The Austrian Connection

Welcome friends!

It’s the funniest thing.  I was just writing last time about how American conservatives have gotten into the rather annoying habit of referring to their political and intellectual adversaries as Nazis and commies and hey presto I happened to read a rather funny article by the always entertaining E.J. Dionne that bears on just that subject.  The starting point for Mr. Dionne’s discussion was a statement ultraconservative politician Ron Paul (former Representative for the state of .... drum roll please .... Texas; in case you had to ask) made during the 2012 presidential campaign season: “We are all Austrians now.”  

WTH?!  Could this be why conservatives always seem to be living in some type of parallel universe?  Because they’re all Austrians?  OK, I suppose I’d better explain a bit before we continue.  First of all, the “we” in that sentence presumably refers to American conservatives or perhaps the particularly virulent subset of American conservatives that support so-called “libertarians” like Mr. Paul.  One thing’s for sure: I know it can’t refer to Americans in general because I’m an American and I’m not an Austrian.  Secondly, we’re obviously not talking about Austrians in the normal sense of the word, that is, in terms of national identity or allegiance.  Mr. Paul was not suggesting American conservatives have any special relationship with the country of Austria.  We’re talking about the co-called “Austrian school of economics” (or that’s what they call it here in the US anyway; I’d be willing to bet they don’t call it that in other places, such as Austria).  In case you’ve forgotten or managed to avoid ever having learned in the first place (in which case I salute you) the “Austrian school of economics” is named for two illustrious Austrian immigrants who were moderately influential academic economists back in the mid-20th century: Friedrich Hayek and Ludwig von Mises.  Personally I think it’s a bit funny to insist on calling them and their followers the “Austrian school of economics” as both gentlemen emigrated from Austria as young men.  Mr. Hayek spent most of his working life first in England and then the US, while Mr. von Mises lived in the US from age forty or so.  But I guess if we called them and their followers the “English” or “American” school of economics things would get even more confusing so let’s just go ahead and keep referring to them as the “Austrian school” for want of a better term.  (If you don’t mind I’ll just keep the quotation marks throughout since we’re not all academic economists and I’d hate for anyone to get confused and think we were talking about Austrians in any more general sense, which wouldn’t be fair to our Austrian friends.  Economists living in Austria are basically on the same page as economists living in any other country.  They don’t follow a special school of economics.)

Now I suppose you’re wondering what’s so special about the “Austrian school of economics” compared to, say, the neoclassical school of economics I’m usually talking about?  Well, I think the most salient point for our purposes is that as a practical matter adherents of the mainstream neoclassical school of economics are just a heck of a lot more careful about how they handle value issues and hence what they are willing to say about broader social and political matters than are adherents of the “Austrian school,” who like many other conservatives have trouble seeing the limitations of economic theory and imagine their ostensible insight into that theory gives them a suitable basis for a complete system of social and political philosophy.

I suppose to avoid confusion somewhere down the road I should clarify that the “Austrian school” initially had mostly to do with what economists refer to as macroeconomic issues, that is, the analysis of large scale economic phenomenon such as unemployment, and thus was formerly most commonly contrasted with other schools of macroeconomic theorizing such as Keynesian economics.  So they made their name so to speak arguing that government  activity cannot really help the economy even in the case of demand side slumps.  Of course at some point during the Great Depression we tried it and it pretty much worked so the conventional opinion is they were apparently mistaken.  However, it takes a lot more than that to convince some people, especially when value issues gets mixed in with empirical issues.  And in this case the significance of the value issues eventually became all too obvious.  The “Austrians” really, really wanted government to fail because they had witnessed the rise of fascism in Germany, didn’t like what they saw, and became highly suspicious of or maybe we should just say paranoid about government in general.  Thus, for the “Austrians” the idea government might ever play any positive role in society was anathema.  They considered any discussion along those lines to be little more than a not very subtle means of allowing fascists in through the back door.  I mean, I understand where they were coming from and I’d probably have had the same reaction if I had been there myself.  Indeed, I’d probably have insisted on any number of  unlikely proposition such as, I don’t know, wearing brown shirts can make one’s brain go funny.  I guess sometimes people can overreact a little to these sorts of traumas, do you think?

