function of the school is to provide a stable environment rich in stimuli across a broad spectrum of disciplines, while the role of the teacher becomes primarily that of the observer who watches as closely — and intervenes as sparingly — as possible.
From this it follows that no two individuals would or could possibly educate themselves in exactly the same way. The self-directed intellectual, aesthetic, and spiritual explorations of millions of people simultaneously thus result in an unfathomable diversification of interests and activities that amounts to an educational "division of labor" — one that supports and enhances the division of labor of the market economy, and is in fact its logical precursor.
It must surely be obvious that such a philosophy is in every way wholly incompatible with systems of compulsory or universalized schooling aimed at "equalizing opportunity," and moreover, that even to use the word opportunity in connection with compulsion or regimentation is to abuse language, otherwise we might just as well reinstate slavery in the name of providing equal "employment opportunity."
Education, if it is to be worthy of the name, demands a method opposite to that of bureaucratic management and entirely irreconcilable with it. It requires flexibility, parsimony, innovation, and above all, a means of daily subjecting the producers of educational services to the competition of their peers and the approval or disapproval of their clients.
It requires, in other words, the free market.
Conclusion [product:94] In Slovenia where I teach, the verb "to learn" literally translates "to teach oneself." If the truth behind this linguistic convention were widely recognized, it would discredit the very premise on which all systems of public education are founded. But, as the great economist Frédéric Bastiat warned more than a century and a half ago, there is a pronounced tendency when confronted with important questions to consider only what is seen and ignore that which is not seen. And this just as true in education as it is in economics. We see students go to school day after day for 12 years, do as they're told, get their diplomas, and finally go on to do something with their lives. Perhaps from our vantage point it does not look so bad. But what we do not see is what they might have become had they been allowed to be the architects of their own fate from the beginning.
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Copyright © 2012 by the Ludwig von Mises Institute. Permission to reprint in whole or in part is hereby granted, provided full credit is given.
Notes [1] Note that on the market, service providers do not "expect" anything from their customers except payment. It is rather the consumer who expects satisfactory performance from the provider.
[2] Block, Walter and Young, A. 1999. "Enterprising education: Doing away with the public school system." International Journal of Value-Based Management, vol. 12, pp. 195–207.
[3] Hasnas, J. 1995. "The Myth of the Rule of Law." In Stringham, E.P. (Ed.), Anarchy and the Law: The Political Economy of Choice, pp. 163–192. Oakland, CA: The Independent Institute.
[4] According to Ask.com, the first cell phones sold for around $4,000.
[5] Those still in doubt should visit the Mises Academy, which has put all of its summer courses on sale for tuition fees ranging from $59 to $79 per class. Ever heard of an accredited — that is, state-cartelized — university having a sale? Neither have I.
[6] One of the most salient insights of both Montessori and Dewey is the theory of concentrated attention, according to which the one indispensable prerequisite of education is that children be allowed to focus on an activity for as long as they are absorbed in it. Both philosophers agree that what we call education can only occur as a result of this absorption, and so, just as it is the first duty of the physician to do no harm, so it is the first task of the teacher not to interrupt. Of course, the modern school is set up to be nothing but an endless series of interruptions. Like the thought-disruption device planted in the ear of the protagonist in Kurt Vonnegut's story "Harrison Bergeron," the school day is broken up into a hodgepodge of unrelated subjects and types of activity, disrupted every 45 minutes by the Pavlovian ringing of a bell. Under these conditions, nothing resembling what Montessori and Dewey would call education can take place. For more on this, see Kirkpatrick, J. 2008. Montessori, Dewey, and Capitalism: Educational Theory for a Free Market in Education. Claremont, CA: TLJ Books.
I am pleased to announce that I will be teaching another installment of the Mises Academy online class Anatomy of the Fed. This class will cater to both the undergraduate student and the seasoned Wall Street executive. This was one of the most popular classes the first time we offered it in early 2011.
The Scope of the CourseThis session of the Fed course runs for eight weeks, from June 25 through to August 19. The goal of the class is to provide a solid introduction to both the theory of free-market versus cartelized central banking and the day-to-day mechanics of the Federal Reserve in action.
After explaining how money and banking would develop in a free-market economy, we will explain central banking from a theoretical perspective. Specifically, we will see that central banking — that is, a government-sponsored cartel of banks with one privileged bank sitting atop the pyramid — serves to circumvent the market's natural checks on credit expansion. In addition to increasing the money supply and prices, central banking also fosters the boom-bust cycle.
After reviewing the theory of free versus central banking, we will explore the historical origins of the Federal Reserve. We will study the institutional structure of the Fed and learn how to read its balance sheet in real time. We'll walk through conventional and unconventional Fed operations, studying not just the theory but also the implementation. (For example, exactly how does the Fed go about buying an extra $600 billion in Treasury securities? Are the cuddly bears being paranoid or not?)
