George Mason U. adopts a free-market philosophy to an unusual degree
Gabriel Rocha
grocha at neutraldomain.org
Wed Oct 24 10:34:11 PDT 2001
http://washington.bcentral.com/washington/stories/2001/10/22/focus1.html
George Mason U. adopts a free-market philosophy to an unusual degree
Eric Winig Staff Reporter
While the U.S. economy continues to sink, the majority of economists
are scratching their heads, unable to divine why low interest rates
and fiscal stimulus are failing to revive consumer spending. Most,
however, predict those old fixes will eventually work their magic
again.
But to a small school of economists, the U.S. downturn is no mystery.
Indeed, they were expecting such an event long before George W. Bush
and Al Gore tangled in Florida last year.
Credit-induced booms inevitably turn to busts, they say. Because
people cannot forever spend more than they earn, such a situation will
always lead eventually to a period of contraction in which debts must
be worked off and savings rebuilt.
Those economists belong to a school of thought known as "Austrian
economics," founded in Austria in the late 19th century and introduced
to America in the early 1900s. Austrian economics is basically a a
strong adherence to free-market economics without government
intervention.
As many Austrian economists see it, the boom years of the late 1990s
were not a "new era," nor a new economy, but instead a period when
cheap credit and abundant capital convinced individuals and
corporations to borrow like mad. Much of this money, meanwhile, was
used for what turned out to be poor investments.
Although stock prices have since come down significantly, the debts
amassed from all that borrowing remain, choking off any economic
recovery before it can begin. As far as most Austrians are concerned,
such imbalances must be corrected before the economy can begin to grow
anew.
It sounds like a simple concept, yet to most who practice economics
for a living Austrian economists are a fringe group. In large part
that is because the Austrian argument against any government
intervention in the market makes most economists -- and their vaunted
economic forecasts -- irrelevant.
In fact, the only doctoral program in the country with a dedicated
Austrian program is at George Mason University in Fairfax.
Something of a mission
The university's Program on Markets and Institutions -- part of the
James M. Buchanan Center for Political Economy
([52]http://www.gmu.edu/jbc) -- is run by Karen Vaughn and Peter
Boettke. And to those with Austrian leanings, GMU is akin to a port in
a violent storm.
"It's a place where you find people who think like you," says
Veronique deRugy, a French native who crossed the pond to do
post-doctoral work at GMU and now works for The Cato Institute
([53]http://www.cato.org), a D.C.-based public policy foundation with
a libertarian philosophy.
"I was one of the rare Austrian economists in France," she says, "so
it seemed like a logical place to go."
Most of the program's students are Americans -- unusual for a graduate
school -- and were introduced to Austrian economics by a professor in
college. While they don't expect to score a tenured position at
Harvard, most students know exactly what they are getting into.
"I don't expect to be teaching a class called `Austrian Economics,'"
says Edward Stringham, who is finishing his doctorate at GMU.
Stringham, like many students, hopes to go someplace where he can
teach economics with a free-market bent, even if his class will be
slightly different from the school's other offerings.
In fact, there are many such professors out there, including a good
number from GMU. And most view their task as something of a mission.
"The task facing Austrians is to take our theories and get them out
there," says Steven Horowitz, associate professor of economics at St.
Lawrence University in New York and a former GMU student. "I can name
a dozen schools that have tenured Austrian economists there. We're
putting our roots down in academia."
A credibility hurdle
Although Austrian economics can be defined loosely as a free-market
ideology, some stress this is not an entirely accurate
characterization.
Austrian economics provides "a deep appreciation of the markets" that
is critical for one to arrive at any economic conclusions, whether
free-market or otherwise, Boettke says.
Scott Beaulier, a second-year doctoral student, says, "If you want to
criticize the mainstream, you've got to know it inside and out."
One of the main hurdles for all Austrian economists is to establish
credibility in a world that views their beliefs as suspect, at best.
