Hey, I’m sort of new to Austrianism and need a little help.
It probably is an easy answer, but how do you argue against government bailouts? He (my friend) does not beleive in the Austrian business cycle theory, he calls my arguments of principle (taking from workers to support bad business models) naive, and he vehemently argues for the “necessity” to keep those workers (from GM or wherever) employed, because “if people stop spending, the economy will crash.” I hate having to resort to somewhere beyond my own knowledge, but I know at least here I’ll find excellent responses.
I probably should read Keynes, Friedman, and Hayek, (and their on my list [:D]) but I don’t have the time right now (college apps are killing me!)
I’d read Part II and III of Rothbard’s “America’s Great Depression” (free on this site and in PDF).
But you should ask him how you can solve a crisis of too many defaults (bad credit) by giving more credit to bankrupt people?
What is being done, is that capital is being taken from successful businesses (which need it to stay successful and make it through this recession) and giving it to the people who are unsuccessful, where they are likely to squander it.
Instead of industry being driven by the winners, it is being driven by the losers, at the expense of the winners.
The Austrian position is not naive. It is harsh and cruel. Failures must fail, so that successful enterprise can continue. Your friend is naive if he believes that giving losers more resources, can make them winners, or that they will manage the confiscated profits of their competitors (bailout money) as judiciously as if they had earned it themselves.
Your argument shouldn’t be based on keeping the economy from crashing, that is inevitable. Your argument should be, it can crash and recover, or it can crash and flatline in a depression. What is his choice?
Peter Schiff and Jim Rogers have a lot of great videos on YouTube where they explain to talking heads and idiot investors who hold similar views as your friend, exactly why they are wrong.
The Auto Union workers are the most greedy people I have ever seen, they don’t care what happens to the company they work for because they know the government will just bail them out, so they keep demanding the benefits they were promised because they know that it will just go on to the back of the American tax payers.
Greed that involves putting your country into more debt is a unforgivable action.
The answer is easy: if a company and its worker have contributed to its obvious demise and have no intention on fixing it besides asking for a bailout, they should fail. They caused it, society must say that people must pay for their own mistakes!