Economics

Mises Institute – Mises Media Podcasts, interviews, lectures, articles, essays, and more. This is the Mises Institute’s master online media catalog.

  • The Private Production of Defense Audiobook
    by Clay on July 10, 2019 at 7:10 pm

    The Private Production of DefenseThe Private Production of Defense Audiobook Hans Hoppe takes on the most difficult subject in economic and political theory: the provision of security. Download the audiobook for free today! Hide Author Box: Sticky wire homepage listing: Sticky podcast homepage listing: Medium: Written

  • A Theory of Socialism and Capitalism Audiobook
    by Clay on July 9, 2019 at 7:10 pm

    A Theory of Socialism and CapitalismA Theory of Socialism and Capitalism Audiobook Hans Hoppe’s Rothbardian work on Socialism and Capitalism, now available as a free audiobook! Hide Author Box: Sticky wire homepage listing: Sticky podcast homepage listing: Medium: Written

  • What Socialized Medicine Really Looks Like
    by Clay on October 9, 2018 at 3:49 pm

    2018 Supporters SummitWhat Socialized Medicine Really Looks Like Presented at the Mises Institute’s 2018 Supporters Summit in Auburn, Alabama. Medium: AudioVideo

  • Chapter 4. The Case for Private Security
    by Clay on July 10, 2018 at 5:00 am

    The Private Production of DefenseChapter 4. The Case for Private Security Pages 21–26 in the text. Medium: Audio

  • Chapter 5. More on Aggression Insurance
    by Clay on July 10, 2018 at 5:00 am

    The Private Production of DefenseChapter 5. More on Aggression Insurance Pages 27–30 in the text.  Medium: Audio

  • These Are the Real Effects of a Minimum Wage Law
    by Dakota Hensley on May 14, 2021 at 10:15 pm

    By: Dakota Hensley In recent years, there’s been a movement among the American Left to increase the minimum wage to $15 an hour. This is under the assumption that having a minimum wage helps workers and makes corporations pay their fair share. However, this is the opposite effect of a minimum wage, especially one that high. It keeps low-skilled (often black or other ethnic minority) workers from finding employment, forcing them to depend on government, and leads to closures of small businesses (especially black-owned businesses) which benefits corporations. To truly help workers and small businesses, we must abolish the minimum wage. In 1931 came one of the first minimum wage laws, the Davis-Bacon Act. It required $2,000 (about $35,000 today) for contractors working on public works projects. It was introduced by Pennsylvania Senator and former Secretary of Labor James Davis and New York Congressman Robert Bacon. Davis was a eugenicist and Bacon was a racist who introduced a labor law because a Veterans’ Bureau Hospital in his district had been built by black workers. As with Davis’ other bill, this act was designed to keep low-skilled workers (mostly black) from being employed. The other Congressmen made it clear this was why they backed Davis-Bacon. Missouri Congressman John Cochran reported that he’d received “numerous complaints in recent months about southern contractors employing low-paid colored mechanics” and his colleague, Congressman Clayton Allgood, said that “cheap colored labor…is in competition with white labor throughout the country.” Thirty years later, in the 