In the short story by Arthur Conan Doyle, Silver Blaze, Sherlock Holmes solves the case by observing the absence of a predictable event: the dog that does not bark in the night when confronted by a stranger. Keen observers must surely have noted a similar non-event since September 2008: the many once-free market economists who have all but withdrawn from the debate over the future of the US economy, or who have even turned up on the side of government intervention. Where are all the real business cycle theorists who once argued that business cycles reflect Pareto-optimality? Where are all the monetarists who used to worry about the inflationary implications of massive increases in the money supply? Where are all the financial economists who used to thrust the efficient capital market hypothesis down the throats of Wall Street brokers? Where are all the law-and-economics scholars who used to boast of the efficiency of the common law? Where are all the New Classical rational expectations scholars who used to explain why systematic fiscal and monetary policies cannot influence macroeconomic activity? Where are all those Friedmanians who used to argue so effectively in support of capitalism and freedom?
Alas! It appears that, for many such, their free market principles were less than skin-deep, ideas to be celebrated when the times are good, but to be quickly jettisoned when the going gets tough. Outside of public choice and Austrian economics, and such free market stalwarts as Sam Peltzman from Chicago and Harold Demsetz from UCLA, there are vanishingly few would-be free market Georgie Patton’s on the current intellectual battlefield:
Where have all the free market soldiers gone?
Why, they have run for cover, almost every one!
Their models have failed, their math is undone.
They need new statistics and that is no fun.
They dig into trenches to evade the socialist gun.
Their escape routes are cut off, nowhere else to run.
They hide in the darkness and avoid the free market sun.
Come out, come out, counter-attack and be done!
Tags: Austrian economics, capitalism and freedom, common law efficiency, efficient capital markets, public choice, quantity theory of money, real business cycles
December 9, 2009 at 8:22 am |
[...] The Dog That Does Not Bark In The Night « Charles Rowley’s Blog. [...]
December 11, 2009 at 8:53 pm |
Hmmmmmmmmmmmmmmmmmm….. maybe, just maybe, they’ve been schooled by reality. Remember that non-Austrians can actually *be* schooled by reality.
December 12, 2009 at 11:43 pm |
What exactly is wrong with theories being discarded when they are proven wrong????
This post is truly a joke
December 13, 2009 at 1:07 am |
Where have the free market soldiers gone? I suppose they learned not to cling to indefensible positions. At least, I hope so.
Engineers are taught to validate their models against experimental data. If the model can’t explain the observations, we either adapt or discard it. Why should economists behave differently?
December 13, 2009 at 6:48 am |
Seems to me that these formerly loudmouthed, know-it-all, brave-new-world-of-opportunity guys have retreated into the woodwork, waiting for the next bubble (Bernanke-created) to dig them out of their bad financial choices, while forming new “free market lite” theories to achieve once again the conditions that will enrich them at the expense of the hopefully still ignorant public.
S
February 7, 2010 at 9:55 pm |
Great blog, keeping me from working