Austrian School On The Rise
The Austrian School of economics is gaining followers. Fueling this shift is a belief that mainstream loose-money policies led our current crisis. While die-hard mainstream economists like Paul Krugman aren’t budging, millions of people are rethinking the role government should play in the economy. Many of them are looking to the Austrian School for answers.
Public outrage over bailouts and rising debt is widespread. The outcry has Wall Street and mainstream economists on the defensive. Banks are so concerned that their leading industry group, SIFMA, just launched a major PR offensive against this “populist overreaction” (yes, that’s their wording. Read the Bloomberg piece for more.) One commenter quipped that the campaign slogan should be Stop Complaining About Getting Fleeced.
The Austrian Answer
Many people are attracted to this school of economic thought because of the fiscal discipline inherent to it. Responsible spending, low taxes, and small government are major themes. Austrian advocates like Ron Paul and Lew Rockwell have been fighting inflationary and easy-money policies for decades. It looks like the crisis they have been warning about has finally arrived. And reflating the bubble may not work this time.
That’s not the only reason their popularity is on the rise, though. Their anti-war stance is popular with the Left, while their small-government policies appeal to fiscally conservative Republicans, who are disillusioned in the wake of Bush’s reckless deficit spending.
Mises.org Traffic: Evidence of Increasing Interest
The Ludwig Von Mises Institute is Mecca for Austrian and Libertarian Economists (in the US, at least). The organization, chaired by Lew Rockwell, has a huge collection of material catering to liberty-minded economists. I contacted their webmaster to see how traffic has been since the crisis started. Their traffic is up rougly 80% YoY. Note the traffic spike in September of last year when Lehman was dying:
A Shift or a Fad?
It’s unclear if what we’re seeing is a major shift in economic thinking, or a temporary blip. If government can successfully reflate the bubble, interest in Austrian economics will probably fade, as Americans once again get comfortably numb. Like a drug addict, hitting rock bottom may be necessary before significant change happens. Whether we have reached that point remains to be seen.
Judging by the shift in consumer spending, Americans are well on their way to a permanent change in lifestyle. We’ve never seen a dramatic shift like the one that happened over the past year or so. Austrian economics may play a major role in policy reform.
Any rational person can see how unsustainable our current path is. But our political and financial leaders remain convinced that the answer lies in more debt/credit. This may delay pain for a few more years, but only makes the long-term picture uglier. A sea-change is inevitable. Exactly how everything will play out is unknown, but it’s going to be interesting to watch.
h/t Jesse’s Cafe for the Greenspan toon
Disclosures: No positions in any stocks mentioned
24 Comments
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I’m a Democratic, Leftist defector. Ron Paul, Peter Schiff, and Lew Rockwell have led me to Murray Rothbard and liberation. I’m pretty ashamed of my previous political beliefs and feel like a veil has been pulled back like in the Wizard of Oz.
There’s a lot of bashing on Liberals, and some of it deservedly so. Just remember, these are potential supporters if you engage them in a civil and reasonable manner. I don’t have a single libertarian (read: Austrian School) friend, but I talk about liberty with my Liberal friends whenever they give me the opportunity.
Welcome. Usually all of us was more or less a leftist (liberal or socialist) at least to some degree in the beginning (even Mises and Hayek was), but learning is what put as closer to the truth and equip us with the tool of critical reasoning.
Rothbard was great (he was my first “teacher” too), but if you go further you will find that Ludwig von Mises, F. A. Hayek and perhaps James M. Buchanan leads you from anarcho-capitalism to a free (capitalist) efficient society further on the road to liberty.
Frank, Andras – thanks for the comments. As you may have guessed, I’m in a similar boat: disillusioned democrat. Really enjoying Hayek, Rothbard, Mises, Ron Paul, and newer voices like Schiff.
Ron Paul led me to Lew Rockwell who turned me on to Murray Rothbard. It was after reading “The Ethics of Liberty” and “For a New Liberty” that I altered my thought process. I was what I called a conservative socialist and believed that while the government ought to be “small” there are certain things that could not be left to the market, like education and health care. I thank God for people like Ron Paul, Lew Rockwell, Murray Rothbard and the entire host of libertarian thinkers that saved my soul, so to speak.
I am a disillusioned GOPer who looked for answers after the economy flopped. In my search I came across Peter Schiff’s video on youtube which lead me to the Mises institute. I am happy to have found my true intellectual footing. My only regret is not looking for it earlier.
My name is Aaron and I am a recovering neocon. I have been sober for seven months.
I’m sixteen, and thanks to the internet, I have been able to see economic policy, not as a series of numbers (while math is fun, it is not fun to grep it for economic policy), but rather, as a set of logical axioms and postulates.
I have always been an ultra-something, (depending on whatever) believing in the primacy of the individual, very small government and very low or no taxes. But I did believe that the US was the best governmental system, until Rothbard and Butler Shaffer opened my eyes. Being a native Texan, I have long been a supporter of Ron Paul.
