and done it again. I have disturbed my overlord, blogger Matt
Yglesias. (Here’s my report on my first
the proceedings at the Republican National Convention in St.
Paul one day in 2008, I decided to try to gather some color
down the road in Minneapolis, where Ron Paul and fellow dissident
conservatives and libertarians were holding a counter-convention
at the Target Center. At one point a speaker thundered that
Barack Obama and John McCain "both have a lot to learn
about Austrian business-cycle theory." The crowd went delirious
with cheers, and soon chants of "end the Fed" echoed
throughout the arena.
He is referring
to my speech. (Here it is, in two
He doesn’t get the quotation quite right; I certainly wouldn’t
have said anything as wooden as "have a lot to learn about
Austrian business-cycle theory." What I did say, having been
taken by surprise by the loud cheers for Austrian business cycle
theory, was that it would be interesting to ask John McCain what
he knew about the subject. We may as well be speaking Chinese,
is Yglesias at outside-the-box thinking that he doesn’t even notice
or care about the shot I was taking at McCain. Yglesias, like
the fake progressives who follow him, will take McCain over Ron
Paul any day. (The rest of his article
is devoted to a "progressive" defense of the Federal
Reserve, an institution we all know is deeply committed to the
welfare of the common man.)
being impressed that thousands of people were economically literate
enough to know something about the Mises-Hayek theory of the business
cycle, which won the Nobel Prize in 1974, Yglesias is beside himself
that so many people had adopted a view that neither he nor his
friends had approved for them in advance. He evidently prefers
the crowds at the Democratic and Republican conventions, which
– whatever else we may say about them – were probably not composed
of people who could tell you a whole lot about business-cycle
Yglesias describes his reaction to the scene:
funny at the time. A bunch of cranks talking about their crank
monetary theories and espousing a crank prescription.
Paul is the chairman of the House Subcommittee on Monetary Policy.
Paul is so scary that Yglesias resorts to the single-sentence
paragraph – a true master of English prose, this blogger! – to
dramatize for us just how scary he is. Today, Paul is the chairman
of the House Subcommittee on Monetary Policy. The earth may
break free of its axis!
business cycle theory is not discussed by anyone along the officially
approved Joe Biden/Mitt Romney axis, for Yglesias it is crankish
by definition. For who but an incorrigible crank would
look for economic truths outside the glorious reservoir of wisdom
that is the American political establishment? (The vast majority
of the economics profession, according to no less an eminence
than James Galbraith, was completely blindsided by the recent
crisis, yet Yglesias still thinks it’s a strike against the Austrians
that they happen to be out of favor with the economics mainstream.)
School argues that interest rates are not arbitrary things, and
that interfering with them leads the economy down an unsustainable
path that does not correspond to existing resource availability
or the pattern of real consumer demand. There are plenty of good
reasons, both theoretical and empirical, to subscribe to this
eminently reasonable theory. It was the centerpiece of Meltdown,
my New York Times bestseller from 2009, and you can learn
all about it online (for instance, in this
graphical representation or this easy-to-understand book,
which you can also download as a free audiobook).
view, evidently, is that interest rates perform no essential coordinating
function, and may be second-guessed by wise central planners who
know better than the sum total of millions of economic actors,
who give rise to market interest rates, what they should be. And
if we want prosperity, why, we simply force those suckers lower.
For no so-called economic law is any match for the iron will of
our great leaders!
if he had his way, would impose on us, as chairman of the Monetary
Policy Subcommittee, still another of the interchangeable drones
committed to the idea that there’s nothing wrong with our monetary
system that couldn’t be fixed with a one percent change, give
or take. Ron Paul’s recent hearing with witnesses James Grant,
Lew Lehrman, and Joseph Salerno would be out of the question.
Dissident opinion would be studiously excluded, the former progressive
slogan "question authority" long since abandoned. Do
not question your overlords, citizen. Remember the new progressive
slogan: shut up and obey!
read James Grant’s testimony
before Dr. Paul’s subcommittee. Grant has ten times the writing
ability, 100 times the wit, and ten thousand times the knowledge
of a nonentity like Yglesias. According to Matt’s ex cathedra
pronouncement, Grant – whose Grant’s Interest Rate Observer
is widely consulted and sought after, which is why the thing is
so expensive – must be a crank, since he questions the existing
system. Go ahead and read Grant for yourself (the very thing Yglesias
is obviously trying to discourage, by disparaging as "cranks"
people orders of magnitude more intelligent than he is) and decide
who possesses a true mastery of the situation, and who is the
in typically Orwellian form, refers to a system that once existed,
and yielded the world extraordinary prosperity and stability,
as a "crankish" idea. As I show in Rollback,
my new book, the crises and panics of the nineteenth century had
precisely zero to do with the gold standard, and occurred more
or less in direct proportion to derogation from the gold standard.
By the time of the 1920s, the so-called gold standard was a pale
imitation of the real thing, being in fact a mere gold-exchange
standard in much of the world and a fractional-reserve system
in the United States, but that hasn’t stopped the likes of Yglesias,
who is evidently incapable of making or even understanding these
distinctions, from blaming gold for the Great Depression.
ask Yglesias about time preference, the heterogeneity of capital,
or the Hayekian triangle – all of which are fairly central to
an understanding of Austrian theory – and we may as well be asking
him to explain the Copenhagen interpretation of quantum physics.
He knows none of this. All he knows is that if the Austrian theory
is correct, his cherished overlords are part of the problem rather
than the solution. Human beings can arrange their affairs without
the violent intervention of the state? That’s a world our blogger
refuses even to consider.
