“For Austrians, on the other hand, man is a purposeful being. … He has spirit and will.” The author of these remarks, Dr. Richard Ebeling, delivered a lecture on Austrian Economics to an audience in Wichita.
Austrian Economics focuses on man as a human actor, rather than as a cog in a system of equations. Dr. Richard Ebeling delivered an introductory lecture on Austrian Economics to an audience in Wichita on September 10, 2015.
A companion article to the lecture is Austrian Economics and the Political Economy of Freedom, in which Dr. Ebeling explains: “The Austrian view of man refutes the positivist, historicist, and neoclassical conceptions of man as a mere physical, quantitative object, or as a passive subject controlled by the dark forces of history, or as a ‘dependent variable’ in a system of mathematical equations. … For Austrians, on the other hand, man is a purposeful being. He thinks, plans, and acts. Man may be made up of matter, but he possesses consciousness. He has the capacity to imagine, create, and initiate. His mind is not simply reducible to lifeless matter. He has spirit and will.”
View video of the lecture below, or click here to view at YouTube in high definition (recommended). Videography by Paul Soutar.
Voice for Liberty presents Richard M. Ebeling, Ph.D. for an informative breakfast event. Ebeling is BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel in Charleston, South Carolina. His topic will be “An Introduction to Austrian Economics.”
Richard M. Ebeling, Ph.D.This meeting is Thursday September 10, 2015, from 7:30 am to 9:00 am. It will be at the Petroleum Club, 9th floor of the Ruffin Building at 100 N. Broadway in Wichita.
The cost is $15, which includes a delicious breakfast. RSVP is not required, but if you plan to attend, would you please let me know by email at [email protected]? This will help with planning. But please attend even if you can’t RSVP.
About the speaker
Dr. Richard M. Ebeling is the recently appointed BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel. He will be conducting courses such as “Leadership, Entrepreneurship, and Capitalist Ethics” as well as “The Morality and Economics of Capitalist Society.” Dr. Ebeling is recognized as one of the leading members of the Austrian School of Economics and the author of Political Economy, Public Policy, and Monetary Economics: Ludwig von Mises and the Austrian Tradition (Routledge 2010). He is currently editing a forthcoming volume in the Collected Works of F.A. Hayek (Univ. of Chicago Press), the noted Austrian economist and Nobel Laureate. Prior to his appointment at The Citadel, Dr. Ebeling was professor of Economics at Northwood University in Midland, Michigan (2009-2014). He served as president of the Foundation for Economic Education (2003-2008), was the Ludwig von Mises Professor of Economics at Hillside College in Hillsdale, Michigan (1988-2003), and Assistant Professor of Economics at the University of Dallas in Texas (1984-1988). He lives with his wife Anna and their dog “Fritzie” in Mt. Pleasant, South Carolina.
The Austrian view of man refutes the positivist, historicist, and neoclassical conceptions of man as a mere physical, quantitative object, or as a passive subject controlled by the dark forces of history, or as a “dependent variable” in a system of mathematical equations. Positivism tried to reduce man and his mind to mere magnitudes to be studied and manipulated like the inanimate matter experimented on in the natural sciences. Historicism claimed that man is determined and molded by external laws of history that shape his thoughts, actions, and destiny, with little latitude for the individual to design and guide his own future. Neoclassical economics treats man like a mathematical function possessing given tastes and preferences, which are themselves induced by his surroundings and on the basis of which he responds in predictable ways when confronted with various constraining and objective tradeoffs in the form of market prices.
For Austrians, on the other hand, man is a purposeful being. He thinks, plans, and acts. Man may be made up of matter, but he possesses consciousness. He has the capacity to imagine, create, and initiate. His mind is not simply reducible to lifeless matter. He has spirit and will. Man reflects on the circumstances in which he finds himself. He judges aspects of his physical and social surroundings less than satisfactory. He imagines states of affairs that would be more to his liking. He creates in his mind plans of action that would bring those preferred states of affairs into existence. He discovers that the things he can use as means to achieve some of his ends are insufficient to achieve all of his ends. He has to weigh the alternatives and decide which he prefers more, since some of them, in the face of scarcity, will have be forgone today or forever. He therefore has to decide the tradeoffs he is willing to make, and as a result he determines the costs of his own choices in the form of goals he is willing to give up in order to pursue others that he considers more important.
Year in review, Wichita Liberty-style.Here it is: A selection of stories that appeared on Voice for Liberty in 2011. Was it a good or bad year for the causes of economic freedom, individual liberty, limited government, free markets, and civil society?
Patriots New Years Eve. Larry Halloran of Wichita — South Central KS 912 Group is sponsoring for the second time a “Patriots New Years Eve”: Taking time to relax in the company of Patriots as we dedicate ourselves to the important work ahead in 2012. This event is New Year’s Eve from 6:00 pm to 11:00 pm at the Hawthorn Suites located at 2405 N. Ridge Road, Wichita, KS 67205, telephone (316) 729-5700. The potluck dinner starts just after 6:00 pm, followed by guest speaker Bob Weeks at 8:00 pm. This is a family-friendly event, and no alcohol is served or allowed. Despite that, I still plan to attend. RSVP to [email protected].
Legislators to hear from citizens. The South-Central Kansas Legislative Delegation will be taking public comments Tuesday January 3rd at 7:00 pm in the Jury Room of the Sedgwick County Courthouse, 525 N. Main in Wichita. (Use the north entrance to the courthouse). This is your opportunity to let local legislators know your wishes on issues that will be considered during the 2012 legislative session. In the past, each person wishing to talk has been limited to between three and five minutes depending on the number of people wishing to speak. There is usually the requirement to sign up as you enter if you want to speak.
California’s redevelopment nightmare to end. In Kansas, they’re called tax increment financing districts, and in California, they’re about to end. A press release from the Institute of Justice notes: “In a landmark victory for private property owners in the Golden State, the California Supreme Court today upheld a statute abolishing the nearly 400 redevelopment agencies across the state. The court also struck down a law that would have allowed these agencies to buy their way back into existence. The final outcome of the case is that, in 2012, California’s decades-long redevelopment nightmare will finally come to an end. California redevelopment agencies have been some of the worst abusers of eminent domain for decades, violating the private property rights of tens of thousands of home, business, church and farm owners.” Besides eminent domain abuse, the high cost of the redevelopment agencies was a factor, with 12 percent of California property taxes being diverted to what are know as TIF districts in Kansas. … The City of Wichita still views tax increment financing as a wise investment, with one such district authorized for creation this month.
Growth will heal nation’s economy. From Kansas Watchdog: While most economists are predicting something between a long, slow recovery and the impossibility of repairing an economy buried in debt, entrepreneur Louis Woodhill believes the U.S. can come roaring back in just one or two years — with the right actions. “We probably need 25 million new jobs to get to full employment from here,” he said. “But basically it could be done in a year or two at the outside if you did everything right.” His recovery formula focuses on growing the gross domestic product. “If Vince Lombardy had been an economist instead of a football coach, he would have said economic growth is not the most important thing, it’s the only thing,” Woodhill said. … The full story is at Louis Woodhill: Prescription for Growth Will Heal Nation’s Economy.
