Archive for September 2012 – Page 2

Human Action, Part I: An Online Course with David Gordon

It starts tonight!  Details here.

A Tale of Two Whistleblowing Bradleys

One whistleblower, Bradley Manning, who sounded an alarm over state aggression is detained (perhaps under terrible conditions) and set to be prosecuted by the Federal Government.  Another whistleblower, Bradley Birkenfeld, who sounded an alarm over attempts to avoid state aggression was just awarded $104 million by the Federal Government.

He who pays (whether in money or vengeance) the whistleblower calls the “crime”.

Distinctly Austrian vs. Eclectic Economics

As I illustrate in this post, Steven Horwitz’s essay The Empirics of Austrian Economics is, as Joseph Salerno put it, “profoundly confused” about Mises’ methodology.  George Selgin responded to Horwitz yesterday.  While I disagree with Selgin’s criticism of Mises’ methodological positions, at least he doesn’t grossly mischaracterize them, as does Horwitz.

Selgin points out that the work that Horwitz refers to as “modern Austrian” is really more “eclectic” than thoroughgoing in its “Austrianism”.

“For one thing, I note that almost all of the examples he supplies of empirical Austrian economics come from George Mason graduates who, like himself, were heavily influenced, directly or indirectly, by the work of the late Don Lavoie. (The one exception—the article on the Fed written by myself, Bill Lastrapes, and Larry White is at most only one-third Austrian.) But just how “Austrian” are these examples? Professor Lavoie was nothing if not eclectic in his approach to economics, and so left his students with an appreciation, for praxeology certainly, but also for hermeneutics and, in his last years especially, economic history, among many other things. It is, I believe, that eclectic approach rather than Austrian economics as expounded by Mises, or even by Hayek, that is reflected in the empirical work to which Steve refers. That of course doesn’t mean that one shouldn’t refer to such work as Austrian economics, or to its authors as Austrian economists. But it does mean that the work may not be representative of broader Austrian-school tendencies.”

Horwitz, who still clings to the mantle of “Austrian” (even as his like-minded colleagues have moved away from the term), ascribes the notion that Austrian Economics is deeply aprioristic to ”various advocates of Austrian economics on blogs and Internet forums,” and claims that these “internet Austrians” misrepresent Mises’ approach to economics.

But Selgin, who actually understands Mises’ approach enough (and recognizes how much it is different from his own) to not call himself an “Austrian”, continues:

“Discerning those broader tendencies requires, for one thing, that one consider the large body of writings by those Austrians who with some justice claim to be the strictest of all adherents to Mises’s methodological views—writings that are by no means confined to Internet forums. This includes work by Israel Kirzner, by Murray Rothbard, and finally by those Austrians whose books are published by the Ludwig von Mises Institute or who publish in its Quarterly Review of Austrian Economics.”

And Selgin is obviously referring to those same scholars, when earlier he refers to those “who have perhaps the best claim to being consistent practitioners of the methods of which Mises approved…”

Entrepreneurship, Once More

Bob Wenzel has written several additional posts on our disagreement regarding entrepreneurship (here, here, and here). I’ve greatly enjoyed the discussion, and I thank Bob for the space he’s devoted to this topic. I hate to sound like a cranky old professor, but I’ve explained my position about as clearly as I can in two books and a series of published journal articles, and I’d like to suggest (politely) that interested parties turn to those for the rest of the story. The following in particular may be useful:

You can also find a bunch of videos of me talking about entrepreneurship. And if you don’t believe my argument, try Rothbard or Salerno, both of whom take the same basic position as me. (BTW I’m far too modest to point out that the Journal of Private Enterprise article won the journal’s annual Best Paper Award.)

In closing, I think the differences between Bob and me are partly semantic. It’s no wonder, because the words “entrepreneur” and “entrepreneurship” are used in so many different ways. In particular, economists use terms like “entrepreneur” and “capitalist” in particular ways, differently from the way business practitioners and lay people use those terms. For the economist, these are generalized economic functions, not personality traits or psychological profiles or descriptions of flesh-and-blood individuals. E.g., “worker” or “wage earner” is an abstract economic function, describing one who provides labor services in exchange for specified remuneration, and applying equally to a Walmart cashier and a Fortune 500 CEO. Of course, in everyday discourse, we don’t refer to Timothy Cook or Meg Whitman as wage slaves, though that’s exactly what they are, in their capacities as salaried employees of their companies. Likewise, those who put capital at risk have been known, since Cantillon in the 18th century, as “entrepreneurs,” even if they don’t look like Richard Branson or Steve Jobs. Entrepreneurship is simply that which generates profit and loss, and there is no profit and loss without resources at risk. (The economic function of the capitalist is to advance funds in the present, in exchange for repayment in the future, in return for interest; absent uncertainty, the capitalist function stands on its own, but under uncertainty, the capitalist is necessarily an entrepreneur.)

