Author Archive for Mises Updates

Our Oligarchs Can Thank James Madison

6732Ryan McMaken writes in today’s Mises Daily

A recent study from Princeton and Northwestern concluded that the United States is an “oligarchy” ruled by a small group of wealthy elites and interest groups.

According to authors Martin Gilens and Benjamin Page:

The central point that emerges from our research is that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while mass-based interest groups and average citizens have little or no independent influence.

Are interest groups and wealthy elites more powerful than the average American? Certainly evidence of that is all around us.

Audio: Mark Thornton Discusses ‘The Bastiat Reader’

220px-Bastiat (1)From the 2014 AERC:

At the Authors’ Forum this year, Mark Thornton discussed the origins and scope of The Bastiat Reader a new collection of Bastiat’s writings to become widely available later this year.

Full audio here. 

See also The Bastiat Collection.

Another Medium of Exchange?

From Jeff Deist:

An important but overlooked story is Walmart’s recent announcement that it will offer cheap store-to-store money transfers.  Given the ubiquity of Walmart stores (which are large and strategically located), this development represents a real threat to the existing wire-transfer industry.

But what if Walmart reduced or eliminated the transfer fee, provided the transmitted funds could be spent only at Walmart?   Why not create some kind of Walmart scrip?

This is nothing more than an extension of retail store gift cards, or existing scrip programs such as Disney Dollars. But since virtually everything one needs to live (other than luxury type goods) can be purchased in Walmart stores, its scrip might begin to circulate among the public (as casino chips do to a limited extent in Las Vegas).  And while Disney Dollars might seem silly, they actually appreciate in value, unlike Federal Reserve Notes!

Killing the Maximum-Wage Myth

6731Julain Adorney writes in today’s Mises Daily:

CEO turnover has reached its highest peak since 2009, which indicates two things. First, CEOs who do not fully grasp the rapid technological change their companies are living through are being let go. Being a CEO is not a secure job; you earn your keep or you find yourself on the street. Second, CEOs who do have a solid understanding of the challenges and opportunities of the evolving economy are in high demand; many may leave their current job for a better offer with a new company.

If this sounds like the labor market for a lot of other workers, that’s because they’re very similar. The labor market for the top 1 percent is not fundamentally different from the labor market for other workers. Some employees, who are underqualified or who golf with the boss’s son or who simply perform less well than their hirer expected they would, may be overpaid. Others, who work harder than their coworkers and provide more value, are underpaid.[2] “The market is an ongoing discovery process,” Mr. Reed points out. “Information being imperfect, adjustments and movements take time.” That’s as true for highly paid employees as lower paid ones.

Congressional Budget Update From Laurence Vance

800px-US_Capitol_west_sideBy Laurence M. Vance

According to the Budget and Accounting Act of 1921, the president must annually submit a proposed budget to Congress for the next fiscal year by the first Monday in February. Although he was late, as usual, President Obama did submit his budget proposal on March 4. But because Republicans control the House of Representatives, and politics controls everything, the president’s budget was, of course, dead on arrival. Although there is no reason why Republicans should object to Obama’s budget, they have now introduced their own.

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Class Begins Thursday: How the Government Wrecks the Economy

Register here. 

Writes Robert Murphy:

The fall of the Soviet Union should have spelled the demise of central planning, yet the socialist mentality thrives — albeit in a diluted form — in all governments in the so-called “free world.” No one explained the failures of pure socialism and of (the more moderate) interventionism better than Ludwig von Mises. Whether we want to understand why people are starving in North Korea, why minimum wage laws lead to teen unemployment, or what caused the boom and then crash in the U.S. housing market, the answer is in the Austrian School of economics. As the Obamacare disaster unfolds before our very eyes, it is critical for the average person — both adults and young people alike — to understand how economic science makes sense of these heartbreaking outcomes, and shows the way to solve them.

In this context, I am pleased to announce that on April 24, we will begin a six-week Mises Academy course that offers an introduction to the Austrian understanding of both pure socialism and of interventionism (or what is often called “the mixed economy” though Mises himself didn’t use that term). This course, titled “How Government Wrecks the Economy,” is the final installment of a three-part series that uses my Lessons for the Young Economist as the main textbook. (The first installment, “Action and Exchange,” gave an introduction to economic science and studied isolated individuals as well as a simple barter economy. The second course in the series, “Introduction to the Free Market,” explained money, comparative advantage, savings and investment, profit and loss, the stock market, and other topics in the setting of a pure market economy free from government interference. Both are available as independent study courses at the links provided, but they are not necessary to take the present course.) Specifically, in “How Government Wrecks the Economy” we will cover chapters 15 through 23 of Lessons for the Young Economist, finishing our coverage of the book.