1960s, minimum wage laws again caused black people to lose their jobs. Farmers were required to pay $1 an hour (about $9 today) instead of the $3.50 a day (about $31 today) they were being paid before. This led to thousands losing their jobs, causing one man’s wife to say the dollar meant nothing if her husband didn’t have a job. While minimum wage advocates don’t advocate for it for the racist reasons of Davis and Bacon, the effects are still discriminatory towards black people. Black workers tend to occupy low-skilled or semi-skilled trades. Immigrants, inner-city minorities, and young people also make up the majority of low-skilled trades. Making the hiring of these workers more expensive leads to poverty, homelessness, crime, and a host of other societal ills. Without a minimum wage, these low-skilled workers and their employers can agree on a wage and the worker can work as long as he or she wants. Once they have the skills (from, say, attending a trade school) and the work experience, they can move on to greener pastures to find an employer willing to pay them more. A minimum wage puts the employer in control, giving them plenty of reasons not to hire the lower-skilled. Without it, the worker is in control. If the minimum wage is anti-corporate, why does Amazon, Google, Target, and Hobby Lobby support a $15 an hour minimum wage? It keeps out competition. They can afford almost $30,000 per employee. Small businesses can’t. As USA Today notes, “The path would be clear for even more market dominance of big business and Wall Street, gained at the expense of Main Street.” People couldn’t buy local and corporations could expand their power. This is especially true of black-owned small businesses. Black businesses have less money to find employees and must often use their own money to fund their business. They have less employees as a result. Imagine if they had to pay $30,000 per employee out of their own pocket. They’d lose the few employees they already have. That would kill black entrepreneurship and doom black communities. This could lead to gentrification where black communities become white and the original black residents are kicked out. According to the CBO, a minimum wage hike would lift 900,000 out of poverty but put 1.4 million out of work. Young, less educated people account for a disproportionate share of those job losses. These low-skilled workers may not have the skills to get another job. We forget what a low-skilled job is. It’s dishwashing, being a retail cashier, being a receptionist, and being a laundry attendant. It’s not plumbing or automotive mechanics or carpentry. Those jobs pay tens of thousands. Those jobs require trade school, not just a high school diploma. A minimum wage punishes those who were born poor and weren’t given the opportunities to go to trade school or college and get those skills. The best way to help labor is to allow workers to negotiate the wages they want, not to apply a one-size-fits-all wage. The best way to save small and minority-owned businesses is not to make every employee an expensive commodity. Minimum wage laws hurt low-skilled, often black, workers. Implementing these laws lead to the growth of big business at small business’ expense. To be truly pro-labor and anti-corporate, we need to abolish the minimum wage.

