A review of Thomas Woods’ “Meltdown”

One of the marks of great writing is that, no matter how abstract a subject might be, the author’s text remains lucid and understandable.  It is not crowded with irrelevant information, unduly antiquated language, or a dense texture.  H.L. Mencken, Joseph Ratzinger, and Murray Rothbard all have this gift.  So does Tom Woods, whose recent book Meltdown I finished earlier this week.

The grand larceny that the government commits is probably aided in no small part by the abstract and difficult nature of the subject of economics.  Add to this factor the reality that most schools of economics, such as Keynes’ and Friedman’s, in addition to being absurdly objectivist, are also about as exciting as the first four and a half hours of Dances with Wolves.  The information that does get to the public is usually watered-down lies:  the GDP, which only measures the consumption of final products and not of raw materials, and the unemployment numbers, which are, at present writing, grossly underestimated, are but two examples.  Little mystery is left as to why there is so much misunderstanding, confusion, and downright indifference in the general public.

Enter into this lamentable situation the work of Tom Woods, whose latest book has descended into the hellish American political debates like dew from heaven.   Woods strikes at the root of the philosophical errors which have our economy trapped in a kind of samsara cycle of booms and busts, and he does so in a way that people whose eyes rightfully gloss over during the business reports on TV can understand and appreciate the nature of the problems that the United States now faces.  I have read many books on economics, but this one cleared up so many issues for me, including certain details on which I was foggy with respect to fractional reserve banking and the operations of the Federal Reserve.  But as understandable as his writing is, Woods does not gloss over anything, drawing carefully-written lines in just the right places.  Qui distinguit, bene docet.

In the center of this book, Woods takes on the myths surrounding the Great Depression, Herbert Hoover, and Franklin Roosevelt.  The conventional wisdom, of course, is that the Great Depression was worse than it needed to be because Herbert Hoover was a laissez-faire president and did nothing, and that FDR arrived on the scene, fully armed with public works projects and other chimeras which, along with a major war, allegedly saved us from further economic disasters.  Woods systematically dismantles this version of history, and in the process of showing that it was precisely the government intervention that made things worse, he brings to light the interventionist policies of the Hoover administration and a journal entry from Treasury Secretary Henry Morgenthau which admitted that none of the government programs were actually working, amongst a whole host of other fascinating information.  And yet again, he takes on the false notion that World War II ended the Great Depression.  As a matter of fact, the numbers did not improve until 1946, after the soldiers returned home and re-entered the work force.  In the midst of all this, Woods glances at something most wouldn’t think to consider:  the inexperience of the women and children who replaced the soldiers in their jobs while they were off at war.  What impact did their inexperience have on productivity?

Woods’ engagement of the Civic Religion surrounding New Deal politics is the great keystone of his book, for these myths are, for many people, the assumed truth that they bring to any conversation about economic issues, and if there is any progress to be made in re-establishing a market that is actually free, then these prejudices must be confronted.  In addition to his theoretical arguments, Woods examines a number of economic downturns in American history, many of which are cited by economists in an attempt to discredit the Austrian Theory of the Business Cycle which Woods promotes.  Time and again, the author brings facts to light that only buttress the work of Mises and Hayek, who were pioneering members of the school of thought in which Woods works.   Two of the most important examples used are the crashes of 1819 and 1920, the latter of which was worse than the crash of 1929 but which lasted only a year because the government did precisely nothing.

Back to contemporary issues.  Woods discusses the government’s role in creating the housing bubble which burst in 2008.  First there is Fannie Mae and Freddie Mac, whose careless policies encouraged banks to give out risky loans.  (This is made all the easier when everyone knows that the Fed will act as a “lender of last resort” in the event that the risky loans end up in default.)  Then there is the Community Reinvestment Act and affirmative action lending, which the government promoted by practically harassing banks to make loans which they knew to be ill-advised.  And in addition to discussing the various kinds of wreckless speculation which were taking place, such as “house flipping,” Woods also takes on the dishonest debate between the Republicrats and Democans about how much regulation there should be in the market.  The status quo has made this discussion fundamentally pointless, since neither party really supports the idea of a free market, however much one of those parties likes to bandy that term about.

Central to Woods’ thesis is the aforementioned Austrian Theory of the Business Cycle.  This system of thought, first developed by Ludwig von Mises, holds that business cycles are not intrinsic to free markets, but that they are rather a result of government tampering with the marketplace through the creation of central banks, manipulation of the currency, playing with interest rates, fractional reserve banking, and the like.  In support of the Austrian view, Woods offers up the dot-com bust and the crash in Japan in the 1990′s.  He explains how artificially low interest rates encourage mal-investment and send business leaders the wrong signals, encouraging them to embark on projects that are doomed, since an inflationary bubble does treacherous work on the factors of production involved in long term projects.