Of course, in the real world, some people are especially eager, bold, creative, alert, aggressive, shrewd, adventurous, and imaginative, and they play a hugely important role in the a market economy. We admire them, we study them, we write books about them. Young people want to be like them. That is all wonderful. But none of these traits is essential to the entrepreneurial function, which is to be the residual decision-maker about the use of resources under uncertainty.

Bob says that entrepreneurs can make money using other people’s money, and gives his own version of the $10 bill story. I had written:

The Knightian-Misesian entrepreneur thinks he sees a ten-dollar bill, but it is partly buried under a rock. To retrieve it, he must buy a five-dollar shovel. If it really is $10 then (ignoring the opportunity cost of his time), he has earned a $5 profit. Otherwise, he has earned a $5 loss. This is a better metaphor for real-world entrepreneurship than Kirzner’s idea of costless discovery.

Bob responds:

As an entrepreneur, who spots the possible bill under a rock, instead of financing the bill digging venture with my own money (as you suggest), I may go to a capitalist and say, “Hey, I know where there might be a $10.00 bill under a rock, if you buy the shovel with your capital and use your labor to dig out the rock, if there is $10.00 under the rock, I’ll split the profit with you, $2.50 to each of us, plus you get the return of your capital.”

I am acting as a pure entrepreneur, with no exposure to risk.

This is simply relabeling. Bob calls the person who thinks he sees the cash (perhaps because he is more aware of his surroundings than other people), and who persuades somebody else to spring for a shovel, the entrepreneur. Fine, we can call him whatever we like, but this is arbitrary. What about the financier? In Bob’s version of the story, the financier is a completely passive player. But why should the financier believe the guy asking him for money? Why does the financier choose to advance the $5 to this guy, and not some other guy with an equally persuasive scheme? The financier has to choose what projects to invest in — a classic example of what Knight and Mises call judgment. (Think I’m exaggerating? Ask venture capitalists or business angels if they exercise judgment!)

Bob and I agree with Rothbard that ideas not backed by money are games. Bob wants to call the idea person the entrepreneur. OK, fine, but the Austrian tradition in economic theory calls the money person the entrepreneur. After all, the money person makes the final call on whether the project will be undertaken or not. In Ludwig Lachmann’s (1956) terminology: “We might . . . distinguish between the capitalist-entrepreneur and the manager-entrepreneur. The only significant difference between the two lies in that the specifying and modifying decisions of the manager presuppose and are consequent upon the decisions of the capitalist. If we like, we may say that the latter’s decisions are of a ‘higher order.’” In my example, the financier’s decision is of a “higher order” than the idea man’s decision, because the former decides whether the latter’s idea will be pursued or not.

Anyway, this is fascinating stuff, and I’m delighted to see it get so much attention in the pages of CB and EPJ.

Wenzel on Kirzner

Robert Wenzel offers a spirited defense of Israel Kirzner’s concept of entrepreneurial alertness in a response to Danny Sanchez. I admire Wenzel’s enthusiasm and his appreciation for Mises, but I think his defense misses the mark. Indeed, there is a growing awareness among scholars working in the Austrian tradition that the essence of entrepreneurship is not alertness, but uncertainty-bearing, what Frank Knight and Mises both called judgment. I’m hardly an impartial observer in this debate, so I’ll offer only a few brief remarks here.

First, the critical construct in Kirzner’s approach to entrepreneurship is not alertness (or discovery), but opportunities. What is it, in other words, that the entrepreneur is alert to? A skilled baseball hitter is particularly alert to the speed and position of the ball; a watchful mother is alert to the cry of her child; the successful hunter is alert to the movements of the deer; and so on. The problem with Kirzner’s metaphor is not the idea that certain people are especially quick to notice things, but the idea that profits exist out there, objectively, waiting to be noticed. In a world of uncertainty, there are no profit opportunities to be alert to.

