By Chris W
The Libertarian Patriot

Ken and Aus are identical twins in every way through their early years in life; both college educated, with the student loans to prove it, and both started a business in the same industry with a similar bottom line. They both also enjoy the finer things in life and as a result have racked up some pretty impressive debt along the way. But in their early 30’s, as they both got married and began families, their lives began to diverge.

Ken, who believed the good times would never end and it was his right to have the nicest house, newest cars and fancy toys, continued to spend and spend and spend on vacations, restaurants and other frivolities of life. Even though he was over his head in debt, he always paid his bills on time so his creditors were more than willing to loan him more. It also didn’t hurt that he was always able to come up with some extra cash from his investors when he needed it; seemingly having the ability to print money on demand and would also charge his wealthier clients more, while still subsidizing his poorer ones, if he needed money in a pinch.

Aus, on the other hand, became more of a realist. As he got older he realized that he couldn’t continue down the path he was on. Although he was making a comfortable living he knew that at some point his debt would become unsustainable, so he did what any forward looking person would do, he cut back. After some soul searching, Aus made sacrifices. He sold his large house, fancy cars and expensive toys – sometimes losing money, sometimes breaking even – and moved into a modest home, bought inexpensive vehicles and lived frugally; paying down his debt and saving what he could. In business he treated everyone equally and provided his clients the same basic services at the same cost. He also never relied on his investors to bail him out.

Ken would often ridicule his brother for the way he ran his business and his life; after all, Ken believed, debt wasn’t a problem and the cash would always be free flowing. Why cut back or save when there would always be someone there to foot the bill even if you made some big mistakes along the way? Aus wasn’t so sure. At some point the gravy train would come to an end so wouldn’t it be better to prepare for the worst. Aus didn’t have much but what he had was his as he had managed to get his debt under control and save a little bit along the way. He also made some wise choices with his savings along the way, just in case.

We now come to today. With an economic slowdown Ken is having trouble borrowing, the investors are afraid he is in too deep, his wealthy clients are beginning to abandon him due to his ever increasing rates while his poorer ones are continue to clamor for more. His family also is not willing to give up their standard of living and continue to want the best of everything without sacrifice. Ken has seemingly reached the end of the line.

Meanwhile Aus is in a lot better shape. His family wishes they had more but have come to realize that they have all they need to survive comfortably. His business is far smaller but his income has remained steady because he has kept his expenses down by not providing any extravagant services, just the bare necessities. As he sees it, there are plenty of other entrepreneurs out there that will fill in the void if people want or need more.

Sadly, there is a twist to this story. Ken, you see, does not have a twin brother. Aus is merely a distant cousin whose path has been disregarded for some time now, although it is becoming ever more popular.

For the past 100+ years believers in the Keynesian model of economic theory have held sway in government and academia while Austrian theory has been relegated to a small corner of the room. Unfortunately for us today, the concept that massive government spending is the best way to keep the economy on an even keel has been proven time and again to be a failure.

While true believers in Keynesian theory continue to posit that the government has only provided a fraction of what they feel is needed to turn things around and want to see more intervention on a grander scale, Austrian followers have correctly predicted previous downturns and predict even more doom on the horizon if we don’t change our ways.

We would be on much firmer economic footing today if the Austrians were allowed to run the show.