Finally, we'll wrap up the course by connecting the operations of the Fed — and its predecessors — with financial crises from US history. These will include the Fed-induced crises of the Great Depression and the housing bubble, but also earlier panics attributable (at least partially) to the swings in credit engineered by earlier incarnations of the US central bank.
Structure of the CourseIn a typical week of the course, I will give a live video broadcast on Monday from 6:30 to 8:00 p.m. (EDT). I will spend the first 75 minutes lecturing on that week's material, we'll take a quick break, and then I will field questions from students for the remaining time. In addition, on Saturday I will have optional "office hours" (exact time to be determined), meaning that I will be available on a live-video broadcast to answer questions from any students who decide to tune in.
Note that the Saturday sessions are purely for the students' convenience and are not mandatory. Also, all broadcasts will be recorded and available to enrolled students, so that people who have a scheduling conflict can still take the class if they wish.
If a student wishes, he or she can simply "audit" the class. This was a popular option for many adults who took my business-cycle class, because they had busy work schedules and would watch my lectures but couldn't keep up with the reading.
However, students may also take the class for a grade. These students will take a multiple-choice quiz each week, in addition to an exam at the end of the class. Although the Mises Institute is not accredited, we will present certificates of completion and a formal grade at the end of the class to those students who desire it.
ConclusionWhether you are a college freshman or a bond trader, you will leave this course with a much better understanding of both the theory and practice of the Federal Reserve. Or perhaps you can't decide on a birthday gift for that special someone who needs to learn that the Fed is not our friend. Either way, I encourage you to enroll quickly. I hope to see you in June!
[Tom DiLorenzo teaches The Road to Serfdom: Despotism Then and Now, a 6-week online course at the Mises Academy, starting June 13, 2012.]
"Every economy has its contradictions.… What counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth." — Paul Samuelson, Economics, 1985 edition
"Contrary to what many skeptics had earlier believed, the Soviet economy is proof that … a socialist command economy can function and even thrive." — Paul Samuelson, Economics, 1989 edition
"Two-thirds of a century after [The Road to Serfdom] got written, hindsight confirms how inaccurate its innuendo about the future turned out to be." — Paul Samuelson, 2009
In 1944, when Friedrich A. Hayek published his classic book, The Road to Serfdom, he was loudly denounced by academic statist apologists in England, where he resided at the time, and in America. In the preface to the 1976 edition of the book, Hayek noted that a prominent philosopher even denounced the book despite admitting that he had not read it! But average citizens did read it. The book was a gigantic success in America, quickly buying over half a million copies. Millions of copies of a condensed Reader's Digest version of the book were also sold and widely read.
The court historians in academe were not concerned about Hayek's age-old warnings about the dangers that centralized political power posed to liberty and prosperity, for they intended to be beneficiaries of that power as well-paid advisers to the state. Millions of average citizens were not as enthusiastic — especially Americans who, during the war, had experienced oppressive and confiscatory taxation, the slavery of military conscription, government-imposed product rationing, pervasive shortages of basic staples, and endless bureaucratic bungling.
Hayek's motivation for writing The Road to Serfdom was the shocking speed at which so many Europeans — especially in Germany — had simply forgotten all that they had learned over the centuries about the virtues of a free society, the need for limitations on government power, the dangers of centralized power, and the workings of capitalism as a worldwide network of mutually advantageous exchange. It only took a couple of decades of socialistic sloganeering to persuade Germans to abandon their classical-liberal roots and embrace big government of the worst sort.
Hayek was deeply concerned that the same despotic ideas were also becoming more and more popular in England, America, and in other countries. As the above quotations of MIT's Paul Samuelson demonstrate, much of America's educational "elite" was enamored with Soviet communism and central planning. Samuelson even went so far as to say in his textbook, which was by far the biggest seller of its day, that "it is a vulgar mistake to think most people in Eastern Europe [during communism] are miserable."
The parallels to today's world are unsettling, to say the least. Perhaps this is why The Road to Serfdom ascended to #1 in sales on Amazon.com after Glenn Beck discussed the book on his Fox News Channel program. There may not be a Hitler on the horizon, but the extent to which governments all over the world have simply ignored the lessons of the past in response to the economic crisis that they created with their own monetary policies and other interventions is mind-boggling.
The US government, in particular, responded to the bust portion of the Greenspan Fed's boom-and-bust cycle with the most economically destructive — but politically centralizing — policies: trillion-dollar bailouts of failing corporations that will create moral-hazard problems the likes of which have never been seen; an escalation of the money supply that dwarfs the monetary inflation of the Greenspan Fed; the Soviet-style nationalization of automobile companies, banks, and much of the healthcare industry; government regulation of executive compensation; the appointment of dozens of dictatorial "czars" with unaccountable power to regulate and regiment myriad industries; trillion-dollar-a-year deficits; and an expansion of the powers of the Fed. And we now have a president who believes he has the power to fire corporate executives, nationalize industries, and send unmanned drone bombers to any country in the world on a whim.
