Economics Left and Right Wing

2 extreme sides of the social science : Post Keynesian and Austrian economics advocates 2 different ways of managing the economy. However, their views on the economy can be assumed to be the same.

However, the most disturbing matter of keynesian economics is that instead of smoothing the business cycles, it wants the economy to move only up and up with short-termism in mind.

Austrian economics has made its stand objectively throughout its history. However, keysians, wanting to prove Austrian econs wrong, have veered of course. The majority of economist and politicians are keynesians, thus, because of human nature, wanting to be right, caused the management of the economy to be flawed.

Austrian economics is not perfect too, because there is such a thing as vicious cycle where intervention is needed before things spiral out of control.

The US economy has moved up too fast and because the government did not allow a natural cycle to occur during the Dotcom bubble + a relaxation of regulation, the US economy has no way to move up anymore unless deflation takes place.

It is understandable that no ones wants any suffering. But it is inevitable, because excesses in consumption have been taking place for far too long. If they do not take the bitter medicine now, their future generations will suffer because of their selfishness. A similar analogy is that it cannot rain forever, because floods will occur. Therefore there is this cycle where rain will fall and stop, and water will evaporate to form clouds and when the clouds are too heavy, it will rain.

However, the main focus is that companies with poor fundamentals should be allowed to fail, like Ford, GM and Chrysler, where it is poorly managed. With the temporary bailout, it will create moral hazard and expectations that the government will not allow it to fail. If it could save itself, it should have done it long ago, not now, where it is the in the worse time in a business cycle to savage itself. They should be allowed to fail and to restructure, or even merge to streamline the poor management what created the problems in the first place.

The government cannot forget that their goal is to soften the cycle, not to go up and up only in expense of the long term future.