  • A Synthetic Anarcho-Capitalist Perspective on Public Goods
    by Fabrizio Ferrari on May 14, 2021 at 3:00 pm

    By: Fabrizio Ferrari Among the several misgivings non-anarcho-capitalist people might have with anarcho-capitalism, there is the issue of public goods. Public goods, in fact, are supposed to be those goods which free markets cannot efficiently supply and allocate because of two properties: non-rivalry, i.e., the fact that A’s consumption of (public) good X does not impair B’s consumption of it; and non-excludability, i.e., the fact that A, the owner of (public) good X, cannot prevent B from enjoying it as well. So, the argument goes, public goods supposedly need to be produced by governments; otherwise, they would be underproduced or overused—that is, free markets would fail to deliver optimal (i.e., desired) quantity and allocation. However, even setting aside historical instances of private provision of alleged public goods,1 it is the theory itself—as well as the alleged necessity for their governmental production—that relies on shaky and fallacious premises, as I will briefly summarize. First, consider that a truly non-rivalrous good is not even an economic good itself: nobody, indeed, would face the need to economize it. In fact, if both A and B can consume (public) good X without reducing the satisfaction each one of them can derive from it, then X is no longer a scarce means that must be allocated efficiently—i.e., it is no longer an object of economic choice and action. On the contrary, X could be considered a “natural condition of human welfare”.2 But, if X is so abundant that neither conflicts nor tradeoffs would arise when both A and B are eager to employ it, then A and B need not worry about any potential underproduction, squandering, or misallocation of X itself. Indeed, X will always be available to A and B for whatever purpose they might need it. That said, moreover, oftentimes so-called public goods—when scrutinized more carefully—actually feature rivalry: hence, conflicts and tradeoffs are bound to arise when it comes to their employment. Therefore, governments themselves, while allocating such goods, must be guided by some principle. Since such a principle is not (by definition) the free-market price mechanism blamed by public-goods theorists, then governmental production and allocation of public goods would require some ethical principle justifying it—that is, some justification for coerced exchange between subjects and governments, i.e., taxation and government expenditures.3 However, such an ad hoc ethical principle would be outside the realm of value-free economic theory. Second, what about non-excludability? Here, the anarcho-capitalist answer is straightforward: governments cannot introduce coercive mechanisms preventing the depletion of (rivalrous) non-excludable goods.4 In fact, on what ground could bureaucrats maintain that depleting a scarce resource today is worse than doing so tomorrow—or in one year, in one century, etc.? Of course, they could not do so on the economic-theoretical ground.5 Why? There are two main reasons. Reason number one: economics does not allow aggregating individual utilities into a social welfare function (utilities are, in fact, unmeasurable, and you cannot perform on them such mathematical operations as additions, averages, etc.). Hence, aprioristic assessments about the social (dis)utility of consuming a (scarce) non-excludable resource today as opposed to tomorrow—or of having a (scarce) non-excludable resource consumed by a group of people rather than a different one—cannot be performed on an economic-theoretical ground. Reason number two: economics does not allow interpersonally comparing the utility of one person (who, say, is depleting the scarce resource today) with the utility of another one (who, say, is not eligible to deplete the resource today, and hence would be depleting it tomorrow). Thus, economics has nothing to say about the distribution of a (rivalrous) non-excludable resource among individuals—i.e., economists cannot know whether (public) good X is desired more eagerly by A or B, and thus have nothing to say about which one among A or B should be entitled to consume it. Therefore, again, since public-goods theorists maintain that the free-market price mechanism is not suitable for allocating (scarce) non-excludable resources, then some sort of ethical justification for governmental coercive provision would be required. However, again, this moves us beyond the scope of value-free economic theory. Economic theory, in fact, cannot proffer value-judgements about the allocation, production, consumption, etc., of scarce resources—this being, instead, the realm of ethics and aesthetics.6 Economics can, at most, show the most efficient arrangement to achieve the desired allocation of resources and satisfaction of (given) ends. Moreover, oftentimes so-called public goods are actually both rivalrous and excludable;7 hence, they can be homesteaded according to Lockean-Rothbardian ethics—i.e., the first one employing (or better: fencing) them is to become their owner. Thus, there is no need for entrusting governments with public goods’ production: the free market, once a