One of the surprisingly popular theories as to why the recession occurred is known as the Austrian Business Cycle Theory (ABCT), which argues that not only is the government not the solution to the recession, but in fact, it is also the cause. It claims that the recession was caused by the government artificially lowering the interest rates and distorting the economy leading to a recession. As you can imagine this theory is very popular among libertarians eager for an excuse to absolve the market of blame for the crash. It is promoted by Ron Paul and Peter Schiff who claim to have predicted the Financial Crash (and the next one too). It is also completely wrong and dangerously so. Continue reading “Why The Austrian Business Cycle Theory Is Wrong”
“The Road To Serfdom” by Fredrick Hayek is a disappointing book. Conservative bloggers often race about it claiming it has great insights into modern politics. While I disagree with the Austrian school of economics I read it to here the other point of view. I found it a boring, out dated book that didn’t have anything particularly original or insightful to say. It’s mainly concerned with saying a totalitarian state where the government controls everything doesn’t work (you don’t say). The book might have been relevant when it was published, but I am at a loss to see its use today.
I think to a large extent Hayek has been misunderstood. I have regularly heard people use Hayek to criticize the growth of the state or the Obama administration. Yet Continue reading “Misunderstanding Hayek And The Road To Serfdom”