# Think Tank > Austrian Economics / Economic Theory >  Can the following be said about Austrian Economics?

## TheNcredibleEgg

It seems most of the resistance to Austrian Economics (from the left) stems from the notion that gov't cannot spend - but needs to cut spending only instead.

This idea just seems abhorrent to people on the left - so they dismiss Austrian Economics out of hand without any serious considerations.

But can I explain it like this:

Gov'ts can still spend money - lots of money under Austrian Economics. (Yes, it does function better with lesser gov't spending.) But that increased spending must either A) be taxed upfront - or B) increased as the economies grows. So you can still have gov't spending. Austrian Economics is not trying to end gov't spending. It's just trying to end the spending that causes malinvestments, the misallocations, the bailouts, the stimulus, especially the deficit spending in recessions. You just have to wait for the economy to improve before you spend - or tax what you spend. 

Would that paragraph mesh with Austrian Economics? If so - it would seem that perhaps the big gov't leftists would not oppose the school so much knowing that.

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## mojobo

It depends what your talking about.  In terms of the recession right now you need to cut government spending right now in order to free up capital for the private sector.  If we had a real credit system based on supply and demand of savings then rates would be extremely high and it would be more obvious that spending needs to be cut as there would be a limited supply of credit and the more they borrowed the higher interest rates would go making it difficult for businesses to finance their operations.  It's like an athlete who suffers an injury and instead of listening to his body telling him to stop spending they inject cortisone into their body to numb the pain.  He can still play in the short term but he will be crippling himself over time.

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## Austrian Econ Disciple

> It seems most of the resistance to Austrian Economics (from the left) stems from the notion that gov't cannot spend - but needs to cut spending only instead.
> 
> This idea just seems abhorrent to people on the left - so they dismiss Austrian Economics out of hand without any serious considerations.
> 
> But can I explain it like this:
> 
> Gov'ts can still spend money - lots of money under Austrian Economics. (Yes, it does function better with lesser gov't spending.) But that increased spending must either A) be taxed upfront - or B) increased as the economies grows. So you can still have gov't spending. Austrian Economics is not trying to end gov't spending. It's just trying to end the spending that causes malinvestments, the misallocations, the bailouts, the stimulus, especially the deficit spending in recessions. You just have to wait for the economy to improve before you spend - or tax what you spend. 
> 
> Would that paragraph mesh with Austrian Economics? If so - it would seem that perhaps the big gov't leftists would not oppose the school so much knowing that.


If you completely skip over Mises Socialist Calculation critique...sure why not, it's not _that_ important. What exactly is the Government going to spend others money on? Something that most people do not want nor value, but benefit the politically connected? That's not a malinvestment? By definition the Government cannot spend anything without it being a malinvestment because it has no profit or loss. Besides, AE doesn't tell you what you should do, only what the repercussions are of any economic action. It is a science after-all, and normative statements do not have anything to do with AE. You can say however that Austrian _Economists_ subscribe to certain policy recommendations because of what the science of human action or Economics tells us are the outcomes. Most Austrian Economists are An-Caps for precisely the aforementioned reason -- considering that Government is a socialist construct (That is state ownership and monopoly on certain goods and services namely, law, security, etc. etc.). Obviously the left isn't going to be enamored with a science which demonstrates the complete and total destruction of their entire paradigm, that the State can solve the problems which arise within society.

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## Acala

> If you completely skip over Mises Socialist Calculation critique...sure why not, it's not _that_ important. What exactly is the Government going to spend others money on? Something that most people do not want nor value, but benefit the politically connected? That's not a malinvestment? By definition the Government cannot spend anything without it being a malinvestment because it has no profit or loss. Besides, AE doesn't tell you what you should do, only what the repercussions are of any economic action. It is a science after-all, and normative statements do not have anything to do with AE. You can say however that Austrian _Economists_ subscribe to certain policy recommendations because of what the science of human action or Economics tells us are the outcomes. Most Austrian Economists are An-Caps for precisely the aforementioned reason -- considering that Government is a socialist construct (That is state ownership and monopoly on certain goods and services namely, law, security, etc. etc.). Obviously the left isn't going to be enamored with a science which demonstrates the complete and total destruction of their entire paradigm, that the State can solve the problems which arise within society.


