Good afternoon, everyone.
It's a great pleasure to be here with you at the Mises Institute
to talk about how we get out the word.
I noticed in beginning his luncheon speech,
Lew Rockwell mentioned that Joe Salerno and Gary North
had stolen some of his thunder.
Well, Rockwell proceeded to do the same to me
by stealing quite a bit of my thunder
from what I was going to talk about this afternoon.
But I'll see how I can do.
As Doug mentioned, this is a talk about getting out the word.
So you've heard quite a few talks already this weekend
presenting some of our radical alternative perspectives
on current events, on the causes of the economic situation
we're in, what to do about it, and so on.
So take it for granted or stipulate
for the purposes of discussion that we have
a viable alternative perspective.
But it is, as the title indicates, or my subtitle indicates, it is an alternative perspective.
So the Austrian position on the business cycle, libertarian, social and political theory more
generally is clearly not in the mainstream of American or world political, social, economic
discourse.
You know, what do we do about that?
How do we change things?
How exactly do we educate?
How do we communicate?
How do we persuade? Right? We have great ideas. We have the great legacy of the Austrian economic
tradition that has been bequeathed to us. It's a living, active, evolving tradition.
We have many great writers and thinkers and scholars and teachers, but we cannot assume
that these good ideas will sort of sweep the field on their own. Right? Ideas matter, but
Actions are required as well. We have to do something to try to get the ends that we seek.
It reminds me of the story of the religious man who wanted to win the lottery, and he
prayed every day without ceasing for that one thing and that one thing only. Every day
he would say, oh God, please, please let me win the lottery. It's all I seek in this life.
If you would just let me win the lottery, I would have peace and happiness, fulfillment,
and Tentament. He prays this day after day after day. And one day he's out walking and the clouds begin to move.
The clouds part and there's a bright light and a booming voice coming down from the heavens saying,
Jerry, meet me halfway. Buy a ticket.
So we've got to meet people halfway, or at least part of the way.
How can we influence, for example, academia?
How can we spread the ideas from our research?
How can we increase awareness of Austrian business cycle theory within economics departments,
for example, not to mention the media and so on?
How do we spread the ideas of Mises and Hayek and Rothbard and others among scholars, among
should we sort of work within the established institutions of scholarship, the established universities and research organizations and so on, seek to infiltrate them as it were, seek to shape them, seek to push them in one direction or another, or should we build up our own alternative parallel institutions and sort of bypass or outflank the established prestige universities and institutions?
How do we influence the next generation in our teaching?
We have many skilled and accomplished teachers of Austrian economics.
Do we try to place them in established colleges and universities?
Do we try to write textbooks and sell them to mainstream institutions and so on?
Or do we again try to set up our own alternative set of institutions for spreading the word
to the next generation?
Do we want to sort of complement or do we want to supplant the establishment?
That's research and teaching.
What about outreach to the lay public, to practitioners, to business people, to journalists and so on?
What do we do?
Do we try to get on CNN and write in the New York Times?
Do we run for public office or do we seek out alternative mechanisms, the alternative
media, social media, new networks and so on?
So in research, in teaching, and in outreach, what do we do to try to have an impact?
Now these are not easy questions with obvious answers.
And these are not generally, with some exceptions, not generally matters of what the Austrians
would call a priori theory, but rather questions of wisdom, practical judgment, and so on.
But I want to suggest that there are a few things we can say in general about this problem
and give you some examples of some different ways that we might try to put some of these
solutions into practice.
So I'll start by referring to the fields of industrial organization and business strategy.
When I took my PhD, one of the fields in which I was formally trained and certified was what
we call industrial organization or industry studies.
It's a well-developed field in many courses and journals, both college texts, graduate texts, and also managerial-oriented books on strategy and competition.
Well, we know a lot about how firms compete with, how they interact with their rivals.
For example, a lot of this literature has looked at how entrance, how upstarts, new
firms seeking to get into an industry or a sector can compete with large established
dominant incumbents.
Incumbents would prefer to keep new people out, to keep new competition out of the industry.
And incumbents use a variety of tactics to create what economists call entry barriers.
Those could be government grants of monopoly privilege, including intellectual property
protection.
