Global debts are rising, as is economic
inequality. Bubbles abound. The Bank for International Settlements is warning of
a potential synchronized financial collapse. Capitalism, particularly the
richest 1% who have benefited from rising asset prices, appear set to take
the blame.
Is that smart?
Not so,
says Jeff Deist, President of the Mises Institute, which will be hosting 150
students from around the world this Sunday in Auburn, Alabama, for a week-long
session about free market economics.
“Mises
was one of the giants of the 20
th century economics,” says Deist.
“Yet his works are being systematically kept out by academic gatekeepers. Students
who come to “Mises University” will learn more in one week about economics than
they would in four years at an Ivy League program.”
Followers
of Mises and the “Austrian Economics” school from which he emerged have a
different take on current economic challenges, which they believe were caused
by governments themselves, not by free markets.
Are governments the problem?
Free
market defenders say that advocacy by mainstream economists (led by Nobel Laureates
like Paul Krugman, central bankers like Janet Yellen and academics like Ken
Rogoff) of near unlimited government spending, borrowing and, most recently,
money printing, will go down
as one of
history’s greatest cons
.
The
works of Mises and later Murray Rothbard, who advanced and popularized many of
Mises’ earlier ideas, provide academic heft to those arguments.
Indeed, backers
of the Austrian economics school believe that almost everything being taught in
today’s university economics program is wrongheaded. For example:
No such thing as “free money”
During
the past 30 years, the US, European and other government central banks, backed
by academia, have bloated credit markets by driving real interest rates to near
zero.
Their
goal was two-fold: to give public sector officials more money to spend, and to
stimulate a “wealth effect.” This, they said, would generate more spending from
which the benefits would “trickle-down” to ordinary folk.
Mises
noted as early as 1912 in his book,
The Theory
of Money and Credit
, that such policies are hard to dial back and could spark
massive, generational, credit-spiked boom-bust economic cycles.
Economics is only a small part of human
action
Mises
also concluded that economics cannot be studied on its own, but must looked at in
context of all
Human Action, which
became the title of his seminal work.
“Studied
properly, economics is a social, not a mathematical science,” says Deist, who
cut his chops working for Ron Paul, a recently-retired libertarian Congressman.
“People are human beings, not automatons that can be programmed using formulas.”
Mises
would have laughed at today’s mainstream economists, who build vast,
theoretically-perfect, econometrics models, but ignore history, psychology and
geopolitics and thus have no clue why their formulas don’t work.
(For
example, neither the US Federal Reserve, the European Central Bank nor the Bank
of Canada
has ever
successfully predicted a recession one year in advance
).
Focus on individuals, not groups
Mises
also prized the role of the entrepreneur in creating new ideas and wealth. He would
have been shocked at US Federal Reserve actions to prop up the banking,
automotive and government sectors following the last financial crisis.
Mises
taught that free markets only work when the lazy, the incompetent and the
greedy face the consequences of their actions. However, those that created,
missed or failed to prevent the 2008 recession and financial crises almost all
kept their jobs. Many were promoted.
Hence
the resulting massive mal-investments and other challenges world economies face
today.
These
underscore the increasing importance of Mises University, which due to its
broader view of current challenges, could well be evolving into one of
America’s most important economics programs.
Because
history teaches us when the intellectuals fail us by preaching wrong-headed,
self-interested and confusing theorems, the public turns to simplistic
populists.
Hard conclusions about individual responsibility
True,
Mises’ work suggests troubling, hard conclusions regarding individual responsibility, particularly for recent generations, which have been taught to
rely on governments to solve all of their problems.
Furthermore
Mises’ free market ideas about saving (instead of consuming), entrepreneurship
(as opposed to government spending) and sound (as opposed to printed) money,
were so radical, he was never given a full-time paid position by a major
university.
However
the academic foundations of Mises’s teachings and those of the Austrian school,
which are being taught at Mises University, are worth having a look at.
That’s
particularly true during a time when the public seems ready to give more power
and resources to the same governments that mortgaged their futures, as well as
those of their kids and grand-kids.
Mises University will be streaming courses
online between July 23 and July 29, 2017 at on its Facebook Live page and
website: https://mises.org/events/virtual-mises-university-...
Mises Canada runs a similar program titled Rothbard University, which is being held between July 19th and 22nd, 2017.
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Peter Diekmeyer is a business writer/editor with Sprott Money News, the National Post and Canadian Defence Review. He has studied in MBA, CA and Law programs and filed reports from more than two dozen countries.
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The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
