Talk:Austrian school of economics/Archive 8

Might it be better if we simply eliminated the reference to "heterodox" in the lede, or at least the definitional paragraphs? Byelf2007 (talk) 10 September 2012

I would be in favor that. -- Fsol (talk) 18:53, 10 September 2012 (UTC)

We've had this discussion before, and consensus (as such), was to have heterodox in the lead. That fact is, if you walk up to any professor of economics and ask them to describe present day Austrian school economics, 'heterodox' or 'non-mainstream' would likely be in the first sentence. Also, reliable sources describe it as such. Austrian school economics is not in the curriculum of the vast majority of universities, it's not even mentioned in introductory and intermediate text of economics (I have several and I've checked their indexes). LK (talk) 02:35, 13 September 2012 (UTC)

Yes, heterodox needs to be in lede, but not necessarily the *word* heterodox--we're trying to make the lede more accessible to a newb to economics/simpletons. Byelf2007 (talk) 13 September 2012

I'm all for accessibility, but it appears to me that a major trust of your edits is to 'pretty up' the image of AS. AS is heterodox, it is generally ignored by the mainstream. It would be misleading for this article to step lightly around the issue. LK (talk) 04:47, 14 September 2012 (UTC)

"it appears to me that a major trust of your edits is to 'pretty up' the image of AS" How so?

"AS is heterodox" This is mentioned in the article, just not the word 'heterodox'. I don't see how anyone is going to read the article and go "Hm...it's 'outside mainstream economics'...but...I'm not seeing anything here about it being heterodox, so I guess it's just sort-of out of the mainstream".

However, it occurred to me that we don't have a link to 'heterodox economics', so I linked it in lede (for the word "outside"). Byelf2007 (talk) 14 September 2012

The Criticisms of ABCT subsection basically has two very different subjects--the theoretical debate and the empirical debate. I therefore think it would be good to split it up into two subsubsections (we've already done this with "Business cycles" and "Economic calculation problem" under "Theories"). Also, the subsection as it is very long, and that makes it look a bit awkward to me. Byelf2007 (talk) 13 September 2012

If no one objects to this idea in the next couple of days, I'm gonna make the edit. Byelf2007 (talk) 14 September 2012

Agreed. -- Fsol (talk) 07:25, 16 September 2012 (UTC)

Previously, we made sure not to double-link things--they were linked once the first time they appear and that was it. Now that we have a 'tenets' section, this is no longer the case. However, I think we should keep things the way they are--I think double-linking is okay only if it's twice and only if the first time is in the the 'tenets' section. Byelf2007 (talk) 13 September 2012

Personally, I like am in favour of multi-linking. -- Fsol (talk) 07:30, 16 September 2012 (UTC)

Does ABCT say

(1) boom-bust is caused by FRB

or that

(2) it can *only* be caused by FRB

?

I've been told that it's the latter, but here's an interesting comment on Mises Institute forum on the subject of whether or not boom-bust can occur without FRB (not to imply that ABCT applies to non-FRB):

" Now what fools people? Quite simply, their thinking that the amount of money is proportional to the amount of resources. For simplicity, let's assume there is one dollar of money for every dollar of resources. Then a dollar in the bank means a dollar's worth of resources nobody wants to consume at the moment, [or for the next ten years, if someone is willing to lend that dollar for ten years]. So that ordinarily, the amount of money available to a businessman to borrow does indeed reflect the amount of resources available to him.

Now say there is an influx of gold into the country, which is turned into more coins, and put into banks. Unless the person grasps that the ratio of dollars to resources has changed, he will think that there are plenty of resources available, as above. He will be fooled.

We see from this analysis that any way the money supply is increased, be it FRB or money printing or an influx of gold, will do the trick. "

This seems plausible to me. I find it hard to believe there's never been an Austrian economist who's argued that ABCT is compatible with this. Is anyone aware of a prominent Austrian economist saying something to this effect?

Remember Tulipmania? The Bank of Amsterdam was a 100% reserve bank at the time. Another example might be all the gold the Spanish flooded into Europe a few centuries back. Once the other countries got enough gold, demand for it plummeted, and Spain's economy when sour--the Spanish got fooled. Byelf2007 (talk) 13 September 2012

Sadly this shows you are confused about Austrian theory. A couple of clarifying points:

