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Chicago vs. Austrian

InsertNameHere
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1/23/2012 3:08:39 AM
Posted: 4 years ago
I'm pretty new the whole economics thing, but I took a survey on the Mises website to find out where I lean economically and apparently I'm closer to the Chicago school than the Austrian school. Obviously I don't really know what any of this means so how does the Chicago school differ from the Austrian school? From my understanding the Austrians support the gold standard or something. Help!
darkkermit
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1/23/2012 3:12:46 AM
Posted: 4 years ago
They are both free markets.

Austrian economics believe that recessions are caused by booms and busts due to fractional reserves and the FED. The austrian business cycle. That's the only real distinction that matters to me, in my opinion.

However, the Austrian school uses praxeology, "deductive reasoning" while the Chicago school uses econometrics, "empirical" studies.
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InsertNameHere
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1/23/2012 3:15:52 AM
Posted: 4 years ago
At 1/23/2012 3:12:46 AM, darkkermit wrote:
They are both free markets.

Austrian economics believe that recessions are caused by booms and busts due to fractional reserves and the FED. The austrian business cycle. That's the only real distinction that matters to me, in my opinion.

However, the Austrian school uses praxeology, "deductive reasoning" while the Chicago school uses econometrics, "empirical" studies.

What about the Chicago school? What is their theory on booms and busts?
Ragnar_Rahl
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1/23/2012 3:20:03 AM
Posted: 4 years ago
At 1/23/2012 3:12:46 AM, darkkermit wrote:
They are both free markets.
Chicagoans usually advocate a strict, government defined, and apparently fiat monetary regime.

Then again, Mises supposedly favored military slavery and opera subsidies. And Hayek was frankly to the left of most Democrats on welfare.

So... they're both stereotypically free market. :P
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darkkermit
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1/23/2012 3:21:08 AM
Posted: 4 years ago
At 1/23/2012 3:15:52 AM, InsertNameHere wrote:
At 1/23/2012 3:12:46 AM, darkkermit wrote:
They are both free markets.

Austrian economics believe that recessions are caused by booms and busts due to fractional reserves and the FED. The austrian business cycle. That's the only real distinction that matters to me, in my opinion.

However, the Austrian school uses praxeology, "deductive reasoning" while the Chicago school uses econometrics, "empirical" studies.

What about the Chicago school? What is their theory on booms and busts?

Well, I think it depends on the situation. Friedman stated that the Great Depression was due to the contracting of the money supply. There's also the theory that recessions are caused by shocks, unexpected changes in variables that cause fluctuation in output.
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darkkermit
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1/23/2012 3:23:46 AM
Posted: 4 years ago
At 1/23/2012 3:20:03 AM, Ragnar_Rahl wrote:
At 1/23/2012 3:12:46 AM, darkkermit wrote:
They are both free markets.
Chicagoans usually advocate a strict, government defined, and apparently fiat monetary regime.

However, monetarists don't necessarily believe that it should be controlled by the FED. Rather they rather have it run by a computer.

Then again, Mises supposedly favored military slavery and opera subsidies.

wasn't aware of that.

And Hayek was frankly to the left of most Democrats on welfare.

I'd hardly call Hayek's views on welfare leftish. He was for minimum welfare, but he was hardly an egalitarian.
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Ragnar_Rahl
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1/23/2012 3:25:18 AM
Posted: 4 years ago
A simpler and possibly overgeneralized comparison of their business cycle theories:

An Austrian will explain a bust as "The fed exists, for the following reasons this makes a cycle inevitable. Only by not having the government supply money can this be avoided."

A Chicagoan will explain it as "The fed dun goof'd, there's a right way for them to handle the money supply and that's not it."
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
InsertNameHere
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1/23/2012 3:26:15 AM
Posted: 4 years ago
At 1/23/2012 3:21:08 AM, darkkermit wrote:
At 1/23/2012 3:15:52 AM, InsertNameHere wrote:
At 1/23/2012 3:12:46 AM, darkkermit wrote:
They are both free markets.

