Categories:
Monetary Policy
Congressman Ron Paul, a man I admire a great deal, held his first hearing on February 9. I posted on one aspect of it here. I was surprised at his choice of one of witnesses, Tom DiLorenzo. Although I defended Tom from the attack of one of the Congressmen, he is not an expert on monetary policy. He did a reasonable job and, if I were given a chance to testify, I would have also. So my criticism is of Ron Paul, not Tom DiLorenzo. If Ron Paul had wanted an Austrian economist who follows monetary policy closely, why not choose Lawrence H. White, George Selgin, or Jeff Hummel?
READER COMMENTS
david
Feb 11 2011 at 7:11am
Signalling to the adepts of the many other causes that DiLorenzo is a fan of, besides Austrian economics. DiLorenzo was not called for his views or expertise on monetary policy; this was politics, not policy.
Greego
Feb 11 2011 at 7:51am
“why not choose Lawrence H. White, George Selgin, or Jeff Hummel?”
Precisely. Bit of a wasted opportunity really.
Larry Thompson
Feb 11 2011 at 8:35am
I completely agree, Paul’s detractors are already going to do whatever they can to avoid legitimate debate by portraying him as a quack, nutjob, etc, why make it easier than it has to be? The ad hominem attacks from the usual suspects practically wrote themselves. I have a ton of respect for him, far more than I do for any other elected representative right now, but I have no idea what he was thinking here.
Bruce Bartlett
Feb 11 2011 at 9:36am
I had exactly the same thought. Ron has unfortunately shown that he is deeply unserious about reforming monetary policy. He just wants to give a forum to his pals in the Rockwell-Mises crowd.
yoshi
Feb 11 2011 at 9:39am
Tom DiLorenzo shouldn’t of been called because he is a neo-confederate wingnut who is also a slavery apologist.
And Ron Paul nor his son deserve any respect. They are on the extreme fringes and do more damage than good.
Lawrence H. White
Feb 11 2011 at 9:45am
I agree with your declarative sentences. As to the question, I infer that Rep. Paul wanted economists affiliated with the Mises Institute, which I am not.
But there’s still a puzzle. If Rep. Paul had wanted an academic Austrian economist who has some expertise on monetary policy and is affiliated with the Mises Institute, why not Roger Garrison or Joseph Salerno?
Daniel Klein
Feb 11 2011 at 10:07am
RE Jeff Hummel, I suspect that he would be great for task.
In fact, I wish Fox Business would give Jeff a look. He would be good on Freedom Watch, I think.
Greego
Feb 11 2011 at 10:07am
Prof. White,
Haven’t both yourself & Selgin written for mises.org and/or spoken at Mises Institute events? What does it mean to be affiliated exactly?
John V
Feb 11 2011 at 10:18am
I agree, David.
As a libertarian, I also admire Ron Paul for being such a rogue on so many issues and giving libertarians one small voice. That being said, he isn’t very good at it in terms of being skilled enough to affect anything and make the right decisions and choices on what to say, how to say it and whom to choose to speak on his behalf.
David R. Henderson
Feb 11 2011 at 11:08am
@Lawrence H. White,
Good point. Or how about Bob Murphy?
Michael Labeit
Feb 11 2011 at 11:08am
“If Ron Paul had wanted an Austrian economist who follows monetary policy closely, why not choose Lawrence H. White, George Selgin, or Jeff Hummel?”
Because Selgin, White, and Hummel are not opponents of fractional reserve banking and DiLorenzo is.
Bill Woolsey
Feb 11 2011 at 11:09am
Larry:
I think the problem is almost certainly that that are “weak” on the need for 100% gold backing for all media of exchange.
Didn’t you one say something positive about silver? What would a silver standard do to gold specultators?
