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Mises Economics Blog

In a post on at Cato@Liberty on January 8, 2009, Tomas Firey calls Cass Sunstein "in his own way, a supporter of liberty", although he would probably not qualify as a libertarian.

The distinguished philosopher Thomas Nagel gives us reason to doubt Firey's verdict. In a review of Sunstein's Republic.com, he said that Sunstein had difficulty suppressing "the impulse to exercise centralised control" and that he distrusted consumer sovereignty. Nagel noted with disfavor Sunstein's proposal to compel Internet sites to link to political sites that opposed their own views. Sunstein, Nagel says, "underrates the pure importance of individual freedom."

In another book, The Second Bill of Rights, Sunstein praised Franklin Roosevelt's call for an economic Bill of Rights and urged that welfare rights be given a constitutional guarantee. In yet another book, Nudge, written with the behavioral economist Richard Thaler, Sunstein defended "libertarian paternalism".

In a review in The Mises Review, I endeavored to show that these authors want the government to guide "irrational" consumers to what we really want.

The prolific Sunstein has also written, this time with the political theorist Stephen Holmes, The Cost of Rights

Hazlitt and the Great DepressionToday

Henry Hazlitt was at the center of the New Deal debate, holding forth in the pages of The Nation, a sophisticated and trendy fortnightly. He was hired as literary editor, a relatively nonpolitical position. But as the politics of the day became more contentious, he was afforded more editorial latitude. He began to write against federal encroachment on private enterprise. That was the beginning of the end. FULL ARTICLE

The Great Credit-Crunch Hoax of 2008Today

Remember the credit crunch? Of course you do. We'd never seen anything like it, or so the highest financial authorities and their lapdogs in the news media told us -- not in a cool, calm, and collected way, either, but in a breathless delivery that suggested imminent economic doom unless the government immediately undertook to "do something." Which it did, of course, on a scale never before witnessed in US history. FULL ARTICLE

Austrians and Keynesians Agree: Milton Was Wrong About the DepressionToday

Believe it or not, Paul Krugman hits the nail on the head in his critique of the Friedman/Bernanke theory of the Great Depression:

Milton Friedman, in particular, persuaded many economists that the Federal Reserve could have stopped the Depression in its tracks simply by providing banks with more liquidity, which would have prevented a sharp fall in the money supply. Ben Bernanke, the Federal Reserve chairman, famously apologized to Friedman on his institution's behalf: "You're right. We did it. We're very sorry. But thanks to you, we won't do it again."

It turns out, however, that preventing depressions isn't that easy after all. Under Mr. Bernanke's leadership, the Fed has been supplying liquidity like an engine crew trying to put out a five-alarm fire, and the money supply has been rising rapidly. Yet credit remains scarce, and the economy is still in free fall.

Of course, Krugman's conclusion is that the Keynesian diagnosis is better than the Friedmanite monetarist one. Matt Machaj argues that there is a third option, the Austro-libertarian position of respecting property rights. For those wishing a fuller analysis, see this blog post.

Burning Economics QuestionsYesterday

I guess I missed this when it appeared in December but Edmund Conway is looking for thoughts on the burning economics questions. Especially good here: he wants to compare various schools of thought, including the Austrian School.