7 ms·

Nothing went wrong with economics. The austrian school of economics predicted the great depression, the economic failure of communism, the '01 nasdaq crash, and

by voisine 17y ago

Nothing went wrong with economics. The austrian school of economics predicted the great depression, the economic failure of communism, the '01 nasdaq crash, and the recent housing bubble. If you keep looking to the keynsians after the stagflation of the 70's completely refuted the core tenant of their entire economic view, well, you've got no one to blame but yourself.

philwelch 17y ago
Economics isn't not a battle between Keynes and the Austrians, though. There are numerous neoclassical schools with varying degrees of prominence. Greenspan, for instance, was a monetarist, not a Keynesian. Other fields include behavioral economics. Meanwhile, while the early Austrian School provided a lot of important insights, most of them have been accepted by the neoclassicals. Most of "Austrian economics" today is merely an apologia for anarcho-capitalism, popular among libertarians who have studied the early Austrians, lack grounding in economics otherwise, and are more interested in rationalizing libertarian economic policies than honestly learning economics.
- gasull 17y ago
  while the early Austrian School provided a lot of important insights, most of them have been accepted by the neoclassicals. Neoclassicals are using some of the rhetoric of the Austrian School, but they are doing the opposite in almost every single issue: central banking, fractional-reserve banking, intellectual property, etc.
  - philwelch 17y ago
    Those are three of very many issues: you failed to mention trade barriers, taxes, spending, government debt, regulations, price controls, rent controls, minimum wage, subsidies, and welfare. All issues which Chicago School economists agree with Austrians, and which a surprising number of other neoclassicals agree too.
    - tc 17y ago
      There is really no need to pick a fight between the Austrians and the Chicago School. Austrians are sympathetic to the Chicago School, particularly as they have adopted many Austrian insights. In fact, many of today's Austrians come from a monetarist background (Friedman as a gateway drug?), but later came to see how it is misguided and incongruous to oppose price controls on rent but support them on capital (interest rates). The real conflict today is between free market supporters (Austrians and most monetarists) and the supporters of big government (Keynesians and the mercantilist-style neoclassicals). Unfortunately the latter have been commanding government policy for some time.
      - philwelch 17y ago
        "There is really no need to pick a fight between the Austrians and the Chicago School." Ha! Rothbard would roll in his grave to hear that. Also, how are interest rates a price control? I always thought time value of money was a relatively uncontroversial idea.
        tc 17y ago
        No one objects to interest. I was referring to central bank interest rate targets as opposed to floating free market interest rates. As for Rothbard and the Chicago School -- yes, I'm aware of that.
- dantheman 17y ago
  One of the key insights of the Austrian school is that historical mathematical analysis while useful for entrepreneurs is not economic law and is merely a forecast. You cannot predict accurately what lowering the interest rate will do, you can say that printing money causes inflation, but cannot specify how prices will actually change.
- kirubakaran 17y ago
  Are there some interesting engaging books that I can read to honestly learn about economics without having to pick a side or hold political beliefs? (something that will be really useful for me to understand the world better... not something that will attempt to convert me...)
  - tc 17y ago
    The most insidious form of conversion is when you don't even realize a viewpoint is being advanced on you, instead believing it to be 'objective.' Every model of the world has certain assumptions, certain axioms, built into it. To maintain the ability to think for yourself, the best material to read are those works that are very clear and honest about their axioms. In a very real sense, those are the most 'scientific' works. But those same works will often appear more partisan as well, in the same way that a research paper is both more scientific and more focused on one model of the world than is a generic textbook. I recommend starting with Murray Rothbard's For a New Liberty, which takes a very bottom-up approach to economic principles: http://mises.org/rothbard/newlibertywhole.asp http://mises.org/rothbard/newlibertywhole.asp There are plenty of other excellent books and materials available freely from the Mises Institute as well: http://mises.org/literature.aspx http://mises.org/literature.aspx http://mises.org/media.aspx http://mises.org/media.aspx
    - trominos 17y ago
      Your point is fairly well-argued but, I think, essentially untrue. > "Every model of the world has certain assumptions, certain axioms, built into it." This is almost a tautology. Of course it's impossible to make a truly objective model of the world, particularly if by "model of the world" we really mean "economic model that has a priori had most of the nuance stripped out of it". There's no truly objective way to approach economics, yes -- because economies are so enormous and so complex that to study them you have to ignore most of what's actually going on. But that doesn't mean all approaches to economics are equally objective, and you're wrong to suggest that objectivity of analysis isn't worth considering. I'm quite sure that some economists have less of an axe to grind than others -- and as a result have more dedication to getting at the truth -- and I'd bet that they get better answers than their competition does. They're the ones I'd like to learn from. And I'd imagine that they wouldn't adhere too closely to any given philosophy, because it seems unlikely that any one philosophy is completely right. So, having said all that, I'd like to reiterate the grandparent's request: does anybody know of any primers to economics that seem concerned more with trying to get the right answers to the questions of economics than with pushing a particular philosophy?
trominos 17y ago
This comment is completely useless without some kind of citation or reference. (It's also annoyingly smug.)
- tc 17y ago
  Sometimes you just assume that people have kept their eyes open -- or at least have Google at their disposal.

