Posted: March 20, 2017 Filed under: Economics, Education, Mediasphere, Think Tank | Tags: Barack Obama, Club for Growth, Donald Trump, Free market, Freedom Caucus, Health Insurance, Patient Protection and Affordable Care Act, Republican Party (United States), White House
The free market needs and deserves a moral defense.
Posted: February 8, 2017 Filed under: Mediasphere, Politics | Tags: A Royal Affair, Adam Bierman, Airbnb, California, Free market, Homesharing, Instagram, Los Angeles, Reason (magazine), Reason.tv, Santa Monica, Santa Monica Pier, video
The popular “homesharing” service made it affordable to book a beachfront property in Santa Monica. Then the city intervened.
Posted: January 21, 2017 Filed under: History, Mediasphere, Politics, Think Tank | Tags: Academic Left, American Enterprise Institute, Barack Obama, Capitalism, Christina Hoff Sommers, Democratic Party (United States), Donald Trump, Economic freedom, equality, Factual Feminist, Feminism, Free market, Imperialism, Liberty, media, news, Patriarchy, patriot, Republican Party (United States), United States, video
Gender scholars like bell hooks argue that American is an imperialist, white-supremacist, capitalist patriarchy. Is she right? The Factual Feminist responds. Read the rest of this entry »
Posted: December 3, 2016 Filed under: Art & Culture, Economics, Entertainment, Mediasphere, Politics, Think Tank | Tags: Alexis Tsipras, Americans, Capitalism, Francis Ford Coppola, Frank Capra, Free market, Gordon Gekko, Oliver Stone, President of the United States, Raymond J. Keating, Tucker: The Man and His Dream, United States, Wall Street
The free enterprise system is not inherently corrupt.
Oliver Stone’s Wall Street leads the movie-goer to believe that the securities industry is a rigged game, and that capitalism is inherently corrupt. Hard work as a means to success in the financial community is debunked, only to be supplanted by corruption and law breaking, as securities trading is seen as a game with little or no productive value. Stone presents a harsh judgment on an economic system he fundamentally misunderstands.
Wall Street has come to be the historical revisionists’ cinematic representation of the 1980s—the so-called “decade of greed.” It, unfortunately, offers a view prevailing not only in the film industry, but in academia and the media as well. In many ways, Wall Street perpetuates a class warfare myth, with contrasts being drawn between so-called haves and have nots, or the bourgeoisie and the proletariat.
The movie’s antagonist is Gordon Gekko, a corporate raider. Gekko’s speech at the stockholders meeting of Telder Paper, his takeover target, is meant by Stone to reflect the corrupt nature of capitalism. In fact, Stone managed—knowingly or not—to provide a glimpse of why corporate raiders provide a positive service in a free market economy. Gekko states:
Telder Paper has 33 different vice presidents, each making over $200,000 a year . . . . Our paper company lost $110,000,000 last year, and I’ll bet half of that was spent in all the paperwork going back and forth between all these vice presidents. The new law of evolution in corporate America seems to be survival of the unfittest. . . . I am not a destroyer of companies; I am a liberator of them. The point is, ladies and gentlemen, that greed for a lack of a better word—is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms, greed for life, for money, for love, knowledge, has marked the upward surge of mankind. And greed—you mark my words—will not only save Teldar Paper, but that other malfunctioning corporation called the United States of America.
Greed or Self-Interest?
The word “greed” in such a speech is Stone’s carrier of corruption. It is his word of choice designed to elicit a specific response from the movie-going audience. After all, how could one view greed favorably? In fact, “self-interest” would have been a more apt term, which was understood over two centuries ago by Adam Smith, the father of capitalism. Smith wrote in An Inquiry into the Nature and Causes of the Wealth of Nations: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” Self-interest removes the judgmental nature of Stone’s presentation, while encompassing not only greed, but also industry, charity, self-improvement, and altruism, i.e., any human motivation.
[Read the full story here, at Foundation for Economic Education]
Gekko’s later statements lend greater clarity to Stone’s view of the world. In reference to a Gekko plan to liquidate the holdings of an airline company, Budd Fox (the movie’s symbol of redemption as he in the end rejects the greed Gekko represents) asks, “Why do you need to wreck this company?” Gekko’s answer: “Because it’s wreckable!” Stone views the breakup of a firm as pure destruction. He is unable to understand what Joseph Schumpeter termed “creative destruction.” That is the notion that resources might be more efficiently used if freed from less profitable ventures and reinvested elsewhere. This is the dynamic aspect of capitalism that allows for renewal and growth.