In truth, many economists hold some Austrian-style views, yet the mere
mention of the Austrian school causes their eyes to glaze over.
"No one is out there saying `I am now an Austrian," says Vaughn,
director of the Markets and Institutions program. "You say the
Austrian school and people say `Oh, that.'"
Vaughn, who has been at GMU for 23 years, says despite such attitudes
the school has done well placing students in teaching positions.
"There are some departments that won't touch us with a 10-foot pole,"
she acknowledges, "but we do well placing [students] at liberal arts
colleges."
However, the university has not done as well placing students as
instructors in other doctoral programs, which limits the effectiveness
of the program. While GMU attracts many students through Austrian
professors in undergraduate programs, the lack of doctoral programs
with Austrian offerings is a problem.
"George Mason," Boettke says with a laugh, "is kind of a monopolist at
the moment."
On GMU's shoulders
GMU came to have the only dedicated Austrian program in the nation
partly by chance, as formerly strong programs at New York University
and Auburn University have fallen by the wayside.
The Auburn demise did not result from a disagreement over the Austrian
approach but rather was one of the casualties when the entire doctoral
program in economics was shut down because of funding problems.
NYU, which was considered by many to have the strongest program and
has the best academic reputation of the three universities, made more
of a conscious decision to shy away from Austrian teachings. The
school no longer offers an Austrian alternative in its doctorate
program, although it does offer one in a master's degree.
The NYU program also lost its leader when Israel Kirzner retired
recently. Kirzner is widely considered the most influential Austrian
economist alive, and his retirement was a huge blow to the NYU
program.
"It was a major hit to us as a school of thought," Boettke says.
So that leaves GMU. And, to hear some tell it, Boettke himself.
"Peter is an amazing guy," says Cato's deRugy. "You can talk with him
about so many different things."
In fact, many current and former students gush about Boettke as the
driving force behind the program.
"He's basically supporting the program here," says Beaulier. "It kind
of rests on his shoulders."
Such a reference conjures up visions of Atlas -- specifically the epic
novel, "Atlas Shrugged," by philosopher Ayn Rand, who espoused
individualism and laissez-faire capitalism. But the affable Boettke
shows little sign of the strain. Instead, he continues to look for
ways to place his students where they have the best chance to make an
impact.
Boettke acknowledges that many dismiss the Austrian school out of
hand, so he advises students to "look out the window and see the
puzzles in the world," then use Austrian economics to help frame their
arguments.
"We need to try to solve real problems that other people care about,"
he says.
How the world works
Meanwhile, although most Austrians are predicting bad times ahead for
the world economy -- and have been for quite some time -- Boettke has
a much more sanguine view.
While he acknowledges recent events have tempered his optimistic
outlook somewhat -- "the war economy is certainly not good for the
economy" -- Boettke continues to believe the forces of capitalism and
entrepreneurship will win out and raise living standards for all.
He doesn't have sympathy for those who refuse to embrace capitalism
and then blame America for their woes.
"We have no responsibility whatsoever in the poverty of these
countries," he says. "It is a result of the stupid policies of their
governments, and we should not shy away from this fact."
So, while the rest of the economics profession struggles to understand
why the U.S. economy keeps getting worse, GMU's Austrian students
quietly go on with their studies. And, they hope, prepare for the day
when others will give them more than a passing glance.
"If you want a hot-shot career at an Ivy League school, don't come
here," Vaughn says. "But if you want to really understand how the
world works, I can't think of a better place to go."
--
Churchill, Winston Leonard Spencer --On the eve of Britain's entry
into World War II:
"If you will not fight for right when you can easily win
without bloodshed; if you will not fight when your victory will be
sure and not too costly; you may come to the moment when you will
have to fight with all odds against you and only a precarious
chance of survival. There may be even a worse fate. You may have
to fight when there is no hope of victory, because it is better to
perish than to live as slaves.
More information about the Testlist
mailing list