Thursday, September 22, 2011

Forget that it's a terrible waste of human capital and a major psychological burden...

...the real problem with youth unemployment is that those people are the ones that end up turning into commies:

"Permanent mass unemployment destroys the moral foundations of the social order. The young people, who, having finished their training for work, are forced to remain idle, are the ferment out of which the most radical political movements are formed. In their ranks the soldiers of the coming revolutions are recruited." - Ludwig von Mises (1922)

Is it just me, or does Jeff Tucker seem completely oblivious to the fact that this quote really doesn't make Mises look all that good?


  1. "the ones that end up turning into commies..."

    ...or even worse, Keynesians!

  2. This strikes me as similar to explanations of youth radicalization in the Middle East these days. What's so concerning about the reasoning? I mean, one might not share Mises's value judgment about revolutionary politics, but finding the basis of revolution in economic disaffection seems reasonable enough.

  3. I'm sure he's exactly right in his reasoning.

    I guess I'm just coming at this as a guy that's done a lot of work on youth joblessness. The first thing that pops into my head when I think of the negative consequences of youth joblessness is not "they might radicalize!".

  4. Actually, given the very violent Third International and then later Brown Shirt terrorism in Austria and Central Europe, fear of radical youth being the very first thing on his mind is not that surprising.

    von Mises lived in times when hatred of Jewish people and their scapegoating once led to several Viennese Jews being forced to squat on the ground and clean the streets with toothbrushes, as taunting youth watch them.

    Naturally, these people were scared, to the point that - as you point out - they forgot that the youth too were suffering.

  5. The U.S. is also pretty allergic to radicalization... witness the lack of riots or demonstrations amidst the economic turmoil of the last few years. In a different social situation, this sort of concern is probably much more relevant. Which, I suppose, preserves your critique of Jeff Tucker (I'm assuming this guy is from the U.S.), but perhaps lets Mises off the hook to a certain extent.

  6. To be fair, I have not heard this sort of critique for the more mainstream in American society, with media accusing ordinary people of "radicalization" just because they engage in a little posturing, hyperbole, and grandstanding during campaigns and rallies.

    Look how some publicly visible people acted like Jared Lee Loughner's killings were the first shots of a brown shirt revolution. It's a pretty embarassing way to view your own fellow citizens in one of the most stable, law-abiding, and low crime regions in the world.

  7. Or look at it another way: what if it turned out that unemployed youth spent their time writing Shakespearean sonnets, composing fugues like Bach's, and painting like Van Gogh. Might we not then conclude, "Hey, high youth unemployment is not so bad!"

  8. Mises said some pretty reasonable things. He adopted a utalitarian perspective on government intervention and was well aware of the limitations of praxeology.

    Unfortunately, this isn't the impression you'd get when visiting the institute that bears his name.

  9. Is it just me or did Kuehn live through the early 20th century?

  10. Jonathan M.F. CatalanSeptember 22, 2011 at 2:02 PM

    You guys realize that this is a quote from Mises' book Socialism, right?

  11. Out of curiosity, DK, what's your take on the latest Irish economic numbers?

  12. I saw the Cowen post but don't know much of anything about the situation and have no thoughts. The way these things work in the blogosphere, I imagine we'll get many other good reactions to it, and the usual suspects that see things more or less how I do ex ante, and are much better versed in the Irish situation specifically, will be commenting too. So their posts would be a good place to start.

  13. Not just to extreme left-wing ideolgies either.

    And Austrian liquidationism is a fantastic way of turning those fanatic ideologies into government.

    Look at Weimar Germany. Of course, individual countries and times have different issues/trends/movements/political biases.

    Modern right-wing extremism in, say, the UK, might go down the road of the BNP, not as bad as fascism but pretty either

  14. Speaking as someone who lives in Ireland...

    I think the recent improvement is because of the stabilisation of the debt situation. The governments accounts aren't looking as bad as they were and for that reason investors are investing. There's plenty of reason to do that when you consider Ireland's corporate tax rate, so long as the institutional environment for business is stable.

    There is also another peculiarity I've noticed recently. Lots of Irish people are planning to emigrate, a while ago they believed this would be quite difficult. The experience of those who have gone first though seems to have shown that it isn't so difficult. So, many people have realised they have other options. I think this has led them to be more confident in spending now.

    I agree that a Euro crisis is looming and that would put Ireland back into recession. I think when that happens Ireland will use it as an excuse to default even if they don't really need to.