Now back when I was studying economics in ... well, the year doesn’t matter ... we all considered the “Austrian school” to be very much a strange and rather archaic outlier in the field of economic thought.  It’s not that we considered them complete crackpots per se, more like people who were clearly motivated much more by their own ideological biases than by either rigorous logic or empirical results.  From my own possibly somewhat idiosyncratic perspective as a budding liberal I considered neoclassical economic theory insufficiently rigorous with respect to how it handled value issues, which I concluded pretty early on led to certain conceptual errors I’ve discussed a number of times now in previous posts.  (See My Own Favorite Posts at the bottom of the page or probably any of the posts tagged as having to do with economic theory in the labels section.)  But you know, I had the impression mainstream neoclassical economists were at least trying to think straight about value issues.  Well, I had that impression about some of them anyway.  Nevertheless, I’ve always sympathized with people who reject economic theorizing as too intellectually sloppy and polemical to warrant further study.  I think that’s a rather drastic reaction to what is now for better or worse a very influential way of making sense of the world, but never mind.  However, the way neoclassical economic theory handles value issues is a beacon of clarity and rigor compared to how the “Austrian school” handles those issues.  I’ve just never really understood people who reject standard economic theorizing to go in that direction.  It’s like out of the frying pan into the fire.  But I guess you have to be in the right frame of mind, and that frame of mind I think must involve value issues one perceives to be so important the dictates of rhetorical effectiveness overwhelm the rather more level headed dictates of logic and reason.  Note that I’m not talking right now about the actual values held by devotees of the “Austrian school.”  As I’ve said before I’m actually fine discussing any perspective on values issues one cares to take.  That’s not the problem at all.  I love to discuss ethical issues.  Let’s get it on!  But we’re not even at that point.  What I’m talking about right now is how certain people discuss value issues.  I’m saying my impression is that adherents of the “Austrian school” of economics do not appear to recognize the limitations of economic theory and the severely attenuated conceptualization of utility used in that theory and therefore are not really defending their values in an appropriate way.  I’m suggesting they use economic theory as little more than a rhetorical device to advance values they are not arguing for directly and honestly.

Let me give you an example of the type of thing I’m talking about.  In addition to his more serious work on macroeconomic issues I mentioned previously Mr. Hayek is also famous or perhaps even more famous for authoring a book with the rather frightening title The Road To Serfdom in which he argued the typical conservative line that any government activity beyond the sort of activity wealthy conservatives find personally useful, such as defending property rights, leads inevitably to the erosion of personal freedom and thus puts us all on the road to serfdom.  So, for example, if the government uses any form of economic stimulus to break a demand side slump and get people working again then one thing will follow another and we will all end up as slaves.  Of if the government provides some help to unemployed people or poor people then, again, we will all inevitably become slaves.  Or if the government changes the tax rates to make them a bit more progressive and spread the wealth around, well you know in that case we’ll all become slaves right away.

For me it’s just such a strange way of thinking about the world.  For one thing, it doesn’t seem to attach any significance at all to the issue of the relative legitimacy of different forms of government.  Basically any government activity Mr. Hayek doesn’t approve of ends up being branded a harbinger of slavery.  It doesn’t seem to matter what anyone else thinks about it at all.  I mean, shouldn’t it matter if we’re talking about the government of fascist Nazi Germany, the government of the Stalinist USSR, or the government of the USA?  It doesn’t matter if we have democracy or not?  All governments are essentially the same?  Then what did we fight all those wars for?  No, but seriously, I think for me this must be the single most serious and dangerous failing of modern conservative thought.  They just don’t seem to have any appreciation of the value of our democratic form of government.  It gives me the creeps.

For another thing I just can’t understand what they think or want to suggest is so different and special about government activity they like and accept, such as enforcing current distributional arrangements via contracts and property rights (and police and jails).  Why doesn’t that government activity also lead us down the road to serfdom?  I mean, there’s certainly a lot of it about, right?  Here in the US we have loads of prisons and lawyers and cops and all that.  I don’t see much minimization going on.  Should we do away with these oppressive governmental institutions and become anarchists?  OK, that’s what they call a rhetorical question.  The answer is pretty obvious.  I’m just saying when you think about those types of questions enough to hit upon the obvious answer, that we’re all better off if we accept some government activity to resolve these conflicts of desires so we don’t have to shoot it out on the street whenever we’re at cross purposes, then you’ll also understand the rationale for using democratic government to pursue broader social aims, such as creating a stable economy that distributes resources in an equitable, just, and appropriate way (with the details depending on one’s ethical leanings, which as I said before is something we can talk about and is intellectually speaking one step away from the point I’m trying to make here).  My point is simply that we’re not really talking about the pros and cons of serfdom here, are we?  We’re talking about the pros and cons of various types of government activity in light of various opinions about how we should resolve interpersonal conflicts on an ethical basis.  Looking at the issue as though it has to do with freedom versus serfdom demonstrates a distinctive form of confusion I think is rather similar to that of anarchists who perceive only the restrictive aspect of government power and can’t seem to recognize the corresponding liberating aspect.  Yes, a law against violent crime constrains one’s impulse to bash someone over the head with a rock and thus clearly limits one’s freedom if that’s what one had in mind to do.  However, it also makes one a bit less leery of walking down the road next to the old village rock pile, doesn’t it?  Such a law enhances one’s personal freedom in that respect.  The discussion about how to handle interpersonal conflicts of desire, such as whether one should be able to hit someone else on the head with a rock, should be about the ethical resolution of these sorts of interpersonal conflicts, not about the red herring of how important we all feel it is to be free.

