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Thread: 'Austrian' School of Economics on the rise ...

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    Default 'Austrian' School of Economics on the rise ...

    (snip)"Austrian School On The Rise

    The Austrian School of economics is gaining followers. Fueling this shift is a belief that mainstream loose-money policies led our current crisis. While die-hard mainstream economists like Paul Krugman aren’t budging, millions of people are rethinking the role government should play in the economy. Many of them are looking to the Austrian School for answers.

    Public outrage over bailouts and rising debt is widespread. The outcry has Wall Street and mainstream economists on the defensive. Banks are so concerned that their leading industry group, SIFMA, just launched a major PR offensive against this “populist overreaction” (yes, that’s their wording. Read the Bloomberg piece for more.) One commenter quipped that the campaign slogan should be Stop Complaining About Getting Fleeced.

    The Austrian Answer

    Many people are attracted to this school of economic thought because of the fiscal discipline inherent to it. Responsible spending, low taxes, and small government are major themes. Austrian advocates like Ron Paul and Lew Rockwell have been fighting inflationary and easy-money policies for decades. It looks like the crisis they have been warning about has finally arrived. And reflating the bubble may not work this time.

    That’s not the only reason their popularity is on the rise, though. Their anti-war stance is popular with the Left, while their small-government policies appeal to fiscally conservative Republicans, who are disillusioned in the wake of Bush’s reckless deficit spending.

    The Ludwig Von Mises Institute is Mecca for Austrian and Libertarian Economists (in the US, at least). The organization, chaired by Lew Rockwell, has a huge collection of material catering to liberty-minded economists. I contacted their webmaster to see how traffic has been since the crisis started. Their traffic is up rougly 80% YoY. Note the traffic spike in September of last year when Lehman was dying:

    A Shift or a Fad?

    It’s unclear if what we’re seeing is a major shift in economic thinking, or a temporary blip. If government can successfully reflate the bubble, interest in Austrian economics will probably fade, as Americans once again get comfortably numb. Like a drug addict, hitting rock bottom may be necessary before significant change happens. Whether we have reached that point remains to be seen.

    Judging by the shift in consumer spending, Americans are well on their way to a permanent change in lifestyle. We’ve never seen a dramatic shift like the one that happened over the past year or so. Austrian economics may play a major role in policy reform.

    Any rational person can see how unsustainable our current path is. But our political and financial leaders remain convinced that the answer lies in more debt/credit. This may delay pain for a few more years, but only makes the long-term picture uglier. A sea-change is inevitable. Exactly how everything will play out is unknown, but it’s going to be interesting to watch."(snip)

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    Default Re: 'Audstrian' School of Economics on the rise ...

    It is laissez faire on steroids. May as well support anarchy and just be done with it.

    From Wikipedia:
    However, Austrian economists often make policy recommendations that call for the elimination of government regulations and their policy prescriptions often overlap with libertarian or anarcho-capitalist solutions. These recommendations are similar to, but further reaching than the minarchist ideas of Chicago School economists, and frequently address issues that other schools ignore, such as monetary reform.


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    Default Re: 'Austrian' School of Economics on the rise ...

    http://www.huppi.com/kangaroo/L-ausmain.htm

    For most of the Austrian School's history, mainstream academia has simply ignored it. Even today, none of its works are on the required reading list at Harvard. Most introductory economics texts don't even mention the school, and its economists are absent from many encyclopedias or indexes of the century's great economists. Several of its founding figures struggled to make ends meet, rejected by universities which did not view their work as sound. Even today, the movement's faculty boasts no more than 75 scholars worldwide. (4) By comparison, there are over 20,000 economists in the American Economics Association alone. Their failure to rise in academia has not been for want of publicity -- on the contrary, their leaders have been publishing books for over 120 years, all the while bumping elbows with famous economists like John Maynard Keynes. And after Hayek shared a Nobel Prize in 1974 for a contribution to monetary theory, the school received a huge burst of academic attention. But it was just as quickly rejected. Their dismal showing in academia stems from the fact that they have simply failed to make their case.

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    Default Re: 'Austrian' School of Economics on the rise ...

    by pure coincidence ... this 'foreign' report has just been released

    (snip)"His [ Obama's - sic ] policies even have the potential to consign the US to a similar fate as Argentina, which suffered a painful and humiliating slide from first to Third World status last century, the paper says.

    There are "troubling similarities" between the US President's actions since taking office and those which in the 1930s sent the US and much of the world spiralling into the worst economic collapse in recorded history, says the new pamphlet, published by the Institute of Economic Affairs.

    In particular, the authors, economists Charles Rowley of George Mason University and Nathanael Smith of the Locke Institute, claim that the White House's plans to pour hundreds of billions of dollars of cash into the economy will undermine it in the long run. They say that by employing deficit spending and increased state intervention President Obama will ultimately hamper the long-term growth potential of the US economy and may risk delaying full economic recovery by several years.

    The study represents a challenge to the widely held view that Keynesian fiscal policies helped the US recover from the Depression which started in the early 1930s. The authors say: "[Franklin D Roosevelt's] interventionist policies and draconian tax increases delayed full economic recovery by several years by exacerbating a climate of pessimistic expectations that drove down private capital formation and household consumption to unprecedented lows."

    Although the authors support the Federal Reserve's moves to slash interest rates to just above zero and embark on quantitative easing, pumping cash directly into the system, they warn that greater intervention could set the US back further. Rowley says: "It is also not impossible that the US will experience the kind of economic collapse from first to Third World status experienced by Argentina under the national-socialist governance of Juan Peron."

    The paper, which recommends that the US return to a more laissez-faire economic system rather than intervening further in activity, has been endorsed by Nobel laureate James Buchanan, who said: "We have learned some things from comparable experiences of the 1930s' Great Depression, perhaps enough to reduce the severity of the current contraction. But we have made no progress toward putting limits on political leaders, who act out their natural proclivities without any basic understanding of what makes capitalism work." (snip)

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    Default Re: 'Austrian' School of Economics on the rise ...

    Quote Originally Posted by hockeybobby View Post
    http://www.huppi.com/kangaroo/L-ausmain.htm

    For most of the Austrian School's history, mainstream academia has simply ignored it. Even today, none of its works are on the required reading list at Harvard. Most introductory economics texts don't even mention the school, and its economists are absent from many encyclopedias or indexes of the century's great economists. Several of its founding figures struggled to make ends meet, rejected by universities which did not view their work as sound. Even today, the movement's faculty boasts no more than 75 scholars worldwide. (4) By comparison, there are over 20,000 economists in the American Economics Association alone. Their failure to rise in academia has not been for want of publicity -- on the contrary, their leaders have been publishing books for over 120 years, all the while bumping elbows with famous economists like John Maynard Keynes. And after Hayek shared a Nobel Prize in 1974 for a contribution to monetary theory, the school received a huge burst of academic attention. But it was just as quickly rejected. Their dismal showing in academia stems from the fact that they have simply failed to make their case.
    Why do you think Harvard likes to poo poo the Austrian School ? How many free market ( as opposed to Keynesians, Socialists and Statists ) economists do you think there are on the Harvard faculty ? Afaik the answer is one. How many Harvard economics professors do you think have read Hayek ? The answer is almost none.
    Btw, they admit to it. Proudly. Like many Liberals, they claim to be open to other ideas and then have to recover from the shock that there are other ideas.

    Harvard has produced some of the greatest mischief makers in our history starting with FDR up to Larry Summers today.

    Fortunately Harvard and the rest of the Ivies are not our only universities. We also have the University of Chicago, George Mason and Stanford just to name three where something resembling academic freedom actually exists. And where the Austrian School gets the attention and respect it deserves.
    Last edited by Eric Stoner; 09-08-2009 at 12:28 PM.

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    Default Re: 'Audstrian' School of Economics on the rise ...

    Quote Originally Posted by Paris View Post
    It is laissez faire on steroids. May as well support anarchy and just be done with it.

    From Wikipedia:
    However, Austrian economists often make policy recommendations that call for the elimination of government regulations and their policy prescriptions often overlap with libertarian or anarcho-capitalist solutions. These recommendations are similar to, but further reaching than the minarchist ideas of Chicago School economists, and frequently address issues that other schools ignore, such as monetary reform.
    Adam Smith and Milton Friedman both espoused "Austrian" ideas and both have been proven far more coirrect than Galbraith or Krugman.

    The historical lessons include distinguishing between regulation and intervention. Even the Austrian School ( which I admit can be extreme and even unrealistic ) supports disseminating as much information as possible. Where people cannot protect themselves, then we need government to do it. What government ought not do is try to fine tune or control the economy. If you look at countries with the greatest growth, many implement Austrian type policies.

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    Default Re: 'Austrian' School of Economics on the rise ...

    This is what our citizenry is made of:

    http://www.youtube.com/watch?v=_c6HsiixFS8


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    Default Re: 'Audstrian' School of Economics on the rise ...

    Quote Originally Posted by Eric Stoner View Post
    Adam Smith and Milton Friedman both espoused "Austrian" ideas and both have been proven far more coirrect than Galbraith or Krugman.
    Friedman's policies when put into practice have been a massive failure. Friedman was personally advising Pinochet on Chile's economy, and less than a decade after Friedman's policies were implemented, their economy completely collapsed. Conservative economic policies are based entirely on hypotheticals, not what happens in the real world. When practiced in the real world, the results are very different than in the hypothetical situations conservatives come up with.

