To put it bluntly, what are the major differences between the two and whats the deal between the feuding?
I'll admit, as far as I know I have not read any explicit "Masonomics" books, but my understanding of the difference is that George Mason tends to stress Hayek more along with more "mainstream" (hopefully I'm not angering anyone with that) monetary theories and methdological approaches. They also seem to cite Mises as supporting their views (FRB etc) while downplaying Rothbard. Mises Institute is more Rothbard (who they say is more in tune with Mises) and the "traditional" Austrian approach. Am I missing any other significant distinguishes?
So whats the drama between them all? Judging by various posts on the internet they appear to have different academic ideas and some of their arguments can get a little personal at times.
Finally, what happened to Gene Callahan? I remember reading his book along time ago and loved it, and now I hear he isn't an Austrian anymore (although he frequents over at Coordination Problem and generally bashes Rothbard). Then I read on a post here he got mad over his book deal with the MI, but I don't know if this is trash talking or not.
And for a bonus question, if you had to pick a "side", which do you prefer? Honest.
For me, Mises Institute.
Just one last, quick note: I do not want to encourage anyone to abandonthe Mises Institute. What I want is to seegood economics, and good monetary economics especially, drive out bad economics there. The more people who chime in with reasonable and informed arguments, the more this will happen. There is a great Mises-Rothbard legacy to be preserved, and no organization can preserve it better than MI. But that legacy isn't insular (Mises and Rothbard were both very widely read, and they took sound arguments from wherever they could), and it isn't "praxeological" of the cartoon-version that eschews any reference to historical facts. It's a legacy of serious and factually-informed scholarship, aimed at discovering truth, and not at defending dogmas by hook-and-crook.
So come on, serious Austrians: make yourself heard loud and clear; drown out the tedious and goofy Rothbard-impersonator lounge act and put some real economics in its place!
So anyone who is for full-reserve banking has all their money in a fee-based safekeeping service, not a bank? I have my money in a bank, and I'm not worried about bank runs. Am I being needlessly risky?
The argument is being spun out by both sides like it's obvious, but cursory assessment seems to indicate there is little worry of a bank run if you only have a few grand in the bank. Can someone show me the math that says the risk is not worth it?
Because Selgin sounded a little sore at the beginning, but now he's sounding more and more reasonable. Especially the final post above.
Why anarchy fails
z1235: Selgin: Fractional reserve banking dates at least from the mid-17th century. Theft, coin-clipping, counterfeiters, fraudsters (legitimized by - and in symbiosis - with kings), and brainwashed (and/or) coerced morons have existed way before that and still exist today. What's your point?
Selgin: Fractional reserve banking dates at least from the mid-17th century.
Fractional reserve banking dates at least from the mid-17th century.
Theft, coin-clipping, counterfeiters, fraudsters (legitimized by - and in symbiosis - with kings), and brainwashed (and/or) coerced morons have existed way before that and still exist today. What's your point?
Well said. This is a blatant logical fallacy. This is the type of "evidence" by the way, that is offered more extensively by Selgin (and White). There really isn't much more then this.
BTW Z, this is also the type of [fallacious] argument that you have made in the past regarding governments emerging out of free markets.
I agree with everything George Selgin has said and am delighted he took the time to say it, too.
Selgin:DD5, I know how to figure a reserve ratio from a bank's balance sheet; I know that economic historians place such ratios at about 30% for England's early goldsmith banks; I know that in Scotland during the FB era gold ratios of less than 2% where common; and I know that ratios seldom exceeded 10% anytime in post-1800 FR banking history unless statutres mandated it, and that this was true despite the lack of insurance or central banks in many instances.
No one has ever contested the fact that FRB is the dominant sytem of banking over the past few hundred years. There is no disagreeement here.
Selgin:And I can give references for any of this. Now, irefer me to a single prominent post 1800 case of private 100% reserve banking, with transferable deposits or notes.
Why? The historical facts as such are not under dispute. But you can't logically deduce any cause and effect by referring to such historical records. Call me dogmatic, cultish, or whatever, but I won't simply do away with logic. Your arguments are well written but they fail the typicall logical examination anytime.
Selgin:So come on, serious Austrians: make yourself heard loud and clear; drown out the tedious and goofy Rothbard-impersonator lounge act and put some real economics in its place!
What tedious goofy stuff? You mean like Rothbard's "Reservations demand" and "exchange demand" for money. Instead, like the real economists, we should write long and inaccurate explanations on how demand for money can somehow be grasped in terms of velocity of circulation after all.
At 12:07 AM DD5 wrote:
Selgin: And how 'bout when this gang says things like, "in a free market, bank reserves would be close if not equal to 100% of their liabilities" as if there weren't OODLES of evidence showing that this just ain't so?
And how 'bout when this gang says things like, "in a free market, bank reserves would be close if not equal to 100% of their liabilities" as if there weren't OODLES of evidence showing that this just ain't so?
"My emphasis.
What evidence? You make observations, you make your own interpretations, and you declare for all that there is evidence. This is what I'm talking about. No praxeology. No logical deductive arguments. No nothing.. except empirical observations, which you are apparently free to interpret in anyway that suits you."
Now, 12 hours later, after I supplied the very evidence he seemed to ask for, he writes:
"The historical facts as such are not under dispute."
and then proceeds to give me a lesson on logic. Well, tell me DD%, how do you "praxeologically" get from the evidence I offered to the 100-percenter claim that there's an overwhelming tendency for fractional reserves to give way to 100-percent reserves in a free market? Or do you think that facts are entirely irrelevant to economic argumentation? Hell, even in my hard-core praxeology days I never believed anything so absurd.
