Tuesday, July 26, 2011

Austrian Fantasy

Browsing the web, I came across the following claim  by Lew Rockwell:

" Need I note, as this article indirectly indicates, that the whole world is reading Rothbard, but that Friedman is almost a nobody outside of mainstream academic economics?"

He provides no support for the claim—the link is to a collection of links on Rockwell's site to works by Rothbard—so I thought I would look for some data. I do not know where one would find figures on what books people read, but the most readily available source for books they buy is Amazon, which ranks books according to sales; rank 1 would be the best selling book on Amazon, rank 100,000 would be the hundred thousandth best book. So I searched Amazon.com for books authored by Murray Rothbard and books authored by Milton Friedman, in each case sorting by sales to find the ones that sold best.

Friedman, Money Mischief: Amazon Bestsellers Rank: #2,132 in Books

Friedman, Capitalism and Freedom: 40th Anniversary edition: Amazon Bestsellers Rank: #2,120 in Books

Friedman, Free to Choose: Amazon Bestsellers Rank: #3,719

Rothbard, A History of Money and Banking in the United States: The Colonial Era to World War II: Amazon Bestsellers Rank: #34,118 in Books

Rothbard, The Case Against the Fed: Amazon Bestsellers Rank: #22,316 in Books

Rothbard, The Mystery of Banking: Amazon Bestsellers Rank: #49,523

Rothbard, America's Great Depression: Amazon Bestsellers Rank: #63,960

Readers are welcome to check the numbers themselves—they will, of course, be a little different each time you check them, since Amazon updates rankings on the basis of current sales—or search for a Rothbard book with sales anywhere close to the top three I found for Friedman. 

I do not usually waste my time defending my father, a job he did more than adequately for himself, but this seemed like a striking example of one prominent Austrian—Lew Rockwell founded the Mises Institute, which publishes several of the Rothbard books I listed—who appears to be living in a fantasy of his own invention.

He is, of course, more than welcome to post a comment here providing the data to support his claim. 

[New Information]

A correspondent points me at data on relative online interest in Milton Friedman and Murray Rothbard.
In fact, according to Google AdWords, there are approximately 135,000 searches a month for your dad's name globally. That's in comparison to 8,100 for "murray rothbard" and 22,200 for just "rothbard". This is based on a 12-month average. Google Keywords
available at: https://adwords.google.com/select/KeywordToolExternal

Another metric to look at is Google Trends which puts this information into a graph over time, and allows keyword comparison. Take a look at:http://www.google.com/trends?q=milton+friedman%2C+Murray+Rothbard

213 comments:

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VangelV said...

"He who inn our age opposes armaments and conscription is, perhaps unbeknown to himself, an abettor of those aiming at the enslavement of all."

Human Action, new revised edition, Yale University Press 1963, p. 282.

Mises is arguing that in a world where everyone played by the right rules conscription would be unnecessary, but that given the existence of aggressors, "If the government of a free country forces every citizen to cooperate fully in its designs to repel the aggressors and every able-bodied man to join the armed forces, it does not impose upon the individual a duty that would step beyond the tasks the praxeological law dictates."

That's pretty clear.


Well David, it is not that clear to me because I have read Mises' other comments on the issue. In his book, Interventionism: An Economic Analysis, we find:

"The first step which led from the soldiers’ war back to total war was the introduction of compulsory military service. It gradually did away with the difference between soldiers and citizens." (Page 69)

and

"Compulsory military service thus leads to compulsory labor service of all citizens who are able to work, male and female. . . . Mobilization has become total; the nation and the state have been transformed into an army; war socialism has replaced the market economy."(Page 69)

Those are very powerful statements that were not repudiated by the change that was made in the 1963 edition of Human Action, for which he was criticized by many Austrians.

From what I have seen in his writing, there is too much pro-liberty and anti-militarism in Mises for him to have really supported conscription for very long, if at all. Of course, Mises is criticized by the anarchocapitalists for his tolerance of statism so you may be right.

