On his podcast Wealth Formula, Buck Joffrey recently covered, together with his guest Richard Duncan, the Austrian School of Economics. Despite being only 42 minutes long, the episode is packed full of errors and fallacies. Superficially, there is no reason for anyone to watch the episode, let alone for someone to write a response correcting the many misconceptions therein contained. However, the episode does merit discussion by Austro-Libertarians, not because Joffrey’s opinions matter, but precisely because they do not.
As Konstantin Kissin recently pointed out on his podcast Triggernometry and Joe Rogan described in his most recent interview with Bret Weinstein, the Zeitgeist is undergoing an abrupt shift to the right and consequently, what is thought and said on the Right is rapidly changing as well. As Austro-Libertarianism rises in popularity as a consequence of this shift, the need for other schools of thought to distance themselves from it will also grow, which will give rise to bite-sized caricatures of Austrian positions that can be easily disseminated to and remembered by those who understand nothing about the Austrian School. Joffrey is just such an individual and the stories he tells about Austrian Economics are indicative of the kind of vacuous, low-hanging fruit that we should expect to confront us in the near future. Thus, it behooves us to familiarize ourselves with the simplistic patterns of thought and speech exhibited by Joffrey in his critique and to develop responses that are effective for such individuals.
Joffrey begins the podcast by claiming that he has gone “full circle” on Austrian Economics, having “spoken like an Austrian Economics advocate” himself when he started his podcast, only to later “grow up”:
Look, I get it, Austrian economists have an appealing story. It’s neat, it’s clean, you save money, you balance budgets, and the free market solves everything. It’s comforting, it’s nostalgic, it’s like your grandparents telling you what it was like in the old days. But while it’s simple and neat, it just doesn’t reflect the reality we live in today. We’ve had multiple examples of that.
As examples of said mismatch, he cites the 2008 financial crisis and the Covid pandemic, and claims that government intervention “saved the day” in the case of quantitative easing and “kept people alive” in the case of Covid stimulus checks, preventing a great depression and mass starvation:
But again, the Austrian economists would have said ‘that’s a sin: violation of the sacred tenets of the free markets.’ But what was the alternative really? A global economic collapse? Having people starve to death? There really wasn’t anything…. The point is that we live in a world where pure economic theories rarely align with reality. Why? Because the global economy is far too interconnected, too complex, and too fragile to really leave the invisible hand out there without intervention. So sometimes we need to have a heavy hand to guide the way, unfortunately. That’s just the reality. We’ve seen it now twice … with 2008 and also with Covid. That leaves the Austrian economists sort of in a situation where they are living in a world, a little bit, of a fairytale.
In summary, Joffrey’s claims boil down to the following: 1) Austrian economics proposes neat theories that are too simplistic to adequately describe the real world in its complexity; 2) Consequently, it promulgates a naïve faith in the free market and the pseudo-religious belief that, as long as there is no intervention, everything will work out for the best; 3) However, if the recommendations of Austrian economists had been followed, there would have been widespread disaster, for the fragile market economy can only be prevented from collapsing by wisely-chosen acts of intervention.
When confronted with the first point, we clarify that Austrian economics does not propose simple theories, but fundamental truths about human action. The global economy may be complex, but at no point does human action not matter.
In response to the second, we can counter that the naïve position is the belief that a group of self-serving bureaucrats knows best; laissez-faire is a necessary consequence of rejecting the fable of government omniscience. And to counter the charge that government interference has been necessary in the past, we need only point out that all such catastrophes are themselves the result of governmental intervention; the Covid virus originated in a government laboratory that was performing government-funded gain-of-function research and the 2008 financial crisis resulted from inflationary government policies that inflated the real-estate bubble and pressured banks to make loans to high-risk individuals for political reasons.
Additionally, governmental intervention in the aftermath of these disasters has only made things worse by imposing lockdowns and curfews to hampering and retarding the financial recovery process. In short, government intervention saves the day in the same way that a heroin addict’s latest fix saves him from recovery.
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