As David Frum has noted, Austrian economists are awfully popular among Republicans. It’s an odd phenomenon: many of the world’s most influential economists are conservatives, but none of them are Austrians. And instead of embracing the most brilliant economists in the world, Republicans lift talking points from a group at the margins of modern economics.
At a superficial level, Austrians are influential because they’re so damn loud. Ever listened to conservative talk radio or watched Beck’s TV program? Chances are you’ve listened to an Austrian economist, probably one predicting impending economic apocalypse. As an occasional contributor to FrumForum, I learned quickly that Austrian economics posts invite an army of e-critics. (This piece will likely inspire an essay-length comment and about 84 links to articles on mises.org.) But there’s something else going on. Austrians aren’t just the most vocal and inspired advocates of capitalism; these days they often seem like capitalism’s only friends.
I don’t mean that no one likes the free market system. Most do. But free market advocacy comes in different shapes and sizes. Those who research and combat the inefficiencies of government policy are free market advocates, but the typical conservative doesn’t have the time to grapple with the size and science of the Keynesian multiplier. Conservatives do have the time to notice some glaring inconsistencies our nation’s economic history. People tell me scary stories about the laissez-faire free market of the George W. Bush years, despite the fact that government grew rapidly during Bush’s tenure. And it seems odd to call the pre-2008 housing market heavily deregulated when government sponsored companies owned trillions of dollars of housing debt. Conservatives are smart enough to know that the anti-market narrative of the financial crisis is inaccurate.
The Austrian school rejected this narrative. Its economists were accessible and spoke to the unease that many conservatives felt. Their criticisms echoed those of mainstream economists. They blamed the Fed’s monetary policy. So did liberal economist Joe Stiglitz. They blamed Fannie Mae and Freddie Mac. So did Keynesian economist Ragu Rajan and Nobel laureate Gary Becker. On this front, the Austrian school was as sensible as it was unremarkable. But the Austrians’ passion and consistency made them excellent spokespersons for the market economy. Without viable alternatives, conservatives understandably gravitated toward the Austrian school.
Some may object that generalities don’t matter. People care about jobs, not bromides about the free market. That view is inaccurate. Conservatives definitely care about jobs, but the conservatives who really worry about public policy, who love to talk about politics, and who volunteer for Republicans causes don’t like it when others deride their principles. Milton Friedman isn’t a conservative icon because his theories helped the Fed control runaway inflation. He’s a conservative icon because of his brilliant defense of economic liberty. In the wake of the financial crisis, no one outside of the Austrian school approached Friedman’s flair for free market advocacy.
Conservatives, while understandably drawn to the Austrian school, lose something in the bargain. Austrians loathe modern Keynesian economists with a religious fervor, even the conservative ones. Other economic libertarians (like Friedman) draw similar scorn. Viewed through an Austrian perspective, public policy judgments are hastily rendered and motives easily impugned. Take for example, the newest round of quantitative easing. Bernanke’s gambit may not work, but Lew Rockwell published this gem about the policy. Among its nuggets of wisdom: a guy who won the Nobel for his work on monetary policy is, yes, “weak” on monetary policy; the Cato Institute borrows ideas from Robert Mugabe’s Zimbawe; and pernicious motives drive the Koch brothers. Is it any wonder that so many Republicans were utterly dismissive of the Fed’s recent activity?
Luckily, Republican leaders rarely sound so insane. And I’m optimistic that the Austrian influence has reached its peak within the party—the Austrian school’s disdain for American foreign policy and willingness to call Lincoln a tyrant don’t sit well with the base. But Republicans want their leaders to articulately defend conservative principles. If the party’s public intellectuals don’t deliver, this marriage of convenience between conservative populism and Austrian economics may continue indefinitely.