Posted tagged ‘Murray Rothbard’

Must Reads For The Week 7/9/16

July 9, 2016

We Will Comment On Hillary and The Shootings In Dallas In A Few Days

Thinking Beyond Stage One, by Walter E. Williams, at jewishworldreview.com. The unintended consequences of tariffs and trade restrictions (please read this Mr. Trump). Excerpt from the article: The question that should be put to those calling for restrictions on imports is: In an effort to save jobs in one industry, do you care about or even know of its cost and disastrous effects in other industries? When Congress enacts a miracle for one group of Americans, such as steel producers, it creates a non-miracle for another group, such as steel- using producers.

What The World Looks To Someone Who Doesn’t Understand Economics, at cafehayek.com. Here are some excerpts from the article: “.….defense of the minimum wage is strong evidence that the world does indeed include people who really do believe that government-officials’ stated intentions determine the outcomes of government actions.” Always remember the limiting factor of any central planning by government, the amount of knowledge the bureaucrats can bring to bear on any situation isn’t even one tenth of the knowledge brought to bear by millions of individuals competing in the free market.

Smashing The Minimum Wage: robot Made Burgers Coming To San Francisco, at economicpolicyjournal.com. When the cost of labor is mandated to be higher than it would be under normal market conditions, Employers (economic forces) try to correct the intervention in a couple of ways. Since they have to pay more, why not pay even more to a person who can produce as much as two people. Another is to use automation to replace the now too expensive employee. Mandates don’t happen in a vacuum. Two Of The Worlds Largest Employers Are Replacing Workers With Robots.

But Why Aren’t People Buying Electric Cars? at theburning platform.com. The auto industry can’t figure out why ‘stupid’ consumers won’t buy electric cars. Could it be because the cost of owning and operating an electric car (even with all the Gov. subsidies) is higher than owning and operating a gasoline powered car? Maybe the consumer is smarter than people think. Read – Electric Car Sales Crash Into Economic Reality.

Brexit Shows Why Central Planning Won’t Work, by Jason Morgan, at mises.org. Excerpt from the article: “As Ludwig von Mises demonstrated in Human Action, it isn’t that economic interventionism and central planning might not work, it’s that they cannot work. Why? Because we simply do not have the ability to predict human action in the future, either in the immediate future, or in a more intermediate future.” Unfortunately for us the solution to the failure of these tyrants politicians and bureaucrats plans is more of the same thing that failed.

Here We Go Again: An August 2007 Redux, by David Stockman, at mises.org. When central banks try to stop market corrections by printing money via credit expansion, they end up creating bubbles that will eventually have to be liquidated. Of course they will try to stop the market correction that was a result of their attempt to stop the first market correction. The dog chasing it’s tail.

Murray Rothbard vs. EU 1989, at economicpolicyjournal.com.

 

Americas Radical Revolution, by Murray Rothbard, at mises.org. Rothbards take on the American Revolution.

This Is A Toilet” US Rowing To Use Sewage Proof Suits At Rio Olympics, at zerohedge.com. People have asked me why the Olympic committee would have the games at a place like this. Why? Because the Olympic committee is probably just as corrupt as FIFA was with the world cup. The pollution at the Beijing Olympics four years ago was probably just as bad.

Sharp Shooting Army Vet Saves Bald Eagle Stuck Upside Down In A Tree, at tammybruce.com. A young eagle was caught in a rope dangling from a tree. An army vet shot the rope and freed the eagle. The army vet was initially worried he might get in trouble for shooting at an eagle if he attempted to shoot the rope. With the way the legal system is today, I think his fears were justified.

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Some Econ. Homework

June 22, 2016

The Fed Has Whiffed Again: Massive Monetary Stimulus Has Not Helped Labor, by David Stockman, at davidstockmanscontracorner.com. The Feds injection of 4 Trillion electronically printed dollars into the economy hasn’t produced a return worth that kind of “investment”. Fewer workers working fewer hours means less is being produced. Just because you print money doesn’t mean goods and services are being produced. It only means goods and services are being demanded by using money not backed by any production. Say’s law is being shown to be true.

“Say’s Law can be explained in the following terms:”

1) “The way that a buyer demands a good is by supplying a different good.”

