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
    by Clay on July 10, 2019 at 7:10 pm

    The Private Production of DefenseThe Private Production of Defense Hans Hoppe takes on the most difficult subject in economic and political theory: the provision of security. Download the audiobook for free today! Medium: Written

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

    A Theory of Socialism and CapitalismA Theory of Socialism and Capitalism Hans Hoppe’s Rothbardian work on Socialism and Capitalism, now available as a free audiobook! 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

  • The Fed Sets the Tone for 2021
    by Robert Aro on February 25, 2021 at 5:30 pm

    By: Robert Aro The Federal Reserve set the tone for 2021 with the release of the year’s first Federal Open Market Committee (FOMC) meeting minutes last Wednesday. With the national debt approaching $28 trillion and covid still not eradicated, there appears to be no intention of ending accommodative policies any time soon. However, the Fed still has a way of never disappointing when it comes to what is discussed behind closed doors. As the minutes reveal, they found: The emergence of a narrow Democratic majority in the Senate bolstered investor expectations for additional fiscal stimulus, prompting upward revisions to forecasts for economic growth this year. This logic naïvely assumes a Republican-controlled Senate wouldn’t have the same or similar “additional fiscal stimulus” as the Democrats. It also assumes fiscal stimulus leads to economic growth. Should we continue along this train of thought, we may conclude that any Senate that favors perpetual fiscal stimulus is best since it creates perpetual growth! We also see the usual Fedspeak, surprising only in its inventiveness: The Committee’s employment and inflation objectives are generally complementary. However, under circumstances in which the Committee judges that the objectives are not complementary… This is difficult because it falls back to the idea of a tradeoff between inflation and unemployment. Of course, the problem with this “theory” is that sometimes it works and sometimes it doesn’t. How such an inconsistent theory can ever be relied upon, much less used as a planning tool to form the Fed’s primary mandate, remains a mystery. And for those unaware, the Fed undertakes desk surveys ahead of its FOMC meetings. The surveys are carried out by the New York Fed; they ask a variety of primary dealers, i.e., those firms able to trade directly with the Fed, questions. Then, a survey is conducted with market participants, comprised of institutional investment firms. According to their expert opinion: The Desk survey results indicated that a majority of market participants anticipated that the pace of net asset purchases would remain stable for the remainder of the year and slow around the first quarter of 2022. According to plan, the Fed will continue its $120 billion of asset purchases for twelve more months, meaning we can expect at least an extra $1.44 trillion of US Treasurys and mortgage-backed securities added to the balance sheet a year from now. This assumes there will be no more “additional fiscal stimulus” packages or any surprises which warrant the Fed to take on more forceful actions. The only thing more troubling than the best-case scenario of adding another trillion to the balance sheet is the erroneous widespread belief that the Fed will slow down its purchases ever again. Last, but not least, the issue of inequality as it pertains to the black and Hispanic communities was addressed: Many participants stressed that sustained support from fiscal policy would help address the hardships faced by these groups and that monetary policy could also help by promoting the economy’s return to maximum employment and price stability. Here they suggest that the solution to poverty and living in an unfair society revolves around asking politicians and central bankers to intervene even more in the lives of those in need. Naturally, this requires the bureaucracy to get paid for its interference. The public is then left to hope that planners will apply the appropriate amount of intervention, calculating the incalculable and doing whatever it takes to make society more prosperous. Targets like “maximum employment” and “price stability,” are used, because they show that the Fed is goal oriented. The Fed will claim to fight racial inequality through their support, but their support can only amount to increasing the supply of money and credit, and deciding who gets access to this new money first. If these money creation schemes actually work, one would think the Fed’s goals would have been met by now. Can we really trust that by Q2 2022, as the survey says, the expansion will slow once the Fed finally hits its targets? What the FOMC meeting ultimately fails to recognize is that by the time we get to March 2022 the only things to change will be the size of the Fed’s balance sheet, the money supply, and the increase in hardships faced by the very same groups the Fed is trying to help.

