Homeopathic Economics

GMU economist Peter Boettke countered the idea that increased government involvement in the economy will be a change in course on The Austrian Economists blog yesterday.  “Fiscal policy has been irresponsible for at least two generations,” he argues, and “monetary policy has been loose in an effort to minimize the short term pain of adjustment.”  The current crisis is not caused by three decades of market liberalization and rampant capitalism; on the contrary, it was precipitated by years and years of Keynesian policies marked by only slight deviations to the right and to the left.  Worse yet, the government’s reaction to this depression has been more of the same, and, as Boettke forcefully puts it, “WE ARE CURRENTLY SUFFERING THE CONSEQUENCES OF THE VERY SAME POLICIES WE ARE NOW ADVOCATING TO FIX OUR PROBLEMS.”  This almost homeopathic approach of treating like with like is perpetuating the problem, Boettke concludes, and it is only with a replacement of current practices with those advised by Hayek et al. that we could “recover from the current malaise which statism has entrapped us.” Read more here.