Archive for April 30, 2012
As we’ve all heard so often from the Austrian School adherents, the proper behavior for government in times of economic downturns is to reduce spending to match the lower tax revenues resulting from the lower amounts of economic activity.
American Republicans, of course, double down on this by suggesting that we should not only reduce spending to match the lower tax revenues, but that we should also lower tax rates to further reduce tax revenues, and reduce spending even further to match that lower amount of tax revenues. But today let’s look at the Austrians. Well, not the Austrians, per se, but rather a nation that has opted to hew pretty closely to the Austrian School of economics.
Yes, we don’t have to merely theorize about what the results would be in following the Austrian model of reduced government spending during a recession. We can make a pretty direct comparison. (more…)