All Commentary
Wednesday, October 25, 2017

Why Is Austria So Un-Austrian?

When it comes to economics and public policy, Austria isn't very, well, Austrian.

On October 15th, Austria held its parliamentary election following the breakup of the coalition between social democrats and the center-right OVP. With a public debt-to-GDP ratio of 85 percent, continuous deficit spending, and rank 16 in the richest countries with the most wasteful government spending, you’d think that Austrians would be demanding an approach which comes closer to the actual Austrian School of Economics. But, in the light of the latest election, why are there actually no Austrians in Austria anymore?

An Election Upset

It’s not unusual for a Vice Chancellor in Austria to resign, and it happened three times under the coalition of the establishment SPÖ (Social Democrat) and ÖVP (center-right). Little did the Austrian people know that this would reveal itself to be a plan orchestrated by Sebastian Kurz, the center-right youth star, who became a member of the government at the tender age of 27. With this young star, the party decided to gamble and appointed him as Chairman of the Party. Kurz is known for taking a tougher stance on immigration and flirting with the Austrian far-right. As foreign minister, he played an important role in 2016 in closing down the Balkan route for refugees flowing into Europe.

Both the center-right and far-right parties’ pretense to favor tax cuts and more individual freedoms should be taken with a grain of salt. Kurz recognizes that there is a market for a more anti-immigration policy in the Federal Republic. This has been particularly advantageous for him since the far-right Freedom Party, FPÖ, despite having gained traction, is often unpopular due to its very radical rhetoric. Even before the elections, Kurz supported and pushed for many policies that were popular with this base which included banning foreign funding of mosques, and a public burqa ban. As the presumptive upcoming Chancellor of Austria, he used his pro-EU track record to maintain his credibility.

This election saw the decline of the Austrian Left. The Green Party, despite winning the presidency of the Federal Republic in the last presidential election, had to deal with massive infighting which split the party. MP Peter Pilz created his own political faction, while the establishment Greens lost over 8 percentage points, rendering the party irrelevant.

The Social Democrat SPÖ lost the elections and finds itself trumped by the center-right for the first time in 15 years. Their leader Christian Kern had run on a Bernie Sanders-style populist message, including phrases such as “Ich hol mir was mir zusteht” (“I will take what belongs to me”), with a notable lack of success. It might be, however, that with the death of social democracy, a more right-leaning government would maintain welfare spending, only to add harsh immigration measures on top.

Both the center-right and far-right parties’ pretense to favor tax cuts and more individual freedoms should be taken with a grain of salt. Kurz’s ÖVP has been in coalition with the Freedom Party before, in the early 2000’s, and all that coalition achieved was a multitude of brazen corruption scandals. Coalitions between social democrats and the center-right have so far only lead to long-term deadlock situations.

The 20th Century Drained Austria of Its Freed Minds

After the end of the Second World War, many of these intellectuals did not return. Liberal (in its classical sense) ideas might not have been as popular in Austria in recent years compared to its neighbors, but many of the founders of Austrian economics did hold prominent positions in the country. The founders of Austrian economics such as Carl Menger, Friedrich Wieser, and Eugen Böhm von Bawerk were all respected individuals in leading positions in universities, and in the case of Bawerk, even held the title of Finance Minister (1895-1904).

With the collapse of the Austro-Hungarian empire and Anschluss to Nazi Germany, many Austrian liberal thinkers decided to exile themselves. This was either because they were Jewish or because they saw no possibility of having any vital position in an annexed Austria. Ludwig von Mises, Jewish himself, left the country before the Anschluss in 1938 took place. The same could not be said about his works which were confiscated and burned as a demonstration of opposition to his ideas.

After the end of the Second World War, many of these intellectuals did not return. Far more disconcerting was that the new Republic also had no interest in creating an incentive for them to return. F.A Hayek did nothing impactful in Austria (besides his short tenure at the Salzburg University) and was never asked by any post-war governments for advice, despite being one of the most respected economists of his time. Mises only visited Austria very seldomly.

Is There Any Hope?

The constant control of the same political parties over the country and the education system may definitely lead free-market reformers to be cynical about the realistic chances for coherent change. Even today ideas such as anti-globalization are openly taught by teachers in school, and much of the material they use is inspired by groups such as Greenpeace or Attac.

There are a few reasons to remain positive. Despite the considerable resistance to the ideas of classical liberalism, not all hope is lost for today’s Austrians. The emergence of the Internet, as well as blockchain technology, has made it possible for liberal ideas to affect society. In essence, positive change for the ideas of liberty is coming from abroad. With the emergence of Bitcoin and blockchain technology, Hayek’s idea of denationalization of money has become a more realistic possibility. House of Nakamoto and the owners of Cointed, both libertarian and supporters of the Austrian school, decided to use this market to sell Bitcoin ATMs to local shops. House of Nakamoto not only sells their ATMs, but they also organize seminars in which they teach people the benefits of cryptocurrencies for free. Blockchain beginners are being introduced to cryptocurrencies through vouchers with pictures of famous Austrian economists.

Even in politics, there are a few reasons to remain positive. The rebranding of the Liberal Democrat party into NEOS has seen a re-launch of a Germanic form of ordoliberalism. This party, created in 2013, was assembled by older Liberal Democrats and members which defected from the center-right. In their first try, NEOS made it into parliament. The party, despite being an EU-federalist movement, is also fueled by more positive influences. It openly advocates for both cuts in public spending and taxation. It’s spokesperson on economics, Sepp Shellhorn, even quotes Ludwig von Mises in parliament sessions. In the recent election, NEOS obtained 5.2 percent of the vote, which means that they are inescapable for a two-thirds majority.

All in all, Austria might not be on its way to becoming a paradise for lovers of liberty, but its impressive intellectual potential and the widespread positive work ethic makes it fertile ground for the activists who have yet to come.

Or as Ludwig von Mises would put it: “The criterion of truth is that it works even if nobody is prepared to acknowledge it.”

  • Mohammad J. Malayeri is an entrepreneur and informatics professional based in Vienna. He holds a Bachelor’s and Master’s degree in Business Informatics from the Vienna University of Technology and helps organize libertarian events in Austria.

  • Bill Wirtz is a Young Voices Advocate and a FEE Eugene S. Thorpe Fellow. His work has been featured in several outlets, including Newsweek, Rare, RealClear, CityAM, Le Monde and Le Figaro. He also works as a Policy Analyst for the Consumer Choice Center.

    Learn more about him at his website