Now I really am bored with the TSA and it sounds as though many of you are too. So I’m passing on this excellent post by Brad DeLong about how extreme today’s neo-Hooverists are, even (maybe especially) in comparison with their supposed idol, Milton Friedman:
Hayek’s fellow countryman, Joseph Schumpeter, went further: “Gentlemen!” he announced to his students at Harvard University (there were no ladies). “A depression is healthy! Like a good ice-cold douche!” If depressions did not exist, Schumpeter thought, we would have to invent them. They were “the respiration of the economic mechanism.”[…..]
Friedman himself condemned Hayek, Schumpeter, and Mellon as devotees of an “atrophied and rigid caricature” of his own doctrines. “[T]his dismal picture,” said Friedman, led “young, vigorous, and generous mind[s]” to recoil. And both Keynes’s and Friedman’s flavors of postwar American macroeconomics, with its focus on government action to maintain stable growth, were the happy result.
Nothing has changed in the past few years to make Hayek’s, Schumpeter’s, and Mellon’s arguments stronger intellectually against the critiques of Keynes and Friedman than they were 60 years ago. On substance, their current victory is inexplicable.
I know next to nothing about Austrian economics, but I was not surprised to read that it emphasizes first-principles argument over empiricism. In many ways, the victory of abstraction over empiricism is the dominant political story of our times.