Austrian economics believe that recessions are caused by booms and busts due to fractional reserves and the FED. The austrian business cycle. That's the only real distinction that matters to me, in my opinion.

However, the Austrian school uses praxeology, "deductive reasoning" while the Chicago school uses econometrics, "empirical" studies.

What about the Chicago school? What is their theory on booms and busts?

Well, I think it depends on the situation. Friedman stated that the Great Depression was due to the contracting of the money supply. There's also the theory that recessions are caused by shocks, unexpected changes in variables that cause fluctuation in output.

Well I think I agree with that. I really don't think it would always be the same scenario creating a boom or bust.
Ragnar_Rahl
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1/23/2012 3:27:44 AM
Posted: 4 years ago
At 1/23/2012 3:23:46 AM, darkkermit wrote:
At 1/23/2012 3:20:03 AM, Ragnar_Rahl wrote:
At 1/23/2012 3:12:46 AM, darkkermit wrote:
They are both free markets.
Chicagoans usually advocate a strict, government defined, and apparently fiat monetary regime.

However, monetarists don't necessarily believe that it should be controlled by the FED. Rather they rather have it run by a computer.
True. But a government-programmed computer.


Then again, Mises supposedly favored military slavery and opera subsidies.

wasn't aware of that.
The opera subsidies bit is disputed and unsourced, pro-conscription references can be found in the 3rd edition of human action.


And Hayek was frankly to the left of most Democrats on welfare.

I'd hardly call Hayek's views on welfare leftish. He was for minimum welfare, but he was hardly an egalitarian.
"Minimum welfare" = "everyone getting basic sustenance if they need it," which is, again, to the left of most Democrats in the United States, or at least what most Democrats will admit to.
They are, fortunately, hardly egalitarians.
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
CosmicAlfonzo
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1/23/2012 3:37:32 AM
Posted: 4 years ago
See, here I thought the Chicago school was all about just letting the mob handle things.

Seriously, people think the mob is dead in Chicago, but in reality, they are so powerful that they are just better at keeping attention away. There is so much mob in the city and suburban law enforcement that they might as well just call themselves goons.

Woooah, off topic, nothing to see here.
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darkkermit
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1/23/2012 3:08:40 PM
Posted: 4 years ago
At 1/23/2012 3:37:32 AM, CosmicAlfonzo wrote:
See, here I thought the Chicago school was all about just letting the mob handle things.

Lol. Perhaps the names should be switched, since that is literally the basis of he Austrian view on security.
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Mimshot
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2/14/2012 1:02:45 PM
Posted: 4 years ago
At 1/23/2012 3:08:40 PM, darkkermit wrote:
At 1/23/2012 3:37:32 AM, CosmicAlfonzo wrote:
See, here I thought the Chicago school was all about just letting the mob handle things.

Lol. Perhaps the names should be switched, since that is literally the basis of he Austrian view on security.

They prefer the term "security insurance" to "mercenary" or "mob"

Chicago school is fairly libertarian/neo-liberal/washington consensus. They support using government to create a structure where the market can allocate the costs of externalities. Austrians want no governments and shiny rocks for money.
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Ragnar_Rahl
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2/14/2012 3:29:48 PM
Posted: 4 years ago
At 1/23/2012 3:08:40 PM, darkkermit wrote:
At 1/23/2012 3:37:32 AM, CosmicAlfonzo wrote:
See, here I thought the Chicago school was all about just letting the mob handle things.

Lol. Perhaps the names should be switched, since that is literally the basis of he Austrian view on security.

Um... I thought that was the basis of the mainstream view on security. You pay the mob so they don't put you in jail.
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
16kadams
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2/14/2012 5:42:05 PM
Posted: 4 years ago
Got Austrian
https://www.youtube.com...
https://rekonomics.wordpress.com...
"A trend is a trend, but the question is, will it bend? Will it alter its course through some unforeseen force and come to a premature end?" -- Alec Cairncross
socialpinko
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2/20/2012 12:22:07 AM
Posted: 4 years ago
At 2/14/2012 1:02:45 PM, Mimshot wrote:

Austrians want no governments and shiny rocks for money.