Woods devotes an entire chapter to money:  its origins (neither from government nor greed), its history, and the way it creates wealth by making trade more feasible.  He not only covers the hot topic of inflation but also ventures into the more obscure but no less important matter of deflation, the latter being considered by the voodoo economists as a bad thing.  This was the mistake that FDR made in the Great Depression, and his subsequent decision to enact price floors was disastrous for the American economy.  Woods’ discussion of commodity monies such as gold and silver is followed up by a reckoning with the usual bromides offered by the monetarists who are opposed to a hard money solution.  The author’s arguments are thorough, and though he seems not to deal with one issue—the contention that more gold could be mined to create more money and thereby destabilize the money system—he does address it obliquely in that he mentions the fact that gold takes a long time to produce and bring into the market, unlike paper, and especially unlike the electronic computer transactions which the Fed does in modern times.

Professor Woods is not content, however, only to tell us what’s wrong with our present situation, and he develops a final chapter on where we should go from here.  At the beginning of this argument he offers the useful distinction, first elucidated by Adam Smith, between productive consumption and non-productive consumption.  Woods uses the example of wearing out an air conditioner over a number of years to show what non-productive consumption is:  A good is exhausted without creating other materials to provide for its replacement.  A machine, on the other hand, is an example of productive consumption:  While it will eventually wear out, it will have performed sufficient work to provide more resources for the future.  Woods puts it pithily:  “Consumptive expenditure uses up, exhausts, and destroys; productive expenditure provides for its own replacement in the form of an increased supply of goods in the future.”  The diminishment of capital which takes place in the wake of the recent government stimulus packages is a form of non-productive consumption, Woods argues.  It is yet another aspect to the civic superstition that we can spend our way to a prosperous paradise.

From here (and I can only hope that I’ve explained the above distinction adequately) Woods goes on to suggest some concrete moves, including letting the companies who fail go bankrupt.  Their assets will be bought up by others, and certainly if they served a useful function in the market someone else will step in and fill the need.  Woods advocates the abolishment of Fannie Mae and Freddie Mac, as well as ending the Federal Reserve, which is really the sinister force behind most of our economic problems, not least because this bank is so difficult to understand.

It has been said that knowledge precedes love.  To love someone, you must know him first.  The same is perhaps true for ideas.  Libertarian economists—usually men of the Austrian School—have taken a beating over the years, having been accused of possessing an irrational hatred for the government and its programs.  Only one who is unfamiliar with the work of these men, however, would level such a charge, for the fruit of their elucidations is the insight that liberty and mutuality, not theft and coercion, are what create our prosperity.  Lying at the heart of the libertarian argument is a deep concern for the welfare of mankind.  Understanding the libertarian mindset is, of course, a prerequisite to seeing the truth in this, and I can think of no better way to start in this process than by reading this offering by Tom Woods.  Because of this, his greatest service is not that he has debunked the quacks, but that he has shown us the way to liberty and prosperity.  Will we have the courage to follow him?

Judge: Government must return seized coins

A judge in Philadelphia has determined that the U.S. government must return ten gold coins which it seized from a family when they showed up at the Mint to have them authenticated.  Lovely how the government just assumed that they were stolen.  The judge seems not to have been fooled.

Is there any chance at all that maybe, just maybe, the government is afraid of real money getting into circulation?

An exercise in self-blacklisting?

Courtesy of Lew Rockwell, a Petition for Fed Independence—WSJ

Below is the list of signers, organized by school, institution, or company.

Boston University (2), Brown University (3), Carnegie Mellon University (1), Columbia University (10),
Cornell University (1), Dartmouth College (5), Duke University (1), Emory University (1), Harvard University (3), Johns Hopkins University (7), Louisiana State University (1), Loyola University, Chicago (1), Massachusetts Institute of Technology (11), Northwestern University (24), New York University (7), Pepperdine University (1), The Ohio State University (2), Princeton University (16), Stanford University (7), University of California, Berkeley (2), University of California, Los Angeles (10), University of California, Santa Barbara (1), University of California, San Diego (11), University of Chicago (22), University of Iowa (1), University of Michigan (1), University of North Carolina, Chapel Hill (1), University of Pennsylvania (2), University of Southern California (1), Yale University (3), The Private and Quasi-Private Sector

