Reply #33: Geez, who dug this up?

[angryfirelord]

I thought three year old threads were locked anyway? Anyway, I agree with NoPasaran's post which shows Paul's naiveness about 19th Century history. Look at what happened with the coal mining companies. We had:

• A free market currency called script, which could only be bought at the company store with inflated prices. No gold or silver here, that was only for the rich people.
  
• No workmen's compensation, so if you got injured, tough luck. If you died on the job, your body was dropped off at the company's rental house where you lived and your wife would either have to send her children in or find a replacement. If not, she would be forced off the property within 24 hours.
  
• The court system could be argued that it was privatized in that the judge and jury were usually bought by the coal company and did not represent the accused fairly. The company had no qualms about putting you to death if you decided to fight for better conditions, which is what happened to the Molly Maguires.
  
• Don't be poor either, the Victorian mindset was that if you were poor, it was your own fault. It wasn't until the later 19th Century that we saw organizations like the Salvation army appear.
  

Most importantly though comes from his understanding of business cycles. According to the Austrian school, there exists only one axiom with which to study economics, something they termed "Praxeology". The problem with this simple-minded method is that they essentially reject all empirical data, deeming it "statist" or otherwise irrelevant. They are usually quick to point out that all cycles are the fault of the central bank, yet they remain silent on the cycles that occurred before the Fed.

For instance, one of the earliest documented boom-bust cycles was the "Tulip mania" that occurred in the 1600s: http://en.wikipedia.org/wiki/Tulip_mania

The 1800s in the United States is littered with recessions that caused some nasty downturns. One of them was called the Long Depression (known as the Great Depression before the 1930s), which started in 1873 and was the result of deflationary pressure due to a lack of demand of coins, something Austrians refuse to admit is a problem. Austrians always view deflation as a good force, even if history shows it always isn't.

However, the most critical portion of free market banking occurred in Australia in the 1890s. There, the economy experienced a large boom followed by a crash and a long depression. But over there, no central bank had been established and despite its much more free economy, it still did not recover very quickly.

So when Paul and libertarians claim that they know all of the answers to our economic ills, ask them if they really know our economic history or if they are just choosing bits and pieces of history.