Monday, August 11, 2014

Böhm-Bawerk: Austrian Economist Who Said 'No' to Big Government

Richard Ebeling emails:
Dear Bob,

I have a new article on the news and commentary website, “EpicTimes,” on “Böhm-Bawerk: Austrian Economist Who Said ‘No’ to Big Government.”

August 27th marks the hundredth anniversary since the death of the famous Austrian economist, Eugen von Böhm-Bawerk, in 1914. He is well known as one of the early leading members of the Austrian School of Economics who developed the “Austrian” theory of capital and interest, as well as a famous critic of the Marxian theory of supposed “exploitation” of workers under capitalism.

What is less well know is that Böhm-Bawerk three-times served as finance minister of the old Austro-Hungarian Empire in the years before the First World War. In this capacity he was a principled and determined defender of limited government, fiscal conservatism, and an opponent what today we would call Keynesian-type “stimulus” programs.

During his longest term as financial minister of Austria-Hungary between 1900-1904, government spending was reduced, taxes were cut, and the Austrian budget was balanced. In addition, he successfully opposed a massive “public works” scheme of railway and canal construction projects proposed by the prime minister in who government Böhm-Bawerk served. He argued they were too costly, unnecessary, and merely a spending device to financially pander to special interest groups.

He succeeded in stopping this fiscal boondoggle, but he soon resigned anyway due to suspected corrupt “irregularities” in the Austrian defense budget that he refused to ignore.

Even after leaving office, Böhm-Bawerk continued to warn of the dangers from out-of-control government fiscal spending, taxing and borrowing and how these easily these lead to the financial ruin of any country. He represented a now long-gone and extremely rare breed of government bureaucrats: an advocate of free market liberalism who actually tries to practice the limited government that he preaches.

Best wishes,

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