Blogroll: Mises Institute

Capitalism, defined as a form of social organization in which there are means of production such as private property and wage labor, is not the moral principle upon which liberalism is based. The reason for this is that there are nonliberal scenarios that capitalism, as a moral principle, allows for—for example: slavery, sexism, racism, and various forms of violence.

However, semantic compatibility does not imply a causal relationship between such variables. In this brief text, I will explain why certain anticapitalist arguments have fallacious inferences, showing the semantic relationships between different concepts that constitute the political economy and other similar disciplines.

Fallacious Inferences and False Statements

Sound arguments are those that contain only true statements and valid inferences. On the other hand, fallacious arguments are those that, regardless of the truth value of their statements, have invalid inferences. An example of such a scenario is as follows:

Premise 1: All married people are not single.

Premise 2: No single person is married.

Conclusion: Socialism is a form of social organization.

In this example, all the statements are analytical and, therefore, true. However, the conclusion is an invalid inference since its meaning is not contained in the meaning of the premises. Although both its premises and its conclusion are true statements, it is not a sound argument as it contains an invalid inference.

The definitions previously used do not indicate the impossibility of valid arguments about causal relationships. Valid arguments about causal relationships can exist if their premises indicate the existence of a certain causal relationship and if their conclusions are inferences whose meaning is contained within the meaning of their premises. An example of this would be:

Premise 1: All types of A are a necessary cause of B.

Premise 2: X is a type of A.

Conclusion: X is a necessary cause of B.

Therefore, it is indeed possible for valid arguments to exist concerning causal relationships. Some arguments with invalid inferences can become valid when one or more premises are added to them. As will be demonstrated in the following sections, many fallacious arguments exhibit structures in which conclusions are erroneously regarded as necessary or sufficient causes, even if their premises and conclusions are contradictory.

Some Fallacious Arguments against Capitalism

As explained in the previous section, fallacious arguments can contain true premises or conclusions. The use of certain technical terms or complex mathematical operations does not mean that a certain argument is sound or, at the very least, valid. Here are some examples of fallacious arguments:

• From its inception, capitalism was riddled with racism, sexism, and slavery. Therefore, as long as there is capitalism, racism, sexism, and slavery will always exist.
• The socially necessary labor time required for the production of a particular commodity determines its exchange value. Capitalists appropriate a portion of the value created by their workers. Therefore, capitalists are stealing from their workers.
• There are poor countries that are capitalist. Therefore, free markets do not serve to alleviate poverty.

Is Capitalism a Form of Theft?

As mentioned at the outset, the definition of capitalism used here is compatible with slavery and violence. However, this does not mean that it is the only possible scenario. Semantically, there can be situations in which different individuals, in the absence of coercion and violence, enter into agreements for specific services at predetermined prices within defined timeframes.

Only if such an agreement is breached would the employer be stealing from the employee through such an employment relationship. An example of this scenario would be if there is a labor contract between individual A and individual B that establishes the payment of $200 per day for the provision of a specific service for five hours. Then, individual A does not provide that amount of money to individual B because he wants individual A to work another two hours despite individual A fulfilling all the agreed conditions. Otherwise, given the definitions used here, if the agreed-upon conditions of such a labor relationship are not violated, it is fallacious to infer that the employer is stealing from the worker.

If a state imposes limits on the contractual freedom of the individuals it governs, noncompliance with such limits does not mean that the employer is stealing from the employee. If a set of labor regulations is imposed, such as a minimum wage for hourly wage labor or mandatory severance pay, and such regulations are not part of the labor agreement, the noncompliance with these regulations does not mean employer theft from the employee.

Furthermore, even if it is assumed that the exchange value of a commodity is determined by the socially necessary labor time for its production, the existence of profits in a business activity does not mean that the employer is stealing from their employees. In a labor relationship where the agreement was to pay the employee thirty dollars and the employer pays the employee that amount, the profit margin does not determine whether such a social interaction was theft or not. Even in the absence of risk and opportunity costs, the accrual of profits would not constitute theft by the employer from the employees.

Free Market Capitalism and Business Freedom

Capitalism and free markets are two different concepts. There can be a region where, in the absence of state coercion or violence, only cooperatives exist. On the other hand, there can be a region where only capitalist enterprises exist, and due to the presence of certain interventionist economic policies, it may not be possible to buy or sell certain goods/services, set certain prices, or establish penalties for noncompliance with commercial contract terms.

Furthermore, a free market does not necessarily mean business freedom. This is because the free market refers to the absence of state restrictions on the exchange of property rights over monetary and nonmonetary assets, whereas business freedom refers to the absence of state restrictions on production, consumption, or property exchange activities carried out by a business. Therefore, a broader category than business freedom would be economic freedom, which encompasses not only businesses but also other types of individual behavior—for example, the freedom to cultivate a specific plant, regardless of whether it is for personal consumption or commercial purposes. In the presence of economic freedom, there are no price controls, monopolies through state coercion, or import quotas.

Lastly, the fact that country A has undergone a greater economic liberalization process than country B does not mean that country A possesses greater economic freedom. A country may eliminate more price controls than another during a specific period of time and still have a greater number of price controls, not to mention the existence of other interventionist economic policies.

Capitalism and Social Problems

Even if capitalism were to result in poverty, violence, sexism, racism, and environmental problems, this does not mean that this mode of social organization is the sole cause of such phenomena. Moreover, the fact that a certain form of capitalism generates certain outcomes does not imply that all semantically possible forms of capitalism will have the same consequences.

A bedrock of Austrian economic thinking is the notion of causality. A libertarian worldview also requires the understanding of causality.

Original Article: Libertarianism and the Importance of Understanding Causality

Many people believe that a general increase in stock prices is an important factor in economic growth. However, this is a questionable observation.

The view that the stock market drives economic growth originates from the observation that changes in stock prices precede changes in economic data. We suggest that various economic indicators are heavily influenced by money supply, which also drives stock prices.

The price of something is the amount of money asked for per unit. When an increased money supply enters a market, more money is being paid for those goods, which means the prices of those goods have increased. Furthermore, when money is increasing in supply, it does not move instantly to all markets. Instead, it moves from one market to another with time lags. Furthermore, the time lag for changes in stock prices is shorter than the time lag from changes in money supply and economic activity.

Consequently, after a time delay, the effect from changes in money supply is manifested first in the changes of stock prices even before changes in economic activity emerge.

Therefore, given that situation, the common belief is that the stock market drives the economy. If, however, the money time lag were shorter with respect to economic activity versus the stock prices, then one would have concluded that the economy drives the stock market, not the other way around.

Clearly, observing is not explaining. Despite the observation that stock market changes lead changes in the economy does not mean that the stock market drives economic activity.

Can a rise in investors’ optimism because of stock price increases cause a further strengthening of stock prices? In the absence of increases in the money supply, an increase in stock prices will divert money from other assets, thus pushing the other asset prices’ momentum lower.

Could an increase in stock prices facilitate the strengthening of the economy? For this to occur, increases in the stock prices must cause an expansion in the economy’s capital infrastructure, which would enable the increase in the production of goods and services. According to Ludwig von Mises in his book Human Action, “Stock speculation cannot undo past action and cannot change anything with regard to the limited convertibility of capital goods in existence.”

Hence, when experts claim that a particular factor is important in lifting economic growth, one must examine that factor’s relation to the pool of savings. Does the factor provide support or undermine savings? Following this reasoning, we can suggest that a rising stock market does not expand the pool of savings and, therefore, cannot generate positive economic growth.

What about the view that a stronger stock market makes individuals more optimistic about the future? This in turn, it is believed, strengthens the demand for goods and services and strengthens economic growth.

It is not individuals’ psychological disposition that determines whether their demand can be fulfilled, but whether they possess an adequate quantity of means. Someone can be very optimistic about the future, but without enough means, he cannot obtain the goods he desires. Improved psychology does very little to lift economic growth without the support of savings.

Furthermore, central bank monetary policies undermine the pool of savings which, in turn, will undermine wealth generation and real economic growth. Notwithstanding the popular view that increasing the money supply accelerates economic growth, money by itself cannot do this. More money cannot replace savings and anything that depletes savings undermines economic growth.

According to Richard von Strigl in his book Capital and Production,

Let us assume that in some country production must be completely rebuilt. The only factors of production available to the population besides laborers are those factors of production provided by nature. Now, if production is to be carried out by a roundabout method, let us assume of one year’s duration, then it is self-evident that production can only begin if, in addition to these originary factors of production, a subsistence fund is available to the population which will secure their nourishment and any other needs for a period of one year. . . . The greater this fund, the longer is the roundabout factor of production that can be undertaken, and the greater the output will be. It is clear that under these conditions the “correct” length of the roundabout method of production is determined by the size of the subsistence fund or the period of time for which this fund suffices.

Increase in the Money-Driven Stock Prices and Wealth

Some economists believe that an increase in stock market prices due to easy money policies increases wealth. This increase in wealth then helps boost overall spending in the economy which, in turn, supposedly expands overall production of goods and services.

However, increases in stock market prices because of easy monetary policies cannot boost the overall wealth in the economy. On the contrary, the easy monetary policy weakens the process of wealth generation by depleting the pool of savings. When these policies increase the money supply, they set in motion an exchange of nothing for something, savings from wealth generators to non-wealth-generating activities.

Central Bank Policies Cause Investors to Commit Erroneous Decisions

Historically, the market selected money such as gold, and in the absence of central banks, an increase in stock market prices will reflect the increase of the pool of savings and lead to economic growth. Note, however, that the increase in economic growth is not because of higher stock market prices but because of the growth in savings.