^This.

Let me put it another way just for my own practice.

When two people voluntarily enter into an economic transaction, let's say exchanging a fish owned by one person for a bag of flour owned by another person, overall wealth is increased because both parties to the transaction are better off, by their own subjective evaluation (the only valid kind) than they were before the transaction.  But when one person is FORCED into the transaction, he is subjectively worse off than he was before the transaction otherwise the transaction would have happened without force.  

When government takes money from one person and uses it to buy something from another person, it is a forced transaction.  The person who was forced into the transaction (the taxpayer) is less well-off than he was before the transaction.  The person who got the money probably entered the transaction voluntarily and so is probably better off than before the transaction.  One might speculate that at least some of the time the amount by which the "winning" party increased their satisfaction was greater than the amount by which the "losing" party had their satisfaction decreased.  But because value is subjective and cannot be reduced to any system of objective measurement, this can never be anything but wild conjecture.  

From this we can conclude that the only certain way in which overall wealth can be increased is through all-voluntary transactions.  We can also conclude that the only time both parties to a transaction receive a net benefit is when the transaction is voluntary.  Anytime government forces a transaction, one party ends up less satisfied and although one might speculate that overall wealth is increased, it is just as likely that overall wealth is decreased and there is no way to determine which has occurred or to predict which will result from a planned, forced transaction.  As a consequence, to the extent economic transactions are forced, the system moves away from assured wealth increase and into the realm of uncertainty.

Add to this the historically demonstrable fact that an economy based on forced transactions inevitably results in systematic corruption where overall wealth increase is abandoned in favor of wealth increase for those who have the power to influence the system of forced transactions, and you have a recipe for failure.

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## Revolution9

I have serious issue with the Austrian Economicists. They want my work to be stealable legally. They would like to out my ass under a bridge and have my goods scattered to the winds. See the IP thread.

Rev9

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## Seraphim

Just tell the socialists that they can create all the government spending they want. Tell them to write a check to the government and fund their ideaologies with their own money. If they aren't at least willing to see that voluntary government is not the same as forced Statism, the person is a vermin and don't bother wasting your precious energy on such a leach.

Austrian Economics does not abhor government spending per se, but Statist, involuntary funding that ALWAYS serves special interests and much be enforced through violence.

Tell them they can cut a check to the US Treasury any time they'd like. If they are not willing to do so, point out to them what a filthy, intellectually dishonest hypocrite they are.

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## Acala

> Tell them they can cut a check to the US Treasury any time they'd like. If they are not willing to do so, point out to them what a filthy, intellectually dishonest hypocrite they are.


And then throat punch them.

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## hugolp

> I have serious issue with the Austrian Economicists. They want my work to be stealable legally. They would like to out my ass under a bridge and have my goods scattered to the winds. See the IP thread.
> 
> Rev9


Austrian economics does not say anything about IP. You are talking about the debate inside libertarian philosophy.

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## TheNcredibleEgg

Thanks for the replies.

I understand that gov't spending is inherently flawed, and to some degree a malinvestment in itself - I did not mean to imply otherwise. I just was trying to come up with some way of phrasing AE so the left would not dismiss it out of hand. Because I dare say no one on the left I ever discuss it with will even consider AE response to the current downturn - and cut spending. They think if they agree to cut spending now - that they have betrayed their principles for bigger gov't. Therefore, instead, they just default with Keynesian response - and let the economy continue to sputter.

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## Seraphim

Buy agriculture, gold/silver, reknewable energy...fixed rate mortgage on a house that is frugal and 30% BELOW what you can actually afford to pay for.

$#@! em. It's too late. Keep learning about this stuff because it will soon be NEEDED by society.

The Titanic is sinking. The iceberg has already been hit - it is futile to turn the steering wheel now. Don't try to patch the hull. Grab a life boat and get the $#@! out of dodge, then start over.