Lastly, the anti-government hand wringing of the “Austrian school” just doesn’t comport with my own feelings at all.  Sorry conservatives.  I realize the US government does all manner of things these day and consequently conservatives probably suppose I must feel myself to be little more than a serf, but I just don’t really feel much like a serf at all.  I feel I have quite a bit of freedom actually.  I think I probably have more personal freedom than nearly anyone else in the world.  And where I’ve given up some of my personal freedom because other people are involved I think it sort of makes sense.  That’s what happens when you live in human society.  Sometimes you can’t do whatever you want because you have to consider how your actions affect other people.  I don’t know, maybe we need to talk a bit about how we define the word “serf.”  I know I talked a little bit in an earlier post about what I was calling wage slavery, which I suppose might sound suspiciously like a form of serfdom, but in that case I was just talking about the typical conditions of life under a market economy.  (November 28, 2013)  I realize market systems only work if they’re backed up with government power to enforce the rules but I didn’t really mean to imply I felt the government was at fault for making me a wage slave by enforcing a market system.  In a democratic system like ours the government does more or less what we tell it to do via the voting booth.  That’s why I was talking about it in the first place.  I was wondering what, if anything, we can or should do about the phenomenon.

So have we made any headway into understanding the enduring mystery of the conservative mind?  Well, I’m not sure.  We have Mr. Paul’s assertion that American conservatives are now all “Austrians,” that is, adherents of the somewhat weird blend of economic, social, and political theorizing known as the “Austrian school of economics,” which paints democratic governments as trying to enslave their populations if they regulate the economy or pay any attention to distributional issues and so on.  And yes, I suppose that does help us understand why conservatives always seem to be charging their opponents with being Nazis and commies.  But for me the underlying mystery remains.  Why do they find that particular perspective so appealing and persuasive?  They didn’t escape from Nazi Germany themselves.  Do conservatives like multibillionaire Mr. Perkins, who I wrote about last time, really feel they are in danger of becoming serfs if our government tries to help out poor people?  Or are they just talking funny because they’re trying to manipulate other people into continuing to allocate them disproportionate economic power and they know most Americans (including especially liberals like me) place a great premium on personal freedom and don’t really like Nazis very much?  And if the latter is what’s going on, are they all in it together, winking at one another behind closed doors as conservatives are wont to do, or is it more a matter of moneyed bigwigs supporting and encouraging sincere ivory tower academics, provincial amateur philosophers, and late night radio talk show hosts and other media types?  How can we ever know for sure?  Who can we talk to straight?  Anyone?  Hmm, that’s a tough one.  Well, I suppose that’s what makes trying to understand conservatives such an entertaining if maddening project.  I guess all we can really do is just keep trying to talk as honestly as we can about our own values and beliefs and see what happens.

References

An economic school has led to gridlock in Washington.  Dione, E. J.  Washington Post.  February 9, 2014.  http://www.washingtonpost.com/opinions/ej-dionne-jr-an-economic-school-has-led-to-gridlock-in-washington/2014/02/09/12de8df0-9020-11e3-b46a-5a3d0d2130da_story.html?hpid=z6.

I See Nazis

Welcome friends!

I suppose you read about the elderly conservative multibillionaire Tom Perkins who wrote a letter to the Wall Street Journal the other day in which he claimed that Occupy Wall Street political activists and other progressives are like latter day Nazis?  Indeed, according to Mr. Perkins “progressive radicalism” is the natural descendant of Nazism.  Oh my gosh!  No, no; I didn’t mean oh my gosh we’d better start drafting people to fight against this new threat to our existence!  I meant oh my gosh what a load of c__ p!  It’s funny but it’s also a little weird, isn’t it?  Well, I suppose I might as well say a few syllables on the subject.  Everyone else has.

