Should Central Banks Lean Against the Wind?

by Andreas Hoffmann The pre-crisis Jackson Hole Consensus view on how to take asset market developments into account in monetary policy can be summarized as follows: Because it is hard to spot bubbles in asset markets with certainty ex-ante, central bankers should not lean against the wind when there seems to be a boom in … Continue reading Should Central Banks Lean Against the Wind?

Zimbabwean Currencies: Condoms, Sweets and Paper Money

by Alexander Czombera* If there is one single law in economics then it is that markets tend to equilibrium. Or, to align this with Grove’s law  (“Technology will always win. You can delay technology by legal interference, but technology will flow around legal barriers”), the free market will find its ways, whether in white, grey … Continue reading Zimbabwean Currencies: Condoms, Sweets and Paper Money

Let Wedding Cake Bakers Discriminate in Peace

By Mario Rizzo “A Colorado judge says a baker who refused to make a wedding cake for a same-sex ceremony must serve gay couples despite his religious beliefs, a ruling that a civil rights group hailed as a victory for gay rights.” Fox News 12/06/2013 Friedrich Hayek argues in his famous essay “Why I am … Continue reading Let Wedding Cake Bakers Discriminate in Peace

F.A. Hayek: His 114th Birthday

by Mario Rizzo Today is Hayek’s birthday. Much has been and will continue to written about him. When I look around at much of what passes for economics today, especially in the prestige circles, I cringe.  But reading his work always comforts me that something better is possible. And, in fact, there are many economists … Continue reading F.A. Hayek: His 114th Birthday

Clarifications of the Austro-Wicksellian Business Cycle Theory

by Mario Rizzo There has been a lively debate on forecasts of high inflation made by those worried about the Fed’s recent policy of quantitative easing. For details I refer the reader to Daniel Kuehn's excellent blog. The question to which I address myself is solely “What do these predictions have to do with core Austrian … Continue reading Clarifications of the Austro-Wicksellian Business Cycle Theory

Spontaneous or Planned: A Sharp Dichotomy, or a Gradient?

by Gene Callahan I am writing a solicited comment for Dan Klein's new book, Knowledge and Coordination: A Liberal Interpretation, for the journal Studies in Emergent Order. This is an especially interesting task for me, as Klein's topic is obviously vital to my preliminary work on social cycles. And Dan is always an intelligent and … Continue reading Spontaneous or Planned: A Sharp Dichotomy, or a Gradient?

Hayek Lecture by Taylor

John Taylor received the Manhattan Institute’s 2012 Hayek prize for his book, First Principles: Five Keys to Restoring America's Prosperity.  In the lecture he gave for the occasion, Professor Taylor argued for rules-based policies—-that would be a real reform. The video of the lecture is on the Manhattan Institute site.   It was also published in … Continue reading Hayek Lecture by Taylor

Euro Crisis from Long Perspective

by Chidem Kurdas The European crisis, in progress for years and still showing no sign of resolution, is largely the result of elite hubris. To create the euro and ram it down the throats of populations that, left to their druthers, would have stayed with their old currencies—this was a massive, top-down social engineering project. … Continue reading Euro Crisis from Long Perspective

Bank Hedges and Social Justice

by  Chidem Kurdas To hedge or not to hedge? That’s the question for many an endeavor. Farmers hedge by selling their harvest ahead of time. Building managers hedge by locking in a price for heating oil or natural gas—last year many got it wrong, blindsided by the decline in the price of gas. Most hedges … Continue reading Bank Hedges and Social Justice

HAPPY BIRTHDAY, PROFESSOR HAYEK

by Mario Rizzo I could not let May 8th pass without writing something about F.A. Hayek, or rather my appreciation of Hayek. I have not been blogging recently because I have been working very hard researching and, at last, writing my book, with Glen Whitman, on behavioral economics and the new paternalism (no real title yet). In terms … Continue reading HAPPY BIRTHDAY, PROFESSOR HAYEK

Notes on a General Theory of the Social Cycle

by Gene Callahan Monday past at our colloquium Andreas Hoffman presented a fascinating paper attempting to depict Austrian Business Cycle Theory as a special case of a more general business cycle theory based upon Hayek's later work on spontaneous orders. Hoffman's general idea (I won't do it justice in this brief summary, so please have a … Continue reading Notes on a General Theory of the Social Cycle

Supply and Demand in Music

by Edward Peter Stringham* Many economists are criticized for being unable to communicate their ideas in am intelligible and non-boring way. How many people, for example, jump to listen about a debate about the Austrian theory of the business cycle? It turns out quite a lot. John Papola and Russ Roberts demonstrated to the world that … Continue reading Supply and Demand in Music

Hayek on the Large Corporation (aka “Breaking up Big Banks?”)

by Mario Rizzo For those who enjoy trying to figure out what important thinkers might have thought about specific issues they never faced (and I am one of them!), the following letter I discovered will prove interesting and perhaps disconcerting to some. Below is a brief excerpt from a letter that F.A. Hayek wrote to the journalist and … Continue reading Hayek on the Large Corporation (aka “Breaking up Big Banks?”)