But the essence of Stone’s limited vision is captured in Gekko’s definition of capitalism: “It’s a zero sum game. Somebody wins, somebody loses. Money itself isn’t lost or made, it’s simply transferred from one person to another—like magic. This painting here, I bought it ten years ago for $60,000. I could sell it today for $600,000. The illusion has become real, and the more real it becomes, the more desperate they want it. Capitalism at its finest . . . . I create nothing. I own . . . . You’re not naive enough to think that we live in a democracy, are you, Buddy? It’s the free market.” Stone does not understand that wealth can be created, not merely shifted around, and that the free market provides the incentives for individuals to create, innovate, and take risks. He sees a rise in the price of a painting as the pinnacle of capitalism. In fact, it is in those nations that have rejected free enterprise where the only source of value is to be found in a painting, for little else is created.
Wall Street presents a view of capitalism as being controlled by the few at the expense of the many—democracy versus the free market in Gekko’s words. Stone does not understand the nature of an exchange economy, missing a fundamental point that in a free enterprise system, one must first supply a service or good in order to demand; i.e., even the most greedy individuals must supply something that fulfills the needs or wants of another individual in order to participate in an exchange economy. Individuals vote with their dollars, if you will. The phrase “democratic capitalism” seems quite natural, for example, while “democratic socialism” seems oxymoronic. Read the rest of this entry »
Posted: December 3, 2016 Filed under: Economics, Mediasphere, Think Tank | Tags: Africa, Banknote, Barack Obama, Ben Folds, Boko Haram, Capitalism, Fortune (magazine), Free market, Nigeria, Steven Mnuchin, United States Secretary of the Treasury
Former U.S. Treasury Secretary Lawrence Summers, Nigeria‘s former finance chief Ngozi Okonjo-Iweala and the president of the Institute for Liberty and Democracy Hernando de Soto join us at Fortune-Time Global Forum.
Posted: August 15, 2016 Filed under: Education, Mediasphere, Think Tank | Tags: YouTube, Barack Obama, Nick Gillespie, Reason.tv, Harry Reid, Party leaders of the United States Senate, Competitive Enterprise Institute, Free market, Fred L. Smith (political writer), State Policy Network
“The alternative to innovation is not stability,” says Fred L. Smith, who founded the influential and controversial Competitive Enterprise Institute (CEI) in 1984. “It’s stagnation.”
In 2014, after almost 30 years as CEI’s president, Smith became director of the group’s Center for the Advancement of Capitalism, which champions free markets as the best means to create a fair, prosperous, and future-oriented society. Libertarians, says the one-time federal bureaucrat, have always had a difficulty communicating their ideas to a wider public, even to the entrepreneurs and business leaders who radically improve our lives on a daily basis by providing better and better goods and services at lower and lower prices. “We need to re-calibrate our arguments so they reach the people we need to have as allies. That means businessmen.”
Reason‘s Nick Gillespie sat down with Smith to talk about the liberating history of capitalism, the regulatory war on innovation, whether millennials are socialists or capitalists, and the morality of market exchanges. “The market not only creates a web of voluntary economic interactions,” says Smith. “It is the best facilitator for creating the social networks that encompass the modern world.” Read the rest of this entry »
Posted: June 30, 2016 Filed under: Economics, Mediasphere, Think Tank | Tags: Abraham Lincoln, Alex Tabarrok, Capitalism, Free market, Free to Choose, Milton Friedman, Nobel Memorial Prize in Economic Sciences, Ronald Reagan, Thomas Sowell, United Kingdom withdrawal from the European Union, United States
Mark J. Perry writes: Two of my all-time most favorite economists — Thomas Sowell and Frederic Bastiat – share the same birthday — they were both born on June 30. To recognize Bastiat’s birthday today I posted some of his quotes on CD yesterday, and I’ll now do the same for Thomas Sowell, who turned 86 today. Here is Thomas Sowell’s webpageand here is his Wikipedia entry. Milton Friedman once said, “The word ‘genius’ is thrown around so much that it’s becoming meaningless, but nevertheless I think Tom Sowell is close to being one.”