They could be economies of scale, customer loyalty, upfront capital expenditures, and
so on.
New entrants, on the other hand, seek to take on or to subvert or to go around the established
players through innovation, right, by introducing better products, newer products or by producing
the same products at lower cost, with better technology, with new distribution mechanisms,
and so on. Maybe charging lower prices or targeting particular audiences. There are
lots and lots of strategies that firms can use to try to get a toehold in a market like
this. This characterizes what the great economist Joseph Schumpeter called creative destruction.
What Schumpeter described as the perennial gale of creative destruction is the process
by which new technologies, new firms, new players in different markets seek to supplant
the established incumbents.
Now, naturally, incumbents do whatever they can to resist the actions of these entrants,
right?
Through aggressive pricing or advertising or marketing and distribution or trying to
to lock up particular suppliers or retailers through exclusive contracts and so on.
Now, assuming they aren't employing the machinery of the state to try to keep rivals out of
the market, there's nothing obviously illegal or unethical about this kind of aggressive
behavior.
One of the lessons that we get from looking at history and thinking theoretically about
what kind of strategies might work for entrants and incumbents is that entrants rarely prosper
by taking on the incumbent head-to-head. Incumbents rarely prosper through direct head-to-head
competition with an established dominant incumbent. Rather, successful entrants tend to employ
a niche strategy or some kind of outflanking strategy by going through or beside the incumbent
rather than trying to topple the incumbent off of his perch. Lots of examples. You know,
The technology sector is a great place for examples.
Think of Microsoft supplanting IBM as the dominant maker of computer operating systems,
not by producing mainframes, but by producing what in the early 80s was considered a sort
of a niche product, a fringe product, the personal computer.
Who in his right mind would want to own one of those?
So by producing an alternative product that ended up doing the same things much more effectively
Microsoft was able to overcome the dominant players of its day, IBM and many other digital
and Wang and other large hardware makers.
Think about Google taking the place of Microsoft in the 2000s as the dominant player in the
technology field, not by producing desktop operating systems and a full-fledged office
to compete head-to-head with Microsoft but by developing an alternative revenue model in the search space by revolutionizing ways that people make money from electronic commerce, from doing business on the web, etc.
Again, you can think of Google's strategy as going around Microsoft rather than trying to do exactly what Microsoft did and doing it better.
Even think of Walmart, right, which took on in the 1960s and 70s the dominant retailers of its day, Montgomery Ward and so on.
Again, not by competing, not by putting in stores across the street from the incumbents, but by targeting a different demographic, right?
Low-income consumers in rural, underserved communities and eventually reaching the place where it could, where it replaced Sears and Ward and so on.
A less sort of sexy example might be Nucor Steel, which is now the US's largest steel company taking on US steel and the other incumbents by introducing a different technology, so-called mini mills that are smaller and more specialized using scrap metal as input, which the incumbent firms were not effectively doing. So going around the establishment tends to work better than taking on the incumbent head-to-head.
What about our industry? What about the industries of research, teaching, outreach, the industry of academic work, of scholarship, of education?
What lessons can we learn from industrial organization and strategic management theory that might be useful to us here?
Well, let's take research, teaching and service in turn. Let's start with kind of the status quo.
Well, in research, it's pretty obvious that the problem is, there is too much of it, and what is done is typically of pretty low quality, okay?
There was a very controversial piece that ran in the Chronicle of Higher Education this past summer in June.
It was titled, We Must Stop the Avalanche of Low Quality Research.
And there were five authors representing a variety of economic disciplines,
Disciplines, Natural Science, Humanities, Social Science, and so on, arguing that, quote,
the amount of redundant, inconsequential, and outright poor research has swelled in
recent decades, filling countless pages in journals and monographs.
And they pointed as evidence to the number of journals and the number of journal pages,
the number of authors in journals, and declining rates of citations to articles in journals.
And they said, these authors went on to say, quote, instead of contributing to knowledge
in various disciplines, the increasing number of low-sided publications only adds to the
bulk of words and numbers to be reviewed.
Even if read, many articles that are not cited by anyone would seem to contain little useful
information.
This avalanche of ignored research has a profoundly damaging effect on the enterprise as a whole.
