The United States is currently practicing what is known as Keynesian economics. What is Keynesian economics? In short believers of the Keynesian philosophy think that spending is the key to everything, even to stimulate the economy. People who promote Austrian economics focus on being more productive. “Austrians” and I don’t mean citizens of Austria, think the best way to grow the economy is to produce more with what you currently have. Keynesian economics promote steering markets, when Austrian economics promote setting them free. For years the United States has been a constant struggle debating which economic policy is the most effective for boosting the economy.

Keynesian Economics is one of the leading causes to our national debt. They believe that government spending is the only way to promote the economy, even with money that we don’t have. Which has been proven to only sink us further into debt. If everyone managed their bank accounts with the Keynesian philosophy, we would all be broke. If you have 10,000 dollars in credit card debt, would you borrow and spend more to try and fix the problem? In a short term scenario the Keynesian philosophy works great. But in the long term taking loans out to pay back other loans only leads to chaos. The only way Keynesian economics could work is if the government had a monetary surplus. That could be used up in hard times, but as we know the Keynesian approach is to spend! spend! spend! If all you do is spend and not save for a “rainy day” then you are bound to have problems. To pay back our debts some Keynesians recommend printing more money, printing more money leads to inflation. Inflation is the devaluation of the dollar. A good example of this is if you were to have a one dollar bill in 1980. Today that would equal to $2.82. Why is this a bad thing? Because things cost more during inflation. Salaries do not keep up with inflation and it leads to destruction.

Austrian economics is more or less a common sense approach to our finical system. One of the biggest causes of the 2008 crash is people bought houses on artificially low interest rates. Companies gave our loans like candy, no matter what your credit score was. In the long run people couldn’t make their payments and they lost their homes. Multiply this by millions of people and all of the sudden the demand for real estate drops astronomically. When this happens it is called a bubble, the Austrian theory doesn't eliminate bubbles in general. But it does eliminate government caused bubbles. Someone who practices Austrian economics can see that if they cannot afford something they shouldn't take out a loan with artificially low interest rates for more than they can afford. For example it makes no sense for someone making 30,000 dollars a year to be living in a three million dollar house. Even with loans, you will not be able to make interest payments on that loan.

Many people who practice Keynesian economics will argue that we can lower our deficit by raising taxes on the rich. First let me clarify deficit is, many people tend to confuse deficit versus debt. Deficit is how much money the government is “down each year”. For example if the government took in ten trillion dollars in taxes but spend 15 trillion. Then our deficit would be 5 trillion dollars. Deficit is erased after the year, this is where debt comes into play. Debt is the accumulative which means it takes the deficits for each year and ads them up. Back to my point, in 2009 the deficit was 1.5 trillion. To “balance” the budget, or to eliminate that deficit the U.S. would have to raise the top 5%’s tax rate from roughly 30-35% to 88%. The average income for the top 5% of Americans is $300,000. If we did tax them their “fair share” of 88% it would bring their income down to $36,000. Which would make the top 5% worse off than the average household. Keynesians promote policies that have failed in the past. In simple terms if you were to stick your finger into a fire and realize that it hurt, you wouldn’t do it again. The Keynesian approach would be to stick your whole hand in the fire, because last time there wasn’t enough pain (spending).
In conclusion Keynesian economics promotes the idea that spending money, even if you run out of money is a necessity to stimulate the economy. Austrian economics is more of a free market system that wants to cut government red tape out of businesses, and to not spend money that we don’t have. When most teens are watching March madness, I’ll be watching C-Span. When most teens listen to 93.7 on their drive to school, I’ll be listening to NPR. For the past 100 years these two systems have been practiced by the federal government at different points in history and the struggle for economic freedom remains in progress.