Fostering a speedy recovery from the current economic crisis in Chile depends on freeing up entrepreneurs and others to act freely and create wealth in the marketplace. This will depend on lessening regulatory burdens, controlling public spending, and lowering taxes. Understanding the Austrian school view of economic action and entrepreneurship holds the key to understanding the way out of the crisis.
Here’s why:
After WWI, the distinguished British economist Edwin Cannan was asked, somewhat reproachfully, what he did during the terrible war years. He replied: “I protested.” The present article is a similar protest against the current lockdown policies put into place in most countries of the Western world to confront the current coronavirus pandemic.
The latest report on new unemployment claims was abysmal, coming in at 4.4 million last week, some 100,000 more than surveyed economists had expected. The continuous claims came in at just under 16 million, an all-time record.
[Author’s note: This is my modified version of Frédéric Bastiat’s great work “That Which is Seen, and that Which is Not Seen,” as applied to the current COVID-19 panic and the resulting 2020 Great Lockdown.]
We have been locked down for weeks. Classes have been canceled. Only essential activities are allowed. Although there is much to cover and analyze, I want to focus on the economics of the situation.
Have you ever noticed how some countries always seem to be having debt crises? For some inexplicable reason they are often in an economic crisis and fail to meet their debt obligations.
In the increasingly polarized America, Black Swan moments like the COVID-19 pandemic have further confirmed growing divides in the country. Our textbooks would like us to believe that emergencies create fertile grounds for unity. But when you have a populace that is politically dividing itself even when it comes to the TV shows it watches, there comes a point when we have to start recognizing that the prospect of national unity is becoming more of a mirage as the days go by.
Sometimes critics of praxeology make this complaint about it. Praxeology is supposed to be logically deduced from the concept of action (Mises) or from the action axiom (Rothbard). If so, these deductions should be set down in rigorous form. We need to know what exactly follows from what. To do this, ordinary language isn’t adequate. Praxeology should be formalized, using mathematical logic. Then, we would be able to tell whether the deductions really worked.
