This is a very nice takedown of E.J. Dionne and his recent bizarre assertion that the GOP is somehow in thrall to Austrian economics. The author not only elaborates on the silliness behind Dionne’s pined-for “normal, bipartisan legislation during the Keynesian heyday,” but also blasts David Frum’s nonsensical assertion that the Austrian school somehow encourages conservative hostility toward intellectuals:
Let me guess: Frum considers himself (sniff) one of those trodden-upon intellectuals.Back in 2012, Bloomberg’s Josh Barro and CNN and Newsweek contributor David Frum similarly charged that conservatives’ embrace of Austrian ideas is to blame for “how hostile the conservative movement has become to intellectuals.” Responding in a piece for ZeroHedge, James Miller of the Mises Institute of Canada, disdains the notion of a great Austrian groundswell among conservative politicians.
If Frum, with all his political credentials, can show me another true blooded conservative that has read through Human Action or Man, Economy, and State, I am all ears. The fact remains that traditional conservatives aren’t brushing up on their Mises when they aren’t attending Tea Party rallies or asking their Congressman to nuke Iran into smithereens.
The author also provides a nice refutation of Krugman’s tired “where’s the inflation” argument:
Much is made of the fact that Austrian warnings of hyperinflation have not come to pass. Nobel Prize winner Paul Krugman calls on the Austrian School to admit the errors of its way in light of the supposed economic recovery now underway. In fact, as CNBC Senior Editor John Carney points out, events have unfolded in perfect compliance with Austrian theory.
Krugman is right that many self-styled Austrian economics mavens predicted high inflation. The Austrian model, however, does not.Part of the confusion lies in the well-known definitional dispute over what is meant by the term “inflation.” In general, most people and economists use inflation to mean “rising prices.” Austrian economics, however, treats rising prices as a contingent phenomenon of an increase in the money supply.In other words, Austrians will insist that any increase in the money supply is inflation—as a matter of definition. But Austrian economics does not insist that this kind of inflation necessarily results in higher prices.
Of course the Austrian movement is growing, just not in the way Dionne imagines. Does he really think the political class, left or right, will embrace economic principles that reduce political power? Then again, maybe he does. Washington is full of incredibly naive dunces when it comes to the real nature of politics.
