AcademicI’m Steve Horwitz, Professor of Economics at St. Lawrence University. My article, “There is No Such Thing as Trickle-Down Economics” recently made the front page of Reddit. AMA!

Oct 13th 2016 by sghorwitz • 25 Questions • 390 Points

Hello everyone, I’m Steve Horwitz, Professor of Economics at St. Lawrence University in Canton, NY. I did my PhD work at George Mason University, the home of the Mercatus Center where I am a Senior Affiliated Scholar today. I am also a Distinguished Fellow at the Foundation for Economic Education, a Senior Fellow at the Fraser Institute in Canada, and I’m currently serving as a Visiting Scholar at the John H. Schnatter Institute for Entrepreneurship and Free Enterprise at Ball State University.

I’ve written three books, Monetary Evolution, Free Banking, and Economic Order (1992), Microfoundations and Macroeconomics: An Austrian Perspective (2000), and Hayek’s Modern Family: Classical Liberalism and the Evolution of Social Institutions (2015). I also write regularly for Bleeding Heart Libertarians and

My work has focused on monetary theory, macroeconomics from an Austrian perspective, the economics of gender, and the family as a social institution.

My recent article for, “There is No Such Thing as Trickle-Down Economics” made the front page at /r/Economics, /r/Politics, and ultimately the front page of Reddit.

Several years ago, my video with Learn Liberty exploring the gender earnings gap, “Do Women Earn Less than Men?” made the front page of /r/Libertarian, leading the video to go viral. I wrote about the ensuing controversy here.

Ask me anything about economics, the gender earnings gap, the role of the family as a social institution, “bleeding heart libertarianism,” or any other aspects of my work you find interesting. I look forward to your questions!

EDIT: Thank you for your questions everybody! I was asked to devote 90 minutes to this conversation, so I am now concluding the AMA. If anyone has a question that I was not able to get to, feel free to follow me over to /r/LearnLiberty where I’ll continue taking questions for a half-hour of “overtime.”


What do you make of many in the economics profession and academia, such as many on /r/badeconomics disparagement of Austrian economics as being "dogmatic" or "fundamentalist"? What would you say the most popular misconception of Austrian economics as a discipline is?


I think the most common misconception is that it's just "ideology" - that it is no different from libertarianism. It isn't helped when people use the term "austro-libertarianism." Austrian economics is as old as modern economics, dating to the marginal revolution in 1871, and is a form of value-free social analysis. Unfortunately, too many economists think math and related models are the only kind of "science" or rigorous thinking. They're wrong as the history of economics and other disciplines demonstrate.

Folks might also want to see this


Prof. Horwitz, what do you think of Scott Sumner's claim that monetary policy is the right's Achilles heel? Given his response, what is the Austrian answer? I am not saying you or Austrians are part of the "right". I am assuming he meant people who favour tight money in general.


I think it is to the extent, as Cory asked below, free market types are seen as not having an answer to the Great Depression. Monetary theory is also REALLY complex and hard and explaining policy to a lay audience is challenging. Explaning why depressions happen and how to "cure" them, with their focus on money, is indeed one of our biggest challenges.

I tried to break down monetary policy for non-specialists here:


I am a college administrator. How do I convince my colleagues that the Koch brothers aren't evil bastards bent on destroying academic liberty?


I wish I had the magic bullet.

I think the best things you can do are:

  1. Point them to Charles's own writings on these issues where his whole argument is that he wants to expand the conversation and give more people the opportunity to have their views in the mix. Reading Polanyi's "The Republic of Science" with them might help.

  2. Be a role model. Demonstrate your own commitment to academic freedom and the central role of faculty.

  3. Don't take grants that give the Kochs or any other outside donor control over hiring or curriculum.

  4. Share the work of high-quality libertarian scholars and let your colleagues judge for themselves.

  5. Given them examples of programs at other schools, esp. something like Ross Emmett's at Michigan State, that have broad reading lists and are gettin gstudents engaged in ideas and writing about them.


What are your thoughts on the "free stuff" economy? By free stuff I mean things that you should be paying for, but can get for free online. Illegally downloading music, movies, porn, etc.

