The Austrian Model Of Economics Is Better Than The Keynesian Model

The issue that caused the Great Depression was decreased capital investment. The problem that caused the Great Depression was a lack of government intervention. By not getting involved, the government exacerbated the original decline and allowed a self-perpetuating failure of the market get worse and worse. By increasing spending, the government has the capacity to re-stimulate expenditures and encourage investment; under the Austrian system, this would not happen. Austrians would prefer that the entire market collapse and eventually somehow rebuild itself, causing immeasurable suffering through high unemployment rates and limited production. The Keynesian plan ended the Great Depression that was originally caused by a lack of early government intervention in the marketplace, and it ought to be praised. The Great Depression was a "forest fire" that lasted for around a decade and showed no signs of rapidly improving by itself. Instead, millions of people with families struggled to survive and business cowered in fear at the prospect of investing in anything, in fear of losing even more than they had already lost. The Austrian ideology of market self-rectification does not work in practice. We need to give credit to Keynes for preventing more unnecessary suffering and hardship for the common man, woman, and child.And while the Federal Reserve policies may have played a role in causing the Great Depression, there were other huge factors that Austrians always overlook: poor management of local banks, bad stock investments that led to a stock market crash, and a drop in international trade (the Smoot-Hawley Tariff Act of 1930.) [1] And my opponent thinks that the Great Depression couldn't have been stopped by the Fed... But it was. Keynes' recommendations were implemented, and the Federal Reserve policies helped stop the Great Depression. The Austrian alternative, of course, would have been to allow the market to collapse--or, to go with my opponent's analogy--to let the forest burn down.There is a point when a forest burns down and there is no more habitat left. Recovery can come in small patches, but immeasurable damage can be done that can destroy the forest for generations and generations. During the Great Depression, the market was crashing to the ground until the government took action through Keynesian policies. And the cost of letting it fall to the ground--that is, the cost of the Austrian vision--would have been dire, to say the very least. And in case my opponent was wondering, the gold standard is relevant to the matter of the Great Depression. The gold standard, which most Austrians love so dearly, was incredibly burdensome as the international market crashed during the Depression. Countries ran away from the gold standard, and those that ran first (e.g., Great Britain) recovered before those that escaped from the gold standard after. [2] Overall, the Austrian School's views seem comical when juxtaposed with real, empirical facts. The Keynesian School has provided immense insights into the workings of the economy and the proper role of government therein. By following Keynes, we can better understand how to respond to economic trends and prevent disasters through external stimulation. A self-sustaining market that builds itself up from the ashes is a bizarre theoretical fantasy, like much of Austrian economics. ---[1] http://en.wikipedia.org...[2] http://en.wikipedia.org...