Posts tagged Ludwig von Mises

Essay on Ideological Thinking Revisited

Ideological Thinking Revisited

Tibor R. Machan

Following the December 15th Republican “debate,” New York Times columnist Paul Krugman wrote once again about the evils of ideological thinking.

Krugman began piece by criticizing Mitt Romney for his repeated vacillations about which public policies he supports, which he opposes, a problem Romney has been plagued by most of his political life. But Krugman didn’t do what follows form this, namely, praise Romney for being a pragmatist, for his agility and flexibility. No, he decried the former Massachusetts’s Governor’s various views. And then he moved on to a more familiar target, one he has been shooting at every chance he gets. This is Representative Ron Paul’s integrity and consistency. Calling it ideological thinking, Krugman considers this a far great failing than anything he could find with Romney.

As Krugman summarizes all this, “In a way, that makes sense. Romney isn’t trusted because he’s seen as someone who cynically takes whatever positions he thinks will advance his career – a charge that sticks because it’s true. Paul, by contrast, has been highly consistent. I bet you won’t find video clips from a few years back in which he says the opposite of what he’s saying now. Unfortunately, Paul has maintained his consistency by ignoring reality, clinging to his ideology even as the facts have demonstrated that ideology’s wrongness.”

Ignore, please, for the moment that Krugman is every bit as ideological as would be anyone who tries to make sense of political economy, just one field of study that tries to learn generalities from the past so as to prepare for the future. The way this is done is by the identification of certain principles and then implementing them with the expectation that bad results will be avoided and good ones fostered. There really is no practical field, such as farming, medicine, engineering, child raising, and so forth, that can carry forth without this approach. Call it theoretical or ideological thought, no one who even dabbles in them can avoid them.

Ron Paul’s theoretical guidance comes from a certain school of free market economics, laid out by the likes of Ludwig von Mises and F. A. Hayek. (Other free market schools are those of Milton Friedman–the Chicago School–and those of James Buchanan–the Virginia School.) Massive volumes lay out these positions, in more or less technical ways, as they do the positions of Paul Krugman and his idol, John Maynard Keynes. It is routine in the social sciences for up and coming scholars and researchers to hitch their wagon to some earlier leader in their field. Just check out sociology or anthropology–they all follow this pattern. Krugman is no exception–he has hitched his wagon to Keynes and follows Keynes’ pragmatic, erratic economic thought. It happens to accommodate his hostility to principles. It doesn’t demand any integrity in one’s thinking; only expediency counts.

Because we are talking here about how political economy should be approached, or if you will macroeconomic theory, the impact of unprincipled thinking is quite remote. It is difficult to tell which results of such a mishmash political-economic thinking come from which ideas–as I have argued before, it is like getting food poisoning or, alternatively, health benefits from a smorgasbord meal which contains many diverse ingredients. But if you consider some areas of concern that are more immediately relevant to one’s life, the unprincipled approach shows its damage right away.

For example, it is generally understood that people with certain medical maladies should stick to a certain diet–think of diabetics. In engineering, medicine, nutrition, farming and the rest the practitioners learn their general principles and implement them in the course of their practice. Or consider morality; it is pretty much the case that lying and cheating ought to be avoided. Eve more drastically, deploying coercion in sexual relations is not just immoral but outright criminal. Everyone must, therefore, practice consensual sex so that rape, for example, is never acceptable. That is the principle of the thing, no exception.

Yet by Krugman’s lights to prohibit rape in all cases, as a matter of one’s ideology, is a serious flaw in one’s character, just as sticking to free market economic analysis is supposed to be in Ron Paul’s thought. As Krugman says, “Paul has maintained his consistency by ignoring reality, clinging to his ideology even as the facts have demonstrated that ideology’s wrongness,” but the only case he offers to illustrate the alleged wrongness is that Paul and his allies have warned about inflation for years and yet we are not seeing inflation break out all over. (Of course, there are those, rather more subtle economists, who see it break out in numerous hidden way–like postponing the destruction of the value of money for a while, kicking the can down the road to confront the mess later, e.g., by our grand children.) In other words, inflation can be prevented in various clever ways but not without eventual dire consequences. So here, too, Krugman is off.

