Federal Reserve credit expansion, then, whether so intended or not, managed to keep the price level stable in the face of an increased productivity that would, in a free and unhampered market, have led to falling prices and a spread of increased living standards to everyone in the population. The inflation distorted the production structure and led to the ensuing depression–adjustment period. It also prevented the whole populace from enjoying the fruits of progress in lower prices and insured that only those enjoying higher monetary wages and incomes could benefit from the increased productivity.As it turns out, despite being the right-wing of right-wing economics and advocating an almost absolutely open and free-market economy, Austrianism actually ends up advocating for consumers above all other "classes" of folk. That's right: Austrians are for the little guys, average folks just trying to get by and raise a family, unlike "supply side" economics, the other right-wing theory which advocates economic growth through stimulation of economic output by businesses via tax breaks and the like. Austrianism actually tends to put brutal pressure on business to actually satisfy real consumer demand, so there tends to be little profit for long, and if you wanna make it big in Austrian world, you'd better be prepared to work your butt off for it. On the other hand, supposed left-wing theories and institutions to "regulate business" and "stimulate the economy" through inflationary consumer spending policies and interest rate manipulation, actually wind up hurting the little guy much more than the other two theories, as indicated in the above quote. The Federal Reserve, one such institution, is supposed to help folks out by maintaining high employment and stable prices, but actually ends up hurting the folks lowest on the totem pole the most by preventing prices from falling and allowing those with the lowest wages access to the fruits of higher productivity. Go figure.
Thursday, December 4, 2008
Austrianism for the Little Guy
An unusual implication of Austrian theory (also from America's Great Depression):