It appears that I have found a misunderstanding and blaming of Mises for the economic problems even more egregious than Thom Hartmann's one last March. The following excerpts are from a May 11, 2009 broadcast of the Thom Hartmann program, featuring a gentleman by the name of Stephen Zarlenga (transcript is in bold):
[[[Stephen Zarlenga: So government gets blamed for [things like the current economic downturn] universally, but in fact when you actually look at the history, that’s not what happened.And people assume that groups such as the Austrian School had done their homework, and I could tell you they haven’t.
Thom Hartmann: The Austrian School being Hayek and Mises.
Stephen Zarlenga: Hayeck, von Mises. You know, von Mises has the nerve to tell us that his theories can never be disproven by mere facts.
Thom Hartmann: Well, he’s been dead for half a century, hasn’t he?
Stephen Zarlenga: Not quite, no, no. But I mean, the methodology’s so wrong. And now we see this in Greenspan.
Thom Hartmann: Is von Mises still alive?
Stephen Zarlenga: No, von Mises passed away.
Thom Hartmann: Oh yeah, like in the 60s. [1973 - ed.]
Stephen Zarlenga: …or two ago.
Thom Hartmann: Oh, recently? OK.
Stephen Zarlenga: Yeah, fairly recently. Now, the proponent that people would know would be Alan Greenspan; Austrian or Libertarian Austrian.]]]
I'm not an arrogant person, nor am I close-minded. I have plenty of friends who disagree with my political views, and I respect that. I even respect Thom Hartmann as an individual of above-average intelligence (even if he's wrong on 98% of everything he commentates on -- I can't say the same for the likes of Ed Schultz and the deranged Mike Malloy). However, comments such as his blaming Mises' ideas for the crisis are so wrong they're basically intellectually unforgivable. However, I think he just got outdone by this Zarlenga fellow.
First of all, he completely fails at understanding Austrian methodology, and presents a bastardized version of what he thinks it is. He claims that Austrians had not "done their homework" -- doing homework, presumably, implies an empirical study of historical events and situations, something that Austrians realize is fallacious and irrelevant except to economic historians.
He then attempts to elucidate on this by claiming that "Mises has the nerve to tell us that his theories can never be disproven by mere facts." I nearly wet myself when I read that -- never in all my time of studying liberty and economics have I read a greater strawman. To correct him: Misesian praxeology has an a priori methodology that explains how there are certain facts about rational human action that can be known beforehand, and exist regardless of whether the empiricists conclude they do via their analyses (things like this already are taken for granted by individuals like Zarlenga -- ex// supply-and-demand). In other words, "mere facts" like a coincidental economic downturn after a tax cut are COINCIDENTAL and unrelated to the downturn. To state it the way Zarlenger did is mindblowing. He also ignores the fact that the belief that empirical knowledge is needed for proof is ALSO an a priori statement, and such things taken for granted by all economists today like the aforementioned supply-and-demand as well as marginal utility are a priori as well.
He then states that the Austrian methodology is "so wrong. And now we see this in Greenspan." Excuse me? Did you ever research anything about Austrian methodology? Even a simple scan of Wikipedia would have shown you you were wrong -- there is NOTHING in Greenspan's economic views that even resembles a priori reasoning about rational human behavoir. No doubt Zarlenga is referring to Greenspan's endorsement of (fake) deregulation -- oh yeah, the institutionalized deregulation that Mises NEVER endorsed. Unbelievable. (I think I know may know why Hartmann believed Mises' ideas contributed to the crisis: he probably heard from Zarlenga that Greenspan utilized Misesian ideas and just took that on faith).
But he's not done. A few minutes prior to his mindblowing misunderstanding of Mises and praxeology, he unloads this:
[[[Thom Hartmann: Why [do you oppose going to a gold standard]? I agree with that, but I know that there are a lot of, particularly the libertarians, this is really big with a lot of conservatives, ‘let’s go back to the gold standard’.
