Newsletter of The Independent Institute Volume 22, Number 4 Fall 2012 A Passion for Economic Liberty By Peter Boettke o the Austrians, econom- the level in the bathtub that was consistent with Tics is not a tool of social full employment. control. My latest book, Living Austrian school economists Ludwig Von Mises Economics: Yesterday, Today, and Friedrich Hayek stood in complete opposition and Tomorrow, describes free- to that view. What Mises and Hayek understood thinking economic study as a is that this whole way of framework for helping us un- thinking about the econo- derstand humanity, its history, and our plight in my reflects a “pretence of the world. Nobel Laureate F.A. Hayek knowledge”—that we can said that the curious task of econom- somehow know what the ics is “to demonstrate to men how little full employment output they really know about what they imag- level would be, that we ine they can design.” The could know exactly how economist is nothing more much water to let in and than a student of society. how much to let out. In reality, if we That understanding and make a mistake with any part of that approach to analyzing past equation, the water comes gushing out and present economic is- all over our bathroom floor, or it drains sues are the essence of Liv- completely out and we have nothing. This belief ing Economics. that social sciences should be like social physics In the mid-twentieth is built on an assumption that Mises said you century, and going up through the 1970s, the could not make. economy was envisaged like a bathtub. One As I examine in Living Economics, our true spigot was monetary policy and the other was free-market heritage can be found in the earlier fiscal policy, and an economist’s task was to turn writings of Thomas Aquinas and other Christian those spigots on to make sure the water rose to scholars in the Middle Ages; later Adam Smith, Jean-Baptiste Say, and Frederic Bastiat; then Aus- Peter J. Boettke is a Research Fellow at The Independent Institute, University Professor of trian School founder Carl Menger, and Mises and Economics and Philosophy at George Mason Hayek in the twentieth century. University, Senior Research Fellow at the Mercatus In recent years, many have questioned the Center, and author of Living Economics: Yesterday, market’s inherent ability to recover from recession Today, and Tomorrow. without government intervention. Currently, we find ourselves on the road to economic ruin, with IN THIS ISSUE big bailouts that have failed to restore consumer confidence. Americans have this big bill in the A Passion for Economic Liberty ................................1 form of a crippling national debt. There’s anger President’s Letter ...................................................... 2 out there—that politics is no longer connected to The Independent Review ........................................... 3 the people, but rather to special-interest groups. Independent Institute in the News ..........................4 However, they aren’t just frustrated with Nancy New Books from the Institute .................................. 5 Pelosi and Harry Reid—they’re not big fans of Student Seminars’ Global Reach .............................6 George W. Bush’s record, either. Their quest for Donors Proudly Support Ideas Over Politics .......... 8 (continued on page 7) 2 The INDEPENDENT EXECUTIVE STAFF DAVID J. THEROUX, Founder, President, and Chief Executive Officer MARY L. G. THEROUX, Senior Vice President President’s Letter MARTIN BUERGER, Vice President and Chief Operating Officer ALEXANDER TABARROK, Ph.D., Research Director BRUCE L. BENSON, Ph.D., Senior Fellow IVAN ELAND, Ph.D., Senior Fellow Ending the Era of ANTHONY GREGORY, Research Fellow, Student Programs Director ROBERT HIGGS, Ph.D., Senior Fellow ROBERT H. NELSON, Ph.D., Senior Fellow CHARLES V. PEÑA, Senior Fellow Big Government BENJAMIN POWELL, Ph.D, Senior Fellow WILLIAM F. SHUGHART II, Ph.D. Senior Fellow Randy T. Simmons, Ph.D. Senior Fellow ALVARO VARGAS LLOSA, Senior Fellow he 2012 elections are indeed RICHARD K. VEDDER, Ph.D., Senior Fellow LINDSAY BOYD, Marketing and Communications Director historic and the issues of Big ROY M. CARLISLE, Acquisitions Editor T CARL P. CLOSE, Research Fellow, Senior Editor SARAH GALT, Associate Director of Development Government and Obamacare are GAIL SAARI, Publications Director BOARD OF DIRECTORS critical. American voters should gilbert I. collins, Private Equity Manager John Hagel iii, Co-Chairman, Center for the Edge, Deloitte & Touche USA LLC be outraged over runaway sally S. harris, Vice Chairman of the Board, Albert Schweitzer Fellowship PETER A. HOWLEY, Chairman, Howley Management Group PHILIP HUDNER, ESQ., Of Counsel, Botto Law Group, LLC government spending that