This is not the situation regarding the present surge in stock prices. The emergence of the bull-bear markets within the present monetary system is in response to the central bank monetary policies that set the menace of the boom-bust cycles. Any monetary policy, whether easy or tight, is bad news for the process of savings generation. Central bank policies inhibit the investor’s ability to distinguish wealth-generating activities from non–wealth generators, creating financial bubbles and resulting in erroneous investment decisions.

By being unable to identify genuine wealth generators, investors become gamblers with the stock market as a casino. Theories such as the efficient market hypothesis argue that it is futile for investors to attempt to identify wealth generators versus non–wealth generators. In fact, Burton Malkiel, one of the pioneers of the efficient market hypothesis, has even suggested, “A blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by the expert.”

Conclusions

Popular thinking claims that a rising stock market increases economic growth, something that is questionable. Without improvement in the capital infrastructure irrespective of the state of the stock market, it is not possible to strengthen the economy.

The disruptive fluctuations of the stock market labeled as the bull-bear markets are the result of the monetary policies of the central bank. These policies undermine the process of savings generation and turn the stock market into something resembling a gambling casino.

Not only is Washington in political turmoil, but the policies emanating from the Beltway are more incoherent than ever.

Original Article: Preserving the Statist Quo: Creating a Generation of Welfare-ing, Libertine Narcissists

Why is Israel a primary benefactor of United States foreign aid? Is Israel a proxy for US imperialism in the Middle East? Does American aid to Israel benefit constituencies other than the defense industry? The ongoing feud between Israel and Palestine has raised these questions to the forefront of public debate. Israel is the leading recipient of American foreign aid, despite its wealth. In 2022, The Economist ranked Israel as the fourth most successful economy in the Organisation for Economic Co-operation and Development.

A prosperous country such as Israel should hardly be a contender for America’s benevolence; hence, America’s commitment to sponsoring Israel strikes people as odd. However, some observe that Israel plays a critical role in bolstering American hegemony in the Middle East by curbing the extremities of Islamic movements. Like earlier European imperialists, who recognized the strategic value of Palestine as a trade route linking Europe to the Far East, commentators opine that America’s aid to Israel is motivated by economics and geopolitics.

The Middle East is a key reservoir of energy resources and contains trade routes of global importance. Therefore, America uses Israel as a watchdog to safeguard its interests in the region. Empowering Israel to act as a deterrent to Arab radicalism enables America to exert greater influence in the Middle East by weakening the Arab states. Scholars think that Israel’s strength protects friendly Arab states, thereby ensuring easier access to oil from the Middle East. However, in a powerful critique, Elizabeth Stephens undercuts the argument that America funds Israel for strategic purposes.

Stephens explains that despite US-Israeli cooperation during the 1970 Jordan crisis, America is aware that collaborations with Israel can adversely affect America’s relations with amicable Arab states. As a result, America refrained from using Israeli troops in conflicts with Arab states, as was demonstrated during the 1990–91 Gulf War. Citing government reports, she highlights deficits in the economic argument for supporting Israel by concluding that such sponsorship poses a financial liability to America.

Stephens identifies domestic politics as the prime factor engendering support for Israel. According to her analysis, the American Jewish lobby and the pro-Israel lobby wield enormous influence on American foreign policy in the Middle East. Although she exclaims that American politicians have not uncritically engaged Israel, the power of lobbyists ensures the consistency of America’s approach to Middle Eastern politics: “As a result of domestic and congressional pressure, a president will generally not be overtly anti-Israel. It is this generally high level of public support for Israel and popular distrust of the Arab states that has set the tone for America’s Middle East policy.”

Noted scholar James Petras reveals that Israel’s relationship with America has conferred the former with unique privileges; therefore, Israel can be described as a lesser power extracting tribute from the American empire. Yet, the image of Israel as a skillful ally is being overturned by intellectuals contending that America has been using foreign aid as a tool of manipulation. Jacob Siegel and Liel Liebovitz complained in a recent article that whereas old rules allowed Israel to allocate 26 percent of aid to the domestic military market, new provisions will eventually require Israel to spend aid in the US.

Quoting figures from Israel, Siegel and Liebovitz purport that the policy change will cost $1.3 billion for Israel, gut twenty-two thousand jobs, and make Israel reliant on American technology. In their view, greater dependence on American technology curtails the ability of Israel to innovate, thus making it susceptible to the machinations of aggressive neighbors. Others posit that foreign aid rules undermine Israel’s autonomy because military transactions with other countries require America’s permission. Fiercer critics believe that foreign aid imperils Israel’s security by enslaving the country to the whims of America.

Caroline B. Glick reminds readers that America and Israel have competing interests, but receiving aid forces the latter to sacrifice national goals to appease America. Using the example of Hezbollah, Glick illustrates that reliance on American aid increases Israel’s vulnerability to extortion:

Consider for instance, the IDF’s support for the U.S.-dictated maritime border agreement with Hezbollah-controlled Lebanon last October. The deal is a strategic disaster for Israel. It gives Hezbollah a share of the Mediterranean gas industry. It limits Israel’s offensive options and maneuver room in a future war with Hezbollah. It threatens Israel’s northern coast from the sea. It presents Israel as a paper tiger who succumbed to Hezbollah extortion.

There is a burgeoning consensus that America should cut aid to Israel. Doing so is a practical policy, but it cannot be achieved without confronting the defense industry. Players in the industry will say that they are crucial to job creation; however, reports show that the defense industry has been shedding jobs even in periods of employment growth. While lobbyists tout the benefits of the defense industry, researchers from Brown University declare that military spending is crippling investments in education, healthcare, and infrastructure. The researchers also indicate that spending in areas such as healthcare, education, and infrastructure would create more jobs. So, evidently, the benefits of military spending are not diffused throughout society.

Addressing issues raised by the current conflict is crucial because people should be dissuaded from believing nonsense. The myth that modern-day Palestinians are indigenous to Palestine is being widely circulated, but it is absurd. Contemporary Palestinians are not the descendants of the Philistines who occupied Gaza, and the Philistines were not indigenous to the region.

Although Palestine has always existed as a place, modern-day Palestinians are the descendants of people who migrated to the region and are not its original inhabitants. Furthermore, the notion of a Palestinian identity is quite recent. When the partition of Palestine was suggested by the Peel Commission in 1937, local leader Auni Bey Abdul-Hadi remarked: “There is no such country as Palestine. Palestine is a term the Zionists invented. . . . Our country was for centuries part of Syria.”

This opinion is even reinforced by the scholarship of mainstream historian Daniel Pipes, who affirms that Palestinian identity emerged in response to Zionism: “Ultimately, Palestinian nationalism originated in Zionism; were it not for the existence of another people who saw British Palestine as their national home, the Arabs would have continued to view this area as a province of Greater Syria.”

The plight of Palestinians is indeed unfortunate, but facts don’t change. Sympathizing with Palestinians is understandable, yet this does not alter the reality that Hamas is a terrorist group known for using its people as human shields to blackball Israel. Propagandists are seizing the present conflict to legitimize lies so we must neutralize their campaigns with facts before the lies become official history.

Since the original sugar tariff of 1789, US government policy has been to subsidize sugar, a policy that has led to serious consequences, including a health crisis of obesity.

Original Article: America the Obese: How Taxpayers Are Forced to Ruin Their Health

Over the weekend, border-policy negotiations between Senate Democrats and Republicans fell apart. The talks were meant to firm up Republican support for the president’s massive $105 billion military support proposal ahead of Wednesday’s vote by including additional funds for border security in the spending package. Now, with no imminent approval of further aid to Ukraine, hawks in government and the media are trying to stoke panic about what will happen if Kyiv is cut off from US support.

In a letter to Congress Monday, White House budget director Shalanda Young told Congress the funds will dry up by the end of the year:

I want to be clear: without congressional action, by the end of the year we will run out of resources to procure more weapons and equipment for Ukraine and to provide equipment from U.S. military stocks. There is no magical pot of funding available to meet this moment. We are out of money—and nearly out of time.

Young goes on to forecast disaster for Ukraine if more money isn’t allocated. But is that really accurate? Are the Ukrainian people doomed if Washington stops funding the war?

If we’re going to understand what might happen in the absence of US involvement in Ukraine, we must first understand Washington’s actual effect on the war, the true nature of which has been laid out brilliantly in a series of recent columns by Ted Snider.

Russia’s invasion of Ukraine began with a bombardment of cruise missiles on February 24, 2022. Later that day, infantry and armored divisions rolled in from Russia, Belarus, and Crimea while paratroopers dropped in around the capital city of Kyiv.

Days later, as the shock and confusion of the initial offensive began to dissipate, Ukrainian president Volodymyr Zelensky attempted to set up indirect talks with Russian president Vladimir Putin. Zelensky called then–Israeli prime minister Naftali Bennett and asked him to contact Putin and to serve as a mediator. Bennett agreed.

Over the next week, Bennett had a series of phone calls with Putin before traveling to Moscow and Berlin to help organize diplomatic communication channels. His effort culminated in a March 10 meeting between the Russian and Ukrainian foreign ministers in Turkey.

In the series of talks that followed, Bennett described both sides as making “huge concessions” in pursuit of a ceasefire.

But Kyiv’s Western backers were resistant to the truce. At a special summit on March 24, NATO decided not to support or approve the peace negotiations. Still, Zelensky and Putin kept at it. And on March 29, the two sides reached an agreement.

According to a draft unsealed this past June, Russia had agreed to pull its forces back to prewar boundaries. In exchange, Ukraine had agreed it would not seek NATO membership.

