Wednesday, November 23, 2011

Austrian Economics Versus the Mainstream

The night before last in Slippery Rock, Pennsylvania, Jeffrey Herbener and myself were privileged to participate in a panel discussion with two economics professors from Slippery Rock University, David Culp and Frederick Tannery. It was sponsored and hosted by SRU's new chapter of Young Americans for Liberty.

An audience of over 300 students and community members were presented a fair-minded exposition of some similarities and key distinctions between conventional and Austrian, causal-realist economic analysis.

The panelists debated issues related to higher education tuition, health care policy, the 2008 economic crisis, and macroeconomic policy. I explained how government subsidization for higher education in the form of Pell Grants and government guaranteed student loans artificially stimulates demand for schooling and, consequently drives up tuition. Jeff Herbener compellingly argued that the best way to reform health care is to move it to a more market oriented system and then brilliantly explained why tax increases are never a good thing, because they take wealth away from those who are able to economize using market prices and puts it in the hands of bureaucrats who have neither the ability nor the incentive to economize.

It was then my turn to explain how the 2008 financial crisis was a product of government intervention from start to finish and not the fault of a free market (hint: we did not have a free market), and then went on to explain how the interventionist responses by both George W. Bush and President Obama have merely slowed the necessary capital restructuring process, thereby hampering economic recovery. Jeff Herbener finished by arguing that the best thing the Fed could do right now to mitigate the possibility of tremendous inflation is to raise legal reserve requirements to 100% and then transform the system to a free monetary, 100% reserve banking system.

Those in attendance seemed attentive and engaged in the discussion. It was an honor to be asked to be a part of the event. A video of the entire panel discussion should be posted in the days to come.

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