Archive for October 2013

Peter Klein to Speak in South Africa

Writes Chris Becker:

I’m very pleased to announce that South Africans with an interest in free-markets, liberty, and in particular, Austrian economics, are in for a treat in November.

Peter G. Klein, Executive director and Carl Menger Research Fellow of the Mises Institute, and Associate Professor in the Division of Applied Social Sciences at the University of Missouri, will be visiting South Africa for a week in mid-November.

Professor Klein has speaking engagements at AfriSake, Solidarity, and Wits. The business dinner hosted by AfriSake on Thursday 14 November at Centurion Lake Hotel is open to the public and one can book seats for the event here. Prof Klein will be speaking about the free-market economy and property rights as a solution to SA’s economic challenges.  Tickets cost R250 each or R2000 for a table of eight. There is a maximum of 100 seats available for the event.

Thomas Woods Explains How to Roll Back the State

LRC yesterday posted this transcript of this podcast with Senior Fellow Thomas Woods.

Among other things, Woods notes the tactics employed to ensure that military spending keeps flowing without fail:

ROCKWELL:

I was so impressed with what you had to say about the Military-Industrial Complex.  It seems to me you’ve got, within the Libertarian/Rothbardian/Ron Paulian view of this, you know, just a particularly effective take-down of that bunch.

WOODS:  …What they’ll typically do is, first, they introduce some weapons program. And this isn’t even prescinding from the morality of these programs, some of which I do get into towards the end of the chapter.  But basically, they introduce one of these programs and they way over promise regarding what it can accomplish.  Oh, it’s going to be great.  It’s going to be stealthy.  Nobody’s going to be able to see it.  Be able to bomb people like crazy from great distances and won’t be able to hit it and everything.  And then it’s going to turn out to be, you know, the size of Wymoing so that the only way for it really to be stealthy would be to rip enemy pilots’ heads — eyes out of their heads.  And it’s not going to be able to do what was promised.  And, in fact, the costs will wind up being much higher than the initial projection.  Well, this is a very — this isn’t unusual.  This even has a name.  It’s called frontloading.  So they over promise what it can do; they under promise what it’s going to cost.  And then you figure, all right, this will come to light and it will all come to an end.  But by then, they’ve done the second scam, which is political engineering, where they make sure that all the jobs associated with this particular program are spread out among so many congressional districts that it becomes politically impossible, once the taxpayer spigot has been turned on for this program, ever to turn if off again, no matter how absurd the program is, no matter how obviously unworkable it is, no matter whether the enemy it was designed for even exists any more.  And this is just one aspect.  And then I just talk about how it hurts firms that have the Pentagon as a client because they become weirdly unable to complete in the normal economy anymore because of the perverse incentives of the Pentagon, and just on and on.  I mean, there’s just so much to be said about it.

Not Enough Inflation Revisited

With the coming anointment of Janet Yellen as Fed chairwomen and the return of Tobin Keynesianism to the leadership of Fed the calls are coming from many of the usual suspect for more inflation as a cure for unemployment. Sheldon Richman responds with “Inflation is the Last Thing We Need.

The call for more inflation as a stimulus for the economy continual resurrects itself from the trash pile of bad ideas despite the long run harm such policies always bring when adopted such as the last time Tobin Keynesianism dominated Fed thinking with the go-stop of the late 1960s and 1970s. Paul Krugman made the argument during Spring 2012. My response, “Not Enough Inflation?,” is still highly relevant.

New Spanish-language Resources

Instituto Mises Hispano has some new translations:

The Institute has posted a translation of Ryan McMaken’s Mises Daily article on government-controlled water: “Subvenciones y escasez de agua en el oeste americano.”

The institute has also added Spanish subtitles to this video: Liberty and Economy on the work of Ludwig von Mises.

Peter Klein Explains: What Is Entrepreneurship?

In this interview, Peter Klein explains what entrepreneurship is, what it means for the economy, and how the state distorts it.

Niaz: To me a great entrepreneur is someone who understands economics, can see the big picture, and analyzes the things globally. He is also an economist, a research scientist, and a remarkable doer. What are the core things of economics and globalization should entrepreneurs be master at?

Peter: I think everyone should understand basic economics—say, by reading Henry Hazlitt’s classic Economics in One Lesson. Most of economic principles are common sense: there’s no such thing as a free lunch, benefits and costs should be compared at the margin, voluntary exchange is mutually beneficial, actions often have unintended consequences, and so on. Basic knowledge about globalization—the radical drop in communication and transportation costs, the often-surprising differences in legal, political, and social rules and customs around the world—is important too. But I don’t think a deep theoretical knowledge of economics or international trade is a prerequisite to successful entrepreneurship. Intuition and experience are typically more here valuable than “book learning.” (And I say that as a university professor!)