So why didn’t it happen? Well, it may have started to. In early April, Russia withdrew its forces from northern Ukraine, around Kyiv—an action Putin later said was related to the Istanbul agreement.

But then, according to Bennett, former German chancellor Gerhard Schröder, Turkish foreign minister Mevlüt Çavuşoğlu, and the leader of the Ukrainian delegation to the talks, David Arakhamia, the West pressured Zelensky to abandon negotiations and fight.

Assuming the best intentions, it’s possible officials in Washington and Brussels believed the Ukrainians could win enough battles to improve their leverage in future negotiations. But that is not what happened.

Instead, Washington bankrolled a horrifying twenty-one-month war of attrition that has cost the people of Ukraine greatly in land, lives, and limbs. After talks broke down, Russia laid permanent claim to tens of thousands of square miles of Ukrainian territory that it had earlier agreed to relinquish.

Last summer, Ukrainian forces began attempting to retake this land by force in the so-called counteroffensive. But they have since lost more territory than they have gained. Ukraine keeps its casualty count classified, but by the end of August US estimates had put it north of two hundred thousand. And it has likely climbed substantially with the ongoing struggle to break through heavy Russian minefields.

As their supply of military-aged men has dwindled, the average age of a Ukrainian soldier has climbed to forty-three. And now there is a push within the Ukrainian government to lower the draft age to begin conscripting those who have so far been too young to be eligible.

The Ukrainian people are being put through hell. And now even senior Ukrainian military officials admit there is no military path out.

If the purpose of stifling the Istanbul agreement was to help the Ukrainians gain more leverage, the West must admit failure before Ukraine loses even more.

And if Washington’s intentions were more nefarious—as comments from officials like Mitch McConnell, who have framed the war as an easy way to burden Russia without spilling American blood, suggest—that’s all the more reason to call off this horrific project.

That brings us back to the original question. What would happen if the United States stopped supporting Ukraine? We already know. Ukraine and Russia would work toward a deal. It won’t go as well for Ukraine as it did almost two years ago when they were stronger. But it’s not a path to fear. Because the alternative is that the White House gets its way and this brutal, unnecessary war carries on. And that’s so much worse.

Sen. Elizabeth Warren is at it again: demanding government intervention in the nation's healthcare system to deal with problems caused by earlier government intervention.

Original Article: Progressive Interventionism Is Ruining American Healthcare

Money supply growth fell again in October, remaining deep in negative territory after turning negative in November 2022 for the first time in twenty-eight years. October's drop continues a steep downward trend from the unprecedented highs experienced during much of the past two years.

Since April 2021, money supply growth has slowed quickly, and since November, we've been seeing the money supply repeatedly contract year over year. The last time the year-over-year (YOY) change in the money supply slipped into negative territory was in November 1994. At that time, negative growth continued for fifteen months, finally turning positive again in January 1996. 

Money-supply growth has now been negative for twelve months in a row. During October 2023, the downturn continued as YOY growth in the money supply was at –9.33 percent. That's up slightly from September's rate decline which was of –10.49 percent, and was far below October 2022's rate of 2.14 percent. With negative growth now falling near or below –10 percent for the eighth month in a row, money-supply contraction is the largest we've seen since the Great Depression. Prior to this year, at no other point for at least sixty years has the money supply fallen by more than 6 percent (YoY) in any month. 

The money supply metric used here—the "true," or Rothbard-Salerno, money supply measure (TMS)—is the metric developed by Murray Rothbard and Joseph Salerno, and is designed to provide a better measure of money supply fluctuations than M2. (The Mises Institute now offers regular updates on this metric and its growth.)

In recent months, M2 growth rates have followed a similar course to TMS growth rates, although TMS has fallen faster than M2. In October 2023, the M2 growth rate was –3.35 percent. That's down from September's growth rate of –3.35 percent. October 2023's growth rate was also well down from October 2022's rate of 1.42 percent. 

Money supply growth can often be a helpful measure of economic activity and an indicator of coming recessions. During periods of economic boom, money supply tends to grow quickly as commercial banks make more loans. Recessions, on the other hand, tend to be preceded by slowing rates of money supply growth. 

It should be noted that the money supply does not need to actually contract to signal a recession and the boom-bust cycle. As shown by Ludwig von Mises, recessions are often preceded by a mere slowing in money supply growth. But the drop into negative territory we've seen in recent months does help illustrate just how far and how rapidly money supply growth has fallen. That is generally a red flag for economic growth and employment.

The fact that the money supply is shrinking at all is remarkable because the money supply in modern times almost never gets smaller. The money supply has now fallen by $2.8 trillion (or 13.1 percent) since the peak in April 2022. Proportionally, the drop in money supply since 2022 is the largest fall we've seen since the Depression. (Rothbard estimates that in the lead-up to the Great Depression, the money supply fell by 12 percent from its peak of $73 billion in mid-1929 to $64 billion at the end of 1932.)

In spite of this recent drop in total money supply, the trend in money-supply remains well above what existed during the twenty-year period from 1989 to 2009. To return to this trend, the money supply would have to drop at least another $3 trillion or so—or 15 percent—down to a total below $15 trillion.  Moreover, as of October, total money supply was still up 32 percent (or $4.6 trillion) since January 2020. 

Since 2009, the TMS money supply is now up by nearly 186 percent. (M2 has grown by 141 percent in that period.) Out of the current money supply of $18.9 trillion, $4.6 trillion—or 24 percent—of that has been created since January 2020. Since 2009, $12.2 trillion of the current money supply has been created. In other words, nearly two-thirds of the total existing money supply have been created just in the past thirteen years. 

With these kinds of totals, a ten-percent drop only puts a small dent in the huge edifice of newly created money. The US economy still faces a very large monetary overhang from the past several years, and this is partly why after eighteen months of slowing money-supply growth, we are only now starting to see a slowdown in the labor market. (For example, job openings have fallen 22 percent over the past year, but have not yet returned to pre-covid levels.) The inflationary boom has not yet ended. 

Nonetheless, the monetary slowdown has been sufficient to considerably weaken the economy. The Philadelphia Fed's manufacturing index is in recession territory. The Leading Indicators index keeps looking worse. The yield curve points to recession. Temp jobs were down, year-over-year, which often indicates approaching recession. Default rates are rising. 

Money Supply and Rising Interest Rates

An inflationary boom begins to turn to bust once new injections of money subside, and we are seeing this now. Not surprisingly, the current signs of malaise come after the Federal Reserve finally pulled its foot slightly off the money-creation accelerator after more than a decade of quantitative easing, financial repression, and a general devotion to easy money. As of early December, the Fed has allowed the federal funds rate to rise to 5.50 percent, the highest since 2001. This has meant short-term interest rates overall have risen as well. In October, for example, the yield on 3-month Treasurys reached 5.6 percent, the highest level measured since December 2000. 

Without ongoing access to easy money at near-zero rates, banks are less enthusiastic about making loans, and many marginal companies will no longer be able to stave off financial trouble by refinancing or taking out new loans. Commercial bankruptcy filings increased sizably during 2023, and continue to surge into the last quarter of the year. As reported by Monitor Daily: 

The bankruptcy filing by WeWork in November propelled November commercial Chapter 11 filings to 842, an increase of 141% compared with the 349 filings registered in November 2022, according to data provided by Epiq Bankruptcy.

The case filed by WeWork on Nov. 6 included 517 related filings, according to analysis from the American Bankruptcy Institute, representing the third-most related filings in a case since the U.S. Bankruptcy Code became effective in 1979.

Overall commercial filings increased 21% to 2,252 in November, up from the 1,864 commercial filings registered in November 2022. Small business filings, captured as Subchapter V elections within Chapter 11, increased 79% to 181 in November, up from 101 in November 2022.

There were 37,860 total bankruptcy filings in November, a 21% increase from the November 2022 total of 31,187. Individual bankruptcy filings also registered a 21% year-over-year increase, as the 35,608 in November represented an increase over the 29,323 filings in November 2022. There were 20,250 individual Chapter 7 filings in November, a 23% increase compared with the 16,421 filings recorded in November 2022, and there were 15,280 individual Chapter 13 filings in November, a 19% increase compared with the 12,862 filings last November.

Lending for private consumption is getting more expensive also. In October, the average 30-year mortgage rate rose to 7.62 percent, the highest point reached since November 2000. 

These factors all point toward a bubble that is in the process of popping. The situation is unsustainable, yet the Fed cannot change course without reigniting a new surge in price inflation. Although some professional economists insist that price inflation has all but disappeared, the sentiment on the ground is clearly one in which most workers believe their wages are not keeping up with rising prices. Any surge in prices would be especially problematic given the rising cost of living. Ordinary Americans face a similar problem with home prices. According to the Atlanta Fed, the housing affordability index is now the worst it's been since 2006, in the midst of the Housing Bubble. 

If the Fed reverses course now, and embraces a new flood of new money, prices will only spiral upward. It didn't have to be this way, but ordinary people are now paying the price for a decade of easy money cheered by Wall Street and the profligates in Washington. The only way to put the economy on a more stable long-term path is for the Fed to stop pumping new money into the economy. That means a falling money supply and popping economic bubbles. But it also lays the groundwork for a real economy—i.e., an economy not built on endless bubbles—built by saving and investment rather than spending made possible by artificially low interest rates and easy money. 

