That is what Michael would like to suggest, and it is why he and people as disparate as Keith Olbermann and our very own Russ the Anonymous Zionist try to pretend like Ron Paul doesn’t even exist.

I love this brand of propaganda:

“even total morons agree”

Polls show that even among self-identified “tea partiers” a majority are glad we have institutions like Social Security, Medicare-Medicaid, unemployment insurance and federal deposit insurance. Rule by Austrians would destroy all their safety nets.

This, to me, is an excellent argument for the retention of the Fed… so there can be a lender of last resort in such instances.

You can ask me to support that contention about “most business failures”, if you hope you’ll be putting me to a lot of bother. But it would be easier if you either just accept it as being an obvious fact, or dismiss it without a second thought.

“Thats socialism. The term ‘socialism’ covers more then just a narrow definition that the communists favored.”

Nate, the trouble with debating Austrians is that you fellows have different definitions for many of the words than those used by the rest of the world. Allow me to clarify:

Most people consider socialism to be a form of government where the State redistributes wealth from the rich to the poor, to alleviate injustice and promote a degree of social equity. They would consider the US government to be an example of “mixed” government, in which the redistributive powers awarded money first to other capitalists, and only to a lesser degree to the deserving poor or working poor.

Also the Austrian version would say that money redistributed in taxes came from the rich and was awarded to the poor. When as we know, tax rates for unearned income, such as dividend earnings or capital gains, gets taxed at a preferential rate to income from wages and salaries, which is fully taxed. Also the first $100,000 of income (approx.) is subject to payroll tax, meaning that all income above that mark is exempt.

So on both those counts I would suggest that we do not live under a socialist government. We live in a mixed economy, with some features of each.

Also, when I said that China’s system worked better than ours, what I was referring to was the fact that we have a chronic trade imbalance, whereby we transfer dollars to China while they transfer manufactured goods to us. That kind of trade is to their great benefit. So I think they have the superior system, seen from the point of view of the two competing governments.

Obviously, seen from the POV of the little guy, you’d rather see a libertarian utopia, unlike either giant.

Worked for Goebbels, for awhile.

“The Great Depression became great back when everyone was just standing around watching it grow. Then when we started doing something about it, even if it was wrong, it started easing up.”

I wonder how many times has this general statement has been made: “Hoover did nothing, and things got bad; Roosevelt did something and things got better.” The dichotomy is false, and has been repeatedly shown to be such. Hoover was an active interventionist, and his interventions have been convincingly blamed for the “greatness” of the Great Depression, and not only by Austrians–even the illustrious Paul Krugman agrees that the Smoot-Hawley Tariff and the ensuing global trade war contributed significantly to the decline. This has been explained to you repeatedly, and your apparently willful ignorance of the details of history is more than a little grating. If you insist that abstract theory cannot be used to explain events, only concrete observations, then you should at least use correct observations, not middle-school level narrative.

Thats socialism. The term ‘socialism’ covers more then just a narrow definition that the communists favored.

“”Creepy, huh? But it works. Better than ours does.”"

No it does not.

Then when we tried balancing the budget prematurely we sent the country back into a second wave. I can see trying everything you can, by whatever theory best fits the facts. But I don’t see trying the same things now that made everything worse back in 1937.

The distinction to be made is that China, is centrally controlled and directed. It’s an authoritarian society, with great economic freedoms and terrible political ones.

This actually puts China at an advantage, relative to us. We allow individuals to make their own financial decisions, and as a direct result the herd mentality sends investors routinely over the cliff, like so many stampeding buffalo. In China, the major investment decisions are made by that state. And their technocrats are able to make the best use of their funds with an eye toward the development of the entire country as one single organism.

Creepy, huh? But it works. Better than ours does.

So your solution is to make us all “free” by chaining us all with regulations, taxes, and redistribution schemes.

Right. Under Libertarian rule we are all free to prey on one another. It’s market forces at their purest.

There are, of course, many places worse than here. I wouldn’t want to be poor, for instance, in Myanmar. Terrible place.

But if one were rich, have you noticed how many rich people find the old US of A to be their first choice? This is a FABULOUS place to be rich. So all the complaints I’m reading on this site do seem to have a, how shall I say this, a dog-in-the-manger quality about them.

Even me. I may not have made a large pile of cash, but I did retain enough to live like a rich man– in that I can buy anything I need and most of the things I want. (My wants are few.)

“What country do you thing you would have the best chance to better your condition? Do the poor in the US stay poor? Why do so many people want to come to this country?”

The USA, hands down. It’s our oppressive system of pervasive statist control. Nearly everywhere else is worse. People love it here! The taxes often go toward socially useful causes, and we are at least theoretically able to improve the quality of governance by throwing out the bad guys we find in high office.

We could do better. But at least the game is not doomed from the start, as it is in so many other countries.

” When you talk about “rich and powerful Capitalists”. I seriously doubt that anyone or business that goes to the federal government to get an advantage in the market is a Capitalist. I don’t consider, for example, GE a capitalistic enterprise. It sucks up big time to the federal government to get an advantage over it’s competitors.”

Amen to that. It’s all in your definition. Most of us would call any company that accumulates capital to build plant, employ people and make profits to be capitalist in form. Even when, as GE has done since WW Two, they rely on government contracts for their main bread and butter.

