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Economic Model Definitions and Discussion on the Repercussions of Such

I see economic terms being thrown around a great deal on this website, and while I do not wish to convey an opinion of any of them, I thought I should give a brief description of them and let the discussion on them begin. I will attempt to give both positives and negatives for each.

Austrian:

Austrian economics would calls for very low government spending/low taxes and free enterprise. It is the "let the market take care of itself" economic model.

Positive:
In periods of good economic times, this provides the most money to the populous which then allows businesses to thrive.
Businesses are not overburdened with taxes, and individuals are able to spend, or save, more of the money they earn.

Negative:
Austrian economics, in times of crisis, businesses contract, lay off people, and the economy can shrink even further.
In times of crisis Austrian economics does not work as it gives no remedy to avoiding a financial crisis.
It forces the society to live through austerity and at a lowered level of service until a point in which society "bottoms out" and the free market booms again.
Under Austrian economics, you see a much more horrible depression, but a much more rewarding boom cycle.

Goals:
Individual - To maximize the most potential growth in the shortest amount of time, while taking the most risk to the individual rather than the government.

Keynesian:

Keynesian economics calls for periods of government spending, followed by periods of higher taxes to pay for this spending.

Positive:
In the event of a crisis when businesses contract, government can take out low interest loans and put this money back into the economy in terms of unemployment, or direct employment.
Major depressions can be avoided by allowing the government to borrow on behalf of the citizens to make up for lost productivity and provide real wages to it's citizenry via public works projects.
During bad economic times, public services are able to be maintained via government borrowing.

Negative:
In times of non-crisis, is that populations are over taxed at a later date to pay for the past government debt.
A prevention of full boom period is placed upon the citizenry due to an increase of taxes during good economic times.

Goals:
Collective - To sustain a balanced and non-fluctuating boom and bust cycle. To provide stability to the markets, by limiting the growth of sectors, and preventing the extinction of others.

Fascist:

Fascist economics calls for a control of government by private business, or in other words, businesses are the government.

Positive:
Prices are set to demand, rather than supply.
There are no boom/bust cycles, economies are dependent upon workers spending what they make.
Technologies have a potential to advance much faster.
Cost of government is low, taxes are low.

Negatives:
Very low consumer choice.
Each private sector is ruled by one monopoly, who in turn controls the government policies towards that sector.
There is no real democracy, as government is 100% controlled by corporations.

Goals:
Profit for Power - To allow for a monopolistic society which is ruled by corporations, and whose government exists solely for the protection of corporations.

Communistic:

Communistic economics calls for the control of private business by the government. This is the reverse of fascism.

Positive:
There are no boom/bust cycles, economies are dependent upon the supplies available for harvest and production.
Technologies have a potential to advance much faster.
Cost of government is low.
"In theory" everyone, including those at the highest ranks of government are equal.

Negatives:
Very low consumer choice.
Each private sector is ruled by the government, as is it's production. There is no private business.
There is no real democracy, as government becomes controlled by elites demanding more than everyone else.
Proletariat becomes poor as ruling class takes advantage of them.
Proletariat are used for the production of goods for the ruling class.

Goals:
Ultimate Classless Society - To allow for a society in which there are no rich and no poor. "From each according to their ability, to each according to their need"

Anarctic/Free market economics:

Anarctic economics disolves all balance between government and business. Government has no control of monetary policity or regulation.

Positives:
Free market is able to grow as large as it chooses
All businesses compete for profit with no interaction from world governments
Consumers have the ultimate choice in who to spend their money with
Goods are the cheapest in some sectors where there is competition

Negatives:
Government has no ability to help a failing economy
Businesses are free to poison or injure their customers as there is no oversight
Monopolies quickly form, lowering quality of product and raising prices
Consumers are often left with a choice between purchasing a product from monopoly, or doing without
Buyer Beware

Goals:
Ultimate Capitalism - To allow for businesses to make a profit at any means, answerable only to their customers, and in cases of monopolies, answerable to no one.

I give no answer or opinion to which the best economic model is, I simply wanted to put out there the basics of each and let the discussion follow. I also did not discuss the impact on community, family, religion, or other social topics, only economic, so please feel free to discuss those and the impacts on them in the comments below.



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Here is what Mises, himself,

Here is what Mises, himself, said about the "grey area" regarding economics.....

http://mises.org/daily/2370/MiddleoftheRoad-Policy-Leads-to-...

http://mises.org/daily/5660/Is-There-Room-for-Compromise-wit...

"I do not add 'within the limits of the law,' because law is often but the tyrant's will, and always so when it violates the right of an individual."

There are plenty of people

There are plenty of people who want to see the world in just black and white but I'm glad to see there is a person who wants to explore all the grey areas as well.

I look forward to reading more posts from you. What is the attitude of Austrian economics towards a fiat currency issued by a central bank?

Well, a central anything

Well, a central anything isn't subject to the price mechanism, so it cannot perform economic calculation. Consequently, all decisions will be arbitrary and whimsical. It also isn't subject to competition, so there is no hope of make the situation better by taking your business elsewhere.

IF you want to economize scarce resources as efficiently as possible, then you wouldn't want centralized anything. You would want true signals to make the best decisions.

IF you want to give freebies to your buddies, then a central bank would help you hide it. You would be able to hide your mistakes and keep your buddies in business even after the consumers(you and me) have rejected them. Progress would be slow, stall, or start going backwards. You can always take credit for the boom, and blame others for the bust.

