[Josh] Barro claims his bookshelf is full of copies of libertarian (and I assume “Austrian” economic, because economics is not the same as political philosophy) literature, but his quick hit piece on Austrian economics doesn’t seem to show any deep reading of it. On Twitter, he actually admits that he couldn’t get through Human Action, because “it actually makes no sense” — what I suspect really happened is that he couldn’t open his mind just enough to understand Mises’ rationalization, and instead opted to put the book down and pretend there was no rationalization (because, the book does make sense to me and a large multitude of other readers, even if some of them disagreed with the book). He then goes on to claim that “most of [Hayek’s] stuff is normative,” ignoring Hayek’s work on capital and business cycle theory between the mid-1920s through to the mid-1940s and his work on monetary theory and policy of the 1970s (Barro does talk about Hayek’s work on “knowledge on society,” but I’d be genuinely surprised if he actually understood Hayek’s point).

In this recent opinion piece he makes some strong claims about Austrian economics that don’t really stand up to the literature. What’s worse is that he repeats some old misunderstandings that non-Austrians like to use to ridicule what they haven’t really taken the time to understand.

For example, writes Barro,

One is that Austrian economists reject empirical analysis, and instead believe that you can reach conclusions about correct economic policies from a priori principles.

It would be more reasonable to claim that many (although, not all) Austrian economists approach economic science through an a priori methodology. That is to the say, Mises and some modern followers of the school believe that economic theory must be arrived at deductively, and that we can make an internally consistent body of theory by starting from an (empirically) valid axiom. Not all Austrian economists were as “axiomatic” as Mises, but I think it’s true that most Austrians approach the science deductively — contra Barro, on Twitter, this includes Hayek.

Does this imply a rejection of empiricism? If you read Mises’ Human Action and Theory and History, the obvious answer is ‘no.’ Mises believed that theory is useful for interpreting data. The only rejection is that of using the data to derive theory. But, if theory is used to understand real world events, then analyzing these real world events are obviously a fundamental part of economic science. And, in fact, Austrian literature is full of historical case studies, applying Austrian economic theory to the real world data. So, claiming that Austrians ignore empirical evidence is absolutely erroneous.

What’s worse is that Barro doesn’t even seem to be talking about this. Instead, he is talking about policy conclusions! How can one make a policy conclusion without knowing what the policy is supposed to address? It is true that perhaps Mises, et. al., might have given policy conclusions for specific events, but to know whether some policy is relevant or not you need to know the real world data. Mises, nor any other serious Austrian economists, would deny this — again, read the literature (not amateur internet Austrians who are just starting to read the original sources).

This isn’t a “we’re right, you’re wrong” type of post. You don’t have to accept Mises’ view on things, but if you want to criticize ideas then you have to understand them. The irony is that the “empirical evidence” is seemingly lost on Barro, since it is he who is unable to cope with the “data.” That is, despite what Mises actually wrote, Barro continue to peddle misunderstandings and dishonest readings. What made my day was Noah Smith’s decision to ask Barro on Mises over Twitter, when the latter admitted he couldn’t get through Mises’ work. The blind leading the blind.