by voisine 17y ago

philwelch 17y ago

Economics isn't not a battle between Keynes and the Austrians, though. There are numerous neoclassical schools with varying degrees of prominence. Greenspan, for instance, was a monetarist, not a Keynesian. Other fields include behavioral economics. Meanwhile, while the early Austrian School provided a lot of important insights, most of them have been accepted by the neoclassicals. Most of "Austrian economics" today is merely an apologia for anarcho-capitalism, popular among libertarians who have studied the early Austrians, lack grounding in economics otherwise, and are more interested in rationalizing libertarian economic policies than honestly learning economics.

gasull 17y ago
while the early Austrian School provided a lot of important insights, most of them have been accepted by the neoclassicals. Neoclassicals are using some of the rhetoric of the Austrian School, but they are doing the opposite in almost every single issue: central banking, fractional-reserve banking, intellectual property, etc.
- philwelch 17y ago
  Those are three of very many issues: you failed to mention trade barriers, taxes, spending, government debt, regulations, price controls, rent controls, minimum wage, subsidies, and welfare. All issues which Chicago School economists agree with Austrians, and which a surprising number of other neoclassicals agree too.
  - tc 17y ago
    There is really no need to pick a fight between the Austrians and the Chicago School. Austrians are sympathetic to the Chicago School, particularly as they have adopted many Austrian insights. In fact, many of today's Austrians come from a monetarist background (Friedman as a gateway drug?), but later came to see how it is misguided and incongruous to oppose price controls on rent but support them on capital (interest rates). The real conflict today is between free market supporters (Austrians and most monetarists) and the supporters of big government (Keynesians and the mercantilist-style neoclassicals). Unfortunately the latter have been commanding government policy for some time.
    - philwelch 17y ago
      "There is really no need to pick a fight between the Austrians and the Chicago School." Ha! Rothbard would roll in his grave to hear that. Also, how are interest rates a price control? I always thought time value of money was a relatively uncontroversial idea.
      - tc 17y ago
        No one objects to interest. I was referring to central bank interest rate targets as opposed to floating free market interest rates. As for Rothbard and the Chicago School -- yes, I'm aware of that.
dantheman 17y ago
One of the key insights of the Austrian school is that historical mathematical analysis while useful for entrepreneurs is not economic law and is merely a forecast. You cannot predict accurately what lowering the interest rate will do, you can say that printing money causes inflation, but cannot specify how prices will actually change.
kirubakaran 17y ago
Are there some interesting engaging books that I can read to honestly learn about economics without having to pick a side or hold political beliefs? (something that will be really useful for me to understand the world better... not something that will attempt to convert me...)
- tc 17y ago
  The most insidious form of conversion is when you don't even realize a viewpoint is being advanced on you, instead believing it to be 'objective.' Every model of the world has certain assumptions, certain axioms, built into it. To maintain the ability to think for yourself, the best material to read are those works that are very clear and honest about their axioms. In a very real sense, those are the most 'scientific' works. But those same works will often appear more partisan as well, in the same way that a research paper is both more scientific and more focused on one model of the world than is a generic textbook. I recommend starting with Murray Rothbard's For a New Liberty, which takes a very bottom-up approach to economic principles: http://mises.org/rothbard/newlibertywhole.asp http://mises.org/rothbard/newlibertywhole.asp There are plenty of other excellent books and materials available freely from the Mises Institute as well: http://mises.org/literature.aspx http://mises.org/literature.aspx http://mises.org/media.aspx http://mises.org/media.aspx
  - trominos 17y ago
    Your point is fairly well-argued but, I think, essentially untrue. > "Every model of the world has certain assumptions, certain axioms, built into it." This is almost a tautology. Of course it's impossible to make a truly objective model of the world, particularly if by "model of the world" we really mean "economic model that has a priori had most of the nuance stripped out of it". There's no truly objective way to approach economics, yes -- because economies are so enormous and so complex that to study them you have to ignore most of what's actually going on. But that doesn't mean all approaches to economics are equally objective, and you're wrong to suggest that objectivity of analysis isn't worth considering. I'm quite sure that some economists have less of an axe to grind than others -- and as a result have more dedication to getting at the truth -- and I'd bet that they get better answers than their competition does. They're the ones I'd like to learn from. And I'd imagine that they wouldn't adhere too closely to any given philosophy, because it seems unlikely that any one philosophy is completely right. So, having said all that, I'd like to reiterate the grandparent's request: does anybody know of any primers to economics that seem concerned more with trying to get the right answers to the questions of economics than with pushing a particular philosophy?

trominos 17y ago

This comment is completely useless without some kind of citation or reference. (It's also annoyingly smug.)

tc 17y ago
Sometimes you just assume that people have kept their eyes open -- or at least have Google at their disposal.