Now who is
Matt Yglesias, anyway, such that he is even entitled to an opinion
about a theory that his idols – Paul Krugman, most notoriously
– can’t even state correctly?
Eight years ago he got a degree in philosophy from Harvard, then
he worked for some magazines, and now he’s a blogger. And here
I was thinking he might not know what he’s talking about.
wave-of-the-hand dismissal of a theory he knows only in caricature,
along with all those who advance it, as "cranks," calls
to mind one of my favorite columns by Glenn Greenwald. Greenwald
– unlike Matt Yglesias a genuine progressive whom Robert La Follette
would have been proud of – notes how terms like "crankish"
or "crazy" are used as weapons in our political culture,
and how selectively people like Yglesias deploy them:
support countless insane policies and/or who support politicians
in their own party who do – from the Iraq War to the Drug War,
from warrantless eavesdropping and denial of habeas corpus to
presidential assassinations and endless war in the Muslim world
– love to spit the "crazy" label at anyone who falls
outside of the two-party establishment.
is partially driven by the adolescent/high-school version of
authoritarianism (anyone who deviates from the popular cliques
– standard Democrats and Republicans – is a fringe loser
who must be castigated by all those who wish to be perceived
as normal), and is partially driven by the desire to preserve
the power of the two political parties to monopolize all political
debates and define the exclusive venues for Sanity and Mainstream
Acceptability. But regardless of what drives this
behavior, it’s irrational and nonsensical in the extreme.
several years about this destructive
dynamic: whereby people who embrace clearly crazy ideas
and crazy politicians anoint themselves the Arbiters of Sanity
simply because they’re good mainstream Democrats and Republicans
and because the objects of their scorn are not. For me,
the issue has nothing to do with Ron Paul and everything to
do with how the "crazy" smear is defined and applied
as a weapon in our political culture. Perhaps the clearest
and most harmful example was the way in which the anti-war
view was marginalized, even suppressed, in the run-up to
the attack on Iraq because the leadership of both parties supported
the war, and the anti-war position was thus inherently the province
of the Crazies. That’s what happens to any views not endorsed
by either of the two parties.
then quotes Conor Friedersdorf:
to name the "craziest" policy favored by American
politicians, I’d say the multibillion-dollar war on drugs, which
no one thinks is winnable. Asked about the most "extreme,"
I’d cite the invasion of Iraq, a war of choice that has cost
many billions of dollars and countless innocent lives. The "kookiest"
policy is arguably farm subsidies for corn, sugar, and tobacco
-- products that people ought to consume less, not more….
to the gold standard is unthinkable, is it not just as extreme
that President Obama claims an unchecked power to assassinate,
without due process, any American living abroad whom he designates
as an enemy combatant? Or that Joe Lieberman wants to strip
Americans of their citizenship not when they are convicted of
terrorist activities, but upon their being accused and designated
as enemy combatants?
disparaging descriptors are never applied to America’s policy
establishment, even when it is proved ruinously wrong, whereas
politicians who don’t fit the mainstream Democratic or Republican
mode, such as libertarians, are mocked almost reflexively in
these terms, if they are covered at all.
It so happens
that Rollback contains a chapter on the Fed that smashes
to smithereens pretty much everything Yglesias has ever written
about central banking. For example, the claim that the Fed has,
after all, made the economy more stable and given us fewer and
shallower recessions is proposed as if it were so obvious that
only a blind ideologue – or a "crank" – would challenge
it. But it turns out that this familiar claim relies on statistics
that – unbeknownst to Matt Yglesias, you’ll be shocked to learn
– have been exploded over the past two decades. Even Christina
Romer, former chair of Barack Obama’s Council of Economic Advisers,
has noted that these faulty figures overstate the instability
that existed before the Fed and understate the instability since.
The instability of output that did exist before the Fed was due
almost entirely to the kind of natural output swings, as from
harvest failures, that plague an agricultural society, while the
instability we have seen since the Fed’s creation is attributable
far more to monetary policy itself.
We can be
fairly certain, I think, that Matt Yglesias knows not a blessed
thing about nineteenth-century bank panics, pre-Fed business cycles,
or the scholarly revisions, to be found throughout the professional
journals, to the previously accepted economic statistics that
were once used to prove the relative success of the Fed. For that
matter, neither do the vast majority of those who would condemn
us as cranks for thinking there might be something a teensy bit
dangerous and destabilizing about a central planning agency tinkering
with interest rates and exercising a money monopoly. They bluff
their way through snarky blog posts, knowing they’ll never have
to debate a knowledgeable opponent face to face. It’s enough,
they think, to call us cranks and leave it at that. We who are
so perverse as to reject the glorious Biden/Romney spectrum deserve
hordes of brilliant young kids are mastering and building upon
the edifice of Austrian thought. That an uncredentialed blogger
who has made precisely zero scholarly contributions to anything
at all wishes to lecture them for adopting something other than
the reigning paradigm in economics – wherever did they get the
idea that they ought to question authority? – is unlikely to give
them much pause.
news for poor Matt Yglesias, who is the worst kind of progressive
– the left-shill for the regime. Not only are we not going away,
but we’re actually getting stronger and more numerous. The rising
generation of Austrians, I can testify, is full of geniuses –
I might mention off the top of my head David Howden, Philipp Bagus,
Mateusz Machaj, G.P. Manish, Malavika Nair, Per Bylund, Xavier
Méra, Matt McCaffrey, and many more – who have mastered
both the mainstream stuff to which Yglesias ritually genuflects
as well as the Austrian alternative about which he knows only
the cartoon version he encounters in the New York Times.
buddy. You’ll need it.