2) “The supply of one type of good constitutes the demand for other, different goods.”

3) “The source of demand is production, not money. Money is only a temporary parking place for past production.”

“In the modern economy with division of labor, most of us demand goods when we supply our labor. I work as a software engineer. I supply my labor writing computer software. And from that supply I am able to demand other goods, such as coffee.”

Pity The Poor Central Bankers: Playing Masters Of The Universe Is No Longer Fun, by Charles Hugh Smith, at oftwominds.com. Here is an excerpt from the article: “Central Banks can create free money for financiers, but they can’t move the needle of the real economy, except to distort and cripple it with perverse incentives to gamble borrowed money on malinvestments and skimming operations…….as former Master of the Universe Ben Bernanke noted: “higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending (that) will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”

I guess former Master of the Universe Ben Bernanke has never read Say’s Law: “The Source of demand is production, not money. Money is only a temporary parking place for past production.

Printing money distorts the pricing system. Market discovery of prices (not Fed manipulated prices) is how information about how much to produce and consume is transmitted to producers and consumers in a free market. The interest rate is the most important of these discoveries, because interest rates coordinates production across time. We live in a world where resources and capital have misallocated for the last decade plus. The cure is to quit printing money and allow the market to set interest rates. What are the odds?

The Fed Pours Water On The Job-Growth Hype, by Ryan McMaken, at mises.org. The administration and the media has been telling us how good the economy has been doing. I guess the Fed hasn’t received the memo. The Fed would normally raise interest rates if the economy is doing well because it would be afraid of it overheating.  The Fed will adjust its monetary policy to weather they think the economy is too hot, or too cold, or just right. The fact that the Fed has raised the interest rate once by a 1/4 point since they lowered it to near zero in 2008 tells us everything about what the Fed thinks of the economy. So where has most of the $4 trillion in printed money ended up? If you say in the financial markets to prop up asset prices, in order to help banks, go to the head of the class. Do you think these false stock prices can stay afloat without more printed money???

Central Banks Are Wrong About Inflation and Deflation, by Frank Shostak, at mises.org. Let’s go to Murray Rothbard writing in Man Economy And State for the definition of inflation and deflation.

ROTHBARD: “The process of issuing money beyond any increase in the stock of specie, may be called inflation. A contraction in the money supply outstanding over any period, (aside from a possible net decrease in specie) may be called deflation. Clearly, inflation is the primary event and the primary purpose of monetary intervention. There can be no deflation without an inflation having occurred in some previous period of time.

Movements in the  supply-of-goods and in the demand-for-money schedules are all the results of voluntary changes of preferences on the market. The same is true for increases in the supply of gold or silver. But increases in fiduciary or fiat media (printed money) are acts of fraudulent intervention in the market, distorting voluntary preferences and voluntarily determined pattern of income and wealth. Therefore, the most expedient definition of inflation is one we have set forth above: an increase in the supply of money beyond any increase in specie.”

The absurdity of the various governmental programs for “fighting inflation” now becomes evident. Most people believe that government officials must constantly pace the ramparts, armed with a huge variety of “control” programs designed to combat the inflation enemy. Yet all that is really necessary is the government and the banks (nowadays controlled almost completely by the government) cease inflating. The absurdity of the term “inflationary pressure” also becomes clear. either the government and banks are inflating or they are not; there is no such thing as “inflationary pressure”.

CONCLUSION

Let’s not be fooled by the “Masters of the Universe’ when it comes to monetary policy and interest rates. With a little bit of reading on the topic, you could come up with the policy for fixing our economic problems. That policy would be to quit electronically printing counterfeit money and allow the market to set the interest rates. The solution is very simple but it is not easy. Why?  Because of the Fed’s previous inflationary policy, the resulting recession that would occur when we implement the cure would be politically difficult for politicians and the Fed to let happen. They have been trying to keep the correction from happening since 08, but at some point economic reality will correct all the Feds previous money printing, and it won’t be pretty.

Milton Friedman – Socialism Is Force!