What Paul insists on is consistency in one’s economic theorizing, something that every bona fide science insists upon. Pseudo-sciences like astrology and tarot reading don’t, with the result that they accomplish nothing useful at all. Most of Krugman’s ad hoc economics is like that–fancy footwork without any useful wisdom in its wake.

The ideology that Krugman follows despite denying it–just as many pragmatists deny that they firmly stick to some ideas–is the economic philosophy of coercion, of the state’s regimenting economic agents at nearly every turn. At no time will coercion as such be frowned upon by Krugman–it would be ideological to do so, in his view.

But the issue isn’t whether ideology is admissible but which ideology is sound, which bogus.

Column on Krugman’s Trashy Debating Style

Krugman’s Trashy Debating Style

Tibor R. Machan

Looks like critics of the free market are at their whit’s end. At least one of the most prominent of them clearly appears to be.

Princeton economics professor and columnist for The New York Times Paul Krugman has always been discourteous to those with whom he disagrees but his latest exhibition of his way of going about debating issues takes the cake. It used to be that he would call everyone who finds even the slightest merit in free market economic theory a “market fundamentalist,” suggesting thereby that such folks are, like all fundamentalists, mindless in their convictions and merely blindly follow some sacred text or book of instructions. Besides wishing to score points for his statist economic politics by smearing the ideas and methods of his intellectual adversaries, he also regularly distorts the scholarly lay of the land by claiming that America is in the grip of such fundamentalism. This basically meant that throughout the academic landscape departments of economics are filled by people who hold and teach views similar to those held by the late Milton Friedman, F. A. Hayek and Ludwig von Mises (among others).

While these thinkers did consider the free market superior to its statist alternatives–ones that give a decisive role to government intervention in the lives and activities of market agents–they did not, of course, hold identical views. Nonetheless, Krugman lumps them all as fundamentalists. Moreover, he rarely takes on living supporters of the free market, such as James Buchanan or Gary Becker, not to mention such current members of the Austrian School as NYU’s Israel Kirzner. Might we suppose that he doesn’t wish to engage anyone in a dialogue about economic policy but merely discredit them once they could not respond? (Just after Milton Friedman died, he and his frequent co-author Robin Wells penned an extensive and it turns out demonstrably inaccurate essay on Friedman for The New York Review of Books.) Also, despite Krugman’s allegation, there is plainly no dominance of free market thinking in American universities. Mainstream economists are mostly followers of such notables as Paul Samuelson and, of course, John Maynard Keynes, with quite a few who are influenced by the political economics of welfare statism. At the universities where I have taught throughout the last 40 plus years, economists may have been respectful toward free market theorists but were by no means fully in line with their views. So even in this elementary matter, Krugman has it wrong.

But the claim that the country is in the grips of market fundamentalism is also mistaken if it’s meant to apply to official public policies bearing on economic matters. Just for starters, the financial market place has been heavily regulated for over a hundred years–consistent free market theorists usually don’t favor a central bank such as the country’s Federal Reserve Bank (even though, somewhat paradoxically, Alan Greenspan had been such a consistent free market thinker before he was selected to head up the Fed). Furthermore, the plethora of government regulation of various elements of the economy, including virtually all professions (apart from the clergy, journalism, and writers of all stripes who are protected against such regulation by the First Amendment of the U. S. Constitution), is decisive evidence that free market thinking does not dominate public policy in America.

Yet, despite all this, here is a Nobel Laureate and professor from a most prestigious academic institution and columnist for a most distinguished newspaper who keeps trying to distort reality. Why? But I will not speculate, again. Who knows what Krugman’s agenda is.