VangelV said...

And what fraction of the U.S. population do you think visits the LVM site with any frequency? 1% would be about 3 million people--do their logs suggest that many readers? 300,000? If one person in a thousand gets exposed to Rothbard, while Friedman is someone who everyone who has ever taken a course in economics and many who have not has heard of, how do you compare their relative influence?

This is a good question. Since you live in a country in which you can go to jail for having a shower head that allows more than the allowed flow of water to go through it or for having a toilet tank that is above the maximum allowed capacity I would say that Friedman had far more influence than Rothbard.

But the problem for the followers of Friedman and other mainstream economic thought is the activity that we see in the real world, which does not care about bad economics. In that real world Rothbard is far more useful to explain and anticipate events, which is why I suspect that the establishment economists have attacked Rothbard and Libertarians over the past few years. As they were exposed for empty suits and their economic theories failed more and more attention has moved to the Austrian school and advocates for a much smaller state and sound money. Given the risks to their incomes and prestige it is no surprise that the failed establishment economists are taking their run at the Austrian school, which got it right once again while the others failed.

VangelV said...

If I had said that, shouldn't you be able to find me saying it and quote me saying it? You seem to be simply repeating over and over again "I believe your position is X," while offering not a scrap of evidence in support of your belief.

If you form beliefs without evidence, why should other people take them seriously?



Perhaps I have interpreted your words incorrectly but I am not sure which one of us is right about your views of Rothbard.

Let me quote some of your own words. You wrote:

Rothbard had a problem. He thought he was a great economist, but practically nobody within the profession agreed and most of them had never heard of him.

Rothbard had a solution. He was ignored because he held extreme pro-market views, which were ideologically unpopular in the academy.

Rothbard had a problem. Milton Friedman held extreme pro-market views--not as extreme as Rothbard's, but far enough from academic orthodoxy so that the same effect should have existed. But Milton Friedman not only wasn't ignored, he was viewed within the profession as a leading figure--despite his unpopular political views.

Rothbard had a solution--to persuade himself and his followers that Milton Friedman was really one of them instead of one of us, hence his acceptance by the profession didn't contradict Rothbard's view of the reason for Rothbard's non-acceptance.


After reading you comments I wrote, Perhaps Pangle and Bloom have had more influence on me than I thought but that is the way I read your line of argument. Rothbard is some kind of kook who is out of step with his time and is rejected by the establishment while freedom loving economists who wanted to work within the system were accepted and influential."

I am sorry but the things that you wrote lead me to conclude that you feel that Rothard was some delusional cook who was out of step with the profession and his time. Clearly you think that Rothbard was not as good an economist as your father (whose videos I use to help teach my children and I do admire in many ways.) But I would say that I can't find anything that your father did that contributes to economics as much as Rothbard's books, papers, and commentaries.

There is no doubt that Milton was more popular among the establishment and that his views were more acceptable. But that does not change the fact that he was wrong in both methodology and his conclusions.

The biggest difference that I see comes down to principles. Murray argued from a foundation of natural rights and made it clear that violation of those rights by the state could not be justified, no matter what the professed motivation. That foundation and the use of logic led Rothbard to his philosophy. On the other hand, your father was a moral relativist and believed that rights could be violated if it benefited society even as he made great speeches in favour of individual liberty. As an engineer who appreciates logic and tends to believe in principles I had trouble with the contradictions and that is the reason that I put your dad a long way behind Rothbard.

Chip S. said...
This comment has been removed by the author.
Chip S. said...

With no disrespect for Murray Rothbard, I find Rockwell's proposition completely laughable.

Milton Friedman was one of the great men of the 20th century, whose work was known worldwide. It's no criticism of Rothbard to observe that he did not begin to approach Friedman's level of influence.