Competition In the Marketplace Is a Hassle

6572So  have the government crush your competition for you. Writes Brian LaSorsa in Mises Daily:

The politicians of the world would like to offer anyone dead set on controlling an entire industry the chance to shine. So come one, come all — government agencies, cronies, and all their friends — as we present the five best ways to create a monopoly and to ensure you never have to compete again….

When the cost of doing business is high, make it higher. Small firms can’t survive government imposed regulations while bigger firms can certainly bear the burden, at least temporarily. Taxes, mandates, and especially “safety regulations” (e.g., clinical trials at the Food and Drug Administration) will wipe out your competition before they even have time to ask what the new rules mean. Then hire a lobbyist in Washington. I’m sure he or she will come up with a good reason that the industry should adhere to stricter and more expensive guidelines.

David Gordon Lists 5 Books For Freedom

LRC today posted the transcript to this podcast with David Gordon on five books every new libertarian should read.

ROCKWELL:  Our guest this morning is Dr. David Gordon.  David is editor of the Mises Review.  He’s a senior fellow at the Mises Institute, author of a number of books, many, many articles.  His most recent book, The Essential Rothbard

But this morning, I want to talk to him about what — say, a person coming into Libertarianism as a result of the Ron Paul movement or attracted by an interest in Austrian economics during this part of the business cycle, David, let’s say, what are the five books that you would recommend for the intelligent layperson to introduce them to the basics of Libertarianism?

GORDON:  Well, thank you, Lew.  It’s very nice to be here.

The first book I might recommend if someone’s been interested in Ron Paul is — I think Ron Paul has a very fine book that came out calledThe Revolution: A Manifesto that really gives an excellent explanation of the basics of his political views and political philosophy…

I think one book people should definitely read — it’s a very short one but it really gets to the essence of the Austrian account of money and the basis of the business cycle and it explains why we’re in the conditions we are today — is by Murray Rothbard, called What Has Government Done to Our Money? …

Now the third book is a great classic of the 19th century by a great French classical Liberal, Frederic Bastiat, called The Law….

Another one that is sort of Bastiat for the 20th century was Henry Hazlitt’s Economics in One Lesson….

And the last one I’d mention is another book, a little longer, by Rothbard called For a New Liberty

The Mises Institute Is Now on Instagram

If you’re like me, you’ve concluded that reading messages up to 140 characters in length on Twitter is simply too exhausting. Who has the time?

If you’d like to know about the Mises Institute’s latest publications, events, news, media appearances, and videos by merely glancing at an image, then the Mises Institute’s new Instagram account is for you.

If you have photos of your own from Mises Institute events that you’d like to share, feel free to send them to me at rwmcmaken@mises.org.

The Death Penalty Is Just One of Many Things the State Does Badly

6571Marc Hyden writes in Mises Daily:

The framework that governs the death penalty guarantees dysfunction. Elected prosecutors are given broad discretion to decide to seek a death sentence or not — regardless of the wishes of the victim or victim’s family members. Political, rather than moral or legal, considerations sometimes drive elected officials to pursue a death sentence. Even the juries are designed to support the death penalty. If a prosecutor seeks capital punishment, then a person who opposes the death penalty is generally not permitted to serve on that jury. If that alone isn’t problematic enough, the appeals process that is currently in place is there not to introduce new evidence but to ensure the convicted was given a fair initial trial. It remains incredibly difficult to introduce new evidence. This framework favors the death penalty and the will of the government over protecting the rights of the people.

VIDEO: Glenn “Kane” Jacobs on Our Enemy, the Fed

Glenn Jacobs (also known as “Kane,” the professional wrestler) explains why understanding the Federal Reserve System is one of the most important tasks facing Americans.

 

The October Issue of ‘The Free Market’ Is Now Online.

Picture1This month in The Free Market, Ron Paul discusses his new book on education with the Mises Institute:

The Free Market: Even with all the growth in homeschooling, the vast majority of students still go to public schools. So is it possible to make a difference with so many still receiving conventional, state directed education?

Ron Paul: We don’t need to convince everyone. Most people take no interest in the issues that drive you and me. We need to persuade a dedicated minority. We need to reach the intellectual leaders of tomorrow from our ranks. If even five percent of the American public were truly conversant with the great thinkers and classics of the freedom philosophy, it would be a very, very different situation.

Hunt Tooley examines the American establishment’s ideal Secretary of State:

Our ideal man—and they are all males—would definitely be in the Council on Foreign Relations (after 1922). After having served for three or four years as Secretary of War or Defense, our man will go back to “business,” almost certainly investment banking. (This is true in nearly every case, even for those who were not bankers before.) He would also maintain extensive board memberships, consultative positions, and other connections to the arms industry. And he would be connected with the worlds of both government task forces and the great tax-free foundations (Ford Foundation, Rand, etc.) and maintain close connections to Lehman Brothers, Morgan, Jacob Schiff, and Goldman Sachs.

