When you here the warning, “don’t try this at home”, it means leave it to the experts because you might get hurt. This has never been more true than when it comes to Government “investment”, except the difference is the politician, who “try’s this at home” profits politically, and the taxpayers are the people who get hurt. The politician making the investment decisions doesn’t suffer any of the consequences for his failures. If you could “invest” money that wasn’t your own, and do it with no repercussions for failure, and your whole life was incentivized and constrained by politics, wouldn’t you invest in something that produces (more…)
Archive for the ‘Econ. 101’ category
Government Investment? Or Government Waste?
December 20, 2012Diffused Costs And Concentrated Benefits, Are Why Politicians Will Never Cut Spending.
December 11, 2012This is a short video from learnliberty.org about the uphill battle we have in trying to roll back the size of Government, and hold on to our individual liberty. Any growth of Government means a reciprocal loss in individual freedom, why, because the decision of the individual is usurped by Government bureaucrats who are back stopped by the coercive power of the state.
The growth of Government and the corresponding loss of individual liberty has happened incrementally over the (more…)
Spontaneous Order Utilizes More Knowledge Than Central Planning Could Ever Hope To Utilize.
December 10, 2012This video from http://www.learnliberty.org talks about spontaneous ordering processes.
This quote by Thomas Sowell, “The abstract existence of knowledge means nothing unless it is applied at the point of decision or action“, explains why the spontaneous order of the market, efficiently produces more output than central planners can produce in a statist economy. The market economy brings abstract knowledge and decision makers together more effectively than central planning could ever hope to do.
Abstract knowledge can’t be known by one individual or board of individuals, this fact alone dooms central planning to failure. Even if planners knew all of the abstract knowledge of every individual , they wouldn’t know the exact time or place to apply this knowledge in the decision-making process. Voluntary cooperation through the free market process is (more…)
Walter E. Williams Speaks About The Economics Of Liberty.
December 7, 2012This is a video by one of the great communicators on liberty and economics, Dr. Walter E. Williams. He talks about what money represents, redistribution of income by Government, or what he calls it legalized theft, and how capitalism raised the standard of living of the world. He never fails to deliver a great message.
Read this short article titled, The Fantasy of Wealth Redistribution by Lorenz Kraus at Mises.org, for further analysis.
We’re All Born In The Middle Of The Story.
November 30, 2012
The Passage of Time (Photo credit: ToniVC)
Each of us was born at a specific time on a specific day of a specific month in a specific year of a specific decade in a specific era of history. Having lived for fifty plus years, I look back at the numerous days, or five decades, or the few eras of history in which I have lived, and realize that you can’t break up time into these convenient measurements and look at them separately. They do not stand on their own. As Thomas Sowell said, “results observed at a given point in time may be part of a process that stretches far back in time.”
Most people think history started the day they were born. They give little thought, or have no understanding of how the world that existed the day they were born came to exist as it did. Where each person is, and what they are doing today, is the result of decisions made by them and other people, in the recent past and the distant past. An example of this is, (more…)
Economic Reality Will Prevail, Even If The Debt Ceiling Is Raised.
November 27, 2012
English: Chart of the United States’ debt ceiling from 1981 to 2010 in $ trillion. This chart tracks the debt ceiling at the end of each calendar year. Years are color coded by congressional control and presidential terms highlighted. Data source: http://www.treasurydirect.gov (Photo credit: Wikipedia)
The debt ceiling will go up in one form or another. But the economic reality, which we discussed in a previous post What Comes First Production Or Consumption, will eventually make it impossible to climb out of the debt hole we have allowed our politicians to dig us into.
The only way the Government fund’s itself is through the multi-layered process of taking from the production of private individuals in the free market. Taxing, borrowing, and counterfeiting money, are the three ways Government takes production from the private sector. Taxing is the direct taking of what we produce. Borrowing is a Government promise to pay back with interest, what individuals freely give to them in exchange for this promise. The only way this promise can be kept is through (more…)
What Comes First, Production Or Consumption.
November 20, 2012
Kindof a visual pun. Which came first? (Photo credit: Wikipedia)
What drives the economy, supply of or demand for goods and services. Does the economy grow because we consume more or can we consume more because the economy grows. This article by Mark Skousen title, “Consumer Spending Doesn’t Drive The Economy, Investment Does”, explains the public’s perceived chicken or egg conundrum about production or consumption. This is not a puzzling question at all, the answer is very logical and easy to understand. Consumption happens at the end of the production process. You can’t consume something that does not yet exist, and the only way a consumer’s good can exist is if someone produces it. Production is the act of creating wealth, while consumption is (more…)
Keynes vs. Hayek Round II, The Fight Of The Century.
November 19, 2012Mises states, “The issue is always the same: the Government or the market, there is no third solution.” This has been the fight of the century, and will be the fight of the next century. Top down central planning by the state vs, bottom up voluntary cooperation in the market.
Central planning by the State sounds so logical and reasonable if analysed on the surface. Spending creates demand and people will produce to supply this demand. That’s simple and easy to understand on the surface, but a deeper analysis reveals that the structure of production is a very complex process. This complex structure of production was created by the spontaneous ordering processes in the free market not (more…)
AUSTRIAN ECONOMICS ADDICT 