Of course, as many others have pointed out, the first thing that jumps out at one about Mr. Perkin’s statement is just how utterly preposterous it is.  Indeed, one can’t help but wonder if the guy is actually familiar at all with the historical phenomenon of Nazism or if he was just using the N word as a sort of generic slur.  After all, I don’t think it’s any big secret the actual historical Nazis were enthusiastically supported by people pretty much like Mr. Perkins himself, which is to say the wealthy industrialists and financiers of the time not only in Germany but other countries as well, such as Henry Ford here in the good old USA.  Yes, these economic and social bigwigs apparently saw the fascists primarily as a means to combat the encroaching Red Menace (by which I mean communism, not the type of “socialism” that appears in the term “national socialism,” which was a rather different beast indeed).  Nor do I think anyone could seriously describe the historical Nazis or their supporters as progressives or liberals in any sense.  They were not really proponents of the working man.  At least I don’t think anyone would have expected to see much in the way of unions or strikes or anything of that nature in the Third Reich.  Not unless they wanted a jackbooted kick to the head.  And I certainly don’t think anyone could claim they were motivated in any way by any sense of egalitarianism.  Their philosophy was your stereotypical elitist Ayn Rand / Friederich Neitsche / American conservative claptrap about the Great Man (and Great Woman I suppose) struggling valiantly against a sea of worthless moochers and takers.  Poor people, working people, and just average people like you and me were basically cannon fodder and units of production.  I suppose the Nazis may have tried to promote some sense of social cohesion and groupthink as a means to consolidate their political control but it was hardly the sort of thing one might hear from progressive activists here in the US.  It was more like everyone needs to get in line and follow the big shots because Germany is number one, everyone is against us, and the only way we’ll ever succeed is if everyone shuts up and does what they’re told with no further questions.  When was the last time you heard a progressive activist in the US talk like that?

But I digress.  Delving into the utter inaptness of Mr. Perkin’s remarks is not really a very interesting subject to me.  I don’t usually waste my time on such laughable nonsense.  No, I’m really more interested in why conservatives apparently feel compelled to keep saying things like this.  Let’s face it, in the past several years American conservatives have gotten into the rather bad habit of saying all manner of outlandish things, which often seem to involve Nazis for some reason.  Perhaps you recall shortly after the financial crisis of 2008 conservatives were already painting President Obama as a Nazi because he proposed some new financial regulations to prevent similar economic meltdowns in the future.  If you recall the news stories at the time I think the actual claim was that the prospect of additional regulatory oversight of Wall Street shenanigans was the moral equivalent of the Nazis invading Poland during WWII.  And then even further back we had some conservative blowhard or other talking about “liberal fascism” or some such rot.  Make no mistake about it.  This isn’t a one off by any means.  The idea that liberals and progressive are like Nazis has been a consistent theme in conservative thinking (or at least talking) for some time now.

But why?  Well, two main possibilities come to mind.  One is that contemporary conservatives are just very attracted to ludicrous histrionics and overblown rhetoric and consider saying outlandish things an appropriate way to motivate their overly excitable and apparently rather ill informed base.  The other is that there is something so unique about the mindset of wealthy conservatives in this country they honestly see themselves as about to be victimized by latter day Nazis in the guise of liberals and progressives.  Let me discuss both of these possibilities in turn.

The case for a conservative attraction to overblown rhetoric seems fairly strong to me, especially when one considers the way they’ve gotten into the habit of blowing everything and I mean everything out of proportion.  You know what I mean.  The president is a foreign Muslim radical who is determined to undermine the Constitution!  That type of thing.  One presumes they just don’t think they’d get very far saying anything reasonable about anything.  In this context the default characterization of anyone who disagrees with them may well be that they are Nazis.  After all, who really likes a Nazi anyway?  Here’s an example from an actual exchange in Congress.  Non-conservative, “The tax rate on the profits from investment income seems totally incommensurate with the tax rate on wages, which we think may raise some distributional concerns particularly in the long run.” Conservative, “You’re a Nazi.”  (That wasn’t a real exchange by the way.  Just a bit of humor to lighten the tone.  But it might have been real, don’t you agree?)