In my opinion, there is no economist alive today who has done more to eloquently, articulately, and persuasively advance the principles of economic freedom, limited government, individual liberty, and a free society than Thomas Sowell. In terms of both his quantity of work (at least 40 books and several thousand newspaper columns) and the consistently excellent and crystal-clear quality of his writing, I don’t think any living free-market economist even comes close to matching Sowell’s prolific record of writing about economics. Even at 86 years old, Thomas Sowell is still active and writes two syndicated newspaper columns almost every week (one column in some weeks) and recently released his 40th book last fall Wealth, Poverty and Politics: An International Perspective — which amazingly was his 13th book in the last decade! To honor Thomas Sowell’s 86 birthday today, I present here 15 of my favorite quotations from Dr. Thomas Sowell and a bonus video:
1. Knowledge. The cavemen had the same natural resources at their disposal as we have today, and the difference between their standard of living and ours is a difference between the knowledge they could bring to bear on those resources and the knowledge used today.
2. Obamacare. If we cannot afford to pay for doctors, hospitals and pharmaceutical drugs now, how can we afford to pay for doctors, hospitals and pharmaceutical drugs, in addition to a new federal bureaucracy to administer a government-run medical system?
[Read the full story here, at Carpe Diem Blog » AEIdeas]
3. Economics vs. Politics I. Economics and politics confront the same fundamental problem: What everyone wants adds up to more than there is. Market economies deal with this problem by confronting individuals with the costs of producing what they want, and letting those individuals make their own trade-offs when presented with prices that convey those costs. That leads to self-rationing, in the light of each individual’s own circumstances and preferences.
4. Economics vs. Politics II. The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.” Read the rest of this entry »
Posted: June 29, 2016 Filed under: History, Mediasphere, Politics, Think Tank | Tags: Capital, Capitalism, Equality under the law, Free market, Industrial Revolution, Liberty, Rule of Law, The Enlightenment
What are the biggest misunderstandings about capitalism? Deirdre McCloskey, professor at the University of Illinois at Chicago, argues that contrary to common belief, it’s not the amount of capital that has been amassed which sets the last two centuries apart, but rather the explosion of innovation—which in turn has made the capital investment worth it.
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Posted: August 31, 2015 Filed under: Politics, Think Tank | Tags: Aaron Wildavsky, Acton Institute, Automotive industry, Capitalism, Career Education Corporation, Classical Liberalism, Coercive monopoly, Dissolution of the Soviet Union, eBay, Federal Trade Commission, Free market, Monopoly
The free market: best anti-monopoly weapon ever developed.
“In New York, we are seeing a collapse as inexorable as the fall of the Soviet Union itself.”
Jeffery A. Tucker writes: An age-old rap against free markets is that they give rise to monopolies that use their power to exploit consumers, crush upstarts, and stifle innovation. It was this perception that led to “trust busting” a century ago, and continues to drive the monopoly-hunting policy at the Federal Trade Commission and the Justice Department.
“No more standing in lines on corners or being forced to split fares. You can stay in the coffee shop until you are notified that your car is there.”
But if you look around at the real world, you find something different. The actually existing monopolies that do these bad things are created not by markets but by government policy. Think of sectors like education, mail, courts, money, or municipal taxis, and you find a reality that is the opposite of the caricature: public policy creates monopolies while markets bust them.
For generations, economists and some political figures have been trying to bring competition to these sectors, but with limited success. The case of taxis makes the point.
“Think of sectors like education, mail, courts, money, or municipal taxis, and you find a reality that is the opposite of the caricature: public policy creates monopolies while markets bust them.”
There is no way to justify the policies that keep these cartels protected. And yet they persist — or, at least, they have persisted until very recently.
“In less than one year, we’ve seen the astonishing effects. Not only has the price of taxi medallions fallen dramatically from a peak of $1 million, it’s not even clear that there is a market remaining at all for these permits.”
In New York, we are seeing a collapse as inexorable as the fall of the Soviet Union itself. The app economy introduced competition in a surreptitious way. It invited people to sign up to drive people here and there and get paid for it. No more standing in lines on corners or being forced to split fares. You can stay in the coffee shop until you are notified that your car is there.