Assumptions about capitalism.Burton W. Folsom in The Myth of the Robber Barons: “This shallow conclusion dovetails with another set of assumptions: First, that the free market, with its economic uncertainty, competitive stress, and constant potential for failure, needs the steadying hand of government regulation; second, that businessmen tend to be unscrupulous, reflecting the classic cliché image of the ‘robber baron,’ eager to seize any opportunity to steal from the public; and third, that because government can mobilize a wide array of forces across the political and business landscape, government programs therefore can move the economy more effectively than can the varied and often conflicting efforts of private enterprise. But the closer we look at public-sector economic initiatives, the more difficult it becomes to defend government as a wellspring of progress. Indeed, an honest examination of our economic history — going back long before the twentieth century — reveals that, more often than not, when government programs and individual enterprise have gone head to head, the private sector has achieved more progress at less cost with greater benefit to consumers and the economy at large.” … Folsom goes on to give examples from the history of steamships, railroads, and the steel and oil industries that show how our true economic history has been distorted. Concluding, he writes: “Time and again, experience has shown that while private enterprise, carried on in an environment of open competition, delivers the best products and services at the best price, government intervention stifles initiative, subsidizes inefficiency, and raises costs. But if we have difficulty learning from history, it is often because our true economic history is largely hidden from us. We would be hard pressed to find anything about Vanderbilt’s success or Collins’s government-backed failure in the steamship business by examining the conventional history textbooks or taking a history course at most colleges or universities. The information simply isn’t included.” … Folsom’s book on this topic is The Myth of the Robber Barons: A New Look at the Rise of Big Business in America.
Resources on Austrian economics. The prolific and best-selling author Thomas E. Woods, Jr. has compiled a very useful collection of resources regarding Austrian economics. In an essay by Lew Rockwell that Woods refers to, we can learn the essence of the Austrian way: “It is not a field within economics, but an alternative way of looking at the entire science. Whereas other schools rely primarily on idealized mathematical models of the economy, and suggest ways the government can make the world conform, Austrian theory is more realistic and thus more socially scientific. Austrians view economics as a tool for understanding how people both cooperate and compete in the process of meeting needs, allocating resources, and discovering ways of building a prosperous social order. Austrians view entrepreneurship as a critical force in economic development, private property as essential to an efficient use of resources, and government intervention in the market process as always and everywhere destructive.” Concluding his essay, Rockwell wrote: “The future of Austrian economics is bright, which bodes well for the future of liberty itself. For if we are to reverse the trends of statism in this century, and reestablish a free market, the intellectual foundation must be the Austrian School.” … Woods’ collection is at Learn Austrian Economics.
Cato University. One of the highlights of my year was attending Cato University, a summer seminar on political economy. Besides attending many very informative lectures and meeting lovers of liberty from across the world, I became aware of several brilliant Cato scholars and executives whom I had not paid much attention to. One in particular is Tom G. Palmer, who is Senior Fellow and Director of Cato University, besides holding the position of Vice President for International Programs at Atlas Economic Research Foundation. He delivered many of our lectures and is the author of Realizing Freedom: Libertarian Theory, History, and Practice. An important chapter from this book is Twenty Myths about Markets. In this video he discusses being effective in bringing about change.
Wichita City Council this week. This week the Wichita City Council will consider these items of particular interest: The Wichita Art Museum has $265,738 in funds that it did not spend. The council will be asked to allow the museum to retain this unspent money. … Mid-Continent Instrument, Inc. is asking for a forgivable loan of $10,000. It received the same last week from Sedgwick County. According to city documents, the State of Kansas is also chipping in $503,055 in forgivable loans, sales tax exemptions, training grants, and tax credits. … Council members will receive the city’s 2010 Comprehensive Annual Financial Report. … An item deferred from two weeks ago will consider hiring an outside firm to inspect the roofs at the airport for storm damage. Wichita Eagle reporting from that time has detail. Some, including Council Member Michael O’Donnell (south and southwest Wichita) have wondered why the city can’t do the inspection with its own engineering staff and resources. … Of further note is that the city — two weeks ago — proposed to use general obligation bonds to borrow the funds to pay for this inspection. This is similar to last December, when the city decided to also use bonds to borrow money to pay for an analysis of nine aging fire stations and what repairs and upgrades they might require. Material for this week’s meeting indicates the project will be “funded with Airport revenues either directly or through the repayment of General Obligation bonds.” … A “receive and file” item notes that as established by city ordinance, the salaries for council members, the vice-mayor, and the mayor will increase by 3.2 percent effective June 7. This is a cost-of-living increase based on the consumer price index. Last year all these parties decided to decline the increase. … A consent agenda item recommends settling a lawsuit for damages resulting from a shooting on August 3, 2008 for the amount of $575,000. The agenda material is not specific, but Wichita Eagle reporting indicates that Wichita police officers on that date shot James Ware “at least seven times” in the parking lot of a club after Ware retrieved a rifle from his car. Ware was charged with a crime in the matter, but acquitted in a jury trial. Consent agenda items will not be discussed by the council unless a member asks to “pull” an item for discussion and a possible vote separate from the other consent agenda items. … As always, the agenda packet — all 376 pages for this week’s meeting — is available at Wichita city council agendas.
Resources on Austrian economics. The prolific and best-selling author Thomas E. Woods, Jr. has compiled a very useful collection of resources regarding Austrian economics. In an essay by Lew Rockwell that Woods refers to, we can learn the essence of the Austrian way: “It is not a field within economics, but an alternative way of looking at the entire science. Whereas other schools rely primarily on idealized mathematical models of the economy, and suggest ways the government can make the world conform, Austrian theory is more realistic and thus more socially scientific. Austrians view economics as a tool for understanding how people both cooperate and compete in the process of meeting needs, allocating resources, and discovering ways of building a prosperous social order. Austrians view entrepreneurship as a critical force in economic development, private property as essential to an efficient use of resources, and government intervention in the market process as always and everywhere destructive.” Concluding his essay, Rockwell wrote: “The future of Austrian economics is bright, which bodes well for the future of liberty itself. For if we are to reverse the trends of statism in this century, and reestablish a free market, the intellectual foundation must be the Austrian School.” … Woods’ collection is at Learn Austrian Economics. … The local chapter of Americans for Prosperity, Kansas has been showing some of the video presentations Woods recommends at its monthly meetings, and will conclude the series at its June 13th meeting. Details to follow.
Wichita Save-A-Lot owner commended. Susan Estes of Americans for Prosperity, Kansas contributed this letter to the Wichita Eagle, and it appeared today. Following is the letter as submitted to me: “News the grocery store project in Planeview will proceed — without tax incentives — is a major win for Wichita taxpayers. We commend Ron Rhodes and his company for finding a way to make this project happen without asking for tax money. Rather than giving up the store entirely when the Tax Increment Financing (TIF) district was vetoed by the county, the Rhodes family continued to explore the possibility of building a grocery store here. The planned Save-A-Lot store will create jobs and serve the needs of the neighborhood without adding on to their grocery bills through tax increases, which is certainly good news for Wichitans.” … For more on this matter, see In Wichita, corporate welfare not needed, after all.
