Posted tagged ‘F.A. Hayek’

Observations From The Margin

August 1, 2018

Observation Tower

-Could a transgender girl (a male who feels he is female) winning a girls high school sporting event be considered “gender appropriation”?

-If the progressive left is against “cultural appropriation”. Should they support “gender appropriation?

-Does the fact that environmentalists are trying to get rid of plastic straws tell us that there are no real environmental problems left for them to fight?

-Anyone who acts surprised that Russia attempted to meddle in the 2016 election is either ignorant about what went on between the U.S. and the USSR during the cold war era, or is faking their bewilderment. Trying to influence the politics of the other side was standard operating procedure for the CIA and the KGB.

-Steve Kerr colluded with his players and coaches to beat the Cavs in the NBA finals. Jessie James colluded with his gang to rob banks. So, is collusion a crime?

-Is the Russian collusion investigation actually a Russian Show Trial?

-I define the “Deep State” as bureaucrats in government agencies (CIA ,FBI, DOJ, NSA, IRS, State Department, DOE, etc) who do not answer to the electorate or elected officials. Deep State bureaucrats are always trying to grow their power. They also defend their power from those who wish to decrease it. Deep State bureaucrats are capable and willing to either destroy their enemies or protect their allies. So, should Trump revoke the security clearances of these former members of the Deep State; John Brennan, James Clapper, James Comey, Andrew McCabe, Michael Hayden and Susan Rice? Would you if you were President? Just as there is no such thing as a former Marine, is there such a thing as a former member of the Deep State? Remember what Sandy Berger did for Bill Clinton after he was out of office?

-The size and power of government has increased under the control of the “big government” D’s or the “small government” R’s. It only varies in degree. The reason government grows is because insiders in both parties accumulate wealth and power as the size of government increases. The establishment of each party has tried to convince us that their D and R game is real. This is similar to promoters of a game between the Harlem Globe Trotters and the Washington Generals trying to convince us that it is a real competition and not a show. The difference is, it is difficult to see that the D and R game is not a real competition between bigger and smaller government.

-We are seeing the establishment D’s and R’s being challenged for control of their parties. True socialist central planners like Bernie Sanders and Alexandria Ocasio-Cortez are challenging the establishment D’s in an attempt to move them toward total government control over economic activity (free healthcare, free education and free housing). While President Trump and the House freedom caucus are challenging the establishment R’s to move them toward less control over economic activity (shrinking bureaucracies, deregulation and lowering taxes). This movement will give citizens a real choice between government centrally planning and a free market economy, instead of having to choose between varying degrees of government central planning.

-In a real competition between socialist central planning and free market capitalism, free market capitalism wins. The problem starts after it wins. It produces such a high standard of living, that individuals forget how the standard of living was produced in the first place. Individuals begin to think that there is a better system of distributing the wealth that has been produced. Socialism is the ideology that economically ignorant individuals gravitate toward. As socialist policies are implemented they begin to upset the economic process that produced the original high standard of living. A downward spiral starts.

-Ludwig von Mises and F. A. Hayek can put more insight into fewer words than I can. So I will let them take center stage.

Ludwig von Mises“Men must choose between the market economy and socialism….some agency must determine what should be produced. If it is not the consumer by means of demand and supply on the market, it must be the Government by compulsion.”

F. A. Hayek – “It has already been suggested that it is not necessary, for the working of this free market capitalist system, that anybody should understand it. But people are not likely to let it work if they do not understand it.”

Ludwig von Mises“Anti capitalistic policies sabotage the operation of the capitalist system of the market economy. The failure of interventionism does not demonstrate the necessity of adopting socialism. It merely exposes the futility of interventionism. All those evils which the self-styled “progressives” interpret as evidence of the failure off capitalism are the outcome of their allegedly beneficial interference with the market.”

F. A. Hayek“While it may not be difficult to destroy the spontaneous formations which are the indispensable bases of a free civilization. It may be beyond our power deliberately to reconstruct such a civilization once these foundations are destroyed.”

Ludwig von Mises“Modern civilization is a product of the philosophy of laissez faire, it cannot be preserved under the ideology of Government omnipotence.

 

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Economic Ignorance Has Caused Our Political Chaos.

March 8, 2017

Microeconomics or Micro Economics as a Concept

What do Jeffery Sachs (economics professor at Columbia), Bill Gates, the Pope, Donald Trump and Republicans in Congress have in common?….. Economic ignorance!

Why areĀ  pronouncements by people with authority rarely challenged?….. Economic ignorance!

I found some recent articles on economicpolicyjournl.com which have a similar theme: People with authority demonstrating their ignorance about basic economic principles.

Here are the articles.

Harvard Educated Economist Clueless About The Fundamentals Of Economics.

I Never Realized The Economic Ignoramus Bill Gates Is….Until Now.

The Pope’s Problem With Basic Economics.

Trump In Melbourne Spilling His Economic Plans And How Non-Free Market Are They.

House Republican Border Adjustment Tax Plan Gains Support In White House: Prepare For Higher Prices And Less Product.

Jeffery Sachs, Bill Gates and the Pope don’t have the power of Government behind anything they say. Their authority exists in the minds of the people who believe they have authority. They can’t force their economic ignorance on us

The President and Congress have the power of Government behind their policies. Politicians and bureaucrats can force their economic ignorance on us.

OUR ECONOMIC IGNORANCE

The increasing political chaos existing in the U.S is rooted in the economic ignorance of a vast majority of people. Both the masses, and people with “authority”, bear responsibility for our present political and economic situation.

