Roberts on Hayek

Russ Roberts's piece in the Wall Street Journal on Hayek today left a little to be desired, but I suppose there's only so much you can expect from an op-ed.

He asks: "Why the sudden interest in the ideas of a Vienna-born, Nobel Prize-winning economist largely forgotten by mainstream economists?"

Name me a single mainstream economist that has "largely forgotten" Hayek. Hayek is a major figure in 20th century economics. I think what Roberts means is that mainstream economists don't think of Hayek in the same way that he does. That's not quite the same as Hayek being "forgotten". Would it be accurate for me to say that Roberts has "forgotten" Keynes? Perhaps it would be, since he goes on to write: "First, he and fellow Austrian School economists such as Ludwig Von Mises argued that the economy is more complicated than the simple Keynesian story. Boosting aggregate demand by keeping school teachers employed will do little to help the construction workers and manufacturing workers who have borne the brunt of the current downturn." Keynes offers a simple view of the economy relative to Hayek and Mises? That's news to me! But then again, this sort of straw-man version of Keynes shouldn't be surprising to anyone who has seen Roberts's Hayek vs. Keynes rap.

It's also sad that Roberts writes something like this: "But now that the stimulus has barely dented the unemployment rate, and with government spending and deficits soaring, it's natural to turn to Hayek." No one who talks about Bastiat as much as Roberts does (not to mention anyone who teaches economics at the university level) should have to have the concept of a counterfactual explained to him. My guess is Roberts understands the concept perfectly, he just deliberately presents a disingenuous picture of the stimulus in this article because it furthers his own narrative. That's unfortunate. If you can't make a fair, honest case in an op-ed this short, that's understandable - but it doesn't give you license to distort the evidence to make a dishonest case.

Even David Henderson is a little hesitant on Roberts's claims about what Hayek means for Fed policy under Greenspan. But again, Roberts has his own narrative of how the crisis went down. For him it's a simple story, not a complicated one (which makes his earlier critique of Keynes espeically ironic) - and he's not going to let the evidence get in the way of that.

I'd dispute some reckless applications of this statement, but you can't really contest Roberts here: "Third, as Hayek contended in "The Road to Serfdom," political freedom and economic freedom are inextricably intertwined."

Also here: "The fourth timely idea of Hayek's is that order can emerge not just from the top down but from the bottom up. The American people are suffering from top-down fatigue." The point he's making in the first sentence is self-evident, but his application is shaky. I'd argue the election of Obama is just a culminating event in a bottom-up movement to retake American self-government in the wake of 1990s passivity and Bush-era top-down leadership. Even the opposition now (the Tea Party) is a grass-roots opposition to what is fundamentally a grass-roots governing majority (the Obama movement), in contrast to the Bush years where a top-down administration's only organized opposition for most of the first decade of the 21st century was a Democratic Party establishment that was largely complicit in the Iraq war and in most of Bush's domestic excesses as well. That started to change towards the end of Bush's presidency, and by the 2008 election we had a genuinely grass-roots movement behind Obama and a genuinely grass-roots movement on the Republican side that continues to this day.

I take issue with some of what the administration has done as being too centralized. The health reform package, for example, is not the package that I would have put together. But Roberts makes this bizarre case that anything emanating from the federal government is "top-down", no matter how "bottom-up" its origins are. Essentially, if you don't agree with Russ Roberts's libertarianism you're "top-down". If you do what he thinks should be done (namely, reducing federal spending and action), then it's bottom-up. This is patently absurd. It's another example of this weird phenomenon among libertarians where they can't comprehend their own propensity to ride roughshod over human liberty, despite the fact that it's blatantly obvious to the rest of us.