An interesting article in The American Conservative (July 2012) suggests that the Austrian economist, Friedrich Hayek, is rising in the world’s estimate. The article, by Mark Skousen, is titled “Austerity's Prophet.” Why just look around. Everyone is trying to solve the economic stall of the world by Austerity. Using that word, redux, may be a little inaccurate, however. Hayek never enjoyed the rank of prophet like John Maynard Keynes; Keynes’ solution to economic sags has been to spend public money. Stimulus! Hayek Brought Back? No. Perhaps we should say instead: Hayek Discovered.
Curious this. But there is, of course, a way of blending these two extremes. We might call that the Josephian economics. Never heard of it? But you have. The theory is laid out Genesis 41:37-57. Joseph, son of Jacob, becomes the ruler of Egypt. In times of plenty he adopts Hayek’s teachings and stores the surplus; in times of downturn he adopts the Keynesian approach and distributes what he’d stored. Austerity in good times, generosity in bad. There was no Nobel Prize for economics then or Joseph would have got it.
Now to practice austerity in bad times and limitless spending in good sounds a little crazy, doesn’t it. But, as the pagan saying has it, Whom the gods would destroy they first make mad.
The only problem is that you can't be Keynesian if you did not store the grain in the first place.
ReplyDeleteLooking at it that way, we did store up in the Clinton boom, then paid out post 9/11 Bush crash, then did not store during the Bush boom, so we have nothing to pay out now.
Hence the 16 Trillion in debt that President Obama was unable to keep track of on his Letterman interview.