Murphy is interviewed on this topic here:

New eBook: ‘The Gold Standard: Perspectives in the Austrian School’

unnamedNow in ebook format or paperback: The Gold Standard: Perspectives in the Austrian School

The world’s financial system is in a precarious state, and everywhere the cry is heard for reform. But a reform to what? More government created fiat money under a new name? The contributors to this notable anthology think not and argue for one particular sort of reform, a return to the gold standard. They all agree that a genuine free market would gravitate toward a gold standard.

Murray Rothard states that any commodity used as money must have value in a non-monetary use. Roger Garrison dismantles the objection that a paper money is cheaper, and less wasteful, than a gold standard. Joe Salerno untangles the web of international finance . By far the most effective political advocate of the gold standard has been Ron Paul, and here he summarizes his proposals for monetary reform. Other contributors include Richard Ebeling on Mises and the gold standard, Hans Sennholz on Carl Menger’s monetary writings, and Lawrence White on free banking and money.

The Gold Standard presents cutting-edge scholarship on the best and most effective monetary system. If you want to understand the gold standard, you need to read this book.

Imagine if We Had Free Prices!

If you were asked how we should go about achieving real economic growth throughout the economy rather than just certain sectors of it, what would you suggest?  Would you revisit the Keynesian toolbox and call for a really, really big stimulus instead of just another really big one?  Would you impose more controls on business, especially the financial sector?  Some people want to revive Glass-Steagall, the gem from the Depression era that was abandoned in 1999 — sound good to you?.  How about officially merging the Fed and the Treasury — i.e., turn “monetary policy” over to the government?  Perhaps you’d break out Sheila Bair’s plan to allow each American household to “borrow $10 million from the Fed at zero interest”? Her proposal was tongue-in-cheek, you say? Ms. Bair, the former head of the Federal Deposit Insurance Corporation, proposed a plan that in its essentials would be received enthusiastically by those in the know —  provided it was confined to special interests. But if it’s good for some, why not everyone?

“Look out 1 percent, here we come,” Ms. Bair trumpeted.

Many readers are familiar with the anecdote about a 1681 meeting between French finance minister Jean-Baptiste Colbert and a group of businessmen that included one M. Le Gendre.  Colbert, a mercantilist, was eager for industry to prosper because it would boost tax revenue . . . sort of a fatten-the-goose approach to economics.  When he asked how their government could be of service to the business community, Le Gendre famously replied, “Laissez-nous faire” — “Let us be.”

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With Government Roads, the Customer Is Always Wrong

Car queue in the bad traffic roadBenjamin Wiegold writes in today’s Mises Daily:

By allowing for more than one provider, not only will each develop their own areas of specialization, but competition will help all providers figure out what works and what doesn’t in terms of the bottom line: maintaining happy customers.

The popular phrase “the customer is always right” applies quite well to the business world, but when it comes to the roadways, the customer, i.e., the average citizen, is typically wrong in the eyes of law enforcement and legislators. Whereas entrepreneurs in a market setting try to anticipate changes in consumer demand in advance and to solve potential problems before they become problems, bureaucrats simply resort to blaming those they are supposed to be helping, while they allow unsolved problems to compound upon one another.

Nevada Standoff a Symptom of Increasing Authoritarianism

us_public (2)By Ron Paul

The nation’s attention has for the past few weeks been riveted by a standoff in Nevada between armed federal agents and the Bundys, a ranching family who believe the federal government is exceeding its authority by assessing “fees” against ranchers who graze cattle on government lands. Outrage over the government’s use of armed agents to forcibly remove the Bundys’ cattle led many Americans to travel to Nevada to engage in nonviolent civil disobedience in support of the family.

The protests seem to have worked, at least for now, as the government appears to have backed off from direct confrontation. Sadly, some elected officials have inflamed the situation by labeling the Bundys and their supporters “domestic terrorists,” thus justifying any future use of force by the government. That means there is always the possibility of another deadly Waco-style raid on the Bundys or a similar group in the future.

In a state like Nevada, where 84 percent of the land is owned by the federal government, these types of conflicts are inevitable. Government ownership of land means that land is in theory owned by everyone, but in practice owned by no one. Thus, those who use the land lack the incentives to preserve it for the long term. As a result, land-use rules are set by politicians and bureaucrats. Oftentimes, the so-called “public” land is used in ways that benefit politically-powerful special interests.

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