has GARY G. SCHLARBAUM, Ph.D., CFA, Managing Director, Palliser Bay Investment Management put the U.S. $16 trillion in debt. Isabella P. Speakman, President, The Curran Foundation W. Dieter Tede, President, Hopper Creek Winery Yet, neither Congress nor the President has DAVID J. TEECE, Ph.D., Chairman and CEO, Berkeley Research Group, LLC David J. Theroux, Founder and President, The Independent Institute Mary L. G. Theroux, Former Chairman, Garvey International even raised meaningful proposals to end the SALLY von behren, Businesswoman massive federal deficits—the yearly increase BOARD OF ADVISORS LesZak balcerowicZ in the debt—much less total government debt Professor of Economics, Warsaw School of Economics jonathan bean Professor of History, Southern Illinois University itself. In response, the Independent Institute herman belZ Professor of History, University of Maryland is moving the needle in public opinion toward thomas bethell Author, The Noblest Triumph: Property and Prosperity Through the Ages Thomas Borcherding opposing runaway spending. Our books, Professor of Economics, Claremont Graduate School Boudewijn Bouckaert including Crisis and Leviathan (by Robert Higgs; Professor of Law, University of Ghent, Belgium James M. Buchanan Nobel Laureate in Economic Science, George Mason University see p. 5), Boom and Bust Banking (edited by ALLAN C. CARLSON President, Howard Center for Family, Religion, and Society David Beckworth; see p. 5) and Financing Failure ROBERT D. COOTER Herman F. Selvin Professor of Law, University of California, Berkeley Robert W. Crandall (by Vern McKinley), are at the forefront in Senior Fellow, Brookings Institution RICHARD A. EPSTEIN discrediting the fallacious belief in government New York University George Gilder Senior Fellow, Discovery Institute mandates, spending binges, and bailouts. Nathan GlaZer Professor of Education and Sociology, Harvard University Our Government Cost Calculator at STEVE H. HANKE Professor of Applied Economics, Johns Hopkins University JAMES J. HECKMAN MyGovCost.org reveals the personal costs of Big Nobel Laureate in Economic Science, University of Chicago wendy kaminer Government for any American. MyGovCost’s Contributing Editor, The Atlantic Monthly LAWRENCE A. KUDLOW Chief Executive Officer, Kudlow & Company total print impressions exceed more than 7.25 JOHN R. MacARTHUR Publisher, Harper’s Magazine million, with broadcast impressions reaching DEIRdre N. McCloskey Distinguished Professor of Liberal Arts and Sciences, Univ. of Illinois at Chicago J. Huston McCulloch about 2 million people. Our fan base on Professor of Economics, Ohio State University Thomas Gale Moore the MyGovCost Facebook page has reached Senior Fellow, Hoover Institution Charles Murray Senior Fellow, American Enterprise Institute over 122,000 followers. Combined with the Michael Novak Jewett Chair in Religion and Public Policy, American Enterprise Institute Independent Institute Facebook page of 170,000 JUNE E. O’NEILL Director, Center for the Study of Business and Government, Baruch College P. J. O’rourke fans, posts from just any one week alone have Author, Peace Kills: Americas Run New Imperianlism and Pariliament of Whores Tom Peters received more than 27,000 likes, 10,000 shares Co-Author, In Search of Excellence: Lessons from America’s Best-Run Companies Charles E. Phelps Provost and Professor of Political Science and Economics, University of Rochester of content, and 500,000 views on Facebook. Paul Craig Roberts Chairman, Institute of Political Economy To accelerate this work—especially during Nathan Rosenberg Fairleigh S. Dickinson, Jr. Professor of Economics, Stanford University PAUL H. RUBIN these difficult economic times resulting from Professor of Economics and Law, Emory University BRUCE M. RUSSETT Big Government—we really need your help! Dean Acheson Professor of International Relations, Yale University Pascal Salin Professor of Economics, University of Paris, France Please join with us as an Independent Associate VERNON L. SMITH Nobel Laureate in Economic Science, George Mason University Member. With your tax-deductible membership, Joel H. Spring Professor of Education, State University of New York, Old Westbury Richard L. Stroup you can receive a FREE copy of either Living Professor of Economics, Montana State University Robert D. Tollison Economics (p. 1), Crisis and Leviathan (p. 5), Boom Professor of Economics and BB&T Senior Fellow, Clemson University Arnold S. Trebach Professor of Criminal Justice, American University and Bust Banking (p. 5), or Financing Failure, william tucker Author, The Excluded Americans: Homelessness and Housing Policies and other publications, including our quarterly GORDON TULLOCK University Professor of Law and Economics, George Mason