My biggest regret is what appears to me to be the impossibility of implementing a Rothbard “world”. I would love to live there.
After the economic meltdown, I discovered Mises.org and have been hooked ever since, reading everything I can get my hands on. The truth does indeed “set you free,” even in the crazy times we’re now in.
Hi, I’m envious of Havvy: I only got to Mises.org this year, at age 39. Would that it had been 20 years earlier!
I just finished reading Investment Biker ( better late than never, right? ) and I have to ask: what took America so long to wake up? The rest of the world has already discovered what Mises and Hayek said a long time ago: socialism fails, liberty works. So why are our politicians and pundits preaching what amounts to assisted suicide, a gruesome death by economic asphyxiation?
I was a lucky one. I started college the year that Pres. Bush II took office, and was a Republican at the time. That lasted until Pres. Bush started pushing for steel tariffs – which was one of the first things he did in office – and which were obviously not a policy that a good, free trade Republican should support. So, I went searching. Fortunately, I didn’t have to search very far. Since I went to Grove City College and was an economics major, I was learning Austrian Economics in my classes every semester. Then, after 9/11, my pacifist leanings were obviously incompatible with the Bushian approach to foreign policy… but were perfectly consistent with the view of Ron Paul and similar libertarians. So, the choice wasn’t a hard one to make.
I was converted from neoconservatism to libertarianism while listening to Ron Paul during the debates and then reading the four books he assigned to Rudy Giuliani. I mainly came over because Congressman Paul converted me from pro-war to anti-war, but I also began to see the logic in Paul’s economic theories. It was Ron Paul that introduced me to Austrian economics and the Mises Institute. The first things I read were Bastiat’s That Which Is Seen and Hazlitt’s Economics In One Lesson, and then I dove into a whole bunch of stuff by Mises and Rothbard and others. After becoming educated on real (Austrian) economics, I started looking at the numbers in early 2008 and seeing how they didn’t add up. I told all my friends and family I thought an economic crash was coming and not to add on any more debt or take out that mortgage. They thought I was crazy and was just spouting Ron Paul’s loony ideas, but the more I read the theories of Mises and the Austrians, the more I was convinced we were in a bubble. Then, sure enough, the economy crashed, and my family, boss, and a couple of my friends are now all educating themselves on Austrian economics as well. It’s spreading!
[...] Austrian School on the Rise [Bearish News] [...]
Although I subscribe to the Austrian School of economic thought, I would like to caution, on the advice of a close friend, that the rise in traffic on mises.org is not necessarily due to some swing in mainstream thinking.
Rather, increased traffic has more to do with good online marketing strategy. Also, I believe that all economic websites would have experienced more traffic with the advent of the economic crisis.
[...] A nice report with some interesting data on Mises.org traffic. [...]
@Frank
Good points. CNBC has probably had a huge boost in traffic/viewership too.
But I think comments like those above offer strong anecdotal evidence of increased interest. The popularity of Ron Paul, hearing people say “Why don’t we just let these banks/auto-cos fail”, and general unhappiness with the bailouts offer more anecdotal clues.
[...] Austrian School On The Rise [...]
Same here. I am originally from Africa, Cameroon and I was somewhat an egalitarian Liberal. Bill Clinton was once one of my political heroes! But, discovering Keynes and not understanding a single words of his precepts led me to an alternative and that’s when Mises appeared and provided me with all the answers I had been looking for in economic theory. I have never felt better ever since and, never ceased to research and study what is going on around the world economies and Nations ever since. Sadly so at the meantime, I can’t help but cast a sorrowful eye on the world and the way things are managed by a minority of economic and financial thugs.
I am glad to see the shift to more responsible money, at least in the every day people’s lives. My grandfather was no economist, but he grew up in the great depression and remembered when they stopped backing money with gold. He taught me much of what I have come to learn is an actual monetary theory. We always just called it common sense.
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As a Republican I know the importance of promoting morality in our country, maintaining monetary discipline is one of the most important moral priorities. ‘We’ kill our children to save us time and money but destroy future productivity and perhaps more importantly spiritual maturity that is vital in becoming disciplined to be able to embrace fiscal humility. The problem for me is the duality of the last Republican administration which through political expediency embraced fiscal irresponsibility while half heartedly defended traditional moral values like pro-life. One sincere stand for one of these two issues, fiscal responsibility and moral fortitude like protecting the weakest of forms of human life like the fetus, should re-enforce and bring about the other, because both are needed to achieve needed maturity to maintain this order. So, I too drift to the libertarian side of things.
I am proud to call myself a recovering Republicrat. I wasn’t fussy about the party. The two parties really weren’t, and aren’t, as far apart as they seem to like to think. Government intervention and increasing government control seems to be their main agenda. Libertarian and “free market” mentality is making more sense with each governmental move! The time may be approaching for a revolution–”of the people, by the people, and for the people.”
[...] would be too much to hope for just now that an army of Austrian Economic Thinkers can take back the Universities, the Treasuries, the Central Banks and the Wealth Managers and put in place a secure, robust [...]