Chapter 2 Opening Remarks

I look forward to hearing your presentations of your papers. And, perhaps even more importantly, learning and obtaining new insights from subsequent interaction. As our Austrian School forbears stated, our knowledge as individuals is very limited and all of us will often make mistakes. The increased expertise has not improved this – it may be harder now as each expert knows more and more but about less and less as his field becomes ever more concentrated and thereby shrinks.Yet by our interaction, usually in some form of competition, our varying expertise, differing knowledge and individual approaches will get the total closer to right over time. We’ll approach equilibrium but of course never quite get there since nothing stands still and the world itself is constantly changing.I have always been fascinated by that miracle in which competing entrepreneurs produce an outcome that is more efficient and better than most would have done individually and look forward to obtaining greater insights as you present your papers.We last met in the fall of 2008, a period of rapid financial meltdown and severity of stress none of us had ever experienced. Of course the last similar crisis took place nearly 80 years ago in the 1930s, long before any of us were born. And in that distant past, there were two main suggestions of how to fix it: the Austrian approach and that of J. M. Keynes. Part of the latter's solution was applied then, and again this time.We asked the attendees, most of whom are represented by the papers in this volume, for comments or suggestions: What would you do now?We spent an hour in this discussion and, I believe:1) recognized that the Austrian School approach would be to allow interest rates to revert to normal levels from the artificially low yields which had misled entrepreneurs in the first place, but 2) accepted the reality that today's politicians had to take action and be seen as doing so.Three weeks earlier I had attended two days of meetings of the Hayek Society in Vienna. Along with some academics, the majority of the members consisted of business men, lawyers, practicing economists, psychologists and even politicians including the two Mr. Pauls from the US (Representative Ron Paul by video call). To my surprise, the consensus appeared to be to let business work out its own problems because no person, not even an expert, can know the future and therefore a perfect solution.It appears that the massive infusions of cash by all governments really have shortened the duration of our global problems. We must be grateful, but we also still need a long-term solution. As I said then and repeat now, giving a drunk some more drinks the morning after makes his hangover more bearable, but we still need to find out how to wean him off excessive alcohol. Our governments have spent, and in most cases are continuing to spend much more money to get us past the meltdown. But this money will need to be repaid by future spending cuts. And we are still living with abnormally low interest rates which will at some point mislead entrepreneurs into risky ventures with inadequate returns. We are building the next bubble.While no one knows exactly what we should do, I expect that the insights and views on expertise presented here, may help to clarify this challenge.