Boston University
Simon Gilchrist
Brown University
George Borts
Peter Howitt
David Weil
Carnegie Mellon University
Chester Spatt
Columbia University
Michael Adler
Martin Cherkes
Pierre Collin Dufresne
Marc Giannoni
Frederic Mishkin
Michael Woodford
Gailen Hite
Enrichetta Ravina
Tano Santos
Shang-jin Wei
Cornell University
Maureen O’Hara
Dartmouth College
Kenneth French
Rafael La Porta
Matthew Slaughter
Andrew Bernard
Robert Hansen (Tuck School)
Duke University
Ravi Bansal
Emory University
Jay Shanken
Harvard University
Diego Comin
Robert Merton
James H. Stock
Johns Hopkins University
Christopher Carroll
Jon Faust (Center for Financial Economics)
Louis Maccini
Robert Moffitt
Stephen Shore
Tiemen Wouteren
Jonathan Wright
Louisiana State University
Doug McMillin
Loyola University, Chicago
Vefa Tarhan
Massachusetts Institute of Technology
Daron Acemoglu
Paul Asquith
Ricardo Caballero
Peter Diamond
Kristin Forbes (Sloan)
Bengt Holmstrom
Paul Joskow
Andrew Lo
Guido Lorenzoni
Richard Schmalensee
William Wheaton
Northwestern University
Eddie Dekel
Matthias Doepke
Martin Eichenbaum
Andrea Eisfeldt (Kellogg School of Management)
Jeffrey Ely
Robert J. Gordon
Steffen Habermalz
Yael Hochberg (Kellogg School of Management)
Ravi Jagannathan (Kellogg School of Management)
Arvind Krishnamurthy
Hilarie Lieb
Robert McDonald (Kellogg School of Management)
Dale Mortensen
Dimitris Papanikolaou
Giorgio Primiceri
Costis Skiadas
Joseph Swanson
Andrey Ukhov
Sergio Urzua
Burton Weisbrod
Michael Whinston
Mirko Wiederholt
Mark Witte
Richard Walker
New York University
David Backus
Thomas Sargent
Mark Gertler
Lasse H. Pedersen
Kermit Schoenholtz (Stern School of Business)
Paul Wachtel (Stern School of Business)
Stanley Zin
Pepperdine University
Dean Baim
The Ohio State University
Nan Li
Rene Stulz
Princeton University
Yacine Ait-Sahalia
Markus K. Brunnermeier
Angus Deaton
Avinash Dixit
Henry Farber
Gene Grossman
Bo Honore
Peter Kenen
Burton Malkiel
Eric Maskin (The Institute for Advanced Study)
Stephen Morris
Esteban Rossi-Hansberg
Michael Rothschild
Hyun Shin
Mark Watson
Wei Xiong
Stanford University
Darrell Duffie
Robert Hall
Pete Klenow
Charles I. Jones (Graduate School of Business)
Stefan Nagel
Monika Piazzesi
Martin Schneider
University of California, Berkeley
Daniel McFadden
Maurice Obstfeld
University of California, Los Angeles
Jernej Copic
Dora Costa
Harold Demsetz
Roger Farmer
Gary Hansen
Christian Hellwig
Matthew Kahn
Hanno Lustig (Anderson)
Lee Ohanian
Pierre-Olivier Weill (Economics)
University of California, Santa Barbara
Rajnish Mehra
University of California, San Diego
Davide Debortoli
Scott Desposato
Roger Gordon
James Hamilton
Gordon Hanson
Takeo Hoshi
David Lake
Bruce Lehman
Keith Poole
Valerie Ramey
Ulrike Schaede
University of Chicago
Fernando Alvarez
Anil Kashyap (Booth School of Business)
Steven Davis (Booth School of Business
Douglas Diamond (Booth School of Business)
Eugene Fama (Booth School of Business)
Milton Harris (Booth School of Business)
Tarek Hassan (Booth School of Business)
Zhiguo He (Booth School of Business)
John Heaton
Chang-tai Hsieh
John Huizinga (Booth School of Business)
Erik Hurst (Booth School of Business)
Steven Kaplan (Booth School of Business)
Ralph Koijen (Booth School of Business)
Juhani Linnainmaa (Booth School of Business)
Atif Mian
Tobias Moskowitz (Booth School of Business)
Stavros Panageas (Booth School of Business)
Lubos Pastor (Booth School of Business)
Amir Sufi (Booth School of Business)
Harald Uhlig
Pietro Veronesi
University of Iowa
David Bates
University of Michigan
Christopher House
University of North Carolina, Chapel Hill
James F. Smith (Kenan-Flagler Business School)
University of Pennsylvania
Andrew Abel (Wharton School)
Francis X. Diebold University of Pennsylvania
University of Southern California
Wayne Ferson
Yale University
Eduardo Engel
Giuseppe Moscarini
Robert Shiller
The Private and Quasi-Private Sector
Scott Anderson (Wells Fargo & Co.)
Cliff Asness (AQR Capital Management LLC—Managing and Founding Principal)
Ralph C. Bryant (Brookings Institution)
Scott Brown (Raymond James & Associates)
Michael Carey (Calyon Securities (USA) Inc. Credit Agricole Group)
Michael Feroli (J.P.Morgan)
David Greenlaw (Morgan Stanley)
Richard Berner (Morgan Stanley)
D. Lee Heavner (Analysis Group, Inc.)
Stuart Hoffman (PNC Financial Services Group)
Peter Hooper (Deutsche Bank)
Ellen Hughes-Cromwick (Chief Economist, Ford Motor Company)
Dana Johnson (Comerica Bank)
Karen Johnson (Federal Reserve Board of Governors (retired))
Juno Kang (The Bank of Korea)
Bruce Kasman (J.P. Morgan Chase)
David Kotok (Chairman, Central Banking Series, Global Interdependence Center, Philadelphia, PA.)
John Liew (AQR Capital Management)
Kevin Logan (Dresdner Kleinwort)
Robert Mellman (J.P. Morgan)
Laurence Meyer (Macroeconomic Advisers, LLC)
Gregory Miller (Suntrust Banks, Inc.)
Robert Parry (President & CEO, Federal Reserve Bank of San Francisco, Retired)
Edwin M. Truman (Peterson Institute for International Economics)
Chris Varvares (Macroeconomic Advisers, LLC)