> Thanks for the replies.
> 
> I understand that gov't spending is inherently flawed, and to some degree a malinvestment in itself - I did not mean to imply otherwise. I just was trying to come up with some way of phrasing AE so the left would not dismiss it out of hand. Because I dare say no one on the left I ever discuss it with will even consider AE response to the current downturn - and cut spending. They think if they agree to cut spending now - that they have betrayed their principles for bigger gov't. Therefore, instead, they just default with Keynesian response - and let the economy continue to sputter.

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## WilliamC

> It seems most of the resistance to Austrian Economics (from the left) stems from the notion that gov't cannot spend - but needs to cut spending only instead.
> 
> This idea just seems abhorrent to people on the left - so they dismiss Austrian Economics out of hand without any serious considerations.
> 
> But can I explain it like this:
> 
> Gov'ts can still spend money - lots of money under Austrian Economics. (Yes, it does function better with lesser gov't spending.) But that increased spending must either A) be taxed upfront - or B) increased as the economies grows. So you can still have gov't spending. Austrian Economics is not trying to end gov't spending. It's just trying to end the spending that causes malinvestments, the misallocations, the bailouts, the stimulus, especially the deficit spending in recessions. You just have to wait for the economy to improve before you spend - or tax what you spend. 
> 
> Would that paragraph mesh with Austrian Economics? If so - it would seem that perhaps the big gov't leftists would not oppose the school so much knowing that.


How about this?

Government can legitimately spend as much as it wants so long as it raises its funds through voluntary contributions and user fees for services provided as part of its charter.

Otherwise it can keep its hands off of the citizens money.

Too simplistic?

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## Seraphim

Occum's Razor!!!






> How about this?
> 
> Government can legitimately spend as much as it wants so long as it raises its funds through voluntary contributions and user fees for services provided as part of its charter.
> 
> Otherwise it can keep its hands off of the citizens money.
> 
> *Too simplistic*?

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## TheNcredibleEgg

> How about this?
> 
> Government can legitimately spend as much as it wants so long as it raises its funds through voluntary contributions and user fees for services provided as part of its charter.
> 
> Otherwise it can keep its hands off of the citizens money.
> 
> Too simplistic?


It's just a nonstarter with people on the left. 

I'm just trying to find a way to get them to understand the importance of cutting spending now. But they seem to view any cutting spending in association with AE as a betrayal of their core self. So they will not even consider cuts - and feel almost obliged to stick with the Keynesian plan.

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## WilliamC

> It's just a nonstarter with people on the left. 
> 
> I'm just trying to find a way to get them to understand the importance of cutting spending now. But they seem to view any cutting spending in association with AE as a betrayal of their core self. So they will not even consider cuts - and feel almost obliged to stick with the Keynesian plan.


Yep, that's the problem with those who want to spend other peoples money.

They just don't get the fact that they are thieves, plain and simple.

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## Travlyr

> It seems most of the resistance to Austrian Economics (from the left) stems from the notion that gov't cannot spend - but needs to cut spending only instead.
> 
> This idea just seems abhorrent to people on the left - so they dismiss Austrian Economics out of hand without any serious considerations.


Austrian economics is abhorrent to many people, not just the left, in part because it is seen as rigid and extreme. Others who see the State as a beneficial institution with legitimate purpose are ignored, dismissed, or attacked as evil and sociopathic. While I do not fully agree, many people believe that the "Hippocratic Oath" and the right of a helpless person to receive assistance is valid and should be offered by a collective body such as the State. Personally, I find the State as a proper authority by implicit consent to distribute land, law, and justice. So, for me, the Austrian school offers some good ideas through honesty, integrity, and truth ... and some not well thought out pie-in-the-sky ideas with detrimental social consequences.




> But can I explain it like this:
> 
> Gov'ts can still spend money - lots of money under Austrian Economics. (Yes, it does function better with lesser gov't spending.) But that increased spending must either A) be taxed upfront - or B) increased as the economies grows. So you can still have gov't spending. Austrian Economics is not trying to end gov't spending. It's just trying to end the spending that causes malinvestments, the misallocations, the bailouts, the stimulus, especially the deficit spending in recessions. You just have to wait for the economy to improve before you spend - or tax what you spend. 
> 
> Would that paragraph mesh with Austrian Economics? If so - it would seem that perhaps the big gov't leftists would not oppose the school so much knowing that.


