I think there exists a fundamental problem with “pop” econ books such as these designed for general consumption: they overwhelmingly lend themselves to outlandish arguments and obfuscation of any criticisms. I think this is somewhat mitigated in microecon books that focus on more narrow issues, specifically in behavioral economics which borrows more from the scientific tradition of assuming that one’s thesis is wrong rather than right. Perhaps it’s more that these macro-level criticisms are what consumers of these sort of books expect, and as a result there seems to be something of a glut of those proffered by authors who are only marginally qualified to address the subject yet prey on either the ignorance or weakness to confirmation bias so many of their readers suffer from. Woods, I feel, is playing up both of those factors.
I suspect the majority of his audience is either those who are already subscribers to Austrian economic theory or other heterodox economic positions, or those who are simply looking for a vaguely cogent explanation of what is, to them, a remarkable event, rather than a routine blemish on a textured body. Given that, the book is a compilation of oversimplifications and misdirection, exemplified best perhaps by the oft-stated claim that assorted and sundry Austrian economists foresaw this, or previous, economic troubles. This is hardly surprising, as to reappropriate a criticism often leveled at Krugman, they have correctly predicted nine out of the last three recessions. Frankly, any group that routinely proclaims policy X will lead to the end of days, but is ever-expansive in terms of the range X represents, is in sore need of restraint. A coterie of Cassandras isn’t worth a whole lot if their objections function only in a realm where their mistakes are ignored.
This is why such heterodoxy is lamentable: Austrians, and other offshoots, continue to isolate themselves from traditional economic thought and publication, creating a nexus of incestuous thought growing ever more extreme and shrill in order to be heard. The ivory tower of economic thought, such as it is, can’t be assailed from afar. Simple rejection shouldn’t imply divorce from the process, and Woods and his ilk would do well to remember this.
Keynes and Friedman are both probably significantly in error, as are any of those who reside on some continuum between them. Just pointing it out, however, isn’t enough: you can’t define policy by what you shouldn’t do, and then hold up as the only positive suggestion an economic system that is either (depending on how generously you would interpret Wood’s ideas of money/currency creation and usage) prehistorical at best or ahistorical at worst. There is no practicality to suggesting a magical utopia be created whereby currency exists in a stateless vacuum.
The Fed is an imperfect actor operating at the whims of an imperfect political system. To point this out is no sin, but to blindly and blithely assert that this network of flaws can be repaired if we simply hope very very hard and are pure of heart and show the world that dammit, we’re right and they of course are not, is less than helpful and only creates more alienation and disappointment. We are studying, essentially, a political body. It has normative goals, which we probably don’t agree with at every juncture. You can’t overcome that by claiming your normative goals are better and then sitting back down.
Your review has more fail than I care to think about.
I would appreciate a stronger response to the criticism than: it has fail. I’m new here and I’m hoping that your post, in which you call me a dumbass in your tag line, isn’t representative of the rest of the community on these forums.
The difficulty is that your review, though written adequately, is short on anything meaningful. Of course short pop-history books titled the Politically Incorrect Guide is long on grand claims and short on footnotes. It reassures outlandish opinions in a cursory, matter-of-fact way, but who cares? If you are debating a specific premise then site it and refute it. Let pop-thinkers read pop-books.## Our arguments for such anti-government policies do not rest solely on efficiency (this is just a kind outcome). It rests on ethics.
Indeed that is unacceptable: I’ve deleted the insulting tag. Sorry for the rough welcome.
The book is largely a layman’s explication and application of the Austrian Business Cycle Theory. A review which purports to criticize Meltdown without even addressing its discussion of the ABCT is not much of a review at all.
“Our”? Please don’t speak for others here, especially since the Forum is named after Ludwig von Mises, whose arguments most decidedly did NOT rest on ethics.
solid point. There are 14,000+ members here
You don’t know who he meant with “our”.
So we are going to ban a word now?
Indeed, and growing all the time. 
I figured he either meant “Austro-libertarians” or “Active Mises Forum members”.
Judging from Jeremiah’s last post, it seems I figured correctly.
his arguments about what follows from policy X did not rest on ethics. which economist does otherwise? the fact that he favoured some policies over others and passionately advocated (argued for) was done from his p.o.v as a utilitarian, …wasn’t it?
Nobody said anything about banning anything. Calm down. It’s simply incorrect to imply that all members here base their arguments on ethics.
Thank you for the welcome, Lilburne.
Allow me to address a specific popular belief against Austrian theory. First, most agree that if a company has to be liquidated and it can be done so in an orderly manner, then do it. The increase in moral hazard due to anticipated bail outs can have adverse effects.
Now, the point that I want to make is that, in some instances, a company that fails can be disruptive to markets in the sense that it alters it’s risk taking profiles. If the failure causes enough collective fear that it poses system wide risk, then as reluctant as we are to bail a company out, there is a good argument for doing so before irrational fear in all market participants takes hold- and all risk taking by economic agents shuts down. When that happens, a systemwide process of deleveraging takes hold, balance sheets across the board are hurt, etc…
ah…you are countering economics science with…animal spirits
what really happens when there is a big reveal of systematic malinvestment is that people study economics and realise that the government is responsible for boom and bust
Indeed.
utils, this recent short thread might be useful.
No economist qua economist. But plenty of Austro-libertarians focus on moral arguments.
Mises was probably driven to better the lot of his fellow man by his simple human decency. So yes, he may have been driven by morality, but that doesn’t make his arguments moral in nature.