Response from Bill Anderson (Frostburg State University; Foundation for Economic Education) on the LRC blog:

Lew’s post is excellent, and it exposes what I think is the real weakness of the current crop of “elite” economists.  I pulled up the letter and saw that a large number of the signees were from the Ivy League institutions or places like Chicago and Northwestern.  In other words, the “highest-ranking” economists are the ones who are absolutely clueless about money and are cravenly ignorant about the Fed.

To these “economists,” money is nothing more than a quantity variable to be manipulated by monetary authorities to have certain macro effects.  The notion that money is a good — a real good — that is used for indirect exchange never crosses their minds.  These people would be outraged if government constantly messed with their cars or their houses to constantly devalue them, yet they insist that such manipulation is necessary for our prosperity.  They may call it “economics,” but I call it fraud.

Lifted from the WSJ comment box:

Court intellectuals afraid of losing their meal tickets are so easy to spot. Funny how many went to the same over-rated schools. What a waste.

If I were a student, this would read like a list of academics to challenge*…or avoid.

Just saying…

*Of course, a student who wishes to directly challenge the views of anyone on this list in the classroom may do well to audit the classes in question.

The Greenspan Depression

Several economists and historians over at LewRockwell.com seem to have taken to calling our present economic situation the Greenspan Depression.

Works for me.

China calls for global currency…

…but you’re only surprised by this if you haven’t been paying attention.

Of equal if not greater interest, the linked article makes mention of the high rate of personal savings that has ensued since the economy tanked.  This is considered by clowns and economists (but I repeat myself) to be a bad thing.  Experts tend to think that spending is better for the economy than saving, and while it is of course necessary for spending to happen in order that an economy can exist, a low rate of savings is nonetheless to be avoided.  However, this is not obvious in an economy that has come to depend on deficit spending.

Modern economists often say that credit is the key to success in the “free” market. An older school of economics, however, would say that capital is the basis of the free market.  An entrepreneur saves up capital, or finds investors, and starts a business.  It is not spending, as such, which gets this operation going, but rather accumulated savings.  Whether the savings is the entrepreneur’s or someone else’s matters not; the money has been piling up due to the intelligent action of far-sighted people.

These days even our banks are too short-sighted to save, and so the Federal Reserve just prints money for this and for that, even to rescue individual businesses who’ve mismanaged their assets.  This calamity results from thinking that credit is the yellow brick road to wealth and happiness.  Alas, it is rather a copper path to hell, paved with the cheap metals that the central bank uses to make our “money.”