The thirty-year mortgage, of all things, came under attack in a piece by Ben Casselman in the New York Times. The three-decade fixed rate loan is, of course, a creation of the government and adds constant fuel to the US housing market. The title of Casselman’s piece calls the most popular debt instrument for home purchases “weird,” “cushy,” and “old.” He blames low interest rate thirty-year fixed loans for the broken housing market.

Casselman points out that nearly 95 percent of US mortgages have fixed interest rates, and of those, more than three-quarters are for thirty-year terms. Once upon a time, homebuyers could only borrow half the purchase price for a home and that loan would be due in three years. The Federal Housing Association changed all of that in the 1930s.

Casselman writes, “No one set out to make the 30-year mortgage the standard. It is ‘a bit of a historical accident,’ said Andra Ghent, an economist at the University of Utah who has studied the U.S. mortgage market.”

Herbert Hoover would be disappointed hearing that America’s favorite mortgage is an accident. In 1931, with Hoover in office, the President’s Conference on Homebuilding and Home Ownership lobbied intensely for establishing institutions that would be the beginning of government’s direct involvement in mortgage finance: the Federal Home Loan Bank System, the Federal Housing Association, and a number of other federal housing programs.

The Federal Housing Association’s guarantee of mortgages made twenty-year, fully amortizing mortgages possible in the beginning, then twenty-five-year and ultimately thirty-year mortgages. In my book Walk Away, I cite professor Thomas J. Sugrue who wrote that since the 1930s “America has become a nation of homeowners and home-speculators because of Uncle Sam.”

Professor David Howden made the point, during a recent conversation with Jeffrey Barr and me, that a home purchase most often involves two transactions: the purchase of a home (real estate) and the sale of a mortgage or bond to finance the purchase. Going further, I would break a home purchase into three parts: first, the buyer is long the land and entitlements (what Austrians would call a higher-order good); second, the buyer will consume the house (as brick and mortar depreciates); and third, the buyer is short the mortgage.

There is tremendous value in being short a low-coupon mortgage. As interest rates rise the value of the mortgage falls, adding value to the homebuyer’s purchase bundle. With mortgage rates at 7.25 percent, a homeowner’s short position on a 3.5 percent mortgage or bond may be half the face amount of the mortgage. The value is realized with the lower monthly payments. Not to mention the Fed’s money creation inflates the principle away. Why would anyone undue that trade? Unless they had to.

And it gets better. As the New York Times scribe points out, mortgages can be prepaid with no penalty. When rates fall, mortgage companies fight tooth and nail to lower your payments. Or, as we might say, unwind your high coupon mortgage transaction and in turn sell a low-coupon mortgage. Indebted homeowners can have their cake and eat it too.

And it gets better again. “By making it easier to buy, the government-subsidized mortgage system has stimulated demand, but without nearly as much attention on ensuring more supply,” writes Casselman. Yes, if anything, many neighborhood groups and municipal governments are antigrowth. The Feds subsidize demand, while local governments constrict supply. Over time, prices must go up.

What Casselman is bellyaching about is housing being unaffordable. He points his finger at the financially savvy folks who refinanced when the Federal Reserve carried out its zero interest rate policy and bought trillions of dollars’ worth of mortgage-backed securities via quantitative easing. The Fed purchased nearly $3 trillion in mortgage-backed securities just from March 2020 to March 2022. He mentions the central bank only once in his piece, how it is controlling inflation by raising interest rates. As if.

Casselman mentions shorter mortgage terms and variable rates to fix the system. But he understands with $12.5 trillion in outstanding mortgage paper, most of it fixed, the government-created, thirty-year fixed rate mortgage isn’t going anywhere.

To unstick the housing market, make all those existing low, fixed rate loans assumable. Some homeowners will happily sell their well-played short bond position along with the land and house.

[From Economic Policy: Thoughts for Today and Tomorrow (1979), Lecture 2, "Socialism" (1958)]

I am here in Buenos Aires as a guest of the Centro de Difusión Economía Libre.1 What is economía libre? What does this system of economic freedom mean? The answer is simple: it is the market economy, it is the system in which the cooperation of individuals in the social division of labor is achieved by the market. This market is not a place; it is a process, it is the way in which, by selling and buying, by producing and consuming, the individuals contribute to the total workings of society.

In dealing with this system of economic organization—the market economy—we employ the term “economic freedom.” Very often, people misunderstand what it means, believing that economic freedom is something quite apart from other freedoms, and that these other freedoms—which they hold to be more important—can be preserved even in the absence of economic freedom. The meaning of economic freedom is this: that the individual is in a position to choose the way in which he wants to integrate himself into the totality of society. The individual is able to choose his career, he is free to do what he wants to do.

This is of course not meant in any sense which so many people attach to the word freedom today; it is meant rather in the sense that, through economic freedom, man is freed from natural conditions. In nature, there is nothing that can be termed freedom, there is only the regularity of the laws of nature, which man must obey if he wants to attain something.

I.

In using the term freedom as applied to human beings, we think only of freedom within society. Yet, today, social freedoms are considered by many people to be independent of one another. Those who call themselves “liberals” today are asking for policies which are precisely the opposite of those policies which the liberals of the nineteenth century advocated in their liberal programs. The so-called liberals of today have the very popular idea that freedom of speech, of thought, of the press, freedom of religion, freedom from imprisonment without trial—that all these freedoms can be preserved in the absence of what is called economic freedom. They do not realize that, in a system where there is no market, where the government directs everything, all those other freedoms are illusory, even if they are made into laws and written up in constitutions.

Let us take one freedom, the freedom of the press. If the government owns all the printing presses, it will determine what is to be printed and what is not to be printed. And if the government owns all the printing presses and determines what shall or shall not be printed, then the possibility of printing any kind of opposing arguments against the ideas of the government becomes practically nonexistent. Freedom of the press disappears. And it is the same with all the other freedoms.

In a market economy, the individual has the freedom to choose whatever career he wishes to pursue, to choose his own way of integrating himself into society. But in a socialist system, that is not so: his career is decided by decree of the government. The government can order people whom it dislikes, whom it does not want to live in certain regions, to move into other regions and to other places. And the government is always in a position to justify and to explain such procedure by declaring that the governmental plan requires the presence of this eminent citizen five thousand miles away from the place in which he could be disagreeable to those in power.

It is true that the freedom a man may have in a market economy is not a perfect freedom from the metaphysical point of view. But there is no such thing as perfect freedom. Freedom means something only within the framework of society. The eighteenth-century authors of “natural law”—above all, Jean Jacques Rousseau—believed that once, in the remote past, men enjoyed something called “natural” freedom. But in that remote age, individuals were not free, they were at the mercy of everyone who was stronger than they were. The famous words of Rousseau: “Man is born free and everywhere he is in chains” may sound good, but man is in fact not born free. Man is born a very weak suckling. Without the protection of his parents, without the protection given to his parents by society, he would not be able to preserve his life.

Freedom in society means that a man depends as much upon other people as other people depend upon him. Society under the market economy, under the conditions of “economía libre,” means a state of affairs in which everybody serves his fellow citizens and is served by them in return. People believe that there are in the market economy bosses who are independent of the good will and support of other people. They believe that the captains of industry, the businessmen, the entrepreneurs are the real bosses in the economic system. But this is an illusion. The real bosses in the economic system are the consumers. And if the consumers stop patronizing a branch of business, these businessmen are either forced to abandon their eminent position in the economic system or to adjust their actions to the wishes and to the orders of the consumers.

One of the best-known propagators of communism was Lady Passfield, under her maiden name Beatrice Potter, and well-known also through her husband Sidney Webb. This lady was the daughter of a wealthy businessman and, when she was a young adult, she served as her father’s secretary. In her memoirs she writes: “In the business of my father everybody had to obey the orders issued by my father, the boss. He alone had to give orders, but to him nobody gave any orders.” This is a very short-sighted view. Orders were given to her father by the consumers, by the buyers. Unfortunately, she could not see these orders; she could not see what goes on in a market economy, because she was interested only in the orders given within her father’s office or his factory.

In all economic problems, we must bear in mind the words of the great French economist Frédéric Bastiat, who titled one of his brilliant essays: “Ce qu’on voit et ce qu’on ne voit pas” (“That which is seen and that which is not seen”). In order to comprehend the operation of an economic system, we must deal not only with the things that can be seen, but we also have to give our attention to the things which cannot be perceived directly. For instance, an order issued by a boss to an office boy can be heard by everybody who is present in the room. What cannot be heard are the orders given to the boss by his customers.

II.

The fact is that, under the capitalistic system, the ultimate bosses are the consumers. The sovereign is not the state, it is the people. And the proof that they are the sovereign is borne out by the fact that they have the right to be foolish. This is the privilege of the sovereign. He has the right to make mistakes, no one can prevent him from making them, but of course he has to pay for his mistakes. If we say the consumer is supreme or that the consumer is sovereign, we do not say that the consumer is free from faults, that the consumer is a man who always knows what would be best for him. The consumers very often buy things or consume things they ought not to buy or ought not to consume.

But the notion that a capitalist form of government can prevent people from hurting themselves by controlling their consumption is false. The idea of government as a paternal authority, as a guardian for everybody, is the idea of those who favor socialism. In the United States some years ago, the government tried what was called “a noble experiment.” This noble experiment was a law making it illegal to buy or sell intoxicating beverages. It is certainly true that many people drink too much brandy and whiskey, and that they may hurt themselves by doing so. Some authorities in the United States are even opposed to smoking. Certainly there are many people who smoke too much and who smoke in spite of the fact that it would be better for them not to smoke. This raises a question which goes far beyond economic discussion: it shows what freedom really means.