Edit: I don't understand how porn is even being made still. Hardly anyone buys porn these days when anything you can imagine is 1 click away. And yet there are still endless amounts of porn being produced. I don't get it.


I'm a fan. :)

I think we are moving more and more to a world in which the pressure to provide things "free" in that way will be ubiquitous.


Steve, The FED inevitably will raise interest rates. 1) What will be the impact on those of us who have money in the market? 2) What is the proper role of the government in monetary policy?


Downvote for using "FED" not Fed. :)

As for 1), if I knew, I wouldn't be doing an AMA, I'd be off making tons of money investing.

It's proper role is not different than it's proper role in anything else: at most, setting and enforcing general rules and the rule of law. I say at most because it's an odd numbered day today, therefore I'm an anarchist. :)


Is gold money?


In general? Today?

It's not really money today as no one uses it as commonly accepted medium of exchange, but it can be and should be.


Dr. Horwitz, thank you for doing this.

What would you say are the top 3 must read books for people interested in Libertarianism?

What do you think are the most common misconceptions people have about Libertarianism?


Oh this is a nearly impossible question. :)

I'm going to go with the more academic books: Hayek's Constitution of Liberty; Nozick's Anarchy, State, and Utopia; and more obscure one: Chris Sciabarra's Marx, Hayek, and Utopia.

But really, there are so many, including Mark Pennington's recent Robust Political Economy that are worth reading.


  1. We are pro-business or in favor of anything that benefits corporations

  2. We think people are only greedy or selfish

  3. We think everything is solved by the market in the narrow sense.

Those are three good ones anyway.


You've said before that you (and many others at George Mason) don't consider yourselves Austrian economists but are nevertheless have a bent towards the Austrian tradition. What are you then? An entirely new school of it (Mercatus School of Economics)?

Follow up question: what influence, if any, has Alfred Schutz has had on your economics or philisophy in general?


I think that many of us are now using Virginia Political Economy to recognize the combined influence of Austrian economics and public choice economics. Hayek meets Buchanan. And then throw in the Bloomington School (Ostrom) and you have the framework for understanding human action adn its unintended consequences in the realms: markets (Hayek), politics (Buchanan), communities/civil society (Ostrom).

I like VPE as a label myself, esp. given the influence public choice had on the Ostroms.


What's the market like for Economics PhD's right now?


I'm not the best person to ask as I don't have grad students. My sense is that it's pretty good as the undergraduate major is in high demand.


Thanks for doing this Dr. Horwitz. What do you think of Piketty's book? I know you probably don't like the wealth tax but what do you think of analysis?


Here's me on Piketty:

it's video lecture.

Your better bets for Piketty criticisms are McCloskey's long review and any thing by Bob Murphy and/or Phil Magness on the book. I endorse them all.


Thank you for this AMA Professor Horwitz. As an avid reader and a huge fan of yours, can you convince me that Murray Rothbard was anything more than a loon or a charlatan?

As someone with a background in theoretical Economics and history of the Economic thought I can't really help it. Everytime it feels like he's just knowingly telling lies about what "mainstream economists" believe. EDIT: that, and the sectarian way of thinking i. e. anyone from JS Mill to Milton Friedman is a "socialist".

Thank you


He was neither a loon nor a charltan. He was wrong about a lot, but I wouldn't be here if it weren't for his vision of a free society, and to some extent his economics. The problem was that his narrow economic work was never really tested by the peer review process, rather it was a matter of reception by libertarian true believers. It allowed him to be sloppy in ways that someone like, say, Kirzner (or Boettke now) can't be.

Read him, but read him with a huge grain of salt. Let him be a way to test whether you like stuff because of your libertarian priors or because it's good economics.


Why aren't you a fan of Tom Woods? What about Robert Murphy?


I don't agree with Tom's understanding of Austrian economics and he's generally behaved like a jerk with respect to me.

I'm a Bob Murphy fan.


Do you think that Manufacturing will ever return to the United States?


Manufacturing never went away. We manufacture as much or more than ever these days

Manufacturing job have fallen of course, but that's good news. Why use labor in manufacturing if we don't need it? That labor can be "released" to other more valuable areas, which is exactly what has happened. It's also what DID happen when agricultural productiivty rose and former farmers became... manufacturing workers.


