Utilizing Austrian economics pragmatically: where does an economy stand?

[Olav]

Hi there,

I’m reading and watching a lot on Austrian economics. However, what I find difficult to understand is how to evaluate or judge the situation in my own country (The Netherlands). A lot of what Austrian economists discuss is related to the US economy.

The Netherlands is quite different than the US. There is a lot of government intervention in basically everything, the welfare state is twice as big as the US, house prices are rocketing and banks loan out mortgages at 120% of a price of a house, etc etc. However, unemployment is relatively low compared to the US and people tend to save more.

The newly elected prime minister Rutte is already talking about how the crisis is way passed creating a pretty false impression.
I always supposed that the economic foundation was just a lousy as in the US, so is this country also heading for the same problems as the US?

My question: is there any article or book which explains how to assess an economy’s state and soundness? Where do I look to evaluate how big the problems are for a certain economy? How do I identify strengths and weaknesses of an economy from the perspective of Austrian economics? Which data do I use? etc etc
I think the differences in the case of The Netherlands are far more subtle than the US, or is that a wrong assumption?

Any personal tips or suggestions are also highly welcome!

[Smiling_Dave]

@Olav

The Netherlands is quite different than the US. There is a lot of government intervention in basically everything,

Very bad sign for the economy

the welfare state is twice as big as the US,

Also very bad sign

house prices are rocketing

The question is why. In and of itself, it says nothing.

and banks loan out mortgages at 120% of a price of a house

Here too, in and of itself, it says nothing.

, etc etc. However, unemployment is relatively low compared to the US

If they are employed in the private sector this is a great sign. If the govt hires a large amount of people, this is a terrible sign.

and people tend to save more.

This is very good.

The newly elected prime minister Rutte is already talking about how the crisis is way passed creating a pretty false impression.

Not sure what this means.

I always supposed that the economic foundation was just a lousy as in the US,

The US problems stem from two main sources. 1. money printing. If Sweden does it as much as the US does, prepare for bad news. 2. The destruction of private business by taxes and regulations. This includes strong unions. If running a business in Sweden is difficult, the businesses will close down, spelling eventual doom for Sweden.

I certainly don’t know what is considered a backbreaking amount of money printing. Any amount is bad, but I don’t know what amount is catasrophic.

As for the degree of difficulty running a business to due govt inteference, in the US it got so bad that we changed from net exporters to net importers. Which means we stopped making our own things and had to buy them overseas instead. I don’t know if it has to get that bad to crush the economy. Any amount of govt interference is bad, but I don’t know what amount spells doom for Sweden.

That’s all Iv’e got, don’t know the answers to the resr of your q’s.

so is this country also heading for the same problems as the US?

My question: is there any article or book which explains how to assess an economy’s state and soundness? Where do I look to evaluate how big the problems are for a certain economy? How do I identify strengths and weaknesses of an economy from the perspective of Austrian economics? Which data do I use? etc etc
I think the differences in the case of The Netherlands are far more subtle than the US, or is that a wrong assumption?

Any personal tips or suggestions are also highly welcome!

[Nielsio]

Hi Olav,

I’m from the Netherlands too. If you want, we could talk/skype about the Dutch economy some time. I have a question though: why are you interested in the precise specifics of the situation that the Netherlands is in as compared to the US? Isn’t it enough to know that generally speaking Western democratic socialism tends to have the same kind of interventionism? From an Austrian Economics viewpoint we can understand why those interventions are bad. So what we advocate for is known and it’s possible to explain it. Do I need to know Japan’s exact minimum wage policy to know that is it destructive?

Personally I’m very uninterested in Dutch politics. I know it is the same as everywhere. I’m interested in economic (and other kinds of) education.

[Olav]

Thanks guys!

@ Nielsio:

I would like to know how to analyze every-day (economical + political) news through the lens of Austrian economics. I am more interested in how daily affairs fit into the big picture. What makes economies and societies sound? Where are we heading for? My microphone broke down, but it would be nice to discuss some Austrian economics. If you want you can add me on msn (masteratwork@versatel.nl) or otherwise skype (I think my username there is olav.di).