Austrian Economics and the Left

Matt Yglesias has a post up over at Slate.com on Ron Paul and Austrian Economics.  I won’t get into the details of what he got right and wrong about his largely honest attempt to explain the Austrian School to Leftists (the word “crank” was only used once!  A new high for the Left).  Instead, what I’d like to do is hone in on this whopper:

Many of the original Austrians found their business cycle ideas discredited by the Great Depression, in which the bust was clearly not self-correcting […]

Has Yglesias conveniently forgotten about Hoover’s attempts to prop up wages and his signing of the protectionist Smoot-Hawley tariff?

Why don’t Hoover’s policies get more attention by economists and journalists trying to understand and explain the Great Depression, or am I missing something?

5 thoughts on “Austrian Economics and the Left

  1. I think there’s a perceptual or cognitive block, that simply makes it hard for many people to see government activity in the foreground of the story, as an actor which actively and (often) arbitrarily changes outcomes.It reminds of the recent Brian Greene programs on cosmology on PBS. In one, he compares the treatment of space, through most of scientific history, as simply being the unadorned theater stage, upon which the truly interesting things actually happen. It’s only later that Einstein (using Riemann’s math) described space as having positive, unambiguous characteristics. After Einstein brought space itself into the foreground, you could make statements about particular things that space did do, and other particular things that space did not do.

    Another example: at a gathering of friends with children, my wife and I were observing a small boy (3-ish) who kept biting the other children. When it came to tears, parents would come in and intervene, and scold him. Later, we watched the same parents — who were baffled at the boy’s biting — laugh and giggle as the father playfully bit his son. Apparently, nobody had ever brought the father’s behavior into the foreground, for their scrutiny, as a possible influence on the son’s problem.Sometimes, the obvious does stare people in the face. I think that the way we describe the role and actions of government, in the press and schools, goes a long way to explain this cognitive block.Libertarianism is nothing like common sense; not nearly.

  2. Free-market or libertarian economics does not claim that an economic depression is self-correcting. Free market economics blames government intervention for depressions, so what needs correcting are the interventions.
    Fred Foldvary

  3. That Hoover was a laissez-faire president is such a persistent myth, having been taught in most high school history courses, that it has become common wisdom for most people. Common wisdom goes unchallenged because, as far as those who believe are concerned, it’s unquestionably true.

Please keep it civil

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