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Mises University 2014

The faculty and students of Mises U 2014 (many more photos here and here and here):


Huerta de Soto on the Spanish Scholastics in Chinese

I earlier linked to this talk at the Segovia Cathedral by Jesús Huerta de Soto about the Spanish Scholastics. Now, it has been subtitled  in Chinese (presumably Mandarin) by Tyler Xiong Yue with the assistance of Mises Institute 2014 Summer Fellow Jingjing Wang. Click here for the video.  


The Demolition of Piketty-ism

By George Reisman who reveals Piketty’s shocking unawareness of even the basic economic theory related to his large, statistic-filled tome.

Understanding Argentina’s Coming Default

recession impact on young man and society in arentinaMises Daily Wednesday by Nicolás Cachanosky:

Argentina’s government is on the verge of default yet again. How could this happen three times in thirty years? Well, the Argentine government has a habit of spending without restraint and then trying to cheat its creditors. But this time, it’s run into a problem.

Timothy Terrell Examines Common Objections to Capitalism

Archived from the live broadcast, this Mises University lecture was presented at the Mises Institute in Auburn, Alabama, on 25 July 2014.

Will the State Save Us From Ebola?

ebolaThe Drudge Report and other media outlets have  done their best to create a panic over the spread of Ebola in western Africa. It’s a safe bet that, if it hasn’t happened already, some devoted interventionists will point to disease epidemics as proof of the indispensable role of states in halting the spread of the disease.  While television and movies have trained people to believe that one person on an airplane can start off a virulent epidemic, the reality appears to be rather different. Ebola is transmitted through direct contact with blood and bodily fluids. Moreover, debilitating Ebola symptoms show up quickly, before the infected can unknowingly  infect large numbers of others, and the conditions in western Africa, where Ebola is most successful, could hardly be more unlike those in Europe and North America where, thanks to relatively free markets, there is easy access to clean water and health care services.

Not surprisingly, we also find that the governments of region where Ebola thrives have paved the way themselves for the spread of the disease, with endless wars and the destruction of capital:

As Dionne notes, all three countries have poor health infrastructure, due in part to years of civil war in Liberia and Sierra Leone. Liberia has just .014 doctors per 1,000 people, and a common joke is that JFK Medical Center, Monrovia’s main hospital, has long had the unflattering nickname “Just For Killing.”

In addition, we can be sure that if any political stability is achieved in Liberia or Sierra Leone, that the local regime would loot any moderately successful private health-care operation. The lack of restrained political systems and private property all but ensure a lack of access to the very things that making disease prevention successful.

Global epidemics have occurred before and the track record of states have not been exemplary.

Perhaps the textbook illustration of this  is the influenza epidemic of 1918. Not only did the First World War generate conditions more favorable to the spread of the disease (by destroying the infrastructure of hygiene, quality food, and good health in general) but the governments of the time ensured worldwide transmission by crowding infected WWI troops with the uninfected, and then shipping them on boats to various cities.

Government incompetence is most certainly not confined to the days of yore, of course. In recent years, there’s been news of another flu epidemic every few years. Predictably, the federal plans for mass inoculations go awry, and the feds then intervene to hamper the production of resources for flu avoidance and treatment. Christopher Westley describes the usual scenario: Read More→

The War on Poverty and the War on Drugs

111031.ICE.HSI.OperationPipelineExpress.herb_08As an apparently war-minded people, Americans (or at least, our American political leaders) have been comfortable framing parts of the domestic policy agenda as wars for decades. Two of the most prominent have been the War on Poverty and the War on Drugs.

Despite the similarity in their names, there is an important difference between the two. The War on Poverty is not a real war. The War on Drugs is.

The War on Poverty is not a real war because there is no enemy that we are attacking to fight poverty. Quite the opposite. The War on Poverty identifies poor people and them gives them stuff. Sometimes it is income. Other times it is food, or health care, or education.

If some analogy to war is made, the War on Poverty is more like the Marshall Plan that provided aid to the victims of war regardless of any fault in causing the war. If people are victims of poverty, the War on Poverty gives them stuff, perhaps with the idea that the stuff can help them escape poverty.

The official poverty rate in the United States has not fallen since the late 1960s, so if the idea of the War on Poverty was to reduce poverty, then according to the government’s own statistics, it hasn’t worked. But that’s a different issue. The point here is that the War on Poverty is not actually a war.

The War on Drugs is a real war. It’s name obscures the people who are the combatants. It is actually a war on the buyers and sellers of drugs. The police are arming themselves with military-style weapons and using military tactics to attack the enemy—drug buyers and sellers—and the members of the declared enemy are also taking up arms to defend themselves and their property, partly against the police, but also partly against other citizens. Obviously, the police will not protect the people with whom they are at war, or their property.

Indeed, with civil forfeiture laws, the police will not only seize the property they have declared war against,but all property associated with those they treat as enemy combatants.

For the most part, laws in the United States are written and enforced to protect minorities of any type, whether defined by race, gender, age, sexual preferences, or religion, but the one big exception to protection of minorities is that the War on Drugs has singled out people for persecution based on substances they choose to buy and sell.

Not too long ago, the legal system went after people who engaged in homosexual activity, or interracial marriage, but we’ve moved beyond that and the laws now protect people’s choices they make in their private lives, even if many people don’t approve. (One exception is same-sex marriage, that is still subject to debate.) Freedom is meaningless if people are only granted the freedom to make choices that political leaders approve.

Despite progress in some areas protecting minorities, the War on Drugs is a glaring exception. I’m not talking about the fact that racial minorities are more likely to be targeted in the War on Drugs (although that is true). The minority I refer to is drug buyers and sellers, regardless of their other characteristics. Why do we persecute that minority as we extend legal protections to so many others?

The government is not content to merely attack actual drug buyers and sellers: it sets up stings to lure people into agreeing to drug transactions even when it has no other evidence against them.

A USA Today article describing these sting operations says, “The ATF’s stash-house investigations already face a legal backlash. Two federal judges in California ruled this year that agents violated the Constitution by setting people up for ‘fictitous crime’ they would not otherwise commit; a federal appeals court in Chicago is weighing whether an operation there amounted to entrapment.”

How are people targeted for sting operations? The article goes on to say, “In one case in San Diego, a government informant… testified that he sometimes approached people on the street to see if they wanted to commit a drug robbery. … In another case, a federal appeals court judge said the ATF dispatched an informant to randomly recruit bad guys in a bad part of town.”

“There’s something very wrong going on here,” said University of Chicago law professor Alison Siegler, part of a team of lawyers challenging the ATF’s tactics in an Illinois federal court. “The government is creating these crimes and then choosing who it’s going to target.”

Justifying its actions, in the same article the ATF says “…its agents rely on criminal records, police intelligence files and confidential information to identify people already responsible for violent robberies.”

Notwithstanding the contradictions in the preceding paragraphs, one reason people who are targeted in the War on Drugs have criminal records is that the government has declared war on them. Further, if they are really targeting people responsible for violent robberies, they should arrest them for robbery rather than try to entrap them in a drug sting operation.

The War on Drugs is a real war in which the government has singled out a minority population—drug buyers and sellers—for attack. It comes after them with military-style weapons and tactics so it can confiscate their property and incarcerate them.

The War on Poverty is not a war. It is a peace-keeping operation that provides goods, services, and money to the poor, much like the Marshall Plan did in Europe after World War II.

In neither case are these programs accomplishing their stated goals. The poverty rate is not declining, and people continue to buy and sell drugs. But then, you knew that before you started reading this.

Re: Mises University

David, I liked this Facebook post from another student, on opening night: “I had the opportunity to listen to a very insightful discussion between an Israeli journalist and a Muslim business owner. They were discussing the challenges of extremists in both their cultures and how government intervention only exacerbates those extreme views. Only at Mises. I love it here already!”

Video: Joseph Salerno Explains Gold Standards: True and False

Archived from the live broadcast, this Mises University lecture was presented at the Mises Institute in Auburn, Alabama, on 25 July 2014.