[Order Jeffrey’s book “Bit by Bit: How P2P Is Freeing the World” from Amazon.com]
In less than one year, we’ve seen the astonishing effects. Not only has the price of taxi medallions fallen dramatically from a peak of $1 million, it’s not even clear that there is a market remaining at all for these permits. Read the rest of this entry »
Posted: August 13, 2015 Filed under: Economics, Mediasphere, Politics, Think Tank | Tags: American City Business Journals, American wine, Austin, Capitalism, Conscious Capitalism, Democratic Party (United States), Free market, Houston, John Mackey, Liberal Fascism, Nick Gillespie, Peter Thiel, Reason.tv, Texas, Todd Krainin, United States, Whole Foods Market
They’re jealous, he says, they side with rulers, and they don’t understand how markets work.
Nick Gillespie & Todd Krainin “Intellectuals have always disdained commerce” says Whole Foods Market co-founder John Mackey. They “have always sided…with the aristocrats to maintain a society where the businesspeople were kind of kept down.”
More than any other outlet, Whole Foods has reconfigured what and how America eats and the chain’s commitment to high-quality meats, produce, cheeses, and wines is legendary. Since opening his first store in Austin, Texas in 1980, Mackey now oversees operations around the globe and continues to set the pace for what’s expected in organic and sustainably raised and harvested food.
Check out the book “Conscious Capitalism: Liberating the Heroic Spirit of Business” at Amazon.com]
Because of Whole Foods’ trendy customer base and because Mackey is himself a vegan and champions collaboration between management and workers, it’s easy to mistake Mackey for a progressive left-winger. Indeed, an early version of Jonah Goldberg‘s best-selling 2008 book Liberal Fascism even bore the subtitle “The Totalitarian Temptation from Mussolini to Hillary Clinton and The Totalitarian Temptation from Hegel to Whole Foods.”
[See more at Reason.com]
Yet nothing could be further from the truth—and more distorting of the radical vision of capitalism at the heart of Mackey’s thought. A high-profile critic of the minimum wage, Obamacare, and the regulatory state, Mackey believes that free markets are the best way not only to raise living standards but also to explore new ways of building community and creating meaning for individuals and society.
[Order Jonah Goldberg’s book “Liberal Fascism: The Secret History of the American Left, From Mussolini to the Politics of Meaning” from Amazon]
At the same time, he challenges all sorts of libertarian dogma, including the notion that publicly traded companies should always seek to exclusively maximize shareholder value. Conscious Capitalism, the book he co-authored with Rajendra Sisodia, lays out a detailed case for Mackey’s vision of a post-industrial capitalism that addresses spiritual desire as much as physial need. Read the rest of this entry »
Posted: July 31, 2015 Filed under: Economics, Education, Mediasphere, Think Tank | Tags: Cato Institute, Chicago School, Free market, Individual Freedom, Libertarian, Milton Friedman, Nobel Prize, Public policy
Today is the birthday of prominent free-market economist Milton Friedman, recipient of the 1976 Nobel Prize for Economic Science.
Friedman, who passed away in 2006 at the age of 94, was widely regarded as the leader of the Chicago School of monetary economics.
Friedman also wrote extensively on public policy, always with primary emphasis on the preservation and extension of individual freedom.
Friedman’s ideas on economic freedom hugely influenced both the Reagan administration and the Thatcher government in the early 1980s, revolutionized establishment economic thinking across the globe, and have been employed extensively by emerging economies for decades.
In the picture above, Friedman is all smiles with Cato Institute founder, Ed Crane and Vice President for Monetary Studies, Jim Dorn.