:Say's Law and Austrian theory would say that a GENERAL (AGGREGATE) decline in economic activity in a "stable money" market generally would not occur. Loose language is a big problem here. There are - of course! - booms and busts in lots of sub-markets all the time (that's life) but that doesn't result in 40% youth unemployment because young people move around from bust in one part to boom in another part of the economy. There could be "frictional" unemployment but in the absence of a tsunami, nuclear war, terrorist attack etc mass unemployment shouldn't EVER occur. However, if you add in a complication like FRB that CONSISTENTLY messes with the economic calculation/price signalling that is so essential for economic coordination to work, that's when you can get aggregate booms and busts. And that can really only be caused by something systemic in the price mechanism, messing with everyone's calculations at the same time. And that is caused by FRB exclusively (if supported by a central bank). See here and here. Also read Rothbard (America's Great Depression - the first theory section). In the absence of systemic mispricing of investment capital AGGREGATE booms and busts shouldn't ever occur, but mini booms and busts in segments of the economy will - of course - occur all the time. But these wouldn't ever result in 30% or 40% youth unemployment in the EU or the US under a sound money system. That must be caused by something (1) systemic and (2) distorting. And that "something" is exclusively FRB. QED. Your confusion lies in not appreciating the full implications of Say's Law. FRB123 (talk) 00:35, 14 September 2012 (UTC)

"In the absence of systemic mispricing of investment capital AGGREGATE booms and busts shouldn't ever occur". I think I see what you're saying. The place where the bust occurs is the malinvested industry. But what happens when there's an almost-systemic mispricing of investment? It's not like it's either/or. I see it more as a spectrum. Wouldn't you say that the end of Tulipmania was an aggregate bust? (because the economy of Amsterdam had changed so much, that that industry failing made a bunch of other ones fail) Or is that something different? I'm not sure how that situation would be the best to categorize, or how we draw the line between systemic mispricing and specific/minor mispricings. Byelf2007 (talk) 14 September 2012

::::OK, I accept it could be a spectrum. Yes, if you take the California "gold fields" economy in the 19th century, there was unemployment when the gold ran out. If you had a massive "real" distortion for a period, there could be an aggregate bust. By the way Tulipmania is not a good example, because there were monetary factors at play even in that case, with coining of gold and silver focusing in Amsterdam and speculative banking practices allowing wild speculation, fuelling the boom there. The Bank of Amsterdam was one (one!) bank and there were many others and given the incredible volume of gold and silver going through the city at the time, there were bound to be problems. See here. But you are right, technically it is a spectrum. I suppose Austrians focus on FRB because it's such an obvious (crimimal?) flaw in the current system, that everything else (including tsunamis, droughts, etc) pale into insignificance compared to this constant, gigantic distortion mechanism. It's like asking in the Soviet Union "Yeah, I understand it's difficult for bureaucrats to estimate a fair price for bread and fix that price everyday, but wouldn't there be shortages of bread even in a free market sometimes? Like, isn't it a spectrum of difficulty, and wouldn't there be shortages even if the Soviet Union didn't fix the price of bread?" Well, yes, but so what? 99.9% of the problem lies in stupid humans trying to price fix, not in the 0.01% of problems that could, possibly, come up in the free market scenario. Again, it shows how accepting people are of FRB that they don't see how it is 99.9% of our current economic problems (at least according to Rothbardian Austrians). But if you want to be really pedantic about it, yes it is a spectrum. Like shortages of bread can occur in a free market, just like the old Soviet Union - just a tad less frequently. - FRB123 (talk) 01:02, 14 September 2012 (UTC)

So, you're basically saying "Yeah, it's a spectrum, but FRB is 95% of the problem, so a boom-bust without FRB would be unlikely/rare, to the point where coming up with a theory regarding *those* events would basically just boil down to 'they were stupid' " Yes? I think that makes sense. Thanks. Byelf2007 (talk) 14 September 2012

::::::Yes. FRB123 (talk) 01:10, 14 September 2012 (UTC)

I would also add that "Stupidity gets priced out of a free market, but can grow infinitely with guns and government bonds." Then you either simply kill - or pay off - anybody who disagrees with you, like any "modern" government. FRB123 (talk) 02:32, 14 September 2012 (UTC)

A reminder from that big ugly box at the top of the page:

"This is not a forum for general discussion of the article's subject."

In other words, this is a page for discussing changes to the article.

WP:EGG. A link should lead to an article that an uninformed reader can reasonably expect. LK (talk

) 02:43, 11 October 2012 (UTC)

Praxeology/methodology

2nd paragraph: "which is the deductive method used by Austrians to study economic events".

So is praxeology Austrian methodology? Or does Austrian methodology include non-praxeology stuff? Byelf2007 (talk) 11 October 2012

: "the" -> "a". Solved. FRB123 (talk) 04:33, 12 October 2012 (UTC)

Recent Hayek/Great Depression edit

"I can't see a way of including this in this section. It should be on Hayek's page..."