Not only does the unsighted work itself require years of field and laboratory or library research,
it also requires colleagues to read and provide feedback, as well as reviewers to evaluate
it formally for publication. Then, once it is published, it joins the multitude of other
related publications that researchers must read and evaluate for relevance to their own
work. Reviewer time and energy requirements multiply by the year. The impact strikes at
at the heart of academe.
You know, I think this assessment is generally on target, certainly for the fields that I'm
closest to.
You can ask most scholars in a field like economics, you know, how many journals, how
many journal articles do they actually read from front to back?
How many journals do they subscribe to for the purpose of actually reading the articles
when they come out rather than having them to display on the shelf?
Surprisingly small numbers. In this particular paper, the authors, I think, did not hit on exactly the right solutions, because they did not identify the heart of the problem, which is government funding.
Think of how much the research university establishment has swollen, certainly in this latter half of the 20th century.
There are simply too many universities, there are too many institutes, too many research faculty, too many granting agencies, too much research money, and so on.
Now this sounds surprising to university professors who think that they're in a climate of extreme financial austerity and there are never enough research funds to go around.
They're always fighting and struggling for the next research dollar.
But again, when I say there's too much research, I mean relative to some notion of how much research there should be and would be in a free society, not relative to how much research university professors would like there to be.
And, Lew already mentioned this in his talk, you know, the amount of, and he's mentioned
in other talks too, the amount of sort of federal direct and indirect subsidy for higher
ed is just astonishing, particularly at the so-called private universities, that many
of the so-called private universities, Yale and Stanford and Chicago and so on, once all
sources of federal, state and local government funding are taken into account, research grants,
student financial aid and so on, easily get 60-70% of their budgets from government.
And that's often more than nominally public universities receive in government assistance.
So the whole higher ed establishment is almost completely a servant of the state, of government,
at least in terms of where its funding comes from.
We certainly wouldn't expect a system like that to produce high-quality research, right?
I mean, in a sense, this is sort of a miracle that any good research gets done at all under
those kind of conditions.
What about teaching?
I mean, there's sort of a growing backlash against overcrowded university classrooms
that are staffed by under-qualified faculty, that are uninspired curricula, and so on.
Students attend college not because they think they're going to learn much of value, but
because they see it, rightly or wrongly, as a necessary credential to get into the workforce.
And even that credential may be less valuable going forward than it has been in the past.
And of course students want to party and meet members of the opposite sex and go to sporting
events and so on, but it's not clear that going to an established four-year college
Peter Wood, who heads the National Association of Scholars, had an interesting piece last year.
He described it this way. He said,
and Self-Satisfaction.
On most campuses, mediocrity can rightly pride itself on being a whole lot better than the
conspicuous dreadfulness of a handful of professors who dedicate themselves variously to the nine
muses of bad teaching.
Boredom, mumbling, disorganization, confusion, forgetfulness, stridency, PowerPoint, textbook
and vacuity.
I see those around me every day at my university.
He's actually talking more about, in this particular piece, he's complaining about or
talking about the increasing use of sort of non-tenured adjunct temporary faculty at universities
and colleges as a cheaper alternative to full-time tenured faculty.
And many faculty are concerned that if this trend continues, eventually there won't be
any need for full-time tenured big shot professors.
Most of the teaching can be outsourced to lower cost, hired labor, maybe over the internet,
from India or something like that.
But don't universities at least challenge and enlighten students by exposing them to
alternative points of view, by raising their consciousness and so on?
Isn't education really all about diversity?
So a lot of critics, critics on the right, have written a lot about problems with university ideology and, you know, but I want to, you may think that college campuses at the US are, you know, dominated by conformity and narrow rigid ideology, but I want to assure you that that's not true.
You might think the typical professor is sort of a Birkenstock-wearing, bike-riding, Prius-driving,
New York Review of Books reading, granola-type person, but I assure you that all professors
are not sort of left-leaning social democrats.
At our campus, that's certainly not the case.
They do occasionally like to hear from the other side.
They like to hear from the extremes.
Last year I saw this announcement come across my desk that the chairman of the U.S. Communist
Party was going to speak on campus, you know, thus exposing students to the other point
of view.