Granted, that it is good to keep people from hurting themselves by drinking or smoking too much. But once you have admitted this, other people will say: Is the body everything? Is not the mind of man much more important? Is not the mind of man the real human endowment, the real human quality? If you give the government the right to determine the consumption of the human body, to determine whether one should smoke or not smoke, drink or not drink, there is no good reply you can give to people who say: “More important than the body is the mind and the soul, and man hurts himself much more by reading bad books, by listening to bad music and looking at bad movies. Therefore it is the duty of the government to prevent people from committing these faults.”

And, as you know, for many hundreds of years governments and authorities believed that this really was their duty. Nor did this happen in far distant ages only; not long ago, there was a government in Germany that considered it a governmental duty to distinguish between good and bad paintings—which of course meant good and bad from the point of view of a man who, in his youth, had failed the entrance examination at the Academy of Art in Vienna; good and bad from the point of view of a picture-postcard painter, Adolf Hitler. And it became illegal for people to utter other views about art and paintings than his, the Supreme Führer’s.

Once you begin to admit that it is the duty of the government to control your consumption of alcohol, what can you reply to those who say the control of books and ideas is much more important?

Freedom really means the freedom to make mistakes. This we have to realize. We may be highly critical with regard to the way in which our fellow citizens are spending their money and living their lives. We may believe that what they are doing is absolutely foolish and bad, but in a free society, there are many ways for people to air their opinions on how their fellow citizens should change their ways of life. They can write books; they can write articles; they can make speeches; they can even preach at street comers if they want—and they do this in many countries. But they must not try to police other people in order to prevent them from doing certain things simply because they themselves do not want these other people to have the freedom to do it.

III.

This is the difference between slavery and freedom. The slave must do what his superior orders him to do, but the free citizen—and this is what freedom means—is in a position to choose his own way of life. Certainly this capitalistic system can be abused, and is abused, by some people. It is certainly possible to do things which ought not to be done. But if these things are approved by a majority of the people, a disapproving person always has a way to attempt to change the minds of his fellow citizens. He can try to persuade them, to convince them, but he may not try to force them by the use of power, of governmental police power.

In the market economy, everyone serves his fellow citizens by serving himself. This is what the liberal authors of the eighteenth century had in mind when they spoke of the harmony of the rightly understood interests of all groups and of all individuals of the population. And it was this doctrine of the harmony of interests which the socialists opposed. They spoke of an “irreconcilable conflict of interests” between various groups.

What does this mean? When Karl Marx—in the first chapter of the Communist Manifesto, that small pamphlet which inaugurated his socialist movement—claimed that there was an irreconcilable conflict between classes, he could not illustrate his thesis by any examples other than those drawn from the conditions of precapitalistic society. In precapitalistic ages, society was divided into hereditary status groups, which in India are called “castes.” In a status society a man was not, for example, born a Frenchman; he was born as a member of the French aristocracy or of the French bourgeoisie or of the French peasantry. In the greater part of the Middle Ages, he was simply a serf. And serfdom, in France, did not disappear completely until after the American Revolution. In other parts of Europe it disappeared even later.

But the worst form in which serfdom existed—and continued to exist even after the abolition of slavery—was in the British colonies abroad. The individual inherited his status from his parents, and he retained it throughout his life. He transferred it to his children. Every group had privileges and disadvantages. The highest groups had only privileges, the lowest groups only disadvantages. And there was no way a man could rid himself of the legal disadvantages placed upon him by his status other than by fighting a political struggle against the other classes. Under such conditions, you could say that there was an “irreconcilable conflict of interests between the slave owners and the slaves,” because what the slaves wanted was to be rid of their slavery, of their quality of being slaves. This meant a loss, however, for the owners. Therefore, there is no question that there had to be this irreconcilable conflict of interests between the members of the various classes.

One must not forget that in those ages—in which the status societies were predominant in Europe, as well as in the colonies which the Europeans later founded in America—people did not consider themselves to be connected in any special way with the other classes of their own nation; they felt much more at one with the members of their own class in other countries. A French aristocrat did not look upon lower class Frenchmen as his fellow citizens; they were the “rabble,” which he did not like. He regarded only the aristocrats of other countries—those of Italy, England, and Germany, for instance, as his equals.

The most visible effect of this state of affairs was the fact that the aristocrats all over Europe used the same language. And this language was French, a language which was not understood, outside France, by other groups of the population. The middle classes—the bourgeoisie—had their own language, while the lower classes—the peasantry—used local dialects which very often were not understood by other groups of the population. The same was true with regard to the way people dressed. When you travelled in 1750 from one country to another, you found that the upper classes, the aristocrats, were usually dressed in the same way all over Europe, and you found that the lower classes dressed differently. When you met someone in the street, you could see immediately—from the way he dressed—to which class, to which status he belonged.

It is difficult to imagine how different these conditions were from present-day conditions. When I come from the United States to Argentina and I see a man on the street, I cannot know what his status is. I only assume that he is a citizen of Argentina and that he is not a member of some legally restricted group. This is one thing that capitalism has brought about. Of course, there are also differences within capitalism. There are differences in wealth, differences which Marxians mistakenly consider to be equivalent to the old differences that existed between men in the status society.

IV.

The differences within a capitalist society are not the same as those in a socialist society. In the Middle Ages—and in many countries even much later—a family could be an aristocrat family and possess great wealth, it could be a family of dukes for hundreds and hundreds of years, whatever its qualities, its talents, its character or morals. But, under modem capitalistic conditions, there is what has been technically described by sociologists as “social mobility.” The operating principle of this social mobility, according to the Italian sociologist and economist Vilfredo Pareto, is “la circulation des élites” (the circulation of the elites). This means that there are always people who are at the top of the social ladder, who are wealthy, who are politically important, but these people—these elites—are continually changing.

This is perfectly true in a capitalist society. It was not true for a precapitalistic status society. The families who were considered the great aristocratic families of Europe are still the same families today or, let us say, they are the descendants of families that were foremost in Europe, 800 or 1000 or more years ago. The Capetians of Bourbon—who for a very long time ruled here in Argentina—were a royal house as early as the tenth century. These kings ruled the territory which is known now as the Ile-de-France, extending their reign from generation to generation. But in a capitalist society, there is continuous mobility—poor people becoming rich and the descendants of those rich people losing their wealth and becoming poor.

Today I saw in a bookshop in one of the central streets of Buenos Aires the biography of a businessman who was so eminent, so important, so characteristic of big business in the nineteenth century in Europe that, even in this country, far away from Europe, the bookshop carried copies of his biography. I happen to know the grandson of this man. He has the same name his grandfather had, and he still has a right to wear the title of nobility which his grandfather—who started as a blacksmith—had received eighty years ago. Today this grandson is a poor photographer in New York City.

Other people, who were poor at the time this photographer’s grandfather became one of Europe’s biggest industrialists, are today captains of industry. Everyone is free to change his status. That is the difference between the status system and the capitalist system of economic freedom, in which everyone has only himself to blame if he does not reach the position he wants to reach.

The most famous industrialist of the twentieth century up to now is Henry Ford. He started with a few hundred dollars which he had borrowed from his friends, and within a very short time he developed one of the most important big business firms of the world. And one can discover hundreds of such cases every day.

Every day, the New York Times prints long notices of people who have died. If you read these biographies, you may come across the name of an eminent businessman, who started out as a seller of newspapers at street corners in New York. Or he started as an office boy, and at his death he was the president of the same banking firm where he started on the lowest rung of the ladder. Of course, not all people can attain these positions. Not all people want to attain them. There are people who are more interested in other problems and, for these people, other ways are open today which were not open in the days of feudal society, in the ages of the status society.

V.

The socialist system, however, forbids this fundamental freedom to choose one’s own career. Under socialist conditions, there is only one economic authority, and it has the right to determine all matters concerning production.

One of the characteristic features of our day is that people use many names for the same thing. One synonym for socialism and communism is “planning.” If people speak of “planning” they mean, of course, central planning, which means one plan made by the government—one plan that prevents planning by anyone except the government.

A British lady, who also is a member of the Upper House, wrote a book entitled Plan or No Plan, a book which was quite popular around the world. What does the title of her book mean? When she says “plan,” she means only the type of plan envisioned by Lenin and Stalin and their successors, the type which governs all the activities of all the people of a nation. Thus, this lady means a central plan which excludes all the personal plans that individuals may have. Her title Plan or No Plan is therefore an illusion, a deception; the alternative is not a central plan or no plan, it is the total plan of a central governmental authority or freedom for individuals to make their own plans, to do their own planning. The individual plans his life, every day, changing his daily plans whenever he will.

The free man plans daily for his needs; he says, for example: “Yesterday I planned to work all my life in Cordoba.” Now he learns about better conditions in Buenos Aires and changes his plans, saying: “Instead of working in Cordoba, I want to go to Buenos Aires.” And that is what freedom means. It may be that he is mistaken, it may be that his going to Buenos Aires will turn out to have been a mistake. Conditions may have been better for him in Cordoba, but he himself made his plans.

Under government planning, he is like a soldier in an army. The soldier in the army does not have the right to choose his garrison, to choose the place where he will serve. He has to obey orders. And the socialist system—as Karl Marx, Lenin, and all socialist leaders knew and admitted—is the transfer of army rule to the whole production system. Marx spoke of “industrial armies,” and Lenin called for “the organization of everything—the postoffice, the factory, and other industries, according to the model of the army.”