  • No, There’s No Reason to Feel Sorry for Robinhood
    by Ryan McMaken on February 24, 2021 at 8:45 pm

    By: Ryan McMaken As the dust settles following the GameStop frenzy in late January, it is clear that one of the biggest losers in the controversy in Robinhood. Robinhood is a trading app that markets itself as a platform for ordinary retail investors seeking to buy and sell securities without the cost of an expensive broker. Or, more romantically, Robinhood claims it has “democratized” investing. But things didn’t play out that way for the company. As buying of GameStop shares intensified in January 28, Robinhood (among other brokerages) halted the buying of GameStop (and some other shares, such as AMC) citing an inability to post sufficient collateral at clearinghouses. This is how a recent Forbes article summed it up:  With the ability to easily buy more and more stocks using Robinhood’s app, the pile-on became a gold rush, as more speculators flooded to the platform to get “in” on the bounty. News about the booming GameStop and AMC stocks spread far and wide. That’s where the trouble started. Robinhood doesn’t directly execute customer trades. Instead, it directs the transactions through a clearinghouse, which pays for the trades as the information it gleans lets it more effectively direct its own trading decisions. Buyers and sellers are quickly matched digitally. However, the “settlement” of the trade—the actual transfer of payment and shares between parties—typically takes two days after the transaction. So clearinghouses require brokers, such as Robinhood, to have enough money on deposit to ensure that a trade can clear—even if the broker is waiting for a separate payment from a client to finish processing. Given high demand for the shorted stocks and the climbing prices, Robinhood’s deposit requirements suddenly jumped ten-fold, according to a company blog post. So Robinhood “put temporary buying restrictions in place on a small number of securities that the clearinghouses had raised their deposit requirements on.” The fact that this move also helped billionaire short sellers at hedge funds was not lost on the general public, and the many immediately began to accuse Robinhood of intervening to help Wall Street oligarchs at the expense of ordinary investors.  Was this the case?  It doesn’t matter all that much. What matters is that Robinhood was unable or unwilling to serve its customers in the way that Robinhood claimed it always would.  According to Robinhood’s narrative, its management had no other choice. And this has led some commentators to defend Robinhood, claiming that it was a victim of circumstance and it wasn’t really conspiring against ordinary investors.  But so what? Even if Robinhood was being perfectly honest with everyone, the fact that it had to cut off its own customers from promised services reveals to us that Robinhood’s management is at the very least incompetent and was unable to plan for future events which would have been anticipated by truly insightful or competent entrepreneurs.  The company’s ineptitude was showcased in a recent discussion between Rob Portnoy and Robinhood CEO Vlad Tenev. Tenev bragged that the company’s block on further GameStop purchases meant “we were able to protect the firm.” But Portnoy correctly pointed out that if “protecting the firm” means “screwing over” the customers, there’s something very wrong going on over at Robinhood. We have a word for “protecting the firm” by harming customers. It’s “exploitation,” or “ripping people off.” In response, Tenev threw out some bromides about how “if the market breaks down” they can’t serve their customers. This assumes, of course, that letting investors buy what they want constitutes a “breakdown” in the marketplace. That’s a rather bizarre assertion. Ultimately, even if we assume Robinhood was in no way conspiring against anyone, the fact remains that—as pointed out on CNBC—Robinhood put itself in a scenario it should not have put itself in.  In other words, doing business with Robinhood now is an “enter at your own risk” sort of proposition. It’s clear that in spite of all of Robinhood’s claims about offering the everyman a way to participate in the markets, investors who do business with Robinhood can’t trust that it will actually deliver the services it claims it will deliver. That’s as good a reason as any to forever ditch any company that acts with such ineptitude in giving the customer what he or she wants. 

  • ACB’s Betrayal of Trump Continues the Red Pilling of Conservative America
    by Tho Bishop on February 24, 2021 at 4:00 pm

