My Economics Journey

My interest in economics began in 1977 when I was crossing the bridge from Hong Kong to China at Lo Wu in Shenzhen.  Before that, the topic bored me. Back in the bad old days of hardline communism, the Hong Kong trains stopped at the border, we got off the Hong Kong trains, walked across the bridge into China, and got on a Chinese train.  I was bewildered as to how Hong Kong, with no resources, except people (and "overpopulation" at that) was a first world territory, and the Peoples Republic of China, with the exact same people and limitless resources, was distressingly poor.  As I reflected on this, the only difference could be the ideas behind the actions that gave the results.  Clearly these were the same people on both sides of the border.  It was ideology that made the difference, in essence economic ideology.

So free markets vs. communism.  What little economics courses I had in college mentioned capitalism (defined as keynesianism) vs. communism, and no wonder I was bored.  Pretension vs utopianism.  But Hong Kong was defined as a free market, which was not on the radar in academia.  Since I was in Hong Kong, I could see how a free (well, freer) market worked.  Little in the way of government.  Almost no one pays taxes.  Everyone who wants to work can.  Charities abundantly supplied. Freedom to come and go.  Goods and services abundant, diverse and affordable.  Private companies issue the currency!  Cosmopolitan with apparently no ethnic strife. Private security well armed on the streets (shotguns everywhere to dissuade the snatch-n-run thieves).  Transport cheap and plentiful (and even trains and later subways privately owned).  Whole districts where no even the cops would go.  Security probably the best in the world.  Wow.  Unimaginable to me.

This being the 70's and Milton Friedman a contributor to Newsweek magazine, I could read about libertarians (he wasn't really one) and the great work of monetarists in Chile.  As the devil emerged in the details, the "Reagan revolution" began and supply side economics and trickle down theory was popular. Gosh, a system that optimizes government receipts.  Why would we want that?

As I travel along these theoretical lines, I keep checking against Hong Kong as a test, and I also start to learn more about the history of Hong Kong, and begin to understand that Hong Kong and USA were started at the same time by the same people.  The USA version of freedom "evolved" over time to what I grew up in.  Hong Kong remained true to its roots.  Hong Kong was what USA should have stayed.

In the 80's I took a sabbatical form work and studied what I had observed the ten years working in importing.  At some point I read an article on school vouchers which included this comment.

Furthermore, there is no need for "vouchers" for particular goods or services: for education vouchers, food stamps, housing vouchers, television vouchers, or what have you. By far the best "voucher," and the only voucher needed, is the dollar bill that you earn honestly, and don't grab from others, even if they are merely taxpayers.

Do you recall ever having that experience when reading and your mouth drops openly stupidly, your brow furrows, and you start breathing through your mouth?  A great truth, a most obvious truth, dawns on you? Your mind is kicked back to neanderthal, as you realize just how stupid you can be?  You make the effort to assent to a new level of awareness, and all that will require.

The writer of that quote was one Murray Rothbard, and through his writings I was turned onto the Austrian school of economics.

I had been debating how vouchers can be "done right" when the truth is we need no vouchers at all!  This fit in well with Hong Kong, where education was plenty and "free" like anywhere else, but parents forked over money to make merely good become first rate.

I began to study the free markets as much as I could, getting sidetracked in German Historical School and following the lessons of Jude Wanniski, a supply-sider.  His unique position had to do with gold as the "north star" of navigation in the economy.  The idea is you set the price of gold (bout $350 at that time) and inflate or deflate the money supply depending on the signal you get from the price of gold rising or falling.

Back when email was first emerging in the late 80's, it was possible to email such eminent people, and get a reply.  Since people only got a few emails a week at first, they took the opportunity to practice.  I argued what I was learning from my studies of austrian school economics with one of the most advanced proponents of modern state economics.  He used one of my questions in his newsletter to stage a lesson, and we were able to argue extensively.  His patience gave me the opportunity to test Austrian economics against a first rate modern economic thinker.

Wanniski yielded to austrian thought over and over, except for their views on gold as money and is use and purpose.  Our arguments got to a dead end point, and that was over the need for government.  In our last exchange, he had said ultimately we need a government to arrange the reconstruction bonds necessary in the event of a huge disaster (since they control the financial system.)  I replied since bonds are voluntary, why could not the Red Cross simply offer the bonds?  He did not reply.  He died the day Hurricane Katrina wiped out New Orleans, so he did not live to witness how government is helpless in a disaster, and private initiative gets the work done.

For ten years I tried to get to the Mises University, a week long seminar in Auburn Alabama where Austrian economics is laid out in toto.  Finally in 2002 I made it, and by then I was there as a faculty observer, not as an student, since I was teaching as an adjunct at SFSU by then.  I highly recommend the experience if you can get a week off for that.

AS I study more, see more, do more I realize more and more that so much of what we "know" is mere social conditioning.  That I would not question vouchers per se was a matter of my being completely indoctrinated in a social system that expects the state to be prime in all matters.  Austrian economics are outsiders, and it takes outsiders to point out the obvious.  To "get" Rothbard you have to realize that you are a person as opposed to a "citizen."

I no longer see economics as science, but back where it started, a subset of ethics, which is a subset of philosophy.  Economics can be considered a science in the old sense of arts and sciences, where philosophy was considered one of the hard sciences.  But this is a muddle:  Economics was carved out of a subset of philosophy. Philosophy is a hard science when it relies on logic, experimentation, rigor and the scientific method. But post-war, hard science meant mathematical formulae.  So economists began tarting up philosophy with whimsical, tendentious or just stupid mathematical formulas, and in so doing reduced their field to a soft science at best.  So the Austrians, who use no mathematical models, are actually the scientists, and those modern economists who do use them are charlatans.

So safer to go back a couple hundred years and consider economics under the field of philosophy, under ethics.  Economics is the study of man's relationship to man.

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