Learn more about Milton Friedman and his ties to Cato…
Posted: June 4, 2015 Filed under: Economics, Think Tank | Tags: Air conditioning, Air travel, American Automobile Association, American Dream, Automobiles, Capitalism, Free market, Howard Hughes, Kevin D. Williamson, Louis CK, Mobile Phones, Money, Swimming Pools
The Paradise of the Real
Kevin D. Williamson writes:
“We treat the physical results of capitalism as though they were an inevitability. In 1955, no captain of industry, prince, or potentate could buy a car as good as a Toyota Camry, to say nothing of a 2014 Mustang, the quintessential American Everyman’s car. But who notices the marvel that is a Toyota Camry? In the 1980s, no chairman of the board, president, or prime minister could buy a computer as good as the cheapest one for sale today at Best Buy. In the 1950s, American millionaires did not have access to the quality and variety of food consumed by Americans of relatively modest means today, and the average middle-class household spent a much larger share of its income buying far inferior groceries. Between 1973 and 2008, the average size of an American house increased by more than 50 percent, even as the average number of people living in it declined. Things like swimming pools and air conditioning went from being extravagances for tycoons and movie stars to being common or near-universal. In his heyday, Howard Hughes didn’t have as good a television as you do, and the children of millionaires for generations died from diseases that for your children are at most an inconvenience. As the first 199,746 or so years of human history show, there is no force of nature ensuring that radical material progress happens as it has for the past 250 years. Technological progress does not drive capitalism; capitalism drives technological progress — and most other kinds of progress, too…”
Read the full text here…
Dana has good taste. (And a great laugh) In a comment to Dana, Kevin D. Williamson notes: “It’s actually an old piece that’s been making the rounds…” Fooled me, too. I also thought it was new column. Good to see it circulation again.
Posted: April 4, 2015 Filed under: Education, Think Tank | Tags: 7-Eleven, Facebook, Free market, Nonprofit organization, Patent, Patent infringement, Patent troll, Republican Party (United States), United States, United States Patent and Trademark Office
The Foundation for Economic Education (FEE) has been proud to partner with Young America’s Foundation (YAF) to produce “Clichés of Progressivism,” a series of insightful commentaries covering topics of free enterprise, income inequality, and limited government. This is the final installment in the series.
(Editor’s Note: For 15 years, the author was editor of The Freeman, the journal of the Foundation for Economic Education. A version of this essay was originally published there in June 2000.)
Sheldon Richman writes: Can the free market provide public education? The short answer, of course, is: yes, look around. Right now, private enterprise and nonprofit organizations provide all manner of education — from comprehensive schools with classes in the traditional academic subjects, to specialized schools that teach everything from the fine arts to the martial arts, from dancing to dieting, from scuba diving to scrutinizing one’s inner self.
If we define “public education” as “what the government does now,” then it’s a trick question. Every school serves members of the public. For the sake of this discussion, we can ignore that the word “public” has been corrupted to mean “coercively financed through the tax system.”
- As long as government can tax its citizens and then provide educational services to them at a marginal price of zero, much private education will never come into being.
- Most parents would no more make educational decisions without consulting knowledgeable authorities than they would make medical decisions without consulting doctors.
- We don’t use the small number of neglectful parents as a pretext for government control or finance of religion. Nor should we use it as a pretext for government control or finance of schooling.
- Government domination of education assures that the entrepreneurial innovation and creativity we are accustomed to in, say, the computer industry will be missing from education.
The free market — and I include here both for-profit and nonprofit organizations — would provide even more education than it does now but for the “unfair competition” from government. Since government has a resource that private organizations lack — the taxpayers — it’s able to offer its services for “free.” They’re not really free, of course; in the government context, “free” means that everyone pays whether he wants the service or not. Clearly, as long as government can tax its citizens and then provide educational services to them at a marginal price of zero, much private education will never come into being. How ironic that government vigilantly looks for predatory pricing in the private sector when it is the major offender.
[Read the full text here, at The Freeman : Foundation for Economic Education]
There is certainly nothing about education that should lead anyone to doubt that the market could provide it. Like any other product or service, education is a combination of land, labor, and capital goods directed at a particular objective — instruction in academic subjects and related matters demanded by a class of consumers, primarily parents.
Here’s where things may get contentious. Critics of market-provided education are uncomfortable with education’s being treated like a commodity, subject to supply and demand. In the marketplace, consumers ultimately determine what is produced. Entrepreneurs take risks to serve them. And fickle consumers show no mercy when something new and attractive comes along. Ask the shareholders of Boston Chicken or Kodak, among others.