just ethical system of assigning property rights is in place, can do that more efficiently—via the price mechanism. Third, as we already hinted, even if such a thing as pure public goods were to exist, this would not suffice to establish the case for their governmental—i.e., coercive—production.8 In fact, governments can produce public goods only if financed via taxation. But then, what gives governments the right to take away resources from citizens—i.e., taxes—in order to produce public goods? There are, indeed, at least two issues with such an ethical stance legitimizing governmental provision of public goods. Problem number one: government, in order to produce and allocate public goods, would invade—via taxation—the legitimately acquired property of its subjects. In fact, if I can no longer enjoy my property to the extent I deem fit—but rather government is to barge in, take it away from me, and employ it as it wish—then government becomes (against my consent) the true owner of the resource. But this would be a prima facie theft—and, unless we want to advance an ethics legitimizing theft, aggression, and invasion, we must recognize this option as deeply unethical. Problem number two: what if the (public) goods that government is supplying are not goods at all for some taxpayer—being “bads” instead? That is, what if government is forcing its subjects to consume goods they actually abhor?9 For instance, I hate watching TV: were government to tax me in order to finance public provision of TV programs, then I would be dissatisfied twice—the first time being deprived of a share of my income, the second time being subjected to junk TV programs. Fourth, and last: any coerced exchange is always suboptimal with respect to a free one. In fact, why do people (freely) exchange? They do so because they know they are psychically profiting from it. If A performs an exchange with B, then we can conclude that both A and B are happier (after the exchange) than they were beforehand—i.e., they revealed their preference for such a free exchange through their action. But things are totally different when governments are involved in coercively supplying—via taxation—public goods. As Hoppe wrote,10 “the value of the public goods is relatively lower than that of the competing private goods because if one had left the choice to the consumers (and had not forced one alternative upon them), they evidently would have preferred spending their money differently (otherwise no force would have been necessary)”. Conclusion Public-goods theory is no compelling argument against anarcho-capitalism. Public goods are, oftentimes, resources that are rivalrous; when they are not, they nonetheless can be oftentimes produced on the free market—and be rendered excludable applying the standard libertarian homesteading principle. Moreover, it is impossible to ethically justify governmental production of public goods—unless we consider as legitimate both theft and coerced dissatisfaction of consumers. Lastly, consumers would always prefer at least one private good—acquired via uncoerced free exchange—over any conceivable governmental public good—produced via coerced taxation. 1. On private production of alleged public goods, see Rothbard, Economic Controversies, 2011, Ch. 24: “The Myth of Neutral Taxation”, pp. 470-73, originally published in 1981. 2. Cf. Rothbard, Man, Economy, and State with Power and Market, 2004 (1962, 1970), pp. 3-5, 1033. 3. For a theoretical, comprehensive analysis of coerced exchanges between governments and subjects, i.e., binary intervention, see Rothbard, Man, Economy, and State with Power and Market, 2004 (1962, 1970), pp. 907-61, 1149-1292. 4. On economics and public-goods theory when it comes to non-excludable, depletable resources (e.g., environment), see Rothbard, Man, Economy, and State with Power and Market, 2004 (1962, 1970), pp. 1036-37, 1124. On how an anarcho-capitalist society would handle seemingly non-excludable resources and prevent negative externalities (e.g., air pollution), see Rothbard, Economic Controversies, 2011, Ch. 20: “Law, Property Rights, and Air Pollution”, originally published in 1982. 5. Cf. Rothbard, Economic Controversies, 2011, Ch. 17: “Toward a Reconstruction of Utility and Welfare Economics”, pp. 310-12, 313-14, originally published in 1956. 6. Cf. Rothbard, Man, Economy, and State with Power and Market, 2004 (1962, 1970), pp. 74-75. 7. On supposed public goods (e.g., law, courts, and police) actually turning out to be standard private, free-market producible goods, see: Osterfeld, Anarchism and the Public Goods Issue: Law, Courts, and the Police, 1989; and Hoppe, Fallacies of the Public Goods Theory and the Production of Security, 1989. 8. Cf. Hoppe, The Economics and Ethics of Private Property, 2006 (1993), Ch. 1: “Fallacies of the Public Goods Theory and the Production of Security”, pp. 11-13, originally published in 1989. 9. Cf. Rothbard, Economic Controversies, 2011, Ch. 24: “The Myth of Neutral Taxation”, pp. 465-66, originally published in 1981. 10. Hoppe, The Economics and Ethics of Private Property, 2006 (1993), Ch. 1: “Fallacies of the Public Goods Theory and the Production of Security”, p. 14, originally published in 1989.

