The Austrian School of Economics is little regarded by our leaders and bankers.
You know, the people who have repeatedly blown up our economies.
But why don’t they like it?
Well, there’s no money in it, and it is difficult to get a man to understand something when his salary depends on his not understanding it (Upton Sinclair)
You see, the Austrian School says that public spending can’t help us once we’re in a jam.
In fact, it says that public spending beyond a certain level actually makes things worse – every penny the State takes from the taxpayer after that is a penny wasted, and that the taxpayer can no longer use to boost the economy.
Whereas John Maynard Keynes said that public spending can help us once we have a surplus to use – his big idea was that if the government taxed us all a little harder than was strictly necessary in the good times and built up a surplus, it would stop us from wasting money on frivolous crap and then could be better spent by the State later on things we all need (throttling the boom and minimising the bust) – sadly for us all Keynes forgot that politicians don’t really like to run surpluses. Why leave money for your opponent to use buying votes after you’ve departed, when you can spend every penny buying votes today?!
So modern politicians pretended that he had said “public spending is always good!” and that turned out to be a very popular position among those who control public spending.
Oh yes.
So the Austrian School tells politicians to stop taking money from taxpayers.
And Keynes told them to only spend money once they had saved some.
But they decided instead to spend money like water on whatever their little hearts desired.
So they have spent and taxed and spent and taxed until now the average taxpayer in Britain pays 54% of their income on the various types of taxes.
Once they realised we weren’t willing to pay more (putting the rates up actually lessens the yield now, as poor old George Osborne discovered when Gordon Brown left a ticking bomb tax rate for him to defuse) they had to borrow like mad. And once no-one would lend to them at a rate they could afford, they had to drive the interest rate on the national debt down to the point where only their own central banks would lend them money (printed money admittedly) and then hope that we’d all believe that the resulting inflation in asset prices could be attributed to our businesses suddenly thriving.
Hard to believe when you’ve got no customers.
Bit of a mess really.
So what’s wrong with the Austrian School?
Well, it’s unemployable – no government official will listen to you if you tell him to quit and get a proper job.
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It's too bad so little mind is paid to Austrian economists. It'll likely take a great collapse on a global scale for humanity to shake free of this pernicious socialism afflicting societies around the world. And the post-socialist world won't be a picnic, either, for awhile. It's a well-written editorial, but it leaves me pessimistic about the future.