"We're All Austrians Now:" Economics on the Campaign Trail
Austrian economists Joseph Schumpeter and Friedrich Hayek lived and worked in the late nineteenth and mid-twentieth centuries. But today's U.S. Republican presidential candidates are citing their free-market ideas on the campaign trail this year: one has cited his abiding faith in "creative destruction;" another says "we're all Austrians now." But what insights can we really derive from long-dead economists? Kojo talks with economist Russ Roberts about the uses (and abuses) of economics on the campaign trail.
Schumpeter, "Creative Destruction," and "Vulture Capitalism"
Republican presidential candidate Mitt Romney has endured attacks on the campaign trail about his previous career in the private equity industry. In particular, critics have accused him of engaging in a kind of "vulture capitalism," pillaging distressed companies for personal enrichment. Romney and his defenders have evoked the concept of "creative destruction." First popularized by Austrian Economist Joseph Schumpeter (1883-1950), "creative destruction" posits that innovation in a capitalist system often involves painful upheavals as inefficient companies give way to newer companies and business models.
Hayek vs. Keynes: A Hip Hop Battle
The "Austrian School" commonly refers to a group of twentieth century free-market economists including Ludwig von Mises (1881- 1973) and Friedrich Hayek (1899-1992). Hayek's writings, in particular, challenged the influential work of British economist John Maynard Keynes (1883-1946).
John Papola and guest Russ Roberts created a series of "hip hop" videos exploring the competing ideas of Hayek and Keynes:
Are We All Austrians Now?
Republican Presidential Candidate Ron Paul routinely evokes Hayek and the Austrian School. In a speech after the Iowa caucuses, he even claimed that "we're all Austrians now:"