My Challenge to Max Keiser

Recently by Thomas E. Woods, Jr.: Max Keiser: Ludwig von Mises Is a Fake Austrian Economist

On LRC yesterday I responded to the bizarre Keiser Report segment that tried to claim Ludwig von Mises was a deviationist from the pure Austrian economics of Carl Menger, the founder of the school. Kind of inside baseball, you might think, but so full of the most preposterous errors that I had to smash it, politely.

Keiser now has a post called "Tom Woods’ Blunders." For a split second I wondered if maybe I had overlooked or misstated something. Then I saw his post.

It begins:

Tom Woods ramblings are lengthy….

Translation: I haven’t the foggiest idea how to answer Woods. If I say his reply to me is "lengthy" and "rambles," that will cover for the fact that I can’t reply to 95 percent of it. Oh, and 15 minutes of bashing Mises and libertarians on the most uncomprehending grounds is not rambling or lengthy.

but I wanted to zero in on this bit:

In the following passage, taken from Tom Woods response to Sandeep Jaitly’s interview on “Keiser Report,” Tom Woods rationalizes the failure of his fundamentalist ideology and ‘economic calculation’ by wedging a lot of intellectual dishonesty into this quote: “Private ownership, which is precluded by state intervention, would encourage the preservation of the capital value of resources.”

The idea that private interests preserve the capital value of resources (‘unless they are interfered with by the state’) produces a superior economic outcome over the public interests preservation of capital value of resources is the type of pseudoscience, faux-Austrian claptrap that gives rise to economic dictatorialism, completely blind to the actual consequences of its actions. What Woods is advocating here is in effect central planning, but the ‘right kind’ of central planning by the ‘right people’; the complete opposite of what Austrians say they are supposedly in favor of and a complete contradiction of what Menger was trying to elucidate before the Mises crowd came along and poisoned the water.

I’ll be a sport and overlook the lack of any argument or analysis here; we are evidently expected to accept Keiser’s ex cathedra pronouncement without demanding such coarse elements as reason or evidence.

Here are Keiser’s points, stripped of the viciousness that was absent from the tone of my own piece, along with my replies:

(1) It is silly and "fundamentalist" to think private owners might take better care of resources than the state.

Evidently the whole "tragedy of the commons" problem has been solved by Max Keiser; with such contributions to the human race, it almost seems petty of me to continue the exchange.

I think, though, he hasn’t really solved this problem. Max would have to believe that people who rent cars treat those cars just as well as they treat their own cars. In Keiserland, people take rental cars for oil changes and maintenance, and repair dings and scratches.

On my planet, people do not take the same care of things they do not own as they do of goods they do own. The same goes for any resource: what private owner would want to destroy the long-term capital value of a mine, or a herd of animals, in order to enjoy one fleeting year of profits? Who would kill all the animals this year, leaving none for next year? What incentive exists to do such a thing?

(2) He thinks private ownership is a form of “central planning.” (This guy has his own show?) Central planning involves (1) the direction of resources in the absence of property rights, or (2) orders handed down to resource owners by non-owners. Neither applies in the case of the ownership and use of a resource owned by someone with legitimate property title.

It of course is not a question of having the “right people” in charge. I am not saying that my people would do a better job of managing resources than Max’s people; that Max even thinks in these terms makes him appear juvenile and uncomprehending.

The issue is that only private owners can operate within the realm of economic calculation, and only private owners have an interest in keeping the resource generating a stream of returns over time. Why would a politician, serving a two-year term, care at all about such a thing? You’ll note how politicians, having no particular reason to care about future prosperity and interested only in immediate electoral returns, have looted a certain resource called the population of the United States. Keiser wants these people in charge of more resources.

(3) Without acknowledging that on every point I overturned his guest’s bizarre and unsupportable claim that Mises was a non-Austrian deviationist from the plumb-line Menger, he closes with further reference to this alleged difference between the two.

Max, here’s my challenge to you. Where does Menger say the state, with its politicians’ limited time horizons, is better able to preserve the capital value of resources than legitimate property owners? Where does Menger say that economic calculation within the division of labor is not a good way for society to economize?

You are saying Mises has deviated from Menger in holding the position he does. I call b.s. You have no idea what you are talking about. Give me chapter and verse from Menger. If you can’t, then admit you’re in over your head, and apologize to your viewers for that ridiculous segment and for this crazy claim about Menger and Mises.