It doesn't seem so. From my discussions with Austrians, all taxes are theft, the non aggression principle is the fundamental concept, explicit consent is mandatory, and any deviation from those principles makes the State a coercive body which is immoral. Their only solution is to abolish the State. So under Austrian economics collective implicitly formed governments with coercive powers would not be allowed to spend any money because they would not exist.

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## Wesker1982

> I have serious issue with the Austrian Economicists.


Do you have a problem with Ron Paul? Are you aware that Ron Paul is a very avid advocate of Austrian Economics?

Mises and Austrian Economics: A Personal View by Ron Paul

The Political Importance of Murray Rothbard by Ron Paul

Actually, calling him an avid advocate is probably an understatement.

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## Steve Teters

> It's like an athlete who suffers an injury and instead of listening to his body telling him to stop spending they inject cortisone into their body to numb the pain.  He can still play in the short term but he will be crippling himself over time.


I like your analogy, explains the concept well.

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## anaconda

> overall wealth is increased because both parties to the transaction are better off


I believe the overall _utility_ is increased, rather than the overall wealth. The free market will have already have priced the fish and the flour. Like when I exchange $2.00 for a can of tuna, the retailer and I are not suddenly "wealthier." As I become increasingly hungry I begin to prefer the can of tuna over my two green backs. The fair market value of the tuna remains unchanged. The retailer needs the green backs to pay his operating costs.

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## Seraphim

You are both wealthier. A need is satisfied for you (last I checked, when you are hungry and unable to support yourself, you are poor), and excess production for him is sold at a price that 1) allows him to continue to do so 2) grants him claim to goods/services that he would have otherwise not had (if the tuna is not bought it goes to waste and capital is destroyed).





> I believe the overall _utility_ is increased, rather than the overall wealth. The free market will have already have priced the fish and the flour. Like when I exchange $2.00 for a can of tuna, the retailer and I are not suddenly "wealthier." As I become increasingly hungry I begin to prefer the can of tuna over my two green backs. The fair market value of the tuna remains unchanged. The retailer needs the green backs to pay his operating costs.

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## Acala

> I believe the overall _utility_ is increased, rather than the overall wealth. The free market will have already have priced the fish and the flour. Like when I exchange $2.00 for a can of tuna, the retailer and I are not suddenly "wealthier." As I become increasingly hungry I begin to prefer the can of tuna over my two green backs. The fair market value of the tuna remains unchanged. The retailer needs the green backs to pay his operating costs.


I define wealth as the aggregate of human economic satisfaction.  In every voluntary transaction BOTH parties increase their satisfaction else the transaction would not occur.  Therefore the net result of every voluntary transaction is an increase in satisfaction.  And therefore an increase in wealth.  And by this definition of wealth, you and the tuna retailer are indeed both wealthier because you are more satisfied with your condition after the transaction than you were before.

Not sure what prices have to do with this example.  And what do you mean by utility?

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## Revolution9

> Austrian economics does not say anything about IP. You are talking about the debate inside libertarian philosophy.


Tell that over on the IP thread where they keep bashing the artists IP by appealing to the authority of Austrian economics.

Rev9

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## Revolution9

> Do you have a problem with Ron Paul? Are you aware that Ron Paul is a very avid advocate of Austrian Economics?
> 
> Mises and Austrian Economics: A Personal View by Ron Paul
> 
> The Political Importance of Murray Rothbard by Ron Paul
> 
> Actually, calling him an avid advocate is probably an understatement.


If he thinks IP is not viable then I immediately withdraw my support and will go post on CGTalk stating exactly this, where there are the whole world of artists who deserve protection for their IP and the IP of those who contract them to the tune of 100's of billions of dollars a year. Anti-IP is the socialization of others work and the fruits of their labor. If Austrian Economics advocates this and Ron Paul does not reject it then that is just plain wrong and throws artist and inventors, movie writers, directors and their studios, musicians, authors and a bunch of others whose monies are derived from the use of their unique to them talents and the products they produce under the proverbial bus for the sake of a fallacious interpretation of this political and economic philosophy.