People with “authority” being economically ignorant creates a problem because we the masses accept what they say as truth. This leads to the passage of Governmental policies which can’t produce the outcomes predicted by the people with authority.

We have the power to be a check on these people with authority. But we reinforce their authority on the one hand, and increase the economic ignorance of the masses on the other, when we don’t challenge the economic validity of what they say.

People with authority always want more power. Their power can’t be increased unless we allow it. Authority not backed by the force of Government isn’t real authority. We voluntarily give people their position of authority.

With politicians and bureaucrats it’s different. Their authority is backed by the force of Government. Our first non-violent voluntary recourse to their power is to vote the economically ignorant out of office, or not to vote them into office in the first place. Our second is putting political pressure on politicians. But this only works if a overwhelming majority of people put political pressure on them.

The ability of politicians and bureaucrats to grow their power, rests on the economic ignorance of the electorate. If the economic consequences of the policies passed by these politicians were known by the voters, they wouldn’t have been passed. Understanding basic economic principles allows us to look over the horizon and see the consequences of these policies.

EXAMPLES OF FAILED POLICIES

The Affordable Care Act aka Obamacare sounds great. But the laws of economics will not allow the ACA to lower the cost of healthcare. The costs can be shifted, but not lowered by government decree. The result of passing the ACA is chaos in the healthcare market, or what is left of a healthcare market.

Increasing the minimum wage for low skilled workers sounds great. But the laws of economics won’t allow increasing the minimum wage, above what that labor produces. The result of passing this law is fewer low skilled workers will be employed.

FORSEEABLE CONSEQUENCES

If, we the people, understood some basic principles of economics we wouldn’t allow these interventionist ideas to be planted, let alone take root.

Some of these basic principles are: 1) Scarcity, 2) Subjective Value, 3) Supply and Demand 4) Production Precedes Consumption.

Lets look at the Affordable Care Act and mandated minimum wage increases through the binoculars of scarcity, and supply and demand.

Scarcity is the first rule of economics. Scarcity simply means, “what everybody wants adds up to more than there is”. Put differently. Their are limited means available to satisfy the unlimited ends we seek. These limited means have to be allocated toward producing the ends we seek. There are two ways to allocate these means. One way is voluntary cooperation, through prices in a free market. The other way is force, through the edicts of politicians and bureaucrats using government power.

Supply and Demand is easy to understand. Put simply; More is demanded and less is supplied at a low price, and more is supplied and less is demanded at a high price. Prices reflect and drive supply and demand. If their is a sudden drop in the supply of a product, the price rises. This increase in price rations the existing supply, and sends a signal that more needs to be produced. On the flip side of the coin, if their is a sudden increase in the supply of a product, the price will go down. This decrease in price sells off the existing glut, and sends a signal less needs to be produced.

AFFORDABLE CARE ACT AND MINIMUM WAGE LAWS

The Affordable Care Act forced “30 million” uninsured people to enter the healthcare market. This meant the demand for healthcare was going to increased. Even though the supply of healthcare couldn’t be increased as quickly. (Example) It takes years for people to become doctors and nurses. Increasing the supply takes more time than the almost instant increase in demand brought about by the stroke of pen. If we apply the economic principles of scarcity, and supply and demand to the Affordable Care Act, what was going to happen to the price of healthcare? And this is not even calculating the cost of the regulations and new bureaucracy created by the 2500 page bill.

Raising the minimum wage increases the price of labor. According to the law of supply and demand, less is demanded at the high price. Voting for laws which increase the wages of people who we think are not being paid enough doesn’t help these people. Fewer people will be employed at the higher price. Many times these low skilled workers jobs will disappear all together because they can be replaced by automation. The price of labor was artificially increased to the point where it was economical to automate (read here). If we apply the law of supply and demand to the rhetoric of increasing the minimum wage, people wouldn’t have been fooled into thinking they were helping the people the law was actually hurting..

OUR CHOICES

Economic principles are always in play. Government edicts can’t negate economic reality. The political chaos we have today is the result of ignoring the reality of basic economics. We can’t wish these realities away because we don’t like the fact they limit what we demand.

I’m going to quote a person with authority at this point. So don’t take this quote as authoritative. Figure it out yourself.

F. A. Hayek a Nobel Prize winning economist, (how is that for status), said: “Planning, or central direction of economic activity, presupposes the existence of common ideals and common values; and the degree to which planning can be carried is limited to the extent to which agreement on such a common scale of values can be obtained or enforced.

Let’s get educated in basic economics. Life is easier to understand when you understand how the world works. Here is another quote.

F. A. Hayek: “The curious task of economics is to demonstrate to men how little the really know, about what he imagines he can design.”

We have two choices. Scarce resources can be rationed through prices voluntarily in the free market. Or Scarce resources can be rationed forcibly by politicians and bureaucrats through the power of Government. Which direction are we moving?

CONCLUSION

Political insiders of both parties have shaped the battle field into a choice between the R’s and the D’s. In reality the real battle is between the insiders in both parties who want to grow the power of Government, and people who stand for free markets and want to cut the power of government. Neither group is a majority. The majority of people are the economically ignorant. These people have been fooled into fighting the battle through the R and D paradigm.

Our job is to educate the economically ignorant. When this majority understands basic economic principles, they will they stop fighting on the fake R and D battlefield and start fighting on the real battlefield: central planning vs. voluntary cooperation.