Moving up a level in terms of potential substantive content is the possibility conservatives feel liberals and progressives are like Nazis because they don’t share conservatives’ hatred of government or more accurately hatred of government insofar as it does anything beyond looking after the interests of wealthy conservatives.  If you recall the Nazis didn’t mind big government at all.  Mind you, they were famous for their antipathy to democratic government, the type we have here in the US.  Unfortunately, the distinction between different forms of government seems to be pretty much lost on modern American conservatives.  Anyway, you see what I’m saying, right?  If you set aside the bit about different forms of government you could say liberals and progressives are like Nazis because they appreciate the need for government.  That at least some conservatives may be thinking along these seems likely to me because when conservatives aren’t calling people Nazis they’re calling them commies, which again is kind of funny if you think about it in a historical context.  It would probably come as a big shock to the old timers to learn one can be both a Nazi and a commie.  But it does make one look for the commonality, which again I suppose would be that both the Nazis and the communists saw a role for government.  So that just brings me back to a theme I’ve discussed in many of my previous posts, which is that I think this argument or really insinuation I suppose is probably the biggest and most dangerous load of utter BS I’ve ever heard in all my life.  I really feel a little silly having to explain this but there’s a big difference between the form of democratic government we have here in the US and the totalitarian governments of the Third Reich and the Stalinist USSR.  If you go about glossing over this rather significant fact and prefer to talk about government in the abstract then I’m sorry to have to tell you but you’re not doing anyone any favors.  You should think about the impact you might be having on the feeble minded who may take what you’re saying at face value rather than appreciating it for the outrageous rhetorical flourish it is and I presume you mean it to be.  And if we’re talking about the proper role of democratic government then I think we’re talking about something I’ve discussed many times before.  Distributional issues involve what amounts to interpersonal conflicts of desire and, yes, we need government to resolve those sorts of conflicts if we’re going to resolve them in an ethical manner.  The question is not or at least should not be which solution generates a smaller government according to some particular metric.  I mean, if you really want to minimize government just let people shoot it out on the streets.  You don’t need any government at all for that solution.  Ask someone from Somalia.  The question is and should be how can we resolve the issue in an ethically satisfactory way and whatever size of government that solution requires is apparently the size of government we need.  In this case the real source of conservatives’ concerns seems rather obvious.  Under our current distributional arrangements they are the recipients of a vastly disproportionate share of our economic resources and they’d like to keep it that way.  So the solution that brings that about is naturally the solution they would like to convince other people involves not behaving like a Nazi or a commie, the proper size of government, and so on.  The other solution, the one where we change something up to get a bit more resources flowing to some other people, is what they would like to convince everyone is what a Nazi or a commie would do.  The size of government in that case would obviously be totally wrong.  In other words, it’s different when I do it.

Moving up to the final level of potential substantive content is the possibility conservatives are not just talking in a particularly flamboyant way but are expressing what they really feel: they are besieged by the modern equivalent of Nazis who are about to break all the windows in their various mansions in a replay of the historical Kristallnacht pogrom and perhaps even pack them off to murder camps in the countryside.  Sound pretty far fetched?  I mean, we’re talking about some of the most economically and politically powerful, privileged, coddled people in the entire country and hence world.  Ironically, however, that’s what I think makes this last possibility somewhat plausible.  You see, the most salient feature of conservatives in this country must be their massive sense of entitlement and self worth.  Remember according to the conservative social philosophy the distribution of resources in a market place and especially the particular market place we have here in the US is imbued with great ethical significance, so the fact they are multibillionaires implies to them that ethically speaking they are many, many, many times more important than average schmoes like you and me.  They’re Very Important People and no place more so than in their own minds.  That presumably is why they consider it perfectly appropriate we should allocate to them sufficient economic resources to allow them to indulge their every passing whim while other people suffer the various ills of relative economic deprivation and do things like sleep on the street, go without necessary health care, be driven to desperation and drug use and crime, witness the lives of their children and loved one being destroyed by unwholesome environments they are too poor to escape, and so on.  Given this overall mindset I don’t think it’s unreasonable at all to suppose many conservatives consider what would appear to most average people as some relatively trivial financial setback for someone in their situation, say a small decrement in their vast wealth from a change in the tax rates or what have you, as the moral equivalent of what would seem on the surface to be a much more drastic problem for people like you and me, such as being dragged off to a murder camp in the middle of a forest by a bunch of angry baboons.

Well, I just don’t know the answer.  I’ll keep an eye on this issue and see if I can make any headway.  Not that I think it should take any attention away from more serious questions such as for example what to do about the incredible wealth and income disparities that have developed in this country over the past several decades.  But it is an amusing question, don’t you think?  Do rich conservatives really see Nazis everywhere or are they just talking funny?  How could one ever tell?  I feel like I’m back in my introductory epistemology class.  Well, maybe if I can get a few more Nazi sightings in different contexts I might be able to piece it all together.  I’ll keep you posted.

References

What in the world: Comparing progressives to Nazis and free speech in the UK.  January 27, 2014.  BBC.  http://www.bbc.co.uk/news/blogs-echochambers-25922096.

Billionaire apologises for Nazi comment in bus row.  January 28, 2014.  BBC.  http://www.bbc.co.uk/news/technology-25930215.