  • Denying Reality Leads to Tyranny and Societal Failure
    by Patrick Barron on May 14, 2021 at 2:45 pm

    By: Patrick Barron The common thread that connects failed societies, from Weimar Germany to the Soviet Union, is an almost pathological insistence on denying reality. Weimar Germany denied that masses of printed money would destroy civilized society. The Soviet Union insisted that Soviet Man would emerge spontaneously from the ashes of capitalist society. Weimar Germany spawned Nazi Germany. Nazi Germany was completely destroyed, both physically and politically, by the World War II Allies. Mercifully, the Soviet Union simply collapsed after seventy years of consuming capital to achieve the phantom of the classless society. Today both Nazi Germany and the Soviet Union are synonymous with tyranny and failure. Both nations murdered millions. Both nations no longer exist. True, Germany exists as does Russia, but I contend that both are new nations. Neither is perfect, but neither claims a political heritage to the nation that preceded it. Pathological policy errors flowed inexorably from a skewed view of reality in both Nazi Germany and the Soviet Union. Once this view of reality was deemed to be above criticism, its champions adopted increasingly tyrannical policies. Nazi Germany’s Aryan Supremacy racial theories seemingly justified the murder of the handicapped, Gypsies, those of alternative sexual orientation, Jews, and Slavs. In the name of birthing a new Soviet Man, the Soviet Union murdered anyone who stood in the way of its program to confiscate all businesses, including small farms. When businesses and farms failed, there was no soul searching as to root causes that might lie in Marxism itself. No, the problem had to be saboteurs within society. Reality, you see, was what the Soviet Union’s Politburo said it was. As the vanguard of the proletariat, the Politburo stood outside society and saw its flaws. Those who disagreed were blind to this insight and had to be eliminated. Chasing the Phantoms of Alternative Reality Today the West especially is adopting policies that flow from alternative realities that, frankly, do not exist. Here I list just a few: Catastrophic global warming/climate change is caused by man and must be stopped. I prefer to qualify the term “global warming/climate change” by the adjective “catastrophic”. Is the world warming? Who knows? Is the climate changing? Probably. But neither global warming nor climate change is “catastrophic”. Yet it has become almost an article of faith that the earth is on the precipice of an environmental catastrophe, requiring ever more radical handicaps on our freedoms and the economy. White privilege in the US is responsible for crimes against minorities and disparities in wealth. This critical race theory has spawned witch hunts for secret and shadowy white supremacist groups especially in the military, which has empowered investigators to find evidence of these groups and root them out. It will be imperative that these investigators actually uncover such groups, whether they exist or not. Critical race theory is the old Marxist class struggle theory in new clothes. The Marxist class struggle theory postulated that we all are born into a class and cannot escape its prejudices. But notice that the Marxist and now the Race theorists consider that they themselves are not susceptible to the prejudices in which all the rest of us are trapped. Very convenient, eh? Covid-19 is an existential threat to human life on earth. Constitutionally guaranteed human rights may be violated with impunity. Who gets to decide all this? Why, elected officials and government bureaucrats, of course. Modern Monetary Theory (MMT) explains that government need not moderate its spending. Government can always manufacture more money in order to fund new programs and pay its debts . More government spending can always prevent a drop in aggregate demand. Government debt is irrelevant, because “we owe it to ourselves”. MMT gave government elected officials exactly what they always wanted–carte blanche to spend, spend, and spend some more and not worry about justifying or prioritizing spending. As Keynes actually said, pay people to dig holes in the ground and pay others to fill them back up. What could possibly go wrong? Champions of the above denials of reality refuse to discuss whether their view of reality is accurate. All are articles of faith and cannot be questioned. In fact, to question them is considered to be an admission of ignorance, guilt, or perfidy. One wants to destroy Mother Earth, enslave minorities, kill innocent people, and prevent all in society from enjoying unlimited prosperity. It’s the old straw man fallacy on steroids. Furthermore, resources will be expended to pursue these phantoms, and more resources will be expended to protect oneself from being caught in a witch hunt. Society will live in fear–fear of global warming, fear of being branded a racist, fear of contracting a dread disease. Unfortunately, what society does not fear is that our lifetime’s savings will be wiped out by inflation made possible by MMT. The Basics of Reality Contrast these phantoms with the pragmatic basics of sound economics: namely, that in order to prosper man must face the reality of human existence—primarily scarcity and uncertainty. People’s preferences must be accepted at face value. Man acts. This is an irrefutable axiom in that to deny it is to confirm its validity. His action is rational in the sense that he believes that his action will improve his condition. He understands cause and effect. He performs one act at a time. He performs the most important act first; in other words, he ranks his actions in order of importance. Performing an act means that he must sacrifice the execution of others until later; in other words, acting means giving up some other preference, at least until some later time. Man’s ordinal ranking of preferences means that the cost of an action is determined by what he eschews until later. No two men have the identical ordinal ranking of preferences; plus, the preferences cannot be assigned a cardinal value in order to compare one man’s preferences with another. Man discovers the concept of comparative advantage and adopts the division of labor in order to accomplish more. Through the market process, man adopts a universal medium of exchange (money) in order to break the tyranny of direct barter. Now man can indirectly exchange his specialized production for a universal medium of exchange in order to obtain his real wants. Man invents government as a specialized service in order to protect his person and his property at a lower cost. He invents law in order to adjudicate inevitable disputes. All this is reality. Peaceful exchange requires social cooperation, which brings about peace and prosperity among men everywhere. As advice columnist Ann Landers used to say, Wake up and smell the coffee!