Of course, Kirzner recognizes that his metaphor is just that, a metaphor. My argument is that the metaphor is unhelpful and misleading. It takes our attention away from the uncertainty inherent in all human action, particularly regarding commercial behavior that involves the ownership and deployment of heterogeneous capital resources. Wenzel counters with examples of real-world entrepreneurs who don’t think about uncertainty. “[T]hey aren’t rolling case or class dice. They aren’t taking much risk. They are seeing Kirznerian opportunities.” But this is simply a category mistake. The issue isn’t what these entrepreneurs think they are doing, but what they are actually doing. Real-world entrepreneurs tend to be highly confident — overconfident, according to most of the research literature — in their judgments about the future. When they act, they have a particular image of the future in mind, and they are often sure their actions will bring about this particular future. But this is a statement about the entrepreneur’s psychology, not the economic function of the entrepreneur. The entrepreneur may believe he is seizing an objectively existing profit opportunity, but he isn’t. There are no such things to be seized.

Second, Wenzel misreads Mises on entrepreneurship and resource ownership (partly by quoting Mises out of context). This is understandable, because Mises’s own treatment of the distinction between entrepreneur and capitalist is uncharacteristically muddled. Mises virtually always associates entrepreneurship with judgment under uncertainty, but he has a lone reference to “pure entrepreneurship,” where he discusses the “imaginary construct of functional distribution” mentioned by Wenzel. I’ve written about this before, so I’ll just quote myself:

Mises clearly associates entrepreneurship with uncertainty-bearing: “The term entrepreneur as used by [economic] theory means: acting man exclusively seen from the aspect of the uncertainty inherent in every action” (Mises, 1949, p.254). Of course, all human action involves uncertainty, as Mises emphasizes by quoting the English proverb: “There’s many a slip ’twixt cup and lip” (Mises, 1949, p.254). Hence, capital owners, landowners, and even laborers (who own their own minds and bodies) act as entrepreneurs under conditions of uncertainty. Mises goes on, in the passage noted above, to describe a “pure entrepreneur” who is neither capitalist, landowner, or laborer, but his discussion is confusing, describing a hypothetical agent who borrows funds from capitalists, invests them, reaps any subsequent profit, and passes losses on to the lenders. But, as he notes: “Such an entrepreneur would, in fact, be an employee of the capitalists who speculates on their account and takes a 100 percent share in the net profits without being concerned about the losses” (Mises, 1949, p.254). But clearly such an agent is an employee of the capitalists, paid with a contingency fee. The uncertainty-bearer – the entrepreneur, according to Mises’s own definition – in this example is the capitalist, not the employee. Mises agrees, writing just two sentences later: “To the extent that the losses incurred cannot be borne out of the entrepreneur’s own funds, they fall upon the lending capitalists, whatever the terms of the contract may be. A capitalist is always also virtually an entrepreneur and speculator. He always runs the chance of losing his funds” (Mises, 1949, p.254). What, then, is a “pure entrepreneur”? The concept makes little sense in Mises’s own formulation.

My 2008 article “Opportunity Discovery, Entrepreneurial Action, and Economic Organization” offers a more detailed critique of the opportunity construct, particularly as used in contemporary entrepreneurship research. I think the entrepreneurship research literature is starting to move away from Kirzner. For example, the best paper award at this year’s Academy of Management conference (Entrepreneurship Division) went to Professor Per Davidsson for a paper arguing that that the entrepreneurship field should drop the concept of “opportunity” altogether.

The Anatomy of the State

“We must, therefore, emphasize that ‘we’ are not the government; the government is not ‘us.’ The government does not in any accurate sense ‘represent’ the majority of the people. But, even if it did, even if 70 percent of the people decided to murder the remaining 30 percent, this would still be murder and would not be voluntary suicide on the part of the slaughtered minority.”

–Murray N Rothbard, Anatomy of the State

Bold, Persistent Experimentation

From Obama’s Convention speech yesterday:

The truth is, it will take more than a few years for us to solve challenges that have built up over decades. It will require common effort, shared responsibility, and the kind of bold, persistent experimentation that Franklin Roosevelt pursued during the only crisis worse than this one.

“Bold, persistent experimentation” of course will, as it did under FDR, amount to desperate, frantic, and unpredictable economic intervention of the kind that always creates what Robert Higgs calls “regime uncertainty,” which will, again, just worsen and perpetuate the depression.

Of course, not that the warmongering, nationalism, and corporatism of Romney would be any better.

Rare Footage of Ben Bernanke as a Child

HT to Michael Woods

Reply to “The Empirics of Austrian Economics”

Steven Horwitz has an essay up at Cato protesting that, contrary to common perception, “modern” Austrian economics is actually very empirical.  Much of his argument stems from his treatment of economic history as being a sub-set of economics, in stark contrast to Mises’ position that,”There is economics and there is economic history. The two must never be confused.”