Pompeo public forum. On Monday June 6 at 6:30 pm, U.S. Representative Mike Pompeo, a Wichita Republican serving his first term, will hold a public forum at Andover City Hall, 1609 E. Central. Pompeo’s office says: “Congressman Pompeo will take questions from those in attendance and discuss issues related to Congress and the federal government.”
Wichita downtown sites draw little interest.Wichita Business Journal: “Interest from developers in eight city-owned “catalyst” sites in downtown Wichita was minimal — unexpectedly so. ‘I was a little bit surprised how light the response was,’ says Scott Knebel, downtown revitalization manager for the city of Wichita.” With the city soliciting informal proposals for eight sites, only two proposals were received.
More flexibility for school funds.Kansas Watchdog reports that Kansas schools will now have more flexibility to spend funds that are presently stashed away in various funds. Of interest in the article is a chart showing the growth in these fund balances. School spending advocates protest that these funds are needed to because revenue doesn’t arrvie at the same time bills do, which is true. But these fund balances have been growing, because schools have not been spending all the money they’ve been given. While this bill is a good idea, schools have always been able to tap into these funds by simply contributing less to them, thereby spending down the balances. But schools have not wanted to to do this.
Growth in Kansas spending. Click for a larger view.
Despite “cuts,” spending grows. For all the talk in Kansas of budget cuts, state spending still manages to grow year after year. Kansas Watchdog is again on top of this topic, noting “Each year various adjustments push state spending above the approved budget, but in 2010 that extra spending took a big jump that will require even more spending in the future.” Of particular interest is the chart showing spending rising every year.
Sandy Springs a model.Common Sense with Paul Jacob: “Local governments suffer from a big problem: bigness. Too often they expand their scope of services, and, in so doing, progressively fail to cover even the old, core set of services. You know, like fire and police and roads and such. The solution is obvious. Mimic Sandy Springs. This suburban community north of Atlanta, Georgia, had been ill-served by Fulton County. So a few years ago the area incorporated. And, to fend off all the problems associated with the ‘do-it-all-ourselves’ mentality, the city didn’t hire on a huge staff of civil servants. Instead, it contracted out the bulk of those services in chunks. Now, the roads get paved and the streets are cleaned and the waste is removed better as well as cheaper than ever. Reason Foundation, a think tank known for its privatization emphasis, has been on the story from the beginning. A 2005 appraisal predicted that the town would become a ‘model city.’ That prophecy seems to have been on the money, and a Reason TV video emphasizes this with the shocking fact that the town ‘has no long-term liabilities.’ As the rest of the nation’s cities, counties and states lurch into insolvency, Sandy Springs shows a way out.” … The City of Wichita has had success in outsourcing the mowing of parks. Currently, the city has several dozen pieces of commercial mowing equipment at auction.
States’ war for jobs.Bloomberg Businesweek: “State and local governments eager to recover some of the more than 8 million jobs lost during the recession are giving away $70 billion in annual subsidies to companies, according to calculations by Kenneth Thomas, a political scientist at the University of Missouri-St. Louis. States have long relied on fiscal incentives to lure businesses, or keep existing employers from decamping to other locales. Such largesse is coming under renewed scrutiny during this time of strapped budgets. State deficits could reach a combined $112 billion in the fiscal year starting July 1. ‘The tragic irony of it is that in order to pay for these things, they’re cutting other areas that really are the building blocks of jobs and economic growth,’ says Jon Shure, director of state fiscal strategies for the Washington-based Center on Budget and Policy Priorities. … With the national unemployment rate at 8.8 percent, the threat of a company pulling up stakes is enough to open states’ wallets. ‘States and communities are afraid to play chicken,’ says Jeff Finkle, who heads the International Economic Development Council. … Kansas has offered movie theater chain AMC Entertainment a generous incentives package to move away from Kansas City, Mo., The New York Times reported in April. Officials in Missouri are considering making a counteroffer. Neither the company nor state officials would comment. The bidding war helped prompt an Apr. 5 letter signed by 17 corporate executives asking the governors of the two states to quit offering inducements to lure businesses across state lines. ‘At a time of severe fiscal constraint the effect to the states is that one state loses tax revenue, while the other forgives it,’ the letter said. ‘The only real winner is the business who is ‘incentive shopping’ to reduce costs.'” … Governor Brownback’s economic development plan speaks of “A more uniform business tax policy that treats all businesses equally rather than the current set of rules and laws that give great benefit to a few (through heavily bureaucratic programs) and zero benefit to many.” It will be a while before we know if the state is able to stick to this plan.
Shale gas to be topic in Wichita. This Friday (may 6) the Wichita Pachyderm Club features Malcolm C. Harris, Sr., Ph.D., Professor of Finance, Division of Business and Information Technology, Friends University, speaking on the topic: “Shale gas: Our energy future?” Harris also blogs at Mammon Among Friends. … “Shale gas” refers to a relatively new method of extracting natural gas, as reported in the Wall Street Journal: “We’ve always known the potential of shale; we just didn’t have the technology to get to it at a low enough cost. Now new techniques have driven down the price tag — and set the stage for shale gas to become what will be the game-changing resource of the decade. I have been studying the energy markets for 30 years, and I am convinced that shale gas will revolutionize the industry — and change the world — in the coming decades. It will prevent the rise of any new cartels. It will alter geopolitics. And it will slow the transition to renewable energy.” … Critics like the Center for American Progress warn of the dangers: “The process, which involves injecting huge volumes of water mixed with sand and chemicals deep underground to fracture rock formations and release trapped gas, is becoming increasingly controversial, with concerns about possible contamination of underground drinking water supplies alongside revelations of surface water contamination by the wastewater that is a byproduct of drilling.”
Economics in one lesson this Monday. On Monday (May 9), four videos based on Henry Hazlitt’s classic work Economics in One Lesson will be shown in Wichita. The four topics included in Monday’s presentation will be The Curse of Machinery, Disbanding Troops & Bureaucrats, Who’s “Protected” by Tariffs?, and “Parity” Prices. The event is Monday (May 9) at 7:00 pm to 8:30 pm at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. The event’s sponsor is Americans for Prosperity, Kansas. For more information on this event contact John Todd at [email protected] or 316-312-7335, or Susan Estes, AFP Field Director at [email protected] or 316-681-4415.
Voters favor cuts, not tax increases to balance budget. “A survey of Kansas voters conducted on behalf of the Kansas Chamber of Commerce found widespread support for cutting spending rather than raising taxes as the way to balance the Kansas budget. Support was also found for cutting state worker salaries, or reducing the number of state employees.” More at Kansas Chamber finds voters favor cuts, not tax increases to balance budget.
Here’s the Kansas data. “KansasOpenGov.org provides a repository of data about Kansas state and local governments, giving citizens the data they need to hold officials accountable.” More at Kansas OpenGov: Here’s the Kansas data.