    Quote Originally Posted by Eric Stoner View Post
    The historical lessons include distinguishing between regulation and intervention. Even the Austrian School ( which I admit can be extreme and even unrealistic ) supports disseminating as much information as possible. Where people cannot protect themselves, then we need government to do it. What government ought not do is try to fine tune or control the economy. If you look at countries with the greatest growth, many implement Austrian type policies.
    If you look at the wealthiest countries, they do not follow the Austrian School. Many poorer countries are much closer to the Austrian model, with much fewer regulations and much less government involvement in the economy.

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    Default Re: 'Austrian' School of Economics on the rise ...

    my 'friend' Elaine brings Keynesian versus Austrian down to a very simple real world example, based on a NY Times article "How Did Economists Get It So Wrong" ...


    (snip)Why was Keynes’s diagnosis of the Great Depression as a “colossal muddle” so compelling at first? And why did economics, circa 1975, divide into opposing camps over the value of Keynes’s views? .

    I like to explain the essence of Keynesian economics with a true story that also serves as a parable, a small-scale version of the messes that can afflict entire economies. Consider the travails of the Capitol Hill Baby-Sitting Co-op.

    This co-op, whose problems were recounted in a 1977 article in The Journal of Money, Credit and Banking, was an association of about 150 young couples who agreed to help one another by baby-sitting for one another’s children when parents wanted a night out. To ensure that every couple did its fair share of baby-sitting, the co-op introduced a form of scrip: coupons made out of heavy pieces of paper, each entitling the bearer to one half-hour of sitting time. Initially, members received 20 coupons on joining and were required to return the same amount on departing the group.

    Unfortunately, it turned out that the co-op’s members, on average, wanted to hold a reserve of more than 20 coupons, perhaps, in case they should want to go out several times in a row. As a result, relatively few people wanted to spend their scrip and go out, while many wanted to baby-sit so they could add to their hoard. But since baby-sitting opportunities arise only when someone goes out for the night, this meant that baby-sitting jobs were hard to find, which made members of the co-op even more reluctant to go out, making baby-sitting jobs even scarcer. . . . .

    In short, the co-op fell into a recession.



    OK: that is a totally stupid story because it isn’t what really happened. That is, I know the true story because I belonged to 2 such co-ops in 2 different states. Each one was run by mothers who were all college connected people. I was the Builder and thus, had free time to babysit in winter which was my idle season. In each co-op, the whole thing broke down after less than three months because only a handful of mothers would babysit. That is, you call a mom and hand her your ‘chit’ and ‘children’ and then go off. Only this was NOT RECIPROCATED.

    That is, when the mothers who babysat wanted to hand these chits to other mothers, we would call each one and ask for time for babysitting and they ALWAYS refused. Every blasted bitch refused to pay up. The pay up was for them to do the labor! They had NO intention of doing ANY labor at all! They were abusing the workers who did honor the chits!

    (snip)It wasn’t that mothers were ‘reluctant to use their chits’….they COULDN’T use them! If no one honors ‘chits’ as ‘money’ it ceases to have value! How could they use these stupid things if all the other mothers refused to accept them (ie: take in the kids and watch them for 6 hours). In NJ, mothers ended up like in Brooklyn, paying me [ with dollars instead of 'chits' - sic ]to take their kids around all over the place. I like children and have lots of fun teaching them stuff. I could make $300 a month doing this. This was real money I could use for my own ends and didn’t depend on some woman honoring her debts. And we know that people will skip out on debts if there are no real contracts or I would have sued all the bitches who skipped out on their duties in the co-ops.

    Modern economics is based on stupid stories like the one Krugman cites here. What I see is, the US plans on being like the mean, petty, self-centerd bitches in our co-op who cheated the good mothers (there were 6 good mothers and about 12 cheating bitches). The US plans on not honoring the chits that were handed out for Chinese labor. The Chinese will be like me! I know this for certain. They will be loud, vicious and will move swiftly to form better alliances with honorable people and use real money or even gold, as well as other rewards. (snip)

    (snip)Economics is all about social connections, honor, trust and common cause. When this is ignored or disrupted or exploited, it falls apart or people form new unions. And we are entering exactly such a stage where this will happen, increasingly. And this is why I like debating fundamental politics and economic systems since this is our future: constant change as we try to deal with the excess actions of cheaters, lazy people and destroyers seeking to get goodies while not giving back to the community.(snip)

    from


    The 'Austrian' points of this story are ...

    - rational people in the real world eventually stop extending credit to those who can't or won't pay off their debts, leading to a major reduction in 'liquidity' as lenders sit on their 'capital' to protect themselves from additional losses.

    - high levels of economic activity that are due to the initial 'spending' of newly obtained credit are permanently unsustainable in the absence of (nearly) all economic participants paying back their debts as promised when said credit was initially extended.

    - the value of 'paper money' is directly tied to the amount of real goods and services that others are willing to exchange for it - something which involves both 'faith' and creditworthiness. And the value of 'paper money' can quickly approach zero when the holders of that 'paper money' have no recourse ( i.e. no guaranteed exchangeability for something else of real value)

    ~
    Last edited by Melonie; 09-09-2009 at 03:19 AM.

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    Default Re: 'Audstrian' School of Economics on the rise ...

    Quote Originally Posted by eagle2 View Post
    Friedman's policies when put into practice have been a massive failure. Friedman was personally advising Pinochet on Chile's economy, and less than a decade after Friedman's policies were implemented, their economy completely collapsed. Conservative economic policies are based entirely on hypotheticals, not what happens in the real world. When practiced in the real world, the results are very different than in the hypothetical situations conservatives come up with.



    If you look at the wealthiest countries, they do not follow the Austrian School. Many poorer countries are much closer to the Austrian model, with much fewer regulations and much less government involvement in the economy.
    You have repeated the standard leftist canards against Friedman which he himself debunked in a PBS interview. The transcript can be read at pbs.org/wgbh/commandingheights/shared/minitext/int_miltonfriedman.html#10.

    In 1973 under Allende, Chile had hyperinflation of 150%, no foreign reserves and a falling GDP. After the coup led by Pinochet, aided by our CIA ( which Friedman had nothing to do with despite a few disgusting allegations by Alexander Cockburn and few other Anti-Semitic factual delinquents ) the economy was taken over by the "Chicago Boys". A group of Chilean economists who had studied at the Univeristy of Chicago via a decades long exchange program with Catholic University in Santiago. Friedman went to Chile for five days and gave a series of lectures on capitalism, freedom and economic liberalization. There was liberalization and state owned companies were privatized. Inflation was stabilized and foreign trade dramatically increased. BUT one crucial mistake was made : Around 1979, the Finance Minister, Sergio DeCastro did NOT listen to Friedman and against his direct advice pegged the peso to the U.S. dollar at a set exchange rate of 39 to the dollar. Since Chilean inflation was much higher than the U.S. rate ( at the time we had inflation of over 10 % ) a serious trade imbalance was created along with a serious monetary bubble which burst in 1982 ( as Friedman predicted ) and Chile had a severe 2 year recession.

    The Chicago policies remained in effect and by 1985 Chile started to recover. Exports grew and unemployment went down. From 1985 to 1996 Chile had annual REAL growth in per capita income that averaged 7 %; the HIGHEST in Latin America. It's GDP grew 7% a year on average during the same time period; also the highest in Latin America. It stagnated between 1997 and 2002 mostly because of falling copper prices and then started growing again. It has benefitted greatly from the global building boom and increased demand for it fertilizer exports.

    When Allende was in charge, almost 50 % of Chileans lived in poverty. Today it's 14%. In Brazil it's 31 % and in Bolivia it's 62%. During the same time frame ( 1973-2008 ) Chile developed the lowest child mortality rate in all of Latin America and life expectancy increased by over 4 years from 64 to 68. It's per capita GDP ranks third of all 29 Latin American nations.

    Despite a clear record of success based primarily on Friedman's ideas including the fall of Pinochet ( which he predicted ) the left LOVES to point to one and only one equivocal or arguable aspect of the Chilean economy : The performance of private as opposed to public pensions. Chile gave it's citizens the option to invest their own retirement funds in 1981 but mandated that new hires enter into a private retirement plan . Some studies have shown that they have performed about the same as the public Social Security type system. However, another view says that some investors did well and some not so well depending on the level of risk they accepted and that the average performance is about the same. As of 2006; about half of the "Class of 1981" did not have enough in their accounts to even give them the minimum benefit provided by the pre-existing Social Security type plan i.e. about $140 a month. This resulted from both investment losses experienced by and excessive fees charged by SOME of the private plans.

    Just in Latin America, the country that adhered the closest to the Austrian model did the best while those that followed socialism ( Cuba, Jamaica, Nicaragua, Peru, Bolivia, Venezuela) have performed the worst.

    Places like Singapore ,Hong Kong, Macau, Switzerland etc. that most closely adhere to the Austrian model do the best. Many European countries that do not are finding that they can no longer afford their socialist type economies and programs- Sweden, Germany etc.

    Would you please name one "poor country" that REALLY follows the Austrian school. A democracy with liberal economic policies, low taxes, free trade etc. ?

    How do you explain the contrast between the economies of pre- W.W. I Britain and the pre-Thatcher 70's ?
    Or the Germany of the 60's, 70's and 80's and it's current stagnation and high unemployment ?
    Or the pre-Depression U.S. economy and the stagflation of the 1970's and the current mess ?

    In every case, there was a shift from free markets and free trade to a statist and socialist model.

    Just to put another nail in the coffin of this Naomi Klein fed calumny that the "Chicago Boys" created a "disaster" in Chile :

    These are the Per Capita GDP numbers for some other Latin American countries for 1973 and 2007 according to the U.N.