“As for the collaspe of the Soviet Union the standard of living went down because it was basically a welfare state. The citizens depended on the state for their livihood. Of course it would cause when the safety net was taken away.”

Let’s see if I understand your argument, Joe. The USSR was a welfare state, and provided minimal safety supports to its population. As it was a very poor country, spending most of its gains on the arms race instead of social services, they didn’t provide much. But when it transitioned to a capitalist enterprise in a decidedly Austrian mold, and all safety nets were removed, standards of living plummeted across the union.

That doesn’t say very much for your philosophy, Joe. It was tried and found wanting. Even today the Communist Party is far from dead. Many of the old folks look back on those days as the Good Times. Now they have to jump to the curb as rich men’s Benzes splash mud on them.

There’s no reason to believe it would happen any differently here. Were democracy to fall as utterly as did Communism one day, do you think those criminals in the woodwork would waste any time before they came to dominate the economy?

Thanks again for the spirited volley.

Leave it to you, Michael, to separate the wheat from the chaff…. and then throw out the wheat!

I was most certainly not saying anything even remotely resembling what you said above; i.e. there’s no overarching theory that’s useful in every conceivable instance. I was pointing out the difficulty of falsifiying economic theory. This in no way relieves us of the duty of trying to determine, somehow, what the correct theory actually is. I’m not necessarily saying that Austrian theory is the inerrant Gospel. But, mixing and matching in some sort of insane cafeteria economics, where you can take anything you like off the buffet to suit your taste of the moment, is not the answer. How can a mish-mash of theories be correct, if the theories logically contradict one another? Do you really believe that anything that can be said to be amenable to science, can be that self-contradictory?

If you believe in the Austrian theory of the cause of recessions, then you should understand that the only real solution to recessions, according to that theory, is to prevent them. According to the logic of the Austrian theory, by the time that the Depression was happening, it was too late to do anything except suck up the pain. It also says that attempted quick fixes will, in the not-so-short term, make the problem worse. If you want to switch to another theory that allows a quick fix at this point, then you don’t really understand or believe in the Austrian theory, because the logic of the Austrian theory doesn’t allow this.

It’s like if you have a theory that alcohol causes hangovers, and the theory says that the only way to avoid hangovers is to not drink. Once the alcohol is metabolizing and giving you that giddy feeling, it may already be too late. Once your head is swimming, you are seeing double, and you’re starting to feel sick to your stomach, it’s definitely too late. You can’t just switch to another theory that promises a quick fix. Hair of the dog? It does work for a very short time, but then you feel even worse than before. The only way to keep up the hair of the dog solution would be to keep drinking forever. Probably not the right solution.

But, economically, you are advocating the hair of the dog, and if that doesn’t work, more hair of the dog, etc., etc., ad nauseum. This was tried, during the Great Depression, and it is what made the Great Depression GREAT! The Austrians are advocating sobriety.

I’m not saying that there should be no laws against certain things. The phrase “legislating morality” generally means that there are laws enacted forcing people to do “good” things. I’m a classical liberal, not an anarchist.

“And he thought that while there might be room for personal charity, there was no purpose to be served in any societal response to the problem of endemic poverty. That view is consonant with Social Darwinism, by any name.”

So freedom is consonant with Social Darwinism, huh?

Where I said “The economy had fully recovered from the dot-com bust, yet the Fed, unaccountably, did not raise rates and tighten up the money supply.” I should have said they did not raise rates ENOUGH TO tighten up the money supply. The Fed Funds Target Rate did go from one percent up to something like 5-1/4% by the end of 2006. But the move had little effect. There was still way too much money in the system, and the rate rise was far too slow to have any effect.

As Nouriel Roubini puts it, “The result was the housing and mortgage bubble. By pumping vast amounts of easy money into the economy, and keeping it there for too long, Greenspan muted the effects of one bubble’s collapse by inflating an entirely new one. This policy was the inevitable consequence of the contradiction at the heart of his approach to central banking: helplessly watching bubbles on the way up, and moving frantically to arrest the downward slide.” (from Crisis Economics)

See? That doesn’t sound very Keynesian. Yet I see the sense in it.

Your posts are getting better, Russ. I think you point to a great truth: there’s no overarching theory that’s useful in every conceivable instance. Some are more appropriate some times while others fit the case at other times. So we have to go with whatever seems most fitting in our present circumstances.

We do have a precedent for taking no action in a recession: the events of 1929-32. Taking no action, in circumstances very similar to our own today, makes things worse.

That happens to be Keynesian. If, on the other hand, the economy was doing just fine, and some numbnut at the Fed decided he’d make it even better by flooding the market with cheap, undeserved credit, that would be a terrible mistake. The Austrians would then rightly point that out.

And in fact that’s what happened around 2004-05. The economy had fully recovered from the dot-com bust, yet the Fed, unaccountably, did not raise rates and tighten up the money supply. Here I would agree with the Austrians that that was a big mistake, leading in part to our problems today. Blame Alan Greenspan.

To everything there is a season, Russ. What’s important is not unswerving allegiance, in every instance, to one theory as opposed to all the others. It’s finding which among the theories fits the circumstance under examination. Theories are just templates against which we try to match complex events.