 

Related ArticleMinimum Wage Laws Create Unemployment, at austrianaddict.com

Related ArticleIncome Inequality Part II: Increase The Minimum Wage, at austrianaddict.com.

Related ArticleThe Reality Of Obamacare, at austrianaddict.com.

Related ArticleThe Economics of Healthcare vs. The Right To Healthcare, at austrianaddict.com.

 

Prager University: Democratic Socialism Is Still Socialism

December 14, 2016

Capitalism or Socialism - Traffic sign with two options - socialist centralized economic planning or capitalist liberated free market

Socialism is defined as Government owning the means of production. In a Capitalist economic system, the means of production are owned by individuals. Many systems today try to have a delicate balance between these two systems. They are similar to the economic Fascism that existed under Mussolini in Italy where the means of production are still owned by individuals, but Government politicians and bureaucrats make rules and regulations on how these means are to be used, as well as taxing away a high percentage of profits.

If a country is in the middle between Socialism and Capitalism the important question is; which direction is it headed? Is a country moving toward more economic freedom or toward more government central planning. The U.S. has been traveling, at varying speeds, down the road toward more central planning since the 60’s, with the accelerator pressed to the floor in the last 8 years.

This past election was a response to what has happened in the last 8 years. Lets hope Trump and Congress want to turn around and head in the direction of more economic freedom. But I wouldn’t count on it. I just hope they take their foot off the accelerator.

DEMOCRATIC SOCIALISM IS STILL SOCIALISM

Steven Crowder looks for the differences between Democratic Socialism and Socialism in this video from Prager University. Even though a majority of people vote for (sanction) this system, it doesn’t change the reality that it doesn’t work.

In 1848 Alexis de Tocqueville wrote this about Democracy and Socialism:

Democracy extends the sphere of individual freedom, Socialism restricts it. Democracy attaches all possible value to each man, Socialism makes each man a mere agent, a mere number. Democracy and Socialism have nothing in common but one word: Equality. But notice the difference. While Democracy seeks equality in liberty, Socialism seeks equality in restraint and servitude.”

 

Here are some statements about Socialism.

Paul Craig Roberts: “We should all be thankful to the Soviets, because they have proved conclusively that Socialism doesn’t work. No one can say they didn’t have enough power or enough bureaucracy or enough planners or they didn’t go far enough.”

F. A. Hayek:There can be no doubt that the promise of greater freedom as become one of the most effective weapons of socialist propaganda and that the belief that socialism would bring freedom is genuine and sincere. But this would only heighten the tragedy if it should prove that what was promised to us as the road to freedom was in fact the high road to servitude.

Ludwig von Mises: “Men must choose between the market economy and socialism……Some agency must determine what should be produced. If it is not the consumer by means of demand and supply on the market. It must be the government by compulsion.”

F. A. Hayek: “Planning, or central direction of economic activity, presupposes the existence of common ideals and common values; and the degree to which planning can be carried is limited to the extent of which agreement on such a common scale of values can be obtained or enforced.”

 

Related ArticleWhy Socialism Won’t Work, at austrianaddict.com.

Related ArticleMilton Friedman – “Socialism is Force”, at austrianaddict.com.

Related ArticleDrifting Toward Fascism, at austrianaddict.com.

Related ArticleDoes Socialism Make People Selfish? at austrianaddict.com.

Related ArticleSocialism Sounds Great, at austrianaddict.com.

 

Drifting Towards Fascism

September 20, 2016

man drifting in a boat

First let’s define Fascism so we can begin at the same starting point. Fascism is an economic system where the state doesn’t own the means of production, but the state makes the rules that producers and consumers have to follow. There is a bureaucratic layer between businesses and politicians which plans the economy. It is crony capitalism on steroids.

Fascism places politicians and bureaucrats as the ultimate rulers aka decision makers. The individual has no rights or liberty except what the rulers say they have. Order comes from the state, (top down) not from the individual, (spontaneous order).

I saw a great chart (below) showing America’s drift toward Fascism, in an article titled, The Road To Fascism In Just Two Charts, at bawerk.net. I have always thought economic systems fit on a line where at one end no government exists, and at the opposite end there is total government control. Where an economic system is placed on this line depends on how much government intervention exists, or put another way, how little governmental intervention exists.

WHAT IS AN ECONOMY? WHAT IS SOCIAL FREEDOM?

An economy is what results when each individual is free to decide what to produce, consume, exchange and save in a world of scarce resources which have alternative uses. Simply put, you own what you’ve produced or what you’ve received in exchange for your production. It is your property and you have a right to do with it what you wish.

Production is the creation of wealth. Consumption is the destruction of wealth. Exchange is the increase of wealth as both parties place a higher value on what they received than what they’ve given up. Saving is the preference of consumption at some point in the future to consumption in the present. Savings is the basis for capital formation. Capital formation is what increases productivity. Increased productivity is the creation of larger amounts of wealth.

Each individuals decision on what and how much he will produce, consume, exchange and save according to what heĀ  subjectively values in a world of scarcity is the essence of freedom.

In order to have economic freedom you have to have social freedom and in order to have social freedom you have to have economic freedom. In other words, economic freedom and social freedom are different sides of the same coin. Individuals are free to act. Each individual is responsible for the consequences of his actions if they bring harm to others or himself.