Rev9

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## Revolution9

> I believe the overall _utility_ is increased, rather than the overall wealth. The free market will have already have priced the fish and the flour. Like when I exchange $2.00 for a can of tuna, the retailer and I are not suddenly "wealthier." As I become increasingly hungry I begin to prefer the can of tuna over my two green backs. The fair market value of the tuna remains unchanged. The retailer needs the green backs to pay his operating costs.


Wealth is not a bank account. It is the aggregate of that which is your property that allows you to eat, drink and live without necessarily putting work into it. It can be considered a store of work and the fruits of that work already completed. The can of tuna can be considered wealth as the cash can be considered wealth. Both parties sustain their lives for that much longer by the transaction.

Rev9

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## Revolution9

> Occum's Razor!!!


You are quite orgasmic over this.

Rev9

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## Austrian Econ Disciple

> If he thinks IP is not viable then I immediately withdraw my support and will go post on CGTalk stating exactly this, where there are the whole world of artists who deserve protection for their IP and the IP of those who contract them to the tune of 100's of billions of dollars a year. Anti-IP is the socialization of others work and the fruits of their labor. If Austrian Economics advocates this and Ron Paul does not reject it then that is just plain wrong and throws artist and inventors, movie writers, directors and their studios, musicians, authors and a bunch of others whose monies are derived from the use of their unique to them talents and the products they produce under the proverbial bus for the sake of a fallacious interpretation of this political and economic philosophy.
> 
> Rev9


"If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen."

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## Revolution9

> "If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen."


Yeahj.. I do not want my talents to be under a form of economic slavery. You are the one advocating chains by cutting the source of livelihood for those in the artistic, entertainment and software development fields to name a few.. And you have the temerity to post those words from someone who was very much not like you. It is obvious you have an inability to do thought experiments which leaves the impression you are an adherent of dogma and trotting out your little dog and pony quote above shows your understanding of the situation is controlled by the blinders of your ideology. Me..I simply do not want to be stolen from. You..you advocate theft. You should be put in chains to stop that kleptocratic tendency. Your lack of moral compass would be astounding were it not par for the course.

Rev9

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## anaconda

> I define wealth as the aggregate of human economic satisfaction.  In every voluntary transaction BOTH parties increase their satisfaction else the transaction would not occur.  Therefore the net result of every voluntary transaction is an increase in satisfaction.  And therefore an increase in wealth.  And by this definition of wealth, you and the tuna retailer are indeed both wealthier because you are more satisfied with your condition after the transaction than you were before.
> 
> Not sure what prices have to do with this example.  And what do you mean by utility?


Utility is economists term for satisfaction. It is very different from economists definition of wealth. 

http://en.wikipedia.org/wiki/Utility

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## anaconda

> Wealth is not a bank account. It is the aggregate of that which is your property that allows you to eat, drink and live without necessarily putting work into it. It can be considered a store of work and the fruits of that work already completed. The can of tuna can be considered wealth as the cash can be considered wealth. Both parties sustain their lives for that much longer by the transaction.
> 
> Rev9


A bank account would most certainly be included in one's measure of wealth. As would the cans of tuna in their cupboard.

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## Acala

> Utility is economists term for satisfaction. It is very different from economists definition of wealth. 
> 
> http://en.wikipedia.org/wiki/Utility


lol.  Okay, you win the jargon contest toady.

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## anaconda

> lol.  Okay, you win the jargon contest toady.


Trying to communicate..not "win jargon contests."

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## Acala

> Trying to communicate..not "win jargon contests."


I apologize if you couldn't understand what I was saying.

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## The Free Hornet

> Tell that over on the IP thread where they keep bashing the artists IP by appealing to the authority of Austrian economics.
> 
> Rev9


So you have a problem with "apealing to the authority" arguments and your solution is to have someone smarter "Tell that over on the IP thread"?

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## anaconda

> I apologize if you couldn't understand what I was saying.


There is a significant difference between "wealth" and "utility."

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