    By: Tho Bishop If we were searching for a reason for political optimism in 2021, we were delivered another reminder of the degree to which mainstream American conservatives are waking up to what the state truly is. The latest institutional betrayal of Republican voters came from the Supreme Court, which rejected considering a lawsuit challenging late changes to Pennsylvania’s election process. The majority that voted to dismiss consideration included Trump nominees Brett Kavanaugh and Amy Coney Barrett. Are Notorious ACB shirts getting treated like the jerseys of an athlete who just jilted a fanbase? This was predictable, of course. Not because there wasn’t a substantive issue worth addressing: the degree to which state courts can interject themselves in election law seems like a valid question—regardless of one’s opinion about the 2020 election. As Justice Clarence Thomas noted in a particularly blunt dissent, this was simply the SCOTUS avoiding the issue entirely: That decision to rewrite the rules seems to have affected too few ballots to change the outcome of any federal election. But that may not be the case in the future. These cases provide us with an ideal opportunity to address just what authority non-legislative officials have to set election rules, and to do so well before the next election cycle. The refusal to do so is inexplicable. Of course, this is precisely the sort of behavior that we have come to expect from spineless politicians, and that is what you find on America’s highest court—politicians in robes. While it’s become more fashionable lately to mention this in recent years thanks to the particularly hammy performance of John Roberts, this has long been the case. As Ryan McMaken has explained: The truly political nature of the court is well documented. Its politics can take many forms. For an example of its role in political patronage, we need look no further than Earl Warren, a one-time candidate for president and governor of California, who was appointed to the court by Dwight Eisenhower. It is widely accepted that Warren’s appointment was payback for Warren’s non-opposition to Eisenhower’s nomination at the 1952 Republican convention. The proposition that Warren somehow transformed from politician to Deep Thinker after his appointment is unconvincing at best. Or we might point to the famous “switch in time that saved nine[,]” in which Justice Owen Roberts completely reversed his legal position on the New Deal in response to political threats from the Franklin Roosevelt administration. Indeed, Supreme Court justices are politicians, who behave in the manner Public Choice theory tells us they should. They seek to preserve and expand their own power. The court, jealous of its power, and reluctant to hand down decisions that might actually cause the court to lose prestige, is at times careful to reflect the majority opinion regardless of how atrocious it might be. To see this, we need look no further than Korematsu v. United States[,] in which the court declared it perfectly legal to round up American citizens and throw them into concentration camps. The court forever plays a careful balancing act with both the public and with other branches of the federal government in which i[t] continually pushes the bounds of federal power without rocking the boat to the point of calling its legitimacy into question among the majority of the population. Naturally, Congress and the presidency, themselves committed to untrammeled federal power, have no problem with most of this on most occasions, except perhaps in the details. It is the last paragraph that brings us to this week’s decision. Regardless of the merits of the argument, there can be no tolerance for any major institution that invites questions over the legitimacy of the 2020 election in Joe Biden’s Americans. Particularly not one that resides in the current war zone of the American capital. Already there are agents of the corporate press trying to spin Justice Thomas’s dissent as an act of sedition. I would be surprised if no Democrat ends up calling for his impeachment over the issue. In terms of the incentive for a justice to build up their own prestige, none had more to gain from ruling against Florida’s first president than Kavanaugh and Barrett. Kavanaugh’s lack of principles has long been obvious to anyone who followed his career in the Bush administration. It is a testament to the repulsive treatment he received from the corporate press that they managed to make a Yale Law alum turned Beltway lawyer sympathetic. It is also understandable to see how both could be convinced that this decision was a practical necessity for their historical reputations. In the view of America’s most powerful institutions, there is no greater stain than having Trump as a benefactor. The only way to be forgiven for this sin is to become politically useful in stopping him. With this case, the last legal challenge of 2020 is likely done. This is yet another example of the unique value of Trump’s presidency. The failure of a conservative-aligned Supreme Court to defend Donald Trump is being properly recognized by many Americans as showing that it also cannot be trusted to defend them. Many who believed that a “conservative legal movement” could effectively defend the Constitution in DC—if only Republicans could get a true majority!—have now lost their innocence. This invites an important question: What happens when yet another governing institution loses the faith of a large portion of the American public? While Congress has long been viewed as dysfunctional and the popularity of the presidency has largely been partisan, the Supreme Court has tended to be held up as a uniquely noble governing body. Now, we see its legitimacy questioned with increased frequency on both the left and right. While this may be a bitter red pill for some to swallow, ultimately it is necessary medicine. The growth of the American empire has always been dependent upon convincing the public that it is acting in its interest. When large portions of the population begin to recognize that this is an obvious lie, that the empire ultimately serves the interests of a privileged few, governing becomes more difficult. As Jefferson noted, the first step to opposing imperial rule is for people to recognize that they no longer consent to a government that is hostile to their lives, liberty, and pursuit of happiness. In America today, there are 50 million+ Trump supporters who believe Joe Biden is a president imposed on the nation—potentially with the help of foreign powers—armed with a Democrat-controlled legislature and a Supreme Court whose credibility is now compromised. Yet another reason why secession is becoming popular.

  • Professor Philipp Bagus on the “Political Economy” of Covid Hysteria
    by Jeff Deist on February 24, 2021 at 3:30 pm

