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Thursday, August 2, 2012

The Absurd Concept of "Austerity"

Once again, modern intellectuals, particularly the modern economists, have offered up a ridiculous false alternative.  To stave off government debt defaults, cascading bank defaults, and economic collapse we are told by the likes of Paul Krugman and George Soros that what Europe needs is more government debt, higher taxes, or outright money printing to pay the bills. On the not insane side, are those who rightly urge governments to cut their deficits by decreasing spending, raising the bar of eligibility on various entitlements, cutting services, and so on, an approach which they have absurdly dubbed "austerity."

In other words, according to these experts, you can either have the idyllic welfare state built on confiscatory taxation, deficit spending, and inflation, OR you can live a harsh meager subsistence known as "austerity."  Take your pick....

But are these really the only alternatives?

Say a man starts a business and concludes he only has two choices: 1) lay around, not work, and hope that profits fall from the sky thus enabling a luxurious lifestyle or 2) live a harsh life of meager subsistence.   Is his thinking correct? Is he right to think that his only alternatives are magic or "austerity?"  What if he attempted to actually be productive and rise as far as his abilities take him? Of course, such an approach might lead to a fabulous lifestyle or it could lead to austerity if he fails or chooses to live simply.

The important point is that reality offers man a choice.  Either he can work and be productive and generate real wealth, or he can do virtually nothing and live meagerly and/or die.  One can borrow from another but the bill must be paid eventually or there will be real consequences. This is not an arbitrary opinion, it is an acknowledgment of the nature of reality.  

Characterizing the alternative to massive budget deficits and welfare statism as "austerity" implies that freedom and sound money lead to a dark, cold world of privation and misery, when in fact the opposite is true.  As centuries of theory and practice unequivocally demonstrate, economic freedom, low taxes, and sound money lead to productivity and wealth creation to the benefit of anyone who is willing to work at any level. Furthermore, increasing wealth enables the productive to be charitable to those who are less fortunate.  On the other hand, welfare statism, government budget deficits, and intervention in the economy stifles wealth creation by impeding or destroying capital and thwarting the progress of businessmen and entrepreneurs leading to stagnation, misery, and malaise.  

The pain or temporary "austerity" associated with the transition from a socialist welfare state to even a moderate welfare state in the form of government layoffs and decreases in welfare spending are the fault of socialists and anyone else who thought they could have their cake and eat it too. It can only be thought of as austerity or pain in the sense that side effects from chemotherapy to cure cancer are painful.