    Argentina went from $1508 to $6636
    Bolivia- $287 to $1378
    Brazil- $810 to $6852
    Costa Rica - $994 to $5801
    Peru - $603 - $3880
    Uruguay- $1004 to $6913

    Most instructive are: Cuba, the "socialist paradise"; the ultimate in government control which went from $1175 to $4611 and Venezuela which despite tremendous oil wealth; high literacy and a strong middle class only went from $1676 to $8,559. Chile started out about the same in 1973 with a per capita GDP of $1696 and in 2007 it was $9854. Over $1000 more than Venezuela during the same period of time .

    Case closed.
    Last edited by Eric Stoner; 09-09-2009 at 12:18 PM.

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    Default Re: 'Audstrian' School of Economics on the rise ...

    Quote Originally Posted by Eric Stoner View Post
    You have repeated the standard leftist canards against Friedman which he himself debunked in a PBS interview. The transcript can be read at pbs.org/wgbh/commandingheights/shared/minitext/int_miltonfriedman.html#10.
    Yes, I'm sure Milton Friedman would be an objective, unbiased judge of how successful his policies in Chile were.

    Quote Originally Posted by Eric Stoner View Post
    In 1973 under Allende, Chile had hyperinflation of 150%, no foreign reserves and a falling GDP. After the coup led by Pinochet, aided by our CIA ( which Friedman had nothing to do with despite a few disgusting allegations by Alexander Cockburn and few other Anti-Semitic factual delinquents ) the economy was taken over by the "Chicago Boys". A group of Chilean economists who had studied at the Univeristy of Chicago via a decades long exchange program with Catholic University in Santiago. Friedman went to Chile for five days and gave a series of lectures on capitalism, freedom and economic liberalization. There was liberalization and state owned companies were privatized. Inflation was stabilized and foreign trade dramatically increased. BUT one crucial mistake was made : Around 1979, the Finance Minister, Sergio DeCastro did NOT listen to Friedman and against his direct advice pegged the peso to the U.S. dollar at a set exchange rate of 39 to the dollar. Since Chilean inflation was much higher than the U.S. rate ( at the time we had inflation of over 10 % ) a serious trade imbalance was created along with a serious monetary bubble which burst in 1982 ( as Friedman predicted ) and Chile had a severe 2 year recession.

    The Chicago policies remained in effect and by 1985 Chile started to recover. Exports grew and unemployment went down. From 1985 to 1996 Chile had annual REAL growth in per capita income that averaged 7 %; the HIGHEST in Latin America. It's GDP grew 7% a year on average during the same time period; also the highest in Latin America. It stagnated between 1997 and 2002 mostly because of falling copper prices and then started growing again. It has benefitted greatly from the global building boom and increased demand for it fertilizer exports.
    Notice how he uses the years 1985 to 1996 to measure economic growth. Maybe that's because there was no economic growth from 1973 to 1986. Unfortunately for Friedman, his policies were implemented in 1973 and many of his policies were undone in 1986.

    http://www.bidstrup.com/economics.htm

    (snip)
    Enthusiastic supporters of the Pinochet reforms like to point out that since 1986, there has been a 7 percent annual growth rate; what they fail to mention is that this occurred only after 1986, after privatization of the banks was reversed, and collective bargaining rights and minimum wage laws were restored; after jobs-creation programs were instituted and privatization of the principal source of foreign exchange was reversed. And they fail to point out that all of that additional wealth has gone into the pockets of the few; the middle class and poor have seen none of it.
    (snip)

    Quote Originally Posted by Eric Stoner View Post
    When Allende was in charge, almost 50 % of Chileans lived in poverty. Today it's 14%. In Brazil it's 31 % and in Bolivia it's 62%. During the same time frame ( 1973-2008 ) Chile developed the lowest child mortality rate in all of Latin America and life expectancy increased by over 4 years from 64 to 68. It's per capita GDP ranks third of all 29 Latin American nations.
    The numbers for poverty I've seen for Chile were 20% when Pinochet took over and 40% when he left.

    http://leiterreports.typepad.com/blo...chet_fo_1.html
    (snip)
    In 1970, 20% of Chile's population lived in poverty. By 1990, the year 'President' Pinochet left office, the number of destitute had doubled to 40%. Quite a miracle.
    (snip)


    Quote Originally Posted by Eric Stoner View Post
    Despite a clear record of success based primarily on Friedman's ideas including the fall of Pinochet ( which he predicted ) the left LOVES to point to one and only one equivocal or arguable aspect of the Chilean economy : The performance of private as opposed to public pensions. Chile gave it's citizens the option to invest their own retirement funds in 1981 but mandated that new hires enter into a private retirement plan . Some studies have shown that they have performed about the same as the public Social Security type system. However, another view says that some investors did well and some not so well depending on the level of risk they accepted and that the average performance is about the same. As of 2006; about half of the "Class of 1981" did not have enough in their accounts to even give them the minimum benefit provided by the pre-existing Social Security type plan i.e. about $140 a month. This resulted from both investment losses experienced by and excessive fees charged by SOME of the private plans.

    Just in Latin America, the country that adhered the closest to the Austrian model did the best while those that followed socialism ( Cuba, Jamaica, Nicaragua, Peru, Bolivia, Venezuela) have performed the worst.

    Places like Singapore ,Hong Kong, Macau, Switzerland etc. that most closely adhere to the Austrian model do the best. Many European countries that do not are finding that they can no longer afford their socialist type economies and programs- Sweden, Germany etc.
    Switzerland doesn't. When the economy slowed, Switzerland used Keynesian policies to increase economic growth.

    http://en.wikipedia.org/wiki/Economy_of_Switzerland

    (snip)
    On the 10.11.2002 the economics magazine Cash publicized 5 measures, which political and economic actors should implement, so that Switzerland would once again experience an economic revival:

    1. Private consumption should be promoted with decent wage increases. In addition to that families with children should get discounts on their health insurances.

    2. Switzerland's national bank should revive investments by lowering interest rates. Besides that monetary institutes should increasingly credit consumers and offer cheaper land zones which are to be built on.

    3. Switzerland's national bank is asked to devalue the Swiss Franc, especially compared to the Euro.

    4. The government should implement the anticyclical measure of increasing budget deficits. Government spending should increase in the infrastructural and educational sectors. Lowering taxes would make sense in order to promote private household consumption.

    5. Work should be flexibilised with new working plans. And thus in case of low demand dismissals could be avoided.

    These measures were applied with successful results along with the government's policy of the Magical Hexagon which consists of full employment, social equality, economic growth, environmental quality, positive trade balance and price stability.
    (snip)

    Sounds like Keynesian policies were very successful in Switzerland.

    Hong Kong doesn't either. The government of Hong Kong plays a significant role in the housing sector. About half of Hong Kong residents now live in public housing estates and other tower blocks with some form of subsidy.

    http://en.wikipedia.org/wiki/Public_...g_in_Hong_Kong


    Quote Originally Posted by Eric Stoner View Post
    Would you please name one "poor country" that REALLY follows the Austrian school. A democracy with liberal economic policies, low taxes, free trade etc. ?
    Bolivia tried it and the results were so bad, they voted out the party that implemented these changes. Same thing in Poland. In Poland the results were so bad, the people voted in former Communists to replace those who implemented these policies.

    Quote Originally Posted by Eric Stoner View Post
    How do you explain the contrast between the economies of pre- W.W. I Britain and the pre-Thatcher 70's ?
    There was a worldwide economic slowdown during the 1970's as a result of very high oil prices.

    Quote Originally Posted by Eric Stoner View Post
    Or the Germany of the 60's, 70's and 80's and it's current stagnation and high unemployment ?
    Germany's economic policies have not changed significantly. One factor in Germany's high unemployment was having to absorb millions of Germans from East Germany after Communism collapsed.

    Quote Originally Posted by Eric Stoner View Post
    Or the pre-Depression U.S. economy and the stagflation of the 1970's and the current mess ?
    We had much more economic stability after the Great Depression than we did before it. It was only after many of the regulations implemented after the Great Depression were removed that we got ourselves into this current mess.


    Quote Originally Posted by Eric Stoner View Post
    Just to put another nail in the coffin of this Naomi Klein fed calumny that the "Chicago Boys" created a "disaster" in Chile :

    These are the Per Capita GDP numbers for some other Latin American countries for 1973 and 2007 according to the U.N.

    Argentina went from $1508 to $6636
    Bolivia- $287 to $1378
    Brazil- $810 to $6852
    Costa Rica - $994 to $5801
    Peru - $603 - $3880
    Uruguay- $1004 to $6913

    Most instructive are: Cuba, the "socialist paradise"; the ultimate in government control which went from $1175 to $4611 and Venezuela which despite tremendous oil wealth; high literacy and a strong middle class only went from $1676 to $8,559. Chile started out about the same in 1973 with a per capita GDP of $1696 and in 2007 it was $9854. Over $1000 more than Venezuela during the same period of time .

    Case closed.
    No it isn't. Brazil's GDP increased more (percentage-wise). So did Peru's and Uruguay's, while Costa Rica's was approximately the same.

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    Default Re: 'Audstrian' School of Economics on the rise ...