This month also features numerous news items on recent books and new research from Mises Institute scholars, friends, and alumni.

 

See the full issue here.

Government-Subsidized Water for Some Leads to Shortages for All

6568In Mises Daily, Ryan McMaken discusses the effects of decades of Federal control over water in the American West:

Water shortages occur in the West not because too many people are flushing their toilets too often, but because agriculture, heavily subsidized through cheap water made possible by the federal government, continues to grow crops in places that would never support agriculture on a similar scale in a free market. Indeed, agriculture uses well over 80 percent of all the water used in Western states, and most of that water is stored, pumped, and diverted using dams, pumps, and aqueducts paid for by the U.S. taxpayer.

As a result, growers don’t have to face the real-life costs of transporting water to their farms. They only need consider the subsidized price, which is far below what it would be in a private market. Consequently, water usage for growers across the West is much greater than what it would be were there a functioning market for water in the region.

New Submissions Guidelines For ‘Mises Daily’

We’ve posted new guidelines for Mises Daily. If you are interested in submitting an article for publication, please consult the guidelines, and also look at the articles published over the past six weeks, which have been published under the new format.

Articles published since mid-August reflect the tone, length, and general style of what are currently seeking for Mises Daily. 

The Mises Institute is pleased to accept unsolicited submissions for Mises Daily. Articles for Mises Daily should reflect the mission of the Mises Institute:

The Mises Institute, founded in 1982, is a teaching and research center for the
study of Austrian economics, libertarian and classical liberal political theory,
and peaceful international relations. In support of the school of thought
represented by Ludwig von Mises, Murray N. Rothbard, Henry Hazlitt, and F.A.
Hayek, we publish books and journals, sponsor student and professional
conferences, and provide online education. Mises.org is a vast resource of free
material for anyone in the world interested in these ideas.

As an educational institution, we are interested in articles that explore the scholarship of free markets and the Austrian tradition, and which seek to change the intellectual climate. We are not seeking articles that call for political action such as the passage of specific legislation or the election of candidates.

We seek articles that are approximately 800-1,000 words. The longer articles we carry are generally written by our Senior Fellows and other Institute Scholars.  If you cannot fit all your ideas into one short article, consider that we prefer two short submissions to one long one.

Mises Daily articles should be written with a scholarly tone, yet easily grasped by an audience of intelligent laypersons of all ages. Articles should be rich in factual material and evidence backing your assertions. Hyperlinks to sources are preferable to footnotes.

The Mises Institute does not pay authors for Mises Daily articles at this time.

Submissions may be sent to Ryan at rwmcmaken@mises.org.

 

 

Joe Salerno Discusses War, Terror, and Banking

LewRockwell.com today posted the transcript for Joseph Salerno’s podcast with Lew Rockwell about war and the state:

ROCKWELL: And, of course, as Hayek’s chapter in the Road to Serfdom on how the worst rise to the top — I mean, these are — as you say, these are the people who are the best at demagoguery, the best at lying, the best at fooling people, are the ones who have the comparative advantage. And so once being in that position, why are they not satisfied to simply rip off their domestic? But why do they want to conquer? Why do they want war?

SALERNO: Well, that’s a very good point. And the reason, of course, is that, at some point, the population becomes very, very — some of the population — dissidents, the Libertarians, the anarchists — notice that this is a big con game and they begin to spread, disseminate these ideas to the rest of the population.

The way to keep the population in line is always to have a tiger, a figure of a tiger at the gates. So you always want a foreign enemy. And so that is the reason why we’ll always have wars, the state will always engage in wars. So imperialism, in a sense, is a logical implication of having a state, and the fact that the state has to lie to cover the fact that it’s just a minority and it’s benefiting itself and not providing any sort of public goods or collective goods.

Thorsten Polleit Interviewed on Gold

Mises Institute Associated Scholar Thorsten Polleit is interviewed on gold and central banking in the Swiss publication Finews.ch.

The interview titled “Central Banks Have Built a Potemkin Village” is available in the original German here, and in the English (Google Translate version) here.

Loosely translated:

Q: Mr. Polleit, after some twelve years of the gold bull market, it now appears noticeably to have lost its luster. Do you agree?

A: As long as the central banks printing money and manipulating interest rates so that the paper money regime does not collapse, the market forces are suppressed. That should be known by every investor.

In principle, the central banks have built a Potemkin village. Therefore, the main trend in the price of gold is still intact. But the paper money system that existed in the past hundred years, can no longer continue.

So far, the strategy central banks have used works quite well.