Mises University

A young man who attended Mises University last week posted the following on Facebook:

At Cato U in San Diego. Just saying: between the two there is NO COMPARISON. Mises remains the gold standard of ideas. The intellectual conversations, the overall decency of the people, and just the welcoming attitude just isn’t the same. Miss you guys

Guido Hülsmann’s “Revolutionary Essay” on Fractional-Reserve Banking

US_$5_1923_Silver_CertificateIn a must-read post on Zero-Hedge, Tyler Durden highlights Guido Hülsmann’s neglected 2003 article “Has Fractional-Reserve Banking Really Passed the Market Test?”  Durden lauds the article and predicts that it “may prove to be the most revolutionary essay in the history of monetary economics and banking, if only it  receives the level of appraisal and promotion it deserves.”

The central–and brilliant–insight of Hülsmann’s article is that in a market completely free of legal restrictions on money production, money certificates, that is, genuine titles to money actually on deposit,  would drive fractional reserve bank (FRB) notes and deposits out of monetary circulation.  The reason is that the latter are not titles to present money but credit instruments that “promise to pay” money at some point in the future on demand.  In the case of a title to money, the holder of the deposit title, whether in the form of a note or checking account, retains ownership of the money and therefore the depository institution is legally obligated to maintain the full amount of the deposit in storage.  In contrast, under a credit or financial contract, the ownership of the money legally passes to the debtor for the length of time specified in the contract.  Thus, for example, a FRB  is free to lend out or invest the money as it pleases, given any constraints specified in the contract.  The only legal obligation is that it have the money available at the moment that the “depositor” demands it.

Now as Hülsmann points out, under these arrangements in an informationally-efficent market, default risk would be priced into the FRB financial instruments and they would therefore circulate at a discount to genuine money titles.  Furthermore, in the absence of  deposit insurance and a central bank operating as a “lender of last resort,” FRB notes and deposits would be dehomogenized and recognized as distinct brands of their issuing institutions.  Thus the discounts of the different brands of  FRB credit instruments against money certificates would vary according to the reputation of the issuing institution, its reserve ratio, the perceived riskiness of its asset portfolio, and the degree of the maturity mismatching between its liabilities (notes and deposits) and its assets (loans, investments and reserves).   Furthermore these discounts  would fluctuate unpredictably over time as  a result of alterations in reserve ratios, the risk and average maturity of asset portfolios, etc.  The constantly fluctuating exchange rates between each brand of FRB notes and deposits and all other brands and the standard money  would make economic calculation all but impossible.  For these reasons, Hülsmann concludes that FRB financial notes and deposits would lose out to money certificates in the competition to serve as a general medium of exchange on a truly free market, although they may still be demanded as a highly liquid component of one’s financial portfolio.

The “Entrepreneurial” State is Anything But

6823Mises Daily Tuesday by Tyler Kubik:

With the failure of central planning worldwide, many economists have turned to promoting government as an innovative and entrepreneurial institution that fosters greater efficiency and economic growth. In truth, governments fail where private entrepreneurs succeed. Governments keep wasting money in the meantime.

Video: Robert Murphy on Energy Policy

Archived from the live broadcast, this Mises University lecture was presented at the Mises Institute in Auburn, Alabama, on 24 July 2014.

WSJ: “What Really Drove the Children North”

Fuerza_del_Estado_MichoacánOn July 14, Mark Thornton’s Mises Daily article explored how Drug War violence in Central America was a major factor in creating the child refugee crisis on the southern US border. On July 20, The Wall Street Journal published “What Really Drove the Children North” which contended that “Our appetite for drugs caused the violence that made life unbearable in much of Central America.”

Those skeptical of this thesis claimed that the theory does not explain why the refugee crisis is a new issue. In typical nationalistic fashion, many right-wing commentators assumed that Central America has always been pretty much the same, and that it’s all their fault anyway. The WSJ article addresses such claims directly:

[Marine Corps. General John Kelly] has spent time studying the issue and is speaking up. Conservatives may not like his conclusions, in which the U.S. bears significant responsibility, but it is hard to accuse a four-star of a “blame America first” attitude.

To make the “Obama did it” hypothesis work, it is necessary to defeat the claim that the migrants are fleeing intolerable violence. This has given rise to the oft-repeated line that “those countries” have always been very violent.

That is patently untrue. Central America is significantly more dangerous than it was before it became a magnet for rich and powerful drug capos. Back in the early 1990s, drugs from South America flowed through the Caribbean to the U.S.