Dr Selgin, what do you make of the following paper by Pacal Salin?
https://mises.org/journals/scholar/Salin.PDF
"When the King is far the people are happy." Chinese proverb
For Alexander Zinoviev and the free market there is a shared delight:
"Where there are problems there is life."
woah... very firey thread... fun read. I just didnt like the whole 'cultish' comment...
My Blog: http://www.anarchico.net/
Production is 'anarchistic' - Ludwig von Mises
It's very good, in my opinion, as are Prof. Salin's writings taken as a whole. I would be surprised to discover evidence that it has led to any substantial alteration of the views of the authors it criticises. But I recommend it to anyone sitting on the FRB-100% fence.
George Selgin:
I take no side in this debate - I'm still interested in hearing the arguments of both. Given your presence in this thread, let me ask you the following question, which I think of as my main worry with fractional-reserve free banking (hereafter FRFB). I would be perfectly happy with your historical argument that what testifies best to the viability and market efficiency of FRFB are the demonstrated preferences of 19th century bank customers who were consciously willing to play the game of having the cake (interest) and eating it at the same time (the IOU on demand). By the way, if you consider this to be an inappropriate metaphor to describe the service in question, please let me know why you think so. I would consider this to be an unambiguously valid argument if, following any given bank run, especially the panic of 1907, the clients of banks were to shrug their shoulders and say: "we knew all along that this could happen, but that's fine with us - the cost of enduring such events is still smaller than the advantages flowing from the existence of interest-bearing demand deposits". However, insofar as my historical understanding of this period goes, this is not what in fact happened. On the contrary, these bank runs seem to have given impetus and rhetorical ammunition to the supporters of central banking, who - as we all know - eventually got their way, with at least tacit approval of the masses (were the latter idiots in that or not?). It would appear that such a development of events says something bad either about FRFB or about its clients, but your argument links the supposed efficiency of the former with its positive evaluation by the latter. Please tell me what I'm missing here.
On a different note - I think you would really have to present more evidence for the claim that whoever disagrees with Mises or Rothbard gets ostracized by the MI community. In fact, even mentioning the two gentlemen in the same sentence seems unjustified in this context - after all, Rothbard criticized Mises on many scores, including his monopoly theory, his minarchism and his "Kantian" praxeology. My papers published in the MI outlets are likewise critical of some of the positions taken by these two figures.
Here, for instance - http://mises.org/journals/qjae/pdf/qjae12_3_3.pdf - I suggest that the Austrian (Misesian) conception of rationality has a rather hard time accomodating certain extreme cases of apparently "irrational" human behaviour.
Elsewhere - http://libertarianpapers.org/articles/2010/lp-2-16.pdf , http://libertarianpapers.org/articles/2010/lp-2-37.pdf, http://libertarianpapers.org/articles/2011/lp-3-6.pdf - I criticize Walter Block's views on abortion and property rights in general, which are themselves heavily influenced by Rothbard's thinking. Our debate so far, from what I can tell, has been respectful and mutually stimulating. Thus, I think you are misleading others by suggesting that the MI community practices any sort of "personality cult". And this certainly does not help mutual understanding and cooperation among the Austrians.
Best,
Jakub
Selgin: Or do you think that facts are entirely irrelevant to economic argumentation? Hell, even in my hard-core praxeology days I never believed anything so absurd.
Not facts but historical facts. They are relevant to our understanding of history, i.e., economic history. Never to economic theory itself.
This is and was absurd to you. Fine, but then you can never claim to have accepted praxeology, even in your "hard-core praxeolgy days" apparently.
The tool of reasoning for praxeology is logic. There is no such thing as soft-core or hard-core logical decutive reasoning. There is either correct or false logical reasoning. No, I don't mean to give you a lesson in logic, but it is a logical fallacy to use mere historical observations in deductive reasoning.
So what is the disagreement here exactly over? You think that it's OK to use empirical observations in logic, or that logical rigor is overrated or cultic?
Selgin: how do you "praxeologically" get from the evidence I offered to the 100-percenter claim that there's an overwhelming tendency for fractional reserves to give way to 100-percent reserves in a free market?
how do you "praxeologically" get from the evidence I offered to the 100-percenter claim that there's an overwhelming tendency for fractional reserves to give way to 100-percent reserves in a free market?
That's the thing. I don't. From the "evidence" you offer, I (or anyone) don't get "praxeolgocially" anywhere. It is praxeologically dervied theory independent of your historical observations that allows one to critisize your interpretations of the data.
This is precisely the problem here and what I claim is the vast difference between some Austrians and other Austrians, which most people here are unaware off or ready to deny. It's not about "free banking" vs. 100%, or about monetary equilibrium, or even price theory. The real difference between the two groups is epistemological. One is Misesian, and one is not.
Empirical evidence helps you check your assumptions, critical to sound logic.
Selgin's point is that either your assumptions are wrong, your logic is wrong, or his evidence is wrong.
This is an interesting (and very Hayekian) comment.
I'm inclined to agree with Dan on this issue, though. If George wants to validate his beliefs through empirical evidence, that's fine, but Dan is right that it's not praxelogy, and I think Dan would have a valid reason to be skeptical. On the other hand, your comment is very relevant, because unless the assumptions are logically traced back to the 'action axiom', then I don't think there is plenty of reason to be skeptical of any conclusions derived thereof (the logic may be fine, but the assumptions may be wrong).
Anyways, Selgin's The Theory of Free Banking is not an exercise in empiricism (he makes a few empirical claims, but never relies on them to validate his theories). I'm surprised Dan made the claim that "all" of George's work has been suspect (from that angle).