For example, Horwitz points to several instances of Austrian-influenced scholars working in economic history (which of course is empirical) as evidence that “modern” Austrian economists resort to empiricism a great deal (as if there was ever a time when Austrian scholars did not use empirical evidence in their efforts to study economic history).

In his discussion of the history of thought, Horwitz does make one rather good point:

“Despite the impression that one might get from reading some Austrians, Mises’s term “praxeology” was not intended to be a “method” for economists.”

I agree with this.  Also, I brought this up with David Gordon at Mises University, and he agrees too.  ”Praxeology” itself should not be confused with the distinctive “praxeological method”.  Praxeology is a science with a distinctive method; it is not itself a method or methodology.  Moreover, it is not an approach to economics; it is a science that includes economics.

But unfortunately, right after accurately clarifying what Mise’ did not intend with the term “praxeology”, he gets entirely wrong what he claims that Mises did intend:

“Instead, that term, which has roots in the Greek for “action,” described a field of study. That field comprised all the “sciences of human action,”….”

This is simply incorrect.  Mises wrote, “There are two main branches of the sciences of human action: praxeology and history.” For Mises, praxeology is one of the sciences of human action, and history is another science of human action.  Praxeology does not include “all” of the sciences of human action.

Horwitz then writes,

“So what today we would call economics, political science, anthropology, and sociology would all fall in this group…”

This too is incorrect.  Of those, only economics is classed by Mises as a branch of praxeology.  Mises wrote (emphasis added):

“History is the collection and systematic arrangement of all thedata of experience concerning human action. (…) It is on the one hand general history and on the other hand the history of various narrower fields. There is the history of political and military action, of ideas and philosophy, of economic activities, of technology, of literature, art, and science, of religion, of mores and customs, and of many other realms of human life. There is ethnology and anthropology, as far as they are not a part of biology, and there is psychology as far as it is neither physiology nor epistemology nor philosophy. There is linguistics as far as it is neither logic nor the physiology of speech.”

And then in a footnote:

Economic history, descriptive economics, and economic statistics are, of course, history. The term sociology is used in two different meanings. Descriptive sociology deals with those historical phenomena of human action which are not viewed in descriptive economics; it overlaps to some extent the field claimed by ethnology and anthropology. General sociology, on the other hand, approaches historical experience from a more nearly universal point of view than that of the other branches of history. History proper, for instance, deals with people or with a certain geographical area. Max Weber in his main treatise deals with the town in general, i.e., with the whole historical experience concerning towns without any limitation to historical periods, geographical areas, or individual peoples, nations, races, and civilizations.”

Horwitz also writes:

“Some Austrians argue as if one can deduce all of economics in one’s armchair, but Mises was pretty clear that this core of economics was fairly limited.”

This, again, is wrong. Mises wrote that, “All the concepts and theorems of praxeology are implied in the category of human action.” Not just a “limited core”, but all of praxeology, which includes all of economics, is “implied in the category of human action.”  This would explain why, according to Percy Greaves, one of Mises’ closest friends:

“Mises used to say that all a good economist needed was some sound ideas, writing materials, an armchair, and a waste basket.”

Horwitz tries to support his characterization of Mises’ position:

“He points out that even the notion that labor is unpleasant is not part of that core, but rather an auxiliary assumption we make based on observation. So too is the existence of things like money. When the economist goes to analyze the world, the core toolkit that comes only from reflection on action is a rather small set of basic propositions. Most of the interesting work in economics is institutionally contingent. For example, even if we recognize the importance of being able to engage in economic calculation, our ability to do so effectively depends upon the set of institutions in the economy under analysis. Moving from what Carl Menger called “exact laws” or pure theory, to applied theory means we must include the human beliefs and social institutions of the empirical world.”

This would seem to imply that, for example, the theory of indirect exchange is not part of the “core toolkit” of pure theory, but is rather applied theory.  This, of course, is incorrect.  Horwitz’s error is to think that, if you introduce assumptions to your theorizing because of experience, that makes the result “empirical” or “applied theory”.  But that is not the case.  For the truth of a theory, it makes no difference why it was constructed the way it was (that is to say, why it includes the assumptions it does).  A self-contained theorem is true or false based on its logical structure, regardless of whether the assumptions are introduced because of experience, because of pure fancy, or for any other reason.