Why not school choice in Kansas?WhyNotKansas.com is a website that holds information about the benefits of giving families the freedom of school choice. The site is new this week, and is a project of Kansas Policy Institute and Foundation for Educational Choice. Innovation in school choice programs is common in many states. Kansas, however, still grants the education bureaucracy a monopoly on the use of public dollars in education.
Economics in one lesson this Monday. On Monday (May 9), four videos based on Henry Hazlitt’s classic work Economics in One Lesson will be shown in Wichita. The four topics included in Monday’s presentation will be The Curse of Machinery, Disbanding Troops & Bureaucrats, Who’s “Protected” by Tariffs?, and “Parity” Prices. The event is Monday (May 9) at 7:00 pm to 8:30 pm at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. The event’s sponsor is Americans for Prosperity, Kansas. For more information on this event contact John Todd at [email protected] or 316-312-7335, or Susan Estes, AFP Field Director at [email protected] or 316-681-4415.
Sowell on government intervention. Must government intervene to fix the economy? Politicians face tremendous pressure to be seen as active, writes Thomas Sowell: “It is not politically possible for either the Federal Reserve or the Obama administration to leave the economy alone and let it recover on its own. Both are under pressure to ‘do something.’ If one thing doesn’t work, then they have to try something else. And if that doesn’t work, they have to come up with yet another gimmick. … The idea that the federal government has to step in whenever there is a downturn in the economy is an economic dogma that ignores much of the history of the United States. During the first hundred years of the United States, there was no Federal Reserve. During the first one hundred and fifty years, the federal government did not engage in massive intervention when the economy turned down. No economic downturn in all those years ever lasted as long as the Great Depression of the 1930s, when both the Federal Reserve and the administrations of Hoover and of FDR intervened. The myth that has come down to us says that the government had to intervene when there was mass unemployment in the 1930s. But the hard data show that there was no mass unemployment until after the federal government intervened. Yet, once having intervened, it was politically impossible to stop and let the economy recover on its own. That was the fundamental problem then — and now.”
Salina’s first TIF district. The Salina Journal looks at issues surrounding that city’s first TIF district. Of note: “TIF districts are prevalent in other cities and states. For instance, Manhattan uses TIF districts so much that it no longer considers it an incentive, [Dennis Lauver, president and CEO of the Salina Area Chamber of Commerce] said.”
Charles on energy and stuff. “We are making it cool to use less stuff,” says Charles, Prince of Wales, KG KT GCB OM AK QSO CD SOM PC AdC(P) FRS. Irish documentary film makers Ann McElhinney and Phelim McAleer have a new short film that looks at the activities of England’s Prince Charles as compared to what he wants the rest of us to do. Write the documentariasts: “Prince Charles is the latest to be exposed as an eco-Hypocrite in our short film series. The Prince is coming to the US this week to speak at Georgetown University about ‘sustainability’ so we decided to see just how he lives up to his own standards. We’ve made a short film that exposes just how hypocritical the Prince is as he lives a fabulous, luxury life whilst lecturing the rest of us that we have to live with less. Prince Charles — Hypocrite exposes the double standard that is at the center of so much environmentalism. … He is coming to the US to lecture on sustainability and tells people they must live with less in order to save the planet but tells us we must end our ‘age of convenience.’ He wants to make our lives more inconvenient to save the planet from alleged climate change but the Prince refuses to make any changes in his own life.”
Government and entrepreneurship. From an essay by Dane Stangler titled Entrepreneurship and Government, contained in Back on the Road to Serfdom: The Resurgence of Statism, edited by Thomas E. Woods, Jr.: “The third way in which the state can intrude on entrepreneurship is through distorted incentives: either with misguided regulations or unintended consequences, the government could end up creating the wrong incentives for entrepreneurs. Will Baumol discussed such institutional incentives in a famous article in which he argued. ‘How the entrepreneur acts at a given time and place depends heavily on the rules of the game — the reward structure in the economy — that happen to prevail.’ Problems arise when these rules of the game encourage ‘unproductive’ entrepreneurial behavior. The principal example of such unproductive behavior is rent seeking, which occurs when companies pursue a bigger slick of economic activity by means other than market competition — that is, when they graduate to seeking favors from Washington rather than seeking a competitive edge by means of innovation. A company’s entreaties to government for protective action often indicate a returns curve that has already turned negative.” … While the article mentions “favors from Washington,” we can easily substitute state capitols, city halls, or county courthouses. For example, Wichita’s economic development policy is firmly rooted in the belief that the city can direct entrepreneurial activity with no wrong incentives or ill consequences. Listening to the recent summit of aviation industry leaders with Kansas Governor Sam Brownback, it is apparent that this industry thrives on, and will continue to expect, large doses of incentives and special treatment and favor from government. But is the aviation industry best for the future of Wichita? While government leaders across Kansas pledge not to lose most important industry, we know it can happen (see Detroit). We have to be careful to make sure that our government policies don’t hasten this loss.
If you’ve heard of Ludwig von Mises and wondered why his ideas are important to freedom, here’s a chance to easily and quickly gain understanding of this important thinker and the field of Austrian economics.
Or if you’ve not heard of or read about Mises and Austrian economics, here’s your chance. The Institute for Economic Affairs, a free-market think-tank based in London, has published a short book titled Ludwig von Mises — A Primer. The book is also available to download for free, so you can read it on your computer or Ipad. The book’s author is Eamonn Butler.
Butler (using British English) explains why Mises is important: “Ludwig von Mises was one of the greatest economists and political scientists of the twentieth century. He revolutionised the understanding of money, inflation and recessions; comprehensively refuted the arguments for socialism; and provided a devastating critique of the methodologies of mainstream economics. His contributions to the Austrian School laid the intellectual groundwork for thinkers such as F. A. Hayek, Murray Rothbard and Israel Kirzner.”
The book’s summary gives several points that show why Mises and his ideas are important:
The market system is much more efficient at allocating resources than political elections, where people get the opportunity to vote only every few years and have to choose between packages of disparate policies. Every penny spent by consumers, in countless daily transactions, acts like a vote in a continual ballot, determining how much of each and every good should be produced and drawing production to where it is most urgently required.
Free markets have no natural tendency to monopoly or monopoly prices; on the contrary, they have a powerful tendency towards diversity and differentiation, which bid quality up and prices down. Few cartels and monopolies would ever have come into being had it not been for government and the efforts of those with political power to stifle competition. Monopoly would be at its zenith under socialism, where all production is in state hands.
Policies that are intended to “improve” the market economy may in fact strangle it. Intervention may lead to unwelcome side effects that are then wrongly used to justify further interference, which in turn creates new problems, and so on. Eventually, although the economy still looks capitalist, it ends up being completely controlled by the authorities.
The belief that state institutions can improve on the market by taking what it does and somehow doing it better is a dangerous conceit. In the absence of the profit motive, there is no obvious way of measuring the success of public agencies in delivering their objectives. Incentives for entrepreneurship are weak, and managers are likely to become risk-averse and bureaucratic.
One of the greatest contributions of Mises was explaining that under socialism, the lack of prices and profits lead mean there is no efficient way of allocating resources. Without markets, he said, economic calculation is impossible.