Why do you think monetary disequilibrium theory hasn't caught on more with both Austrian economists and mainstream economists? What can be done to change the common perception that the true Austrian approach to recessions is merely "doing nothing," letting any and all deflation "run its course"?


I think it's doing better than it used to as the Market Monetarists are also working from that broad approach. I think part of it is that it's, like so much else, tough to model in the ways the mainstream values (wrongly). I do think it's more common among Austrians too - the younger Larry White students are working from that tradition.

As for the second, we need to keep reinforcing the argument that monetary equilibrium is the goal and that letting deflation run its course is a disaster, as we saw in the 30s.


Currently, who is the most enlightened and articulate "libertarian" in your opinion? Someone self identified libertarians should follow on Facebook?


Well the answer to the first is David Schmidtz, but he's not on Facebook in any real way.

I'm a huge fan of Don Boudreaux and Deidre McCloskey, but neither are big FB users. If you don't follow Jacob T. Levy on Facebook, you should.


Broad question: What, if any, implications do behavioral economics have for the Austrian school? What has the relationship been, and what should it be from your perspective?


Great question. I have an article coming out in Economic Affairs from the IEA on exactly this topic later this month.

Here's some earlier thoughts:

The short version is this: behavioral econ shows us that, empirically, we are not homo economicus. Austrians have always known that. Humans are bumbling, stumbling, masses of imperfection with limited knowledge and all kinds of cognitive biases. So BE is helpful in providing the empirical evidence of that.

The question is: so what? For some BE folks, those imperfections are an ipso facto case for government intervention just like "market failure." Not for Austrians. Following Vernon Smith we are interested in understanding how human social institutions enable us to learn from each other and overcome those "failures" and general mutually beneficial interactions that better us all.

BE helps us understand the "problem situation" of human action, but Virginia Political Economy provides the answer for how we overcome it.

IOW: you don't destroy the case for markets by destroying the fiction of homo economicus.


Hello Professor Horwitz. Thank you for doing this AMA.

Do you feel more optimistic or pessimistic about the direction America is headed in?


I'm a short-run pessimist (even without this election) and a long-run optimist. My kids and grandkids will live better than I have.


The idea of a universal basic income (in it's various forms) was fundamental towards making me believe that libertarianism was marketable to the general American population. Anecdotally, when I discuss it with my friends on the left, they also love it and have never, ever heard of it. So questions on this topic:

I have lots of questions but maybe answer one or two that you find most interesting?

  1. Is this idea originally from Hayek? It's in LLL, but was it around before him?

  2. Why do you think Johnson isn't selling this concept? He seems to support it. The idea that you give people money and they buy their own health care, college education, housing, seems to appeal to a wide range of voters.

  3. How would the basic income adapt for people who have more expensive needs? I'm thinking for example, of people who have severe medical issues. The "basic" income wouldn't be sufficient.

  4. Do you think that the idea is actually possible in America? Or would it end up twisted by rent-seeking like everything else?

  5. Obviously, some people will choose not to work with a basic income. Do you think the problem would be worse than under our current welfare system?


Just some quick thoughts on this:

It's in LLL but it's also, I think, in Constitution of Liberty as well, at least the idea that people who cannot participate in the "game" of the market should get some sort of minimum.

I do think it would be ripe for rent-seeking and as several folks have argued, it's doubtful for public choice reasons that politicians would trade out the existing system for a UBI.

That said, if that DID happen, I think we'd have a much better situation than the status quo. Not perfect of course, but better. Yes, there'd be some negative incentives of a UBI, but not nearly the ones we have now, working at cross-purposes and destroying families. etc.


Thanks for this AMA!

What do you think about Acemoglu's & Robinson's quantitative research on Institutions and/or their opus, Why Nations Fail?


I think there's some good stuff in there, but McCloskey raises excellent criticisms in volumes 2 and 3 of the Bourgeois trilogy. They are overly focused on institutions and perhaps not enough on what Deirdre calls "habits of the lip." Well worth reading though.


I've always argued for a free and open economy. When I've talked about Austrian economics, on Reddit, replies will say that Austrian economics is a "debunked" theory that "no economist actually believes any more."

