Austrian economics does not condone fraud
As a believer in the Austrian theory of economics, I would like to clear up a misconception that many critics have of the theory. This is the idea that Austrian economics allows fraud, since they vouch for free markets. This is a false notion. It is not true.
No economic theory condones fraud because fraud is unfair and all economic theories try to establish fairness. Fraud does not fit into any theory except for anarchy, where anything goes. Free markets do not mean anarchy. There are many supporters of Austrian economics, myself included, who still want oversight for fraud. Oversight is ok and it is necessary to punish those who commit fraud, but it is not acceptable to meddle in markets and companies from the get go.
The government needs to stop worrying about “leveling the playing field” with things such as corporate taxes and penalties for companies, and instead should start working on creating a more efficient fraud-monitoring system. As we saw with the recent Madoff story, the SEC and other measures against fraud aren’t doing so well. It is time to catch the cheaters instead of hurting and controlling the successful.
1 Comment »
Jan 04 2009 at 10:23 pm
Enforcement of contracts is a necessary component of stable property rights. You can’t have a free market without well-defined property rights, so I agree entirely.
By the way, your site was submitted to my libertarian-themed blog aggregator at emergentdisorder.org. If you’d like to remove your blog from syndication, let me know. Otherwise, I would appreciate (but not demand) being linked.