Why Freedom?

Sometime during the late 80′s or early 90′s, George H.W. Bush delivered a speech in which he waxed eloquent about what is generally called the fall of communism, the wave of revolution that swept Eastern Europe at the end of the Cold War.  In this allocution he said that tyranny fell “not to the force of arms, but to the force of an idea:  Freedom works.”

Freedom works.  This is the line of thinking that has been used by many in the political discourse.  Does freedom work?  Currently we’re in a time when many claim that it has not worked, and thanks both to the verbal jujitsu of the Republican Party and the stupidity of Boobus, this is widely accepted wisdom.  Never mind the fact that what the GOP calls a free economy is riddled with aspects of Fascism.  Our current situation, despite the popular perception, is not proof of the failure of freedom, and we should not feel obligated to give in to the Keynesian orgy presently taking place.  Wherever freedom has been tried, it has worked.  

But we need not belabor the point, for this utilitarian angle is not only useless, it is dangerous.  More on the danger in a bit.

If the “freedom works” argument is irrelevant, what is?  I would argue that the argument for freedom is found in the concept of natural rights—the right of self-determination, the right not to be robbed or shot by anyone, including the State.  From this perspective, it really doesn’t matter if freedom “works.”  The salient point is that freedom—a system of voluntary mutual exchange, one that respects individual rights and private property rights—preserves each man’s natural rights.  Period.  End of story.

Now let us return to this “Freedom works” utilitarian claptrap.  The contemporary Right, and even figures like Ludwig von Mises, have enthroned so many of their arguments on this premise.  Its danger lies not in its untruth; indeed the truth of the matter is not what I intend to dispute.  The problem is that this line of thought presents a beautifully engraved invitation to those who are unfriendly to laissez-faire capitalism:  The minute something goes wrong, they can blame freedom (they usually say “capitalism” to try to make it sound evil, a la Karl Marx) and say that we can no longer tolerate this irresponsible freedom.  

And so it’s time for the real friends of laissez-faire capitalism to stand up and say that this is truly the system that best preserves the rights that belong to us and cannot be taken away.

This is an age-old battle, really, one that started during the Exodus, when the wandering Israelites begged for a return to slavery because it was so much easier than their new-found freedom.  But nothing in life that’s worth a damn is easy, and some things are worth any price.  Freedom—from violence, theft, coercion, and other hobbies of the State—is one of them.

Henry Hazlitt and the unseen

One of my Christmas presents was Henry Hazlitt’s very excellent Economics in One Lesson.  The essential point of this work is the importance of understanding the broader consequences of economic decisions, and not just the immediate effects.

For instance, certain spread-the-work policies do give jobs to more people, but without an actual increase in production no one has gained anything in terms of real wealth.  Certain union policies regarding division of labor also create the same appearance.  Union rules might make it necessary to hire two men to perform a job that could be efficiently completed by one.  Yes, someone got a job out of it, but the customer spent more money than he needed to, which has a negative impact on his limited resources to benefit the economy in other ways.  It is true that these kinds of policies can benefit certain individuals, but only at the expense of society as a whole.

These wider-reaching deleterious effects are what might be called the “unseen” effects of these policies.  They are not invisible, mind you, but rather go unnoticed for whatever reason.

Perhaps the tendency for these kinds of things to go unseen explains the frequent false accusation that free market economics, and in particular Austrian economics, is atomistic.  In truth, though, it seems as though the aforementioned make-work projects are the actual atomistic approaches, for they take account only of the most obvious effects of a given situation without realizing the broader consequences which are involved.  They look at the benefit to one particular man or group and not at the consequences for the entire economy.   That sounds pretty atomistic to me.

The miracle that is the free market

I spent the early part of this evening running some errands.

First I had to pick up my car from the shop. It needed a few minor (thankfully!) repairs. I got to the shop while the mechanics were still finishing up. While we were waiting, the owner was chatting me up about some musical questions. He’s working on buying a particular instrument for someone who needs it and wanted my help. I’m afraid to say that I was a bit out of my depth in this particular case, though I promised to follow up.

When we finished talking business, we kept batting the breeze nonetheless. My mechanic is an old school Philadelphian—hard working, honest, direct, and as good-hearted as they come. He’s the kind of guy that looks you in the eye the whole time he’s talking to you. I instinctively trust him. The mechanic finished up the car, we finished chatting, I paid a very reasonable charge for the work, and we all bid each other a Merry Christmas, and that was that.

