Professor Peter Boettke is a University Professor of Economics and Philosophy at George Mason University; the BB&T Professor for the Study of Capitalism, Vice President for Research, and Director of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at GMU.
In The Wall Street Journal, Bruce Caldwell, an editor of F.A. Hayek’s work, said Prof. Boettke has done more for Austrian economics than anyone in the last decade.
Boettke’s new book Living Economics: Yesterday, Today, and Tomorrow is published by the Independent Institute. When not in the classroom, he shares his great insight and wit on his blog, Coordination Problem.
Matt Naugle: Why should people buy your new book, Living Economics?
Prof. Boettke: The book is primarily a specialist book with a target audience of recent graduates prior to heading to graduate school to help them think through what type of economists they would like to be after their graduate work, and recent graduates from graduate school who have to decide what sort of teacher of economics they would like to be. The book is divided into 3 parts. First part to be the core teachings of economics. Second part discusses how great teachers that I have encountered in my own career sought to communicate those core teachings. And part three discusses the implications for the way we do economics if these core teachings are taken into account in the way we approach the discipline as researchers and as educators. I do argue that economics is a very serious business, but also that it a very entertaining discipline as well.
MN: When did you develop a libertarian worldview and become an Austrian?
PB: I had a great economics professor at Grove City College —- Hans Sennholz —- and he is responsible for introducing me both to the teachings of free market economics, the Austrian school of economics and classical liberalism. After Sennholz’s initial inspiration I just kept reading and following up with additional readings. Then I decided to attend graduate school and was exposed to some great economists and teachers of economics ed early on in my education with The Foundation for Economic Education, and then with the Institute for Humane Studies.
MN: Why are the mathematical models of Paul Samuelson’s Foundations of Economics so popular, even among conservative Republican politicians?
PB: Paul Samuelson was a brilliant man, and he became convinced of a rather straightforward argument … confusion in the social sciences result from using the same words to mean different things, and different words to mean the same thing. So he thought he could eliminate the ambiguities that plagued “literary economics” by making economists use the language and methods of mathematical analysis. But as Kenneth Boulding wrote in his review of Samuelson’s Foundations in the JPE, it may be that the flawless precision of mathematical economics will prove impotent in addressing the complexities of economic and social reality. And, I am very persuaded by the arguments of MIses, Hayek, and others about the dynamic nature of human action and the competitive market proc itional tools of mathematical analysis are not appropriate for the study of human action or the market process.
MN: Former Enron advisor Paul Krugman recently battled with the President of Estonia Toomas Hendrik Ilves on Twitter over the necessity for austerity. Who is right?
PB: I think the President of Estonia won that round.
MN: Since the Federal Reserve isn’t being abolished anytime soon, how would a Federal Reserve Chairman Boettke manage fiat dollars?
PB: On monetary policy, I think we need to keep searching for what I would term “robust” monetary policy — policy that doesn’t require for its functioning assuming that central bankers are either incentivized to behave exclusively in the public interest or in possession of the detailed knowledge necessary to engage in discretionary policy moves. Monetary authority must be bound by rules that eliminate discretion. But to get this it might require a different institutional setting than a government monopoly of the money supply. This is why I think free banking is a live option even if it doesn’t seem like it. Milton Friedman in Capitalism and Freedom —- any institution that a sincere error by a few can threaten the entire economic system is perhaps an institution we cannot afford.
MN: What should a wise businessman or investor learn from the Austrian business cycle model? Where do you invest?
MN: The Austrian theory of the business cycle is helpful for all in understanding the consequences of the manipulation of money and credit by government. Business acumen is different than economic theory. ATBC is an application of economic theory, and obviously businessmen can use that understanding to position themselves based on tendencies and directions. But it cannot provide exact predictions.