Washington, DC, no longer recognizes any limits at all to its powers to socially plan all aspects of American life. This totalitarian impulse is not limited to national politics. The mayor of New York City believes he has the power to regulate all of the eating and drinking habits of New Yorkers, even including how much salt they consume with their meals and what type of soft drinks they can enjoy.
The subtitle of the 1976 edition of The Road to Serfdom, published by the University of Chicago Press, is "A Classic Warning Against the Dangers to Freedom Inherent in Social Planning." The exponential explosion of governmental powers in response to the current, government-generated economic crisis makes The Road to Serfdom as relevant today as it ever was (as Glenn Beck's audience instinctively understands).
This is why the Mises Institute is offering a special 6-week online class, The Road to Serfdom: Despotism Then and Now, under my direction through the Mises Academy, beginning on Wednesday, June 13.
The course will be an in-depth examination and discussion of Hayek's analysis, its relevance to today's world, and how such ideas can be used to put America — and other parts of the world — back on the road to freedom.
The writings of Hayek's mentor, Ludwig von Mises, will also be an integral part of the course, which will utilize selections from Mises's own classic on governmental tyranny, Ominipotent Government. We will discuss Mises's ideas regarding the nature of the state, fallacies of "economic nationalism," the delusions of worldwide economic "planning," governmental "peace schemes" like the United Nations, the delusions of foreign-trade-planning bureaucracies (e.g., NAFTA), the catastrophes caused by monetary "planning," and why German fascism and Marxian socialism were essentially the same thing.
Hayek's insights were remarkable and remain so to this day. He understood and explained the power of ideas: European fascism could never have been adopted without a 25-year propaganda campaign against individualism (basic respect for the individual), classical liberalism, and free-market economics. He pointed out the "fatal conceit" of believing that government bureaucrats could plan an entire society. He explained why socialism — including its fascist variant — meant little more than "equality in restraint and servitude." "Marxism has led to Fascism and National Socialism," he wrote, "because, in all its essentials, it is Fascism and National Socialism [i.e., Nazism]."
Hayek saw through all the rhetorical tricks and gimmicks of the socialists of his day, one of which was the constantly repeated refrain that socialism and government planning were inevitable; therefore, it is futile to oppose them. Nor did he fall for the gimmick of wrapping totalitarian socialism in the mantle of the god of democracy. Government planning is inherently incompatible with both democracy and the rule of law in the long run, he explained, and leads to some degree of economic dictatorship. Any business person who has had to deal with the dozens of federal, state, and local government regulatory agencies knows that economic dictatorship is a key feature of the current American political system.
The worst always rise to the top of the political heap under a regime of government planning, Hayek explained, for they are the ones with the least qualms about brutalizing their fellow citizens and depriving them of their liberties. All of this can only be sustained by what Hayek called "The End of Truth," or the effects of massive government propaganda that demonizes the civil society, individualism, and the system of peaceful voluntary exchange and private property (capitalism), while glorifying all aspects of the state.
The purpose of this course, The Road to Serfdom: Despotism Then and Now, is to educate students about these present dangers and arm them with the intellectual ammunition that they will need to oppose them and champion freedom instead. The totalitarian socialists of the early 20th century understood that they could not succeed unless they first discredited the ideas of freedom. The only way to stop their intellectual descendants ("the totalitarians in our midst," as Hayek would call them) is to counter their totalitarian ideas. Hayek was a hero of society for putting his career as a renowned economic theorist on hold (for most of the rest of his life, it turned out) to lay out one of the most articulate arguments for a free society ever made. We must revisit and strengthen these arguments if we are to choose capitalism and freedom over socialism and serfdom.
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[David Gordon will teach Political Thought through the Ages, a 6-week online course at the Mises Academy, starting June 7, 2012.]
In a famous essay, Benjamin Constant distinguished between the "liberty of the ancients" and the "liberty of the moderns." Ancient political thought subordinated the individual to the community, Constant argued, while modern political liberty respects the rights of individuals.
In this course, we'll use Constant's essay as a guideline to understand the development of political thought. For ancient thought, Plato's Republic will be one of the main works discussed. Does Constant's generalization apply to Plato? Can one go further, as Karl Popper did, and view Plato as an advocate of the "closed society" and thus a precursor of totalitarianism?
Aristotle criticized Plato, and we'll look at his own distinctive political views. Is he in part an exception to Constant's generalization? We'll look at the important argument of Fred Miller, in his Nature, Justice, and Rights in Aristotle's Politics, which finds in Aristotle an anticipation of individual rights.
We will next look at Thomas Hobbes, who abandoned the Greek search for the highest good. Motivated by the fear of violent death, people established an all-powerful state. What, if anything, is wrong with Hobbes's argument?
