Mark Blyth YouTube Video
Certainly, we can point out the historic path of state interventionism on behalf of the politically connected which led to the debt crisis facing most of the western world today. And, we cannot fail to make mention of the role the monetization of debt played in creating the biggest debt hangover ever. But given that, the question comes: what do we do now? Will austerity only further strengthen the hegemony of the interventionists?
It was easy for Austrian thinkers to identify the bailouts as interventionism of the nastiest sort. Republicans largely supported the bail-outs while libertarians shook their heads with a “tisk-tisk”. Now Republicans have suddenly discovered austerity. Have they really been reborn? Or are they really contributing to a cycle of economic control as suggested by Blyth?
-Adrian
PS. I embedded the YouTube video in the post, and as I edit it, I can see it. But when I view the post I cannot see it. Any tech-dog know why?
Austerity policies will probably keep the government functioning and solvent. They are pursued not for the benefit of the private sector, but for saving government. (Not that the private sector doesn’t benefit from government not siphoning away more capital from them by issuing bonds.)
But if a government were simply allowed to become insolvent, that would only force privatization even more. I don’t get all the social democrats opposing austerity. Their opponents are saving the public sector from itself. These policies are a blessing for civil servants, activists, lawyers, watchdogs, and other such professionals who work for the government. And the most consistent social democrats and lovers of the public sector have pursued austerity - Canada and Sweden have laid off one-tenths of their governments gladly, while Netherlands pursued fiscal consolidation in the 1990s.
Thanks to what Cameron has done, the NHS will not have to be privatized and social spending can increase by another 45 billion pounds annually by the next five years in Britain.
Because governments run on capital, they are also capitalist institutions and also depend on capital. Size of government can only expand as far what capital permits. When governments become insolvent, not only will they go down, but they’ll make sure to drag the private sector down with them using devaluations, taxes, and inflation. When governments pursue austerity, they will save themselves and also give mercy to the private sector. It’s why capitalism is not a zero sum game. Increasing size of public sector does not remove capitalism in favour of “socialism”, but merely raises the issue of whether we are under a chaotic capitalist system or an orderly capitalist system.
Wait, what? Can you explain this?
Does that mean socialist institutions are capitalist institutions?
The former certainly looks orderly to the people presuming to run it – and I’m sure they matter the most to themselves.
I agree, Autolykos. But would the bureaucrats and legislators kill the private sector to the point that they can’t get their tax revenues from it? That’s why there are some “natural” limits to increase in state size. If they go too far with it, they’ll burst. Because Cameron has cut defense spending and most of the other department’s spending by 25%, he kept spending on NHS intact. The ironic thing about the state is that state activities are run on a budget, even though private activities can not budget themselves and stick to it - what happens when the cost of irrigation becomes higher? Will the farmer irrigate less? But for the state, when the cost of conducting one activity becomes higher, and they are still forced to stay on a budget, they will have to cut the size of the state in some departments. In the end, as Cameron helps generate private sector revenues, his own state will increase spending even more.
Yes, “socialist” institutions are capitalist institutions, and that’s because there is no such thing as a socialist institution. Socialism implies the allocation of all resources by an organized community. Even in etatist autarkies, there is always property and ownership in some form. State controlled industries are still run by a bureaucrat who imperfectly replaces the entrepreneur and from capital that is taken from other sources. It’s capitalism. But bad capitalism. As Mises said, the choice is between capitalism [that you can stomach] and chaos.