The theory of indirect exchange is pure, aprioristic theory, not applied theory.  We choose to formulate it, because we observe that indirect exchange is part of the world around us.  We take the effort to formulate it, because we want to later apply it to economic history.  But the theory itself is true independent of experience.  Whether it is applicable to any given experience is another question.  It only becomes “applied theory” when it is applied to particular historical episodes.

Again, Mises:

“But the end of science is to know reality. It is not mental gymnastics or a logical pastime. Therefore praxeology restricts its inquiries to the study of acting under those conditions and presuppositions which are given in reality. It studies acting under unrealized and unrealizable conditions only from two points of view. It deals with states of affairs which, although not real in the present and past world, could possibly become real at some future date. And it examines unreal and unrealizable conditions if such an inquiry is needed for a satisfactory grasp of what is going on under the conditions present in reality.

However, this reference to experience does not impair the aprioristic character of praxeology and economics. Experience merely directs our curiosity toward certain problems and diverts it from other problems. It tells us what we should explore, but it does not tell us how we could proceed in our search for knowledge.”

Murphy on Man, Economy, and State

I highly recommend Robert Murphy’s insightful evaluation of Murray Rothbard’s Man Economy and State on the 50th anniversary of its publication. Murphy is one of the few commentators to recognize that one of Rothbard’s central contributions in MES was the complete reconstruction of neoclassical production theory. Indeed five of the twelve chapters in Rothbard’s treatise are devoted to production theory. Perhaps Rothbard’s greatest achievement in this area was to integrate the objective structure of production analysis developed by Knut Wicksell and Friedrich Hayek with the subjective pure time preference theory of interest formulated by Frank Fetter and Ludwig von Mises. Rothbard supplemented his analysis of capital and interest with an improved version of marginal productivity theory independently discovered by John Bates Clark, Wicksell and Alfred Marshall. Thus Rothbard provided the first complete theory of the pricing of the factors of production, the formation of the interest rate, and the temporal interrelations of factor prices in the structure of production.

I have a few disagreements with Murphy’s otherwise excellent article. First, Murphy might have emphasized that Rothbard saw himself as a member of the neoclassical mainstream when he was busy writng MES in the 1950s. Rothbard was intimately familiar with contemporary literature as his copious citations indicate. Thus while Murphy tends to portray Rothbard as an outsider who was trying to tear down and replace the existing theoretical edifice, it is more accurate to say that his aim was to save neoclasical economics from the descent into arid mathematical formalism and rigid and intolerant positivism that was just beginning to occur.

Second, although Murphy is “particularly fond” of Rothbard’s criticisms of Keynesian economics, he believes that these have lost some of their force because “a typical Keynesian textbook no longer bases its policy conclusions on the arguments that were common when Rothbard was writing.” I disagree. Although Bob’s characterization of curent macroeconomics textbooks is correct, the financial crisis and the prolonged stagnation of the U.S. economy have forced the sophisticated New Keynesian theorists to embrace crude 1950s-style Keynesian stimulus policies. Indeed many have gone beyond beyond the old-style Keyneisans who advocated inflationary policies per se and have begun to urge the Fed to actually promote inflationary expectations by threatening a rapid depreciation of the dollar in the future in order to stimulate panic spending by consumers and businesses in the present. Rothbard once said “Keynes was a Keynesian.” Well, the same is true of the New Keynesians: despite their high-falutin’ “dynamic stochastic general equilibrium” models they too are Keynesians, who believe that inflationary money creation and government spending programs are the sure cure for economic stagnation. So Rothbard’s criticism of the basic Keynesian expenditure-income model and liquidity preference theory, which underly these views, still repays careful study today.

Finally, I take issue with Murphy’s definition of a “Misesian” as any economist who “thinks that economic principles are logical deductions from self-evident axioms.” Perhaps I am nitpicking here. But there were many economists who believed that their views logically followed from self-evident axioms. The great classical economist Nassau Senior developed his entire economic theory from “four elementary propositions” and the overall result was nothing that we would recognize as Misesian, although some of it certainly was. And of course, Marx believed that he derived his system from self-evident postulates about the nature of value and the necessity for a capitalist economy to accumulate capital and reproduce itself.

These quibbles aside, Murphy’s article on possibly the greatest economics treatise of the twentieth century is a must read, especially for those newly acquainted with Austrian economics.

