It's Hayek's World, the U.S. Government Just Spends in It


As the guilty flee when no man pursueth, so do the statists see Austrian economists' cold dead hands trying to take away their (metaphorical, until they are literal) guns when our country's politicians are all too prepared to Keynesian manage their way to all of our graves.

See E.J. Dionne in yesterday's Washington Post:

today's conservatives are in thrall to Austrian thinking, and this explains a lot of what is going on in Washington. Broadly popular measures such as raising the minimum wage and extending unemployment insurance — normal, bipartisan legislation during the Keynesian heyday — are blocked on the assumption that people are better off if the government simply keeps its mitts off the market.

It is now difficult for Congress to pass even the kind of spending that all sides once saw as necessary public investment in transportation, research and education. It's that "road to serfdom" again: Anything government does beyond enforcing contracts and stopping violence is denounced as the first step of a fox trot toward dictatorship.

So let's give Ron Paul credit for unmasking the true source of gridlock in Washington: Too many conservatives are operating on the basis of theories that history and practice have discredited. And liberals have been more reluctant than they should be to call the ideological right on this, partly because they never fully got over the shell shock of the Reagan years and also because they have a strange aversion to arguing about theory. When it comes to government policy, the Austrian economists paved the road to paralysis.

Hm, what did the Congressional Budget Office say about government spending last week? "Federal outlays are expected to increase by 2.6 percent this year, to $3.5 trillion, or 20.5 percent of GDP—their average percentage over the past 40 years. CBO projects that under current law, outlays will grow faster than the economy during the next decade and will equal 22.4 percent of GDP in 2024." Is this a government gridlocked, prevented from functioning?

And is asking, as congressional Republicans are, for offsetting cuts elsewhere before voting for unemployment extensions truly a sign of embracing Austrian warnings about the bad effects of messing with free markets and market clearing in a way someone not desperate for a column hook would recognize?