The_Orlonater
Feb 11 2011 at 2:11pm
I agree with the general sentiment shared on this regarding the choice of economists, however there is the future. I’m sure this isn’t the only hearing that will be had. Personally, I probably would have also brought on a “non-Austrian” who more or less shares the outlook of monetary-disequilibrium theory , i.e. Scott Sumner or David Beckworth(At least from what little I know of him, please feel free to correct me). A more interesting hearing in my opinion would involve maybe Selgin, Beckworth, and Hummel discussing the role of the Federal Reserve’s monetary policy in the early 2000’s period.
Steve Horwitz
Feb 11 2011 at 3:01pm
I’m late to the party here, but I concur with the explanation for Paul not choosing George or Larry or Jeff. Larry’s question is the interesting one: Why Tom D and not Roger G or Joe? If you’re going to pick a MI person, get the ones who actually do monetary stuff – and why, oh why, pick one that opens you to exactly the sorts of criticisms that have been laid?
A HUGE missed opportunity in terms of who wasn’t invited and a HUGE additional cost due to who was.
David R. Henderson
Feb 11 2011 at 4:12pm
@Steve Horwitz,
I thought you put it best.
@The Onionator,
Like you, I have some hope. But to raise the probability of some good things happening, should I say something or shut up? I want Ron Paul to understand that it’s not just the people with the sharpened knives who thought this was a bad start, but also people like me who wish him well, who want to get rid of the Fed, and who want to put our best foot forward.
Bob Murphy
Feb 11 2011 at 11:41pm
David,
Clearly he wouldn’t have put Hummel up there, since he (and you) don’t think the Fed caused the housing bubble, and hence had anything to do with the current unemployment. (Right? I don’t want to put words in your mouth.) You might as well ask why he didn’t ask David Beckworth to testify.
Also, let’s take some of your guys’ own answers: “He’s just putting his Mises buddies up there.” “Why doesn’t he put Salerno and Garrison up there?”
OK so if that’s what he’s doing, then he might as well put the “neo-Confederate slavery lover” up there first and get it out of the way. Game theory. I.e. it’s not like he has one chance to call witnesses. I think he gets to do this again, and now Krugman, Yglesias, et al. have all played the racism card. What are they going to do next time?
You can say you know more monetary theory than Ron Paul, and that would at least be plausible (because you guys have PhDs in economics), but I don’t think any of us can lecture him on how to spread the anti-Fed message to the public. C’mon. That’s like us second-guessing a professional coach’s decision to punt or go for it. (Do I sound like Boettke now?)
Also, what exactly is so shocking about DiLo’s quotes? Are you guys OK with Lincoln locking up newspaper people who opposed the war etc.? Are you against people being able to leave a government that they no longer believe represents them?
Doktor
Feb 11 2011 at 11:44pm
Anyone else find this statement from Ron Paul absolutely ridiculous?
“We probably have pumped in $4 trillion” to the economy, he complained. “I imagine we could’ve given everybody 60-, 70-, maybe $100,000 – I haven’t done the calculations – just give ’em the money and we would’ve been better off.”
Aside from his bad math, having the fed just give away 4 trillion would cause the hyperinflation he so fears.
Bob Murphy
Feb 11 2011 at 11:45pm
Also David, I appreciate the compliment but I am even worse than DiLorenzo in terms of credibility. At least he teaches somewhere official. I would just be a punk with no papers on monetary theory and who has half-naked YouTubes floating around.
David R. Henderson
Feb 12 2011 at 12:01am
@Bob Murphy,
I didn’t mean to imply that Tom DiLo shouldn’t have criticized Lincoln for his nasty measures: I put Lincoln as one of the United States’ three worst presidents. And I certainly believe in the right to secede.
I’ll think about your professional coach analogy. But there is some evidence that Ron does a bad job of delegating. Look at how, in the New Hampshire primary in 2008, Republican voters thought McCain, not Paul, was the more antiwar candidate.
Tom Dougherty
Feb 12 2011 at 1:50am
I actually had the same thought as Bob Murphy that Ron Paul will certainly have more than one hearing, so there will be ample opportunity to call other witnesses in future hearings other an economic historian. However, that being said, I certainly hope for his next hearing he brings someone with better monetary economics credentials.