Car fixed. Now what’s for dinner? After mulling over some options I decided to go right back to the hoagie shop where I had eaten lunch. While the workers—both of them immigrants—worked on my sandwich, we chatted about tonight’s biggest, brightest full moon of the year.

Now before I go any further I want to assure you that, while I’m an introvert, I’m no loner, and I have plenty of friends. Sometimes it’s hard to keep track of them all. But nevertheless a thought struck me about my various vesperal visitations. What characterizes my relationship with these several proprietors? It is frankly, as if we are all buddies. This is the miracle of capitalism.

The free market gets a lot of bad press these days, but this is the result of a careless conflation of crime with free exchange. Corrupt business leaders getting in bed with government deserve to be called out (though one could certainly argue that this is not representative of a truly free market). Wal-Mart customers stampeding a janitor to death justly rouse disgust. But in its essence, the free market is a system of voluntary exchanges. The voluntary aspect of this makes each party responsible for himself and dependent upon the others. Each person is there because he wants to be, and this, coupled with the obvious desire to succeed, helps to build relationships.

This is not true in any other economic system. Surely it is not true in feudalism, nor is it true in socialism, which micromanages economies right down to who works in which job. Voluntary exchange would not even exist on an anarcho-communist paradise island, since everyone would be forced to pool resources.

The free market is the sole guarantor of voluntary exchange. It liberates us, so that we are no longer slaves, but free men—no longer slaves, but friends.

Milwaukee funny money?

Certain neighborhoods in Milwaukee are contemplating the establishment of their own currency. They would just print the money themselves, and it would be accepted at local businesses.  The great mystery to me is how such “monopoly money” could have any purchasing power whatsoever.  I’ve been wondering the same thing about the American dollar for years.

Of plumbers, philosophers, and would-be “DeFamers”

There has been some discussion on the Mises Yahoo! Group regarding an attack that a Brad DeLong — a man who does not register on my radar — directed towards a book written by Ludwig von Mises, the dean of the Austrian school of economics. The target of the attack was The Theory of Money and Credit — a book I have not read.

What makes this particularly interesting was that the book was mentioned in the December edition of The American Spectator by unlicensed celebrity plumber Samuel J. Wurzelbacher, a.k.a. “Joe the Plumber.”[1] When Lew Rockwell posted this on the Mises Blog, more than a couple of regular visitors reacted with a certain degree of disbelief. What would a plumber — an unlicensed one, at that matter? — be doing reading up on an unorthodox school of politico-economic thought?[2]

I myself thought the same thing; then I thought, why not? What would a freelance jack-of-all-trades like myself be doing reading Mises? As I’m a contract laborer for the institute named after the man, I’m “closer to the action.” But Joe is not, which upon further thought makes his disclosure all the more notable. It would be interesting to discover how he discovered the writings of Mises.

I link to DeLong’s post without reading it myself only to provide the resource to readers who care to examine the evidence. However, this comment on the Mises list gives me reason not to waste the time (of course, I spent the time writing this post):

The closest he comes to a critique is declaring The Theory of Money and Credit to be “totally bats.” Which, of course, is name-calling, not a critique. If I were to “respond”, it would be by saying that DeLong’s selection of quotations seems haphazard at best. Most of it is just fragments connected by ellipses, chosen in such a way as to prevent the reader of the quotation from having much clue what Mises was actually saying. The effect is exactly what DeLong wants: making Mises look like a mad man, as the method of quotation “sounds” like someone who has lost their mind and whose rambles turn into mumbling between the disconnected thoughts.

Which is very far from what Mises’s writing is actually like.

I can confirm this with absolute certainty. I am in the middle of reading Mises’ magnum opus, Human Action: A Treatise on Economics; he writes in an impressively logical, concise, but dense manner. To use ellipses when quoting this man comes pretty close to misrepresentation; one would do well to cite full paragraphs in many cases. This makes DeLong’s selective-prooftexting attack seem pathetic, based on secondhand information.[3]

DeLong will have to try harder to have this blogger pay attention to him; indeed, I have spent too much time with this post.

Notes

[1] Wait until next month for the current issue to appear online; others have tried to locate it online and failed.

[2] However, none other than Lew Rockwell asserts,

Had progress in economic thought not been interrupted by Keynesian theory and the rise of positivism in the social sciences, we would not even be speaking of the Austrian school. Misesian theory would be economics proper (emphasis added).

[3] To be sure, Mises has a treasure trove of relatively short quotations as well. But you will need to delve into his writings to appreciate the wisdom contained in the short snippets.

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