  15. Daniel, some people really abhor mass killing. I'm not saying this with irony or self-righteousness. You clearly don't; your comments on my blog about Obama using military intervention "sensibly" or "with prudence" or whatever you said, shows that this is not a burning issue with you.

  16. Bob - then you've completely misconstrued my comments on your blog.

    I could easily argue that you don't abhor mass killings because you are unwilling to apply violence judiciously to stop mass killings.

    I COULD argue that, but I don't go around saying that "Bob Murphy clearly doesn't abhor mass killings". I'd appreciate it if you didn't say that about me either.

    In a messed up world like ours, it's very hard to avoid mass killings. Rather than question my motives, lets just say that you and I see the best way to approach these problems somewhat differently. That's the courtesy I extend to you, after all.

  17. Current -
    Thanks for the thoughts - that makes a lot of sense, assuming the debt was a major impediment. These PIIGS are between a rock and a hard place. There is a sense in which, because of their budget situations, contractionary policy can have expansionary effects. What they really need is an infusion of demand at the same time that they clean up their books. But Germany does not seem particularly interested in a vigorous application of this option (at least for Greece - has Ireland sought anything from the EU?).

  18. OK Daniel I'll drop that point... Let's move on. When some Austrians call Keynes a central planner, Keynesians flipped out. They quoted Keynes showing how he thought his policies would ameliorate mass unemployment and thus save Western liberalism. What a great guy.

    When some Austrians call Mises a great guy for pointing out this his policies would ameliorate mass unemployment and thus save Western liberalism, you flip out about how his priorities are all out of whack.

  19. Lord Keynes,

    "Look at Weimar Germany. Of course, individual countries and times have different issues/trends/movements/political biases."

    The Great Depression did not create Nazism or lead to it gaining power in any direct way, nor did austerity measures by the Weimer republic for that matter. If anything created the circumstances for Nazism to arise it was the inability of the German people in general to acknowledge that they lost WWI - not helped by the fact that Ludendorf, etc., who demanded from the German government in 1918 that it sue for peace, turned around and stated within a year of doing so that their was a "stab in the back" coming somewhere within Germany itself. Nazism was popular enough prior to 1929 in other words. Indeed, other fascist states (as well as parties - Romania is an example) had come into being throughout Europe prior to 1929.

    BTW, neither did the peace treaties following WWI create the Nazi party or lead to WWII; in comparison to past treaties, it was a kind treaty. In fact, in the case of most of the treaties following the war (there were four of them) as they related to Germany, they merely rubberstamped what happened on the ground following the defeat of the Central Powers - that is Poland, etc. drew their own borders and the Allies simply acknowledged that (while claiming to have some significant role in the process that they did not play). However, its kindness did not placate because there were high expectations that the war would be won (unlike in Britain and France where the views on the outcome were much less confident); that also made the "stab in the back" story far more appealing. Anyway, given the general paranoia that led Germany to start WWI in the first place (and yes, the Germans started the war - there are mountains of evidence to demonstrate such), it isn't surprising that in defeat that paranoia turned inwards (it had been turned outwards toward the Russians beforehand) and found internal enemies in the process or that various thugs would be inspired and lock in to such paranoia.

    As for how Hitler came to power, that was the result of the internal decision-making of those in power before him - namely that he would be an easily manipulated puppet (along with two ministers of Hitler's choosing) that conservatives could use against the powerful communist/socialist bloc within Germany (which is something they had been itching to do for some time). That was a fundamental misunderstanding of Hitler's political chops, but that isn't explained by the Weimar republic's austerity measures in a direct or even in a very indirect way. After all, the communists/socialists had been powerful prior to 1929 (they had roughly 3/4 of the membership level of the Nazi party), so whatever threat they posed to the nation had been the case for some time by 1933.

  20. Unless I read whatever surrounds these two quoted lines my judgment of them is fairly limited. Indeed, given how short it is, I would imagine that it is part of a paragraph.

    And for those reading the quote, it ought to be obvious that when Mises writes "destroys the moral foundations of the social order" and "forced to remain idle," you can (you don't have to - but you can) plug stuff like "terrible waste of human capital" and "major psychological burden" and such into that.

  21. I'm pretty sure, Gary, that the argument about unemployment and economic malaise aiding the rise of the Nazi's is meant to be more narrow- an argument that states it aided it rather than that it was the only cause. Certainly the other issues you mention are a piece of the story as well.

