Interventionism

Bailing out Bear Sterns while letting Lehman fail, the two TARP votes, and the incessant clamor about (nonexistent) systemic risk were geared toward bailing out Wall Street firms on the wrong side of housing risk.

Government spending — whether on our current armed forces and their more than 800 foreign bases or on "green" energy and other government-favored projects — does not produce prosperity. It only diverts resources.

Despite the chorus of praise, the TARP bailout was a terrible idea that will cost taxpayers both directly and indirectly through its perverse incentives. Only the Austrians consistently opposed the Republican and Democrat bailout schemes.

How often do you hear the minarchist say, "Well, I don't like government, but we at least need things like traffic laws. We need a government to keep us safe"? What  if we actually began to publicly advocate the abolition of traffic regulations?

Austrians get a bum rap for their prescription for recession. The readjustment process is not cruel; it is about permitting production to align more closely with consumer preferences. Recovery, like growth and development, requires forward-looking planning.

Blinder is arguing that of course the Obama stimulus worked, because spending money creates jobs, period. To see just how naive this view is, consider that there is nothing in Blinder's argument restricting it to cases of severe recession.

If mainstream analysts continue to disregard the role of regime uncertainty in the major depressions of the modern era, especially in accounting for their extraordinary duration, then they will only demonstrate the poverty of their own mode of analysis.

It is not the system of private enterprise and free markets that is responsible. It is the suspension of that system. It is not capitalism but interventionism and monetary uncertainty that are responsible for the persistence of the slump.

Recorded at the Mises Circle in Colorado Springs, Colorado; 18 September 2010. Sponsored by Pikes Peak Economics Club.

The only way politicians can really improve the economy — and our lives — is by (1) getting out of the way, and (2) undoing the policies they've previously implemented that hamper it.