    By: Jeff Deist Professor Philipp Bagus has published a remarkable article making the case for developing a political economy to help us understand the 2020 coronavirus and similar events prone to mass hysteria. The article, titled “COVID-19 and the Political Economy of Mass Hysteria,”1 appears in the International Journal of Environmental Research and Public Health. Happily, it is available online in full from the Swiss outfit MDPI (which is committed to open access scholarly publishing in the face of lingering and absurd twentieth-century paywalls for most academic journals). Bagus, along with coauthors José Antonio Peña-Ramos and Antonio Sánchez-Bayón, argue that digital media effectively boosts and weaponizes information provided by authoritative state sources in times of crisis. The invocation of “public health” tends to suspend the public’s capacity for disbelief; after all, who wants to be sickened by an illness which respects no borders or strata of society? And why would politicians or media figures lie about a strange new virus emanating from China? It also tends to suspend the public’s objections to plainly illegal or dubious extralegal measures, such as business closures and school shutdowns. It makes us forget about tradeoffs and alternatives, at least temporarily, because life, or at least our health, is at stake. This is especially true in the early months of a crisis, what we might call the “fog of war.” But as Bagus and company make clear, political and economic realities do not magically vanish during a pandemic. In fact, the enduring tensions between economics and politics loom ever larger when states take aggressive steps to keep citizens at home and substitute fiscal or monetary stimulus for economic activity. Public health and the broader welfare state—especially public healthcare systems—cannot be neatly separated. And the bigger the government, the more profound the magnitude of policy errors. Politicians, per Hans-Hermann Hoppe, have an everlasting tendency to think short term by their very nature. And they are at their worst when emergency powers are seized from a willing public uninterested in legislative processes. Bagus’s framework for the political economy of covid emerges when we begin to understand the politics and the economics realistically and in tandem. Mass hysteria imposes tremendous costs across society, both in human and economic terms. Tradeoffs cannot be avoided, even if they are not much discussed in popular media. Alcoholism, suicides, untreated illness, and vast psychological harms all must be considered in addition to the staggering and almost unknowable financial costs of lockdowns. Hysteria makes it all worse. The paper identifies political institutions, politicians themselves, and media actors as having colluded to intensify the degree of hysteria in society over covid during the past year: States banned or limited activities like dining, sports, and socializing;States approached the perceived threat from the virus in a centralized way;Heavily politicized and state-licensed media tended to promote viewpoints provided by government officials;Negative news stories were bolstered when provided by seemingly authoritative public health officials;Politicians may well haved benefited by instilling fear in the population; andPoliticians had every incentive to overstate the threat of the virus, as they don’t bear the costs The close nexus between political actors and dominant media platforms creates a ripe environment for covid hysteria simply because the incentives and tools are so suited to it. As the authors put it: Self-interested politicians face an asymmetric pay-off. Underestimating a threat and failing to act has great political cost, as politicians will be held responsible for the disaster caused by the threat they underestimated. By contrast, an exaggeration or even invention of a threat and bold state intervention are politically more attractive. If the existential threat claimed by politicians really turns out to be such a great danger, they can be celebrated as heroes if they enacted bold measures. If the costs of these measures ultimately turn out to be excessive compared to the actual danger, then the politicians do not have to bear the cost of the wrong decision but can pass it on to the rest of the population. Politicians enjoying a guaranteed income therefore have an incentive to exaggerate a danger and to impose exaggerated measures, also called policy overreaction, which is conducive to the emergence and growth of mass hysteria. In sum, property rights tend not to be effective limits in curbing mass hysteria in a welfare state. Moreover, the state may inhibit the natural mechanisms that reduce stress and hysteria. The centralized nature of the state increases group and conformity pressures. Politicized mass media and negative messages from official state agencies can further increase psychological pressure. Finally, the state may intentionally want to increase anxiety, and politicians have the incentive to make bold decisions and exaggerate the threat. Big government and big media go hand in hand, hence the public overreaction to covid. After all, collectives by their very nature do not allow for a variety of viewpoints or approaches to problems. Bagus and his coauthors have given us a wonderful and original exposition, a new way of looking at Edward Bernay’s old concept of “manufacturing consent.” They have also given us the solution: market incentives, property rights, and decentralized mechanisms for discovery. Top-down statecraft cannot produce competition for solutions, but instead acts as a blunt and inefficient instrument of bad policy. Or as the authors state, “there exist important limits for a mass hysteria to harm life and liberty in a minimal state.” 1. Philipp Bagus, José Antonio Peña-Ramos, and Antonio Sánchez-Bayón, “COVID-19 and the Political Economy of Mass Hysteria,” International Journal of Environmental Research and Public Health 18, no. 4 (2021): 1376, https://doi.org/10.3390/ijerph18041376.