    Quote Originally Posted by eagle2 View Post
    The numbers for poverty I've seen for Chile were 20% when Pinochet took over and 40% when he left.

    http://leiterreports.typepad.com/blo...chet_fo_1.html
    (snip)
    In 1970, 20% of Chile's population lived in poverty. By 1990, the year 'President' Pinochet left office, the number of destitute had doubled to 40%. Quite a miracle.
    Lets get our dates straight. Allende did not take power until November of 1970. By 1973 when he was ousted poverty rates had risen dramatically to almost 40%. While it did not take him long to wreck the economy of Chile, it did take him some time. Unfortunately for the Chilean people Allende's results were entirely predictable. Yet, he was able to steal the 1970 election through outright thuggery. While I do not endorse Pinochet's counter coup, he did right a tremendous wrong committed by Allende and his communist allies.

    HTH
    Z

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    Default Re: 'Austrian' School of Economics on the rise ...

    ^^^^ Milton was very capable of defending himself and his ideas. He didn't need me to do it then or now.

    Here we go again with your reading comprehension difficulties; I gave per capita GDP numbers for 1973 and 2007. It looked like substantial growth to me. Clearly better than Venezuela which has significant advantages over Chile and started at the same place and ended up with a lower per capita GDP. By more than $1000 per person. How do you explain that ? Other than Chavez and his various economic insanities ?

    Zofia is right. The poverty numbers when Pinochet took over for Allende in 1973 were about 40% and I've seen studies that have it even higher. Are you seriously trying to claim that Allende reduced poverty in Chile ? That inflation was not 150% ( actually by some measures it was much higher ) ? That GDP was not declining when he was deposed and killed ? The actual trigger for the CIA supported coup was his nationaization of the copper mines but Chile was a basket case even before he did so.

    Both Allende and Pinochet have plenty of apologists. Many of whom have tried to rewrite history to try and explain and excuse their respective crimes. The fact of the matter is that Allende was elected with 36% of the vote. He ignored the law and the Chilean Constitution by confiscating 60% of all the farmland and even private homes. As many as 14,000 Cuban and other foreign Communists came to Chile to try and turn it into another Cuba. Pinochet was ASKED to depose Allende several times. Unlike Castro, Mao, Stalin, Franco, the juntas in Brazil, Uruguay and Argentina, etc.etc. there was not a large scale bloodbath when Allende was deposed. Some 3,000 leftists were killed. 3,000 too many afaic but there was certainly some restraint. Pinochet was hardly a bloodthirsty butcher.


    Honestly, I am not very familiar with Bolivia. I do know that they aren't doing any better with a socialist in charge.

    The oil shock did not hit until 1973-4 and by 1975 there was a general recovery. In the late 70's both Germany and Japan were doing well economically as were we ( more or less ) until about 1979. We had high inflation BEFORE the second oil shock thanks to the Fed.

    Germany reunited in 1989. Twenty years ago. While we were growing from 1995 or so, the German economy stagnated under the weight of heavy social spending and high taxes. Compare her economic growth AFTER W.W. II when the whole country was destroyed and on it's knees and it's growth rate over the last 20 years.

    I pointed to Britain to show how an economic lion from 1800 to 1914 went to a lamb thanks to Labor policies. Before Thatcher took over, Britain was a mess: high taxes, high spending, emigration. labor out of control and stagnant growth thanks to the drag of numerous unprofitable nationalized industries.

    Again, you ignore the incredible economic growth we experienced both before and after W.W. I. I have demonstrated over and over again how government caused the Great Depression ( as has Melonie ) and I decline to beat the dead horse further. Markets and the rule of law usually provide adequate stability and things like the FDIC, SEC and a properly run Fed are more than adequate.

    The Chilean economy grew up to about 1982 and I explained what happened that plunged Chile into a SEVERE recession. it was Chile's GOVERNMENT monetary policy that did it coupled with a worldwide recession. Why do you keep forgetting the wonderful economy Nixon, Ford,Carter and of course Arthur Burns created in the 1970's and early 80's ?

    While some de-regulation was clearly unwise and contributed to our current problems, the root causes were government created.
    1. We had a Fed pumping out too much money at too low interest rates.
    2. We had a government incentivizing home ownership for decades and too many people buying houses who could not afford them.It was
    GOVERNMENT that not only permitted abandonment of of lending standards but in many cases MANDATED it ! Remember the CRA ? Who cooked up "no money down" mortgages ? The name Franklin Raines seems to come to mind.
    3. We had Fannie and Freddie and other government lenders and guarantors getting their
    fingers into 95% of all home loans.
    4. It was tax and regulatory policy that drove money into mortgages and related securities from 2005 to 2007. The top five broker dealers were exempt from capital standards. What do you think "Friends of Angelo" was all about ? How do you think Lehman Brothers, Bear Sterrns and AIG got into trouble ?

    To say that our current mess was caused by "greed" is like saying that all plane crashes are caused by gravity.

    As for the respective growth rates, you are correct that some countries had larger overall increases in per capita GDP. What you ignore, ( which surprises me given your expressed egalitarianism ) is the poverty rates in those countries. All have higher poverty rates than Chile and all have lower percentage reductions in those rates than Chile.

    I never said that Chile's record was perfect and that they did not have problems. You tried to blame it all on the "Chicago Boys" which is partially true but it was when they deviated from Friedman's prescriptions and proscriptions that they had most of their problems. In fact, most scholars agree that it was the generals who ran the economy from 1973 to 1979 and then they gave up in frustration after their policies failed. It was THEN that they turned to the "Chicago Boys".

    A lot of this is generated by the left who never forgave Friedman for meeting and speaking with Pinochet. Something I too wish he hadn't done but as Friedman said : he never got criticized for meeting and speaking with Chinese leaders or Tito. He had one 45 minute meeting with Pinochet. Thereafter he refused numerous honors and awards from a regime he repeatedly described as "despicable".

    The rewriting of history and slanders against Friedman have culminated with Naomi Klein and her pathetic screed "SHOCK DOCTRINE" where her misquotes of Friedman were so numerous and her taking his words out of context so egregious that LEFTIST critics who were no fans of Friedman like Hitchens, Cockburn, Korn and especially Johan Norberg pulled her panties down and exposed her intellectual dishonesty.

    Do you think it's an accident or coincidence that China and India experienced the growth and reduction of poverty that they did AFTER they liberalized their economies i.e. became less socialist and more capitalist ? All those countries you like so much for their generous social welfare and egalitarian culture did NOT start that way. The Netherlands was as greedy and cutthroat a mercantile nation as anyone else; Sweden used to be a worldwide arms merchant; the Swiss were as greedy and amoral as any other banker. Their wealth was built by capitalism , NOT socialism. I can't think of a single country that started at the bottom and rose up via socialism and statism. Africa, Asia and the Caribbean are littered with former colonies who went socialist right after independence; where the state owns everything of serious value and all are worse off now than when they were colonies. The only exceptions are those who liberalized and junked Marx for Adam Smith.
    Last edited by Eric Stoner; 09-10-2009 at 12:25 PM.

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    Default Re: 'Audstrian' School of Economics on the rise ...

    Quote Originally Posted by Zofia View Post
    Lets get our dates straight. Allende did not take power until November of 1970. By 1973 when he was ousted poverty rates had risen dramatically to almost 40%. While it did not take him long to wreck the economy of Chile, it did take him some time. Unfortunately for the Chilean people Allende's results were entirely predictable. Yet, he was able to steal the 1970 election through outright thuggery. While I do not endorse Pinochet's counter coup, he did right a tremendous wrong committed by Allende and his communist allies.

    HTH
    Z
    Things may have been bad under Allende, but they became worse under Pinochet for many people, especially the poor.

    http://en.wikipedia.org/wiki/Economi...rms.2C_1975-81

    (snip)
    After the military took over the government in September 1973, there was a year and a half of benign neglect of the economy as the regime consolidated its power. When in April 1975, the so called "Chicago Boys" took control of economic policy, a period of dramatic economic changes began. Chile was transformed gradually from an economy isolated from the rest of the world, with strong government intervention, into a liberalized, world integrated economy, where market forces were left free to guide most of the economy's decisions. This period was characterized by several important economic achievements, bolstered by increased support from the US administration: inflation was reduced greatly, the government deficit was virtually eliminated, the economy went through a dramatic liberalization of its foreign sector, and a strong market system was established. Along with these achievements, drops occurred in the standard of living of the poorest citizens, poverty jumped dramatically, wages declined, and the gap between rich and poor widened significantly.
    (snip)

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    Default Re: 'Austrian' School of Economics on the rise ...

    The Australian school of economics is not gaining disciples, except among highly unrealistic, uh, excuse me, ideological conservatives and libertarians who care more of philosophy than reality, because the free market (or the market that existed during the reign of both sincere and hypocritical free market advocates) collapsed. When it comes to economists, the technocratic ones tend to beat the philosophers, and always we should favor the truth, even if it doesn't appeal to our prejudices.

    And have fans of Austrian Economics even looked at Austria's economy? It should make any objective observer instead favor Singapore Economics, China Economics, Canada Economics, Taiwan Economics, or any other pragmatic, non-ideological school of economics.

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    Default Re: 'Austrian' School of Economics on the rise ...

    Quote Originally Posted by Eric Stoner View Post
    ^^^^ Milton was very capable of defending himself and his ideas. He didn't need me to do it then or now.

    Here we go again with your reading comprehension difficulties; I gave per capita GDP numbers for 1973 and 2007. It looked like substantial growth to me. Clearly better than Venezuela which has significant advantages over Chile and started at the same place and ended up with a lower per capita GDP. By more than $1000 per person. How do you explain that ? Other than Chavez and his various economic insanities ?
    Here we go again with your inability to understand the difference between "constant dollars" and "current dollars". Nowhere do you specify which was used. Considering your figures show Chile economy as being more than 5 times as big in 2007 as it was in 1973, and Brazil's economy being more than 8 times as big in 2007 as it was in 1973, I doubt very much you were using constant dollars. Your numbers are meaningless in showing how much Chile grew over 34 years. A 2007 dollar is worth less than half of a 1973 dollar.