August 13, 2015

Organizing a society via the force of central planning whether it take the form of monarchy, dictatorship, socialism, communism, fascism, or a democratically elected big government is very appealing to the people who are in charge of doing the planning. Or, in the case of democratically elected big government, it also appeals to the people who have been convinced that they are on the side of the planners they elected. As our country moves ever closer toward central planning, more force will have to be used to achieve the planners goals. This will produce more contention between people, which leads to less cooperation and more chaos.

Milton Friedman explains this in the video below.

Here is an excerpt.

“Trying to do good with methods that involve force lead to bad results. Because the people who set out with good intentions are themselves corrupted. And if they’re not corrupted they are replaced with people with bad intentions who are more efficient at getting control of the use of force……The most harm of all is done when power is in the hands of people who are absolutely persuaded of the purity of their intentions.”

Here is a quote from Murrray Rothbard:

“The market promotes and rewards the skills of production and voluntary cooperation. The Government enterprise promotes the skills of mass coercion and bureaucratic submission…and those who get to the top will be those with the most skill in that particular task.”

 

Related ArticleWhy The Worst Get On Top, at mises.org.

Related ArticleWhy Socialism Won’t Work: Human Nature?, at austrianaddict.com.

Must Reads For The Week 12/27/14

December 26, 2014
The pen is mightier than the sword...

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

The Advance Of The Robots: Hershey’s 3D Printed Kisses, at economicpolicyjournal.com. Minimum wage hikes are leading to the replacement of labor with technology. Watch the video to see 3D printing of candy.

NANOPLUG: The Worlds First Invisible Hearing Aid, at indiegogo.com. Markets keep producing better and better products.

France Waves Discreet Goodbye To 75% Super Tax, at yahoo.com. Here is a quote from the article, “The reform clearly damaged France’s reputation and competitiveness,” said Jorg Stegemann, head of Kennedy Executive, an executive search firm based in France and Germany. “It clearly has become harder to attract international senior managers to come to France than it was,” he added.  Nobody could have predicted this, could they?

Gun Violence In America (In Six Uncomfortable Charts), at zerohedge.com. I don’t know how you can consider fire arm violence a health problem. In the last chart it says, “the United States has high mortality rates from firearm homicide and suicide”. By definition doesn’t homicide and suicide mean that the mortality rate is 100%?

Murray Rothbard On Confused Intellectuals, I saw this video at economicpolicyjournal.com. This is what is happening today in America. Keep capitalism and markets, and just allow state intervention to correct the flaws.

How Japan Bankrupted Itself – Lessons For Europe, at zerohedge.com. Not just lessons for Europe, but hopefully lessons for ourselves. Two and a half decades of economic stagnation brought about by Keynesian proscribed spending and debt, can’t be overcome by more of the same.

Demographics – Why The Great Recession Started (And Won’t End Anytime Soon), at zerohedge.com. The charts in this post are interesting. It’s interesting how central planning politicians and bureaucrats think they can circumvent economic forces.

Why The Butter Shortage In Japan?, at pretenseofknowledge.com. Who would have guessed that Government intervention in the dairy industry, would lead to unintended consequences down the road?

The Extraordinary Life Of Barack Obama’s Imaginary Son, by Stephen Miller, at ricochet.com. This is a good read if only to understand the rhetorical tactics used by politicians and bureaucrats who don’t have a real argument for their positions.

We’re stuck with the bill for this gift from our “leaders“.

Solutions To California’s Drought: Government Fines, or Market Prices.

July 24, 2014

File:2003-09-28 Lawn sprinklers at NCSSM.jpg

California’s water shortage due to the drought is being dealt with in typical interventionist fashion. The Government wouldn’t even consider how the free market deals with scarcity. Murray Rothbard wrote about a water shortage that occurred in 1977 in northern California in this article titled, The Water Shortage, (at economicpolicyjournal.com). Time has passed since this was written but the economic principles are as true today as they were in 1977.

FREE MARKET vs. CENTRAL PLANNING

When Government is the supplier a good, whether it’s water, electricity, or healthcare, the first thing that happens when there is a shortage is they blame the consumer for using too much. When electrical use is high during the summer, suppliers always warn consumers to use less electricity because of the strain on the system. Rolling black outs may come into play if use outstrips the ability to supply enough electricity. I’ve always wondered why producers of electricity are always trying to get consumers to use less of their product, even to the point of giving them energy efficient light bulbs. In the free market, producers use advertising to try to increase demand for their product.

