From Mises Daily
I read this little essay on Austrian business cycle theory about a week ago and it set my mind a-turnin’. The authors seem to imply that there is a role for the government in mitigating recessions and that that role is cutting taxes to allow firms to reach their break-even-points faster. Once they are at the break-even-point they can then begin making new plans and reallocating the capital previously liquidated capital into higher valued lines of production.
Today, whilst scrubbing dishes for $7.50/hr, I thought up a critique and elaboration of this line of thinking, the basic thesis of which is that the effectiveness of tax policy in combating recessions largely is determined by federal spending policies and aggregate savings. I hope to get a blog post up soon. I’d do it now but instead I’m finishing off this bottle of fine Jamaican rum I’ve had lying around.