Can anything Think Progress says about the Kochs be believed?Mark Tapscott, Washington Examiner Beltway Confidential: “Almost certainly not, to answer the question posed by the headline above. Here’s the latest example of why. Think Progress is all atwitter about a Nation magazine report concerning the Koch Industries 2010 Election Packet. This dastardly document, according to Think Progress, was “mailed to 50,000 employees instructing them on who to vote for in the 2010 midterm elections.” Curious, I clicked over to the Nation and read the cover letter in the packet. Here’s what it said about how Koch employees should decide for whom to vote: “For most of you, we’ve also enclosed a listing of candidates supported by Koch companies and KOCHPAC, the political action committee for Koch companies. Of course, deciding who to vote for is a decision that is yours and yours alone, based on factors important to you. (emphasis added)” … At RedState, Erick Erickson contrasts the behavior of unions: “Think Progress and Lee Fang love them some unions. And what do unions do? Unions send out fliers encouraging union members to vote for union backed candidates. Hell, unions even get union members to go door to door for candidates and give union dues to candidates — something KOCHPAC cannot do with all employees, just executives. Additionally, unions will often bus employees to the polls and have a poll monitor watch to make sure the union members have voted. Koch Industries does not do that. But here’s where the real intellectual dishonesty or stupidity come in. Lee Fang and Think Progress support card check. They want unions to be able to stand over a business’s employees and find out whether or not the employee has signed a card to unionize and, if not, intimidate and cajole the employee until he does (not that Think Progress or Lee Fang are on record supporting that last bit).” … Lee Fang is apparently assigned full time to digging up dirt on Charles and David Koch, and Fang’s reporting has been found to be unreliable and misinformed.
Kansas governor on first 100 days. In a press release, Kansas Governor Sam Brownback listed some accomplishments of the first 100 days of his administration. Highlights mentioned were: “First Month Commitments” in the Governor’s Road Map for Kansas accomplished, including releasing a Strategic Economic Development Plan and establishing the Office of the Repealer. … Six Executive Reorganization Orders designed to restructure state government to become law on July 1, 2011 to increase efficiency, restructure government, and cut overhead costs. … Numerous Road Map for Kansas goals achieved through bi-partisan-supported legislation signed into law including the “Rural Opportunity Zones” bill, several deregulation bills, two pro-life bills, a voter ID bill, and a workers compensation reform bill. … On challenges ahead, the Governor said: “I am pleased with what we have accomplished in our first 100 days but our state continues to face a multitude of fiscal challenges that need to be addressed. More than 100,000 Kansans are still out of work. This administration will continue to focus on building a pro-growth environment that includes allowing businesses of all sizes to expense their investments and abolishing burdensome regulations to protect Kansans and encourage job creation.”
Freeloaders come in all types. Recently John Stossel had an hour-long special show that focused on freeloaders. The show is now available on the free hulu service by clicking on Stossel: Freeloaders. The freeloaders Stossel profiles are not just panhandlers, although Stossel did work in disguise as a panhandler and discovered he could make over $90 a day — tax free, he added. One segment of the show uncovered farmers who received $50,000 because they were discriminated against by lenders. But — some of these farmers merely grew potted plants or fertilized their lawn to qualify as a farmer. Another reported on homeowners who stopped paying their mortgages on advice of a website. The homeowners and the website operator said there is no moral obligation to pay their mortgage loans. Corporate freeloaders didn’t escape, as General Electric was mentioned as a large recipient of government handouts. And, they won’t pay taxes: “Despite billions in profit, they’ll pay no taxes this year,” reported Stossel. … The severe poverty of American Indian tribes that live on government-managed reservations and living on government handouts is contrasted with a tribe that accepts no handouts and has no casinos. … Stossel covered his own beach house, which was covered by low-cost subsidized federal fund insurance. It suffered losses twice. … Standing in front of the U.S. Capitol, Stossel said “We rich people freeload off you taxpayers all the time, because the over-promisers in there keep churning out special deals for politically-favored groups. And they tend to be rich people, because the rich can afford lobbyists. … Think about how much money we could save if these guys just didn’t pass so many laws that encourage freeloading. But they do, year after year. They micromanage life with subsidies. And the winners are not so much the needy, but people like Bon Jovi, Ted Turner, Maurice Wilder, and — me. So let’s hope for an end to all this freeloading.”
Are taxes the solution? From Bankrupting America: “It’s Tax Day 2011! And while it isn’t the most pleasant thing to think about, it doesn’t sting as bad as when you consider we’re $14 trillion in debt and face a $1.6 trillion deficit. So what got us into this mess? We’ve had an unfortunate habit of spending far more than we can afford — and have been doing it for years. The logical solution is to … well … stop doing that. But some have suggested we should tax our way out of the hole. Beyond the question of whether we should, there’s a more important question: can we?” … The site has an interesting infographic relating to taxes.
The spontaneous society — centralized planning not required. In the following excerpt from Austrian Economics — A PrimerEamonn Butler explains that we don’t need centralized government planning in order to have great human accomplishment. Also, markets process far more information than any central planner could: Many people find it hard to believe that a society or an economy could survive — much less create and distribute wealth in any organised and rational way — without central planning and authority. Hayek has provided the explanation, however: the liberal human society and economy is, he says, an example of a spontaneous order. Just because something is not planned from the centre does not mean that it is wild, unkempt, random and disorderly, he points out. Societies of bees and termites are very orderly, but they are hardly planned. Human language, similarly, was never “invented”, but evolved, and grew and survived because it is useful. … The market and the price system, similarly, was never planned, but evolved as people exchanged different goods. Nor do they need any central command structure to maintain them: they have survived and expanded because they deliver such enormous benefit to us. In other words, there is a great deal of wisdom in these institutions, despite the fact that they have never been consciously designed and planned. The price system, for example, quickly and efficiently steers resources to their highest value uses, without anyone ever having deliberately invented it. The fact that there is no central planning does not mean that it is “unplanned” and irrational. We are all planners, says Hayek, in that we consciously act in order to satisfy our ambitions with the materials and information that are available to us. In the market order there is in fact far more planning taking place, and far more information being used and acted upon, than could ever be achieved by the single mind of any central authority. … In the case of the liberal market order, the rules are principles like the respect for private property and the right to hold or dispose of it, the rejection of violence and coercion, the freedom of people to enter into voluntary contracts, and the honouring of such contractual promises. Astonishingly, a few simple liberal rules such as these are sufficient to create what Rothbard calls an “awe-inspiring” harmony and co-ordination between individuals, and a precise, swift arrangement to guide resources to the greatest possible satisfaction of consumers’ desires.
