The Austrian Economists: PLEASE, Just Say No!

Peter Boettke writes:

If instead, we were to use the current financial mess to learn the right lesson and get government out of the business of doing business, and instead restrict government to the minimalist role of the "nightwatchman state" we will see market adjustment proceed ruthlessly and quickly cleaning out the malinvestments and redirecting resources to more efficient uses and people to more effective employments of their time and talents. Get government out of the financial industry, let businesses fail, let reallocation of resources and people take place, and lets build effective restraints on government so that we don't end up in this mess again.

Instead if we provide this bailout, as it almost inevitably appears we will, we will move even further away from economic decisions based on "market" pricing and the disciplining of those decisions based on "profit and loss" statements. We will get an even bigger orgy of spending backed by easy credit and imprudent and irresponsibility rather than wealth creation will characterize the US economy...

To try to throw money at a problem that was caused by a system of incentives that said we will bail you out when your risky investments go sour is merely to reinforce the perverse incentives that caused the problem in the first place --- JUST SAY NO.

The Austrian Economists: PLEASE, Just Say No!