One of the most useful of all the tropes of statism is that the Great Depression was caused by the free market and exacerbated by President Hoover’s refusal to take the sort of bold interventionist measures that they are certain the government must take. That notion has been refuted over and over, but it keeps coming back.
Economics professor Steven Horwitz (St. Lawrence University) writes about how important it is for libertarians to be excellent teachers. "Not everyone will be the next Hayek," he writes. "Most of us will have our greatest impact in the classroom, where the number of students we teach over a career can add up very quickly. That's going to be many more people than the number who read our relatively obscure scholarly articles (though not this column!)." Horwitz explains what it takes to be an excellent teacher: passion, empathy, and love. Young people often leave high school with their heads filled with statist assumptions and cliches. If we ever turn off the road to serfdom and onto the road to liberty, professors like Steve Horwitz will have played a key role because they got their students to question those assumptions and cliches.
Yesterday's Wall Street Journal included a letter from a writer who thought that he could counter a recent op-ed by Charles Koch, arguing that the federal government does too much, costs too much, and menaces our future prosperity, with a 1995 comment by the late historian Arthur Schlesinger, Jr. Schlesinger, venting after the Democrats lost control of Congress, saw big government as a line of defense for the common people against rapacious "corporate interests." He did not see that those corporate interests only have power due to their alliances with politicians. Here is the letter I just sent to the WSJ in response:
Writer George Kovac evidently believes that the late historian Arthur Schlesinger, Jr. penned a brilliant “critique” of the government-downsizing movement (letters, March 14). Writing after the Democrats lost control of Congress in the 1994 elections, Schlesinger opined that it was an “assault on the national government” that would merely transfer power to “the great corporate interests.”
It is inane to offer Schlesinger’s 1995 comment as a rejoinder to the arguments made by Charles Koch in his March 1 op-ed.
First, the serious case for downsizing the federal government is no more an “attack” on the government than were liberal arguments against governmental policies made by people like Schlesinger back in the 50s and 60s when they argued that the government should stop waging unnecessary wars, stop enforcing racial segregation, stop trying to stifle dissent and so on. To maintain as Mr. Koch does, that the federal government is doing things it should not do and thereby imposing undue burdens on our prosperity while undermining our freedom, is a rational criticism. Brushing it off as “an attack on the government” is exactly the kind of rhetoric that liberals like Schlesinger used to decry when conservatives used it.
Second, Schlesinger poses a false dilemma in suggesting that we must choose between big government domination and domination by “great corporate interests.” Corporations cannot compel people to buy their products, to subsidize their losses, to support whatever agendas they may have. Politicians, on the other hand, can and do subject us to coercion with innumerable taxes, mandates and prohibitions. Often, they enter into alliances with businesses, unions, and other interests to give those interests favors and privileges they would not otherwise have. It is exactly that sort of crony capitalism that is the main target of Koch and others who wish to restore the government to its proper constitutional limits.
Schlesinger may have been a good historian, but his understanding of the effects of expansive government was badly flawed.
The Labor and Employment Relations Association, previously called the Industrial Relations Research Association, is a learned society devoted to industrial and labor relations. Traditionally, LERA has supported the National Labor Relations Act but it had not been overtly partisan. In fact, its most prominent member, John T. Dunlop, had served as Secretary of Labor under President Gerald Ford. When I finished my doctoral studies in 1991 I found the organization to be pro labor rather than neutral in orientation, and I had not participated in it since the January 2000 meeting. Since it is one of the only games in town, I decided to give it another chance in 2011. What I found is shocking. LERA is not merely ideologically biased, but overtly partisan and Democratic. Virtually every session I attended included an attack on the GOP. I submitted a blog to LERA's new website, called the Employment Policy Research Network (EPRN), questioning the group's partisan atmosphere. The LERA leadership, which oversees the website, not only refused to publish it but refused to respond to me in writing. I had to call the LERA office to obtain a verbal response. I posted the blog on my Website.
In this week's Pope Center Clarion Call, Troy Camplin discusses his rather unsatisfactory experience as a Ph.D. who can only obtain adjunct teaching positions. He sees his situation (staying at home with his young children because day care costs more than he'd make by teaching an array of courses) as evidence for the Austrian school's explanation that government actions can distort people's decision-making and lead them into costly mistakes -- such as taking out lots of governmentally backed student loans to get degrees that don't pay off. There are plenty of interesting revelations in this piece, including one where Camplin was told, "Now, we aren't saying that you should dumb down your course...." when that was just what the administrators wanted him to do.
