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My Part in the Great Right-Wing Conspiracy

Stephen Williamson, a well-known monetary economist with a blog of his own called New Monetarist Economics, was kind enough to draw attention there recently to my remarks concerning Gary Gorton's book. His post in turn elicited a sarcastic comment (anonymous, of course), the gist of which was that it was after all to be expected that a paid flunky of the "right wing" Koch brothers should be against regulating banks.

This isn't the first time someone has tried to tar me with that brush, and I don't suppose it will be the last. Nor do I suppose that by defending myself against such libels I will ever put a stop to them. Nevertheless the comments inspire me to do something I've meant to do for some time now, which is to explain the role that politics and ideology have played in my thinking generally and in my writings on free banking in particular.

First, for the record: I work not for any Koch-sponsored entity but for the University of Georgia, where I've been now for almost 25 years. (True, my first job was at GMU, but (1) my salary there was paid by the taxpayers of the Commonwealth of Virginia, and (2) I got the boot, and it wasn't for being insufficiently anti-Fed.*) Since I'm the only free banker at UGA, and I also haven't exactly been awash in roses and Valentine cards from its administrators, I trust that no one will be inspired by these revelations to claim that I'm a shill for the Georgia State Legislature, or the Board of Regents, or my University President, or any of the other persons responsible for my livelihood.

It's true that I'm also a "Senior Fellow" at the Cato Institute, and proud of it. But "Senior Fellow" is an honorary (that is, unpaid) title only. And though I have been paid to take part in Cato's annual monetary conferences, so too, at one time or another, have about four-fifths of the world's better known monetary economists and monetary policy makers. Finally, I've done some paid consulting for Mercatus and have lectured in the past for the Institute for Humane studies. But to have allowed the pittance I've gotten from both to suffice to turn me into a mere appendage of the so-called "Kochtopus," I'd have to have been a sucker all along.**

If I'm not actually paid, or paid enough, to espouse views not necessarily my own, then is it not at least correct to say that my own thinking has been shaped by my "right-wing" convictions rather than by any detached appeal to theory and evidence? Actually, it isn't. For starters "right wing" is hardly the right phrase for describing my convictions, such as they are, unless one thinks the expression applicable to someone who thinks, among other things, that carbon dating is more reliable than Genesis 1:1-5; that pregnant women are usually more fit than others to decide whether they should give birth or not; that the world would be less rather than more nasty were cocaine sold at Walgreens; and that the Patriot Act ought to be called the Scoundrel Act. In short, if you absolutely must label me, try "libertarian."

But the fact is that I'm not even much of a libertarian. In California back in 1979 I helped to get the Libertarian Party's Presidential candidate, Ed Clark, on the ballot. Since then, I've had nothing to do with politics, which I've come to regard as unseemly. That others can be enthusiastic about this or that politician surprises me in the same way that it might surprise me to learn that there is such a thing as an official streptococcus fan club with a list of dues-paying members. And although I can't claim never to have voted, I can at least say that I would hate to ever have to admit voting for any of the people I voted for. All things considered I'd much rather exercise what Herbert Spencer calls my "Right to Ignore the State."

Ideology admittedly played some part in the development of my views on money. But that part was much smaller than many may imagine. Back in 1980, when I was supposed to be working toward an M.S. in Marine Resource Economics at the University of Rhode Island, I instead spent my time either swimming at Charlestown Beach or reading books on monetary economics, the aim of the last having been that of understanding the double-digit inflation then in progress. I'd already read several dozen books on money when my former college chum Clint Bolick encouraged me to see what von Mises and Hayek, who I'd not yet heard of, had to say. So I read the Theory of Money and Credit, and it was as if someone had taken a broom and swept the cobwebs from inside my skull. Then I read Denationalisation of Money, and it was as if someone set off fireworks there. I wasn't instantly won over by Hayek's thesis. But that thesis got me seriously wondering whether the instability of the U.S. dollar might have its roots in government meddling with money.

That's when I first got involved with IHS. As I recall, they had placed a little ad in some libertarian magazine (yes, I read that sort of thing back then) offering summer grants for economics research. So I proposed to examine Hayek's thesis in light of U.S. experience (or was it the other way around?). Anyway, I got the grant and worked away at my essay and ended up discovering that getting the U.S. facts to fit Hayek's general hypothesis was easier than shooting fish in a barrel. It was while I was working on that project that Walter Grinder, IHS's long-time Academic Director, told me about Larry White's work, then still in progress, on the Scottish banking system. Of course I wrote to Larry and read his chapters as he sent them to me. Then I asked him to let me know as soon as he took a job offer, which is how we both ended up showing up at NYU at the same time. You know the rest.

So ideology pointed me in the direction that was to develop into my research program. But it did so, not by making me want to become an advocate for "libertarian" monetary ideas, but by equipping me with a working hypothesis that was long overdue for testing, and which seemed to me to survive such testing remarkably well, if not with flying colors. I dare say that any young professor finding himself armed with such a hypothesis would have done exactly what I did, which was to run with it as far as it would go. Naturally libertarian groups (but not genuinely "right wing" ones***) have found my research attractive, and have sometimes awarded me for it. But I didn't pursue it just to please them. Indeed I rather prefer having non-libertarians express interest in, if not agreement with, my ideas, because their interest is more likely to depend on the power of my arguments than on the propriety of my conclusions. It's hard, on the other hand, for me to really get a kick out of talking to hard-core libertarians since their way of thinking makes all my hard research seem like so much gimcrack ornament.

But even admitting this doesn't quite get to the bottom of the bearing of ideology upon my work. For after some years as an academic economist I came to think of ideology as an outright hindrance: one cannot, it seems to me, both subscribe to some preconceived "system" of beliefs (as opposed to assumptions that are merely tentative or working) and remain perfectly free to form beliefs of one's own. For that reason I long ago stopped describing myself as a libertarian economist or as an Austrian economist or as anything save a monetary economist or economist sans adjectif. More importantly I stopped thinking of myself as anything other than a plain-old economist or monetary economist, and so no longer concerned myself, if I ever did, with establishing my bona fides with anyone apart from other economists. If I reject or simply question arguments for government intervention in the monetary system, it's only because I don't find the arguments convincing or consistent with available evidence. It's not my fault that so many arguments for government intervention in money turn out to be nothing more than unfounded (though oft-repeated) assertions.

Finally, although I'm used to being called one, I don't even consider myself a "free banker," in the sense meaning an advocate of free banking. Of course I'd like to see a revival of the Scottish currency system, or something like it, because I'm convinced that such a revival would make most people, myself included, better off. But the prospect of changing the world wouldn't float my boat even if it weren't quite so teeny-weeny. What does turn me on, really and truly, is the feeling of having my hands on some truth no one else has yet managed to grab. I know that sounds corny, but I mean it. I think a lot of economists mean it. I just wish people wouldn't find it harder to believe when I say it than when some fan of the Fed does.
*Don't ask.
**Tyler Cowen, on the other hand, knows how to strike a hard bargain: although as Mercatus's General Director he is presumably on that Koch-sponsored institution's payroll, he nevertheless continues to hold out, even going so far as to defend the Fed against free bankers like myself. I do hope that the Koch Foundation will go ahead and give him the money he wants in return for changing sides. While they're at it, I hope they might also do something about all those monetary economists who are as yet in the Fed's pocket.
***I am still waiting for an invitation to speak at the Heritage Foundation, or the American Enterprise Institute, or the John Birch Society, or the Trilateralist Commission. Probably this post won't make the wait any shorter.