John Locke, like Hobbes, began from people in a state of nature, but his conclusions differed greatly from those of Hobbes. He supported individual rights, including the acquisition of property. How close did he come to libertarianism?
We'll next look at Jean-Jacques Rousseau, who combined elements of ancient and modern thought in his Social Contract. Is his "general will" a recipe for totalitarianism?
Finally, we will look at libertarian arguments from Lysander Spooner and Murray Rothbard that challenge altogether the authority of the state.
The course consists of six lectures, and here is a tentative schedule:
Week 1: Plato
Week 2: Aristotle
Week 3: Hobbes
Week 4: Locke
Week 5: Rousseau
Week 6: Spooner and Rothbard
For decades, Federal Financial Aid (FFA) programs have been implemented and expanded to make higher education "affordable" for students. The ostensible merits are obvious: loans, grants, and work-study schemes allow students to purchase education without much need for cash or other sources of private funding — a supposed benefit to students who otherwise might not be able to pay for college.
However, as Bastiat instructed, "It almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa." Surely, to the credulous eye, the immediate consequences of FFA have solidified its standing as a model of successful federal intervention. Virtually all students who are admitted to college qualify for FFA, which has helped fuel a substantial increase in matriculation rates. This illusory victory is but a distraction from the later and disastrous consequences that Bastiat warned of.
The unintended consequences of FFA are numerous, indeed. Skyrocketing tuition, high default rates, and pathetic graduation rates — to name a few — are all byproducts of a system that incentivizes inefficiency, largess, and misguided decisions. Oddly, while many students aren't legally permitted to take a sip of alcohol, they are systematically encouraged to contract into years of, essentially, indentured servitude. It is evident that the aggregate result of FFA is net harm.
Even statists, to an extent, are recognizing some of the negative effects of FFA. President Obama warned college officials in his recent State of the Union address that "If you can't stop tuition from going up, the funding you get from taxpayers will go down." While it is mildly encouraging that he implicitly endorses the Bennett Hypothesis — former education William Bennett's assertion that FFA enables colleges to "blithely" raise tuition — his proposed solutions, including increasing campus-based aid to $10 billion and a bubblegum $1 billion "Race to the Top" competition, only offer ever greater federal intervention. In essence, he wants to reward the meth addict for switching dealers.
Naturally, the only solution to eliminating the harmful effects of FFA is to abolish the programs altogether. Of course, this logical proposal is sure to be met with a great deal of skepticism. Perhaps this is understandable. After all, if one were to assume that nothing would change in the absence of FFA — that college officials, students, and other primary actors would exhibit precisely the same actions as they do today — then skeptics might possess a façade of rationality.
Such assumptions, however, are simply fallacious. Abolishing FFA would, in essence, change the laws of physics as we know them in the world of higher education. As Mises wrote, "Rational conduct means that man, in face of the fact the he cannot satisfy all his impulses, desires, and appetites, forgoes the satisfaction of those which he considers less urgent."
Each actor in higher education, therefore, would reprioritize its actions as it strives to, in Mises's words, "substitute a less satisfactory state of affairs for a more satisfactory one."
It is instructive to evaluate how college officials and students might adjust their actions to determine the effects of abolishing FFA. The effects of these actions, including lower tuition rates, increased institutional efficiency, and most importantly, better outcomes for students are overwhelmingly positive.
Institutional Actions The Department of Education (DOE) spends about $30 billion annually on subsidies for higher education, almost all of which is distributed in the form of student loans and grants — $9.6 billion and $17.4 billion, respectively. Much like the housing boom, where easy credit fueled a bubble, this has stimulated demand for higher education. Between 1986 and 2006, a period in which FFA programs were greatly expanded, enrollment increased by 48 percent. This surge was accompanied by a 21 percent real increase in cost between the 1995–96 and 2005–06 academic years.
To be certain, the precise effect that FFA has on tuition is difficult to ascertain. The elasticity of supply, for example, differs greatly among institutions — a price increase at Princeton may not have the same effect on demand as a similar increase at Arizona State University. It can be reasonably concluded, however, that FFA generally leads to higher tuition costs. As Boston University professor Peter Woods explains, FFA is "seen by colleges and universities as money that is there for the taking … tuition is set high enough to capture those funds and whatever else we think can be extracted from parents."
Unquestionably, the abolition of FFA would drastically decrease demand for higher education at current tuition levels. Many potential students would possess neither the willingness nor ability to pay these artificially inflated prices — and rightly so. This would place immense pressure on most colleges to respond with substantial tuition cuts. Failure to do so would result in rather desolate campuses. Since state subsidies generally account for a substantial amount of institutional funding, college officials would also be under immense political pressure to adjust their prices. After all, they would be hard pressed to justify any funding without students.
It's evident that abolishing FFA would result in lower tuition rates. Failure to do so would be, essentially, suicidal for the majority of colleges. But how could they possibly persist without their usual injections of inflated revenue?
