Think Right

United States’s SBS News commentators Shields and Brooks are in a quandary as to the trillion dollar “stimulation” package.

Shields: We are spending billions on getting out of this but nothing is happening.

Brooks: Confidence is the child of optimism.

Shields: Americans rebuilt devastated Germany after WW2. Americans rebuilt devastated Japan after WW2. We can surely rebuild America.

Shields is quite wrong on both of those points. It was the wise economic decisions of Finance Minister Ludwig Erhard that rebuilt West Germany. He eschewed money printing, reduced taxation and the recovery was so dramatic, that unemployment went from 50% to zero in 10 years.

And five million new workers had to be imported from Greece, Turkey, Italy Spain and France.

In Japan’s case, it was Japan’s Minister of Trade and Industry, Tanzan Ishibashi who dictated Japan’s economic policies. He abolished the tax on the interest of savings. He cut tax on dividends from 11% to 7% and cut personal rates by 10%. Corporate tax rates were dropped from 42% to 40%.

Curiously tax revenues rose by 15% and voluntary savings rose by an astonishing 31.5%.

Taiwan, Hong Kong, Singapore and South Korea also copied West Germany’s recipes and made astonishing gains in ten years.

Our illustrious leaders and Opposition ought to study these policies and apply the nation building recipes here.

Ronald Kitching

The United Kingdom, already financially moribund after 12 years of socialist rule is yet another a sad example of monetary madness, as they prepare to emulate Mr. Mugabe’s example of “stimulation” by money printing on a grand scale.

Who would have thought that this once great nation which was the modern founder of sound money, could descend to such relative penury.

President Obama and Prime Minister Rudd are too embarking on the Mugabe recipe.

It was Sir Isaac Newton when he was made Master of The Mint in 1717, who declared: “If this nation is ever to prosper, it must have honest money. That is, we must have a standard by which money can be measured. In order to calculate, you must define the unit. Therefore, from this day forward, every guinea will be worth 129.4 grains of gold. Thereby, we intend this currency to hold its value.”

So seriously did he take his views that counterfeiters were hanged. It is a great pity it isn’t still a hanging offence, we would get rid of the Central Bank and a raft of corrupt senior politicians all in one hit.

Ronald Kitching

The PM assures us that he is concerned about jobs. If he and his advisers knew anything about how real jobs are created and maintained he would not now be acting out the most incredibly destructive fiasco in Australian history.

A short letter cannot possibly do justice to the subject. But the following book does so.

Murray N. Rothbard’s book titled America’s Great Depression is a staple of modern economic literature and crucial for understanding a pivotal event in American and world history. Applied Austrian economics doesn’t get better than this.

Since it first appeared in 1963, it has been the definitive treatment of the causes of the depression. The book remains canonical today because the debate is still very alive.

The Great Depression was not a crisis for capitalism but merely an example of the downturn part of the business cycle, which in turn was generated by dishonest government generated money and government intervention in the economy.

Its appearance in 1963 meant that free-market advocates had their first full-scale treatment of this crucial subject. The damage to the intellectual world inflicted by Keynesian- and socialist-style treatments are illustrated and demolished.

The Great Depression was a failure not of capitalism but of the hyperactive state.

It is available in hard copy and on line at: www.mises.org/rothbard/agd.pdf [PDF, 956KB].

Ronald Kitching