Support. Byelf2007 (talk) 13 October 2012

:Thanks. I wouldn't put the header "FRB" though - it was about whether Hayek commented on the issue of monetary policy in relation to the Great Depression. What this has to do with a paragraph on the history of the whole Austrian School in the whole 20th century is completely beyond me. It was a bizarre and irrelevant addition that an interested editor can insert on the Hayek page (or Great Depression) page. As Hayek is part of the "weak" Austrian wing (praising Keynes and being one of the most conciliatory Austrians of the late 20th century) I frankly consider him a borderline Austrian in any case, but that's irrelevant to the issue.FRB123 (talk) 09:56, 13 October 2012 (UTC)

Changed the heading. Byelf2007 (talk) 13 October 2012

Heterodox in the lead

There has been a long consensus about including the word heterodox in the lead. Please stop removing it. The lead should summarise the text of the article, and the text has many references to how AS is currently heterodox. LK (talk) 08:02, 16 October 2012 (UTC)

The lede is the intro. It's always been in the lede. What you want is for it to be in the first paragraph. That's different. The first paragraph should explain what AS is, and the heterodox comment should be in the lede, which it was. It's frankly ridiculous to criticize something before even stating what it is. It's similar to editing the first sentence to this: "AS is a heterodox school of thought much criticized for its methods by mainstream economists who consider its methods unscientific and a priori". That is an insanely biased intro. But similar to yours. Other people have any suggestions? Byefl?FRB123 (talk) 11:39, 16 October 2012 (UTC)

Yes, it's site policy to start an article with explaining what something is in a hierarchical way, as in "It's a car, and it's crummy" as opposed to "It's a crummy car" where we're told it's crummy before we're really told *what* it is.

And 'heterodox' is basically in the intro when we say it's out of mainstream. I don't think we really need the term. Byelf2007 (talk) 16 October 2012

Indeed. I also don't think someone employed by GM should be commenting on Hyundai on WP, but that's another issue. - 138.130.110.148 (talk) 04:09, 17 October 2012 (UTC)

I don't have the perspective of expertise in this area. But from a pure Wikipedian angle, it looks like it (in particular the "Austrian is heterodox" statement contained within) should not be in there for the following two reasons:

• The lead should be a summary of what is in the body of the article, and such is not in the body of the article. The word "heterodox" is not anywhere in the body of the article.
• As a preface, of the four references given, three were easily checkable (on line) the fourth appeared to be on line but the link was just to an on-line sales page of the book. Basically it looks like none of the 3 on-line references made the assertion that Austrian economics is (overall) heterodox, and that one actually refutes it. By the latter I mean that it said that Austrian economics overall is NOT heterodox, but that (only) in one particular respect it is.

Again, I do not have the perspective of expertise in this area; possibly I am missing or unaware of something.

Sincerely, North8000 (talk) 11:29, 17 October 2012 (UTC)

Axiomatic Truths

I'm not sure that i agree with the opening sentence declaration that deduction from axiomatic truths is the defining characteristic of Austrian Economics, but if any editors believe that this is correct, I think there should be a statement of those axiomatic truths. The list that currently follows is something other than that, and I'm not sure that it is appropriate in its current location nor that it helps set forth Austrian Economics to the reader who comes to the article with no previous knowledge. Thoughts on this?'''SPECIFICO''' (talk) 15:46, 20 October 2012 (UTC)

Since you have a different view of Austrian economics than what is presented in the article, it would be helpful if you could provide us with a source that explains the topic, preferrably one from an academic publisher. In the meantime, I see nothing wrong with the statement, it is sourced and represents as far as I know the major difference between Austrian and mainstream economics. TFD (talk) 16:46, 20 October 2012 (UTC)

Agree with TFD. SPEC, please slow down and be careful in your editing. Praxeology relates to this so it is in the list. You're not reading the article carefully and your edits reflect that. Perhaps discuss some of your edits on the talk page before launching in and typing. In addition, some edits are ungrammatical or contain typos.FRB123 (talk) 23:18, 21 October 2012 (UTC)

I've for some time held the opinion that we should be drawing from sources such as this article on Austrian Economics by Peter Boettke hosted at the Concise Encyclopedia of Economics. Instead, what we have is largely the Rothbardian viewpoint as espoused by the Mises Institute. LK (talk) 11:45, 22 October 2012 (UTC)

