Obama Slaps Free Markets in the Face

On January 8, 2009, President-elect Barack Obama addressed the nation regarding our hard economic times from a speaking platform at George Mason University. In the speech, Obama made it a point to say that "Only government can break the cycle that are crippling our economy, where a lack of spending leads to lost jobs, which leads to even less spending, where an inability to lend and borrow stops growth and leads to even less credit."

The unstated and downright irrational assumptions in Obama's words were, to say the least, slippery and disgusting. However, the focus of this article is not to necessarily refute Obama's economics (the opportunity to do so will exist for at least four more years), but to point out the arrogant slap in the face Obama gave to the theory of Austrian economics.

For those unfamiliar with George Mason University, possibly the school's most famous department is its economics department. At George Mason, the consensus among its economic professors lands squarely within the Austrian theory of economics. This theory advocates free market economics with almost no justifiable form of intervention by government. Some might differ slightly to advocate (or mix in) the Chicago school of economics, which is another strain of free market economics that minimizes government intervention to a very small degree. Either way, the consensus in the Mason economics department regarding our current crisis would probably go along the lines of: maximum markets, minimal government.

Just consider the background of a few of George Mason's well known economics professors:

Walter Williams, a Ph.D. in economics from the University of UCLA, has written hundreds of articles and even some books in defense of free market theories. In fact, he recently wrote a book entitled More Liberty Means Less Government. Additionally, in an article on George Mason's departement of economics site, Williams said, "Capitalism is relatively new in human history. Prior to capitalism, the way people amassed great wealth was by looting, plundering and enslaving their fellow man. Capitalism made it possible to become wealthy by serving your fellow man."

In the foreword to the Foundation for Economic Education's 1998 copy of The Law by Frederic Bastiat, Williams praised the free market thinking of Bastiat by saying "After reading [The Law] I was convinced that a liberal-arts education without an encounter with Bastiat is incomplete. Reading Bastiat made me more keenly aware of all the time wasted, along with the frustrations of going down one blind alley after another, organizing my philosophy of life. The Law did not produce a philosophical conversion for me as much as it created order in my thinking about liberty and just human conduct."

Donald Boudreaux is the chairman of Mason's economic department. Many fans of free market thinking love to check out Cafe Hayek, a blog he runs with his colleague, Russell Roberts. Though Boudreaux takes an optimistic view of our current crisis, he warned at the end of an article for Forbes.com that "If our confidence in free markets does come to be overwhelmed by a renewed, if utterly baseless, confidence in the central direction of the economy, then our economic prospects will once again truly be in a great depression." In other words, Boudreaux believes that only a free market approach will fix our economy, not government stimulus packages.

Boudreaux himself has little taste for Obama's artificial and flowery rhetoric. In a letter to the Washington Times last December, he commented on Obama's speech at the 2004 DNC: "The most we can conclude from that speech is that Mr. Obama is capable of displaying passion that appears genuine to audiences longing to hear it, much like a soap-opera star is capable of displaying passion for an actress whom that star might hold in utter contempt the moment the tape stops rolling." In fact, on October 29, 2008, Boudreaux posted another letter that he wrote on Cafe Hayek, saying that he was as interested in having "O.J. Simpson come to GMU's campus to lecture us on how to manage one's marriage" as he was in having either Obama or McCain come to talk about economics.

Russell Roberts, as noted above, is Boudreaux's co-blogger at Cafe Hayek and formerly taught at the University of Rochester, Stanford University, and UCLA before coming to Mason. In a Youtube video, Russell Roberts made it clear that he was pretty "pessimistic" about government solutions and was worried about the impact of bad economics today on the "next generation." Moreover, he blamed the government for causing the current crisis and therefore did not place much stock in any future government solution. In short, the video showed how the entire problem we are in today was caused by the government and how deregulation and markets were the true solution.

Additionally, Mason is home to the Mercatus Center, a decidedly free market organization dedicated to implementing free market theories into real world policies.

Quite clearly, the ideas that Williams, Boudreaux, Roberts, and those at the Mercatus Center advocate are diametrically opposed to the assertions that Obama preaches to the masses whenever he speaks. They stand against the growing power of "benevolent government" even as Obama seeks to tear their ideas down. They probably were somewhat embarrased that their university provided a platform for Obama's defense of Keynesian nonsense.

So why did Obama get to give his speech at George Mason University even though it boasts an economics department that is the antithesis of everything he seeks to establish economically? I do not know. But according to an interview with Russell Roberts on NPR, neither he nor Donald Boudreaux (who you will remember is the chairman of George Mason's economics department) were invited to the speech. Nor did Obama pay any heed to their existence while he was at the campus.

Even though Obama has to this point ignored the reality (and success) of free market economics, I have no doubt that George Mason will continue to train its students in the understanding of these important ideas. It's unfortunate that the platform for Keynes' misbegotten ideas happened at the university where his ideas are possibly most ridiculed, but let no one believe for a second that the economics department at Mason agrees with Obama's stimulus plan.