Marginal,
I didn’t say that unemployment is the fault of the individual in question, rather that any suffering due to said unemployment is their fault. They aren’t responsible for being unemployed, but they are responsible if they haven’t saved enough to live on throughout the period of unemployment. Much as how somebody isn’t responsible for a tornado that destroys their house, but if they live in a tornado-prone area and don’t have tornado insurance then they are responsible for any suffering that they may incur due to said lack of insurance.
Were their expectations that house prices would continue to rise correct? I thought Australian house prices had stagnated, although maybe they’re rising again now that the interest rates have been lowered.
As to the economy of Food and Luxury services example, imagine the population needs 10 units of food per week. Originally, the 10 workers in the food industry were employed in a production process that produced 1 unit of food per worker per week. Thanks to artificially low interest rates, however, a new production process was discovered that appeared to produce 2 units of food per worker. Hence, only five people needed to be employed in the food industry in order to produce the 10 units of food the population required, and the other five could be employed in the Luxury Services industry. When the bubble bursts, however, it turns out that this new production process only produces half a unit of food per worker, so is less efficient then the old one. Hence, society will return to the former production process, the one that produced 1 unit per worker, and in the process of this not only will the 5 people transferring from the Luxury Services industry back to the Food industry be structurally unemployed, but also the 5 people in the food industry who were previously employed in the second production process will also be temporarily unemployed, as they transfer back to the first production process. So, that is why 10 people are unemployed, and that is why there is unemployment throughout the whole economy: not only must people transfer between industries as the economy realigns, but they must also transfer between production processes in the industries that due to the affect of the bubble adopted production processes that turned out to be unsustainable malinvestments.
I mentioned Japan because you used the Japanese Lost Decade as an example of people ‘hoarding money’, as if to suggest the low GDP growth was due to money hoarding, and I was suggesting that lack of population growth was more likely the cause of poor (non per-capita) GDP growth.
As to Rothbard, monetary neutrality, and inflation/deflation, don’t forget that Rothbard’s arguments were ultimately moral arguments. Inflation by way of printing money was bad because it acted as a wealth transfer (theft) from individuals to the printers of money (government), assuming non-neutrality of money. Under non-neutrality of money, deflation might also have “negative effects”, but these aren’t as negative in a moral sense as those of inflation, in that they don’t involve ‘theft’ on the part of any particular entity. So that could be how, in Rothbard’s view, inflation is worse than deflation, as the former involves ‘theft’, violation of property rates, whereas the latter doesn’t. To put it another way, the damage suffered if one’s house is destroyed by a guy with a rocket launcher may be equal to the damage suffered if a meteor hits one’s house, but the former represents an ‘immoral’ action, a violation of property rights on the part of the guy with the rocket launcher, and the latter doesn’t. Hence, from a deontological moral system like Rothbard’s, the destruction of the house by a guy with a rocket launcher would be seen as worse than its destruction by a meteor, even if the damage caused was equal in either case.
To Smiling Dave: “Which models have had any predictive value, and what did they predict correctly? Was there any talk about current events five years before they happened? A year?” As far as I’m aware, the majority of mainstream economists (excluding followers of MMT) do not support running a perpetual deficit, rather they support running a surplus in boomtimes and using this surplus to stimulate the economy in times of recession. If the world was run by mainstream economists, the economy might not be as perfect as the ideal envisioned by Austrian economics, but it’d still be a hellova lot better than it is now. As the world isn’t run by economists, it’s run by politicians, in a system that encourages potential rulers to borrow against the future in order to buy votes in the present. In that sense, I think one of the best predictions of all from Austrian theory (Hoppe in particular, I think) is the prediction that democracy will inevitably lead to loose monetary policies and excessive debt, since in the vast majority of democracies this indeed does seem to be the case (and the world’s greatest creditor government is a dictatorship). So yes, there were mainstream economists who identified the housing bubble (much as many Australian economists claim there is a housing bubble here, very few of them Austrians), there were mainstream models that predicted the failure of the Euro (it wasn’t an ‘optimal currency union’, and none of the Eurozone nations stuck to the conditions that they signed on to upon its formation, conditions under which the assumption of its feasibility was made), and simply arithmetic could predict the collapse of Greece (especially if they hadn’t doctored their numbers). So it’s not really fair to say “American and Europe fail because they ignore Austrian economic theory in favour of mainstream theory”, as they haven’t really done a good job of following mainstream theory either. Be fair to say though that they’ve failed because they ignore Austrian political theory.