Why should parents alone determine what is and what is not acceptable education? But why not parents? To whose hearts are the interests of children closer? Besides, most parents would no more make educational decisions without consulting knowledgeable authorities than they would make medical decisions without consulting doctors. The uninformed-consumer argument against free-market education is a red herring. Read the rest of this entry »
Posted: February 21, 2015 Filed under: Economics, Think Tank | Tags: Capitalism, dispersed knowledge, Economic Activity, Economic Liberty, Free market, Incentive, media, Microeconomics, Oil Prices, Price System, Prices, Professor Tabarrok, Roses, video
Join Professor Tabarrok in exploring the mystery and marvel of prices. We take a look at how oil prices signal the scarcity of oil and the value of its alternative uses. Following up on our previous video, “I, Rose,” we show how the price system allows for people with dispersed knowledge and information about rose production to coordinate global economic activity. This global production of roses reveals how the price system is emergent, and not the product of human design. Read the rest of this entry »
Posted: July 25, 2014 Filed under: Art & Culture, Education, History, Mediasphere, Politics | Tags: America, Capitalism, Cartoon, Free market, Freedom of speech, Harding University, YouTube
A great find. For Reason.com, Emily Ekins writes:A 1940s capitalism cartoon is making a comeback with over 7 million views on YouTube. The cartoon “Make Mine Freedom” was produced by Harding University, a private university in Arkansas in 1948 extolling the virtues of free-market capitalism and inveighing against “isms” particularly communism and statism more generally.
The cartoon mixes humor with serious philsophy as it defines what freedom means: “America is the freedom to work at the job you like, freedom of speech and to peacefully assemble, freedom to own property, security from unlawful search and seizure, the right to a speedy and public trial, protection against cruel punishments and excessive fines, the right to vote, and worhip God in your own way.” Read the rest of this entry »
Posted: March 5, 2014 Filed under: U.S. News | Tags: Elon Musk, Free market, Lisa De Pasquale, PayPal, SolarCity, Tax advantage, Tesla Motors, Watchdog.org
How to Succeed in Solar Energy: Grab Government Giveaways
What’s the secret sauce? You guessed it…
Lisa De Pasquale reports: Time and time again, the free market has spoken on alternative energy companies. Yet, we keep hearing about booming companies like SolarCity. Watchdog.org (via FoxNews.com) knows the secret to their success:
The company’s stock, initially offered at $8 a share in December 2012, is trading around $82 a share early Monday. And in a shareholder’s meeting last week, company officials said they’re bullish on the company’s future.
Buried in SolarCity documents is the secret to that success. Musk, the billionaire who founded PayPal and is chief executive officer and product architect of electric carmaker Tesla, has built SolarCity on government giveaways — subsidies that will decrease substantially in the next two years.
Read the rest of this entry »
Posted: February 11, 2014 Filed under: Mediasphere, Politics, U.S. News | Tags: Capitalism, Das Kapital, Free market, Karl Marx, Marxism, New Republic, Onion
“Cognitive dissonance or not, Das Kapital has so thoroughly permeated our understanding of capitalism that we’re seldom even aware that we are citing it. It’s become a kind of cultural white noise – always present, but rarely acknowledged.”
Considering that The Onion is post-college humor, it’s not surprising in the least, as universities inoculate students with Marxist dogma. It’s as natural to typical college students as term papers, speech codes, censorship, conformist ‘protests’ (of approved targets) spring break customs, cheating on tests, screwing, drinking beer, and nearly worthless degrees that lead to low-paying jobs and moving back in with their parents. The New Republic‘s admiring, fawning, pro-communist praise of the Onion is, for better or worse, fairly accurate.
William Bigelow writes:
Noting pieces such as “Man Briefly Forgets Hotel Staff Are Not Human” as a reminder of “capitalist commodification not just of goods, but of humans’ subjective agency in the form of labor,” “Laid Off Man Finally Achieves Perfect Work-Life Balance” as espousing “the contention that capitalism alienates the proletariat from their species-consciousness by making them participants without control in the economic relations of their culture,” “Majority of Office’s Supplies Used to Apply for Different Job” as a “clear indictment of false consciousness, arising inexorably from bourgeois dogma as it perverts our very understanding of fulfillment, family, and success…”
Read the rest of this entry »
Posted: January 1, 2014 Filed under: Economics, Politics, U.S. News, White House | Tags: Ayn Rand, Barack Obama, Federal Reserve System, Free market, George W. Bush, Harry Binswanger, Laissez-faire, Obama
Photo by: Pablo Martinez Monsivais
Harry Binswanger writes: President Obama’s Kansas speech is a remarkable document. In calling for more government controls, more taxation, more collectivism, he has two paragraphs that give the show away. Take a look at them.
