The Cult of Austrian Economics

After his real talk on Republicans and health care earlier this week, conservative Josh Barro decided to unload on austrian economics in a spectacular way:

Richard Posner gave an interview to NPR this week in which he blasts current-day conservatives and says today's "goofy" Republican Party has made him less conservative. Over the last 10 years, he said, "There's been a real deterioration in conservative thinking. And that has to lead people to re-examine and modify their thinking."

Posner is probably the most respected judge in America who doesn't sit on the Supreme Court, and a key thinker in the law and economics movement. His alienation is a reflection of how hostile the conservative movement has become to intellectuals.

Of course, conservatives will tell you they care a lot about intellectual grounding. These days, they especially love Austrian economists, such as Friedrich Hayek and Ludwig von Mises. I have a whole bookshelf dedicated to duplicate copies of Austrian economics books that conservative and libertarian organizations have given to me for free. I have four copies of The Road to Serfdom, which is like Dianetics for libertarians.

There are two big reasons today's right loves the Austrians. One is that Austrian economists reject empirical analysis, and instead believe that you can reach conclusions about correct economic policies from a priori principles. It's philosophy dressed up as economics; with the Austrians, there is never any risk that real-world events will interfere with your ideology.

The other big advantage is that the main Austrian thinkers, Friedrich Hayek and Ludwig von Mises, are dead, so they can't argue with your interpretation of their work. This is especially important with Hayek, who got sort of squishy later in life.

My question for libertarians is usually a simple one: Why has their ideology failed any time it has been implemented, at any real scale, at any time throughout human history?

I'm honestly not trying to be glib, it just doesn't work. Ever. But there is a good reason for that, because having it work isn't the point. Libertarian economics isn't a means to an end, it's a means for the sake of a means. Barro goes into the recent financial crisis to hammer the point home:

And that is how so many on the right have pulled off the remarkable feat of going through the 2008 crisis and its aftermath without revisiting any of their policy views. Mine have certainly changed a lot -- I have a much different outlook on monetary policy and bank regulation than I did four years ago. Posner had a big shift on fiscal policy.

But if you have Mises at your side, you "know" that empirical findings have no bearing on what policy should be. Leaning on Austrian thinkers is a great way to avoid further thinking. If Posner feels like he's no longer welcome on the right, it's probably because the right has decided it no longer needs people like Posner.

"Leaning on Austrian thinkers is a great way to avoid further thinking." So well said.