    You are making a straw man argument regarding Venezuela. Not once have I advocated for Chavez's policies, only that Pinochet's were a failure. By any objective measurement, they were. If Pinochet's policies were so great, how do you explain Brazil's economy growing 50% faster during the period you showed?

    Quote Originally Posted by Eric Stoner View Post
    Zofia is right. The poverty numbers when Pinochet took over for Allende in 1973 were about 40% and I've seen studies that have it even higher. Are you seriously trying to claim that Allende reduced poverty in Chile ? That inflation was not 150% ( actually by some measures it was much higher ) ? That GDP was not declining when he was deposed and killed ? The actual trigger for the CIA supported coup was his nationaization of the copper mines but Chile was a basket case even before he did so.
    I never made any claims about Allende. For many people in Chile, the economy became even worse after Milton Friedman's policies were implemented by Pinochet.


    Quote Originally Posted by Eric Stoner View Post
    Both Allende and Pinochet have plenty of apologists. Many of whom have tried to rewrite history to try and explain and excuse their respective crimes. The fact of the matter is that Allende was elected with 36% of the vote. He ignored the law and the Chilean Constitution by confiscating 60% of all the farmland and even private homes. As many as 14,000 Cuban and other foreign Communists came to Chile to try and turn it into another Cuba. Pinochet was ASKED to depose Allende several times. Unlike Castro, Mao, Stalin, Franco, the juntas in Brazil, Uruguay and Argentina, etc.etc. there was not a large scale bloodbath when Allende was deposed. Some 3,000 leftists were killed. 3,000 too many afaic but there was certainly some restraint. Pinochet was hardly a bloodthirsty butcher.
    I've never advocated anything Allende did. I don't support his policies. I've only said that Pinochet's policies, based on the Austrian School of Economics, were failures.

    Chile had a population of approximately 10 million people at the time. That would be the equivalent of killing 90,000 Americans. In addition to the 3,000 killed, another 28,000 were tortured.

    Quote Originally Posted by Eric Stoner View Post
    Honestly, I am not very familiar with Bolivia. I do know that they aren't doing any better with a socialist in charge.
    The people in Bolivia think they are.

    Quote Originally Posted by Eric Stoner View Post
    The oil shock did not hit until 1973-4 and by 1975 there was a general recovery. In the late 70's both Germany and Japan were doing well economically as were we ( more or less ) until about 1979. We had high inflation BEFORE the second oil shock thanks to the Fed.
    The second oil shock was in 1977 or 1978.

    Quote Originally Posted by Eric Stoner View Post
    Germany reunited in 1989. Twenty years ago. While we were growing from 1995 or so, the German economy stagnated under the weight of heavy social spending and high taxes. Compare her economic growth AFTER W.W. II when the whole country was destroyed and on it's knees and it's growth rate over the last 20 years.
    As I said before, integrating East Germany into the German economy had a significant impact on economic growth. What do you think would happen if Mexico was integrated into the US economy? East Germany was even worse off than Mexico.

    By many measurements, Germany is better off than the US. Their poverty rate is much lower, thanks to heavy social spending. They have much lower crime rates. All of their citizens have health coverage. They have longer life expectancy and lower infant mortality rate.


    Quote Originally Posted by Eric Stoner View Post
    I pointed to Britain to show how an economic lion from 1800 to 1914 went to a lamb thanks to Labor policies. Before Thatcher took over, Britain was a mess: high taxes, high spending, emigration. labor out of control and stagnant growth thanks to the drag of numerous unprofitable nationalized industries.
    Britain was significantly weakened economically from having to fight two world wars. Regardless, I never advocated Labor policies. You keep making these straw man arguments. I'm not in favor of nationalizing industries. I have never advocated that. Because I don't go along with Milton Friedman's views doesn't automatically mean I'm a socialist.

    Quote Originally Posted by Eric Stoner View Post
    Again, you ignore the incredible economic growth we experienced both before and after W.W. I. I have demonstrated over and over again how government caused the Great Depression ( as has Melonie ) and I decline to beat the dead horse further. Markets and the rule of law usually provide adequate stability and things like the FDIC, SEC and a properly run Fed are more than adequate.
    Before FDR became President, we were having Depressions every 20-30 years. We haven't had one in more than 75 years since then. Do you think this is just a coincidence? The time period you're referring to, there was immense poverty in the US. It wasn't uncommon for seniors to go bankrupt after their life savings ran out, and end up living on the streets. Any rational person can see that Americans are much better off today than they were 100 years ago.

    You have not demonstrated how government caused the Great Depression and neither has Melonie. There wasn't any single cause. If we had many of the laws and regulations passed since then at the time, it's unlikely it would have happened. As I said before, there hasn't been a depression in more than 75 years.


    Quote Originally Posted by Eric Stoner View Post
    The Chilean economy grew up to about 1982 and I explained what happened that plunged Chile into a SEVERE recession. it was Chile's GOVERNMENT monetary policy that did it coupled with a worldwide recession. Why do you keep forgetting the wonderful economy Nixon, Ford,Carter and of course Arthur Burns created in the 1970's and early 80's ?
    As bad as the economy was, there weren't any other countries that suffered as big as a downturn as Chile did.

    Quote Originally Posted by Eric Stoner View Post
    While some de-regulation was clearly unwise and contributed to our current problems, the root causes were government created.
    1. We had a Fed pumping out too much money at too low interest rates.
    2. We had a government incentivizing home ownership for decades and too many people buying houses who could not afford them.It was
    GOVERNMENT that not only permitted abandonment of of lending standards but in many cases MANDATED it ! Remember the CRA ? Who cooked up "no money down" mortgages ? The name Franklin Raines seems to come to mind.
    That's just right-wing misinformation. Only a small percentage of bad loans were made under CRA provisions.

    "No money down mortgages were made possible by the Alternative Mortgage Transaction Parity Act of 1982, signed into law by Reagan. It was deregulation such as this that lead to the financial crisis.


    Quote Originally Posted by Eric Stoner View Post
    3. We had Fannie and Freddie and other government lenders and guarantors getting their
    fingers into 95% of all home loans.
    No, the percentage of loans being held by Fannie and Freddie decreased significantly in years preceding the crisis. The majority were going to private securities firms, such as Lehman Brothers.

    Quote Originally Posted by Eric Stoner View Post
    4. It was tax and regulatory policy that drove money into mortgages and related securities from 2005 to 2007. The top five broker dealers were exempt from capital standards. What do you think "Friends of Angelo" was all about ? How do you think Lehman Brothers, Bear Sterrns and AIG got into trouble ?
    No, it was deregulation that drove money into mortgages and related securities from 2005 to 2007. Many of the transactions that took place would not have been allowed 30-40 years ago. Canada never deregulated their banking industry and they never ran into the crisis we did.

    Quote Originally Posted by Eric Stoner View Post
    To say that our current mess was caused by "greed" is like saying that all plane crashes are caused by gravity.

    As for the respective growth rates, you are correct that some countries had larger overall increases in per capita GDP. What you ignore, ( which surprises me given your expressed egalitarianism ) is the poverty rates in those countries. All have higher poverty rates than Chile and all have lower percentage reductions in those rates than Chile.
    The unfettered free-market policies imposed on Chile by Pinochet exacerbated the poverty problem. It was only after his policies were undone, such as eliminating the minimum wage, that the poverty rate went down.

    Quote Originally Posted by Eric Stoner View Post
    I never said that Chile's record was perfect and that they did not have problems. You tried to blame it all on the "Chicago Boys" which is partially true but it was when they deviated from Friedman's prescriptions and proscriptions that they had most of their problems. In fact, most scholars agree that it was the generals who ran the economy from 1973 to 1979 and then they gave up in frustration after their policies failed. It was THEN that they turned to the "Chicago Boys".

    A lot of this is generated by the left who never forgave Friedman for meeting and speaking with Pinochet. Something I too wish he hadn't done but as Friedman said : he never got criticized for meeting and speaking with Chinese leaders or Tito. He had one 45 minute meeting with Pinochet. Thereafter he refused numerous honors and awards from a regime he repeatedly described as "despicable".

    The rewriting of history and slanders against Friedman have culminated with Naomi Klein and her pathetic screed "SHOCK DOCTRINE" where her misquotes of Friedman were so numerous and her taking his words out of context so egregious that LEFTIST critics who were no fans of Friedman like Hitchens, Cockburn, Korn and especially Johan Norberg pulled her panties down and exposed her intellectual dishonesty.
    I don't blame everything on the "Chicago Boys", but nobody can deny they had a great deal of influence on Chile's economic policies under Pinochet.

    Quote Originally Posted by Eric Stoner View Post
    Do you think it's an accident or coincidence that China and India experienced the growth and reduction of poverty that they did AFTER they liberalized their economies i.e. became less socialist and more capitalist ? All those countries you like so much for their generous social welfare and egalitarian culture did NOT start that way. The Netherlands was as greedy and cutthroat a mercantile nation as anyone else; Sweden used to be a worldwide arms merchant; the Swiss were as greedy and amoral as any other banker. Their wealth was built by capitalism , NOT socialism. I can't think of a single country that started at the bottom and rose up via socialism and statism. Africa, Asia and the Caribbean are littered with former colonies who went socialist right after independence; where the state owns everything of serious value and all are worse off now than when they were colonies. The only exceptions are those who liberalized and junked Marx for Adam Smith.
    Again, I never advocated complete state control of the economy. To much state control is just as bad as too little. Having government completely controlling the economy doesn't work and neither does having no government control. Completely unregulated free markets do not work any more than economies completely controlled by the state.