As Christopher Hitchens would say if he weren't in hell, you speak like someone who has never heard what the opposition thinks. Austrians are not conceptually anarchists. Major founders, among them Menger, Hayek, and Mises all supported the existence of a ggovernment. RothbRd was to my knowledge the first Austrian anarchist and really only started a trend. The Austrian school isn't definitionally anarchist, plus Chicago economists also have an anarchist tradition e.g. Friedman.

On gold standard, Austrians dont support it just because it's shiny. While I'm sure the aesthetic quality makes it valuable in many people's eyes, the main qualities the market looks for in a possible common medium of exchange is being able to be divided easily, being easily maneuverable, being sufficiently scarce (meaning you can't create as much as you want out of thin air to depreciate the value), etc. Shininess is hardly sufficient.
: At 9/29/2014 10:55:59 AM, imabench wrote:
: : At 9/29/2014 9:43:46 AM, kbub wrote:
: :
: : DDO should discredit support of sexual violence at any time and in every way.
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darkkermit
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2/20/2012 12:26:11 AM
Posted: 4 years ago
At 2/20/2012 12:22:07 AM, socialpinko wrote:
At 2/14/2012 1:02:45 PM, Mimshot wrote:

Austrians want no governments and shiny rocks for money.

As Christopher Hitchens would say if he weren't in hell, you speak like someone who has never heard what the opposition thinks. Austrians are not conceptually anarchists. Major founders, among them Menger, Hayek, and Mises all supported the existence of a ggovernment. RothbRd was to my knowledge the first Austrian anarchist and really only started a trend. The Austrian school isn't definitionally anarchist, plus Chicago economists also have an anarchist tradition e.g. Friedman.

On gold standard, Austrians dont support it just because it's shiny. While I'm sure the aesthetic quality makes it valuable in many people's eyes, the main qualities the market looks for in a possible common medium of exchange is being able to be divided easily, being easily maneuverable, being sufficiently scarce (meaning you can't create as much as you want out of thin air to depreciate the value), etc. Shininess is hardly sufficient.

Milton Friedman isn't an anarchist. His son, David Friedman isn't an economist.
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socialpinko
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2/20/2012 12:31:29 AM
Posted: 4 years ago
At 2/20/2012 12:26:11 AM, darkkermit wrote:
At 2/20/2012 12:22:07 AM, socialpinko wrote:
At 2/14/2012 1:02:45 PM, Mimshot wrote:

Austrians want no governments and shiny rocks for money.

As Christopher Hitchens would say if he weren't in hell, you speak like someone who has never heard what the opposition thinks. Austrians are not conceptually anarchists. Major founders, among them Menger, Hayek, and Mises all supported the existence of a ggovernment. RothbRd was to my knowledge the first Austrian anarchist and really only started a trend. The Austrian school isn't definitionally anarchist, plus Chicago economists also have an anarchist tradition e.g. Friedman.

On gold standard, Austrians dont support it just because it's shiny. While I'm sure the aesthetic quality makes it valuable in many people's eyes, the main qualities the market looks for in a possible common medium of exchange is being able to be divided easily, being easily maneuverable, being sufficiently scarce (meaning you can't create as much as you want out of thin air to depreciate the value), etc. Shininess is hardly sufficient.

Milton Friedman isn't an anarchist. His son, David Friedman isn't an economist.