In fact. As it turns out, this little game can be kept up for a long time. Many investors were assuming that the system would collapse much earlier and were then surprised that it still holds so long.

Q: With what consequences?

A: The extreme case occurs when the demand for newly-created fiat money dries up and the people are no longer willing to hold the newly created money and instead take refuge in gold, real estate, and other assets. But this development is not yet apparent. Not yet.

Read the full interview.

Easy Money and Asset Bubbles

Central to the Austrian understanding of business cycles is the idea that monetary expansion — in Wicksellian terms, money printing that pushes interest rates below their “natural” levels — leads to overinvestment in long-term, capital-intensive projects and long-lived, durable assets (and underinvestment in other types of projects, hence the more general term “malinvestment”). As one example, Austrians interpret asset price bubbles — such as the US housing price bubble of the 1990s and 2000s, the tech bubble of the 1990s, the farmland bubble that may now be going on — as the result, at least partly, of loose monetary policy coming from the central bank. In contrast, some financial economists, such as Laureate Fama, deny that bubbles exist (or can even be defined), while others, such as Laureate Shiller, see bubbles as endemic but unrelated to government policy, resulting simply from irrationality on the part of market participants.

Michael Bordo and John Landon-Lane have released two new working papers on monetary policy and asset price bubbles, “Does Expansionary Monetary Policy Cause Asset Price Booms; Some Historical and Empirical Evidence,” and “What Explains House Price Booms?: History and Empirical Evidence.” (Both are gated by NBER, unfortunately, but there may be ungated copies floating around.) These are technical, time-series econometrics papers, but in both cases, the conclusions are straightforward: easy money is a main cause of asset price bubbles. Other factors are also important, particularly regarding the recent US housing bubble (I suspect that housing regulation shows up in their residual terms), but the link between monetary policy and bubbles is very clear. To be sure, Bordo and Landon-Lane don’t define easy money in exactly the Austrian-Wicksellian way, which references natural rates (the rates that reflect the time preferences of borrowers and savers), but as interest rates below (or money growth rates above) the targets set by policymakers. Still, the general recognition that bubbles are not random, or endogenous to financial markets, but connected to specific government policies designed to stimulate the economy, is a very important result that will hopefully influence current economic policy debates.

[Posted originally at Organizations and Markets]

Apoplithorismosphobia is all the Rage

This New York Times article argues the the fear of deflation (i.e. apoplithorismosphia) is everywhere from major retail companies to the leaders of the Federal Reserve. Economist Kenneth Rogoff calls for a 400+% increase in CPI inflation for several years to come!

Here is a link to my article “Apoplithorismosphobia” in the Quarterly Journal of Austrian Economics

Hayek on Two Types of Individualism

6569In a selection from his book Individualism and Economic Order, Hayek explains there are two traditions of Individualism, and only one of them leads to free markets:

The true individualism which I shall try to defend began its modern development with John Locke, and particularly with Bernard Mandeville and David Hume, and achieved full stature for the first time in the work of Josiah Tucker, Adam Ferguson, and Adam Smith and in that of their great contemporary, Edmund Burke — the man whom Smith described as the only person he ever knew who thought on economic subjects exactly as he did without any previous communication having passed between them.

This second and altogether different strand of thought, also known as individualism, is represented mainly by French and other Continental writers — a fact due, I believe, to the dominant role which Cartesian rationalism plays in its composition. The outstanding representatives of this tradition are the Encyclopedists, Rousseau, and the physiocrats; and, for reasons we shall presently consider, this rationalistic individualism always tends to develop into the opposite of individualism, namely, socialism or collectivism. It is because only the first kind of individualism is consistent that I claim for it the name of true individualism, while the second kind must probably be regarded as a source of modern socialism as important as the properly collectivist theories.

Anti-Semitism and the Early Austrian School

An important new working paper by Hansjoerg Klausinger, “Academic Anti-Semitism and the Austrian School: Vienna, 1918–1945.” Here’s the abstract:

The theme of academic anti-Semitism has been much discussed recently in histories of the interwar period of the University of Vienna, in particular its Faculty of Law and Policy Sciences. This paper complements these studies by focusing in this regard on the economics chairs at this faculty and, more generally, on the fate of the younger generation of the Austrian school of economics. After some introductory remarks the paper concentrates on three case studies: the neglect of Mises in all three appointments of economics chairs in the 1920s; the anti-Semitic overtones in the conflict between Hans Mayer and Othmar Spann, both professors for economics at the faculty; and on anti-Semitism as a determinant of success or failure in academia, and consequently of the emigration of Austrian economists. Finally, we have a short look at the development of economics at the University of Vienna during and after the Nazi regime.

VIDEO: Ron Paul On How the Public Rejected a New War in Syria

Ron Paul discusses the popular rejection of war and a renewed momentum toward world peace.