I have a quote by F. A. Hayek at the top of my web site. It is my favorite quote because it sums up the choice individuals have faced since the beginning of time:

F. A. HAYEK: “THE COORDINATION OF MENS ACTIVITIES THROUGH CENTRAL PLANNING OR THROUGH VOLUNTARY COOPERATION ARE ROADS GOING IN VERY DIFFERENT DIRECTIONS, THE FIRST TO SERFDOM AND POVERTY THE SECOND TO FREEDOM AND PLENTY.

Let’s take a look at the chart and see what it reveals.

true-political-axis

Zero Government intervention into the economy starts at the bottom left of the chart and moves upward and to the right as Government intervention starts to increase. Zero Social Freedom starts at the top right of the chart and moves downward and to the left as the level of Social Freedom starts to increase.

Communism, socialism, fascism and democratic socialism are on the top right of this chart. They are economic and political systems that strangle individual liberty. Their very nature means intervention into, or control of, what is produced, consumed, exchanged and saved.

Anarcho capitalism, free market capitalism, classical liberalism and our America constitutional founding are onĀ  the lower left of the chart. They are economic and political systems that strangle Government and allow individuals the freedom to produce, consume, exchange, and save as they see fit.

What exists today is the middle ground of crony capitalism, crony socialism and other forms of government interventionism. This is the utopian middle ground that elites think mixes the best parts of both ends of the chart. They know that free market capitalism produces great amounts of wealth as seen by our standard of living. But the elites don’t like the way the wealth is “distributed” and want to use the force of government to make this distributionĀ  “fairer” according to their idea of “fair”.

The elites attempt to redistribute wealth differently than it would exist in the free market, creates incentives that ultimately decreases the wealth that is being produced. It divides us into groups that can be pitted against each other by political opportunists.

These statements by Ludwig von Mises tell us all we need to know about the above chart:

The issue is always the same: the government or the market. There is no third solution.”

The middle-of-the-road policy is not an economic system that can last. It is a method for the realization of socialism by installments.”

Anti capitalistic policies sabotage the operation of the capitalist system of the market economy. The failure of interventionism does not demonstrate the necessity of adopting socialism. It merely exposes the futility of interventionism. All those evils which the self-styled “progressives” interpret as evidence of the failure off capitalism are the outcome of their allegedly beneficial interference with the market.”

CONCLUSION

We are in the chaotic middle. Our choice is to move towards freedom and free markets. It is going to take a lot of time and effort to educate enough people in order to tip the scales toward freedom. Is the cost too high? It’s your decision.

 

Related ArticleCapitalism vs. Crony Capitalism, at austrianaddict.com.

Related ArticleSocialism Sounds Great, at austrianaddict.com.

Related ArticleWhat Creates Wealth? Freedom, at austrtianaddict.com.

Related ArticleWe Can’t Recreate The Garden Of Eden, at austrianaddict.com.

 

What Are Your Options When Both Political Parties Are Based On Socialist Ideals

April 19, 2016

This video, by LibertyPen, is an appearance Margaret Thatcher made on Firing Line in 1977, which was two years before she became Prime Minister of Great Britain. She was talking about ‘Capitalism and a Free Society’. The whole video is great but the part that really jumped out at me starts at 4:27. Mrs. Thatcher talks about the difference between American politics and British politics. Below is the money quote from the video. Oh how times have changed.

“I think in many ways American politics are very different because you have two parties based on a free society, or free enterprise society and economic freedom. We have one party based on that, one main party, and another one based on socialism.

Mrs. Thatcher’s statement about American politics couldn’t be uttered in 2016. Today we can safely say the Democratic parties ideals are in harmony, if not goose step, with socialistic ideals. And since around 2000, the Republican party has and is basing its actions on socialistic ideals, even though its platform doesn’t reflect its new direction. The inside the Washington beltway Republican establishment talks a good game when it comes to smaller government but its actions don’t back up its rhetoric. If what a person values is revealed by his actions, then we can safely say that both parties value ideals that are based on socialistic thinking.

Over the last seven years President Obama has increased the size and scope of Government with no opposition, and in some cases help, from the “small Government” Republican party. When both parties increase the power of Government, what are the options for people who understand individual liberty, the rule of law and free markets?

Since it is hopeless to change the Democrat party, your options are, either start a third-party, or take over the Republican party and purge it of the big government established leaders like Boehner, McConnell, McCain, Graham, Cantor et al. Since election cycles are every two years, this will take a long time. I think the third-party option has a higher cost in terms of time and credibility. Incrementally taking over the Republican party is the best option, and the seeds of this take over have already taken root around the country. How important is this job? This quote from F.A. Hayek spells it out.

F. A. Hayek: “The battle for freedom must be won over and over again. The socialists of all parties must be persuaded or defeated if they and we are to remain free men.

Where would we be today if the insurgency against big government hadn’t started in 2009 with the tea party and liberty groups? The gains by Republicans at the State and local levels (click here Republican Stranglehold On State Government) is a direct result of the grass-roots insurgency. The insurgency is led by people who believe in such radical ideas as individual liberty, free markets, and constitutional limits on government. It will take time for this limited government insurgency to trickle up to the Federal level. Senators Cruz, Lee, and Paul, along with the forty or so members of the freedom caucus that forced Boehner out of the House speakers position were born out of this bottom up change.

Bottom up change has a better foundation than top down change. Most peoples world view is based on the shifting sands of emotion not logic. Changing a persons vision of the world is difficult, which is why it happens at the individual level. It is personal. It starts and ends one conversation at a time, one person at a time, and it isn’t easy.

