Mar 9, 2009

Habsburg Economics - Let's Party Like It's 1913

Hey all,

another day, yet another grim forecast for the world economy as we move through the financial crisis. With all the emerging bad news, it would be super easy to get depressed about life.

So in case you are feeling down, you should take a leaf from the Austrian's book, and party like there is no tomorrow. Even in the midst of economic doom and gloom, the Viennese Bankers Club circa 1913 threw the 'Bankruptcy Ball' - partying all night, even whilst the Habsburg empire was bleeding red ink and plunging into financial oblivion at lightspeed.

Hopefully this Austrian idea - of partying away the economic blues - will lead to more positive outcomes than the evils that other Austrian economic ideas (eg. those of von Hayek) have led to!!



Katya said...

excuse me, but what's wrong with Hayek?

Cam said...

Where do I start with the problems of von Hayek.........?

....Although he is admittedly not as extreme as some of his intellectual heirs, his work did spawn the evils of Reagonomics and Thatchernomics (just ask the American working class of the 1980s and the Welsh coalminers how much fun their experiences of trickle down economics were..........), policies which, although recently revived by Bush,failed spectacularly. And his work is also taken as the holy writ for the crazies in organisations such as the Cato Institute and the American Enterprise Institute.

I find that Hayek's work is not universally as bad as some left wing ideologues like to portray, as he does make some meritorious points, such as the necessity for government intervention in the case of market failure.

However, to argue as his central thesis that government spending in the social interest leads to centrally planned economies and therefore economic slavery (and therefore government spending = bad, the 'Road to Serfdom', as he put it in the title of his famous treatise) is to fall directly into the 'slippery slope' logical fallacy. Conflating enlightened government spending with centrally planned economics and an erosion of civil liberties is perhaps his most egregious error in reasoning.

Additionally, you only have to look at the experience of countries such as Britain and the USA, where civil liberties greatly expanded during times of government economic intervention (e.g. the New Deal), to conclude that this thesis is, empirically speaking, rubbish.

Katya said...

Cam, i don't want to sound mean, but are you taking this stuff from the article you linked or you actually read the dude's works? cause i did, a long time ago though, so i probably don't remember everything, but honestly, he is not so bad :)

in fact, i find his argument for the information revelation role of prices very sharp and quite amazing and i so wish Stalin read his critique of the central planning when the book came out. many things would have been different. or maybe not.

i never thought that his central thesis was on govt spending per se (like the article and you say), so i find it a bit strange what you say. and the argument that in free societies individuals sometimes organize in groups of common interest and that works super great...well, that is just beside the point. he was writing a critique of central planning, not communes.

although i admittedly don't know as much about the UK economy as i wish i did, i used to think that what Thatcher did with the miners, while painful, was necessary to break up the power of the unions and revitalize the British economy, which she did. if i were to give her credit for one thing (and she did many controversial things during her reign), it would be this. in fact, many people would argue this is what the rest of Europe needs too. eurosclerosis, rings a bell?

Cam said...

I did actually also read the Road To Serfdom (admittedly a long time ago), although not his other works. So perhaps I have forgotten some of the nuances of his argument. But the article that I linked expresses views and impressions of his work that I formed after a wide range of reading on the topic in my previous studies (believe it or not, I was also a major in political science as well as economics).

Why else would I link the article, if it were not something that I agree with and wanted people to read?

Obviously plagiarism isn't the best of academic activities to engage please give me more credit than before saying I engage in it.......