A brief quote from Mart Laar, who as prime minister ushered in the Estonian "economic miracle," illustrates the point nicely:

The first time I heard the name Milton Friedman, it was in propaganda newsletters that said there is one very bad and very dangerous economist, and his name is Milton Friedman. I was quite sure, when he is so dangerous for the Communists to be telling me this, he must be a good man.

Anonymous said...

Apparently, Milton Friedman is famous. The Fed says so on their money supply FAQ page.

http://www.federalreserve.gov/faqs/money_12845.htm

Anonymous said...

For what it's worth I gave up on Rothbard long ago when I had to edit something he wrote. It was on a topic that I actually knew something about and the number of errors Rothbard made were inexcusable. He made claims which were contrary to the facts. He attributed views to people that most definitely did NOT hold. I was under the distinct impression that Rothbard first had conclusions and then would twist and distort facts to fit his conclusions.

I have discussed this with friends who were closer to Murray than I was. (I found him too malicious and vindictive to spend much time with him, he was always trashing whoever was in his disfavor at the time). They said Murray was known to write material and then pay a student to try and find footnotes to prove it. This, by the way, was from someone who actually likes Murray and likes his views and works with the cult he founded—you know the one where they all go around in bowties to prove they are individualists.

VangelV said...

Anonymous wrote:

For what it's worth I gave up on Rothbard long ago when I had to edit something he wrote. It was on a topic that I actually knew something about and the number of errors Rothbard made were inexcusable. He made claims which were contrary to the facts. He attributed views to people that most definitely did NOT hold. I was under the distinct impression that Rothbard first had conclusions and then would twist and distort facts to fit his conclusions.

Interesting claims but since there is no specifics given, no evidence, and identification of the claimant I have to reject the posting. I do not agree with all of Rothbard's interpretations or claims but I certainly hold him to be a clearer thinker and a better writer than Friedman, Keynes, Krugman, or most make believe economists.

YEA said...

Your father is awesome!

Anonymous said...

I regard one of the biggest flaws of the so-called "Austrians" and "von Mises" people is their obsessive need to denigrate Milton Friedman. It makes it almost impossible to take them seriously, especially their tendency to put Friedman in the same boat as Keynes, or in the same boat as Obama and Bernanke. They do this by selectively characterizing Friedman's views in a way that completely distorts his overall message.

Let me also compare Friedman to Rothbard as a writer, scientist and educator. Because Friedman was quantitative, the von Mises and the Austrians dismissively call him a "statistician, not an economist."

What they miss is that Friedman's arguments are infinitely more logical, complete and rigorously sound than the Austrians, at least as exemplified by Rothbard. Rothbard is hard to follow, often a poor writer, takes all kinds of unjustified leaps of logic and is frequently internally inconsistent and self-contradictory. Friedman's arguments are much more carefully constructed and logically consistent. So you have the rare situation where Friedman, the mathematician and data-driven guy, is much easier to understand and read, and makes much more intuitively appealing arguments, than Rothbard, the qualitative, so-called intuitive guy.

For me there is no contest. I don't hold this against Rothbard as it is almost impossible to compete with true geniuses like Friedman. What I do hold against him and his followers is their tendency to make ad hominem attacks and thus to try to damage people's credibility using personal means. It turns me off to them and, I note, is something that Friedman almost never did, even when he should have.

VangelV said...

...They do this by selectively characterizing Friedman's views in a way that completely distorts his overall message.

It is not about a selective characterizing of Friedman's views. It is an argument about methodology. Milton was more of a math person than an economist and pushed a number of questionable ideas. Personally, I was never very comfortable with his argument that the fact that a theory’s assumptions were unrealistic should not matter because the only thing that mattered were the predictions made by the theory. This argument just allows economists to deal with the fact that their theories are not realistic and fail to make reasonable predictions when it really matters.