A recent Pope Center article in which a number of economics professors explained why they find that students comprehend the subject better if they avoid mathematics and focus exclusively on the logic of human action has raised a little dispute on the blog. If a prof disdains mathematizing the study of economics, is he somehow shortchanging the students? Or is it the case that the use of math does nothing to help us understand and explain the discipline? Here are two pertinent articles on that question, one by Murray Rothbard and one by Gene Callahan. Both defend the Austrian School's position that importing math into economics lends a spurious sense of exactitude where, due to the volitional nature of the subject matter (human beings), we don't have it. It also tends to baffle many students.
That view is hardly surprising among the limited government types who frequent the NAS blog, but quite surprising when you hear it from a "progressive" writer. That's the case, however, with DIY U by Anya Kamenetz, and I write about the book in this week's Pope Center Clarion Call. I entitle my piece "Three Cheers for Half a Book" but it's really only about the first third that is marred by the author's fondness for hard-wired leftist ideas such as that we need to "fix the economy" with more redistribution and by fomenting labor unions. That stuff isn't relevant to Kamenetz's core argument that higher ed is being transformed to make it far more user friendly and less expensive. Although she doesn't exactly say so, change is happening through laissez-faire capitalism. The free market's process for discovering what works well and abandoning what works less well is boiling away and will lead to dramatic changes in higher education -- unless the institutions of the status quo manage to stop it by the use of political influence. This is something that "progressives" and free-market advocates can agree on: established institutions (businesses, universities, professional associations, etc.) usually attempt to protect themselves against change by appealing to politicians for favors. To the extent that they succeed, progress is thwarted. As momentum for change builds, look for colleges to start lobbying for regulations designed to slow or stop it.
In today's Pope Center piece, Jane Shaw writes about an event we sponsored last Friday, bringing together several econ profs to share their ideas on how to make the subject interesting to students. The crucial thing -- steer away from the mathematized approach that has become so commonplace and focus instead on the logic of decision-making in a world of scarcity and trade-offs. Not only will the students find the course more understandable and appealing, but they'll also be apt to learn lessons that will make them leery of the interventionist nostrums that politicians usually peddle.
In this week's Pope Center Clarion Call, I write about the "Capitalism on Campus" conference sponsored by the Manhattan Institute. It was a first-rate event that brought together scholars to discuss how capitalism fares these days (not very well, on the whole) and what approaches we might take to ensure that more students get something other than the anti-capitalist mentality (as Ludwig von Mises termed it) that is so prevalent among professors.
That seems to be the dismissive approach of The New York Times when it turns out that a professor who favors the free market and opposes crony capitalism is proven to be right. Professor Jonathan Bean writes here about the treatment of his book about the politicization of the Small Business Administration at the hands of a NYT writer. At the Times and many other places in the thrall of statism, work that calls into question the supposed desirability of government expansion is reflexively criticized as "ideological." Why won't they treat arguments on their own merits?
Economics professor Steven Horwitz has written an article for the Foundation for Economic Education taking further issue with the scurrilous piece I mentioned here on Monday. Like so many others who have an instinctive hatred for the system of voluntary production and exchange (generally called "capitalism" but that term is so loaded with both emotion and misinformation that it's better to avoid it), the writer of the piece in question doesn't get his facts straight. Horwitz provides some needed instruction.
The Chronicle Review has a scurrilous piece by one Charles Ferguson, who is a documentary film director. His targets are 1) Larry Summers; 2) academic economists generally; and 3) anything that suggests the virtue of laissez-faire economic thinking. Ferguson would have you believe that large numbers of academic economists are cashing in on ties to businesses, ties that are enhanced by their advocacy of "deregulation." He claims that laissez-faire demonically took hold of American economic policy back in the 1980s, and blames people like Summers for allowing the recent economic debacle because of their self-interest in unfettered capitalism. I am no fan of Larry Summers, but it's a hatchet job to suggest that he made policy decisions while serving in government because he calculated that they would put money in his pockets. It's also wildly mistaken to say that Summers or any of the other economists Ferguson attacks are laissez-faire advocates. (That's on a par with saying that Herbert Hoover was a laissez-faire advocate.) They have advocated minor deregulation in some aspects, but that is light years from a return to laissez-faire such as Murray Rothbard advocated. Moreover, Ferguson focuses on a few tiny bits of deregulation while overlooking the elephant in the room: federal policies that vigorously promoted foolish lending. Most politicians wanted to push housing and crushed those who spoke up, such as officials at the Office of Federal Housing Enterprise Oversight who were threatened with budget cuts if they persisted in questioning the policies of Fannie Mae and Freddie Mac. No amount of government regulation was going to stop the housing expansion as long as it was paying political benefits. Ferguson dislikes the fact that some professors (very few, but indeed some) make money by selling their expertise, but the irony is that the very laissez-faire he portrays as the villain is the antidote to that. In an economy where the government has no power to dispense favors to interest groups, there would be little or no money to be made in writing briefs and peddling influence.