Some downtown Wichita properties plummet in value. A strategy of Real Development — the “Minnesota Guys” — in Wichita has been to develop and sell floors of downtown office buildings as condominiums. Some of these floors have been foreclosed upon and have come back on the market. Some once carried mortgages of $400,000 or more, meaning that at one point a bank thought they were worth at least that much. But now four floors in the Broadway Plaza Building, three floors of the Petroleum Building, two floors of Sutton Place, and one floor of the Orpheum Office Center are available for sale at prices not much over $100,000, ranging from $14 to $25 per square foot. Other downtown office buildings — very plain properties — are listed at much higher prices. For example, one downtown property is listed at $82 per square foot. … Some of these floors have had declining appraisals. According to the Sedgwick County Treasurer, the fifth floor of Sutton Place, which is listed for sale at $135,000, was appraised in 2008 for $530,900. In 2009 the appraised value dropped to $215,000.
Kansas Days. The primary news made at this year’s Kansas Days gathering was the election of Todd Tiahrt to replace Mike Pompeo as national committeeman. Otherwise, there was a large turnout in Topeka with many receptions and meals that provided opportunities to meet officeholders and new friends, and to reacquaint with old friends from across the state. Plus, I got to sample the “Brownback” beer. It’s pretty good.
Williams named to national economic development committee.From Wichita Business Journal: “Wichita City Council member Lavonta Williams has been named to a National League of Cities steering committee on Community and Economic Development Policy and Advocacy.” Undoubtedly for her unfailing support of any form of corporate welfare that comes before the Wichita City Council.
Mises University this summer. If you’re a college student and would like to receive instruction in Austrian Economics — “a rigorous and logical approach to economics that gives free markets their due and takes full account of the reality of human choice” — I suggest applying to the Ludwig von Mises Institute to attend Mises University this summer. I attended as a member observer in 2007, and it was a wonderful and very intense week. For more information, click on Mises University 2011. Scholarships are available.
A Rosa Parks moment for education.Kevin Huffman in the Washington Post: “Last week, 40-year-old Ohio mother Kelley Williams-Bolar was released after serving nine days in jail on a felony conviction for tampering with records. Williams-Bolar’s offense? Lying about her address so her two daughters, zoned to the lousy Akron city schools, could attend better schools in the neighboring Copley-Fairlawn district. … In this country, if you are middle or upper class, you have school choice. You can, and probably do, choose your home based on the quality of local schools. Or you can opt out of the system by scraping together the funds for a parochial school. But if you are poor, you’re out of luck, subject to the generally anti-choice bureaucracy.” Kansas has no school choice programs to speak of, and so far Kansas Governor Sam Brownback has not expressed advocacy for school choice.
The state against blacks. The Wall Street Journal’s Jason L. Riley interviews economist Walter E. Williams on the occasion of the publication of his most recent book Up from the Projects: An Autobiography. The reason for the article’s title: “‘The welfare state has done to black Americans what slavery couldn’t do, what Jim Crow couldn’t do, what the harshest racism couldn’t do,’ Mr. Williams says. ‘And that is to destroy the black family.'” … On economics and why it is important, Riley writes: “Over the decades, Mr. Williams’s writings have sought to highlight ‘the moral superiority of individual liberty and free markets,’ as he puts it. ‘I try to write so that economics is understandable to the ordinary person without an economics background.’ His motivation? ‘I think it’s important for people to understand the ideas of scarcity and decision-making in everyday life so that they won’t be ripped off by politicians,’ he says. ‘Politicians exploit economic illiteracy.'” … On the current state of politics: “Mr. Williams says he hopes that the tea party has staying power, but ‘liberty and limited government is the unusual state of human affairs. The normal state throughout mankind’s history is for him to be subject to arbitrary abuse and control by government..”
Professor Cornpone.From The Wall Street Journal Review & Outlook: “The last time these columns were lambasted by a presidential candidate in Iowa, he was Democrat Richard Gephardt and the year was 1988. The Missouri populist won the state caucuses in part on the rallying cry that ‘we’ve got to stop listening to the editorial writers and the establishment,’ especially about ethanol and trade. Imagine our amusement to find Republican Newt Gingrich joining such company. The former Speaker blew through Des Moines last Tuesday for the Renewable Fuels Association summit, and his keynote speech to the ethanol lobby was as pious a tribute to the fuel made from corn and tax dollars as we’ve ever heard. Mr. Gingrich explained that ‘the big-city attacks’ on ethanol subsidies are really attempts to deny prosperity to rural America … Yet today this now-mature industry enjoys far more than cash handouts, including tariffs on foreign competitors and a mandate to buy its product. Supporters are always inventing new reasons for these dispensations, like carbon benefits (nonexistent, according to the greens and most scientific evidence) and replacing foreign oil (imports are up). … Given that Mr. Gingrich aspires to be President, his ethanol lobbying raises larger questions about his convictions and judgment.” Another advocate for the ethanol boondoggle, and perhaps again a presidential candidate, is Kansas Governor Sam Brownback.
Politics and city managers to be topic. This Friday (February 4) the Wichita Pachyderm Club features as its speaker H. Edward Flentje, Professor at the Hugo Wall School of Urban and Public Affairs, Wichita State University. His topic will be “The Political Roots of City Managers in Kansas.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.
Wednesdays in Wiedemann this week. Wednesday (February 2) Wichita State University’s Lynne Davis presents an organ recital as part of the “Wednesdays in Wiedemann” series. These recitals, which have no admission charge, start at 5:30 pm and last about 30 minutes. The location is Wiedemann Recital Hall (map) on the campus of Wichita State University. For more about Davis and WSU’s Great Marcussen Organ, see my story from earlier this year.
Government bird chirping.American Majority’s Beka Romm wonders about the wisdom of a mayor’s plan to broadcast bird songs on the city’s streets, and how we can decide whether government should be doing things like this.
Tax increment financing. “Largely because it promises something for nothing — an economic stimulus in exchange for tax revenue that otherwise would not materialize — this tool [tax increment financing] is becoming increasingly popular across the country. … ‘TIFs are being pushed out there right now based upon the but for test,’ says Greg LeRoy. ‘What cities are saying is that no development would take place but for the TIF. … The average public official says this is free money, because it wouldn’t happen otherwise. But when you see how it plays out, the whole premise of TIFs begins to crumble.’ Rather than spurring development, LeRoy argues, TIFs ‘move some economic development from one part of a city to another.’ … In Wichita, those who invest in TIF districts and receive other forms of subsidy through relief from taxes are praised as courageous investors who are taking a huge risk by believing in the future of Wichita. Instead, we should be asking why we have to bribe people to invest in Wichita. Much more on tax increment financing at Giving Away the Store to Get a Store: Tax increment financing is no bargain for taxpayers from Reason Magazine.
Lessons for the Young Economist. The Ludwig von Mises Institute has published a book by Robert_P._Murphy titled Lessons for the Young Economist. Of the book, the Mises Institute says “It is easily the best introduction to economics for the young reader — because it covers both pure economic theory and also how markets work (the domain of most introductory books).” From my reading of samples of the book, I would agree, and also add that readers of all ages can enjoy and learn from this book. The book is available for purchase, or as is the case with many of the works the Institute publishes, it is also available to download in pdf form at no charge. Click on Lessons for the Young Economist.