But when a U.S. interdiction strategy in the Caribbean raised costs, trafficking shifted to land routes up the Central American isthmus and through Mexico. With Mexican President Felipe Calderón’s war on the cartels, launched in 2007, the underworld gradually slithered toward the poorer, weaker neighboring countries. Venezuela, under Hugo Chávez, began facilitating the movement of cocaine from producing countries in the Andes to the U.S., also via Central America.

In a July 8 essay in the Military Times headlined “Central America Drug War a Dire Threat to U.S. National Security,” Gen. Kelly explains that he has spent 19 months “observing the transnational organized crime networks” in the region. His conclusion: “Drug cartels and associated street gang activity in Honduras, El Salvador and Guatemala, which respectively have the world’s number one, four and five highest homicide rates, have left near-broken societies in their wake.” He notes that while he works on this problem throughout the region, these three countries, also known as the Northern Triangle, are “far and away the worst off.”

With a homicide rate of 90 per 100,000 in Honduras, and 40 per 100,000 in Guatemala, life in the region is decidedly rougher than “declared combat zones” like Afghanistan and the Democratic Republic of Congo, where the general says the rate is 28 per 100,000.

How did the region become a killing field? His diagnosis is that big profits from the illicit drug trade have been used to corrupt public institutions in these fragile democracies, thereby destroying the rule of law. In a “culture of impunity” the state loses its legitimacy and sovereignty is undermined. Criminals have the financial power to overwhelm the law “due to the insatiable U.S. demand for drugs, particularly cocaine, heroin and now methamphetamines, all produced in Latin America and smuggled into the U.S.”

So, there is any easy explanation for “why now.” US policy caused drug war violence to shift from the Caribbean to Central America, greatly increasing violence during the 1990s, and culminating in the present crisis.  For many Americans, however, who can’t tell the difference between Guatemala and Chile, and who are committed to the perpetuation of stereotypes about foreigners, such facts are no doubt difficult to comprehend, and not worth repeating. Nonetheless, the whole affair is an excellent case study in unintended consequences and the futility of government prohibitions.

Tom Woods on the Four Things the State Is Not

Archived from the live broadcast, this Mises University lecture was presented at the Mises Institute in Auburn, Alabama, on 24 July 2014.

Update on Toshio Murata, student of Mises in 1959-60

Toshio Murata was a student of Mises in New York, and translated Human Action into Japanese. He is almost single-handedly responsible for creating an Austrian/Misesian movement in Japan.

Marc Abela of Mises Japan sends us this update, along with some photos of this amazing man recently giving a presentation at age 90:


Entering his 90s this year, professor Toshio Murata, direct scholarship student to Mises back in 1959-60 in NY, picture taken earlier today, close to Murata-sensei’s home in Nagano prefecture (Japan).

Murata-sensei shared with us the several meetings he would get invited to where Hazlitt would at times show up to proofread Mises’ English, or with Ayn Rand and others (Bettina Greaves, etc) around or showing up in some of the seminars… He was right in New York when Hazlitt was working on renewed editions of his One Lesson (1946) and remembers to this day being handed out freshly printed versions of the new edition on their way to the store (he was probably referring to the 1961′th edition I guess with the added new chapters here and there). Stories go back 50+ years back in time and Professor Murata is turning 91 this year, but all his memories remain quite impeccable it seems.


Video: Thomas DiLorenzo Explains The Corrupt Origins of Central Banking in America

Archived from the live broadcast, this Mises University lecture was presented at the Mises Institute in Auburn, Alabama, on 24 July 2014.

Labor Unions Are Anti-Labor

Message of a worker despair for the failure of his factory, now abandoned.Mises Daily Monday by George Reisman.

Many Americans, perhaps a substantial majority, still believe that labor unions are fundamental to the well-being of workers. In fact, labor unions work to prevent increases in the productivity of workers, which is ultimately the only way to increase real wages.

Video: Robert Higgs Explains How War Leads to Big Government

Archived from the live broadcast, this Mises University lecture was presented at the Mises Institute in Auburn, Alabama, on 24 July 2014.

Video: Tom Woods Explains The Robber Barons and the Progressive Era

Archived from the live broadcast, this Mises University lecture was presented at the Mises Institute in Auburn, Alabama, on 24 July 2014.