Quotation of the Day…

by Don Boudreaux on October 22, 2011

in Economics, Hayek, Myths and Fallacies, State of Macro

… is from page 349 of Hayek’s The Trend of Economic Thinking, which is Vol. 3 in The Collected Works of F.A. Hayek; specifically, this quotation appears in a short essay that Hayek wrote on Bastiat in 1964:

It is characteristic of much of recent economics that by ever new arguments it has tried to vindicate those very prejudices which are so attractive because the maxims that follow from them are so pleasant or convenient: spending is a good thing, and saving is bad; waste benefits and economy harms the mass of the people; money will do more good in the hands of the government than in those of the people; it is the duty of government to see that everybody gets what he deserves; and so on.

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Invisible Backhand October 22, 2011 at 12:38 pm

A quick off topic question: Is austrianism the same thing as neoliberalism?

kyle8 October 22, 2011 at 3:01 pm

Pretty much, except that neoliberalism is rather broad and as such would include monetarists, whereas Austrians would not be in total agreement with monetarists.

Invisible Backhand October 22, 2011 at 3:41 pm

Thanks. The sense I got was that Austrianism was the immutable and unchanging holy scripture, while neoliberalism was austrianism as it is actually practiced, kind of like the difference between the christian bible and the christian church.

Anotherphil October 22, 2011 at 11:25 pm

In a long string of incoherent comments, that’s your magnum opus.

Have you thought about appropriate psychiatric care?

Ken October 23, 2011 at 1:38 am

Nothing like demonstrating that even a seemingly pertinent question is likely to be asked in bad faith, considering the source….

Craig October 22, 2011 at 7:53 pm

“Is austrianism the same thing as neoliberalism?”


Hayek was a neo-liberal; his mentor Von Mises was a liberal.

Von Mises was disturbed at Hayek’s neo-liberal outlook, but both may — to one degree or another — be termed Austrians. That does not make the neo-liberalism and Austrianism synonymous.

Josh S October 22, 2011 at 11:35 pm

No. Austrianism is a school of economic theory, encompassing a particular methodology, a certain set of epistemological ideas, and particular theories about the nature of money, prices, and the business cycle.

Neoliberalism is a particular program of political action that recommends reducing the size and influence of the government to protecting property rights and providing certain key goods, such as education, defense, and roads.

One can be an Austrian and a neoliberal, but one need not be a neoliberal if one is an Austrian, nor does one need to be an Austrian to be a neoliberal.

Dan J October 23, 2011 at 4:03 pm

It’s the opposite of authoritarianism as is the ideal of progressives and Barak Obama.
I have no doubt that we would resemble China should progressives have their way.

Chris Ryan October 22, 2011 at 12:55 pm

i guess in today’s economy, the quote should be changed to : spending is a bad thing and saving is good. Yes, everybody should get what they deserve.

W.E.Heasley October 22, 2011 at 2:10 pm

Bastiat disproved the insane French economic idea promoted by many of destroying items to create jobs e.g. burn Paris and rebuild it. If Bastiat were alive today, he might have a caveat: if you plowed under Washington D.C. AND DID NOT REBUILD IT, it would likely create jobs.

Randy October 22, 2011 at 3:19 pm


persiflage October 22, 2011 at 5:39 pm


vikingvista October 22, 2011 at 5:55 pm

The broken window metaphor refers to economic costs, not political ones. Since political costs are often huge, restraining them can unleash untold wealth creation and confound a broken window interpretation. Arguably, e.g., the fact that most New Orleans schools post-Katrina are charter may very well produce value beyond the cost of the hurricane destruction of the public school infrastructure. But that is due to a change in politics, not the stimulative effects of destruction.

I have no doubt a similar, but bigger, renaissance would occur if DC were flattened and salted.

W.E.Heasley October 22, 2011 at 6:56 pm


“The broken window metaphor refers to economic costs, not political ones”.

Maybe, maybe not.

Upon further review, Bastiat took a political notion offered as “economics”, and disprove the notional point, by in fact moving the notional back into the political realm. Removing it, as it were, from the realm of economics. Does not, in fact, the metaphor refer to political costs?

Anotherphil October 22, 2011 at 11:33 pm

If DC were was reduced (let alone eliminated), we would have the same problem the folks in Ohio had when that nutjob released all those animals and committed suicide-wild animals that should have never bred left out of capitivity.

Josh S October 22, 2011 at 11:38 pm

Well, good thing we have a big federal government that prevented that from happening!

Chuclehead October 23, 2011 at 12:31 am

What about quarantine? Nobody in or out.

Nikolai Luzhin, Eastern Promises October 23, 2011 at 10:18 am

this repeated trope, which is all wrong, is getting really old

Keynes never said, “spending is a good thing, and saving is bad.” He said that at or near the zero bound we enter a world of paradoxes where good individual decisions, shall we say, collectively become bad ones.

Why do you misrepresent what Keynes said? You are often worse than Ron Paul

You then add the Ricardian equivalence, which is absolutely false, has been shown to be false, which everyone admits is false and we again get nowhere

As the Queen said, classical economics cannot tell us how to score runs!!!!!!!!

Greg G October 23, 2011 at 10:57 am

This type of one sided caricature of Keynesianism has a lot to do with why the views about Keynes that are so prevalent on this blog are gaining so little traction once you get far from a Koch funded institution.

I came here from links with Fight of the Century and the interviews that Russ does on Econ Talk. Both of those are extraordinarily fair in their treatment of Keynes despite the fact that Russ and John are opposed to Keynesianism.

It wasn’t Keynes that convinced Republicans that deficits don’t matter. It was Reagan and Milton Friedman.

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