You have socialism at one extreme and communism at the other extreme, and the full range of
opinion is covered.
Now actually what I'm more interested in today is not so much the ideological issues, but
But more kind of the structural issues, how higher education institutions are organized
and governed, their size and shape and scope and mission and so on.
Fortunately we have a lot of, we have many new entrants into the game, in teaching and
in research, you know, we have things like wikiversity for example, which is a Wikipedia
style online instructional resource with materials and readings and lectures and so on.
We have Academic Earth as a portal to online courses offered at established major universities.
Of course you have TED.
Many of you are familiar with the TED Talks.
There was a very nice piece in the magazine Fast Company last month on TED essentially
She's saying, you know, if you were going to start a top university today, what would
you do?
You'd bring in the best minds to speak on topics in which they are experts.
You would deliver it online at low cost.
In other words, it would look nothing like Harvard or Princeton or, you know, the University
of Michigan or whatever.
It would look like TED, right?
And here at the Mises Institute, we have developed our own alternative teaching platform.
Besides our regular student conferences, in particular the Mises University, we also have
the Mises Academy, which Doug mentioned, where students can sign up for online short courses
on a variety of subjects in economics and political theory and so on.
Short courses, longer courses, these are not degree-oriented.
It's not a degree-oriented curriculum, at least not yet.
And it doesn't try to present, to duplicate, the standard four-year curriculum at a mainstream
college or university, and why would it?
In fact, if you think about these entrants, potential and actual entrants to the academic
marketplace, one thing that characterizes them is variety or heterogeneity or real diversity.
Not ideological diversity, but organizational and structure and managerial diversity.
Why should every academic program have the core curriculum and stretch out over four
years and a certain number of hours per course and a certain kind of examination and so on?
Why must we have conformity within academia?
Academia.
In fact, you would expect in a free market to have a lot of experimentation, a lot of
variety, as entrepreneurs seek to create and discover new techniques, new models for content,
for delivery, for distribution, and so on.
I mean, you know, part of the challenge in discussing education is that most people think
of education as sort of a homogeneous blob, right?
Everyone has a right to education.
What does that mean?
Does that mean primary school only?
Does it mean primary and secondary school?
Does it mean college?
Does it mean a four-year college education?
What about a two-year education?
Does it mean Greek and Latin and the humanities, or should it be more vocationally oriented?
Should it be easier or harder?
Should it be longer or shorter?
Should it be standardized or should it be up to the students to design their own curriculum?
Who knows, right?
Ex-ante, we have no way of saying what the model would be and we certainly wouldn't expect
there to be only one model if we had a genuine free market for education.
My guess is, my intuition is, we would have many, many different types of institutions
with different shapes, colors, sizes, you know, and smells, right?
And that's exactly the way it should be, just as we find with automobiles or computers or
whatever.
We don't have simply one product.
We have a variety of products.
One of the challenges in thinking this through is that the typical mindset within the establishment
is one in which education is one thing and it's done one way with one set of outcomes
and metrics and so on.
There was a very influential piece in 2007 in the New York Times, almost, it was pitched
as sort of an expose of the University of Phoenix and for-profit educational institutions
more generally.
Even the Times headline gave you a pretty good hint of where they were going.
The headline was, Troubles Grow for a University Built on Profits.
That's sort of per se suspicious.
This was right around the time, shortly after the New York Times was in all kinds of trouble
for, you remember the Judith Miller scandal, you know, I was thinking about, you know,
what about a headline, you know, troubles grow for a newspaper built on profits, you
know, you don't see many of those in the stories about the New York Times.
But what was interesting about this article is not so much the conclusion, which predictably
denounced online for-profit education and Phoenix in particular, but what the Times
thought was wrong with it.
And the article really didn't discuss the content of the courses as much as the structure
of the university, right?
So the specific complaints about the University of Phoenix that were listed in this article
include that it, one, relies on part-time contract faculty, two, uses an accelerated
schedule in which students graduate in about half the time as traditional programs, three,
that it does not have an expensive campuses, but locates in suburban office buildings near
highways.
Four, that it exploits economies of scale by centralizing course design using a standard
syllabus for each course at all campuses.