What do you mean? David Friedman isn't an economist? He wrote a book on price theory and one I'm currently reading on the relationship between law and economics. Though I suppose it's fair as he doesn't hold an economics degree to my knowledge.
: At 9/29/2014 10:55:59 AM, imabench wrote:
: : At 9/29/2014 9:43:46 AM, kbub wrote:
: :
: : DDO should discredit support of sexual violence at any time and in every way.
:
: I disagree.
16kadams
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2/20/2012 12:42:32 AM
Posted: 4 years ago
"Chicago macroeconomic theory rejected Keynesianism in favor of monetarism until the mid-1970s, when it turned to new classical macroeconomics heavily based on the concept of rational expectations. Chicago economists applied rational expectations to other areas in economics like finance, which produced the influential efficient market hypothesis." - Chicago
http://en.wikipedia.org...

"The Austrian School of economics is a school of economic thought. It advocates methodological individualism in interpreting economic developments (see praxeology), the theory that money is non-neutral, the theory that the capital structure of economies consists of heterogeneous goods that have multispecific uses which must be aligned (see Austrian business cycle theory), and it emphasizes the organizing power of the price mechanism (see economic calculation debate).[1] Austrian School views are considered heterodoxy and mainstream economists are generally critical of its methodology. Austrian economists are generally advocates of laissez-faire policies." -Austrian
http://en.wikipedia.org...

I am more supply side myself:

"Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created by lowering barriers for people to produce (supply) goods and services, such as lowering income tax and capital gains tax rates, and by allowing greater flexibility by reducing regulation. According to supply-side economics, consumers will then benefit from a greater supply of goods and services at lower prices. Typical policy recommendations of supply-side economists are lower marginal tax rates and less regulation."
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"A trend is a trend, but the question is, will it bend? Will it alter its course through some unforeseen force and come to a premature end?" -- Alec Cairncross
darkkermit
Posts: 11,204
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2/20/2012 12:45:13 AM
Posted: 4 years ago
At 2/20/2012 12:31:29 AM, socialpinko wrote:
At 2/20/2012 12:26:11 AM, darkkermit wrote:
At 2/20/2012 12:22:07 AM, socialpinko wrote:
At 2/14/2012 1:02:45 PM, Mimshot wrote:

Austrians want no governments and shiny rocks for money.

As Christopher Hitchens would say if he weren't in hell, you speak like someone who has never heard what the opposition thinks. Austrians are not conceptually anarchists. Major founders, among them Menger, Hayek, and Mises all supported the existence of a ggovernment. RothbRd was to my knowledge the first Austrian anarchist and really only started a trend. The Austrian school isn't definitionally anarchist, plus Chicago economists also have an anarchist tradition e.g. Friedman.

On gold standard, Austrians dont support it just because it's shiny. While I'm sure the aesthetic quality makes it valuable in many people's eyes, the main qualities the market looks for in a possible common medium of exchange is being able to be divided easily, being easily maneuverable, being sufficiently scarce (meaning you can't create as much as you want out of thin air to depreciate the value), etc. Shininess is hardly sufficient.

Milton Friedman isn't an anarchist. His son, David Friedman isn't an economist.

What do you mean? David Friedman isn't an economist? He wrote a book on price theory and one I'm currently reading on the relationship between law and economics. Though I suppose it's fair as he doesn't hold an economics degree to my knowledge.

If I wrote a book on economics, that would hardly qualify me as an economist.
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Reasoning
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2/20/2012 1:28:34 AM
Posted: 4 years ago
At 2/20/2012 12:45:13 AM, darkkermit wrote:
If I wrote a book on economics, that would hardly qualify me as an economist.

What if you wrote a book on economics and taught economics at the college level?
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran
darkkermit
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2/20/2012 1:31:00 AM
Posted: 4 years ago
At 2/20/2012 1:28:34 AM, Reasoning wrote:
At 2/20/2012 12:45:13 AM, darkkermit wrote:
If I wrote a book on economics, that would hardly qualify me as an economist.

What if you wrote a book on economics and taught economics at the college level?

Well you'd need a doctorate in economics to teach at the college level.

Does David Friedman teach at the college level?
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Reasoning
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2/20/2012 2:36:11 AM
Posted: 4 years ago
Yes. http://www.daviddfriedman.com...
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran