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Source link: http://archive.mises.org/13747/the-states-inception-fails/

The State’s “Inception” Fails

September 1, 2010 by

Lew Rockwell explains that government-planned prosperity was only a dream. Massive unemployment and failing industries are the reality. Stimulus is just hitting the snooze button. FULL ARTICLE


Allen Weingarten September 1, 2010 at 11:29 am

“For anyone with an open mind, the economics of the Austrian School has become the prevailing mode of thinking for our time.”

I wish that were true, but if it is, then most people do not have an open mind. There remains the prevalent belief that our economic problems stem from Wall Street, banks, big businesses, lack of regulation, etc. I agree with Llew Rockwell when he writes “Let the bad investments wash out of the system. Let housing prices fall. Let banks go broke. Let wages fall and permit the market to reallocate all resources from bubble projects to projects that make economic sense.” However, the fraction of the public who hold to this position is miniscule.

Until the public can reason, by its own morality and commonsense, that government intervention is akin to an ever increasing drug addiction, they will not switch from a Keynesian to an Austrian analysis. The Austrians have a superior product, but the Keynesians are better marketers.

Bruce Koerber September 1, 2010 at 1:05 pm

Keynesians are not better marketers, they are not restrained by morality. They lie, bribe, steal, and counterfeit whereas the Austrians respect the human rights/property rights of each and every human being!

Allen Weingarten September 1, 2010 at 2:12 pm

Bruce, even if as you say the Keynesians have swung the public to their side by immoral practices, they would be better marketers. However, I do not believe that success is strictly a function of immorality. They provide a clear (albeit mistaken) ‘moral’ perspective, which Austrians have not done, and an easily understood (albeit wrong) explanation for why things fail.

Even a high school dropout says ‘The rich make all our problems; its bad for them to got so much, while I ain’t got none; so their loot should be given to the community. And because I can’t afford stuff, businesses go bust.’ Such rhetoric is clear, simple, ‘moral’, and easy to apply with regard to policies. Were Austrian economists able to present their outlook in as clear, simple, ‘moral’, and applicable a manner, they could be competitive.

Bruce Koerber September 1, 2010 at 3:07 pm

“better marketers” without considering an ethical basis is like saying so many other fallacious things, like: candy vendors easily can convince children to eat candy instead of vegetables; or more pertinent, giving money to those who do not work appears to be alleviating poverty. There is no need (except that we are living in the Dark Ages of economics and haven’t yet decided to seek the ethical solution) to accept such a perverse and unreal perspective as the starting point in an argument.

Half-truths are always easier to convey and so if the uneducated are more gullible that does not imply that the failure to reach the uneducated is caused by not being able to successfully divide the truth into pieces. Some responsibility rests with individuals – to awaken their own entrepreneurial spirit.

Now you can see why the State wants to control the education system – to keep people in latency so they can be fooled by the half-truths.

See if this is a clear, simple, ‘moral’, and applicable manner: there is no moral authority for any intervention into the economy because all intervention causes corruption. The economy is divine and all human intervention is narrow-minded, short-sighted and ultimately unjust.

Allen Weingarten September 1, 2010 at 5:30 pm

Bruce, if you claim that the immoral approach necessarily out-competes morality, are you not conceding that morality is guaranteed to lose?

You mention that the State wants to control the education system, yet that capability exists precisely because the statists have been winning the war of ideas. Is it your view that if people believed that statism was immoral & ineffective, the statists would still win?

I concur that intervention lacks moral authority, causes corruption, and is unjust. However, that requires an intellectual foundation which Austrian economics has not provided. Surely it is not given by von Mises, who wrote (In Human Action, p. 720) “There is, however, no such thing as a perennial standard of what is just and what is unjust. Nature is alien to the idea of right and wrong.”

Moreover, it is not in itself applicable, which requires (not only economic science but) economic policy. I submit however that this could be worked out by ensuring that responsible behavior is rewarded, while punishing theft, fraud, and irresponsibility.

Bruce Koerber September 2, 2010 at 7:56 pm

Dear Allen,

I am in no way conceding that morality is guaranteed to lose nor am I saying that the immoral approach necessarily out-competes morality.

We are a victim of the time that we live in and we think that it’s now or never! It may be that the State is winning the battle but it will lose the war.

My studies of Austrian economics and my economic theorizing sheds light on the intellectual foundation that you say is necessary and since I am an Austrian economist it must follow that Austrian economics does indeed provide a scientific foundation for ethical economic policy.

Gil September 2, 2010 at 12:00 am

I’m siding with Allen. After all, why is Communism easier to sell than Capitalism?

Russ the Apostate September 2, 2010 at 12:26 am

“…why is Communism easier to sell than Capitalism?”

Because communism promises something for nothing, which will always appeal to those who are lacking in moral fiber. It also promises perfect justice and fairness, which appeals to those who are disturbed by the injustices and unfairness that will always exist in this world, and who don’t have the stomach to accept the inevitability of those injustices and unfairnesses. In other words, communism appeals to both our heartstrings and our human weaknesses, which almost everybody has. Capitalist arguments appeal to reason, experience and wisdom, which are much less common human attributes.

Bala September 2, 2010 at 4:55 am


” Because communism promises something for nothing, which will always appeal to those who are lacking in moral fiber ”

Good point. However, it raises the pertinent issue of why such a large fraction of humanity lacks in moral fibre (can’t get over my British spelling :) ).

mpolzkill September 2, 2010 at 6:30 am

“don’t have the stomach to accept the inevitability of those injustices and unfairnesses.”

A lack of a different kind of “moral fiber” could be as easily pointed out by lefties regarding righties. *Their* stomachs are oh-so-strong enough to cope with this “inevitablility”, being born on the right side of the world’s tracks, so-to-speak.

I’ve just started a book…


…all about those on Russ the Burgher’s side of the tracks and those on the other, I look forward to doubling my attacks on him when I’m done. Apparently they read this book in the Pentagon: they’re even dumber and/or more wicked than I thought.

Bruce Koerber September 7, 2010 at 7:45 am

Half-truths are always easier to convey.

HL September 1, 2010 at 11:33 am

Slightly off-topic, but does anyone know if DiCarprio’s character actually made it home to his kids in the movie? I started snoozing halfway into the movie and no one has been able to explain what exactly happened.

DD5 September 1, 2010 at 12:34 pm

Fischer is killed by Mal and goes into limbo, so Ariadne and Cobb follow him down and confront her. There Mal attempts to convince Cobb to stay in limbo by making him question reality, referring to events that occurred while he was awake. Cobb reveals that he planted the idea in Mal’s mind to wake, making him indirectly responsible for her suicide. She attacks him, but Ariadne shoots her. Cobb remains in limbo to locate a now dead Saito, while Fischer and Ariadne return to the mountain fortress where he comes to the conclusion that his father wanted him to be his own man. Cobb eventually locates an aged Saito and then wakes on the plane to find everyone up and well. Saito honors their arrangement; Cobb enters the United States and finally returns home to his children. Cobb spins his top to test reality, but is distracted by the reunion before any kind of resolution is seen.

Paul in Lakeview September 1, 2010 at 1:51 pm

HL and DD5, spoiler alerts, please! It would help if you stayed on topic, too.

DD5 September 1, 2010 at 3:06 pm

It’s your fault for not watching the movie sooner.

Paul in Lakeview September 1, 2010 at 3:48 pm

I stopped reading your post after “Fischer is killed…”. And it’s certainly not my fault that you can’t, or refuse to, stay on topic.

Take your sophomoric backtalk elsewhere.

DD5 September 2, 2010 at 12:23 pm

lol u mad?

Paul in Lakeview September 1, 2010 at 4:06 pm

“That was the direction chosen by the Reagan administration in 1981….The result…was a short downturn followed by recovery.”

>>>Perhaps, but the experience is not exactly convincing for two reasons. First, there was rabid militarism during Reagan’s time in office. Second, the claim lacks enough detail to infer the desired conclusion but by post hoc ergo propter hoc. Also, if the FR banks expanded the money supply in the mid 80s, as it supposedly did during the dotcom boom, then we would have reason to believe that the recovery was more nominal, as measured in dollars, than it was real.

“the state tried to implant in all our heads the idea that there was no depression”

>>>Step #1 of the implantation: Get court intellectuals and journalists to repeat “recession” instead of the blunt phrase “economic depression”.

“Only 61 percent of all people over 20 have any kind of job now.”

>>>What jobs are you counting? Just those the conpensation for which the state can track? Also, what’s the percentage if the state’s employees are excluded? Or if all people who depend on transfers from the state, not including the state’s own employees, are excluded? (For example, construction crews who build and maintain interstate highways and airports depend on transfers from the state but usu. work for private persons or firms.) How about if we exclude officers of the courts like ambulance chasers and all other lawyers?

“People are talking about the death of the American dream”

>>>If only they knew that the most powerful of all American dreams is the one induced by Publius, Hamilton, et al. Their work was Keynesian before there was a Keynes. In fact, any alert person should be able to read the 1st cl. of Art. VII of the Constitution and have enough latent skepticism to ask a subversive question: “How could the requirement for ratification by nine states’ conventions be relevant to establishment without presupposing establishment of the 1st cl. of Art. VII before ratification?”. There’s sufficient cause to suspect that the inception in 1788 of the state called USA is rooted in knavery and nothing but knavery.

“Evidence is emerging by the day, as municipalities shut down street lamps and cut back on the hours at public schools.”

>>>Has John Galt gone on strike? Probably not. America doesn’t produce John Galts. In fact, what Randian ever had the gumption to study physics and philosphy thoroughly after reading Atlas Shrugged if s/he hadn’t studied these subjects already?

“Meanwhile, the state…has its central bank trying to pump in more money and credit”

>>>Given the complexity of the Federal Reserve System AND widespread ignorance about its origins, nature, and behavior, it would be prudent not to obscure its details. So, “Meanwhile, the state…has its twelve central banks trying to pump in more money and credit…”. The distinction is especially important if you suppose that the multitude of central banks was intended to make it easier to manipulate money and credit in the 12 assigned regions, and it might serve to mute the obfuscating din about the FRS banks’ ownership, which is nominally private but more like a merger of corporations and the state. In other words, the FR banks are fascistic.

“In the digital world, we see growth and expansion and progress. This sector is not as heavily hooked up to manipulations of the Keynesian elite”

>>>Sure, less heavily hooked, but the valuability of telecommunications devices and services is nevertheless intimately dependent upon what’s happening to one’s business. Businesses that are hurting will find it less easy to justify purchase of new gadgets and will not provide to telecoms service providers the revenue growth the latter may have been expecting to make their investments good ones. And what person can eat a Tweet, use it for clothing, live in it, drive it to work, and so on?

That leaves the good trend of “sweeping away Keynesian fallacies”. Or, rather, the dream of doing so. My suspicion is that even if you could totally discredit Keynes, the predilection for interventionism will remain powerful. And why shouldn’t it? The masses crave a parent to give them attention and to rig things their way. If the idea, or daydream, of a cosmic superperson above the starry canopy cannot satisfy the neediness, then the needy will look elsewhere, e.g. to the state, for attention and affection. The problem isn’t Keynesianism or state schools, per se, but bad culture showered on children starting the moment they exit the womb. And as Ayn Rand showed in Atlas Shrugged, much of that bad culture can be traced to Christianity.

Wuggles September 1, 2010 at 4:31 pm

I have to agree with Allen on this one. The biggest problem that Austrians have today (in my opinion) is the delusion that the masses in general actually want freedom but are constantly stomped down by big government and big business. The sad truth is that the majority of people do not want to be free, they despise liberty, and quite frankly, don’t give a damn about anybody else but themselves.
Alex Jones, who I personally feel is too overdramatic and unnecessarily emotional in his presentation, nevertheless nails it on the head when he talks about the condition of society today. A land of sheep casting about with blank faces and glassy eyes – for too long exposed to the voices of the Keynesians so that now they shy away from the voices of the Austrians and follow their masters right over the cliff.
The blind leading the blind. Truly a sad state of affairs.

mpolzkill September 1, 2010 at 4:41 pm

Yep, that’s about the size of it. You say this delusion is a problem. What do you see being better if this delusion were eliminated, Wuggles? Austrians could or would devise better PR?

economic historian September 1, 2010 at 8:00 pm

“That was the direction chosen by the Reagan administration in 1981….The result…was a short downturn followed by recovery.” – Ask to old owners of Chrysler on this. Reagan did the same thing that Obama and Bush, also gave public money to failed companies.

Bennet Cecil September 1, 2010 at 9:17 pm

Democrats have demonstrated to all Americans that they will tax, spend and regulate without any restraint until voted out of office. They have compounded the financial crisis pain. We knew that Bush loved to spend the public purse but Obama makes him look like a piker. Millions of the unemployed see no jobs for them for years. Successful Americans are expected to shovel money into Washington coffers to fund the expanding utopia. We will get partial relief in November and hopefully a better president in 2012. Winding down the empire and the nanny state is needed to regain prosperity. This is is still unlikely unless the dollar collapses.

Joe September 2, 2010 at 12:16 pm

Where in Atlas Shrugged did Ayan Rand show that bad culture was a result of Christianity?

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