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    Quote Originally Posted by eagle2 View Post
    Here we go again with your inability to understand the difference between "constant dollars" and "current dollars". Nowhere do you specify which was used. Considering your figures show Chile economy as being more than 5 times as big in 2007 as it was in 1973, and Brazil's economy being more than 8 times as big in 2007 as it was in 1973, I doubt very much you were using constant dollars. Your numbers are meaningless in showing how much Chile grew over 34 years. A 2007 dollar is worth less than half of a 1973 dollar.

    You are making a straw man argument regarding Venezuela. Not once have I advocated for Chavez's policies, only that Pinochet's were a failure. By any objective measurement, they were. If Pinochet's policies were so great, how do you explain Brazil's economy growing 50% faster during the period you showed?



    I never made any claims about Allende. For many people in Chile, the economy became even worse after Milton Friedman's policies were implemented by Pinochet.




    I've never advocated anything Allende did. I don't support his policies. I've only said that Pinochet's policies, based on the Austrian School of Economics, were failures.

    Chile had a population of approximately 10 million people at the time. That would be the equivalent of killing 90,000 Americans. In addition to the 3,000 killed, another 28,000 were tortured.



    The people in Bolivia think they are.


    The second oil shock was in 1977 or 1978.


    As I said before, integrating East Germany into the German economy had a significant impact on economic growth. What do you think would happen if Mexico was integrated into the US economy? East Germany was even worse off than Mexico.

    By many measurements, Germany is better off than the US. Their poverty rate is much lower, thanks to heavy social spending. They have much lower crime rates. All of their citizens have health coverage. They have longer life expectancy and lower infant mortality rate.



    Britain was significantly weakened economically from having to fight two world wars. Regardless, I never advocated Labor policies. You keep making these straw man arguments. I'm not in favor of nationalizing industries. I have never advocated that. Because I don't go along with Milton Friedman's views doesn't automatically mean I'm a socialist.


    Before FDR became President, we were having Depressions every 20-30 years. We haven't had one in more than 75 years since then. Do you think this is just a coincidence? The time period you're referring to, there was immense poverty in the US. It wasn't uncommon for seniors to go bankrupt after their life savings ran out, and end up living on the streets. Any rational person can see that Americans are much better off today than they were 100 years ago.

    You have not demonstrated how government caused the Great Depression and neither has Melonie. There wasn't any single cause. If we had many of the laws and regulations passed since then at the time, it's unlikely it would have happened. As I said before, there hasn't been a depression in more than 75 years.



    As bad as the economy was, there weren't any other countries that suffered as big as a downturn as Chile did.


    That's just right-wing misinformation. Only a small percentage of bad loans were made under CRA provisions.

    "No money down mortgages were made possible by the Alternative Mortgage Transaction Parity Act of 1982, signed into law by Reagan. It was deregulation such as this that lead to the financial crisis.



    No, the percentage of loans being held by Fannie and Freddie decreased significantly in years preceding the crisis. The majority were going to private securities firms, such as Lehman Brothers.


    No, it was deregulation that drove money into mortgages and related securities from 2005 to 2007. Many of the transactions that took place would not have been allowed 30-40 years ago. Canada never deregulated their banking industry and they never ran into the crisis we did.


    The unfettered free-market policies imposed on Chile by Pinochet exacerbated the poverty problem. It was only after his policies were undone, such as eliminating the minimum wage, that the poverty rate went down.



    I don't blame everything on the "Chicago Boys", but nobody can deny they had a great deal of influence on Chile's economic policies under Pinochet.



    Again, I never advocated complete state control of the economy. To much state control is just as bad as too little. Having government completely controlling the economy doesn't work and neither does having no government control. Completely unregulated free markets do not work any more than economies completely controlled by the state.
    Sigh.

    The per capita GDP figures I posted were CLEARLY denoted as being in CONSTANT dollars. They all came from the same U.N. economic data table. What do you think, I used 2007 dollars for Chile and constant dollars for Brazil ? Only the authors of some of the links you like so much do stuff like that.

    If 3rd place economically out of 29 Latin American countries : reducing poverty from 40% to 14 % and having the lowest infant mortality in Latin America is a "failure", could we please have the same type of "failure" in Haiti, Jamaica , Mexico and Central America ?

    Allende wrecked the Chilean economy for EVERYBODY. Chile's transition to a liberalized , market based economy was not smooth. I never said it was. It was not and is not a pure disciple of the Austrian or Chicago Schools. However, overall, they have made remarkable progress.

    Friedman described the Pinochet regime as "despicable". I think he was being kind. BUT, Mao killed tens of millions. So did Stalin. Franco killed at least 100,000 Republicans after they surrendered. Castro killed thousands. Tthe Argentinian Junta killed tens of thousands in the "Dirty War". Some on the left think despotism began and ended with Pinochet. The irony is that Allende, with Cuban help, was planning to impose a Cuban style dictatorship. It's a fair question how many Chileans would have been killed and tortured under an Allende dictatorship. After Pinochet was deposed, Chile made even greater economic progress.

    When you're right, you're right. Bolivia seems to be doing well economically. Not as well as Chile but there has been substantial improvement. Let's see how long it lasts.

    By some measures Germany is doing better than we are. By other indicia we are.
    BUT Germany has a stagnant population that is getting older. Every year, fewer and fewer German workers are available to tax to pay for it's generous social programs. They are facing an even greater cash flow crunch in the next 10 to 20 years than we are.

    No my friend. I was around then and remember it all very well. The second oil shock resulted from the fall of the Shah in Iran which occurred in 1979 and lasted well into 1981.

    If avoiding Depression defines stability then we have been more stable since 1933.

    I have most certainly demonstrated by citing historical FACTS that government turned a recession into a Depression by 1. cutting the money supply and raising interest rates 2. raising taxes 3. erecting trade barriers 4. not rescuing a major N.Y. Bank directly setting off the bank run on 1932-3.

    FDR prolonged the Depression by raising taxes. The Fed. joined FDR in creating the Recession of 1938 by cutting the money supply and raising interest rates. If you don't like these facts, take it up with the authors of the history books ! Stop trying to have your own facts ! Modern historical scholarship has debunked many myths about the Great Depression and it's causes. Try reading some.

    Rotflmao. What about Argentina ? The whole country almost collapsed ? What about Brazil and it's hyperinflationary period ? Stop trying to have your own facts. Chile did not exist in a vaccuum and many of it's neighbors had even worse problems.

    Unlike some , I don't blame the CRA as much as the Fed. , Countrywide, Fannie, Freddie, private banks, mortgage brokers etc. etc. An existing problem thanks to Clinton and Reno metastasized under G.W. Bush in his second term with his "ownership society" bullshit. In looking at Fannie and Freddie involvement there are three things to look at : direct lending which was relatively small; loan guarantees which were huge and securities that were issued. Add all three and include other Federal lending like HRA, etc. and total Federal involvement one way or the other got close to 95% of all new mortgages issued from 2004 to 2006.

    Here we actually agree that our deregulation of banking was dumb. If we'd maintained Glass- Steagall, traditional lending standards and had an alert and effective SEC, we would already be out of a mild correction, At the worst.
    I have NEVER advocated the kind of deregulated laissez faire capitalism called for by the Austrian School. Remember when I described it as "extreme and unrealistic" ? ^^^^^ I don't even agree with "Uncle Miltie" on everything. Inter alia, I support a reasonable minimum wage. While theoretically it might have negative effects, in actual practice a minimum wage has minimal if any drag on the economy. It does not affect actual hiring in any meaningful way that I am aware of.
    Last edited by Eric Stoner; 09-11-2009 at 12:00 PM.

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    Default Re: 'Audstrian' School of Economics on the rise ...

    Quote Originally Posted by eagle2 View Post
    Things may have been bad under Allende, but they became worse under Pinochet for many people, especially the poor.

    http://en.wikipedia.org/wiki/Economi...rms.2C_1975-81

    (snip).... Along with these achievements, drops occurred in the standard of living of the poorest citizens, poverty jumped dramatically, wages declined, and the gap between rich and poor widened significantly.
    (snip)
    I would take issue with some of the wikipedia article's conclusions. What I have seen is poverty hit about 40 percent in Allende's last year in office and inflation was rampant. Pinochet's government first tamed inflation, but did little about the poverty rate until very late. In the late 1980s poverty rates began to fall. It was not until Pinochet was replaced by a democratically elected successor that the full fruits of his labors came to pass. Still, by 1990, poverty stood at 23 percent, slightly higher than it was in 1970 before Allende stole the election. Even today with almost no national debt, and no inflation the poverty rate in Chile stands at about 18 percent. Better than pre-Allende, but still not good.

    All in all, I think Allende was far worse than Pinochet and the Chilean people are far better off being rid of a communist dictator.

    XOXO
    Z

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    Default Re: 'Audstrian' School of Economics on the rise ...

    Quote Originally Posted by Zofia View Post
    [/I] I would take issue with some of the wikipedia article's conclusions. What I have seen is poverty hit about 40 percent in Allende's last year in office and inflation was rampant. Pinochet's government first tamed inflation, but did little about the poverty rate until very late. In the late 1980s poverty rates began to fall. It was not until Pinochet was replaced by a democratically elected successor that the full fruits of his labors came to pass. Still, by 1990, poverty stood at 23 percent, slightly higher than it was in 1970 before Allende stole the election. Even today with almost no national debt, and no inflation the poverty rate in Chile stands at about 18 percent. Better than pre-Allende, but still not good.