It is of little debate that inefficiency and largess are rampant throughout higher education. According to Bowen's law, named for Howard H. Bowen, "Colleges raise all the money they can and spend all the money they can raise." Unlike profit-seeking entrepreneurs, and much like any bureaucracy, their budgets have little regard for optimizing the relationship between expenses and quality. As Bowen explains,
The question of what ought higher education to cost — what is the minimal amount needed to provide services of acceptable quality — does not enter the process except as it is imposed from the outside.… The duty of setting limits thus falls, by default, upon those who provide the money, mostly legislators and students and their families.
Abolishing FFA would force colleges toward greater, albeit still bureaucratic, efficiency. Significant cuts in expenditures could be made painlessly with virtually no effect on their core service. Administrative bureaucracy would be a logical starting point for this. In 2007, it accounted for approximately 26.1 percent of the total workforce in higher education, an increase of 15.2 percent from 1997. Administrative bloat has significantly outpaced growth in spending on instruction-related activities. It has been estimated that a mere 5 percent reduction in administrative bureaucracy would save $1.78 billion annually.
Yet even more obvious ways exist to eliminate waste. For years, colleges have been engaged in a virtual arms race, growing to resemble amusement parks rather than institutions of higher learning. Rock-climbing walls, gourmet-dining commons, and lavish fitness centers have all become commonplace. Washington State even boasts the largest jacuzzi on the west coast and the University of Vermont has a $70 million student center. Oddly, such luxuries are rarely questioned in commentary on escalating tuition prices — while likely not a significant cause, per se, they are undoubtedly symptomatic of a greater problem. Although such grandiosity is highly effective at luring marginal students, it is inconsequential in the mission to educate and thus wasteful. Ending this madness would be another step towards greater efficiency on college campuses.
Perhaps most importantly, academia is in dire need of a cultural revolution. With insurmountable pressure to "publish or perish," teaching is but an afterthought for many faculty. As Walter Block and Roberto McGee noted, "receiving an award for good teaching is considered the kiss of death for an untenured professor." It is unsurprising then that teaching loads plummeted an astounding 36 percent between 1987–1988 and 2003–2004. It has been estimated that such reductions have increased costs by $2,850 per student at public four-year colleges.
Of course some research is indeed productive. However, it is highly unlikely that many of the 21,674 scholarly publications written on Shakespeare between 1980 and 2006, for example, had a demonstrable impact on student success. Colleges have much to save — and students even more to gain — when college officials reprioritize the work of their faculties.
Clearly, significant opportunities exist for colleges to become substantially more efficient. Abolishing FFA, and the necessary tuition cuts that follow, would force officials to eliminate many of the expenditures that are peripheral to educational quality. Additionally, student actions would also respond to these changes.
Student Actions Superficially, abolishing FFA would be detrimental to the millions of students who rely on it to make college "affordable." Without federal assistance, the argument goes, students from poor and middle-class families would be unable to pursue the "American dream." This simplistic thinking, of course, fails to account for the myriad positive effects of purging FFA from higher education. Namely, the effects that would occur when students adjust their actions in a system void of terrible incentives.
Before evaluating these effects, it is worth noting the outcomes FFA has contributed to and thus challenge the primary assertion of the statists that federal intervention in higher education is good for students.
The national six-year graduation rate from four-year institutions is an abysmal 57.3 percent. For African Americans, whose well-being statists are supposedly trying to promote, this figure is 42 percent. In addition to wasted time and the dark cloud of failure for those who don't graduate, 8.8 percent of all borrowers were in default in 2009. In fact, 2 million senior citizens have student-loan debt, 11.2 percent of which are in default.
So, in a typical college auditorium with 100 students, 43 will not graduate within six years (if at all) and nearly ten will eventually fall behind on their loan obligations by more than nine months. Sadly, over 200,000 senior citizens are likely getting harassed by collection goons. All of this and the adult literacy rate has barely moved in the past 15 years, despite increasing rates of college attendance.
Failure, debt, and stagnant illiteracy — this is the American dream that FFA has helped students attain. While statists are quick to place the burden of proof on critics, their interventionists programs have achieved net harm over the past several decades. Nevertheless, it is instructive to postulate how student actions would change in the absence of FFA — and the positive outcomes that would likely result.
Currently, the "just get your degree!" mentality is quite pervasive. For this reason, a student is likely to downplay the significance of selecting a course of study. Similarly, it is commonly advised to attend the "best" institution possible — regardless of factors such as tuition and whether or not living at home is an option. Ultimately, the result of these fallacies is that, upon exiting college, a student is more likely to have poorer prospects for employment and a heavier debt burden than they otherwise would.
