Thursday, February 05, 2009

The Austrian Solution

Austrian economists have been criticized frequently for proposing that we do nothing in response to the economic crisis in a political climate where the majority are demanding that the government do something (anything!)

Well, Robert Murphy over at Mises.org takes up the challenge of answering, "do you Austrians have a better idea?"

Murphy first points out that you don't actually need have a better idea to realize that the idea being criticized is bad (an idea that's dangerously rare these days)

If an allergic man has been stung by a bee, I don't know what to do except rush him to the hospital and maybe scour the cupboards looking for Benadryl. But I'm pretty sure drawing blood from his leg, in order to inject it into his arm and thus "stimulate his immune system," is a bad idea on numerous accounts — not least of which, is that I'm pretty sure an allergic reaction means your immune system needs to calm down. But the point is, if a bunch of guys hold the man down — he has to be forced to endure the procedure for his own good, don't you know — I feel perfectly qualified in yelling, "Stop!"

If you grasped that analogy, you can understand my feelings about anything Paul Krugman writes.

He then lays out an Austrian-friendly (though he admits not pure Austrian) plan for dramatically cutting government as the ultimate economic stimulus.

Among his recommendations: dismantle the IRS and level the building, eliminate the DEA and the Department of Education, and more:
Cut the Pentagon budget in half. In FY 2008 it was (officially) some $460 billion,Download PDF so that cut alone would free up $230 billion per year. This isn't an article about foreign policy, so we won't be specific about how the military could achieve such cuts. But if you're worried that the country would suddenly be overrun by Iranian tanks, the following chart should reassure you:


Top 10 Countries by Military Expenditure, 2007

These ideas are far from politically feasible in the US or Canada, but it's an entertaining read and it's nice to see pie in the sky thinking in the right direction.

h/t: Isaac Morehouse.

cross-posted to the Shotgun blog

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