The worst Congress. While liberals praise the 111th Congress as one of the most productive ever, not all agree. The Washington Examinerreprises some of the worst moments of this Congress, and concludes: “Our Founding Fathers were always wary of those who wanted government to do lots of big things. That’s why they created a system that separated powers among three more or less equal branches and provided each of them with powerful checks and balances. When professional politicians become frustrated with Congress, it is a sign that our system is working as intended. Columbia University historian Alan Brinkley told Bloomberg News recently that ‘this is probably the most productive session of Congress since at least the ’60s.’ When Congress votes on bills that no one reads or understands, it can be quite ‘productive.’ Americans have already rendered a verdict on such productivity and elected a new Congress with orders to clean up the mess in Washington.”
China has seen the future, and it is coal.George Will in The Washington Post: “Cowlitz County in Washington state is across the Columbia River from Portland, Ore., which promotes mass transit and urban density and is a green reproach to the rest of us. Recently, Cowlitz did something that might make Portland wonder whether shrinking its carbon footprint matters. Cowlitz approved construction of a coal export terminal from which millions of tons of U.S. coal could be shipped to Asia annually. Both Oregon and Washington are curtailing the coal-fired generation of electricity, but the future looks to greens as black as coal. The future looks a lot like the past.” Will goes on to explain how it is less expensive for coastal Chinese cities to import American and Australian coal rather than to transport it from its inland region. China uses a lot of coal, and that is expected to increase rapidly. The growth of greenhouse gas emissions in China trumps — by far — anything we can do in American do reduce them, even if we were to destroy our economy in doing so.
Personally, I find the book difficult to read. An example of Hayek’s writing is from the jacket notes prepared by the author himself: “The economic freedom which is the prerequisite of any other freedom cannot be the freedom from economic care which the socialists promise us and which can be obtained only by relieving the individual at the same time of the necessity and of the power of choice: it must be the freedom of economic activity which, with the right of choice, inevitably also carries the risk and the responsibility of that right.”
Someone else might have written: “A socialist government that provides for our needs doesn’t make us free. Freedom, both economic and political, comes from having choices and the power to exercise them. With that comes responsibility and risk.”
(Hayek’s realization of the importance of economic freedom is one of the reasons why I named my analysis of votes of the Kansas Legislature the Kansas Economic Freedom Index.)
This week George Mason University’s Russell Roberts wrote about The Road to Serfdom in the pages of the Wall Street Journal. The article, titled Why Friedrich Hayek Is Making a Comeback and available only to subscribers, lists four of Hayek’s important ideas:
First, “[Hayek] and fellow Austrian School economists such as Ludwig Von Mises argued that the economy is more complicated than the simple Keynesian story.”
Second, Hayek recognized the Federal Reserve’s control of monetary policy as a factor in the business cycle. Applied to current events, Roberts writes: “Former Fed Chairman Alan Greenspan’s artificially low rates of 2002-2004 played a crucial role in inflating the housing bubble and distorting other investment decisions. Current monetary policy postpones the adjustments needed to heal the housing market.”
Third, “political freedom and economic freedom are inextricably intertwined. In a centrally planned economy, the state inevitably infringes on what we do, what we enjoy, and where we live.”
Fourth, “order can emerge not just from the top down but from the bottom up. … Hayek understood that the opposite of top-down collectivism was not selfishness and egotism. A free modern society is all about cooperation. We join with others to produce the goods and services we enjoy, all without top-down direction. The same is true in every sphere of activity that makes life meaningful — when we sing and when we dance, when we play and when we pray. Leaving us free to join with others as we see fit — in our work and in our play — is the road to true and lasting prosperity. Hayek gave us that map.”
In Wichita, we see the importance of economic freedom ignored — trampled upon, I might say — on a regular basis as the City of Wichita seeks to direct economic development in our town from city hall. We are entering an especially dangerous period, as the master plan for the revitalization of downtown Wichita will soon be in place. This form of centralized planning by government is precisely what Hayek warns against.
Why Friedrich Hayek Is Making a Comeback
With the failure of Keynesian stimulus, the late Austrian economist’s ideas on state power and crony capitalism are getting a new hearing.
By Russ Roberts
He was born in the 19th century, wrote his most influential book more than 65 years ago, and he’s not quite as well known or beloved as the sexy Mexican actress who shares his last name. Yet somehow, Friedrich Hayek is on the rise.
When Glenn Beck recently explored Hayek’s classic, “The Road to Serfdom,” on his TV show, the book went to No. 1 on Amazon and remains in the top 10. Hayek’s persona co-starred with his old sparring partner John Maynard Keynes in a rap video “Fear the Boom and Bust” that has been viewed over 1.4 million times on YouTube and subtitled in 10 languages.
Why the sudden interest in the ideas of a Vienna-born, Nobel Prize-winning economist largely forgotten by mainstream economists?
If you’ve heard of Ludwig von Mises and wondered why his ideas are important to freedom, here’s a chance to easily and quickly gain understanding of this important thinker and the field of Austrian economics.
Butler explains why Mises is important: “Ludwig von Mises was one of the greatest economists and political scientists of the twentieth century. He revolutionised the understanding of money, inflation and recessions; comprehensively refuted the arguments for socialism; and provided a devastating critique of the methodologies of mainstream economics. His contributions to the Austrian School laid the intellectual groundwork for thinkers such as F. A. Hayek, Murray Rothbard and Israel Kirzner.”
The book’s summary gives several points that show why Mises and his ideas are important:
The market system is much more efficient at allocating resources than political elections, where people get the opportunity to vote only every few years and have to choose between packages of disparate policies. Every penny spent by consumers, in countless daily transactions, acts like a vote in a continual ballot, determining how much of each and every good should be produced and drawing production to where it is most urgently required.
Free markets have no natural tendency to monopoly or monopoly prices; on the contrary, they have a powerful tendency towards diversity and differentiation, which bid quality up and prices down. Few cartels and monopolies would ever have come into being had it not been for government and the efforts of those with political power to stifle competition. Monopoly would be at its zenith under socialism, where all production is in state hands.
Policies that are intended to “improve” the market economy may in fact strangle it. Intervention may lead to unwelcome side effects that are then wrongly used to justify further interference, which in turn creates new problems, and so on. Eventually, although the economy still looks capitalist, it ends up being completely controlled by the authorities.
The belief that state institutions can improve on the market by taking what it does and somehow doing it better is a dangerous conceit. In the absence of the profit motive, there is no obvious way of measuring the success of public agencies in delivering their objectives. Incentives for entrepreneurship are weak, and managers are likely to become risk-averse and bureaucratic.
One of the greatest contributions of Mises was explaining that under socialism, the lack of prices and profits lead mean there is no efficient way of allocating resources. Without markets, he said, economic calculation is impossible.
What kind of man was Ludwig von Mises? As this unique film shows, Mises (1881-1973) was a man who never stopped fighting for freedom: not when the Nazis burned his books, not when the Left blackballed him at universities, not when it seemed as if statism had won. With courage and genius, he fought big government until the day he died … in 25 books, hundreds of articles, and more than 60 years of teaching.
Mises’s battles against Communists, Nazis, and other socialists, are featured in this film, as are his ideas of Liberty.
