BOOK REVIEW: Chicagonomics

In his new book, Chicagonomics: The Evolution of Chicago Free Market Economics, Lanny Ebenstein follows the development of classical liberal thought at the University of Chicago from its founding in 1891 by John D. Rockefeller. The University was the first in North America to boast of a separate department of economics. Twenty-eight of its students, researches, and faculty have won the Nobel Prize in Economic Sciences since the prize was first given in 1969.

But Ebenstein didn’t concentrate primarily on the University’s accomplishments per se, nor on the unique brand of Chicago economics after World War Two. Instead, Chicagonomics was a book addressed by Ebenstein “To Contemporary Libertarians,” purportedly to separate the view of a true classical liberal from today’s libertarians, particularly regarding egalitarianism and progressive taxation.

Classical Liberalism is not Contemporary Libertarianism

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Sneak Peek at Chicagonomics

A full review of Chicagonomics will be posted here at midnight tonight. But I wanted to give you a preview of the book’s content and the author’s perspectives. Here’s a list of his policy proposals from page 206:

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As you can see, it’s a mixed bag of great ideas and not-so-great ideas. More on the book later, at midnight tonight.

[UPDATE: I’m not pleased with the quality of my review for this book, so I’m going to delay the post for a little while.]

BOOK REVIEW: Chicagonomics, part 2

Continuing with my review of Lanny Ebenstein’s new book, Chicagonomics, I have some preliminary thoughts from the very brief amount of the book I’ve had time to read. Before I begin, let me say that the subtitle of the book could more accurately than its current heading be titled “The Evolution of Chicago Egalitarianism.”

  1. Ebenstein is obsessed with income inequality. He writes that he desires to see a “greater economic equality in the distribution of income and wealth” by restoring the high tax rates of the 1950s, “when rates of progressive income taxation were highest.” Later in the book (page 196) he asserts that income inequality is the greatest problem we face today in the United States.
  2. The introductory chapter is more of an apologia for egalitarianism than it is for free markets and voluntary exchange. Instead of extolling the virtues of capitalism, he writes that “As historically understood at the University of Chicago, classical liberalism and capitalism require a strong egalitarian element achieved through progressive income and estate taxation.” Any of the several impressive snippets of praise for free markets and voluntary exchange are totally drowned out by the incessant calls for more egalitarianism.
  3. Ebenstein grossly mischaracterizes the libertarian approach to income inequality. Here are three passages to illustrate my point [emphasis added]:

    Page 9: “The classical liberal economic ideal was not and is not a society divided into a very few, ultra-wealthy makers and creators and a great mass of impoverished workers and indigents, though this may rapidly be approaching the American reality for tens of millions—and, indeed, this reality is rapidly attaining the status of an ideal for many contemporary libertarian writers and thinkers.”

    Page 10: “…contemporary libertarians and many conservatives seek inequality as among their highest practical goals.”

    Page 10-11: He claims that our (libertarians) “opinion of the appropriate and optimal society is one in which income and wealth are very unequally received and held, such as, for example, the contemporary United States.” Then he says that our view “on the desirability of inequality is not a part of the classical liberal tradition.”

    I’d urge any skeptic of libertarianism to spend a few weeks perusing the libertarian blogosphere and libertarian books. He or she will notice that we do not speak in such terms as an “appropriate and optimal society” or eagerly await the day when a few wealthy overlords rule over the rest of us puny proletarians. He or she also will never see greater degrees of income inequality expressed as among our “highest practical goals.” Ebenstein so clearly mischaracterized our views that he almost strikes me as somebody who doesn’t really understand our views, but nevertheless invents strawmen to refute, to make our side look like intellectual Neanderthals.

  4. Finally, to get a grasp of Ebenstein’s outlook of the Chicago School, consider the names he mentions as carrying on the legacy of traditional, classical liberalism (pages 17-18). Among them are Joseph Stiglitz, Paul Krugman, Larry Summers, Robert Reich, Ben Bernanke, and Janet Yellen. It’d probably be redundant for me to note that Thomas Sowell didn’t cut the list.