Yes, Paul: It is Hayek versus Keynes

by Mario Rizzo Although by the standards of contemporary economics, I am a historian of economic thought, I am not a historian of economic thought, properly considered. Thus my major interest in F.A. Hayek’s business cycle theory is not from the point of view of a historian. My interest is only incidentally in how Hayek’s contributions … Continue reading Yes, Paul: It is Hayek versus Keynes

Chicago and Vienna

by Jerry O’Driscoll In the last two days, two prominent economists have asked me essentially the same question: what is the difference between Chicago and Austrian economics? It is interesting that both asked, particularly since one has a Ph.D from Chicago. The second economist asked me specifically if Armen Alchian wasn’t really an Austrian. I’ll respond … Continue reading Chicago and Vienna

The Rule of Discretion versus the Rule of Law: Soros Gets Nailed

by Mario Rizzo In a previous post I reported a Cato Institute panel discussion of Friedrich Hayek’s The Constitution of Liberty (as reissued in a new edition by The University of Chicago Press). This discussion was among Bruce Caldwell (Duke University), Ronald Hamowy (Cato and the University of Alberta), Richard Epstein (New York University), and George … Continue reading The Rule of Discretion versus the Rule of Law: Soros Gets Nailed

Another step down the road to serfdom

by Roger Koppl Peter Orszag, former director of the Office of Management and Budget, has written an article for The New Republic entitled “Too Much of a Good Thing: Why we need less democracy.”  “To solve the serious problems facing our country,” he says, “we need to minimize the harm from legislative inertia by relying … Continue reading Another step down the road to serfdom

Monetary Nationalism

by Jerry O’Driscoll I recently read Money, Markets and Sovereignty by Benn Steil and Manuel Hinds. I highly recommend it. The jacket blurb accurately summarizes the book’s importance: “Benn Steil and Manuel Hinds offer the most powerful defense of economic liberalism since F. A. Hayek published The Road to Serfdom more than sixty years ago.” … Continue reading Monetary Nationalism

The Führer Principle – Light

by Mario Rizzo David Gergen has written a piece decrying the lack of leadership on the debt-deficit “crisis” and calling for a new Churchill. David Gergen, who saw no problem working for both Ronald Reagan and Bill Clinton, now teaches at the JFK School of Government at Harvard. He has a claim to being a … Continue reading The Führer Principle – Light

Moral Trial and Error

by Mario Rizzo The recent discussion-thread at the blog Coordination Problem regarding a Hayekian case for same-sex marriage got me thinking more generally about moral evolution. In a market there is a process of trial and error. New products or methods of production come into existence. Some fail; others succeed. Some speculators make successful predictions … Continue reading Moral Trial and Error

David Hume and Friedrich Hayek: Classical Liberal Giants

by Mario Rizzo I have just discovered the wonderful coincidence that May 7th is David Hume’s birthday and May 8th, as I have known, is Friedrich Hayek’s birthday. It is Hume’s 300th birthday – how amazing that he is still so relevant in a myriad of ways. It is Hayek’s 112th birthday. As most of our … Continue reading David Hume and Friedrich Hayek: Classical Liberal Giants

The Wal-mart Solution

by Jerry O’Driscoll Who should provide disaster relief? Who does provide disaster relief? In the Weekend Wall Street Journal, David Beito of the University of Alabama provides the answer for the victims of the devastating tornado in Tuscaloosa: it’s Wal-mart, churches, students, private individuals and, critically, talk radio. The four Tuscaloosa Clear Channel stations organized … Continue reading The Wal-mart Solution

George Soros, F.A. Hayek, and The Constitution of Liberty

by Mario Rizzo I think George Soros is a good man. To me he seems like a person who wants to make the world a better place. He, like Keynes, is against comprehensive economic planning (ambiguities about “planning” noted) but thinks that financial markets are inherently unstable and thus must be regulated by a nimble … Continue reading George Soros, F.A. Hayek, and The Constitution of Liberty

Hayekian Credit Booms

by Andreas Hoffmann Currently there is an interesting discussion in the blogosphere on how it is possible that in Hayek’s Prices and Production framework consumption and investment can increase at the same time. In my opinion they cannot, or only very slightly, but this is not a problem! Because, 1) the explanation is not one of the … Continue reading Hayekian Credit Booms