It is easy to see how such ill-guided advice was born. After all, it has been estimated that college graduates command a 74 percent premium in the job market. For reasons real, perceived, or some combination thereof, it is generally beneficial to have a degree. However, this does not always suggest that the knowledge and skills acquired while pursuing one are a direct cause of the wage premium or future success. It would be foolish to suggest, for example, that Steve Wynn's entrepreneurial achievements have much, if anything, to do with his English degree. The truly capable student is likely to possess the intellectual prowess and self-discipline needed to be successful regardless of official educational attainment. It is therefore thoughtless to compare college graduates and non–college graduates without accounting for selection bias.
This certainly does not imply that a college education is either a good or bad investment. For some fields, especially technical ones, it might represent the most efficient and financially rewarding option. For others, it is can be an entirely inefficient investment of time and money. This is quite obvious. Every degree type, after all, is indiscriminately given a four-year curriculum. It is rarely questioned why a student studying engineering and another studying business are to attend college for precisely the same number of years. To be certain, there are "reasons" why this is so — but none are particularly compelling.
It is clear that there are numerous factors an individual should consider when making decisions about education. Personal variables, such as interests and abilities are particularly important. Too often, these factors are ignored or given insignificant weight.
In the absence of FFA, a student would be more cognizant of their return on investment (ROI). Of course, actually having to pay for an education, and not merely buy one, would immediately increase their sensitivity to price. A magical fairy (i.e., DOE) would no longer make a student's bills disappear until they graduate or drop out. For some students, this might mean forgoing an expensive college in favor of a more economical one — others might opt to forgo college altogether.
If college is, indeed, a worthwhile investment for an individual, it might be necessary to delay matriculation in order to save money for tuition. Not only would this allow students to mature and develop an appreciation for the real world, it would be invaluable in helping them to be more prudent in selecting a course of study. True, fewer students would eventually enroll in higher education, as critics will likely point out with vigor — but is this worse than having myriad students dropping out with debt and many more graduating with impotent degrees?
A typical college student would also adjust their actions while in college. Currently, students devote an average of 3.2 hours to education on a given weekday in comparison to 3.9 hours to leisure and sports. Additionally, almost half of all full-time students abuse alcohol or drugs (subsidized by taxpayers). While these figures certainly vary by major and institution, it is reasonable to conclude that the preponderance of students could very well hold part-time jobs to cover cost-of-living expenses. Some might even choose to live at home and attend college locally. Perhaps many students could also learn to live without their iPhones, spring-break getaways, and other luxuries.
This is not to disparage college students. They are merely responding to the incentives created by FFA. Many have little choice but to act within the confines of the system — artificially inflated tuition rates in particular — which make debt and waste largely inevitable.
It is evident that without FFA, tuition would decrease and students would have greater incentive to delay college, work while in college, and live frugally (a nightmare to statists!). But what if this still isn't enough to cover the costs of higher education?
Currently, the costs of student-loan default are borne predominantly by taxpayers. If colleges are, indeed, confident that their programs will result in successful outcomes — then why shouldn't they assume this risk? Many colleges already offer institutional loans. In the absence of FFA, administrators would be incentivized to expand these programs to benefit capable students. In addition, private lenders have a strong financial incentive to assist those with promising futures. Nonfederal loans already account for about 16 percent of all educational loans.
Moreover, it is impossible to fully anticipate how entrepreneurs and philanthropists would respond to the abolition of FFA. Private scholarships and support from foundations would likely increase. Human-capital contracts and other innovative measures could flourish and even become the primary source of support for students. Unquestionably, such programs and others yet to be imagined will never come to fruition unless FFA is abolished. The market has incredible solutions to satisfying unmet needs and to allocating resources efficiently.
Absent FFA, students would be more responsible and prudent consumers of their education. This would be indispensable in preparing them for the real world. Until then, most will remain coddled and blissfully unaware of what awaits them in the future.
Conclusion In the case of FFA, the later consequences that Bastiat warned of are clearly disastrous and have resulted in net harm. Abolishing these schemes in higher education would have positive effects for both institutions and students. The current culture of debt and inefficiency can be replaced by one that teaches students responsibility, hard work, and frugality. This should be embraced, not feared.
[The Page-Barbour Lectures for 1931 at the University of Virginia.]
Traditionally, an educational system was conceived of as an organic whole, with distinct lines fixed between its units; and each unit was supposed to exercise its function with strict reference to the units preceding and succeeding it. When we organized our system, this was also our general plan. Our units were the primary and secondary schools, the undergraduate college, the university and the technical school. The intention was that a person should proceed directly through the primary school into the secondary school, and through that into the undergraduate college. On leaving college, he was prepared to enter the university, if he was looking forward to one of the four so-called "learned" professions. Otherwise, if he proposed to occupy himself with one of the sciences, or with some pursuit like agriculture, architecture, engineering, for which a considerable technical training is necessary, he was also prepared to begin that; he was qualified to enter the institute of science or the technical school. I do not say that this intention was always and everywhere carried out; at the University of Paris, in the 16th century, students entered under the Faculty of Law with very little preparation, sometimes with none. In a new civilization like ours, local poverty, poor equipment, the scarcity of teachers, and other difficult obstacles stood in the way of orderly consecutive progress through all these grades. Nevertheless, this was the intention; and in general, probably, it was as well kept to as circumstances permitted.
