Austrian Economics versus Mainstream Economics | Mark Thornton
Presented at the Ludwig von Mises Institute in Auburn, Alabama, on 24 June 2011.
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Gotta love the raging Liberals, Socialists and plain good ol Communists
yelling bloody murder against Austrian Economics, which they never tried,
whilst praising the democidal Keynesian ‘economics’. But then again,
Communists invented Democide so how could they not love Keynesian economics?
Unfortunately, the economy is not going to get any better as long as
Americans are afraid of freedom and a true free market, i.e Austrian
Economics and a true Laissez-faire society and culture, the very factors
that harbored the entrepreneurial spirit that made America such a
prosperous country in the past.
We are part of nature and as such, a natural balance will always be reached
if things are allowed to be. But as long as governments keep trying to
control a natural system, they will only create disastrous effects as the
present perfectly portraits and proves.
Deregualte the market, except for rational, sensible safety measures, stop
requiring licensing except for specialist practices, lower taxes and
promote the entrepreneurial spirit that made America once so great, sit
back, relax and watch the economy blossom. Problem solved, enjoy. Or keep
up the Keynesian socialist nightmare and watch it burn until nature will
eventually take its course and reach the previously mentioned balance
through less pleasant means.
We have 2 options to chose from, 3 really if you count in maintaining the
status quo by differing our problems hoping they would magically disappear,
but inadvertently, we will be forced to chose between:
1. Adopt the free market model and suffer a little in doing so, but then
enjoy unprecedented economic growth and accumulation of wealth. Or
2. Suffer a ferocious economic collapse which will leave no alternative but
the adoption of a free market which again, will be inevitably followed by
unprecedented economic growth and accumulation of wealth.
The difference between 1 and 2 is obviously, the amount of suffering we
chose to endure and subject ourselves to before we adopt the free market
model. We can make it easy on ourselves and adopt it early or we can oppose
the inevitable change and be swiped off our feet by the tsunami of economic
collapse.
What mathematically cannot continue, will not continue.
For all the Keynesian bitching in the comments. No, we never had a free
market and for sure we dont have one now. If there is anything to be blamed
for the current crisis, is the Keynesian mode lat work and its buddy,
government over regulations and licensing.
The free market never failed since it was never used. Any argument against
free market based on so called ‘precedents’ or past experiences are
invalid, null and void, the height of intellectual dishonesty and/or
irrationality and madness.
I’m a bit puzzled why e.g. the Austrian and Mainstream analyzes over the
causes of the financial crisis ought to be either/or? In my view it seems
both points have a sense of truth. Money was loose (low interest), but also
the banks were out of control (bad regulation; repealing of Glass-Steagall;
Commodity Futures Modernization Act; overturning the Net-Capital-Rule,
allowing massive leverages; flawed incentives encouraging risk taking and
bad ethics/agressive selling to unknowing customers, asymmetrical
information / betting over their defaults etc.)
In addition you have the point of Minsky, ‘stability is destabilizing’..
The bubble will build up, slowly but surely. Further, the whole economy is
based on/driven by debt, which is continuously growing and growing, towards
saturation… The basic structure/mechanism of an economy based on
compounding debt seems flawed, becoming restraining once the
households/businesses can’t afford to borrow anymore, and revert to just
taking care of their interests/loans = destroying money from circulation…
or am I missing something?
I’m just starting to familiarize myself with the Austrian ideas, but I’m
curious of the foundations of the ‘economic actor’ in the Austrian economic
theory. Mr. Thornton mentions that the Austrians use logic and reason for
trying to understand human economic behaviour. Does this also entail using
scientific knowledge e.g. about the human psychology, and sociology etc.,
and do Austrians update their ‘building blocks’ based on new
knowledge/findings? I’m bringing this up since I feel that e.g. the ‘homo
economicus’ of neoclassical economics is flawed, outdated thinking.
I agree with Austrian Economist when it comes to sound money. Unlike both
Austrian Economists and Mainstream Economists, I think Government
regulation is necessary but it should be kept at a minimum. I disagree with
Austrian Economists refusing to use any Mathematical Model whatsoever and I
disagree with Mainstream Economists relying solely on data even when
there’s no reasonable explanation. You need both intuitive deduction and
empirical observations.
For a good start….
I got my Econ degree in the 70’s. Funny that Hazlitt, Von Mises, et al
were never mentioned. I didn’t have a realistic understanding of Economics
until I read Hazlitt, Von Mises, Bastiat, et al, much later…
The Common Sense of a Von Mises is understandable to the average person
because it is simple truth. In my 56 years I’ve discovered that a LOT of
people dislike the truth.
Any idea what unrealistic model he’s talking about to predict human
behaviour at like 2:07?
Bosniake, wir haben nun mal ein Schuldgeldsystem. Jedes Jahr müssen für das
Bezahlen der Zinsen neue Schulden aufgenommen werden. Entweder vom Staat,
oder vom Bürger und von den Unternehmen. Wenn man Flassbecks Vorträge
kennt, dann weiß man, dass er dafür ist, die Unternehmen höhere Löhne
zahlen zu lassen und stärker zu besteuern, damit sie eben wieder zur Bank
müssen, um sich zu verschulden und zu investieren. Seit 2002 sind die
Unternehmen in Summe der Volkswirtschaft in Deutschland Sparer. Und das
dürfen sie nicht sein, weil das dann nun mal entweder die Bürger oder den
Staat dazu zwingt, sich zu verschulden. Deutschland hat sich bisher damit
gerettet, dass sich das Ausland bei uns verschuldet hat. Aber das will auch
das Ausland, insbesondere Südeuropa, nicht mehr. Bzw. wir sagen, dass es
Südeuropa nicht soll.
Konnte man keinen besseren Platz für das Gespräch finden ??