My other problem is that while I agree with the Austrian theory regarding Fed policy engineering a boom which ultimately results in a bust, this recession that began as a mild recession was made much more severe due to the crash in aggregate demand. Some Austrians, because a crash in aggregate demand is too Keynesian in prescription for a decline, see this severe recession as purely Austrian in nature blaming it on a misallocation of capital due to low interest rates in oughties. But, it seems clear that the decline in aggregate demand caused the severity of this recession and so expansive monetary policy should have been used to increase aggregate demand. The Fed should never have done QE1 and instead should have engaged in QE2 right from the beginning in Sept. and Oct. 08 when people started to realize the economy was in big trouble.
These views are not popular with some Austrians, but to deny the role that the decline in aggregate demand had during this recession is crazy. But for those who only see the decline in aggregate demand as the cause of this recession should remember that the recession began before the decline in aggregate demand.
I really think that some Austrians are going to have a hard time convincing people to abolish the Fed if they misdiagnose this recession as purely “Austrian” in nature, saw no role for monetary expansion to increase aggregate demand, and do not explain how an alternate monetary regime that would replace the Fed could have prevented the severity of this recession which the Fed could or did not.
I am not familiar with Hummel, but I would second Dave Henderson in choosing White or Selgin as great witnesses for Ron Paul’s next hearing on monetary policy.
Tom Dougherty
Feb 12 2011 at 9:36am
One other tip for Ron Paul’s next witnesses (because I am sure they are reading this and willing to take advise from me). Be prepared for further attacks on the Austrian methodology as being non scientific, not using empirical evidence, etc…. This assumes wrongly that all “Austrians” agree with each other on what Austrian methodology is and all use the same tools to inquire about economic events. Also there is the implication in this line of attack that the non-Austrian method is scientific and superior.
Well, as I recall, there has been a lot of hand wringing going on by “mainstream” economists about how they were caught unaware of the severity of this recession and about the uselessness of the “scientific” mainstream macroeconomic models during this recession. Next time a congressman attacks an Austrian as not being scientific, he should be prepared with numerous quotes from mainstream economists attacking their own mainstream models. Also it would be a good idea to remind congressmen of the failure and downfall of Keynesian economics in the 70s.
It would be a mistake to not only not defend your methodology, but also leave the impression that there is nothing wrong with mainstream methodology even from the perspective of mainstream economists themselves.
Doc Merlin
Feb 13 2011 at 4:44am
“If Ron Paul had wanted an Austrian economist who follows monetary policy closely, why not choose Lawrence H. White, George Selgin, or Jeff Hummel?”
Because Ron is a Rothbardian.
scineram
Feb 13 2011 at 5:09am
Michael Labeit writes:
“If Ron Paul had wanted an Austrian economist who follows monetary policy closely, why not choose Lawrence H. White, George Selgin, or Jeff Hummel?”
Because Selgin, White, and Hummel are not opponents of fractional reserve banking and DiLorenzo is.
But Joe Salerno and Bob Murphy to my knowledge are. In any case non of this train wreck would have happened. This choice is inexplicable to me.
Lawrence H. White
Feb 14 2011 at 9:05pm
Greego asked:
I haven’t spoken at a Mises Institute event since 1983. I believe the last article I wrote that the MI published was a co-authored piece with Roger Garrison that was published by the Institute’s newsletter Free Market in 1999. I have more recently defended my views against criticism in the comments section of the MI’s blog, but that’s not exactly writing for mises.org.
What I meant by “affiliated” was that I am not listed on the MI website as a “Senior Scholar” (as DiLorenzo is) or an “Adjunct Scholar” (as Vedder is). Selgin is listed as an Adjunct Scholar, and he has spoken to MI audiences in the last couple of years.
Time will tell whether scineram is right that a key criterion for an invitation to testify at Rep. Paul’s hearings is not only to favor ending the Fed but also to oppose fractional-reserve banking. That is of course Rep. Paul’s prerogative, but it would narrow the range of potential Fed critics.
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