Therefore, in the socialist system everything depends on the wisdom, the talents, and the gifts of those people who form the supreme authority. That which the supreme dictator—or his committee—does not know, is not taken into account. But the knowledge which mankind has accumulated in its long history is not acquired by everyone; we have accumulated such an enormous amount of scientific and technical knowledge over the centuries that it is humanly impossible for one individual to know all these things, even though he be a most gifted man.

And people are different, they are unequal. They always will be. There are some people who are more gifted in one subject and less in another one. And there are people who have the gift to find new paths, to change the trend of knowledge. In capitalist societies, technological progress and economic progress are gained through such people. If a man has an idea, he will try to find a few people who are clever enough to realize the value of his idea. Some capitalists, who dare to look into the future, who realize the possible consequences of such an idea, will start to put it to work. Other people, at first, may say: “They are fools”; but they will stop saying so when they discover that this enterprise, which they called foolish, is flourishing, and that people are happy to buy its products.

Under the Marxian system, on the other hand, the supreme government body must first be convinced of the value of such an idea before it can be pursued and developed. This can be a very difficult thing to do, for only the group of people at the head—or the supreme dictator himself—has the power to make decisions. And if these people—because of laziness or old age, or because they are not very bright and learned—are unable to grasp the importance of the new idea, then the new project will not be undertaken.

We can think of examples from military history. Napoleon was certainly a genius in military affairs; he had one serious problem, however, and his inability to solve that problem culminated, finally, in his defeat and exile to the loneliness of St. Helena. Napoleon’s problem was: “How to conquer England?” In order to do that, he needed a navy to cross the English Channel, and there were people who told him they had a way to accomplish that crossing, people who—in an age of sailing ships—had come up with the new idea of steam ships. But Napoleon did not understand their proposal.

Then there was Germany’s Generalstab, the famous German general staff. Before the First World War, it was universally considered to be unsurpassed in military wisdom. A similar reputation was held by the staff of General Foch in France. But neither the Germans nor the French—who, under the leadership of General Foch, later defeated the Germans—realized the importance of aviation for military purposes. The German general staff said: “Aviation is merely for pleasure, flying is good for idle people. From a military point of view, only the Zeppelins are important,” and the French general staff was of the same opinion.

Later, during the period between World War I and World War II, there was a general in the United States who was convinced that aviation would be very important in the next war. But all other experts in the United States were against him. He could not convince them. If you have to convince a group of people who are not directly dependent on the solution of a problem, you will never succeed. This is true also of noneconomic problems.

There have been painters, poets, writers, composers, who complained that the public did not acknowledge their work and caused them to remain poor. The public may certainly have had poor judgment, but when these artists said: “The government ought to support great artists, painters, and writers,” they were very much in the wrong. Whom should the government entrust with the task of deciding whether a newcomer is really a great painter or not? It would have to rely on the judgment of the critics, and the professors of the history of art who are always looking back into the past yet who very rarely have shown the talent to discover new genius. This is the great difference between a system of “planning” and a system in which everyone can plan and act for himself.

It is true, of course, that great painters and great writers have often had to endure great hardships. They might have succeeded in their art, but not always in getting money. Van Gogh was certainly a great painter. He had to suffer unbearable hardship and, finally, when he was thirty-seven years old, he committed suicide. In all his life he sold only one painting and the buyer of it was his cousin. Apart from this one sale, he lived from the money of his brother, who was not an artist nor a painter. But van Gogh’s brother understood a painter’s needs. Today you cannot buy a van Gogh for less than hundred or two hundred thousand dollars.

Under a socialist system, van Gogh’s fate might have been different. Some government official would have asked some well-known painters (whom van Gogh certainly would not have regarded as artists at all) whether this young man, half or completely crazy, was really a painter worthy to be supported. And they without a doubt, would have answered: “No, he is not a painter; he is not an artist; he is just a man who wastes paint;” and they would have sent him into a milk factory or into a home for the insane. Therefore all this enthusiasm in favor of socialism by the rising generation of painters, poets, musicians, journalists, actors, is based on an illusion. I mention this because these groups are among the most fanatical supporters of the socialist idea.

VI.

When it comes to choosing between socialism and capitalism as an economic system, the problem is somewhat different. The authors of socialism never suspected that modern industry, and all the operations of modern business, are based on calculation. Engineers are by no means the only ones who make plans on the basis of calculations, businessmen also must do so. And businessmen’s calculations are all based on the fact that, in the market economy, the money prices of goods inform not only the consumer, they also provide vital information to businessmen about the factors of production, the main function of the market being not merely to determine the cost of the last part of the process of production and transfer of goods to the hands of the consumer, but the cost of those steps leading up to it. The whole market system is bound up with the fact that there is a mentally calculated division of labor between the various businessmen who vie with each other in bidding for the factors of production—the raw materials, the machines, the instruments—and for the human factor of production, the wages paid to labor. This sort of calculation by the businessman cannot be accomplished in the absence of prices supplied by the market.

At the very instant you abolish the market—which is what the socialists would like to do—you render useless all the computations and calculations of the engineers and technologists. The technologists can give you a great number of projects which, from the point of view of the natural sciences, are equally feasible, but it takes the market-based calculations of the businessman to make clear which of those projects is the most advantageous, from the economic point of view.

The problem with which I am dealing here is the fundamental issue of capitalistic economic calculation as opposed to socialism. The fact is that economic calculation, and therefore all technological planning, is possible only if there are money prices, not only for consumer goods but also for the factors of production. This means there has to be a market for raw materials, for all half-finished goods, for all tools and machines, and for all kinds of human labor and human services.

When this fact was discovered, the socialists did not know how to respond. For 150 years they had said: “All the evils in the world come from the fact that there are markets and market prices. We want to abolish the market and with it, of course, the market economy, and substitute for it a system without prices and without markets.” They wanted to abolish what Marx called the “commodity character” of commodities and of labor.

When faced with this new problem, the authors of socialism, having no answer, finally said: “We will not abolish the market altogether; we will pretend that a market exists; we will play market, like children who play school.” But everyone knows that when children play school, they do not learn anything. It is just an exercise, a game, and you can “play” at many things.

This is a very difficult and complicated problem and in order to deal with it in full one needs a little more time than I have here. I have explained it in detail in my writings. In six lectures I cannot enter into an analysis of all its aspects. Therefore, I want to advise you, if you are interested in the fundamental problem of the impossibility of calculation and planning under socialism, read my book Human Action, which is available in an excellent Spanish translation.

But read other books, too, like the book of the Norwegian economist Trygve Hoff, who wrote on economic calculation. And if you do not want to be one-sided, I recommend that you read the highly-regarded socialist book on this subject by the eminent Polish economist Oskar Lange, who at one time was a professor at an American university, then became a Polish ambassador, and later returned to Poland.

VII.

You will probably ask me: “What about Russia? How do the Russians handle this question?” This changes the problem. The Russians operate their socialistic system within a world in which there are prices for all the factors of production, for all raw materials, for everything. They can therefore employ, for their planning, the foreign prices of the world market. And because there are certain differences between conditions in Russia and those in United States, the result is very often that the Russians consider something to be justified and advisable—from their economic point of view—that the Americans would not consider economically justifiable at all.

The “Soviet experiment,” as it was called, does not prove anything. It does not tell us anything about the fundamental problem of socialism, the problem of calculation. But are we entitled to speak of it as an experiment? I do not believe there is such a thing as a scientific experiment in the field of human action and economics. You cannot make laboratory experiments in the field of human action because a scientific experiment requires that you do the same thing under various conditions, or that you maintain the same conditions, changing perhaps only one factor. For instance, if you inject into a cancerous animal some experimental medication, the result may be that the cancer will disappear. You can test this with various animals of the same kind which suffer from the same malignancy. If you treat some of them with the new method and do not treat the rest, then you can compare the result. You cannot do this within the field of human action. There are no laboratory experiments in human action.

The so-called Soviet “experiment” merely shows that the standard of living is incomparably lower in Soviet Russia than it is in the country that is considered, by the whole world, as the paragon of capitalism: the United States.

Of course, if you tell this to a socialist, he will say: “Things are wonderful in Russia.” And you tell him: “They may be wonderful, but the average standard of living is much lower.” Then he will answer: “Yes, but remember how terrible it was for the Russians under the tsars and how terrible a war we had to fight.”

I do not want to enter into discussion of whether this is or is not a correct explanation, but if you deny that the conditions are the same, you deny that it was an experiment. You must then say this (which would be much more correct): “Socialism in Russia has not brought about an improvement in the conditions of the average man which can be compared with the improvement of conditions, during the same period, in the United States.”

In the United States you hear of something new, of some improvement, almost every week. These are improvements that business has generated, because thousands and thousands of business people are trying day and night to find some new product which satisfies the consumer better or is less expensive to produce, or better and less expensive than the existing products. They do not do this out of altruism, they do it because they want to make money. And the effect is that you have an improvement in the standard of living in the United States which is almost miraculous, when compared with the conditions that existed fifty or a hundred years ago. But in Soviet Russia, where you do not have such a system, you do not have a comparable improvement. So those people who tell us that we ought to adopt the Soviet system are badly mistaken.

There is something else that should be mentioned. The American consumer, the individual, is both a buyer and a boss. When you leave a store in America, you may find a sign saying: “Thank you for your patronage. Please come again.” But when you go into a shop in a totalitarian country—be it in present-day Russia, or in Germany as it was under the regime of Hitler—the shopkeeper tells you: “You have to be thankful to the great leader for giving you this.”

In socialist countries, it is not the seller who has to be grateful, it is the buyer. The citizen is not the boss; the boss is the Central Committee, the Central Office. Those socialist committees and leaders and dictators are supreme, and the people simply have to obey them.

