Hi everyone, I'm just finishing my first semester as an economics student (I'm currently declared as a history-economics double major). I spend a couple hours everyday now reading about economics, mainly on mises.org and the Foundation for Economic Education, and I think I know more than most Americans nowadays on many economic topics (sadly, most people seem to know nothing), but I still have much to learn, clearly. I believe that I can refute many of Keynesian ideas at this point— and unfortunately, most of my classes just repeat Keynesian talking points. It's ridiculous just how illogical Keynesianism is, but I digress. So far I like Austrian Theory, and believe this is where most of my beliefs lie, but I have a few questions. First, regarding the gold standard and currency: most Austrians I've seen favor a return to the gold standard and want a free banking system. I don't necessarily disagree with this, and the more I read about it, the better idea it seems to be. However, what happens if demand for money exceeds the amount of gold? Would the currency be debased? And how exactly would the currency system work? Would there be several competing currencies or would there be a standard American dollar still? If there were several currencies, likely regionally based to make business easier, wouldn't this make commerce on larger scale harder, similar to colonial/revolutionary America where each state had a different currency, making trade cumbersome? Please, correct me if I'm wrong— which I almost certainly am— because I agree that a government monopoly on money seems to be a bad thing, as it's too easy for the Fed and whatever politicians it listens to to manipulate the currency for political and short term gains. Also, many Austrians seem to greatly dislike Alexander Hamilton. I know this is mostly because of his central banking system, but he was a strong supporter of the gold standard. Many Keynesians claim he favored a large public debt, but this is false; he may have said that the debt could be a "blessing," but this was if the debt was small, manageable, and periodically paid off. Before he died, he was horrified by those who mischaracterized his views as a justification for running up a high debt. And concerning taxes, he believed them necessary to fund the government— and he's correct. He did not, however, favor high taxes to fund a super large government, nor did he want taxes to be used as a punitive measure, as so many liberals want today. I don't see the problem with the national assumption of state debts to establish US credit and promote investment from abroad, and, while I am normally hate tariffs in nearly every circumstance, I don't see much of a problem with these early tariffs. Can someone please explain how else a reliable economy could have been established from what was an absolute dumpster fire otherwise? And, the last question pertaining exclusively to Austrian economics, what books should I look to buy to learn more about these theories? I plan on buying Hazlitt's "Failure of the New Economics," but I have a book reimbursement scholarship from high school that I can use to purchase several, several books (they don't need to know that these books aren't exclusively for school. Who would ever think I would buy econ books just for some light reading lol?). Bonus question: This question strays a bit from economic theory, but what do Austrians believe believe the extent of the government's responsibilities should be? As Ayn Rand states in her essay on the nature of government, a government is necessary to establish rule of law, in order to protect one's right to life and all of its corollaries— mainly property rights. This is the only way to protect a free market. I do not believe the government should play much of a role in the economy other than to protect property rights, but I do believe there is room for some very basic environmental laws (but not these ridiculous standards our government is pushing for at the moment). No one can own the air, for example, and massive air pollution will harm people's health (I don't care about climate change. If it truly is man-made, it's the trade-off for living in a modern, developed society). Can one not draw a line and say that at some point this harms one's life to the extent that it violates their property rights (rights to one's life/body)? Or, another example, dumping pollutants into water contaminates the water supply, which directly does affect many peoples' property. And do roads and public education fit within the duties of government (imo, the government's domain should extend only to setting up a court system to protect property rights and outlaw the use of coercion, thereby protecting the free market; maintaining roads and funding public education; and, national defense— and having the power to tax to fund such responsibilities, but not having taxes be used a means to punish one for being rich, or reward one for being poor). I, at the moment at least, believe that the duties of government extend only to funding that which pertains directly to the most basic general welfare, but which is not economically viable for any one person to take on himself (as I said, roads, education, and defense). That is the only justifiable use of tax dollars, in my opinion. And investing in what is essentially physical capital and promotes commerce (roads), as well as intellectual capital (education), is the only way that the government can contribute to real wealth production, and not the inflationary measures that most Keynesians call for, which do nothing but destroy real wealth and devalue the currency (oh, and let it be known that I do not support many of these inefficient road bills so many Democrats are calling for. They wish to rip apart perfectly fine roads, only to rebuild them— almost like Keynes' belief that employing people to dig holes and fill them in would contribute to economic growth, despite the fact that it produces no new real wealth— and build new roads which there is absolutely no need for). I apologize for such a long post, and I thank you all in advance for any answers. Have a good night everybody.
>Currency? A free market in currency is all that is necessary. It's likely that a free currency market would include gold backed currencies, but that's not an essential requirement. I would expect these currencies would be national or international in scope, because they would be more useful on that scale. I hypothesize that the reason early currencies were local was because of the limited "connectedness" of that time period. Personally, I think a cryptocurrency will replace both gold-backed and fiat currencies. It's impossible to do FRB with bitcoin and it has no need for clearing houses, both of which aren't true for gold-backed paper currencies. >Can someone please explain how else a reliable economy could have been established from what was an absolute dumpster fire otherwise? You seem to be assuming that the state was necessary in colonial America. Some history you might enjoy: http://bit.ly/1TyaiSq >Books? I read Human Action. Some people might say that Rothbard's Man, Economy and State supersedes HA, so maybe that instead. If you want something shorter, Economics in One Lesson should be enough. >Political philosophy, defense, education, roads, environmentalism? Rothbard was an ancap. Mises was a minarchist (like you). Hayek supported a "minimal" welfare state. There isn't really a single Austrian answer. I would really recommend you not spend too much time on Rand. I find it really dubious that she claimed only the classics as forerunners. She really not as big in libertarian circles as outsiders think she is. You won't find but maybe 5 people who mention her on /r/Anarcho_Capitalism or /r/libertarian. See this David Friedman (not an Austrian, but good nonetheless) in Machinery of Freedom on private police: https://youtu.be/jTYkdEU_B4o Private defense on a larger scale would probably be managed by insurance companies. Private education is clearly better. Public education sucks and it's not cost efficient. England had the highest literacy in the world in the mid 1800s with private education. There are various models for providing private roads. Walter Block wrote a 500 page book on the subject. You could probably find a nice summary on Mises Blog. Rothbard also wrote on pollution. I tried to find the the short version that I read, but couldn't. Here's the long version: http://bit.ly/1TyagKf. Sorry this is terse and maybe not a direct response. I'm trying to answer but not spend too much time on it.
- MengerianMango
link: http://bit.ly/21xb0EP