The intention was, moreover — and this is most important — that the character of this progress through the schools and the undergraduate college, right up to the doors of the university or technical school, should be purely disciplinary. The curricula of the primary and secondary school and of the college should be fixed, invariable, the same for all participants. There should be no elective studies. The student took what was deemed best for him, or left the place; he had no choice. Hence there was no overlapping or reduplication of function anywhere along the line. The college, for example, did not reach back into the work of the secondary school to fill up any holes or take up any slack in the student's career there. If the student came to college unprepared in any particular, he was unprepared, and there was nothing to do about it but to remand him. No more did the college reach forward into the purview of the university or the technical school with any prevocational or preprofessional exercises. Each institution kept strictly to the doings in its own bailiwick, as a unit in a general system.
Such, I say, is the traditional way in which the mechanism of an educational system is supposed to work; and such, speaking broadly and with regard to the force of circumstances, was the way that our mechanism was set up to work. The progress through school and college did, in fact, remain quite strictly disciplinary up to the revolutionary period which set in, as well as one can put a date to it, about 35 years ago. Now, it was of the very essence of this disciplinary character — the very fifth essence, as a medievalist might say — that all the knowledge canvassed in these fixed curricula should be of the order known as formative. Instrumental knowledge, knowledge of the sort which bears directly on doing something or getting something, should have no place there; it should have as strict an institutional quarantine raised against it as cities raise against a plague. This discrimination was quite carefully regarded in our institutions until the revolution of 35 years ago broke it down. I suggest that we look for a moment at the disciplinary fixed curricula made up of purely formative studies, to see what it actually came to in practice.
Let us look at it in this way: let us suppose that an educable person found good schools and a good college, where all circumstances were favorable — there were such — what would he do, and what might be expected of him? After the three Rs, or rather for a time in company with them, his staples were Latin, Greek, and mathematics. He took up the elements of these two languages very early, and continued at them, with arithmetic and algebra, nearly all the way through the primary, and all the way through the secondary schools. Whatever else he did, if anything, was inconsiderable except as related to these major subjects; usually some readings in classical history, geography, and mythology. When he reached the undergraduate college at the age of 16 or so, all his language-difficulties with Greek and Latin were forever behind him; he could read anything in either tongue, and write in either, and he was thus prepared to deal with both literatures purely as literature, to bestow on them a purely literary interest. He had also in hand arithmetic, and algebra as far as quadratics. Then in four years at college he covered practically the whole range of Greek and Latin literature; mathematics as far as the differential calculus, and including the mathematics of elementary physics and astronomy; a brief course, covering about six weeks, in formal logic; and one as brief in the bare history of the formation and growth of the English language.
What was the purpose of this? We may admit, I presume, the disciplinary value of these studies, since that has never been seriously disputed, so far as I know, but we may say a word, perhaps, about their formative character. The literatures of Greece and Rome comprise the longest and fullest continuous record available to us, of what the human mind has been busy about in practically every department of spiritual and social activity; every department, I think, except one — music. This record covers 2,500 consecutive years of the human mind's operations in poetry, drama, law, agriculture, philosophy, architecture, natural history, philology, rhetoric, astronomy, politics, medicine, theology, geography, everything. Hence the mind that has attentively canvassed this record is not only a disciplined mind but an experienced mind; a mind that instinctively views any contemporary phenomenon from the vantage point of an immensely long perspective attained through this profound and weighty experience of the human spirit's operations. If I may paraphrase the words of Emerson, this discipline brings us into the feeling of an immense longevity, and maintains us in it. You may perceive at once, I think, how different would be the view of contemporary men and things, how different the appraisal of them, the scale of values employed in their measurement, on the part of one who has undergone this discipline and on the part of one who has not. These studies, then, in a word, were regarded as formative because they are maturing, because they powerfully inculcate the views of life and the demands on life that are appropriate to maturity and that are indeed the specific marks, the outward and visible signs, of the inward and spiritual grace of maturity. And now we are in a position to observe that the establishment of these views and the direction of these demands is what is traditionally meant, and what we citizens of the republic of letters now mean, by the word education; and the constant aim at inculcation of these views and demands is what we know under the name of the Great Tradition of our republic.
