First of all the reason the Austrian school doesn't get a lot of attention from the mainstream media and from politicians is because Austrian Economists can clearly explain what causes the Boom and Bust cycle: Government intervention in the economy (and more specifically central banks artificially adjusting the interest rate). This totally opposes the Keynesian view that can be easily used by politicians as an excuses for endless borrowing of funds they use to buy peoples' votes.

On methodology: Yes there is a huge difference in methodology between the Austrian School and the schools of thought that get most of the media attention these days.

The Austrian School uses an axiomatic-deductive method (which btw used to be the most commonly used method in economics until the neo-liberals like Friedman started promoting the empiric-scientific method.)

According to the empiric-scientific method it is impossible to be certain about something. Economists who use this method formulate hypotheses and then they test and retest these hypotheses. Afterwards they can for example state that hypothesis A was not disproved in 10 of their tests and that hypothesis B was disproved in 8 out 10 of their tests.

Austrian economists totally reject this empirical-scientific method for 2 reasons:
- It is possible to be certain about certain things. For example If I state that all objects that are completely blue cannot at the same time be completely red than you know that that statement is correct. Even though it is clearly impossible to test this statement in an empirical-scientific way. Another example: 2 objects cannot occupy the same physical space at the same time.
- While the empirical-scientific method is useful when investigating the natural sciences (physics, chemistry etc) it is impossible to use these techniques when investigating how the economy works. While it is possible to isolate 1 or more chemical elements in a lab and for example test at what temperature they melt or burn or vaporize, it is impossible to place the entire economy in a lab. It is not possible to measure all activities, ideas etc. It is impossible to put people in a lab and monitor their behavior without affecting their behavior.

The Austrian school uses an axiomatic-deductive method. This means they start with an axiom (a statement that is true) and use a known method (Logic) to deduct things from that axiom. So If your axiom is true and if you have not made any logical errors, than whatever you have deducted from that axiom must also be true.

I recommend you take a look at 'praxeology'. The axiom here is that "people act" (It is impossible to disprove that people act because by trying to do so you would be performing an act and contradict yourself) and it is remarkable to see how much economic laws can deducted from that simple axiom.


Critics of the Austrian School often try to take a shortcut and instead of arguing based on content they simply try to dismiss or discredit the Austrian method as 'religion'. Of course by doing so these critics are dismissing logic and reason itself and even other axiomatic-deductive sciences like mathematics.

If the use of an axiomatic-deductive method were mere religion and if it were impossible to be certain about something than a high school maths teach would for example not be able to teach his students about the Pythagorean theorem because than that would be mere religion.

Here is the problem with applying Hayek's Austrian economic theory. Monopoly.

Hayek didn't substantively address capital monopoly and additionally, his endorsement of regulation is a counter-point to his own theory. The fact of the matter is that the very people that endorse his economic theory are against government regulation of the market. Regulation is a critical component of his theory.

Here are some very real facts about the US economy. The wealthy control 87-90% of capital assets. In order for Hayek's theory to work in real world application, demand must be a driver. In this sense he proves Keynes basic point that consumer spending drives a successful economy.

The consumer class only controls 10-15% of the capital assets in the US and based on that fact alone it should be obvious that they (we) don't have any economic power in comparison to the wealthy. I am not saying that it is impossible... however, the odds of success are now much lower than before the onset of corporations and the central banking system. It is why so many businesses fail from lack of capital. It isn't just because they didn't have a good idea... in many cases, it is the result of insurmountable market competition and/or means to get the idea started.

I appreciate your response, but I merely explained why they are shunned.

And I wouldn't put too much stock in an explanation that has no practical application. If they could accurately model, predict and offer adjustments to smooth out boom and busts, they would be taken more seriously.

And Government borrowing, which is extended out the yield curve is subject to pricing (interest rate) by the market, not the FED.

Whether politicians borrow and spend more than is prudent is a political issue.

.

One thing is clear: Obamanomics does not seem to be creating a vibrant economy.

I am afraid that if he won the presidency, some corporate/fed/spook asshole would shoot him.

Tits or GTFO!

Palin 2012!!!!!!

First the airport, then what?

What can Ron Paul do as president? Bring our troops home. For real this time. :thumbsup

I kid, Mr. Paul FTW!






The best at their finest:pimp

Um no it's not clear. It's amazing how one president can spend 8 years fucking shit up and then people want to blame the new guy when he has fixed. 8 YEARS OF FUCK UPS in 2 1/2 years. You can even explain ONE thing he you think he should be doing to "fix" this economy that he's not. And don't say stupid shit like "create jobs" how is supposed to do that? Well we could have a massive infrusture imporvement project. It's not like we don't have roads and bridges in bad need of repair. But oh wait teabaggers will say we're spending too much money. Because teabaggers don't get sometimes you have to spend money to make money.

what Keynesians don't get is that you first have to save money before you can spend it.

Allegedly, Ron paul once had a gay encounter at the white house way back when Reagan was in office.

Ron Paul, being the smaller of the men present, had to submit to being the "catcher" at the event, Held in the Lincoln Bedroom.

It depends on what kind of spending you mean.

Government spending does not create jobs, it only creates debt, fosters corruption, and devalues our currency. Look at all the bailouts and all the stimulus fraud. It just made us sink deeper and deeper.

Tea Party people know that private industry needs to spend. But, private industry is scared to death of Obama and all of the Obamas in Congress, so they won't spend until we get new, better leadership. They won't spend unless they feel secure that government won't overly tax, overly regulate, or compete with them.

Why would that matter to an open-minded online pornographer?

Do you enjoy hypocrisy much?

:helpme

this guy gets treated like he's the lone voice of reason in a country whose government has run amok because he appears to be so sincere and speak the truth. I could write that speech as could a million other people, not hard to do as an outsider, vague solutions that sound like so much common sense, some do have common sense, but his solutions in the real world are unfeasible and I tend to believe what wig says it would end up causing a huge depression.

he's a Disney movie.

the world is fucked, the entire global economy should be reset - there will be those who lose more than others and if it's the United States who loses more so be it.

No way can one party be blamed more than the other, both are destructive and misguided and corrupt.

Open your history book. Big empires have never gone down without a bang.

A very big bang.

Watch what you wish for.