Taxpayers in Revolt: Tax Rebellions in American History

“The United States owes its birth in part to a tax strike. Despite this fact, tax rebellion has not been a favorite topic of American historians. Remarkably few studies deal with the politics of taxation–much less tax revolt–after the Whiskey Rebellion in the 1790s. This neglect is lamentable not only because the taxpayers’ protest merits consideration as a historical phenomenon in its own right but because it also offers a suggestive approach to several vital questions. Chief among these is the relationship of tax conflicts to the following issues: the perpetuation of legitimacy by the state, class theory, and the strengths, weaknesses, and persistence of anti-big-government thought during American economic crises.”

–David T. Beito, Taxpayers in Revolt: Tax Resistance during the Great Depression

Wenzel on Carney

Here is commentary from Robert Wenzel on that great John Carney post I blogged about last week.  He writes:

Carney’s article is the most sound presentation of the Austrian School’s view on gold with reference to price stability that I have ever seen in mainstream media. Carmey gets it.


Success of the impact of the Mises Institute in a small anecdote; one well educated convert at a time:

Shortly after Mises Daily published my written testimony before the Subcommittee on Domestic Monetary Policy and Technology of the Committee on Financial Services, US House of Representatives “Fractional Reserve Banking and Central Banking as Sources of Economic Instability: The Sound Money Alternative,” from June 28, 2012 as a daily artilce on July 12 (, I received an email from a former colleague from Metro State asking if I would be willing to meet him for lunch with a Physcian friend of his. Rigors of a schedule of a retired prof (two trips to Santa Fe for opera, dining, and wine and spriits tasting; Tosca, Peral Fishers, and Maometto II), prevented us from meeting until last week.

What a delightful lunch. Nearly two hours of discussion with a well informed non-economist! The Dr. had discovered Tom Woods on a Youtube video which lead him to and its vast amount of educational resourcers on economics and liberty. Besides lots of reading on his own, he had taken several of the new ‘courses’ available at the Institute. His knowlede and understanding was impressive and he commented on how the delivery was innovative and effective, espeically relative to tradition delivery in higher ed.

It was a real pleasure to meet him and see, if only in one person, the impact of easy access in multiple formats of resources that were so hard to come by even for a PhD student 30 years ago when I began my journey into Austrain economics after Fred Glahe handed me 2-3 pages of notes on Hayek-Keynes  with the instruction – turn this into a dissertation.

In a follow up, the Dr. wrote, “I enjoyed meeting a living Austrian economist. Hopefully, Americans, or anyone, will recognize the value of …  [the] knowledge and principles”.

Daniel Sanchez recently argued ( in the “real Ron Paul Revolution” that

“Ron Paul’s legacy is not in his legislative record but in the number of minds he changed. The way to perpetuate his legacy, then, is to continue — and ramp up — the “Paulian” educational campaign. And the most Paulian nonprofit educational organization in the world is the Ludwig von Mises Institute.”

My recent lunch was positve feedback to me that my support of the Institute has born fruit and how important continuing support is if the Instutue is to stay the leader moving forward.

Per Daniel, “We [] have a lot of exciting things planned (overhauling the website, new ambitious programs, and more), but we need your support to see them through. Please help us finish what Ron Paul started. Help us bring to fruition an ideological revolution for liberty, property, and peace.”

I have. I hope you will too!


A Long Wait

Poland’s foreign minister told EU officials his country will join the euro zone “when you have resolved your problems and when we can say to our people ‘we can now safely join.’ ”

On a related note, London Mayor Boris Johnson urges Croats not to put their heads “in the Brussels noose” in his Telegraph column today.  If Croatia follows through with its plan to become the 28th EU member next July 1, writes Johnson, it will have escaped one doomed federal structure (in the 1990s) only to attach itself to another–without even the benefit of an opt-out clause.

It goes without saying that the EU needs Croatia much more than the reverse, if only to counter the economic and political backlash that will accompany the Grexit, for which firms are preparing now.  The Croats shouldn’t join as it’s hard to explain why Croatia’s economic performance since independence can be improved upon by doing so–but if they must, they are beyond foolish not to use their tremendous bargaining power to require better terms.

The economic integration of Europe, and the peace that trade begets, does not require lost sovereignty.  Rather, it requires trade which nation-states can only hinder.  It amazes one to think about how much more wealth and, by extension, charity there would be in Europe today if so many billions of euros were not forcibly transferred to the super-bureaucracy in Belgium.  Let’s hope Poland’s foreign minister is up for a long wait.

Ludwig von Mises on Sound Money

“It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights. The demand for constitutional guarantees and for bills of rights was a reaction against arbitrary rule and the nonobservance of old customs by kings. The postulate of sound money was first brought up as a response to the princely practice of debasing the coinage.”

–Ludwig von Mises. The Theory of Money and Credit