Another problem that is the inconsistency. While Dr. Friedman was usually great on micro matters I found his macro positions to be not very different than the Keynesians. He seemed to argue that you can have freedom on the micro side at the same time as the central planners were permitted to control the macro side of the economy. Public schooling was not a problem no matter how bad the results; his primary goal was efficiency. The Fed's policies of destroying the purchasing power of workers and savers was OK as long as it followed strict rules that limited the destruction to a small percentage each year. He proposed guaranteed annual incomes for all no matter how little they chose to do to earn that income. On the issue of money Friedman is a total disaster. In his study of the Great Depression he did not notice that the bust was created by money creation in the later half of the 1920s but blamed it on insufficient money printing after the market collapsed. This is why statists love to bring up Friedman when arguing that the Fed should do more to 'stimulate' the economy via the printing press and credit expansion.

Let me also compare Friedman to Rothbard as a writer, scientist and educator. Because Friedman was quantitative, the von Mises and the Austrians dismissively call him a "statistician, not an economist."

Why not. Friedman is OK as a writer but not as good as Rothbard. Friedman uses a lot of math but that does not mean that the Austrians are incapable of doing the same thing; they just know better. You cannot assume simplicity where you have complexity or hide behind the argument that predictions are all that matters after most of the predictions have been discredited.

What they miss is that Friedman's arguments are infinitely more logical, complete and rigorously sound than the Austrians, at least as exemplified by Rothbard. Rothbard is hard to follow, often a poor writer, takes all kinds of unjustified leaps of logic and is frequently internally inconsistent and self-contradictory. ..

How is perfect competition, and arguments that reality does not matter logical? Friedman's arguments not logically consistent and certainly not carefully constructed because his positions are contradictory. A true advocate of free market capitalism does not make excuses for taxation, money printing, or negative taxation. Not only is Rothbard the better writer he is the more consistent and logical writer.

For me there is no contest....

As I wrote above, Friedman was great on some issues. But he was clearly a statist and terrible on others. You can choose to ignore the warts but I can't.

Laeeth said...

Replying to an old post, but why not. It's not as if these questions suddenly become less relevant purely by reason of the passage of time:

"The person who spoke about Austrians having trouble getting jobs: Its more a methodological problem than anything else. "

There are many, many Austrians in the investment world. In part that's because one must be concerned with understanding developments in markets and the economy most of all, and one simply isn't concerned with academic prestige or persuading that kind of audience. There may be other reasons, also.

Carl M:
"Ah, Marc Faber. Wasn't he writing for that investment letter Strategic Investing for a while? I seem to recall his name on some of the columns in that letter which made one bad prediction after another.

Predicting a crash to happen a decade and a half before it happens isn't particularly useful. You can miss an awful lot of market gains in the interim."

I've been following Marc for more than 13 years now. I keep a stash of his old newsletters to re-read now and then. He's perceived as a perma-bear because of his choice of character during appearances on CNBC. One simply can't communicate in nuances on that medium, but if you're interested in his work then you need to put in the effort. My ex-girlfriend was a trader for Moore, and I know that Louis Bacon reads him regularly. Similarly there are many others of that standing that respect his work.

Taking the most important, career-defining point in markets:

In June 2003 when Mr Bernanke was speaking of deflation, he wrote about the financial impications of reflation advocating selling bonds short, buying hard assets and emerging market equities. Rather a good call.

In June 2008 he turned bullish the US dollar, bearish commodity prices (including gold) and expressed concerns about widespread economic weakness, not just in the US, but in emerging economies - a significant slowdown in global growth. At the time, most commentators expected a decoupling of global growth, with emerging markets largely immune to the 'US subprime crisis'.

I have lost letters from the early part of 2009, but from memory I am quite sure that he turned bullish then, expecting the worst to be over.

In July 2012 when my own view that 'the European crisis is in principle soluble' was seen as something shocking and outrageous, he was buying European stocks (he sent me a list of French equities he was buying).

So I think perhaps you should be more careful with your assessment. The more subtle Austrians have done much better than many others over the past years.



Laeeth.


Unknown said...

i don't get it, im sure there are more google searchs for "keynes" and all his crap.. so this whole debate is pointless

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