The first rule of economics is scarcity. What we desire is greater than the means available to fulfill this desire. These scarce goods have to be rationed one way or another. If there were no scarcity, there would be no need to economize on any good. Prices ration scarce resources in the free market. Bureaucrats and planning boards ration scarce resources in a centrally planned system.

ROTHBARD EXPLAINS SCARCITY, SHORTAGE, RATIONING

I’m going to let Rothbard take it from here because he is way better than me at explaining scarcity, shortages, rationing, prices, and supply and demand. Her are some excerpts from the 1977 article.

“….northern California, has been suffering from a year-long drought, ……. government must leap in to combat it—not, of course, by creating more water, but by mucking up the distribution of the greater scarcity.”

“…. on the free market, regardless of the stringency of supply, there is never any “shortage”, that is, there is never a condition where a purchaser cannot find supplies available at the market price. On the free market, there is always enough supply available to satisfy demand. The clearing mechanism is fluctuations in price. If, for example, there is an orange blight, and the supply of oranges declines, there is then an increasing scarcity of oranges, and the scarcity, is “rationed” voluntarily to the purchasers by the uncoerced rise in price, a rise sufficient to equalize supply and demand. If, on the other hand, there is an improvement in the orange crop, the supply increases, oranges are relatively less scarce, and the price of oranges falls consumers are induced to purchase the increased supply.”

“Note that all goods and services are scarce, and the progress of the economy consists in rendering them relatively less scarce, so that their prices decline. Of course, some goods can never increase in supply. The supply of Rembrandts, for example, is exceedingly scarce, and can never be increased—barring the arrival of a Perfect Forger. The price of Rembrandts is high, of course, but no one has ever complained about a “Rembrandt shortage.” They have not, because the price of Rembrandts is allowed to fluctuate freely without interference from the iron hand of government.”

“If the water industry were free and competitive, the response to a drought would be very simple: water would rise in price. There would be griping about the increase in water prices, no doubt, but there would be no “shortage”, and no need or call for the usual baggage of patriotic hoopla, calls for conservation, altruistic pleas for sacrifice to the common good, and all the rest. But, of course, the water industry is scarcely free; on the contrary, water is almost everywhere in the U.S. the product and service of a governmental monopoly.”

“When the drought hit northern California, raising the price of water to the full extent would have been unthinkable; accusations would have been hurled of oppressing the poor, of selfishness, and all the rest. The result has been a crazy-quilt patchwork of compulsory water rationing, accompanied by a rash of patrioteering ecological exhortation: “Conserve! Conserve! Don’t water your lawns! Shower with a friend! Don’t flush the toilet!”

“…. local ecologists and statists got into the act. They groused that the over-conservation had induced people not to water their lawns, which led to the “visual pollution” “unsightly” lawns…..”

“…. wouldn’t the poor be hurt by the water district raising its water prices? …No….the poor are not being hurt by the higher price because, being forced to cut their consumption, their total bill has not increased. Thus, a price rise by a private firm is always selfish and oppressive of poor people; but when a monopoly governmental agency increases its price, the poor do not suffer at all, since if they cut their purchases sufficiently in response to the higher price, their total dollar payments will not increase. It is this sort of nonsense that our statists and busybodies are now being reduced to.”

NOTHING HAS CHANGED

In the present drought situation, central planners are trying the same failed responses to the problem, while free market solutions siton the sideline waiting for their chance to prove they are better than these “first string solutions” of the central planners. Remember, there is no solution to scarcity, just a better or worse way of dealing with it.

This article, California City Will Fine Couple $500 For Not Watering Lawn, State Will Fine Them $500 If They Do, by Mary Beth Quirk, at consumerist.com, shows that central planners have not gotten any smarter in 35 years. They are true believers in their central planning religion, and no amount of conflicting incentives or failures will convert them.

