Changing the Terms of the Debate

Basically every pro-intervention policy economic argument goes like this:

(1) The neoclassical model says if we do this, output will be lower but

(2) it is naive and unrealistic to believe the neoclassical model represents reality.

Unfortunately, most of the time the free market defender resorts to something like "yes, but it approximates it close enough."

Until we rid economics of the absurd assumptions of the neoclassical model, we will always be on the defensive, and the arguments will be weak. Just think of the eternally frustrating "trickle down" economics description. Yet, very few public figures can explain Austrian methodology, assumptions and models in the soundbite format of modern policy debate; and the public is already familiar with the neoclassical model, and assumes that any free market advocate believes in perfect competition and the tooth fairy.

It is the dominant role of the neoclassical model and synthesis (and mathematical economics) during the twentieth century that brought us belief in the superiority of planning and the supply side/demand side dichotomy. This reminds me of the socialist/fascist dichotomy: they are both wrong and actually similar not opposites. There is an actual alternative on the opposite end of the spectrum, being ignored.

The terms of the debate need to change. In order not to be on the defensive, we need to loudly declare the actual assumptions and structure of our model, and the reasons why it claims that intervention will lower growth, if it does. This is starting - between Freedom Watch and the Ron Paul revolution, the Austrian name is seeing some light of day again. And, now with the Tea Party protests, the tide is turning in the popular mood. Folk Austrianism is trickling in so to say...hopefully with a better face than "trickle down" economics.

There are several Austrian economists working hard to popularize some of the ideas. Lets keep pushing this forward, not be afraid to call it "Austrian" economics, to distinguish it from the neoclassical synthesis, and make sure to point out the major difference: we don't assume that markets produce zero economic profit and everyone is omniscient. We are realistic. You can't wave your hand and say we're naive and so government has to help. They are naive; they are the ones that beleive government produces zero waste and is omniscient.