Are you talking as a mainstream Keynesian or as a neutral observer? It is a tad frustrating when people like Byfl who have studied Austrianism for years and worked on the page for months get comments from people who either haven't formally studied Austrianism or are from other Schools of thought but nevertheless can't resist putting their (fiat) two cents into the lede rather than the Criticisms section. Thank you for sharing your personal reflection however (1) Rothbard/Mises is really the only "viewpoint" different from neo-classical (if you water it down it to Hayek/Selgin/White it disappears - please edit neo-classical if that is the case) (2) Mises/Rothbard/de Soto/Hulsmann/Salerno is the "main" Austrian view (within the heterodox school of Austrianism) (3) Boetke is ref'd multiple times (4) some don't consider Boetke neutral enough to comment but that's a separate issue. GMU is considered by some hopelessly out of touch on Austrianism and James Buchanan has been ripped apart by Rothbard, Hoppe and other Austrians for his public choice stuff. Buchanan was a central figure at GMU. So the only way of keeping this neutral is quoting as much as possible the actual words from unambiguously Austrian scholars. If we do it any other way it's opening the page up to mischaracterization/misrepresentation. And I didn't know WP should be copying secondary content from other Encyclopedias. Is that a new WP policy? As a final point I note that the "main" characterizations of AS from that Encyclopedia are actually all included here anyway. It's just that this article quotes Rothbard and the other doesn't. The other Encyclopedia also includes clearly non-Austrian scholars such as Buchanan. A shockingly debatable point. And questionable given Boetke also comes from GMU. So it's useful as a point of comparison but frankly another example why an open source Encyclopedia is sometimes more objective than the inbred, incestuous world of academia (with academics telling kids what other academics want to hear). FRB123 (talk) 11:53, 22 October 2012 (UTC)

GMU Austrians, Hayekians ext. are Austrians, and their views should be duly represented along side the Missesian view. Especially regarding FRB. --MeUser42 (talk) 12:48, 22 October 2012 (UTC)

I think we should use peer-reviewed articles or books from academic publishers. The advantage of using these sources it that they are more likely to be accurate and it is much easier to resolve any disputes about accuracy or bias. It is not important what views writers have because we are using articles as sources of facts not opinions. I think Hayek should be included because he was part of the Austrian school, and we can point out where his views diverged. There is nothing stopping us from creating a separate article specifically about different versions of Austrian economics. TFD (talk) 17:47, 22 October 2012 (UTC)

What is the GMU view of FRB? Do they support or oppose central banking? Free banking? Currency competition? The gold standard? FullRB? Aside from some public choice stuff they seem like monetarists to me, with a very weak link to Austrianism. Are there any reliable references putting Buchanan or Boetke in as Austrians and are there any references documenting their views on this issue? If the only thing they've come up with in the last 40 years is public choice stuff, then by all means put them in there.FRB123 (talk) 03:41, 23 October 2012 (UTC)

Could you please in the first use identify what you mean by initials such as GMU and FRB. TFD (talk) 03:50, 23 October 2012 (UTC)

George Mason University. Fractional Reserve Banking. Full Reserve Banking.FRB123 (talk) 04:57, 23 October 2012 (UTC)

Thanks. But why does this matter? Hayek was a student of Mises and departed to some degree from the School's teachings. We can say that. Also, Hayek is best known for his political writing, esp. The Road to Serfdom. His admirers Reagan and Thatcher for example had little interest in economics and followed Friedman with occasional Keynsian lapses. TFD (talk) 05:31, 23 October 2012 (UTC)

TFD, you should read this post by Boettke on his blog 'coordination problem',[2] it'll give prespective on the divide between internet Austrians and economists following the Austrian tradition (including those at George Mason University). Coming back to what Specifico stated at the beginning of this section, I agree with his objection with the claim in the lead that "deduction from axiomatic truths is the defining characteristic of Austrian Economics". From what I can gather, the Austrian tradition emphasizes methodological individualism and a focus on economic institutions. Economists working in the tradition also hold a distrust of complex optimizing models (beloved of the Chicago school), and a suspicion of results from overly complicated econometric analysis. However, the rejection of empiricism and much of standard economic theory in favour of deduction from axiomatic truths (Praxeology) is a Misean/Rothbardian programme and does not reflect what most professionals in the field actually believe. As Boettke has written, the distinction between Austrian school and mainstream is now almost non-existent.

My view on this is that there are now two distinct claimants to the 'Austrian school' label:

• Professional economists who have been following the Austrian tradition as it was before it was high-jacked by Rothbard and the libertarians in the 1960s, who although they are now a distinct minority, are still part of the mainstream conversation.
• The von Mises Institute followers much seen on the internet (also including Ron Paul and other libertarians), whose beliefs and methods are so heterodox as to be essentially 'fringe science'.

I find it unfortunate that this page has largely been written by and largely describes the latter group. LK (talk) 09:07, 23 October 2012 (UTC)

Direct quote from Boettke: "We have always been among those who attempted to offer resistance to this use of the term. It has become evident to us that our efforts have been futile. Rather than resist the pure ideological identification, we are choosing to devote our efforts elsewhere. The name Austrian economics has been lost as a focal point for a tradition of economic scholarship, and is now a focal point for something else. We have to let it go." "We have to let it go." THEY DON'T WANT TO BE INCLUDED IN THE AUSTRIAN SCHOOL. Why is there any conflict? The only ones left are Mises and Rothbard, who are happy to be included. The ones LK wants included don't actually want to be included. Where is the conflict? This debate is cazy. There is no conflict. It only comes from those who are not reading the sources and think they know when they don't. FRB123 (talk) 23:36, 23 October 2012 (UTC)

LK, you omitted the third group:

• Self-styled arbiters who read the minds of defunct economists. I do not think that is part of Austrian doctrine.'''SPECIFICO''' (talk) 23:49, 23 October 2012 (UTC)

Byefl, our work is sadly overrun by people like SPECIFICO who are confusing the page yet again with ungrammatical (and ignorant) edits. Nothing we can do until they move on. I note no one has responded to my point - Boettke doesn't want to be associated with the Austrian School, yet LK and others insist this is the "true" core of the School. How crazy is that? And no one other than LK and SPEC is reading anyone's mind. Rothbard and Mises expressly stated (themselves) they were part of the AS. Hayek wasn't clear. Boettke is clear he DOESN'T. Buchanan is ambivalent. So who's crazy?FRB123 (talk) 00:42, 24 October 2012 (UTC)

It may be true that the only people now willing to be called 'Austrian school' are the Rothbardian libertarians (I personally don't think so), but it doesn't follow that this page should use their definition of what 'Austrian school' is to describe the Austrian school. Further, even if we have a page dedicated exclusively to describing those following the Misean/Rothbardian tradition, the page should still be clear that their methodology and beliefs are distinctly different from Hayek, Buchanan, Horwitz, and other economists following the Austrian tradition. LK (talk) 04:02, 24 October 2012 (UTC)

You miss the point. What if (1) the only ones willing to accept the label Austrian are Rothbardians AND (2) those on the "border" in academia (White, Selgin, Boettke etc etc) positively state they do NOT want to be called Austrian? Boettke and Selgin have openly rejected the label and don't want to be called Austrian. Buchanan sort of said something like "I don't mind if others call me an Austrian" but has never positively affirmed a view either way. I dispute Buchanan is "really" an Austrian just from this throwaway comment. Boettke is definitely out. Hayek is in. Horwitz is (probably) in. Who else do you have? The point is that you are consistently attempting to include the ideas of economists who positively REJECT the idea that they be included in this School, saying that somehow this page is dominated by Rothbardians. That simply does not make sense based on the real quotes of real people about their own positions in relation to the School. If (hypothetically) all you have left after economists themselves (White, Selgin, Boettke) disclaim allegiance to the School is those "crazy" Rothbardians, then the "crazy" end of the School is the one that should be explained on these pages. I'm not saying that is the reality but I am saying it is simply insane to add on these pages the ideas of people who have expressly stated they don't want to be associated with the School. Like Boettke. No economist who expressly states "I'm no Austrian" can be working in the Austrian tradition. Any suggestion they are is pure Original Research. FRB123 (talk) 04:35, 24 October 2012 (UTC)

Oh, and there are many others who are happy to be identified (and are in fact identified by others) as Austrians: Hoppe, Hulsmann, de Soto, Salerno, Murphy, to name a few. Perhaps these names should be expanded and Boettke can be put on a new page called "The Co-ordination Problem"? He certainly doesn't want to be included on this page. He doesn't want to be associated with the term. FRB123 (talk) 10:24, 24 October 2012 (UTC)

List Needs Re-write

That list up top is all wrong for the reasons previously stated and needs complete re-write. If nobody wants to discuss it here, I can give it a try.'''SPECIFICO''' (talk) 13:18, 24 October 2012 (UTC)

For starters, the citations should be associated with the lines to which they apply.'''SPECIFICO''' (talk) 14:34, 24 October 2012 (UTC)

Hulsmann

--The following thread is copied from Bylef2007's talk page:

Hulsmann on Austrian Economics

Hello. I don't see that Hulsmann's article says that Caplan is inconsistent. Can you point out where he argues that? Thanks.'''SPECIFICO''' (talk) 17:47, 28 October 2012 (UTC)

I remember writing that. The word 'inconsistent' didn't appear in that context in the article (that I can remember). However, that is, basically, his response, so I wrote the 'inconsistent thing'.

