A recent Tom Woods podcast episode dealt with another attempt to rewrite history by changing the name of James Madison High School in Madison Wisconsin. Both Tom and his guest, Madison biographer Kevin Gutzman, bemoaned the lack of intellectual curiosity of those who quickly and thoughtlessly sign on to such efforts in the name of correcting the record of slavery. While they have a point, the lack of intellectual curiosity should not be mistaken as a sign of the times.
It is often the case that we mis-remember the past. People frequently claim that things were better, politicians didn’t engage in such partisan bickering, and the general public was nicer as well as smarter. This last claim, in particular, is little more than wishful thinking. As was pointed out here before, the standard measure of intelligence sets the average intellect at 100, with 85% being no smarter than 15 points above that. As a result, few challenge the prescribed narrative. This is why millions of people voted for Donald Trump and a few million more voted for Hillary Clinton: lack of intellectual curiosity. In the end, creative and intelligent people are the exception, not the rule. This is why politicians, the news media, and social leaders find it so easy to direct public opinion toward their nefarious ends: they know that Mozart was an anomaly.
The Austrian school of economics is unique in the field largely due to its reliance on deductive reasoning over empiricism. This doesn’t mean that empirical evidence has no value, only that it is used to confirm rather than develop hypotheses. The use of deductive reasoning led the early leaders of the Austrian school to develop theories in marginal utility, time preference, and the business cycle.
The advantage to such an approach is consistent, logic based argumentation; it is difficult to counter a contention when it is built on soundly applied logic. With sound reasoning, policy decisions can be prescribed with confidence not in their predictive nature but in the certainty that they are pointed in the correct direction.
Since Ludwig von Mises, Austrian economic theory has been grounded in what he termed “praxeology,” the science of human action. With the individual as the starting point, the tendencies of individual action lead the Austrian economist to develop broader economic theory. The fact that an item possessed today is of greater value than the same item possessed tomorrow, for example, enabled Austrian economists to develop theories of interest as it relates to time. These theories could then further be extrapolated, logically, to show how interference with interest rates creates false signals regarding individual time preferences and ultimately leads to mistakes in investment. These mistakes cause the business cycle. The most complex theories put forth by economists of the Austrian school can all be traced back, logically, to the actions of individuals.
The Donald made international headlines when he announced U.S. withdrawal from the Paris Climate Agreement, a toothless document whereupon states around the globe promise to curtail carbon emissions. To show how inconsequential the agreement is, one need only look at some of the “reductions” promised. For example, China, supposedly the source of nearly one quarter of the earth’s greenhouse gas, promises to increase emissions until no later than 2030. Similarly, Pakistan’s agreement includes the following:
“…there is no plan at present for carbon sequestration in the country due to uncertainty surrounding implementation potential and associated high costs…”
While there is nothing in the agreement binding signatories to their promised reductions, Mr. Trump’s opposition to the agreement is largely focused on the “international support” required by nearly half of the nations pledging to participate. Since it is the United States which contributes the most in foreign aid, the burden of this support would further tax the nation now under Mr. Trump’s control. While foreign aid as a percentage of the total U.S. budget is negligible, Mr. Trump seeks any opportunity to seem fiscally responsible. In this case, his appearance of fiscal conservancy has no bearing on global temperature nor the runaway U.S. debt, but we can give him the thumbs up regardless.