    The terrible economic situation was very certainly a contributor to the massive gain in seats the NSDAP (as well as the KPD, of course) experienced during the 1930 election which certainly helped their bargaining position.

  22. Warren,

    Actually, they lost seats following that, and it was their diminished circumstances which allowed conservatives in the German government to feel comfortable in reaching out to them. History is about contingency.

    It also certainly doesn't in any way explain the Nazi agenda; it was part of the gameplan of the Nazis long before the depression began.

    Similarly 1929 doesn't explain the Italian fascist desire to re-create the Roman empire - that was part of their agenda when they came to power ~six years before that.

    1929, the depression and the Weimar austerity plan were probably minor factors at best in comparison to what else was going on.

  23. Gary,

    You mean after the next election in which they once again made rather substantial gains? They still wouldn't have made it if they hadn't received the huge jump in seats in the first two elections following the crisis.

    Of course it doesn't explain their agenda (as you said there was more going on there than high unemployment), but I'm certainly not arguing it did. Saying it helped their rise to some extent and saying it was what defined their ideology are different things.

    Considering the Italian Fascists had been well established by 1929 it certainly doesn't explain much about their ideology or revanchist wars. Nobody here is seriously arguing that either as far as I can tell.

    I'm simply stating something that ought to be obvious; in periods of high unemployment, social unrest, and economic depression extreme ideologies become more palatable. That doesn't mean that it has anything to do with the origins of their ideology per se (Lenin was obviously a radical communist before World War One, for one example), but it does explain an element how the existing power structure became wavering enough to allow ostensibly revolutionary strong men from minorities into power.

    I probably wouldn't apply the blame as loosely as LK did, but I'll stop there before I go on a semantic tangent.

  24. Warren,

    What made the Nazis palatable to von Papen was their relative political position in 1933; they had shed ~2 million votes from their earlier electoral success. In fact, if they had held ground or increased slightly in popularity it is unlikely that von Papen would have turned to them.

    "Considering the Italian Fascists had been well established by 1929 it certainly doesn't explain much about their ideology or revanchist wars. Nobody here is seriously arguing that either as far as I can tell."

    I never suggested that they were; I was using that by way of comparison.

    "I'm simply stating something that ought to be obvious; in periods of high unemployment, social unrest, and economic depression extreme ideologies become more palatable."

    There are actually plenty of examples where that is not the case; mere economic bad times explains very little I'd say, and even where bad economic times appear to lead to one thing or another it explains very little.

    When it comes to the latter let's take this outside of the controversial context Hitler's Germany and look at the 3rd century crisis of Rome (a crisis which was as much economic as anything - debasement of the currency, abandonment of large sections of urban centers, decrease in commerce, etc.). It leads to the eventual rule of Diocletian as Emperor - who makes dramatic changes to Roman rulership, the economy, etc. - ex. he tries to make all manner of professions hereditary, he tries to force those who had left the countryside back onto the land, etc. All of these were rather illiberal policies in comparison to what had come before. One could argue that late 2nd century and 3rd century crisis were what brought on the possibility of his rulership (which in many ways dramatically changed the nature of the empire and the relationship between ruler and subject), but it really isn't much of an explanation - indeed, it is a bit like saying that the Roman Empire collapsed because barbarians invaded the empire. All the economic problems are merely a symptom of, for example, the decline in population from roughly the end of the 2nd century onward - fewer people means fewer resources by which to maintain an empire in the West within the borders created roughly by the time of Claudius. The economic explanation really doesn't lead very far in other words when it comes to explaining the decline and fall of the Western Roman Empire.

    "I probably wouldn't apply the blame as loosely as LK did..."

    Well, we agree on that at least.

  25. "The first thing that pops into my head when I think of the negative consequences of youth joblessness"
    The quote was not his immediate reaction to someone telling him about joblessness. As pointed out, it was in a book titled "Socialism", so of course he's going to relate unemployment to his book's subject.

  26. "I'm sure he's exactly right in his reasoning.

    I guess I'm just coming at this as a guy that's done a lot of work on youth joblessness. The first thing that pops into my head when I think of the negative consequences of youth joblessness is not "they might radicalize!"."

    Yeah, but you're an american thinking about the problem in 2011 and not a european thinking about it in the 1920's. You don't need to be a history buff to find it pretty obvious why the potential radicalising effect of long term unemployment was more pressing to Mises then than it is to you now.


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