Here's an excerpt: "In this article, we will show that Caplan fails to identify the important differences between Austrian and neoclassical economics. Caplan’s errors seem all to be rooted in his failure to grasp that Austrian economics is a theory of action (praxeology) rather than some kind of applied psychology".

In other words, he's saying Caplan is inconsistent because he's attacking neoclassical instead of Austrian and applied phychology instead of praxeology.

Saying 'inconsistent' for the article is, in retrospect, a bit vague. Perhaps we should change it to include more detail? Byelf2007 (talk) 29 October 2012

Hulsmann is not a notable or expert figure to cite on this subject. There are so many better sources, and I think it really debases the article to dredge up a fringe character like Hulsmann to respond to Caplan, who is a recognized economist at a prestigious university. Rather than continuing to reinsert Hulsmann, please reconsider and if you are not convinced of his insignificance please seek consensus on talk. I will copy this thread onto the Austrian School talk page in case others are interested. Thanks.'''SPECIFICO''' (talk) 19:18, 29 October 2012 (UTC)

I'm fine with getting a different source if possible, but in the absence of another one, I'd say we ought to keep it to make sure we have a mention of the counter-argument. Since he has an article, I believe he's notable enough assuming there is no other reliable source for the argument.

I would like the material included until a better source is found. Byelf2007 (talk) 30 October 2012

Concur.. Either a better source for the ideas he expresses will be found or his de article will improve and boost his creditability. By keeping him out we are passing judgment on the ideas themselves, which is POV.--S. Rich (talk) 05:58, 30 October 2012 (UTC)

--I am distressed to return from several days' storm-related absence to see that the Hulsmann "inconsistent" material has been reinserted. Although neither I nor LK have repeated our stated objections, those objections have not been addressed and remedied either by counterarguments or offers of better material to replace the Hulsmann reference. Please remove the current Hulsmann language and I would welcome it if you can replace it with any good cogent critique of Caplan's assertions from a knowledgeable and authoritative source. We can't leave the current sentence in there simply because there's nothing valid with which to replace it. Not every statement such as Caplan's may have a direct refutation. Moreover I again call your attention to the fact that Hulsmann is not merely lacking an English Wikipedia page but that his page was reviewed according to Wikipedia processes which directed it to be expunged after he was determined to be non-notable in his presumed field of expertise. In summary: There is still outstanding objection to that sentence so please self-revert and I look forward to any suitable replacement you may find. Thanks'''SPECIFICO''' (talk) 18:54, 5 November 2012 (UTC)

"Mainstream economics"

I feel this article overuses this expression without defining properly what it means. For example, this sentence: "By the mid-1930s, much of mainstream economics had absorbed what were seen as the important contributions of the Austrians." This implies that there was such a thing as mainstream economics, and then Austrian economics came along from outside. But probably it was as much a part of "mainstream economics" in the nineteenth century as any other school of thought. The page does link to another article Mainstream economics, but looking at the Mainstream_economics#History section, it says that "Economics has, in modern times, always featured multiple schools of economic thought, with different schools having different prominence across countries and over time; the current use of the term "mainstream economics" is specific to the post–World War II era, particularly in the Anglosphere, and to a lesser extent globally." As World War II ended in 1945, this contradicts mainstream economics existing in the 1930's. Count Truthstein (talk) 23:41, 7 November 2012 (UTC)

What do you propose as a solution? Byelf2007 (talk) 7 November 2012

I agree that the "mainstream economics" label is overused and undefined. At best it is vague and could have a variety of connotations for various readers. In my opinion, it would improve the article to remove references to "mainstream economics" and replace it in each instance by a well-defined, meaningful, and appropriate alternative. Count Truthstein, do you want to take a try at that? I will have a look as well.'''SPECIFICO''' (talk) 02:51, 8 November 2012 (UTC)

I've made a few changes to the wording but I'd have to see what some of the citations say to make sure that they aren't used to back something up they don't say. I reckon that "mainstream economics" means the economists working at universities and publishing in economic journals. Count Truthstein (talk) 13:19, 8 November 2012 (UTC)

You're probably correct. I'll investigate soon. Byelf2007 (talk) 8 November 2012

Impossible/virtually impossible

Wouldn't it be more accurate to say Austrians think precise modelling of economies is "virtually impossible" because the modeler might get it exactly right with a good helping of luck, or does the whole decision-making actor thing make the notion of modelling them as such, regardless of their actions, intellectually dishonest? I'm afraid I haven't read enough praxeology to know the answer to this. Byelf2007 (talk) 18 September 2012