    All in all, I think Allende was far worse than Pinochet and the Chilean people are far better off being rid of a communist dictator.

    XOXO
    Z
    Wikipeida is NOT an authoratative scholarly source for anything !

    You are correct in that Chile made greater progress AFTER Pinochet than while he was in power. The latest figures I've seen ( up to 2007) have the Chilean poverty rate at 14 %.

    Afaic Allende and Pinochet were just opposite sides of the same coin. Neither was a democrat. Both were thugs. Both had blood on their hands but the crimes of Allende's leftist goons were dwarfed by what Pinochet's military did. Neither had any respect for the rule of law.

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    Default Re: 'Audstrian' School of Economics on the rise ...

    Quote Originally Posted by Zofia View Post
    [/I] I would take issue with some of the wikipedia article's conclusions. What I have seen is poverty hit about 40 percent in Allende's last year in office and inflation was rampant. Pinochet's government first tamed inflation, but did little about the poverty rate until very late. In the late 1980s poverty rates began to fall. It was not until Pinochet was replaced by a democratically elected successor that the full fruits of his labors came to pass. Still, by 1990, poverty stood at 23 percent, slightly higher than it was in 1970 before Allende stole the election. Even today with almost no national debt, and no inflation the poverty rate in Chile stands at about 18 percent. Better than pre-Allende, but still not good.

    All in all, I think Allende was far worse than Pinochet and the Chilean people are far better off being rid of a communist dictator.

    XOXO
    Z
    I think Allende and Pinochet were both very bad. Most of Chile's economic growth came after Pinochet left office and many of his policies were reversed. During the 15 years Pinochet was in power, there was little economic growth overall and most people were as bad or worse off then when Pinochet came to power. The only ones who benefited were the very wealthy. In 1990, 17 years after Pinochet took over, more than 38.6 percent of the people were living below the poverty line. It was only after a center-left government took over that the poverty rate began to dramatically fall.

    http://www.macleans.ca/world/global/..._109285_109285

    (snip)
    Poverty has fallen faster in Chile than anywhere else in Latin America, according to figures recently published by the Chilean government. Statistics collected by the Caracterización Socioeconómica Nacional(CASEN)survey carried out by the country's planning ministry showed that poverty fell from 18.7 per cent in 2003 to 13.7 per cent in 2006. In 1990, when dictator Augusto Pinochet left office, more than 38.6 per cent of people in this Andean country of 16 million lived below the poverty line.
    (snip)

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    Default Re: 'Austrian' School of Economics on the rise ...

    Quote Originally Posted by Eric Stoner View Post
    Sigh.

    The per capita GDP figures I posted were CLEARLY denoted as being in CONSTANT dollars. They all came from the same U.N. economic data table. What do you think, I used 2007 dollars for Chile and constant dollars for Brazil ? Only the authors of some of the links you like so much do stuff like that.
    You were using current dollars for all of the countries you listed, which is not accurate. It makes their economic growth artificially high. You show Chile as having a per-capita GDP of $1,696 in 1973. That was in 1973 dollars. In 1993 dollars it was $3,600. It would be even higher in 2000 dollars or 2005 dollars. To base economic growth on how much the per-capita GDP was in 1973 dollars in 1973 to how much the per-capita GDP was in 2005 in 2005 dollars grossly exaggerates economic growth. It also does not accurately reflect how much the economy grew or didn't grow under Pinchet, since your numbers include the more than 10 years since he left power. If you measure per-capita GDP growth during the years Pinochet was in power, in constant dollars, the results were horrendous. The per-capital GDP actually decreased during the years Pinochet was in power.

    http://www.huppi.com/kangaroo/L-chichile.htm

    (snip)
    So what was the record for the entire Pinochet regime? Between 1972 and 1987, the GNP per capita fell 6.4 percent. (13) In constant 1993 dollars, Chile's per capita GDP was over $3,600 in 1973. Even as late as 1993, however, this had recovered to only $3,170. (14) Only five Latin American countries did worse in per capita GDP during the Pinochet era (1974-1989).
    (snip)

    Quote Originally Posted by Eric Stoner View Post
    If 3rd place economically out of 29 Latin American countries : reducing poverty from 40% to 14 % and having the lowest infant mortality in Latin America is a "failure", could we please have the same type of "failure" in Haiti, Jamaica , Mexico and Central America ?
    All of the economic growth and poverty reduction occurred after Pinochet left power and many of his policies were reversed. As the article above mentions, only five Latin American countries did worse than Chile during the years Pinochet was in power.

    Quote Originally Posted by Eric Stoner View Post
    If avoiding Depression defines stability then we have been more stable since 1933.

    I have most certainly demonstrated by citing historical FACTS that government turned a recession into a Depression by 1. cutting the money supply and raising interest rates 2. raising taxes 3. erecting trade barriers 4. not rescuing a major N.Y. Bank directly setting off the bank run on 1932-3.
    The government actually cut taxes dramatically in the years preceding the Great Depression. The top tax rate went from 73% in 1921 to 25% in 1925.

    http://www.truthandpolitics.org/top-rates.php

    Taxes were not raised until 1932, when the depression was already well under way. What was most likely the main cause of the Great Depression was the tightening of the money supply.


    Quote Originally Posted by Eric Stoner View Post
    FDR prolonged the Depression by raising taxes. The Fed. joined FDR in creating the Recession of 1938 by cutting the money supply and raising interest rates. If you don't like these facts, take it up with the authors of the history books ! Stop trying to have your own facts ! Modern historical scholarship has debunked many myths about the Great Depression and it's causes. Try reading some.
    The economy grew significantly during FDR's presidency. FDR raised taxes in 1936 to 79% for the highest earners, and the economy grew at 14% that year, the highest peacetime growth in US history. It was only when government cut spending in 1937 that the US economy went into recession. Here's a timeline:

    http://www.huppi.com/kangaroo/Timeline.htm

    Here are related excerpts:

    1936

    Top tax rate raised to 79 percent.

    Economic recovery continues: GNP grows a record 14.1 percent; unemployment falls to 16.9 percent.

    1937

    Economists attribute economic growth so far to heavy government spending that is somewhat deficit. Roosevelt, however, fears an unbalanced budget and cuts spending for 1937. That summer, the nation plunges into another recession. Despite this, the yearly GNP rises 5.0 percent, and unemployment falls to 14.3 percent.

    1938

    The year-long recession makes itself felt: the GNP falls 4.5 percent, and unemployment rises to 19.0 percent.

    1939

    The United States will begin emerging from the Depression as it borrows and spends $1 billion to build its armed forces. From 1939 to 1941, when the Japanese attack Pearl Harbor, U.S. manufacturing will have shot up a phenomenal 50 percent!

    (notice what deficit spending can do for the economy)


    Quote Originally Posted by Eric Stoner View Post

    Here we actually agree that our deregulation of banking was dumb. If we'd maintained Glass- Steagall, traditional lending standards and had an alert and effective SEC, we would already be out of a mild correction, At the worst.
    I have NEVER advocated the kind of deregulated laissez faire capitalism called for by the Austrian School. Remember when I described it as "extreme and unrealistic" ? ^^^^^
    I'm glad you are in agreement with this.

    Quote Originally Posted by Eric Stoner View Post
    I don't even agree with "Uncle Miltie" on everything. Inter alia, I support a reasonable minimum wage. While theoretically it might have negative effects, in actual practice a minimum wage has minimal if any drag on the economy. It does not affect actual hiring in any meaningful way that I am aware of.
    This is the problem with conservatism. Everything is based on hypotheticals, rather than what happens in the real world. Anyone can come up with a hypothetical situation to justify their position. It's easy to think of a hypothetical reason why having a minimum wage is bad, but if you look at what happens in the real world, it's obvious that having a reasonable minimum wage is not detrimental and is actually beneficial to the economy.

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    Default Re: 'Austrian' School of Economics on the rise ...

    Quote Originally Posted by eagle2 View Post
    You were using current dollars for all of the countries you listed, which is not accurate. It makes their economic growth artificially high. You show Chile as having a per-capita GDP of $1,696 in 1973. That was in 1973 dollars. In 1993 dollars it was $3,600. It would be even higher in 2000 dollars or 2005 dollars. To base economic growth on how much the per-capita GDP was in 1973 dollars in 1973 to how much the per-capita GDP was in 2005 in 2005 dollars grossly exaggerates economic growth. It also does not accurately reflect how much the economy grew or didn't grow under Pinchet, since your numbers include the more than 10 years since he left power. If you measure per-capita GDP growth during the years Pinochet was in power, in constant dollars, the results were horrendous. The per-capital GDP actually decreased during the years Pinochet was in power.

    http://www.huppi.com/kangaroo/L-chichile.htm

    (snip)
    So what was the record for the entire Pinochet regime? Between 1972 and 1987, the GNP per capita fell 6.4 percent. (13) In constant 1993 dollars, Chile's per capita GDP was over $3,600 in 1973. Even as late as 1993, however, this had recovered to only $3,170. (14) Only five Latin American countries did worse in per capita GDP during the Pinochet era (1974-1989).
    (snip)


    All of the economic growth and poverty reduction occurred after Pinochet left power and many of his policies were reversed. As the article above mentions, only five Latin American countries did worse than Chile during the years Pinochet was in power.