Stephen Zarlenga: Well, OK, we know how to handle that question with them, and first of all you never did have a gold standard. It was always a fraudulent thing. There were promises to pay gold, it was never really there. But what they’ve done, and the Ron Paul people especially are tuned into this that we need gold for money, they are confusing an investment with a money. Now, they like gold as an investment, and at certain times gold’s a fine investment, other times it’s terrible. But you want an investment to go up and up and up. You don’t want money to go up and up and up. You want money to be relatively stable. So what you need out of an investment, which might be gold, at a time, and what you need out of money, totally separate. And the Ron Paul people, they understand this when tell them.]]]
Zarlenga correctly states that there never was a true gold standard. But that's precisely the point! Promises to pay in gold were often nominal and there was still a large amount of fraudulent inflation occurring at the time, which PREVENTED the gold standard from working. His poopooing of the gold standard for being stupid because it was never obeyed is unbelievable. I doubt he would like it if I told him that "health care reform" is stupid because it won't work because "it's not REAL health care reform." But he throws us the same logic.
Zarlenga then says that the "Ron Paul people" (as if all Austrians/libertarians are automatically "Ron Paul people") are "confusing an investment with a money". No Stephen, on the contrary: YOU are confusing money with an investment, a fatal error which leads many individuals to view gold negatively. Historically gold has almost always emerged as a default money of individuals, but since the removal of the gold standard and the implementation of legal tender laws gold has, de jure, been relegated to the role of investment. Secondly, you do not want money to be "relatively stable" anymore than you want any other price to remain fixed one way or another. Falling prices do not kill you, they lead to investment and re-employment of resources in even more productive fashions. Praxeology notwithstanding, to state that it leads to hoarding that destroys the economy goes entirely against the law of marginal utility, because the more money/value you accumulate, the less value each additional unit of value affords you and the more likely you will spend (consumer) or invest (capitalist/market investor) that money. It's hilarious that the very same individuals who favor helping the poor are the same ones who advocate robbing from them via fiat inflation.
Zarlenga, though, saves his best for last with this:
[[[Stephen Zarlenga: And as to the fiat part, any Ron Paul person listening in now will understand the following completely. The problem is not fiat money. The problem is the private issue of fiat money. Then it operates like a tax.
Thom Hartmann: Right, through the Federal Reserve. Right.
Stephen Zarlenga: Like a tax on all of us. Any private issue of money will do that.]]]
Another stunner. The so-called "private" federal reserve was not only created by government (i.e. not an institution created by the free market) but responds to the GOVERNMENT'S need for money, whether it be for bailouts, quantitative easing, lower interest rates, etc. In other words, all things that Zarlenga and Hartmann fully support as long as they think it's in the interest of the "poor". Zarlenga seems to imply that if the Fed were nationalized and put "in control of We the People" (yeah right), there wouldn't be as much fiat inflation. How do you figure? There would be just as much and possibly more. Again, the "private" Fed only prints as much money as the GOVERNMENT demands. He also fails to comprehend that legal tender laws are the cause of the inflation tax, not because the Fed is "private". Removal of legal tender laws would neuter the inflation tax overnight.
The statement that "any private money" will lead to an inflation tax is mindblowing. If there were competing currencies, no one would be forced to use one or another. Good currencies would succeed, the rest would fail and their providers go bankrupt. An inflation tax only occurs with legal tender laws, regardless of whether the central bank is nationalized or (nominally) private. This is basic. Very basic.
The fed is not private, it is fascist (merger of public and private), just as Blackwater is (an institution they no doubt oppose, though as they should). It is not private money that is dangerous, it is fascist money and government money, close to the same thing.
Again, I'm not too judgmental a person. But when you engage in the kind of intellectual failure that is displayed here, I have to take a stand. It's not just that he's completely wrong, it's that he gets all the DETAILS wrong too. Insane.
He has said too many nonsensical things that someone basically had to set it straight. No one was doing it, so I took up the job.
ReplyDeleteThe guy I critiqued here is Stephen Zarlenga, who is even worse than Hartmann, as is evident by his egregious factual errors (ex// saying Greenspan was an Austrian).