So, what do you want to accomplish? Do you want to satisfy the wants and needs of everyone, or just your buddies. Answer this, and I can tell you if a central bank is good for you or not.

"I do not add 'within the limits of the law,' because law is often but the tyrant's will, and always so when it violates the right of an individual."

That is kind of a double edged sword

for instance. Austrian economics would say that in a fiat currency, a central bank should only issue new currency when there is demand for it to stave off inflation, and not for purposes of "easing" the markets as the federal reserve has been doing recently.

But let's apply austrian economics to this, and for the example let's say that our economy hoisted itself up by it's bootstraps.

We were in a deflationary period, and had there not been an issue of fiat easing, we would have seen the value of the dollar increase. great huh? not really in a fiat world. Our dollar would have risen in value while others decreased. This means that any goods we export would be far too expensive for other countries to purchase, which would have hurt our own economy in the long run. it's the whole "protectionist" thing.

Ultimately you want to have a currency backed up by a tangable material, gold, silver, etc. (gold is no longer viable as too many electronics require it).

A fiat system is basically a checks and balance against other countries based off of debt ratios. to that end, austrian economics can work in a fiat system IF all other major trading partners focus on austrian economics as well. If some trading partners are keynesian and some are austrian, well you find yourself in the situation of germany with spain and greece, where in order for them to survive, germany has to bail out other countries.

In many ways we were lucky that the european union formed when it did. had it not, we would have been in far more trouble. Germany and UK took the brunt hit for greece and spain, rather than WE taking the hit had their currencies not been in trouble.

This was the reason why we saw so many protests in greece over austerity, because germany gave them an ultimatum, either become austire, or go down in flames, and we'll take the hit to our (german) economy.

Really not understanding the downvote on my post

people may not like the downside to austrian economics, but that is the downside, just as many other economic models have downsides. discuss these things, don't downvote.

I was forced to give the

I was forced to give the down-vote. With these definitions as given, I can't use any of the words. I'm left describing the idea using "long-hand".

If I want to discuss "the idea of gov't control over the economy", I can't simply use the words communism, socialism, OR fascism anymore. I have to type it all the way out to prevent confusion!!!

If I use the word "Austian", the reader may think that I'm advocating "letting them starve", so I have to avoid the word all together, and instead type out "analyzing causes and effects in the real world".

Things like this is how the word "liberal" got so messed up, that it now means the OPPOSITE of free market, individual liberty, free trade, and limited gov't. Professed "Liberals" are more statist than conservatives, for god's sake!!! Conservatives championing the individual, individual rights, and non-imperialism? That tells you the danger of redefining words, right there!!!

.....So, I submitted the original, more accurate, definition of "Austrian" economics. Namely, "causal-realist" economics.

So, what does "Austrian" economics suggest for policy? Well, it all depends on what you want to achieve. As the only school that deals with cause and effect in the real world, "Austrian" economics is the only school that is meaningful REGARDLESS of your intentions.

"I do not add 'within the limits of the law,' because law is often but the tyrant's will, and always so when it violates the right of an individual."

It doesn't matter anyway

no one reads economic posts. They are all too busy with important things like banning bongs in florida, 30" earth worms, and infowars.

So I get a downvote

for using the correct terms economists use, and you not in particular? Nice.

I don't subscribe to your

I don't subscribe to your definitions, so I won't participate in any discussion using them.

For example, Austrian economics is only called "austrian" because the German historisism school disliked Austria. It was meant to be a prejudice label. It descriptive name is "causal-realist" because it only seeks to explain what CAUSES certain things to happen in the REAL world. It makes NO POLICY RECOMMENDATIONS. It only explains the results of policies. It only says that IF you want to cause X, then you must do Y.

IF you want to cause unemployment, then establish a minimum wage and raise it periodically to keep up with inflation.

IF you want economic progress, then you must save and invest.

IF you "blow your economic wad" living beyond your means, then you will find yourself in poverty once your savings run out and you can't afford to repair/replace your machines.

IF you want to please the unions, then you inflate the currency to afford their raises.

IF you want to feel safe, then give up your liberties.

IF you want to starve poor people, then put price controls on the things they buy to make them more affordable.

......IF you don't want any of these effects, then DON'T implement any of these policies.

Also, the difference between fascism and communism is mere sophistry. They are both ideas of total gov't control.

"I do not add 'within the limits of the law,' because law is often but the tyrant's will, and always so when it violates the right of an individual."

So, it's one school

So, it's one school attempting to explain the REAL WORLD

vs.

Trying to remake the real world fit 3 different emotion driven models of how some one thinks the world SHOULD work.

I'll take causal-realist economics over well-wishing in denial any day. The negative of "austrian" economics? Well, the truth hurts sometimes, and the real world can be quite unforgiving, ESPECIALLY if we don't learn from our mistakes!!!

....And whatever negatives result from keeping more of your own money in your own pocket, naturally.;)

"I do not add 'within the limits of the law,' because law is often but the tyrant's will, and always so when it violates the right of an individual."

i didn't want to give my opinion in the post

but I will here in the discussion. Yes, I do agree with you on austrian eocnomics. I subscribe to it, but yes, we do have to understand that in the times of bust, there is no net to catch us. the trade off is a greater reward in good times.

But i can understand the masses who do not want to go through something like that, and instead subscribe to keynesian. most are happy just coasting along, knowing they will never fall too far, but never drive the car either.