Teaching Austrian Economics to High Schoolers

Yesterday, I returned to my high school as a guest speaker. My captive audience was a class of Senior AP Economics students, and my topic was the Austrian Theory of the Business Cycle. An American History teacher, the head of the Social Studies department, and the principal all stopped by for all or part of the talk. I began by laying out two of the most distinguishing features of the Austrian School: (1) free markets are the best way to incorporate information spread out among multiple participants into a coordinated, cohesive economic system; (2) economics is properly deductive, not empirical. Their coursework covered Keynesian and Classical models, so I compared some of the beliefs of the Keynesians and the Austrians in a two-column point/counterpoint list. Then I told the parable of Paul Krugman on Sushi Island (from The Importance of Capital Theory by Robert P. Murphy). I concluded by giving a brief overview of the Austrian analysis of the Great Depression and the current financial crisis.

Then it was time for question-and-answer. This led to a discussion of the difference between a capitalist, socialist, and fascist economy. I explained that in my own opinion, the greatest risk posed by an Obama administration was not the ascendancy of socialism, but rather the emergence of a fascist-style economy: the union of corporate and government power, an activist government that picks winners and losers based on "national interest" and political connections, and a system of privatized profits and socialized losses.

Afterwards one student came up and asked me if I thought that we'd been starting to see economic fascism before Obama. I said "absolutely," and described the trend as going back as far as the '70s (in retrospect, the seeds were there ever before then). I pointed to Eisenhower's farewell address warning to guard against "undue influence" by the "military-industrial complex" as a warning against economic fascism.

The teacher who hosted me gave some concluding remarks which were gracious and open-minded. She told her students that she hoped they'd take away a realization that there were a lot of different ways to think about economics beyond what they'd learned.

The whole thing was filmed, and the high school's media center even edited my Powerpoint slides into the video. I'll be getting a DVD in the mail.

All in all, an excellent experience, and one I hope to repeat. I heard that the Social Studies department has been interested in some kind of curriculum enrichment on the economics of the Great Depression. I'm writing my honors thesis on the topic, so I might ask if I could contribute next time I'm in town .