Just remember, as you start to walk through a tunnel, it gets darker and darker with every step. Just keep in mind that when it’s darkest, you are half way to your destination. Don’t give up. Keep moving forward, because you don’t realize how far you’ve traveled when you’re in the dark middle of the journey. Take some motivation from this quote by Ludwig vonMises.

Ludwig von Mises: “The history of mankind is the history of ideas. For it is ideas, theories and doctrines that guide human action, determine the ultimate ends men aim at, and the choice of the means employed for the attainment of these ends. The sensational events which stir the emotions and catch the interest of superficial observers are merely the consummation of ideological changes. There are no such things in rather misleading terms, a “turning point in history” is the coming on the scene of forces which were already for a long time at work behind the scene. New ideologies, which had already long since superseded the old ones, throw off their last veil and even the dullest people become aware of the changes which they did not notice before.

Here Is Some Econ. Homework

March 22, 2016

When knowledge is allowed to flow unhampered through the market, mainly through the price system, it works to coordinate all activities as optimally as possible. But when Government interventions don’t allow this knowledge to flow freely, malinvestments and dislocations are the result. The only way to cure these problems is for the interventions to stop. This allows the market to purge itself of these wasteful activities via a recession. Unfortunately no politician, bureaucrat, or Fed policy maker wants to have this correction happen on his watch.

Even tough hampered markets have an appearance of sustainability, they ultimately succumb to economic forces.

Here are two articles that talk about hampered markets. The first article is titled, Mises Was Right: The Hampered Market Is Unsustainable, by Sandy Ikeda, at mises,ca. Here are some excerpts from the article:

“Regulatory Dynamics Are Worse Than Transfer Dynamics. This is all because of the central role that prices play in coordinating market processes. That means that the government’s attempt to execute macroeconomic policy by manipulating the quantity of money and credit is perhaps the worst aspect of regulatory capitalism. Monetary manipulation eventually impacts all market prices directly and severely. Other things equal, it is the most distortionary form of intervention.”

“We can rank the major categories of intervention in order of their distortionary effects and thus in order of their unsustainability: 1) Large-scale monetary manipulation, 2) Large-scale price control, 3) Large-scale income redistribution.”

“So, other things equal, a country that pursues a pure form of welfare state capitalism might last longer than a country that pursues a pure form of regulatory state capitalism……”

“……Every country that has attempted interventionism in the past 100 years or so has experienced repeated economic crises. In Russia, crisis led to the Bolshevik Revolution and later the collapse of the Soviet Union. In Germany, the failure of the Weimar Republic conditioned the rise of National Socialism and then later the ā€œeconomic miracleā€ under Ludwig Erhard. And in the United States, regulation and monetary manipulation produced the Great Depression and, decades later, the so-called Great Recession of 2007–09, with the ā€œReagan Revolutionā€ in between.”

Ludwig Erhard And The German Economic Miracle.

 

Here is the second article titled, We Live In A Time Of Piecemeal-Planning & Incremental Interventionism, by Richard Ebeling, at mises.ca. Here are some excerpts from the article:

“Wherever we turn we are confronted with politicians, political pundits, television talking heads, and editorial page commentators, all of whom offer an array of plans, programs, and projects that will solve the problems of the world – if only government is given the power and authority to remake society in the design proposed.”

“Even many of those who claim to be suspicious of ā€œbig governmentā€ and the Washington beltway powers-that-be, invariably offer their own versions of plans, programs, and projects they assert are compatible with or complementary to a free society.”

“The differences too often boil down simply to matters of how the proposer wants to use government to remake or modify people and society. The idea that people should or could be left alnoe to design, undertake and manage their own plans and interactions with others is sometimes given lip service, but never entirely advocated or proposed in practice.”

“In this sense, all those participating in contemporary politics are advocates of social engineering, that is, the modifying or remaking of part or all of society according to an imposed plan or set of plans.”

“The idea that such an approach to social matters is inconsistent with both individual liberty and any proper functioning of a free society is beyond the pale of political and policy discourse. We live in a time of piecemeal planning and incremental interventionism.

“Society is a spontaneous order not a planned one.”

“Hayek argued that the true individualism starts from the premise that ā€œsocietyā€ is not some ethereal entity having an existence of its own, nor the designed creation of one or a handful of minds imposing a ā€œplanā€ on people that produces the social order.”

“Instead, society is the cumulative and interactive outcome and result of multitudes of individual human beings making their separate individual plans that interact and generate connections and associations with other individual plans to produce the overall social order and its coordinated patterns.

 

If you really want to do some home work, read The Use Of Knowledge In Society, by F. A. Hayek at mises.org.

Related ArticleSpontaneous Order = Free Market Economy, at austrianaddict.com.

Related ArticleCentral Planners Hate Economics, at austrianaddict.com.

Related ArticleCharles Hugh Smith; Why Suppressing Feedback Leads To Financial Crisis, at austrianaddict.com.

People Want A President Who Will ‘Get Something Done’

March 15, 2016

I hear a recurring theme from people when asked who they want as their next President? The answer goes something like this; I want someone who will ‘get something done’, or I want someone who will ‘fix things’, or I want someone to ‘run the country’. What do people mean when they say these things? More importantly what is implied by these statements?

People who make these statements are implying that government is the place where problems get solved. They seem to think everything emanates from government. This is 180 degrees from the principles on which our country was founded where individuals solved their problems and government stayed out of their way.