  • Pennsylvania’s Centrally Planned Vaccine Plan
    by Georg Grassmueck on February 23, 2021 at 11:45 pm

    By: Georg Grassmueck Pennsylvania’s Acting Secretary of Health Alison Beam said in a press release on February 12 https://www.media.pa.gov/pages/health-details.aspx?newsid=1292 that only four groups are allowed to handle distribution of Covid-19 vaccines going forward: hospitals, federally qualified health centers, county health departments, and pharmacies in effect shutting out primary care doctors from Covid-19 vaccine distribution.  In response, the Pennsylvania Academy of Family Physicians, Pennsylvania Osteopathic Medical Society, and the Pennsylvania Chapter of the American College of Physicians (physician group) collectively expressed disappointment in the Acting Secretary of Health’s misguided allocation changes to the state’s COVID-19 vaccination distribution plan, removing primary care providers from the list of those permitted to administer the COVID-19 vaccine.  Their press release states: Without sound justification and demonstrating a lack of understanding in the way most Pennsylvanians receive their health care, the Administration is making a woeful mistake by cutting out primary care physicians as eligible providers. Justifying her action acting Secretary Beam said. “As there is very limited COVID-19 vaccine supply compared to demand, every possible effort must be made so that the vaccine received in the commonwealth is effectively administered. To achieve this goal, I am issuing an order outlining appropriate steps and recognized best practices to ensure vaccine providers are effectively meeting the goal of vaccinating Pennsylvanians and creating a healthy Pennsylvania for all.” While acting health secretary Beam’s intention of making use of every dose of the Covid-19 vaccine is commendable, what is so puzzling about this decision is the inconvenient fact that one of the most successful vaccine rollout by percent of people vaccinated is in the neighboring state of West Virginia.  West Virginia, a small and mostly rural state with a large elderly population, quite similar to Pennsylvania in many aspects, showed how to roll out Covid-19 vaccinations successfully. West Virginia is now being hailed as a vaccination success story, with 85 percent of its delivered doses already used, according to data from the Centers for Disease Control and Prevention, putting it second in the country behind North Dakota.  A key part of the strategy in West Virginia was the decision not to activate a federal partnership with pharmacy chains and instead relying on independent drugstores.  Dr. Clay Marsh, West Virginia’s coronavirus czar and vice president and executive dean of health services at West Virginia University may have read some articles from the Mises Institute when he states “But we absolutely rely on the creativity and the innovation of all of our people. Because we don’t want to rely on external resource requirements for us to be able to do what we need to do.”  Primary care physicians have plenty of experience administrating immunizations across a wide range of age groups.  They are in the business of connecting and caring for people at the local level on a daily basis.  They are best equipped to pull up a list of patients who qualify for the Covid-19 vaccine at each phase of the rollout.  But with the new order by the acting health secretary Beam, primary care physicians are being sidelined.  West Virginia has shown that good personal contact is key to the whole effort.  Most people in rural areas would rather get vaccinated by their doctor that they know and trust than by large impersonal semi-governmental vaccination centers.  According to the Pennsylvania Department of Health the list of approved vaccination sites will shrink from about 780 providers statewide to only 200 to 300 that will continue receiving doses from the state.  In their press release the physician groups conclude: Many people will turn to their primary care physician for guidance as to whether they should get the vaccine. Physicians, nurses, and physician assistants who provide care in private practices are trusted by their patients. This is especially noteworthy when considering those patients who may otherwise be reluctant to get the vaccine. A pharmacist or other provider who is unknown to the patient will not be able to provide that same level of confidence. Additionally, many older Pennsylvanians may believe that they will receive the vaccine in their primary care physician’s office. The new order creates yet another hurdle for a demographic who is already struggling with navigating the vaccine distribution landscape. A main reason and good reason for the change in policy is to ensure all vaccine doses provided are administered and not wasted.  However, on February 17th acting health secretary Beam had to address a major vaccine snafu when COVID-19 vaccinations for up to 115,000 Pennsylvanians have to be rescheduled. According to Beam, the Moderna vaccine was inadvertently administered as the first of the required two shots when the serum was earmarked for the second shot instead.  Pharmacies often don’t have more than a day’s notice about shipments, which complicates scheduling people for vaccinations.  Each vial of the Moderna vaccine has 10 doses, and once the vial is open, the vaccine lasts only five hours. After five hours the vaccine has to be discarded, only a minority of primary care physicians can manage the logistical challenges of such a strict timeline. Another reason for the change by acting health secretary Beam and an order by Governor Wolf is to expedite the rollout.  Pennsylvania’s COVID-19 vaccine program has been marred by glitches from the start.  It has been criticized over how fast its allocated shipments are administered ranking Pennsylvania in the middle while West Virginia ranks third according to the New York Times tracker.   The glitches in the vaccine rollout in Pennsylvania are even more troublesome by the fact that President-elect Joe Biden tapped Pennsylvania Health Secretary Dr. Rachel Levine to be his assistant secretary of health in the U.S. Department of Health and Human Services.  Dr. Levine was in charge of the Covid-19 response in Pennsylvania and Pennsylvania is now trying to untangle its botched vaccine rollout under her leadership.  What can the rest of the country expect once Dr. Levine is in charge of a larger rollout?  

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