The market is always trying to correct perverse incentives created by central planners. It will come up with alternatives to paying the fines, as shown in this article, Spray-Painting Your Grass Green Is One Way To Avoid “Brown Lawn Fees“, by Mary Beth Quick, at consumerist.com. The shame of it is there would have been no need for this lawn spray-painting business in a true free market. It only became viable because of Government planning. The labor, capital, and resources used to keep from getting fined, could have been used in more productive ways satisfying true free market demand. If the price would have been allowed to go up to ration water, each person could have decided how much to use at the higher price, allowing them to use their money for other things than complying with green lawn laws. This is a version of the broken window fallacy, read here, Hurricane Sandy And The Broken Window Fallacy.

Understanding some basic economic principles will give us enough knowledge to confidently argue against the political “solutions” bureaucratic central planners come up with in dealing with the first rule of economics; scarcity.

Related ArticleIncentives Matter, at austrianaddict.com.

Related ArticleThe Reality Of Obamacare, at austrianaddict.com.

Related ArticleMilton Friedman on Market Failure vs. Government Failure. Which Has a Higher Cost? at austrianaddict.com.

 

Myths About Capitalism

April 4, 2014

Many people think big businesses like free market capitalism. The truth is when big businesses were small they liked free market capitalism, because it allowed them to compete with bigger businesses for a share of the market. Once these businesses get big, they don’t like competition. They want to protect their position in the market, and the only way to do that is to try to get Government to pass regulations that makes it difficult for their competitors to compete. This is crony capitalism.

Free market capitalism rewards people who are good at production. They are rewarded by consumers who vote with their dollars on who provides the best product or service. Crony capitalism rewards people who are good at political games.

Free market capitalism uses scarce resources more efficiently than the waste that occurs in a crony capitalist system. {Solyndra}

Top Three Common Myths Of Capitalism, Video by learnliberty.org.

Here is a quote by Murray Rothbard,

“The market promotes and rewards the skills of production and voluntary cooperation. The Government enterprise promotes the skills of mass coercion and bureaucratic submission…and those who get to the top will be those with the most skill in that particular task.”

Related ArticleWalter E. Williams: Free Market Capitalism Creates A Higher Standard Of Living For Everyone, by austrianaddict.com.

Related ArticleWhy Is Capitalism So Unpopular? by Art Carden at mises.org. Excerpt from the article.

“Under capitalism, the common man does not need an intellectual vanguard or a group of virtuous surrogates to make his decisions for him or to defend him against the rapacity of his fellows. He can do just fine without our help, thank you very much, and would be much obliged if we would go back to our ivory towers and leave him alone.”

Related ArticleDo Capitalists Produce Nothing, by D. W. MacKenzie, at mises.org. Excerpt from the article.

“Capitalists who improve production plans serve the needs of consumers and produce economic progress. This is how the system that we accurately call “free enterprise” actually works. Capitalists who participate in the redistribution of wealth through government policy produce disruptive production plans and economic waste. That is how the system that we accurately call “crony capitalism” works.”

 

Richard Ebeling: “How The Fed Goes Bust”, Interview on RT’s Prime Interest.

August 15, 2013

Economics professor Richard Ebeling is interviewed on a show called Prime Interest, which is produced by RT, formerly known a Russia Today. It is a Russian based television network that is a non-profit organization funded by the federal budget of Russia. It is hard to believe you have to go to Russian television to find an Austrian economist give an outstanding analysis of how the Federal Reserves policy of low-interest rates, and electronically printing counterfeit money, created the artificial economic boom that led to the 08 bust, and how this same policy has them in a box from which there is probably no escape. They have to keep counterfeiting money or their will be a huge correction. Because they injected ever-increasing amounts of counterfeit money, in order to keep the correction from happening in 08, the inevitable correction will be much worse, and more painful, than if they would have let the correction run its course.

The interview starts at 2:48 and ends at 13:50, and is well worth it. He also talks about his interactions whth F. A. Hayek and Murray Rothbard two of the three most well-known Austrian economists, the other being Ludwig von Mises.

You can’t find this on American television news. Is American television the new Pravda? Pravda, which means “Truth”, was the state news paper of Russia.

Related Article – Federal Reserve Money Injections Since 00 Haven’t Worked As Advertised, at austrianaddict.com.

Related Article – Dallas Fed President Fisher Points To The Feds Real Problem, at austrianaddict.com.

Related Article – Real Savings vs. Counterfeit Savings, at austrianaddict.com.