Anything But Austrian Economics Is Fundamentally Flawed Dogma

The strategic problem that is fundamental to the dilemma of the non-Austrian economic school is that they are saddled with fundamentally flawed dogma. The state's absurd obsession with a 'macro' economic solution. The Austrian school does not accept this, and rightly so. All economics are 'micro'.

The strategic problem that is fundamental to the dilemma of the non-Austrian economic school is that they are saddled with fundamentally flawed dogma. The state's absurd obsession with a 'macro' economic solution. The Austrian school does not accept this, and rightly so. All economics are 'micro'.

Let me use as an example the huge pressure, not just from Europe but North America that somehow exporting so much is wrong as is failing to increase domestic consumption. That Germany should buy more from France or Spain, as if those countries were a coherent economic unit. Somehow political commentators have been persuaded that Germany should be made responsible for their neighbours' debt because, well because they are neighbours. Imagine trying that one in your village. "Hey diddly doo neighbour, can you help me with my overdraft you earn more than me and we're all Christians in Little Sodbury-under-the-Wold".

Look at a few facts. German trade surplus with the rest of the Euro-zone was €1 billion far less than most journalists imagine. Yet it was €140 billion with non EU countries. (2013 Jan-Nov) Pretty straight forward? Well not really. Dwell on this, Germany ran a trade deficit of more than €15 billion with Holland yet a surplus of €30 billion with France. How does a government, even if it was the responsibility of government, adjust auto exports from one country to another, fashion goods, pharmaceuticals, wine, tourism or raw materials?

Economies consist of thousands of micro-units. Northern Italy has a different economy from the South. London has a completely different economy from the rest of the UK. Looking farther afield, Washington DC has an economy completely out of kilter with the rest of the USA because everyone works for the recession proof public sector (for the time being!).

The responsibility of government is to set their countries free and let the market take its course. The huge French imbalance of trade with Germany could be corrected relatively easily though not painlessly by slashing public spending, borrowing and tax, deregulating employment legislation and letting their industry and services compete.

There is nothing a Frenchman cannot do that a German or Brit can do if the shackles of state were removed. Remove these shackles from Europe and indeed the USA and competition from the Far East could be met head on.

At the moment national economies are more like a British horse race handicap 'over the sticks'. Each horse carrying a different lead weight in the saddle bags. The world is not like that anymore. The race is not always to the swift, but as Damon Runyon said, "that's the way to bet'.

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