‘Let’s Hope’: The OECD’s Latest Outlook And The Absurdity Of The Austrian ‘Reset’

‘Let’s Hope’: The OECD’s Latest Outlook And The Absurdity Of The Austrian ‘Reset’

Six months after declaring COVID-19 "a global health crisis without precedent in living memory" and bemoaning the "enormous damage to people’s health, jobs, and well-being" inflicted by "the most severe economic recession in nearly a century," the OECD is out with their latest global economic outlook. The December tome, which clocks in at a "succinct" 267 pages, finds the OECD cutting its global growth forecast for next year to 4.2% from 5%. "Activity will continue to be restricted with soci
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12 thoughts on “‘Let’s Hope’: The OECD’s Latest Outlook And The Absurdity Of The Austrian ‘Reset’

  1. “the irony would be that the scores of previously “vulnerable” people who suffered as the existing system failed them, would quickly metamorphose from ‘prey’ to ‘predators’ ”

    That’s a good point.

  2. This is a fantastic post. I wholeheartedly agree with investing in children and education and science. I am actually heart broken over the collapse and resulting closing of the Arecibo radio telescope in Puerto Rico- due to lack of government funding in science.
    Also, due to a never ending supply of “cheaper” labor from outside the US and the continuing trend to replace human laborers with robots/computers, our best chance for increasing living standards for the poorest in the US, is to educate to increase the pool of skilled labor.

    I remember reading your post “Where Were You When the World Did Not End” when originally posted— not only for your usual fantastic insights but also because I appreciated and valued the trust that you placed in us, your collective group of students, which led you to disclose a glimpse into who you are as a human, not just as our professor.

  3. The Achilles heel of the Austrian school is that their theories were formulated in a different era. Specifically when it comes to how long it takes to come to settle creditor claims in the modern court system. As I recall, it took over three and a half years to fully settle legal claims from the Lehman bankruptcy. Imagine if it had not only been Lehman, but Citibank, JP Morgan, Goldman Sachs, GE etc etc.

    No healthy re-allocation of capital during that period would have been possible. The Austrian purges sound nice on paper but are impractical in any country where the rule of law prevails.

    On another note, I’ve been too lazy to research it, but one tenet of at least one member of the Austrian school was the need for open borders when it came to the movement of capital, goods and LABOR. I love to ask GOP blowhards who claim to be adherents of Austrian theories where they stand on that aspect of their world view. A lot of hemming and hawing ensues.

    1. Yeah, most of the people who advocate for this kind of thing online haven’t actually studied the relevant literature in an academic setting or really even on their own. They don’t understand the context or the historical debate. They just read about it on some blog somewhere, and then they parrot it because it sounds “right.”

  4. Economic ivory tower thinking is a lot different than policy in the real world that affect real people. Austrian economics in my view has some useful elements like many social and economic theories but as an operating principle it is largely bunk. It is cruel and does not factor in the suffering it will cause as a cost – it only focuses on the benefits down the road. As Keynes once said, “In the long run we are all dead”. Until the US as a society focuses more on the needs and yes the benefits of helping the less well off, we will be operating at a level that is far from optimal. Creative destruction sounds great until you are in the middle of it.

    1. Nonsense! I once heard Joe Kiernan talking about how great creative destruction is. (Perhaps in 2010 or 11?) He suggested that laid-off coal miners pivot to writing iPhone apps. Now there’s a solution!

        1. If you’re talking about Joe Kernen (i.e., the CNBC anchor) he appears, at times, to wear a Presidential Rolex. Nothing wrong with that (at all), but anyone wearing a Prezzy and talking about creative destruction is almost by definition a charlatan. Those two things just don’t go together very well. 🙂

  5. Thanks for sharing this piece I would never have seen otherwise. As to creative destruction remember inertia — it’s the law! We are where we are and will keep going how we are going without enormous force applied to the contrary. No real support for that amount of force, or the past for that matter.

    I was going to insult Joe Kernan but instead I checked up him a bit. I found that he actually holds a masters in Molecular Biology from MIT. What a waste to take all that training and become a vacuum cleaner salesman at a brokerage house for ten years. I also read that he makes 22 mil a year but only has a net worth of half that amount. Not much of an investor I’d say.

  6. I suspect all the talk of re-engineering the societal and economic structure we have become accustomed to in our lives is in part because subconsciously we know we are approaching an end of life as we know it. With climate change and the decreasing ability of the oceans and the arable land to support a growing number of mouths to feed, what is the answer?? Other than the obvious one of vastly decreasing the horde.

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