How should I respond to people who argue that no respectable person believes this stuff?


sources, sources, sources.

There is an organization of professional economists the Society for the Development of Austrian Economics with over 100 members and that has sessions at professional meetings. There are dozens of tenure Austrian econ profs at all kinds of schools. They have written hundreds of professional articles that have passed the peer review process. Peter Boettke is the president of the Southern Economic Association. I could go on. AE is alive an well in professional economics.


I'm reading Marx's Capital, and trying to wrap my head around what Marx meant when he talked about the labour theory of value, (as opposed to cartoon versions of the LTOV that people tend to talk about when they know they disagree with Marx).

It seems like to Marx, value is something that's social - useful things still need to be produced, but it's important that they're useful to society as a whole rather than because they're useful to individuals in society. No matter how long someone spends making stuff no one needs, it won't be productive labour. The way that we figure out what counts as productive labour is based on the relative exchange value of useful things.

First: is that right? If not, what am I missing?

And if it is right, what happens to diminishing marginal utility? Surely Marx doesn't think we need two coats as much as we need one, but if labour hours are strict ratios then that seems like a problem.



Hi Nerd.

I think the first part of this is largely right. It's the social value of labor and there lots of cartoon versions of the LTV around.

As for the second, if we're talking about Marx's end-world, where things really are produced according to the socially necessary labor involved, unmediated by prices and markets, we're in a world of post-scarcity where DMU isn't going to be a big issue. If I'm understanding the question right...


Hello Dr. Horwitz, thank you for this AMA.

What do you think of the austrian studies outside Economy?

Why they feel so behind in comparison with the Economy studies?


Do you mean applying Austrian ideas to non-economic areas? I'm a big fan, having written a whole book on Hayek and the Modern Family. :)

I think it's harder because the libertarian intellectual movement is still very much an economics driven one and it's easier to get jobs and publications in that area.


I think a lot of libertarians I meet lose arguments because of the facets of "libertarianism" they focus on while debating. I often find myself reaching a logic argument about coercion, comparing relative wealth in the US with the poorest around the globe, reaching "privatize everything!", or something else along those lines that comes across as very 'purist'. I'm not saying these are all wrong, but they come across as silly or irrelevant to most of my peers. I much prefer chatting with "Bleeding Heart Libertarians" who can at least share sympathy in acknowledging some validity to progressive arguments.

So, two questions: (1) how has your personal version of "BHL" evolved in the past few years, as Black Lives Matter, equality for trans people, 'white privilege' acknowledgement, and other "left-wing" movements have grown to reach the mainstream?

..and (2) how can the BHL movement save us from the eternal bickering of 'libertarians' and 'progressives'? Thanks.


Love this question.

I think that BHL types (and libertarians in general) should be qualified supporters of all of those things in your first question. Equality for trans folks being the most obvious and without qualification. BLM is trickier as libertarians have long noted the racism and brutality of the cops, but we would have big problems with some of their proposed solutions, esp. to the extent it's been captured by socialists.

And I think we can carefully acknowledge the language of privilege. But I also think we can expand it to talk about state-granted privilege. After all, things like occupational licensure do way more damage to non-whites (and poor whites, who often get forgotten in this discussion) than white privilege talk.

I don't know if BHL can "save us," but it can enable us to talk mroe productively with the left if we recognize the legitimacy of many of their concerns and the ways in which we share goals, but also talk civilly with them about how best to achieve them.


What is the best way to advance the ideas of liberty?


To make good, clear arguments with high-quality evidence, presented in calm, well-constructed, written and spoken form that unambiguously demonstrate our commitment to creating a better world for all, and especially the least well off among us.


I became a libertarian by first being a republican then reading libertarian scholars in college. For people without my starting inclinations and who don't ha e interest in reading those kind of books, how do we trigger conversions to libertarianism?


With patience. It doesn't happen at once, as you know. We keep talking to people and we pick our battles. We don't try to turn people into anarcho-capitalists in one conversation. Don't fight over the roads when you can get them to agree about occupational licensure or corporate welfare. Don't given them a reading list right away, unless it's something specific and short.

And don't think about this as a "conversion" but a conversation.