    The government actually cut taxes dramatically in the years preceding the Great Depression. The top tax rate went from 73% in 1921 to 25% in 1925.

    http://www.truthandpolitics.org/top-rates.php

    Taxes were not raised until 1932, when the depression was already well under way. What was most likely the main cause of the Great Depression was the tightening of the money supply.



    The economy grew significantly during FDR's presidency. FDR raised taxes in 1936 to 79% for the highest earners, and the economy grew at 14% that year, the highest peacetime growth in US history. It was only when government cut spending in 1937 that the US economy went into recession. Here's a timeline:

    http://www.huppi.com/kangaroo/Timeline.htm

    Here are related excerpts:

    1936

    Top tax rate raised to 79 percent.

    Economic recovery continues: GNP grows a record 14.1 percent; unemployment falls to 16.9 percent.

    1937

    Economists attribute economic growth so far to heavy government spending that is somewhat deficit. Roosevelt, however, fears an unbalanced budget and cuts spending for 1937. That summer, the nation plunges into another recession. Despite this, the yearly GNP rises 5.0 percent, and unemployment falls to 14.3 percent.

    1938

    The year-long recession makes itself felt: the GNP falls 4.5 percent, and unemployment rises to 19.0 percent.

    1939

    The United States will begin emerging from the Depression as it borrows and spends $1 billion to build its armed forces. From 1939 to 1941, when the Japanese attack Pearl Harbor, U.S. manufacturing will have shot up a phenomenal 50 percent!

    (notice what deficit spending can do for the economy)




    I'm glad you are in agreement with this.



    This is the problem with conservatism. Everything is based on hypotheticals, rather than what happens in the real world. Anyone can come up with a hypothetical situation to justify their position. It's easy to think of a hypothetical reason why having a minimum wage is bad, but if you look at what happens in the real world, it's obvious that having a reasonable minimum wage is not detrimental and is actually beneficial to the economy.
    Wrong again ! The data table I used was in CONSTANT dollars. If you don't like the data, please take it up with the U.N. bureaucrats who compiled and published it. Remember how you liked pointing out that Brazil's per capita GDP increase was larger in percentage terms than Chile's ? ( Which it was, btw. ) Afaic that was a legitimate point for you to make BUT you have to also look at the price that Brazil paid and is paying : huge swaths of rain forest destruction; serious dislocation of indigenous tribes. And they still have a poverty rate of 31 % while Chile's is down to 14 %. A lot of Brazil's progress was based on heavy industrialization; free trade for its agricultural exports and heavy use of sugar cane based ethanol which minimized the impact of oil price increases. They don't grow very much sugar cane in Chile. On top of everything else, Brazil has a huge domestic market of about 200 million people while Chile's is about 16 milion.

    I like how you're trying to paint me as an apologist for Pinochet. I could not condemn him in clearer terms. Likewise you are trying to pretend that the "Chicago Boys" were in charge of the Chilean economy when they most certainly were NOT. Pinochet took over in 1973. He didn't even start listening to the "Chicago Boys" until 1979 when the U.S. and the rest of the world were heading into a severe recession. Remember the second Oil Shock ( 1979 -1982 ) ? The Latin American Debt Crisis ( 1980-1990 approx. ) ? Again, you cherry pick some facts and then insist on looking at them in a vacuum. NOBODY in Latin America was doing particularly well economically from 1980 to about 1990.

    I'm going to say this one last time: Chile experienced serious economic growth AFTER Pinochet was deposed and democracy was restored. I NEVER argued otherwise. You just ASSUMED I was defending everything the Chicago Boys did. I pointed to only one example where they did not follow Friedman's advice and reaped the lousy results. There were several others mostly dealing with fiscal and monetary policy. Btw, even though Chile has had some center-left governments, they have NOT undone most of the liberalizing and denationalizing started by the Chicago Boys. As I pointed out, ( ME , this guy here, not you), their greatest failure afaic has been the attempted privatization of the National Pension System. To date, on average, it has not outperformed the government run system. There are a LOT of reasons for it including widespread fraud but it is a cautionary tale for those advocating that we do something similar.

    Are you trying to claim that Coolidge's tax cuts caused the Great Depression ? That's a novel theory. Not even Krugman or Stiglitz have picked up on that one afaik. I always thought it was the wheat bubble followed by the real estate bubble and the oil bubble and then the stock market bubble; the sequential bursting of which caused a severe recession. Which was followed by the Fed restricting the money supply and failing to bail out the banks coupled with Hoover's tax increases and protectionism resulting in a trade war. But what do I know ?

    In your cherry picked history lesson you FINALLY recognize the Recession of 1938 and try to blame it all on FDR's spending cuts. Of course, you insist on ignoring the effect of his tax increases and even MORE importantly, the effect of the Fed. reducing the money supply. Unemployment is ALWAYS a lagging economic indicator. Btw, I love how you say that " unemployment FALLS to 14.3 % " in 1937. After the Depression had gone on for EIGHT ( 8 ) years. After FDR had been in office for Four 4 years. After most of the rest of the world was well on its way to recovery. As though getting it down to 14.3% was some kind of major achievement on FDR's part. Especially when France and England were already out of double digits. ( Let's limit our comparisons to Western democracies, shall we ? )

    Volcker deserves a share of the credit for Reagan's successes and Greenspan for Clinton's because it was their policies that gave us economic growth without inflation. Likewise, Greenspan deserves plenty of the blame for our current mess; Arthur Burns is heavily responsible for the stagflation of the 70's and Hoover and FDR had plenty of help from stupid Fed policy in the 1930's. The fiscal policies of our various presidents have to be looked at in conjunction with MONETARY policy then and there existing. Something you choose to recognize only after considerable kicking and screaming. Part of the reason for our current mess and something that bodes ill for the forseeable future is our weakening dollar. It has lost 1/3 of its value in the last ten years. Something else you insist on ignoring for God only knows what reason. We are a net IMPORTER and a weak dollar means we have to pay more for those imports. As I have repeatedly pointed out, one of Bush's greatest failings was failure to support the dollar. Obama and Geithner have done nothing to reverse Bush's weak dollar policies.


    Rotflmao. Conservatism is NOT based on hypotheticals. Far from it. Keynes is much more theoretically based than free market economics. Exhibit A is the economic history of the U.S. and Britain. Nothing did more to create progress and reduce poverty than free market capitalism. Exhibit B is California where liberals have run amok for the last 25 years. Exhibit C is the current state of the U.S. economy. Contrary to what you try to say, Conservatism recognizes the need for reasonable regulation to temper greed i.e. everyone acting in their own self interest. Total and complete deregulation does not always result in a salutary state of affairs. All you have to do is look at our current Tax Code. Reagan, Rostenkowski and Bradley reduced rates and eliminated almost all credits and deductions in 1986. K Street has spent the last 23 recreating preferential treatment for this group and that interest. More than anything else, free market capitalism realistically takes account of human nature which is to be acqusitive and greedy. People are naturally going to act in their own self interest and not some idealistic, collective or altruistic way. All efforts to outlaw it have failed miserably. The only thing that can be done is to control it and moderate its negative effects e.g. controlling speculative bubbles with margin requirements.

    As for the minimum wage, if I am not mistaken, it is actually lower NOW in real terms than it was in 1935. Thus moderate increases are not going to have a serious impact on hiring within the confines of LEGAL employment. It may have some effect on the margins where employers somehow feel entitled to use illegal labor. But many of those jobs have an underground or cash element with tips included e.g. car washes and restaurants. However, if the minimum wage were $20 an hour and that's what we were paying burger flippers and dishwashers, then it would undoubtedly have a serious impact on current employment. In other words, it's usually not minimum wage employment that causes employers to lay off workers or relocate. Rather, that almost always happens where salaries and benefits are far in excess of the minimum wage. Even with major minimum wage employers like Target and Walmart, most workers do not stay at minimum wage for more than a year at the most. That's how things work in the REAL world and not the Harvard economics lecture halls.
    Last edited by Eric Stoner; 09-14-2009 at 11:50 AM.

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    Default Re: 'Austrian' School of Economics on the rise ...

    The economy grew significantly during FDR's presidency
    to be technically correct, the 'official formula for GDP' showed a higher number of total dollars spent. Unfortunately, as I have attempted to explain many times, gov't spending of freshly borrowed / freshly printed dollars does NOT achieve real economic growth - and particularly so when it is spent on non-capital items. But the GDP fallacy was a useful 'propaganda' tool in the 1930's and remains so today !!!

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    Default Re: 'Austrian' School of Economics on the rise ...

    Quote Originally Posted by Melonie View Post
    to be technically correct, the 'official formula for GDP' showed a higher number of total dollars spent. Unfortunately, as I have attempted to explain many times, gov't spending of freshly borrowed / freshly printed dollars does NOT achieve real economic growth - and particularly so when it is spent on non-capital items. But the GDP fallacy was a useful 'propaganda' tool in the 1930's and remains so today !!!
    That would come as a surprise to every economist who hasn't been completely wrong and who knows there's more to GDP than just "I" (investment), which is what you're contending, and C + G (private consumption and government spending) is bigger. And increasing the money supply or running government deficits can result in growth, if they're not overly inflationary.

    Because the Great Depression was a period of deflation, money GDP actually understates economic growth.

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    Default Re: 'Austrian' School of Economics on the rise ...

    ^^^ again I wasn't saying that growth is totally impossible without increased private investment - I was merely pointing out that an increasing 'official' GDP statistic and real economic growth are two very different things ( and particularly so when G becomes the dominant factor in the GDP equation !

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