Economics Questions

Re: Is David Friedman an Austrian?

Clayton — Thu, 28 Jul 2011 08:37:30 GMT

Mises' support for state Opera.

As a minarchist (and, as you point out, the 'min' wasn't truly 'min'), Mises definitely had some inconsistencies.

Clayton -

Re: Is David Friedman an Austrian?

Smiling Dave — Thu, 28 Jul 2011 08:08:56 GMT

2. Why would you identify the Chicago school with defense of the Federal Reserve, given that it was Chicago school economists who argued that the Fed was largely responsible for the Great Depression as well as subsequent macro problems?

Because the Chicago school argues that the Fed, if it knew what it was doing, could have averted the Great Depression and the susequent macro problems. The school likes the intstitution of the Fed in theory, seeing it as a force for good in the right hands, merely arguing that its powers were misused.

An Austrian would argue that the mere existence of the Fed, no matter who is in charge there or what he does [besides twiddling his thumbs], leads to problems.

Re: Is David Friedman an Austrian?

David Friedman — Thu, 28 Jul 2011 07:21:28 GMT

1. I am not an Austrian; methodologically I consider myself part of the Chicago school.

2. Why would you identify the Chicago school with defense of the Federal Reserve, given that it was Chicago school economists who argued that the Fed was largely responsible for the Great Depression as well as subsequent macro problems?

3. I suggest that identifying schools of thought by particular policy positions that some of their members hold is a bit risky. Among other things, it will require you to identify the Austrians as socialists, given Mises' support for state Opera.

David Friedman

Re: Is David Friedman an Austrian?

Jeremiah Dyke — Wed, 04 Aug 2010 19:20:09 GMT

@ David Friedman

Thanks for posting the links, i have bookmarked them.

Re: Is David Friedman an Austrian?

David Friedman — Wed, 04 Aug 2010 15:12:38 GMT

"But didn't Hume neglect the matter of wealth effects, which was so perceptively discussed by his rough contemporary Richard Cantillon? Although, to be fair to Hume, he probably wasn't able to read Cantillon's posthumously published book until (if ever) after he wrote his economics work: a likelihood not recognized by Rothbard, who was critical of Hume being a "step back" from Cantillon in his history of economic thought."

I don't know--I would have to look through Cantillon to see. I distrust anything Rothbard wrote on Smith and his contemporaries, since parts of his discussion are blatantly dishonest. For example, he offers as evidence that Smith wasn't really a libertarian the fact that he proposed an export tax on wool--without mentioning that what Smith was proposing was to replace an absolute ban on the export of wool, enforced by ferocious regulations, with a tax. He compares Smith unfavorably with Turgot, claims (falsely--but it could be an honest mistake) that Smith was in favor of government education—and fails to mention that Turgot proposed to the King of France a complete government takeover of the existing French educational system.

For a more extensive and detailed critique of Rothbard on Smith and his contemporaries, see:

http://groups.google.com/group/humanities.philosophy.objectivism/msg/cc3e3b99db7ba2b1?hl=en&&q=Smith+Vincent+Cantillon+++author%3ADavid+author%3AFriedman

It's a post by me in a Usenet thread, in which I describe that part of Rothbard's book as a hatchet job, and defend that claim. David Gordon has an essay attacking me for it on the Mises site:

http://blog.mises.org/5182/friedman-contra-rothbard/

And I have some responses in the comment thread.

Re: Is David Friedman an Austrian?

Joe — Wed, 04 Aug 2010 15:09:15 GMT

To back up Grayson, see this thread

It would be like watching a MLB teams single A affiliate, judging them on MLB standards, and concluding that the major league team had bullpen issues.

Re: Is David Friedman an Austrian?

Lagrange multiplier — Wed, 04 Aug 2010 15:05:15 GMT

Grayson Lilburne:
As has already been pointed out to you, this is a site predominantly populated by novices. To infer what "Austrians understand" about mainstream economics from the content of posts here is frankly ridiculous.