And five, that it relies heavily on online instruction with reduced in-class interaction
between students and professors.
Now, none of this strikes an organizational or managerial scholar as in any way odd or suspicious.
Right? I mean, why not experiment with those alternatives?
Right? Maybe that's a better structure than the dominant one.
But in other words, you know, economists always, mainstream economists, always very worried about monopoly.
Okay? And it's important to have, you know, free and open competition in a level playing field,
and let the little guys in to compete with the big guys when they're talking about industry.
But when it comes to education, oh my goodness, heaven forbid that a smaller guy should come in and try to build a better mousetrap.
Try to do it a different way from the establishment.
Now, it's true that the University of Phoenix in particular and some other for-profit institutions are certainly not above working the system.
There's been a lot of complaints that they sort of manipulate the financial aid
establishment to get government grants for their students.
I certainly wouldn't condone anything like that.
And I'm not making a statement about the University of Phoenix per se,
that specific institution, but more about the model, right?
I mean, in short, one of the professors quoted in the New York Times piece,
Columbia University education professor was complaining about their business degree.
He said their business degree is an MBA light.
You know, you can imagine sort of saying this with a sneer to the New York Times reporter.
He says, I've looked at their course materials, it's a very low level of instruction.
Well, I mean, compared to Columbia University, yeah, it probably is a low level of instruction.
You know, a Toyota Corolla is not the same thing as a 7 Series BMW.
Okay, but so what? I mean, does everyone have to drive a BMW or go without a car?
To conclude, let me leave you with... Oh, well, sorry, I forgot to plug my book. Heaven forbid I should forget that.
No, I did want to mention briefly some alternative sort of research and publication institutions.
The Mises Institute, as you know, not only publishes academic journals and distributes academic articles,
Publishes a number of original scholarly books, like my recent book, The Capitalist and the Entrepreneur.
Republishes many older works that have gone out of print.
Lew mentioned The Law, Bastiat's The Law, which has been reprinted.
And you can find, of course, thousands of full-text important contributions to the scholarly literature on Mises.org, available online for free.
I actually have another, this book came out late spring early summer and it
retails downstairs. The list price is $15 but it may be on sale. If you want to, if
you buy one this weekend I might be able to get you an autograph. I know some
people. I have another book that has just come out, an edited volume called
The Elgar Companion to Transaction Cost Economics, published by Edward Elgar
Elgar, which does a number of scholarly books in economics and business, and it's about
the same size as the capitalist and the entrepreneur, and Elgar has priced it at $185.
So the capitalist and the entrepreneur, you can not only get it for $15 or less, you can
actually read the whole thing online for free as a PDF on Mises.org or at the Scribd site.
It's a different model for dissemination, right?
It's very much like the discussions about intellectual property that we've been having.
Getting out the word is more important to me than any royalties that I might make on
a $185 book.
And once I buy one and a couple of libraries buy one and my mother buys one, that's going
to be pretty much it on the sales of the Elgar Companion.
The journals tend to serve a sort of a gatekeeper function.
The prestigious academic journals, you know, getting an article accepted by the journal
is kind of a stamp of approval for the article.
But that gatekeeper function, like so much else, thanks to the web, is becoming increasingly
democratized.
Right?
There are so many more ways to get both scholarly and popular communication out that the role
All of the gatekeepers may, it's not clear, but may become less important, that scholars
and students are just as likely to take seriously and read something that appears in a blog
or a wiki or a non-peer-reviewed article than they do something that is in sort of the peer-reviewed
scientific literature.
To conclude, I just want to refer you to Murray Rothbard's writings on strategy, which are
are extremely important.
Rothbard talked about the importance
of having both research and teaching programs,
not only to educate those who are hearing
the ideas for the first time, not only to spread new ideas,
but also to encourage and to develop
the sort of hardcore of the movement itself.
And these kinds of activities, research
in the development of new ideas, education of various strata of society, including members
of sort of the hardcore movement themselves, along with fellow travelers and the curious.
That is an essential part of the educational mission at the Mises Institute and other organizations
like it.
And that's why we're so grateful to you, our supporters, for providing the resources
that allow these alternative institutions to proceed.
Thank you very much.