GET SOMETHING DONE?

If ‘getting something done’ is the standard for rating the success of an administration, than every President has been a success. The Federal Government has been growing at an ever-increasing speed over the last century and especially over the last fifty years. This couldn’t have happened unless presidents and politicians were ‘getting something done’. So from the stand point of growing the size and power ofĀ  Government, politicians have been ‘getting something done’ for quite some time. Unfortunately this ‘something’ that has been ‘getting done’ is destructive to the principles and institutions on which our country was founded, such as individual liberty, the rule of law, property rights, and a free market economy.

Everybody has their own idea of what ‘getting something done’ means. For me ‘getting something done’ would be cutting government in half and probably more. Of course the only person who agrees with what I ‘want to get done’ is me, and I’m not running for President.

When we say we want someone who will ‘get something done’ we are implying that ‘solutions’ to perceived problems can only come from government central planners. Even so-called conservatives, who are supposed to be for smaller government and greater individual liberty, seem to think that ‘solutions’ to ‘problems’ can be found if the right people are put in power. The world is so big, people seem to think that the complex order that exists in society can only be brought about and operated by top down planning from politicians and bureaucrats. People have no understanding that complex order can happen spontaneously when individuals are allowed to voluntary cooperate in free markets. Government central planners, can’t bring the amount of knowledge to bear on any situation as the total amount of knowledge that individuals acting in a free markets can bring. Thomas Sowell has said, “People who are very aware that they have more knowledge then the average person are often very unaware that they do not have one tenth of the knowledge of all the average persons put together. In this situation, for the intelligentsia to impose their notions on ordinary people is essentially to impose ignorance on knowledge.” Does this sound like our present day political and bureaucratic class? Now add their thirst to rule over the masses, and you have a dangerous situation for individual liberty.

Politicians have been talking about change for decades. My goodness President Obama was elected on Hope and Change. Unfortunately when you run on something as ill-defined as change, each voter ascribes his idea of change to the candidate. By using the vague phrases like Obama’s ‘hope and change’ or Trump’s ‘America’s going to win again’, the politician holds up a mirror in front of himself, allowing the voter to see his perfect candidate, himself. It’s a verbal sleight of hand trick that fools many in the audience.

SOLUTIONS? TRADE OFFS? OR TOLERABLE BESTS?

What needs to be fixed? Is there a solution, a trade-off, or just a tolerable best?Ā  Where does the best possible outcome lie; top down decision-making by central planners in government, or individual decision-making in a free market?

Top down decrees can’t solve problems for two very important reasons. 1) There are no solutions to most ‘problems’ there are only trade offs. and 2) Top down decision makers don’t have access to the amount of knowledge that millions of individuals bring to bear as they make decisions about the trade offs they face everyday.

If government intervention caused a problem in the first place, the problem can’t be fixed by implementing another government solution. Many of the original ‘problems’ that Government tried to solve are not problems at all, they are the inescapable realities of the imperfect world in which we live. When it comes to these ‘tragedies of the human condition’ there are no solutions or good answers, only bad or worse choices (a tolerable best).

What would constitute a solution? Is the solution an end result, or is the real solution the process for making trade offs between tolerable bests? Because of subjective value, scarcity, and the passage of time there can’t be end results. The solution lies in the process of allowing individuals to freely produce, consume, exchange, and save whatever they want.

THE ROAD TO SERFDOM

When thinking about the possibility of solutions, trade offs, and tolerable bests, ask yourself, who should have the power to make a particular decision, you, or a government central planner? InĀ  The Road To SerfdomĀ  F.A. Hayek said, “Few are ready to recognize that the rise of fascism and nazism was not a reaction against the socialist trends of the preceding period but a necessary outcome of those tendencies. This is a truth which most people were unwilling to see even when the similarities of many of the repellent features of the internal regimes in Communist Russia and National Socialist Germany were widely recognized. As a result, many who think themselves infinitely superior to the aberrations of the nazism, and sincerely hate all its manifestations, work at the same time for ideals whose realization would lead straight to the abhorred tyranny.”….. “Hitler did not have to destroy democracy; he merely took advantage of the decay of democracy and at the critical moment obtained the support of many to whom, though they detested Hitler, he yet seemed the only man strong enough to ‘get things done.”

The growing power of the executive branch over the last two administrations is what should give us pause. We probably don’t have to worry too much if a Republican is elected President in 2016, because the Democrats and the media will push back hard against everything he would try to get done. The only reason President Obama has gotten away with ‘getting something done’ is because the Republicans were too afraid of being called racist to push back, and the media was cheerleading the Presidents usurpations of power.

How far down the road to serfdom are we? How many exits remain before there is no turning back?

I know, I know: IT CAN’T HAPPEN HERE!

Related ArticleMilton Friedman: Moving Toward Serfdom, at austrianaddict.com.

Related Article – Spontaneous Order Utilizes More Knowledge Than Central Planning Could Ever Hope To Utilize, at austrianaddict.com.

Related ArticleIs America Still On F.A. Hayek’s “Road To Serfdom“, by Richard Ebeling, at fee.org.

 

 

Must Reads For The Week 1/23/16

January 23, 2016

ECONOMIC FORCES EVENTUALLY WIN

China Promises To Keep Intervening To “Look After” Stock Market “Investors”, Hurt “Speculators“, at zerohedge.com. So the cure for the Chinese stock market bust is Government intervention? Didn’t Government intervention cause the boom in the first place?Ā  Government planners can’t stop reality. Economic forces are always in the process of correcting Government interventions.