In today's Pope Center Clarion Call, Hillsdale economics professor Gary Wolfram discusses the recent study on for-profit higher education published by the Center for College Affordability and Productivity. He finds that the authors have correctly identified the factor that makes the for-profits efficient, namely that their incentives are aligned with the interests of students. Being "non-profit" may sound lovely to those who have been raised with what Ludwig von Mises called the anticapitalist mentality, but non-profit status doesn't mean that self-interest disappears. The quest for profit drives all kinds of businesses, including educational ones, to make the best use of resources.
In this week's Pope Center Clarion Call, Professor Bruce Caldwell of Duke University discusses what he sees as a big hole in the graduate economics curriculum and one that's developing in the undergraduate curriculum -- courses in the history of economic thought. If you think it deplorable that English students can get their degrees without reading Shakespeare, is it not equally deplorable that economics students can get theirs without reading Adam Smith, David Ricardo, F. A. Hayek and, yes, Karl Marx?
In today's Pope Center piece, Michael Strong gives a ringing defense of programs such as those funded by BB&T that are designed to teach students about capitalism and particularly the value of entrepreneurship. Students usually enter college knowing little or nothing about the role of the entrepreneur, and most graduates leave with some degree of hostility toward business, thanks to professors who harbor an ignorant hostility toward capitalism. (In this article, Strong provides an example.) So if we think it a good thing for young people to complete their college studies with a more informed and realistic view of how economic progress comes about, what is wrong with programs like those BB&T has been promoting? Nothing, Strong argues.
In today's Pope Center piece, my colleague Jay Schalin writes about the flap over the fact that some colleges have accepted funds from BB&T Foundation with the proviso that the money be used to support courses in which students will learn about Ayn Rand's philosophy of Objectivism and in particular her defense of laissez-faire capitalism. The argument raised against this is that colleges are supposed to allow the faculty to decide upon curricular matters. Naturally, some professors who are adamantly hostile to the case for laissez-faire (although I doubt that many have ever read Rand's Capitalism: the Unknown Ideal or have heard a thorough explication of the damaging consequences of government interference in the spontaneous order of the free market) say that schools should shun BB&T money. Jay gets a whiff of double standard here, since professors on the left don't much complain about the importation of material into the curriculum they find congenial. Rather than a defense of princple, their stance seems to be an instance of selective indignation. Econ 101 is often taught as a dull, mechanistic and to many students baffling exercise in graphs and abstruse theories having little apparent relationship with life. Adding a BB&T catalyzed course that allows students to see how Rand and other advocates of laissez-faire (Ludwig von Mises, e.g.) looked at economic questions would be a beneficial offering. Colleges should be open to the marketplace of ideas. Like the marketplace of goods and services, sound ideas tend to win out and unsound ideas tend to be rejected. (I say "tend" because it doesn't happen automatically. After all, we still have cigarettes in stores and professors who preach socialism.) John Allison of BB&T is trying to get colleges to open their curricula to another idea (or set of ideas). No harm in that.
In this week's Pope Center Clarion Call, Jay Schalin takes a look at the conventional wisdom that a sure-fire way for states or countries to boost their economies is by putting more resources into higher education. He concludes that the conventional wisdom is mostly wrong. Education, like everything else, is subject to diminishing returns and we're probably well past the point where additional benefits are less than additional costs.
In today's Pope Center Clarion Call, Jay Schalin writes about the "Economic and Social Justice" minor offered at UNC-Chapel Hill. Unfortunately, the minor is the brainchild of a far-left professor who wants to turn out students who are dedicated to increasing government domination of society and the elimination of what she thinks is "capitalism." Students do not need to take a course on the principles of economics in order to earn this minor; nor will they encounter the devastating counter-attack on the very concept of "social justice" by F. A. Hayek in his book The Mirage of Social Justice. In one of the courses the students may take (Philosophy 273), however, they at least get a taste of Robert Nozick's criticism of the mega-state. This minor is far more agitprop than education.