I wouldn't disagree with you, except for the stubborn hostility to alternative economic viewpoints. It's either Austrian or it's wrong. No need to look into it. That's all I was addressing: the double standard for "closed-minded" mainstream economists while Austrianism is an unquestioned dogma here.

Re: Is David Friedman an Austrian?

Daniel James Sanchez — Wed, 04 Aug 2010 14:50:25 GMT

Most disappointing fact I've learned from this forum: Austrians hate that they are neglected by mainstream economics, but they have little to no understanding of mainstream economics.

As has already been pointed out to you, this is a site predominantly populated by novices. To infer what "Austrians understand" about mainstream economics from the content of posts here is frankly ridiculous.

Re: Is David Friedman an Austrian?

Lagrange multiplier — Wed, 04 Aug 2010 14:03:25 GMT

David Friedman:
This is part of a subset of comments in the thread that leave me wondering where in the world people get their ideas of other people's views--and suspecting that the answer is "from sources all of which are hostile to those other people."

Most disappointing fact I've learned from this forum: Austrians hate that they are neglected by mainstream economics, but they have little to no understanding of mainstream economics.

Re: Is David Friedman an Austrian?

Smiling Dave — Wed, 04 Aug 2010 06:49:15 GMT

"Is there a branch of the Chicago School that does defend the Federal Reserve? My father argued that it was largely responsible for the Great Depression."

Did he argue that they caused it by their very existence [akin to assigning a monkey to grade students' tests, he can succeed only randomly], or by making an AVOIDABLE mistake?

If the latter, then the Chicago position may be that a well educated intelligent Fed would be a good thing. If the former, then End the Fed in any case.

Which is it?

Re: Is David Friedman an Austrian?

Daniel James Sanchez — Wed, 04 Aug 2010 06:44:27 GMT

I remember my father commenting, possibly in a speech or essay, that it was easier to say what we had learned about the quantity theory in the past century than what we had learned in the past two centuries, since large parts of what we now know--and what people didn't know earlier in the 20th century--could be found in Hume.

Hi Dr. Friedman!

I'm as much of a fan of Hume as just about anyone. But didn't Hume neglect the matter of wealth effects, which was so perceptively discussed by his rough contemporary Richard Cantillon? Although, to be fair to Hume, he probably wasn't able to read Cantillon's posthumously published book until (if ever) after he wrote his economics work: a likelihood not recognized by Rothbard, who was critical of Hume being a "step back" from Cantillon in his history of economic thought. (Hume's Of Money was published in 1742. His Political Discourses were published in 1752. Cantillon's treatise wasn't published until 1755.)

Re: Is David Friedman an Austrian?

David Friedman — Wed, 04 Aug 2010 06:23:44 GMT

"Well, yeah, you can even find it in Hume."

I remember my father commenting, possibly in a speech or essay, that it was easier to say what we had learned about the quantity theory in the past century than what we had learned in the past two centuries, since large parts of what we now know--and what people didn't know earlier in the 20th century--could be found in Hume.

Re: Is David Friedman an Austrian?

David Friedman — Wed, 04 Aug 2010 06:21:57 GMT

"Did Friedman ever acknowledge that money can be privately produced?"

Of course. How could anyone familiar with monetary history deny that? The U.S. had private bank money in the 19th century.

That's like asking if he ever acknowledged that two and two are four, or that England exists.

This is part of a subset of comments in the thread that leave me wondering where in the world people get their ideas of other people's views--and suspecting that the answer is "from sources all of which are hostile to those other people."

As it happens, I remember pointing out to my father that a private money issuing industry would, in perfect competitive equilibrium, produce precisely the behavior of the money supply that he had argued was optimal in the book _The Optimal Quantity of Money and Other Essays_. He did not express surprise.

Re: Is David Friedman an Austrian?

nirgrahamUK — Wed, 04 Aug 2010 00:33:32 GMT

sorry, i was trying to help you clean up some confusion you left lying around. nevermind.

Re: Is David Friedman an Austrian?

Caley McKibbin — Wed, 04 Aug 2010 00:29:01 GMT

nirgrahamUK, don't make a mountain out of a grain of sand.