It's infinitely recursive. Assume an "accurate" model predicts gold will be $2500 by 1 January 2013. This detailed (supercomputer) "modelling" of supply and demand in the gold sector is published. Speculators would then pile in and drive up the price NOW. So (at the very least) the date's immediately going to be wrong. An accurate model would then have to take into account the effect of its own publication, so that the prediction changes again. And again. And again. And again. etc. So it's not "virtually impossible" but really intrinsically impossible. Humans can't model market behavior without affecting that market. Admittedly Martians could. So could some genius with a spreadsheet at home, but if the model was so brilliant and he participated in the market he'd move the market in any case. So any "accurate" "published" model is pointless. See this terrific academic paper on the Austrian School here. To use an analogy, to keep it simple and easy to understand: any "accurate" betting model for horseracing is pointless if published - there are some very successful ones that are confidential however and some people have admittedly made literally hundreds of millions based on those confidential models - but economics is not about confidential models. (Why all half-decent engineers don't get into algorithms on horse racing on the side (with a computer and a few friends) I don't know, but that's beside the point.) Mainstream economists don't admit this is an issue. Ever. They always (always) say "I estimate the inflation rate will be 4%" like they are talking about gravity or the speed of light. They never say "inflation's going to be 4% provided no one takes me seriously". So the whole game is self-evidently stupid, especially when it gets to exchange rates and stockmarkets and housing price estimates. "My perfect model says the US dollar is going to collapse on 1 June 2013 at 12pm!" Well, if you publish that and it makes sense it's going to collapse now. LTCM tried modelling the bond market and they blew themselves sky high, despite being Nobel Prize winners. Also, beyond trying to predict prices via a model, virtually every "variable" in economics cannot be set as a "constant". Lower interest rates "generally" would encourage borrowing. But if people sense there are no profitable investment opportunities (or they are already bankrupt) they won't borrow. So the "model" on interest rate won't work. But Fed economists still think it will because in their model "lower prices increase demand." But humans aren't machines and the equation no longer "works", but they are stuck with their model and can't shift thinking because that's what their model says. They think we are the machines but (ironically) they are because they can't get in their heads that their model is just a model - they can't constantly change every variable in their models to make them accurate at every instance in time and space. It's (again) impossible in the real world. Finally, the point Hahn makes is this: How to you mathematically model political risk? How do you model what Congress is going to do with the deficit two years from now? How do you model what the Fed is going to monetize next (given they can monetize anything)? So economic models can be fun and interesting from an academic point of view but never (ever) try to use them in the real world (or, if it's brilliant and 100% accurate, don't ever publish it). An example of the madness of using models in the "real world" is what the Fed is doing right now. "Lower interest rates increase demand for credit". No they don't, not in all circumstances. - FRB123 (talk) 00:58, 19 September 2012 (UTC)

• Note FRB123 has been indef blocked as a sockpuppet of Karmaisking [3]. --TFD (talk) 03:34, 14 November 2012 (UTC)

No because they reject the possibility of the empirical method being used to develop models to predict social behavior, which includes countless people with free will making individual decisions. TFD (talk) 06:49, 20 September 2012 (UTC)

Better said, with fewer words. FRB123 (talk) 12:21, 20 September 2012 (UTC)

I wonder if you realise that you are describing the mainstream theory of rational expectations? Models using this as a principle substitute the prediction of the model into the expectations of the economic agents. Roughly speaking, such a model predicts that all choice variables are at equilibrium and that only unexpected shocks can drive changes observed. LK (talk) 02:56, 11 October 2012 (UTC)

I am well aware of both Lucas's rational expectations models and the hypothesis that underpins it. I am also aware of the efficient market hypothesis. You clearly don't understand Austrian theory because that's not what Austrians are getting at. First, Austrians don't believe in stable equilibrium, which underpins Lucas's "silly" models. Second, these models don't model their own publication, although they model agent's expectations (as if "agents" are aliens on another planet). Third Austrians consider future price movements unknowable at a deep level (subjectivism compels that conclusion) but mainstreamers don't "get" this point (geeks looking at other humans as if they are aliens that can be studied like lab rats). The point I was making above is "like" RE and if I stopped there I could understand the confusion. But Austrian analysis goes far deeper than RE models that (basically) say "the market is always right because it's always at peak equilibrium. Let me show you how to model robot-people's inflation expectations...". They say it in "complex" equations but that's essentially what they say. They also talk about inflation getting out of hand through dynamic expectation models - hence the government incentive to lie about inflation to reduce expectations - but again this is "lab rat" stuff. Austrians are more like this: "The market doesn't know the future but continually searches for the right answer. Idiots with stupid mathematical models in government and at the Fed Reserve trying to turn humans into lab rats will only make this complex delicate ever-changing dynamic discovery process much worse because they are the dumbest people in the room but think they are the smartest because they were taught algebra in public school but never invested their heart and soul in a real business. But just because they are stupid doesn't mean the market is perfect. The market is 'good' simply because it is an information mechanism - not because prices are at equilibrium or are 'right' every single millisecond of every single day." - FRB123 (talk) 12:18, 11 October 2012 (UTC)