The Rest Belt Goes Red – Glory Days Of China’s Steel Boom Leave Behind Abandoned Mills And Broken Lives, at davidstockmanscontracorner.com. Another example of a Government created bubble ending in a bust. Government centrally planning an economy doesn’t work. Ask the former Soviet Union.

The Three Musketeers Of Global Deflation – China, Russia, and Saudi Arabia, at davidstockmanscontracorner.com. We know about China’s problems, but over 65% of Russia’s and 45% of Saudi Arabia’s GDP comes from oil. Oil below $30 a barrel hurts these two countries. Economic forces can’t be stopped by Government central planners.

The Fragile Forty & How The Word Lost $17 Trillion In 6 Months, at zerohedge.com. Forty global stock indices are in bear markets, as over $17 trillion of equity has evaporated in the last six months. Central banks think the wealth effect created by their money printing will reignite the global economic engine. It hasn’t worked because economic forces eventually prevail.

This Is What The Death Of A Nation Looks Like; Venezuela Prepares for 720% Hyperinflation, at zerohedge.com. Bernie Sanders take note. This is what a socialist utopia looks like. Excerpt from the article: “..in reality the Venezuela economy no longer exists, with all transactions now taking place in grey or black markets, and the government apparatus effectively operating in a vacuum.” Economic forces creating a black markets was inevitable.

Schlumberger Fires 10,000 As It Announces $10 Billion Stock Buy Back, at zerohedge.com. To keep your slumping stock price up, all you have to do is buy back your stock. Simple supply and demand. How do you finance this buyback. Either borrow low interest printed money like many companies have and are doing, or get rid of your biggest expense, your workers. Economic reality forces businesses to make decisions.

A Post Boom World, Auto Prices Will Fall,, by Patrick Barron, at mises.org. Easy credit and sup-prime loans for cars will eventually end in a bust, like the housing bubble. Economic forces of supply and demand will bring the car market back in line.

And You Thought QE Was Over: The Fed Will Monetize Half Of This Years U.S. Treasury Issuance, at zerohedge.com. Over the next four years, the Federal Reserve is going to have to repurchase, with printed money, $1.1 trillion in maturing Government debt that it owns. The Federal Government can only grow to it’s present size if it is financed by it’s central bank, the Federal Reserve.

A RECESSION IS THE CORRECTION

Why We Need A Recession, by Ronald-Peter Stoferle, at mises.org. A recession is nothing more than economic forces correcting the misallocation of resources, labor, land and capital that was brought about by previous central bank money creation and easy credit.

As Ludwig von Mises said: “The return to monetary stability does not generate a crisis. It only brings to light the malinvestments and other mistakes that were made under the hallucination of the illusory prosperity created by the easy money.

And as F. A. Hayek said: “To combat a depression by a forced credit expansion, is akin to the attempt to fight an evil by its own causes; because we suffer from a misdirection of production, we want even more misdirection – an approach that necessarily leads to an even more serious crisis once the credit expansion comes to an end.

GOVERNMENT KNOWS BEST

How Government Poisoned The People Of Flint, by John Counts, at mlive.com. Government doesn’t know what’s best.

Texas Adopts New York Values On Fantasy Football, Tho Bishop, at mises.org. Government wants to protect you from illegal gambling. It’s better for you to buy legal state lottery tickets.

Central Planners Hate Economics

August 26, 2015

F A Hayek

F.A. HAYEKĀ The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

 

Politicians get voted into office because they promise to use the power of government to ‘do something’ to fix fake ‘crises’. They try to blame the unfettered free market for every inequality or unmet need found in society. Politicians blame economics because it is an easy target since most people don’t understand basic principles of economics.

Economic reality puts a limit on the unlimited designs of planners. The first law of economics, scarcity, especially the scarcity of knowledge, sees to it that everything has limits. Economic laws don’t limit the planners plans. Economic laws reveal the reasons the plans won’t work but they don’t create the underlying economic reality.

Ludwig von Mises

LUDWIG VON MISESĀ  – “Economic history is a long record of Government policies that failed because they were designed with a bold disregard for the laws of economics.”

Planners have charged their central banks to do away with scarcity by using electronically printed counterfeit money. It sounds plausible on the surface if you look at ‘that which is seen’. But we all know from reading Bastiat that ‘that which is not seen’ is more important. The unintended consequences of Central Bankers policies, of money printing and zero percent interest rates, are playing out right now for all to see. Wasted resources and capital consumption are two of these results.

F. A. Hayek – “It has already been suggested that it is not necessary for the working of this system (free market capitalism) that anybody should understand it. But people are not likely to let it work if they do not understand it.

Central planners condemn free market capitalism because it doesn’t produce perfect results, (which means it doesn’t produce their desired result). Free market capitalism is the best system for allowing individuals the freedom to pursue their desires. This individual freedom has lifted the masses of people to a higher standard of living. Is it perfect? Nothing that man does is perfect. It is the responsibility of each voter to understand basic economic principles in order to protect the free market from the planners who want to destroy it. Start now because your individual freedom to pursue your interests in a free market is under siege.

 

LUDWIG VON MISESĀ  – “Many think that governments are free to achieve all they aim at without being restrained by an inexorable regularity in the sequence of economic phenomena….they maintain that the state is God.”

