Austrian Economics: Why it matters

I believe that the best long-term remedy for the economic catastrophe that has been plaguing us these past four years is the adoption one simple strategy: the government should largely step back from trying to 'manage' the economy and allow market forces to play the primary role in its management, so that resources would be diverted, by these market forces, into the most productive outlets. That in a nutshell is what "Austrian Economics" is all about. Think about the real reasons the housing price boom which preceded the current prolonged recession occurred - I would say it was because interest rates were artificially maintained at too low a level by government intervention, so that it became too easy to borrow money, much of which was not employed in genuinely productive investments, but instead was used by many individuals as seed-money for investment property portfolios, which itself of course fuelled the building of property to meet the increased demand for property. Now the government tells us it must keep interest rates low so as not to cause a downturn and to stimulate spending, even if it requires the printing of more money without any backing. It is like pouring petrol on a blazing fire! The net result of this kind of madness is the inflation which we are now seeing beginning to gather pace, after having been told every month for the past four or so years that the rise in inflation was only 'temporary' and would soon be reversed - that reversal has of course not occurred yet. The "Keynesian" model that is being followed is not working, and never worked (nor could it ever work), but governments and central banks (in our case the Bank of England) are loath to accept this - because the conventional wisdom is that the "Keynesian" policy of interventionism is the correct path to follow, when empirical evidence points in a completely different direction.

This is just a small example of the fundamental differences in ideas which separate "Austrian Economics" from the "Keynesian" philosophy of economics which many western countries have followed far far too many decades. The video-clip below is well-worth watching in full - it is quite lengthy - as it discusses very clearly and I think pretty objectively the rationale which lies behind "Austrian Economic" theory:



- this is taken from the an article in the blog of the Ludwig von Mises Institute whose website is here.

If you are not familiar with "Austrian Economic" theory, then I urge you to become so - for then you will, I hope, begin to understand why the "Keynesian" economic theories which our and many other governments have been following for so many decades is so counter-productive in the longer-term and that there is another better way of conducting our economic affairs.

Truly, truly pathetic - and weird too

to whoever views this post, regular as clockwork (apparently from Norway)

This gentleman posted one of his occasional very enlightening 'treatises' on his suggestions for solving the world's and this country's ills in another blog where, aparently, he has 'guest posting' privileges; the post in question may be read here; the post is entitled " Isolationism's Time Has Come".

Like many of the notions posted by this gentleman over the years (which I have been reading less frequently of late, for various reasons, mainly relating to my sanity and blood pressure and my desire to retain some semblance of the former and to prevent the latter from soaring to dangerous levels), it presents what for many (and me certainly) might be considered 'unconventional', 'novel', perhaps even 'courageous' ideas. Nevertheless it is probably instructive to have such ideas presented from time to time, and I would defend his right to do so, whatever I may think of these underlying ideas.

However, the host blog permits comments, whereas the writer does not (and has never done so, at least for a long time), so far as I am aware, in his own blog. One of the comments posted has aroused the ire of said gentleman and provoked (or more neutrally, perhaps, 'caused') him into publishing a post in his own blog here employing what is I suspect not 'irony' when he entitles it " A Spineless Coward..." ; naturally and as usual he is not permitting any comments in his own blog. It is perhaps debatable who deserves more the name of 'spineless coward' in this particular little spat. Obviously I do not condone threats of physical harm, but given the nature of the other person's blog (which I have scanned briefly), I would venture to suggest that the comment he made might possibly be more accurately classified as rhetorical flourish than a genuine intent to do physical harm, given the opportunity. The querulous riposte of this gentleman with a further comment of his own and a post in his own blog (where no comments are permitted, I remind readers), is probably a better indication of the weight that rational individuals may feel justified in placing on what he writes. My own reaction is one of mirth, coupled with pity. Nevertheless I admire his willingness to write in the way he does and bring inevitable opposing and mocking comments down upon his head even if I find extraordinarily curious his unwillingness to permit comments in his own blog. The owner of the host blog chooses to give him guest posting privileges and I certainly admire his openness.

PS/ I have never referred, and most probably will never refer, to this gentleman by name in this blog, nor do I link to his blog in my 'blogroll' even though he, to this day, links to my own little blog in his blogroll; long-time readers of my blog will surmise correctly that there are three reasons for this - the first reason is included in my 'Links Policy' and the second is because I like to maintain my own no doubt idiosynchratic notions of 'propriety' and finally, quite frankly, because it gives me a perverse (and perhaps somewhat childish) pleasure to withhold such linkage; however, I have linked several times in this post (and occasionally in earlier posts some years ago), so I hope this is some small 'compensation'. Now I must go wash my hands and pour a stiff drink down my throat!

The European Commission exposed

Whilst I classify myself as generally a Europhile I am in no way blind to the many flaws in the way the European Union functions, nor the way in which the nomenklatura (permanent officials) seek to grasp further powers to themselves. Of late I have been reading the blog of a libertarian from Belgium (yes, truly) and his latest offering Life of a European Mandarin makes truly fascinating, but not surprising, reading. Derk-Jan Eppink, a former Dutch official in the European Commission, has written about his experiences there - in the extracts quoted, his opinions on the negotiating tactics of various member countries are given, but curously there are no comments about the British; perhaps we really are of no account, or just too 'maverick'. Luckily Vincent De Roeck, the author of Libertarian.be, writes many of his posts in English (and I don't understand Flemish/Dutch), even if almost all the comments (sigh) are in Flemish.