One thing does clearly stand out in his approach to making a case for more and more government involvement in the economy. This is that he relies extensively on name calling, on besmirching those with whom he disagrees. In a recent column he went so far as to dismiss all those who hold views opposed to his as zombies! Yes, zombies. That means that people, some very distinguished scholars, who are convinced that a public policy of laissez-faire when it comes to a country’s economic affairs is best are all mindless. They do not merely think mistakenly but cannot think at all.

When a critic of a position needs to resort to this kind of technique with which to attract readers of his missives to his own outlook, it suggests that the intellectual merits of that position are truly hopeless. And that is precisely so. Statism in economics has for a long time been proven and shown to be utterly unsupportable, be this the Draconian sort one found in Soviet Russia and finds in North Korea or the less drastic kind that has just produced the worldwide financial meltdown, namely the more or less interventionist welfare state.

Column on Planners and Earthquakes

Planners and Earthquakes

Tibor R. Machan

It is no fun to use the Haiti earthquake as an object lesson–it may take away from the first business of the day, namely, to extend one’s generosity to those who have been devastated by it. Still, once one has done one’s part to help, to send off ones support, there are some lessons, also, to be learned.

One of these is that the effort by governments to plan our lives, to pursue collective economic and related goals, faces yet another obstacle. It is only a reminder, of course, since the fact of which it reminds us surrounds us day in and out, never mind the magnitude of the disruption. Even the daily weather should call to mind the impossibility of massive government planning. Yet the most powerful obstacles to government planning aren’t the phenomena of impersonal but certain basic facts of human nature.

Human beings are the same in only very limited respects. Yes, we all need nourishment and air and shelter and the like but even these we need in a great variety of different ways. Even that prominently promoted idea of universal health care cannot be delivered in a one-size-fits-all fashion since people differ in what can cure their maladies, what ails them, and even in how much value excellent health is to them–a mountain climber, for instance, needs to be far more fit than a columnist!

Even at the elementary levels people are very different from one another. When we factor in their enormously diverse goals and purposes and tastes and preferences, the problem of devising plans for them from afar–a national or state capitol, let alone some international center of political power–multiplies beyond imagination. Even such a widely embraced public policy as is pursued by, say, the Food and Drug Administration of the US Federal Government turns out to be absurd, given how different people are with respect to what kind of medicines will help them, what they are allergic to, what the proper dosage is that will serve them well. Not even their proper weight can be calculated without serious qualification–we have just learned, from the UK, that having a sizable rear end can be a health benefit for some!

The brilliant father of the Austrian School of economics, Ludwig von Mises, and his Nobel Laureate pupil, F. A. Hayek, along with several of their very bright students have shown in the early parts of the 20th century that government planners face literally insurmountable hurdles. If one remembers that their plans are supposed to suit millions and millions of different human individuals, not ants or bees that tend to be pretty much indistinguishable from each other, the notion that their lives can be planned by bureaucrats in far off places becomes evident nonsense. What the economist demonstrated with their sophisticated theories (and what recent history bore out so clearly) is that no one, no group of policy wonks, can figure out how to make us all prosper, how to anticipate what will be best for us economically. Only the spontaneous workings of the free market can do this, wherein the great variety of prices manage to reflect better than anything else can what it is that people need and want and how to fulfill it all by way of a enormously complex system of supply and demand.

A massive earthquake is only a reminder of what the Austrian economists taught with their research and theoretical work–the most reasonable economic system is one that lets decisions be made on the ground, among the free men and women who make the market do its work. Of course, hardly any politicians can readily admit this since they must always pretend that without their meddling in our lives we would all remain inept and helpless. But as Adam Smith and many other economists have made clear, the best plans are laid by those who must live with them, not by people in high places. Even when a disaster like that in Haiti hits, and when worldwide efforts are extended to try to lessen its blow, it must be those at ground zero who ultimately decide what sort of help, and where, is most fruitful.

Government planning is not only an enemy of human freedom but also a major obstacle to economic efficiency.