Among his many accomplishments, Mises showed that socialism had to fail, that central banking causes recessions and depressions, that the gold standard is honest money, and that only laissez-faire capitalism is fully compatible with Western civilization.
Mises was the twentieth century’s foremost economist, and one of its most important champions of Liberty. Here is a film that does justice to this extraordinary man, and to his equally extraordinary ideas.
There’s a video concerning some obscure but vitally important ideas in economics that’s getting a lot of play on YouTube. Titled “Fear the Boom and Bust” a Hayek vs. Keynes Rap Anthem, the video tells the story about two competing theories of how the world works — the theories of John Maynard Keynes and Friedrich A. Hayek. The ideas of Keynes have been vastly more popular in mainstream economics and politics and are embraced by President Obama and his advisors. This, of course, doesn’t necessarily mean that Keynes and his followers are correct.
A hearty word of congratulations to Russ Roberts and John Papola for putting all this together and providing a fantastic example of how economics can be communicated to every person. It was Mises’s own view that economics should not be relegated to the classrooms but should be part of the study of every citizen. Roberts and Papola have taken his injunction very seriously and done something wonderful for Hayek, for Austrian ideas, for economics in general, and for the intellectual progress of the world.
The presentation manages to squeeze in one of my favorite quotes of Hayek: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”
The theories of Austrian economists such as Ludwig von Mises, Hayek, and Murray N. Rothbard are becoming more popular as their theories offer explanatory power that Keynesian theories can’t match. Here in Wichita, Austrian ideas were recently advanced to explain the nature of the unemployment in Wichita and what might lie ahead. Malcolm Harris, Professor of Finance at Friends University in Wichita, who blogs at Mammon Among Friends, appeared last Friday on the KPTS television public affairs program Kansas Week and presented an explanation of our current woes based on Austrian principles.
Harris said that today we have a “different kind of unemployment.” He explained that credit plays a crucial role in the business cycle, something that he said we don’t hear much about today: “An overexpansion of credit causes an overexpansion of activities that cause real trouble.” Cessna, he said built many airplanes in 2007 and 2008 because there was such a credit bubble, and Cessna produced planes to meet the demand the bubble generated.
But now the bubble is over and demand has fallen. This type of unemployment, Harris said, doesn’t get solved by a stimulus package. He said this is “Austrian” unemployment, because it was the Austrian economist Hayek who explained the importance of credit in the business cycle.
Events over the last year have placed our nation’s monetary system in focus. Or, at least it should be in sharp focus, as U.S. monetary policy and the Federal Reserve System bear much responsibility for the financial crisis and the accompanying recession. Few politicians, Ron Paul being one, are looking in the right places for the cause of the problem. His campaign to audit the Fed is a good first step.
The problems with our system of money have been known for many years. This video, dating from 1996, produced by the Ludwig von Mises Institute, explains the problem and its history. It’s 42 minutes long and well worth the time. Here’s more information from the Mises Institute:
Thomas Jefferson and Andrew Jackson understood “The Monster”. But to most Americans today, Federal Reserve is just a name on the dollar bill. They have no idea of what the central bank does to the economy, or to their own economic lives; of how and why it was founded and operates; or of the sound money and banking that could end the statism, inflation, and business cycles that the Fed generates.
Dedicated to Murray N. Rothbard, steeped in American history and Austrian economics, and featuring Ron Paul, Joseph Salerno, Hans Hoppe, and Lew Rockwell, this extraordinary new film is the clearest, most compelling explanation ever offered of the Fed, and why curbing it must be our first priority.
Alan Greenspan is not, we’re told, happy about this 42-minute blockbuster. Watch it, and you’ll understand why. This is economics and history as they are meant to be: fascinating, informative, and motivating. This movie could change America.
What kind of man was Ludwig von Mises? As this unique film shows, Mises (1881-1973) was a man who never stopped fighting for freedom: not when the Nazis burned his books, not when the Left blackballed him at universities, not when it seemed as if statism had won. With courage and genius, he fought big government until the day he died … in 25 books, hundreds of articles, and more than 60 years of teaching.
Mises’s battles against Communists, Nazis, and other socialists, are featured in this film, as are his ideas of Liberty.
Among his many accomplishments, Mises showed that socialism had to fail, that central banking causes recessions and depressions, that the gold standard is honest money, and that only laissez-faire capitalism is fully compatible with Western civilization.
Mises was the twentieth century’s foremost economist, and one of its most important champions of Liberty. Here is a film that does justice to this extraordinary man, and to his equally extraordinary ideas.
Economist Walter E. Williams explains the causes of the housing crisis. Then, why would we let these same people who caused the housing crisis take charge of health care? Short and worthwhile viewing.
Obama’s volunteer corps, Kansas cigarette taxes, U.S. Auto industry, Austrian economics
The Rise of ObamaCorps (Americans for Limited Government) “Unless the Blue Dogs can muster enough support to halt Speaker Pelosi’s march to madness, the American taxpayer will have to pony up another $5 billion for paid ‘volunteers’ (an oxymoron if there ever was one) to politically-oriented organizations, the aims of many of which they will invariably oppose.”
Study documents historic trend of decreased state tax revenues following cigarette tax increases “This study clearly shows that raising cigarette taxes simply drives Kansas consumers to other states to purchase tobacco products,” said AFP-Kansas state director Derrick Sontag. “It clearly results in lower cigarette tax revenues, not because more people are quitting, but because people go elsewhere to avoid paying those higher per-pack taxes. … We hope this document will show to lawmakers that raising cigarette taxes is an ineffective deterrent to smoking and that it is simply unwise to fund government programs with revenue that is likely to dwindle once the new tax takes effect.”
Detroit’s Fate Sealed in West Wing (Wall Street Journal) Describes President Obama and his team’s involvement in the remaking of General Motors. “Mr. Rattner broke the news to [General Motors CEO] Mr. Wagoner at his office at the Treasury, according to an administration official. Afterward, Mr. Rattner met with Mr. Henderson, and told him he would take over as GM’s CEO.” The president plans to put some of his own staff into the auto companies. We can be sure that as the president and his team assert more control over GM and Chrysler, Congress will want to get in on the act too.
The Obama Autoworks: At GM and Chrysler, politics is now Job One (Wall Street Journal) More analysis of just how bad things are likely to get now that the American automobile industry — at least GM and Chrysler — is on the road to nationalization. “Bankruptcy or not, the larger problem here is Washington’s industrial policy. Even if Chrysler merges and GM restructures, Mr. Obama wants the companies to make the kind of cars the political class favors, whether or not consumers want to buy them. ‘The United States of America will lead the world in building the next generation of clean cars,’ the President said yesterday. He didn’t mention a goal of profitability. … Mr. Obama’s industrial policy vision runs directly counter to a strategy that would get the companies back to profitability as soon as possible. … All of which is to say that the taxpayer commitment to the Obama autoworks is only getting started.”
Austrians Can Explain the Boom and the Bust (Robert P. Murphy at the Ludwig von Mises Institute) An Austrian explanation of the recent boom and bust cycle, including the Austrian model of the structure of capital. Interest rates, as it turns out, are very important.