An educational system, was set up in our country, and lavishly endowed in response to the noble sentiment of parents for the advancement of their children. It was to be equalitarian, as the average man understood equality; that is to say, everybody should be regarded as able to take in its benefits. It should be democratic, as the average man understood democracy; that is to say, no one had any natural right to anything that everybody could not get. Very well, then, we said, education, traditionally, is the establishment of certain views of life and the direction of certain demands on life, views and demands which take proper account of the fundamental instincts of mankind, all in due measure and balance; the instinct of workmanship, the instinct of intellect and knowledge, of religion and morals, of beauty and poetry, of social life and manners. The aim at an inculcation of these views and demands is the Great Tradition of a truly civilized society. The traditional discipline, the process which has been found most competent to the purpose, is that chiefly of scrutinizing the longest available continuous record of what the human mind has hitherto done with those instincts; what it has made out of them; what its successes and failures have been; and what is to be learned from both. Bring on your children, and we will put them through this process under the sanction of an equalitarian and democratic theory.
It did not work. We discovered almost at once that it did not work, and that apparently there was no way of making it work. The reason it did not work was that this process postulated an educable person, and everybody is not educable. Far from it, we discovered that relatively very few are educable, very few indeed. There became evident an irreconcilable disagreement between our equalitarian theory and the fact of experience. Our theory assumed that all persons are educable; our practical application of it simply showed that the Creator, in His wisdom and in His loving-kindness, had for some unsearchable reason not quite seen His way to fall in with our theory, for He had not made all persons educable. We found to our discomfiture that the vast majority of mankind have neither the force of intellect to apprehend the processes of education, nor the force of character to make an educational discipline prevail in their lives.
Thus we were faced with a serious dilemma. On the one side was our equalitarian theory, with all the power of a strong sentiment behind it, pushing it on into the test of practice. On the other side was the fact that an inscrutable Providence had most signally failed to do its part towards enabling our theory to stand this test. We had, then, the choice of revising our theory, or of letting it stand and sophisticating our practice into some sort of correspondence with it. If we let go of the equalitarian idea in our theory, the democratic idea would disappear with it; for if all persons are not educable, then some persons may pretend to a distinction to which all others may not pretend, whereby education becomes a kind of class-prerogative; and this is undemocratic.
We made our choice, leaving our theory unrevised and unexamined; it remains today the theory upon which our system undertakes to operate. I repeat for the sake of emphasis, that as far as I know, this theory has never been formally brought before the bar of letters for examination and critical judgment. Then, having made our choice, we set out at once on the business of overhauling, recasting, readjusting and tinkering the mechanics of our system; and this has gone on without cessation for 35 years, and so energetically as to degenerate at last into a mere panicky license of innovation. Plan after plan, method after method, program after program has been hailed and touted as the one thing needful, put into effect, carried on for a while, and then become outmoded in favor of some other; our shores are strewn with their wreckage —
Quae regio in terris nostri non plena laboris?
This article is excerpted from The Theory of Education in the United States (1932), chapter 6.
An Austrian Perspective on the History of Economic Thought, the capstone of Murray Rothbard's career, is one of the greatest works of intellectual history written in the 20th century. It is a massive book, over 1,000 pages of small print, and students often find it hard to read. This course will cover the second volume. Students who take it will gain a thorough knowledge of some of the key themes of the book.
People with three different interests will find this course of value.
First, if you want to learn Austrian economics, it is essential to grasp how this system grew out of previous economic thought. Austrian economics from the time of Carl Menger developed in reaction to the classical economics of David Ricardo and his successors, down to John Stuart Mill. Also, to understand the monetary theory of Mises, Hayek, and Rothbard, knowledge of the 19th-century British debates between the Banking and Currency Schools is extremely helpful. Rothbard's book is an unrivalled source of insight on these vital topics.
Second, if you are interested in the thought of Murray Rothbard, you need to read An Austrian Perspective. It contains his views on many topics either not otherwise available or not discussed elsewhere in so much detail. These include
the nature and problems of Bentham's utilitarianism,why John Stuart Mill is a confused thinker,the basic flaws of Marxist economics, andthe contributions of Say and Bastiat.Third, if you are interested in intellectual history, you will find in Rothbard's book a treasure trove of insights.
What are the theological roots of Marxism?
What is the underlying pattern of thought of German romanticism?
What is the basis of Hegel's dialectic?
What is the significance of Bentham's panopticon project?
These are only a few of the topics Rothbard addresses in the book.
The course consists of six weekly lectures, beginning April 24. Each lecture will last about one hour, followed by a half hour for questions and discussion. Weekly quizzes will be offered for those who wish to take the course for credit. The course does not presuppose knowledge of the first volume of Rothbard's history.
Here is a tentative schedule for the course:
Week 1: J.B. Say and His Followers: How Say Anticipated Austrian Economics. Rothbard's Method in Writing the History of Economic Thought.
Week 2: Jeremy Bentham and Utilitarianism; The Ricardian System.
Week 3: The Bullionist Controversy and the Banking and Currency Schools.
Week 4: John Stuart Mill: Ricardianism Revived and Modified.
Week 5: Marxism: Philosophy and Economics.
Week 6: Bastiat and the French Laissez-Faire School.]
Copyright © 2012 by the Ludwig von Mises Institute. Permission to reprint in whole or in part is hereby granted, provided full credit is given.