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View Full Version : George Selgin on Austrian Finance, Central Banks and the Virtues of Free Banking




bobbyw24
04-19-2010, 04:31 AM
The Daily Bell is pleased to present an exclusive interview with George Selgin (left).

Introduction: George A. Selgin is a professor of economics in the Terry College of Business at the University of Georgia, a senior fellow at the Cato Institute in Washington DC, and an associate editor of Econ Journal Watch. Selgin formerly taught at George Mason University, the University of Hong Kong, and West Virginia University. Selgin's principal research areas are monetary and banking theory, monetary history, and macroeconomics. He is one of the founders, along with Kevin Dowd and Lawrence H. White, of the Modern Free Banking School, which draws its inspiration from the writings of Friedrich Hayek on denationalization of money and choice in currency. A central claim of the Free Banking School is that the effects of government intervention in monetary systems cannot be properly appreciated except with reference to a theory of monetary laissez-faire, analogous to the theory of free trade that informs the modern understanding of the effects of tariffs and other trade barriers. Selgin is also known for his research on coinage, including studies of Gresham's Law and of private minting of coins during Great Britain's Industrial Revolution, and for his advocacy of a "productivity norm" for monetary policy – a plan that would have policymakers target the growth-rate of nominal gross domestic product at a level that would allow the overall price level to decline along with goods' real (unit) costs of production.

Daily Bell: How did you develop your interest in economics?

George Selgin: The story of my becoming interested in economics is actually rather complicated. My childhood dream was to be a marine biologist or oceanographer, and those remained keen interests of mine through college. I ended up adding an economics major partly at my father's urging. In fact my father absolutely loathed Friedman and Rand and all the free-market people, and looked forward to my becoming a socialist. So he was very disappointed when my beliefs turned the other way.

Daily Bell: Did he eventually relent?

George Selgin: Yes, his own thinking changed after the collapse of socialism, so he was actually proud of me when, a few years before he passed away, I showed him the copy Milton had sent me of his letter recommending me for tenure!

Daily Bell: You studied Ayn Rand's philosophy as a young man. How much of an Ayn Rand fan are you?

George Selgin: Like so many others I became a fan of free markets by reading Atlas Shrugged as an undergraduate. But I didn't consider myself an objectivist for very long, if indeed I ever thought of myself as one. Encounters with self-styled objectivists while I was studying economics at NYU finally settled the matter for me. Their way of arguing reminded me of so many talking dolls – the same catch phrases would keep coming up, that were supposed by the objectivists to be unanswerable, but which mainly left me scratching my head. One I recall was, "You cannot have a market for a market." That was the explanation for why anarcho-capitalism wouldn't fly.

Daily Bell: What did it mean?

George Selgin: I still don't know what it was supposed to prove. Since them I've met many objectivists who seemed perfectly reasonable; but then I also became increasingly unwilling to identify myself with ideologies or labels of any sort.

Daily Bell: Do you consider yourself an Austrian economist?

George Selgin: While at NYU I did consider myself an Austrian and, more precisely, a Misesian. Despite the influence Hayek's Denationalisation of Money had on me, I came to regard him as rather too namby-pamby for me! But that attitude didn't survive my first few years in the profession, which taught me that, if I was really going to be a scholar - and by then that was what mattered to me most – I needed to forget all about schools of thought and such. That is, I decided that I preferred being an independent thinker to being a representative-in-good-standing of this-or-that school or ideology. What's more, I decided that having an ideology or identifying with any school was just going about things the wrong way, by starting with a set of answers before researching a question.

Daily Bell: That sounds like a tough road – "less traveled."

George Selgin: I no longer refer to or even think of myself as an Austrian economist, or as any sort of "free market" economist. If other people think I'm one of those things, that's fine - but I don't conduct my research with any thought of making such labels fit. There's a cost to this, of course: people may think I'm being ungrateful; and I certainly feel very lonely at times. But it's the only way I know in which to stay true to my values.

Daily Bell: Tell us how you developed your interest in free banking.

George Selgin: After college I first tried to combine my main interests by working toward a degree in marine resource economics at the University of Rhode Island. The program turned out to be a disappointment to me – neither fish nor free-markets, you might say; just one Hamiltonian equation after another.


Daily Bell: We have trouble visualizing you as a marine biologist.

George Selgin: To keep my brain from rotting I decided to spend my spare time reading up on economic subjects I hadn't had a chance to study in college. I started with monetary economics simply because I wanted to get what seemed to me the hardest subjects out of the way first. I read everything I could get my hands on, particularly concerning inflation (which was the big issue back then). Some of the books were very bad indeed; others less so. But then I read Henry Hazlitt's The Inflation Problem and How to Solve It, and the scales fell from my eyes! Next came Mises' Theory of Money and Credit, which in turn led to my reading Hayek's Denationalisation of Money. That hooked me.

Daily Bell: You took human action?

George Selgin: I quit URI and applied to the Institute for Humane Studies for a summer grant, which allowed me to write a long essay on "Free Banking and the Monopoly of Money" that contained the germs of much of my later research. While I was working on the project the institute's president, Walter Grinder, sent me a couple chapters from Larry White's dissertation, which was itself still in process then, on the Scottish free banking system. After reading them I wrote Larry, asking him to let me know as soon as he got a job, because I intended to study with him. So we both turned up at NYU at the same time, and have worked together ever since.

Daily Bell: Can you please compare Austrian economics and free banking.

http://www.thedailybell.com/975/George-Selgin-Austrian-Finance-Central-Banks-Free-Banking.html

hugolp
04-19-2010, 06:18 AM
Thanks. I am just marking this to read it later.