The Austrians reject the rational expectations theory.[4] It is not just that unexpected events can occur or that erratic decisions by some individuals may skew expectations, it is that they do not believe that models can predict human behavior. TFD (talk) 20:36, 13 October 2012 (UTC)

Not sure about that. Observe 100 people who accidentally touch a hot iron. Do you think Mises and Hayek would have declined to predict that most would recoil?'''SPECIFICO''' (talk) 23:28, 14 October 2012 (UTC)

That would be an argument against Austrian economists. But in economics choices are less stark. Can you tell me for example how much you would have to pay your group of 100 people in order to get 50% to participate in the experiment? TFD (talk) 23:47, 14 October 2012 (UTC)

It would be very easy to find out, wouldn't it? I wasn't making any argument against Austrian Economics, far from it. I was saying that you mis-characterized it.'''SPECIFICO''' (talk) 02:22, 15 October 2012 (UTC)

No, you are pointing out what you believe to be a fallacy in Austrian economic theory. Where is your source that the Austrians discredited their own theories? TFD (talk) 05:30, 15 October 2012 (UTC)

As a published Austrian Economist, I am not going to indulge you with further discussion until you are prepared to drop the straw-man arguments and attributing to me positions which I have not embraced. Enjoy your day.'''SPECIFICO''' (talk) 14:51, 15 October 2012 (UTC)

Tony Lawson and

Mohammad Hashem Pesaran, authors of the source I provided, are published economists too. That does not mean that they are right, but I would appreciate a source that supports your view. TFD (talk

) 16:27, 15 October 2012 (UTC)

I recall a quote from Mises along the following lines: "When you throw a stone into a pond science predicts it will sink. When you throw a man into a pond, he must first decide whether to sink or swim." Hence the difference. Some decisions no doubt can be "modelled" - most (not all) people will not touch molten iron. Many economic behaviors (what is the best investment today?) cannot (at least not accurately or consistently) not because people aren't self-interested beings but because the information they have to decide on their self-interest is (1) not complete and (2) unevenly distributed throughout the population. - FRB123 (talk) 23:06, 15 October 2012 (UTC)

Another straw-man argument. I know of no economist who claims to have a model that will predict which investment will be chosen by a given individual. Let's stick to the empirically given issue.'''SPECIFICO''' (talk) 23:53, 15 October 2012 (UTC)

Errr... excuse me, you apparently have no idea. I know of many economists who claim that the Efficient Market Hypothesis is fact and THEREFORE predict you cannot consistently make above average returns in the market. But the distribution of actual returns suggests a wider distribution than the economists predict. But they still say you can't beat the market. So they (1) do predict things about investments and (2) ignore real evidence that contradicts their own models. See here. So there's no straw man. Just dead economists hanging in the wind. - FRB123 (talk) 06:11, 16 October 2012 (UTC)

Dear Err, please stick to the point under discussion. Read my words, "I know of no economist who claims to have a model that will predict which investment will be chosen by a given individual." I'll be glad to continue this chat, IFF you choose to be civil. Thanks.'''SPECIFICO''' (talk) 18:15, 16 October 2012 (UTC)

Lew Rockwell -- Reliable Source?

There are many citations of self-published or other non peer-reviewed writings of Lew Rockwell in this article. I would like to examine each of these and evaluate the associated content. If it seems valid and relevant, I think we should try to find more credible and authoritative sources for that content. Otherwise, we should consider deleting material that appears to be the sole view of Lew Rockwell. Thoughts?'''SPECIFICO''' (talk) 05:29, 14 November 2012 (UTC)

Rockwell is cited twice, and one of the links is dead. In any event the Mises Inst. is a reliable source. Self-published applies in those cases where the subject of the article writes about him/herself, which is not the case here. Also, what is the merit of the actual material?--S. Rich (talk) 06:32, 14 November 2012 (UTC) Also, how do we establish that such material is the sole view of someone?06:36, 14 November 2012 (UTC)

Please read

WP:RS and then re-read my comment. Thanks.'''SPECIFICO''' (talk) 14:46, 14 November 2012 (UTC)

INFLATION

Bylef, I see that you deleted reference to Mises' statement that inflation of prices follows inflation of the money supply. Please re-read the source, which clearly states this and indeed emphasizes the debasement of purchasing power due to monetary expansion. If you agree please reinsert that language, otherwise please expand on why you disagree. Thanks'''SPECIFICO''' (talk