• 1. Later the Centro de Estudios sobre la Libertad.

Critics of college legacy admissions claim that the practice is racist and admits undeserving students. The longer-term results of such admissions show why colleges continue to employ them.

Original Article: The Legacy of Legacy Admissions Is Not What the Critics Claim

One of the political trends of the past few years has been an expanding disconnect between political unity rhetoric and the increasing disharmony politicians’ proposals create.

The root of this beltway cognitive dissonance is the rapid increase in government power. Unity rhetoric helps mobilize candidates’ political bases and can sway some independents, helping win elections. However, their postelection expansion of government power into areas where people have dramatically or even diametrically opposed beliefs about Washington’s legitimate role, combined with the fact that government can give nothing it does not first take, guarantees growing disharmony. Once such choices are appropriated into government hands, there is only the question of whose preferences will be imposed on others.

One person who has adroitly analyzed this issue is Frédéric Bastiat, one of history’s most dedicated defenders of freedom. Whether government created social harmony or social disharmony was a major theme in his unfinished (because of tuberculosis) book Economic Harmonies. Because of the large and often dictatorial involvement of government in virtually every area of American life, which has robbed many Americans of rights, freedoms, and property to benefit others, it is worth reconsidering some of those insights, particularly well-presented in Economic Harmonies’ opening chapter:

All men’s impulses, when motivated by legitimate self-interest, fall into a harmonious social pattern . . . the practical solution to our social problem is simply not to thwart those interests or to try to redirect them.

Coercion . . . [has] never yet done anything to solve the problem except to eliminate liberty.

If you consider individual self-interest as antagonistic to the general interest, where do you propose to establish the acting principle of coercion? . . . For if you entrust men with arbitrary power, you must first prove that . . . their minds will be exempt from error, their hands from greed, and their hearts from covetousness.

Socialists . . . felt that men’s interests are fundamentally antagonistic, for otherwise they would not have had recourse to coercion . . . they have found fundamental antagonisms everywhere: Between the property owner and the worker . . . capital and labor . . . the common people and the bourgeoisie . . . the producer and the consumer. . . . Between personal liberty and a harmonious social order.

The economist school, on the contrary, starting from the assumption that there is a natural harmony among men’s interests, reaches a conclusion in favor of personal liberty.

It is not necessary to force into harmony things that are inherently harmonious.

The economists observe man, the laws of his nature and the social relations that derive from these laws. The socialists conjure up a society out of their imagination and then conceive of a human heart to fit this society.

[Liberty] is practical, for certainly no maxim is easier to put into practice than this: Let men labor, exchange, learn, band together, act, and react upon one another . . . there can result from their free and intelligent activity only order, harmony and progress.

The question is whether or not we have liberty . . . not profoundly disrupted by the contrary act of institutions of human origin.

Under the philanthropic pretext of fostering among men an artificial kind of solidarity, the individual’s sense of responsibility becomes more and more apathetic and ineffectual.

This is exactly the tendency not only of most of our governmental institutions but . . . to an even greater degree of those institutions that are designed to serve as remedies for the evils that afflict us.

Social order, freed from its abuses and the obstacles that have been put in its way—enjoying, in other words, the condition of freedom—[is] the most admirable, the most complete, the most lasting, the most universal, and the most equitable of all associations . . . the present social order has only to achieve freedom in order to realize and go beyond your fondest hopes and prayers.

However much we may admire compromise, there are two principles between which there can be no compromise—liberty and coercion.

If the laws of Providence are harmonious, they can be so only when they operate under conditions of freedom. . . . Therefore when we perceive something inharmonious in the world, it cannot fail to correspond to some lack of freedom or justice. Oppressors, plunderers . . . cannot take your place in the universal harmony.

The state always acts through the instrumentality of force. . . . The question then amounts to this: What are the things that men have the right to impose on one another by force? Now, I know of only one, and that is justice. I have no right to force anyone to be religious, charitable, well educated, or industrious; but I have the right to force him to be just: this is a case of legitimate self-defense.

Now there cannot exist for a group of individuals any new rights over and above those that they already possessed as individuals. If, therefore, the use of force by the individual is justified solely on grounds of legitimate self-defense, we need only recognize that government action always takes the form of force to conclude that by its very nature it can be exerted solely for the maintenance of order, security, and justice.

All government action beyond this limit is an encroachment upon the individual’s conscience, intelligence, and industry—in a word, upon human liberty.

Accordingly, we must [turn] . . . to the task of freeing the whole domain of private activity from the encroachments of government. Only on this condition shall we succeed in winning our liberty.

Will the power of government be weakened by these restrictions? On the contrary: to restrict the public police force to its one and only rightful function . . . is the way to win it universal respect and cooperation. Once this is accomplished . . . from what source could come all our present ills . . . which teach the people to look to the government for everything . . . to the ever increasing and unnatural meddling of politics into all things?

All these and a thousand other causes of disturbances, friction, disaffection, envy, and disorder would no longer exist; and those entrusted with the responsibility of governing would work together for, and not against, the universal harmony.

Harmony does not exclude evil, but it reduces evil to the smaller and smaller area left open to it by the ignorance and perversity of our human frailty, which it is the function of harmony to prevent or chastise.

If man can only win back his freedom of action . . . his gradual, peaceful development is assured.

Men’s interests are harmonious; therefore, the answer lies entirely in this one word: freedom.

In Economic Harmonies, Frédéric Bastiat made the case that freedom was the key to economic harmony and progress, and that such freedom required a government “that by its very nature . . . can be exerted solely for the maintenance of order, security, and justice.” In contrast, because “all government action beyond this limit is an encroachment upon the individual’s conscience, intelligence, and industry—in a word, upon human liberty,” it is the expansion of government beyond its limited defensible role, with consequent reductions on citizens’ freedoms, that expands disharmony rather than harmony.

The 2024 election circus, already well underway, looks to be a particularly interesting election year with regard to unity. The likely major party candidates have in the past promised unity but produced results far from it. Those deviant results have featured contractions in Americans’ liberty as well as their economic well-being, where the closest thing to general unity in the country at the moment seems to be a common distrust of or disgust about both candidates, where the primary disagreement is who would be worse.

In facing the need to make such judgement, citizens need to be particularly on the lookout for proposals that only unify particular groups in divisive battles to impose their will on those who disagree. And in evaluating those efforts, we could benefit by remembering that harmony is a synonym for unity, and ask, with Bastiat, whether the coercive proposals advanced will expand or erode harmony.

Is cryptocurrency a scam or is it a legitimate alternative to state-corrupted money? Political elites want to eliminate it altogether, but that alone should tell us we need to better understand this alternative money source.

Original Article: Cryptocurrency: Integrity Destroyer or Policy Scapegoat?

Paul Krugman can’t figure out why everybody is so bummed about the economy. From his perspective, we should all be jumping for joy, praising Joe Biden, and publicly signing fifty-year commitments to vote Democrat. Official statistics show that “unemployment is still near a 50-year low, yet inflation has been falling fast.” But the ignorant masses simply won’t get with the picture. Krugman admits “surveys of consumer sentiment and political polls continue to show that Americans have a very negative view of the Biden economy.”

He concludes that it is partisanship and media bias driving a wedge between consumer sentiment and economic reality. He found a study that shows that 30 percent of the disparity can be explained by Republicans who are doing fine economically but are just mad that Biden is stumbling and mumbling around the White House.

Krugman Is Wrong

I think Krugman is mailing (faxing?) this one in. I’m not convinced that consumer sentiment is just now being disproportionately affected by angry Republicans, especially considering all the dramatic economic changes that have shaken consumers over the past few years.

The measure Krugman is looking at is the University of Michigan Index of Consumer Sentiment.

Figure 1: University of Michigan: Consumer sentiment index

newman1.png Source: “University of Michigan: Consumer Sentiment (UMCSENT),” FRED, Federal Reserve Bank of St. Louis, last updated October 1, 2023. Data from Surveys of Consumers, University of Michigan, last updated November 2023.

The index is based on survey responses to questions like “Would you say that you are better off or worse off financially than you were a year ago?,” “Do you think that during the next twelve months we’ll have good times financially, or bad times, or what?,” and “Do you think now is a good or bad time for people to buy major household items (like furniture and big appliances)?”

It’s Affordability, Not Partisanship

I looked at the trends in the answers to each of these questions and found that the last question is the one whose answer has worsened most significantly since the 2020 crisis.

Figure 2: Components of consumer sentiment index

Source: Data from Surveys of Consumers, University of Michigan, last updated November 2023. Author’s visualization of data.

The yellow line in the chart tracks the responses to the question of whether now is a good time to buy major household items. The red and purple lines track respondents’ view of the trajectory of the overall economy over the next twelve months and five years, respectively. The blue line shows the households’ evaluation of their financial situation compared to a year ago, and the green line shows their expectations of their financial situation one year from now. (Note that in this chart, higher values correspond to worse sentiment.)

This is a problem for Krugman’s thesis, because pessimism based on political partisanship would most likely be channeled through the survey questions about the trajectory of the economy as a whole, not the one about buying a refrigerator.

While all the components have worsened since 2019, you’ll notice that the largest swing has to do with affording furniture, appliances, and other major household items. Pre-2020, most respondents said that it was a good time to buy major household items, but post-2020, most are saying that it is a bad time.

Why Is It Harder to Afford Consumer Durables These Days?

Why would people say that? Well, prices for consumer durables and credit card rates have both increased dramatically since 2020.

