Tweet [1]
E.J. Dionne suggests [2] that the trouble in Washington these days is the influence of Austrian economics on the Republican Party and the political process:
To a remarkable degree, our politics are haunted by the principles of Austrian economics and their sweeping hostility to any actions by government to keep downturns from becoming catastrophes or to promote greater economic fairness.
Don explains here [3] why Dionne has misinterpreted Hayek and Mises. Equally important is how Dionne has misinterpreted recent political results. He writes:
Yet today’s conservatives are in thrall to Austrian thinking, and this explains a lot of what is going on in Washington. Broadly popular measures such as raising the minimum wage and extending unemployment insurance — normal, bipartisan legislation during the Keynesian heyday — are blocked on the assumption that people are better off if the government simply keeps its mitts off the market.
It is now difficult for Congress to pass even the kind of spending that all sides once saw as necessary public investment in transportation, research and education. It’s that “road to serfdom” again: Anything government does beyond enforcing contracts and stopping violence is denounced as the first step of a fox trot toward dictatorship.
I guess he forget that $820 billion “stimulus” spending. That spending somehow got through the political system despite the obsession conservatives have with Austrian economics. Keynes is dead but somehow, between 2009 and 2012, federal deficits were over a $1 trillion every year. We’ll see about 2013, it may be less. That government spending as a percentage of GDP was only 25% in 2009 and above 24% in 2010 and 2011–the highest levels since WWII–was evidently due to lawmakers being in thrall to Austrian thinking.
If only it were so.