Thursday, July 11, 2019

Interview: Cato's George Selgin says "there’s no such thing as 'libertarian economics'"

Editor's note: This interview was originally published in April 2017.

This is the second of three articles spanning my discussion with George Selgin. The first piece is available. 
Story by Joseph Ford Cotto
Libertarianism has seen better days.
A few years ago, certain political forecasters claimed that the future of America's center-right belongs to libertarians. Since the 2012 presidential election, however, protectionism surged -- not only in the GOP, but among Democratic ranks as well. Now, amid the age of Donald Trump, libertarianism's once-ascendant nature seems a distant memory.
"I fear that the classical liberal/libertarian idea and ideal will be seriously tarnished by the policies and politics of the Trump Administration," Dr. Richard Ebeling, one of our time's greatest Austrian School thinkers, recently told me.
He continued: "Virtually all of Trump’s proposed policies involve a continuation or an intensification of government involvement in social and economic life. He acts as the all-knowing government central planner when he calls in business executives and tells them where to invest and what products they should make to 'create jobs.' He undermines respect for and protection of essential civil liberties when he ridicules the freedom of the press and their way of reporting on his administration’s actions and his words."

Ebeling went on to state his worry "that with the assistance of the mainstream media the Trump Administration’s anti-freedom policies will tarnish the real case for a free society and a free market. That is, people who want lower taxes and fewer regulations on business will be identified as the people who also believe in torture, discrimination against immigrants, violations of civil liberties, and the instigation of trade wars because of aggressive nationalist attitudes."
Much, though certainly not all, of libertarian philosophy hones in on fiscal policy. Understanding the value system of economic libertarianism is not a simple undertaking, though often is presented as such by ideological opponents.
It is ironic that one of our time's foremost authorities on the finances of personal liberty does not refer to himself as 'libertarian.' Rather, he forsakes labels entirely -- along with movements -- and speaks his mind issue-to-issue.
Dr. George Selgin "is a senior fellow and director of the Center for Monetary and Financial Alternatives at the Cato Institute and Professor Emeritus of Economics at the University of Georgia," his biography at the former explains. "[The Doctor's] research covers a broad range of topics within the field of monetary economics, including monetary history, macroeconomic theory, and the history of monetary thought. He is the author of The Theory of Free Banking(Rowman & Littlefield,  1988); Bank Deregulation and Monetary Order (Routledge, 1996); Less Than Zero: The Case for a Falling Price Level in a Growing Economy (The Institute of Economic Affairs, 1997); and, most recently, Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage(University  of Michigan Press, 2008). 
"Selgin is one of the founders, along with Kevin Dowd and Lawrence H. White, of the Modern Free Banking School, which draws its inspiration from the writings of F. A. Hayek on denationalization of money and choice in currency. Selgin has written for numerous scholarly journals, including the British Numismatic Journal; the Economic Journal; the Economic History Review; the Journal of Economic Literature; and the Journal of Money, Credit, and Banking; and for popular outlets such as the Christian Science Monitor, the Financial Times, and the Wall Street Journal, among others. 
"Selgin retired from the University of Georgia to join Cato in September 2014. He has also taught at George Mason University, the University of Hong Kong, and West Virginia University. He holds a BA in economics and zoology from Drew University, and a PhD in economics from New York University." 
Selgin recently chatted with me about many issues concerning the American economy. Some of our conversation is included below.

Joseph Ford Cotto: One reason the American economy fails to meet standards set by its postwar halcyon era is that it produces a decreasing number of material goods. From a libertarian standpoint, is it possible to note a relationship between the decline of our manufacturing sector and monetary instability?

Dr. George Selgin: I cannot answer from a libertarian standpoint, for I’m not a spokesman for such a standpoint. What I am is an economist who works for a libertarian think tank.  But there’s no such thing as “libertarian economics” as such—or if there is, I can’t think that it would be an improvement!

Speaking ads a plain-old economist, I agree with the vast majority of my peers in rejecting the premise that the U.S. economy is worse off because it doesn’t manufacture as much as it used to. Just as individuals can prosper best, not by trying to make every good and perform every service they require on their own, but by specializing and trading with others. If the U.S. were a closed economy, it wouldn’t benefit by setting up trade barriers so that every state, let alone every town, had to rely solely on its own factories for all manufactured goods!  Well, what goes for states goes for nations also. It makes no more sense for us to make all our own cars these days, when we can get them more cheaply elsewhere, than it makes for us to grow all of our own bananas. 

I also can’t think of any obvious reason why the decline in manufacturing would be a cause of greater monetary instability. Certainly it’s the case that economies with heavy manufacturing have their share of such!

Cotto: China is notorious for its currency manipulation schemes. Beyond this, however, it not only owns a tremendous amount of America's national debt, but accounts for much of our trade deficit as well. How do you suppose that the U.S. could level the playing field in the near future?  

Selgin: I don’t believe any such a levelling desirable. As I noted, by manipulating our currency to combat whatever manipulating China does, we only risk exposing ourselves to monetary instability that will hurt us.  As for China sending us goods in exchange for our government’s IOUs, bully for us!

Cotto: Some claim that the surest way for America to enjoy monetary stability is a return to the gold standard. Do you believe that, given current socioeconomic affairs, this is a viable option?

Selgin: No. But that doesn’t mean that the pre-WWI gold standard was a bad set up.  Probably we will never have a better one.  The trouble is, it’s almost inconceivable that we could restore that system, which among other things involved, not just the U.S., but all of the world’s more advanced economies of the time.  It was a Humpty-Dumpty that can’t be put back together again.