Figure 3: Consumer Price Index (consumer durables) and credit card interest rates

newman3.png Source: “Commercial Bank Interest Rate on Credit Card Plans, All Accounts (TERMCBCCALLNS)” and “Consumer Price Index for All Urban Consumers: Durables in U.S. City Average (CUSR0000SAD),” FRED, Federal Reserve Bank of St. Louis, last updated August 1, 2023, and October 1, 2023. CPI data from the Consumer Price Index, US Bureau of Labor Statistics, last updated October 1, 2023; interest rate data from Consumer Credit, Federal Reserve Statistical Release G.19 (Board of Governors of the Federal Reserve System).

Interest rates on credit cards have increased along with all other interest rates as the Fed has attempted to deal with unpopular price inflation. This goes to show that everything has a cost—you cannot print and spend your way through a crisis without consequences. It is a hallmark of Keynesian thinking (of which Krugman is a true believer) to think otherwise.

Commenting on this feature of Keynesian policy, Ludwig von Mises said, “We are destined to spend decades paying for the easy money orgy of a few years.”

Conclusion: Consumers Are Justifiably Concerned about the Future

Beyond consumer durables, however, there are plenty of reasons to be wary of the future. Consumer sentiment is much more complicated than which party is in the White House or even the unemployment rate plus price inflation.

Consumers have seen declining quality in both goods and services, long wait times for products, a smattering of bank failures, and volatile stock markets. Policy uncertainty from both the federal government and the Fed also affects consumer expectations. Consumers have run through their savings (which were nominally boosted by stimulus checks) and have added trillions of dollars in debt since 2020. Credit card delinquency rates have spiked up to 2007–8 levels.

This is a much more plausible explanation for why consumer sentiment overall doesn’t match Krugman’s “surreally good” sentiment. It’s Krugman’s partisanship, not consumers’, that explains the divergence of views.

Philip Goff wants to solve the why of the universe, but his answers are not always logically coherent, as David Gordon explains.

Original Article: The Taxman Cometh

Argentina’s president-elect, Javier Milei, is set on implementing promarket policies, including a vast desocialization, or privatization, of the economy. The privatization of the Argentine airline industry is seemingly first on the agenda (along with privatization of state-owned media). Privatization is necessary, but above all else, it must be done correctly.

Aerolíneas Argentina, the state-owned airline, makes up 63 percent of the domestic airline market in the country. Furthermore, its profitability has been falling since 2020. The airline arose out of a government-directed merger of four local carriers in 1949. The government essentially promoted the creation of this airline company, thereby harming competition.

Through various tribulations, Aerolíneas was once “privatized” in 1991, but this privatization scheme was perceived as a failure in light of its financial problems. Consequently, the company was renationalized in 2008, and it has remained that way ever since.

Now Argentinians are stuck with a nationalized airline company that makes up a majority of the domestic airline market and has been directly bailed out by the national government since 2021 (looking at its profits and national government payments reveals that since 2021, its profits have been solely driven by government payments). The head of the aviation workers’ union has even stated that “this company doesn’t work without the contributions of the state.” This statement was intended to be a defense of state ownership but is an embarrassing omission of the company’s inefficiency. The taxpayers are being forced to prop up this company against their will. This must cease as soon as possible.

The answer is clear: privatization.

What if the company fails? Business failure is a feature of a free market system, not a bug. Failing enterprises do not deserve government support. If Aerolíneas must fail, then let it fail, and its assets will be liquidated and transferred to a superior airline company.

Furthermore, any and all regulations prohibiting competition in this market must be abolished. As Murray Rothbard proposes, privatization must coincide with deregulation and cutting taxes. All regulation and taxation on the airline industry must be eliminated. But this leaves the problem of what to do with Aerolíneas.

Milei’s solution is to hand over shares of the company to the workers, effectively making it a worker-owned company. Ironically, many labor leaders have criticized Milei’s plans, some even going as far to say that Milei “will have to literally kill us” if he wants to implement privatization. However, if Milei accomplishes privatization, the airline workers will be forced to bear the responsibility of the company, or they will sell their shares and move for greener pastures.

The question remains of whether devolving the ownership to workers is the best way to privatize. It may be the most expedient method in Argentina, a country where the labor movement dominates, but is it the correct way?

Rothbard seems to be a fan of this approach:

In a sense, abolishing government ownership of assets puts them immediately and implicitly into an unowned status, out of which previous homesteading can quickly convert them into private ownership. The homestead principle asserts that these assets are to devolve, not upon the general abstract public as in the handout principle, but upon those who have actually worked upon these resources: that is, their respective workers, peasants, and managers.

But government-owned land is not unhomesteaded. The government can be the first user of land, but when it does acquire property, its acquisition is offset by obligations it takes on by aggressing against taxpayers. The government does not really own assets because it has a moral obligation to immediately rectify the damage it has caused. Therefore, those whom governments aggress against have sole claim to government property.

Hans-Hermann Hoppe states in Democracy: The God That Failed, “The syndicalist privatization strategy applie[s] only in such cases where no identifiable previously expropriated private owner or heir of socialized factors of production exist[s]. If such an owner-heir could be identified, then he should be again installed as private owner.” To assign ownership to public employees when expropriated private property owners are identifiable is a “moral outrage,” says Hoppe.

Rothbard agrees with this, stating that there is a “fourth principle of privatization” that would require the government to “return all stolen, confiscated property to its original owners, or to their heirs.” This principle becomes difficult to implement when the government asset is an enterprise created through taxation. Privatization in this case is not simply the restoration of a definite land title. Furthermore, it is difficult when the original owner is not identifiable.

In the case of Argentina, original owners are identifiable: the Argentine taxpayer. In such a case, Hoppe suggests the following in regard to streets, which can then apply to all government enterprises:

The former taxpayers, in accordance with their amount of local, state, and federal taxes paid, should be awarded tradable property titles in local, state, and federal streets. They then can either keep these titles as an investment, or they can divest themselves of their street property and sell it, all the while retaining their unrestricted right-of-way.

Essentially, a joint stock company would be formed for the privatized enterprise. Each taxpayer would own a percentage share proportionate to their share of total tax revenue. However, there are some problems with this approach.

The bureaucracy would have to go through tax documents and calculate shares so that nobody is given less or more than they have a legitimate claim to. Consequently, there might be entire bureaus created to sort through this issue, creating a further burden on the taxpayer. This would be wholly unjustifiable. As Hoppe states, “To charge a victimized population a price for the reacquisition of what was originally its own would itself be a crime.” This method of privatization would give way to its own property rights abuses. This cannot be tolerated.

Furthermore, the joint stock company solution has potential to neglect actual justice. Imagine paying taxes your entire life and then you receive a certificate in the mail that gives you an infinitesimally small share in a variety of privatized government enterprises. Is this expected to rectify the transgressions against you? Absolutely not. Sure, you can sell the certificate, but what if nobody wants to buy it? It would seem you are out of luck. No, justice must go further than a simple share in a joint stock company.

To account for these problems, it is necessary to combine the joint stock company and syndicalist approaches. Let’s take the example of Milei’s airline privatization plan. First Milei should cease all government transfers to the Aerolíneas and eliminate all government-granted privileges. Most importantly, the company should not be pardoned of its willing participation in taxation and expropriation. Taxpayers should be free to make claims against the now private airline company.

Milei can give the company to the bureaucrats who currently run it just as he presently intends to, but private entities should be able to bring claims against it in civil court. They must back these claims with documentation—tax receipts, for example—and the taxpayer can be rewarded a payment, bond, or share in the company in proportion to the share of taxation the company is responsible for.

This approach is distinct from the solutions posited by Rothbard and Hoppe. It acknowledges that the taxpayers, not the public employees, hold legitimate claims to the company. However, it relegates the dividing of the company to the free market rather than the government. Initially, it will mirror the syndicalist solution, but it will quickly transform into a mixed system as taxpayers obtain payments, bonds, and shares from the company for rectification.

Following this approach, Aerolíneas should be cut off from the government altogether without caring how the former public employees organize the company, then make a legally binding order of some kind (perhaps an executive order) stating that the company’s expropriations of the taxpayer are no longer legally protected, allowing taxpayers to extract rectification from the now private company.

What are some key takeaways? Milei is right in trying to transfer Aerolíneas to the workers. Such a plan is quick and easy (assuming the Peronists can cooperate). However, without allowing taxpayers to extract rectification from Aerolíneas, this privatization plan is doomed to cause injustice from the start.

Regardless, any privatization plan is going to be preferable to the status quo. Milei should be encouraged even if his plans fall short of the ideal. In the words of Rothbard, “Mistakes made in the shift to freedom will tend to iron themselves out after a free market is established.”

Rothbard continues, “On the other hand, we must not make the mistake of blithely assuming that the costs or inefficiencies of this process may be disregarded. It would be preferable to come as close as possible to the optimum in the initial privatization.” This is precisely why it is necessary to criticize the shortcomings of Milei’s plan.

In the past two decades, the TSA has proven it is ineffective in providing real security for airline passengers. However, its growing incompetence is matched only by its increasing intrusion into travelers' lives.

Original Article: The TSA Is Still Crazy after All These Years

Mainstream economists turned climate warriors use cost-of-production methods to determine the “true” social cost of carbon. They appeal to a discredited methodology falsely attributed to medieval Scholastics.

Original Article: The Worse-than-Medieval Economics of Climate Technocrats

Progressives claim that perhaps individual freedom might be appropriate for a simpler society but that as society grows more complex, the need for government grows. As Leonard Read pointed out, however, greater complexity requires greater freedom, not less.

Original Article: The More Complex the Society, The Less Government Control We Need