These quotes by Hayek and Mises came to mind as I was reading an article titled, Economics Is Dead, And It Is Being Killed Again, by Per Bylund, at mises.org. here are some excerpts from the article.

“You have to applaud the anti-economics left for this rhetorical masterpiece. They have struggled for decades to sink the ship of economics, the generally acclaimed science that has firmly stood in the way of their anti-market and egalitarian policies, hindered the growth of big government, and raised obstacles to enact everything else that is beautiful to the anti-economics left. The financial crisis is exactly the excuse the Left has been waiting for. It is a slam dunk: government grows, Keynesianism is revived, and economics is made the culprit for all our troubles.”

“If this weren’t so serious, it would be amusing that the failure of Keynesian macro-economics (whether it is formally Keynes’s theory or post-Keynesian, new Keynesian, neo-Keynesian, monetarist, etc.) is taken as an excuse to do away with sound micro-economic theory to be replaced with Keynesian and other anti-market ideas. But it is not amusing. If most of the discussions heard are to be believed, the failures of central planning is a reason for central planning, just like socialism is a reason for socialism. The success of the market, on the other hand, is not a reason for the market.”

“…. the Left hates all that is economics. Because it points out that creating a better world through central planning, money-printing, and political manipulation is indeed impossible. The market is neither perfect nor efficient, but it is better than any available alternative. In fact, the unhampered market is the only positive-sum means available for human society. The market is indeed the only way of progress; all else is a step backward.

Related ArticleCapital Consumption aka. Eating Our Seed Corn, at austrianaddict.com.

Related ArticleWe’re All Born In The Middle Of The Story, at austrianaddict.com.

Related ArticlePolitician’s “Affordable” Ideas Must Obey Economic Forces, at austrianaddict.com.

 

Must Reads For The Week 8/15/15

August 14, 2015

The pen is mightier than the sword...

Ā The pen is mightier than the sword… (Photo credit: mbshane)

Fed Finally Figures Out Soaring Student Debt Is Reason For Exploding College Costs, at zerohedge.com. The Fed has figured out that when money, from debt and money printing, is injected into a particular area of the economy, it raises the price (creates a bubble). Does this revelation hold true for all of the Feds printed money that has gone into the stock market?

The Doctor Won’t See You Now, at Forbes.com.Ā  The laws of economics will be strictly obeyed.Ā  The money quote from the article, “Many exchange policies limit patients’ choices of doctors and hospitals in order to keep premiums down in the face of Obamacare’s intrusive regulations and costly mandates.”Ā  Who could have predicted that?

Navajo Nation Vows To Hold EPA Accountable, at zerohedge.com.Ā  The EPA is responsible for releasing 1 Million, 3 Million gallons of toxic waste water into Colorado’s Animus River.Ā  Like all Government agencies they are currently blaming the contractor for the accident.Ā  Tough luck for New Mexico and Utah who are downstream from the toxic release.Ā  I haven’t heard a peep from the media or environmental groups about this.Ā  I guess it’s neither illegal nor a big deal if the government does it.Ā  I wish the Navajo nation good luck in any lawsuit.Ā  It’s great to be the tyrant, king!

Did EPA Intentionally Poison Animus River To Secure SuperFund Money?, at zerohedge.com.Ā  It appears that a retired geologist predicted that the EPA would foul the Animus River a week before it actually occurred.Ā  The implications of his accusations are chilling.Ā  Never let a good crisis go to waste?

The Battle Intensifies: Police Raid Uber’s Hong Kong Office, at economicpolicyjournal.com.Ā  Car Wars! Return of the Jitneys continues.Ā  At this point, a rational government would realize they can’t put the genie back in the bottle.Ā  Protecting special interests always trumps rationality but it can’t defeat the basic laws of economics.

Going Breadless in Venezuela, at economicpolicyjournal.com.Ā  Socialism and price controls rear their ugly head again as bread shortages are the new norm in Venezuela.Ā  Weren’t there food riots last week?Ā  Don’t they have a toilet paper shortage as well?Ā  Hey, let them eat cake!Ā  Sorry, that’s reserved for the rulers.

Minimum Wage Effect?, at Carpe Diem Blog.Ā  January to June job losses for Seattle area restaurants reaches 1300.Ā  While there are many reasons for declining employment, artificially raising the price of labor means you will have less of it.Ā  Businesses must make adjustments to increased costs.Ā  My guess is that one unintended consequence will be less tipping for servers.

China’s Currency Policy: Devastating Manipulation or a Form of Generous Foreign Aid to Americans?, at Carpe Diem Blog.Ā  This is a very different take on China’s recent efforts to devalue their currency.Ā  Government intervention in currency whether it is printing counterfeit money, zero point interest rates, fractional reserve banking, or devaluing will always have unforeseen and negative consequences.Ā  As for devaluing currency, how do you jump off a cliff halfway?

The Disturbing Messages In Police Recruiting Videos, at The Washington Post.Ā  You don’t have to watch all the videos to get the point.Ā  Why would you stress violent confrontation in your recruiting videos?Ā  Even the Marine Corps doesn’t do that and they have the best military recruiting videos bar none.Ā  If it is part of the recruiting tactics then it is likely the emphasis of their training.Ā  When the only tool you have is a hammer, everything looks like a nail.Ā  Make sure you check out the last recruiting video by the Decatur Alabama police.Ā  Quite the difference!

Serfdom USA!, at economicpolicyjournal.com.Ā  Let’s end the week with some laughs.Ā  This is for all of the true Austrian Economics Addicts out there.