  • An Interview with Vaclav Klaus on Europe’s Lockdowns
    by Claudio Grass on May 14, 2021 at 2:45 pm

    By: Claudio Grass Some readers might enjoy this this interview I conducted conducted with Václav Klaus, the former Prime Minister of Czech Republic, on the current Covid-19 situation and the prospect for human freedom. He has a rich perspective and experience having spent most of his life under a communist system and shares his views freely. This interview is was conducted as apart of a full length documentary, Planet Lockdown, and is being released in advance of the film for those that wish to learn more about the world and where we are.

  • The Swiss National Bank’s US Stocks: $150 Billion and Counting
    by Robert Aro on May 14, 2021 at 10:45 am

    By: Robert Aro This time last year, the Swiss National Bank (SNB) had US stock holdings of $94 billion. The portfolio of Switzerland’s central bank has grown by $56 billion since, reporting ownership of $150 billion worth of US listed stocks as at Q1 2021. Apple is currently the largest holding, at $8 billion, but the portfolio contains countless smaller publicly traded companies, like GameStop, valued at $25 million at quarter end this year. At the recent annual general meeting, SNB Chairman Thomas Jordan said: We would like to live in a world where the interest rates are positive. But in the current situation negative interest rates as well as readiness to intervene in the currency markets are essential. Per the Chairman, it’s not the bank, the world just isn’t quite right. Apparently, due to the “current situation,” the bank is forced to act accordingly. As reported, despite a recent devaluation of the Swiss franc, the currency is still “highly valued.” For this reason, its appreciation must be moderated via monetary intervention. Unfortunately, these actions create a few unconventional outcomes: a policy rate of minus 0.75% and the purchase of over 2,000 US publicly traded stocks in order to manage the foreign exchange market. This “essential” intervention has an upside for the SNB, a profit of $23 billion USD for year end 2020, of which nearly half came from foreign currency positions such as stock gains and dividends. As if manipulation of foreign exchange markets is nothing more than routine policy, Reuters reports: The SNB spent nearly 110 billion Swiss francs ($120 billion) on currency interventions in 2020… It seems unfathomable that approximately $120 billion USD was spent by the SNB for the purpose of currency intervention during the year. This money was not the result of profit made from the sale of goods or services; the SNB is not a highly successful investment bank who is simply buying equities from past business dealings. Rather, it’s a central bank. The purchases come from money creation for the purpose of buying stocks. This only works because they have a monopoly on one of the most desired currencies in the world. The SNB continues to do what only a handful of central banks can successfully get away with, for now. Over the course of the year, they never wavered on this most lucrative of devaluation strategies. Their actions led to a hefty profit, money supply expansion of Swiss francs, and Switzerland having the lowest rates in the world. Like most central bank inflationary schemes, there is no end in sight. We are left to wonder what the value of the portfolio will be this time next year. If this strategy works so well for Switzerland, there’s no reason the USA shouldn’t do the same. After all, the USD is still one of the strongest currencies in the world as well. But if the Fed employed the same strategy, buying $150 billion of stocks and making billions from dividend income, it would most certainly be considered problematic; the same sentiment should exist to the SNB. It’s concerning why this story is only followed by a limited number of media outlets, and will likely never be important enough for mainstream economists to speak against. Few people in America or Switzerland seem to realize, nor care, what is going on. But it’s important to note the flagrant abuse of power, theft, and inflationist monetary policy that makes our already expensive stock market all the more expensive.

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