“…there is a certain crowd in Washington who, for the last few decades, have said, let’s respond to this economic challenge with the same old tune. “The market will take care of everything,” they tell us. If we just cut more regulations and cut more taxes–especially for the wealthy–our economy will grow stronger. Sure, they say, there will be winners and losers. But if the winners do really well, then jobs and prosperity will eventually trickle down to everybody else. And, they argue, even if prosperity doesn’t trickle down, well, that’s the price of liberty.
Now, it’s a simple theory. And we have to admit, it’s one that speaks to our rugged individualism and our healthy skepticism of too much government. That’s in America’s DNA. And that theory fits well on a bumper sticker. (Laughter.) But here’s the problem: It doesn’t work. It has never worked. (Applause.) It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible postwar booms of the ’50s and ’60s. And it didn’t work when we tried it during the last decade. (Applause.) I mean, understand, it’s not as if we haven’t tried this theory.”
Though not in Washington, I’m in that “certain crowd” that has been saying for decades that the market will take care of everything. It’s not really a crowd, it’s a tiny group of radicals–radicals for capitalism, in Ayn Rand’s well-turned phrase.
The only thing that the market doesn’t take care of is anti-market acts: acts that initiate physical force. That’s why we need government: to wield retaliatory force to defend individual rights.
Radicals for capitalism would, as the Declaration of Independence says, use government only “to secure these rights”–the rights to life, liberty, property, and the pursuit of happiness. (Yes, I added “property” in there–property rights are inseparable from the other three.)
That’s the political philosophy on which Obama is trying to hang the blame for the recent financial crisis and every other social ill. But ask yourself, are we few radical capitalists in charge? Have radical capitalists been in charge at any time in the last, oh, say 100 years?
Read the rest of this entry »
Posted: November 27, 2013 Filed under: Economics, Education, Think Tank | Tags: Business, Economic, Elinor Ostrom, Free market, John C. Goodman, Liberalism, Libertarianism, Obamacare, Politics
Just as there are timeless truths, there are also timeless falsehoods.
Here are a few of the latter that I’ve recently encountered, but there are, of course, plenty more. Some libertarians may not agree with me (at least at first) on all of them.
1) The free market creates scarcity and higher prices. In any economic system—socialist, interventionist, or free market—the quantity of a good will typically not be enough to satisfy demand when the price is zero. In a free market, in which people trade their legitimate claims to those resources, prices will tend to rise or fall to the level where the quantity supplied equals the quantity demanded, and in that way prices help us to cope with scarcity. Not only that, the free market, via a system of profit and loss, gives entrepreneurs an incentive both to supply more of scarce resources and to discover alternatives to them. (But not all “trade” is conducted this way. See No. 4 below.)
2) The free market means the government gives businesses special privileges. This is a very common belief based on the idea that pro-market means pro-business. But the free market is free precisely because it denies special legal privileges to any person or group. People sometimes define “privilege” as any advantage a person or group may have over others. Certainly such advantages exist today and would exist in a free market—you may be born into a wealthy family or have superior drive and resourcefulness—but these advantages are consistent with the absence of privilege in the libertarian sense, as long as you acquired such advantages without fraud or the initiation of physical violence against the person or property of others.
3) The pre-Obamacare healthcare industry was a free market. Actually, it was a highly interventionist market, as John C. Goodman explains. Similarly, the failures of the housing and financial markets were hardly the result of “free-market policies,” and the same could be said for practically every other sector of the American economy. The free market is free of legal privileges and discrimination; it is whatever happens in the absence of aggression and within certain “rules of the game”—for example, private property, freedom of association, and the rule of law. Again, it’s not pro-business, pro-consumer, or pro-anything if that means using political power to intentionally help some and hurt others.
Read the rest of this entry »
Posted: October 30, 2013 Filed under: Economics, Education, Think Tank | Tags: Brokerage firm, Business, Free market, Investing, Multinational corporation, Private property, Stocks and Bonds, Wall Street
Aaron Ross Powell writes: Markets are much more than multinational corporations, banking firms, and stock brokerages on Wall Street, though all of those things are the result of a market system.
Sound economies, from the biggest multinational banks to a child’s sidewalk lemonade stand, operate on the principles of private property and exchange. These concepts are the building blocks of free societies, and it is the system of countless small trades, taken as a whole, that we call “the market.”
Read the rest of this entry »