Canada's Financial Post goes Austrian

Very nice piece on the crisis defending an Austrian understanding of the cause and cure.

Comments

[Roger Koppl]

Thanks for posting that, Steve. George Bragues's analysis of the "Paulson's scheme" in the Financial Post makes me think the truth of the situation will come out sooner than I might have expected. I think the truth is grim, but pretty simple: Greedy businessmen highjacked capitalism and the Federal government, which was supposed to be our watchdog, helped them do it. It's time to restore the Constitutional principle of limited government with checks and balances.

[Brian Pitt]

Great post. Professor Koppl is a bit more confident than I am though.

[Eric]

Roger,

That's a joke right? That's what you got out of that article? Who hijacked Greenspan over 2001-2005? Was it some Rothschild conspiracy that Greenspan was involved in?

Looks more to me like a hapless central bank, which knew little in comparison to millions of individual savers and borrowers, arrogated to itself the power to set or distort the terms (i.e. rates) on which they would save and borrow.

Incompetent as he was, there's no evidence at all that Greenspan committed his errors out of malice. Just economic ignorance and pragmatism.

[Roger Koppl]

HI Eric,

Well, a one-sentence summary is gonna lack nuance. But I think it is entirely fair and accurate as far as it goes. I think rent-seeking is an essential part of the story. You know, big business doesn't lobby for laissez faire and so on. That's the "greedy businessmen" part. The bad monetary policy is an essential component of how the "Federal government . . . helped them do it," even if Greenspan was sincerely attempting to promote the common good. I would be completely open to a better one-sentence summary if it you don't have to already comprehend lots of relatively arcane theory and history to understand it.

[Toronto life insurance broker]

Roger - to say the truth, I don't believe "the truth of the situation will come out sooner than I might have expected". Because, there simply never has been an objective truth in economy - somebody will be persuaded it was the malfunction of the invisible hand, somebody another will be sure it was government's failure. Let's take 1929 - is there any objective truth about this? Did New Deal save the day or it just prolonged the suffering? I know what I believe, you know what you believe, maybe we both believe the same, but there will be another people out there believing something completely different...
Lorne