Every year, free marketeers get their hopes up that the Nobel committee will select an economist who champions abolishing the Federal Reserve System, adopting sound money, and implementing free market solutions to everyday problems. Unfortunately for the schools of economic thought that teach capitalism as a virtue and not a sin, they have their dreams shattered by Stockholm as the Nobel prize in economics is given to someone who believes the government is a benevolent force.
The Royal Swedish Academy of Sciences recently awarded the 2018 Nobel Memorial Prize in Economic Science to American economists William D. Nordhaus and Paul M. Romer. As expected, the Nobel committee chose economists advancing the cause of government intervention and tinkering rather than selecting economists espousing the principles of free market capitalism in the same vain as previous winners Milton Friedman or Friedrich Hayek.
Nordhaus was picked “for integrating climate change into long-run macroeconomic analysis.” Romer was chosen “for integrating technological innovations into long-run macroeconomic analysis.”
In other words, they were the politically correct options. Should we have expected anything different?
If Paul Krugman, the disciple of John Maynard Keynes, and former President Barack Obama can win a Nobel, then anyone can. That’s how much the integrity of the annual honor has deteriorated since its inception.
So, why should Nordhaus and Romer’s victories make any conservative or libertarian shake their head?
Globalism Is Front and Center
While the two economists are not environmental fanatics that believe we would be happier living in the Middle Ages, they are still dangerous thinkers who could influence public policy aimed at centrally planning our day-to-day lives.
First, let’s examine Romer. He recommends government-led research and development (R&D) investing, coming up with new regulations, and adopting technocratic initiatives to address climate change while boosting economic growth.
He told iMoney Magazine:
“One of the conclusions I came to when I was working on the theoretical foundations of growth theory is that there is enormous scope in the private economy for discovering new and better ways to provide a higher standard of living. This same insight applies equally well to the public sector….I think almost every economic system can benefit from experimentation with new forms of government and new types of government services.”
Perhaps the worst sin of all: He was the mentor to Paul Krugman.
Now, in the case of Nordhaus, the Yale professor recommends an odious universal carbon tax as a global climate policy aimed at reducing carbon emissions. Moreover, by positing that climate change comes with a hefty economic cost, and that state regulations can somehow cool the planet, Nordhaus abandons the idea that the private sector can either adjust to warmer weather or positively affect the environment through free market solutions.
It has been more than a year since President Trump withdrew the U.S. from the Paris Accord, an international pact that tries but fails to cut nations’ carbon footprint. (Funny enough, the U.S. has led the world in lowering emissions, while many signatories have only seen their emissions grow.) With this in mind, you can view this year’s Nobel prize in economics as an anti-Trump statement.
Nobel’s Atrocious Past
Should we really take that much stock in Nobel recipients? Ever since former Vice President Al Gore won a Nobel and an Oscar in the same year, it was apparent that both the Royal Academy and the Academy Awards had the same thing in common: backslapping those who share politically correct ideas.
Let’s take a gander at various positions of some economists who have won a Nobel.
Krugman advocates government stimulus, lectures that the Great Depression ended because of war and spending, blogs that budget deficits do not matter (except when Republicans are in charge), and supports monetary policy to inflate bubbles, like the dot-com in the 1990s and housing in the 2000s.
In 2013, Robert Shiller was one of three economists to win the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. His record? Shiller blames capitalism for unemployment, encourages deficit spending to fight recessions, endorses tax hikes on the rich, recommends a levy on robots to finance a program for displaced workers, and wants to regulate cryptocurrencies. He has had some positive moments in recent years, like warning of a bond bubble. Aside from that that, Shiller is another big government advocate.
Richard Thaler, who is the Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics at the University of Chicago Booth School of Business, was last year’s winner. His stances? He joined former Treasury Secretary Larry Summers and his call for banning the $100 bill. Thaler might not approve of state mandates, but he favors a “nudge” to centrally plan the people.
Another doozy was his evolving position on price-gouging.
The Wall Street Journal reported that Thaler opposed anti-price-gouging laws in Connecticut in 2012, correctly pontificating that one-time entrepreneurs can supply crucial items during a crisis and well-known companies would not harm their reputation by raising prices. A few years later, he changed his tune (maybe to be considered for a Nobel?), telling Marketplace: “A time of crisis is a time for us all to pitch in; it’s not a time for us to grab.”
What do all of these men have in common? The state and nothing but the state. Rather than purporting freedom, they preach on controlling the public, even if it is a “nudge.” It’s frightening what the Nobel has metastasized into over the years. It must’ve been a mistake or a fluke when Hayek won.
Friedman and Hayek
There have only been two winners in the 50-year history of the Nobel Memorial Prize in Economic Sciences who really deserved the honor: F.A. Hayek and Milton Friedman.
It is true that conservatives and libertarians typically debated the merits of Friedman’s victory. He believed that the Federal Reserve should have done more during the Depression, he opposed Hayek’s free market currency concept (though he changed his mind in his latter years), and he regularly encouraged a 2% inflation rate maintained by the Eccles Building (again, he modified his opinions on this prior to his death, suggesting to end the Fed).
That said, Friedman was still a stalwart of free market capitalism; just read Free to Choose.
Hayek, meanwhile, held views that would ridiculously be deemed white supremacist and anti-poor today. The author of The Road to Serfdom detested collectivism, articulated on the free price system, and attributed property rights to the birth of civilization. Like Friedman, he wasn’t perfect; he thought a basic income guarantee and state-run healthcare would be acceptable in a wealthy society.
Yet, Hayek remained a champion of free market capitalism; peruse Fatal Conceit.
Next Year’s Winner
So, who should win next year’s prize? Three names: Thomas Sowell, Israel Kirzner, or Walter Block. Who will realistically win the prize? Some obscure economist who subscribes to a politically correct cause du jour that involves government intervention and greater control of our existence. And you shouldn’t expect anything different. It would be odd for a Nobel to go to a big government progressive one year and then a proponent of the Austrian School of Economics the next. Only the statists will be victorious.
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