The Austro-libertarians will tell you it is banks expanding credit that generates these financial depressions.
Well, yes, guys, but what do they “expand credit” to finance? Is that one a bit too hard?
The question is difficult for libertarians to respond to, because many of them don’t accept Henry George’s position that it’s to finance land price bubbles – the excessive private capitalisation of land rents.
Murray Rothbard wrote an illogical little piece that tried, in vain, to dismiss George’s logic on the subject. It’s worth reading in order to see the fragile nature of libertarianism when George’s argument has to be twisted and contorted in order for it to be ‘defeated’. (If you can’t see Rothbard’s fallacies, take a peep at Todd Altman’s criticism #6.)
Once you’ve dismissed socialism holus bolus, how can you possibly accept that there is one thing (only) that does need to be socialised – the rent of land – if we are to avoid economic depressions? That’s their problem, see? They believe that socialising the one thing that needs socialising might lead to socialising others. So, we’ve socialised everything else instead. [!]
Dismissing the Georgist premise that excessive land price is always the culprit leading to economic depression, leaves most Austro-libertarians–not all of them!–seeing nothing wrong with the monopolisation either of land or its rent. Those monopolies were apparently justly earned, and Ayn Rand is their saint.
So their problem’s got to be the banks and the creation of money, you see? Admittedly, that is a secondary problem, but if you address first principles, guys–the need for public capture of land rents instead of taxes– you will also solve the secondary problem of banks issuing excessive credit.
The US and Europe are in deep depressionary do-dos, and now China and Australia are about to learn their governments err to the max also in levying taxes when they should instead be capturing publicly-generated land rents for revenue.
Anyone for a revolutionary change of government, or a partial take-over of a country, instead of solving the depression itself?
Next? (Is it only Georgists who have thoroughgoing insights into an economic interpretation of history?)
It’s terrible having the answer to economic depressions in a world where confusion reigns on the topic.