John Stossel always levels the playing field a bit. In this clip, he discusses climate change with Jerry Taylor of the Cato Institute. The key point is not an argument over whether it is good to live sustainably but whether the methods paraded by most are worth the paper they are written on! It’s not even an argument over whether your Hummer really hurts the environment, just a look at the realities of the proposed “solutions”. Check it out! under 10 minutes…
I recently came across a collection of articles and information compiled and published by the Foundation for Economic Education (FEE) here. This is an excellent collection that I would argue all should read and understand before making rash decisions regarding our current economic circumstances. The media and certain groups are quick to demean and blame capitalism which, in my opinion, is not only jumping to harsh conclusions but outright wrong. It is important to obtain multiple perspectives and this page and information offers one of those perspectives. Following is from that page on FEE’s site:
Check out the list of books they recommend here on the page. I have read many of the articles and a book or two and highly recommend them. These will give you a historical understanding that allows for improved support and solutions in today’s situation.
Paul Krugman issued his latest self-empowered revelation to us lowly economic buffs (here). Apparently I should still look to demand-side, interventionist economics when that’s never worked historically! (talk to the 70’s)! It definitely didn’t help the depression (see my light review of a great essay here)… Let alone the fact that interventionism is exaggerating and even causing the business cycles that lead to the financial ruin of today!? Anyone heard of the federal reserve and monetary policy? NOT classical economics and capitalism, that’s human intervention at its finest, guessing what the interest rate should be. To think we can control the interest rate is to be ignorant to economic complexity. Read “I, Pencil” for crying out loud. This is the problem, looking at solutions while ignoring or investigating the cause, simply making blatant, uneducated assumptions as to the ‘likely’ cause of the problem, the story of Krugman’s life (at least published life).
The best is that Krugman ignores the lives of other economic greats such as Hayek or Mises, what about Friedman even? He forgets that Keynes actually failed in predicting the great depression! Mises was the one who nailed that. See ‘Making of Modern Economics’ for more on that little tidbit. Keynes simply got credit for offering government actionable solutions, which any politician will praise. It gives them purpose, and a much greater one than simple keeper of the peace as they should be. The Ludwig Von Mises Institute gave a tidbit on the Krugman piece simply saying:
It’s all here: how economists were in love with capitalism before the Great Depression (?), how Keynes was the only one who saw the failures of laissez-faire (!), how economists fell in love again with markets in recent years (!!), and how the popping bubble has startled them whereas the great Keynesian Krugman knew it all along (??). Oh, and by the way, there is no one who ever existed named Hayek or Mises or Haberler or their students.
The whole thing reads like a big fairytale, and the author is the hero in the end.
I can’t believe this guy got the Nobel prize in 2008. He’s too politically tied anyway to be a solid economist. That’s simply my opinion, think what you will…
It continues to amaze me that somehow, the American people will buy into the illogical conclusions of Keynesian economics. Is it because the conveyor has an advanced degree? Some degree… It is as Ayn Rand puts it, simply mysticism brought on by the “witch doctors” of our times, telling us that we are not advanced enough to understand. Lets break it down, can you ever get out of personal economic crises by simply running up your credit cards? NO!!! Eventually, you will have to pay the piper in the form of newly increased and unaffordable monthly payments. Well who makes these payments? We do. As so simply is stated on FEE’s website:
hey are guaranteeing that future generations are going to be faced with the devil’s bargain of either having to tax themselves mightily to pay off the debt or to repudiate it with inflation. Neither is a satisfactory outcome.
We at least ought to admit this much…
William Anderson (the author of the above article at fee.org) goes on:
Keynesians seem to believe that a boom can be sustained forever, providing that governments fill in with extra spending. However, that is extremely unsound thinking. As Ludwig von Mises and the Austrians long ago noted, the very nature of the crisis at the end of a boom is built upon the fact that a boom cannot be sustained because the longer the boom goes on, the greater the malinvestments.
It comes across to me as the classic example of a lowly lottery winner. Someone who suddenly comes upon a substantial amount of money without an increase in personal production doesn’t tend to make wise financial decisions with it. You see lottery winners blow through millions on unneccesary luxuries and “malinvestment” to find himself/herself destitute once again. The boom has busted. If they win a second time, now they think they will never lose and the boom will bust that much harder. Investments are even riskier and more unguided than the first time.
Indeed, the only way out of the crisis is for the malinvestments to be liquidated or diverted to other, more sustainable, uses. Once the fundamentals of an economy are put back into balance, a recovery can begin.
Someday, over the rainbow, we will come back to fundamentals…
Jul 16
In today’s economic landscape, one economist in particular seems to be the most popular, John Maynard Keynes. Keynes was a British economist who is the father of the Keynesian Theory of economics. Essentially the concepts are of capitalism with an interventionist appeal. Wikipedia defines his economics as follows:
Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle.
If we look at the actions of the US government over the last 80 years, we can see his influence, in some times more strongly than others. What appeal does he have? in particular, to politicians and political leaders? I will start by saying I am NOT a support of Keynes. As a subscriber to free market economics, I don’t feel that any body of people has the ability nor the capacity to effectively “out-guess” the natural market actions in order to create policy and govern money supplies, etc. A great example of market complexities is leonard Reads book “I, Pencil,” a simple essay on the process of creating a common pencil. For me, economic interventionism is playing economic “god” and good luck with that. Now, on to the political appeal…
An issue that a full time politician of modern age runs into is a matter of where energy is channelled and what time is dedicated to. In a efficiently run free-market, there are few full time politicians, many more carry alternative employment and simply govern as a means of maintaining and upholding freedoms and protection with little or no pay. It is the desire of the statesman to govern himself as to not be governed by one who desires to eliminate freedoms, therefore a natural willingness exists. However, as a full time politician, for example a legislator, what is the chief function? to legislate… to write law. As a dedicated full time legislator, you will likely write a considerable amount of law. In a free market, there is no application for the vast majority of such law. In a Keynesian economy however, you now have a crucial role, a high level of power and importance, you control the fate of society with policy. A new prestige is created, the aristocrat is born! Richard Ebeling described Keynes work and influence on our current political landscape in an article in the Freeman titled “John Maynard Keynes: The Damage Still Done by a Defunct Economist”:
Seventy years ago, on February 4, 1936, the English economist John Maynard Keynes (1883–1946) published what soon became his most famous work, The General Theory of Employment, Interest, and Money. Few books, in so short a time, have gained such wide influence and generated so destructive an impact on public policy. What Keynes succeeded in doing was to provide a rationale for what governments always like to do: spend money and pander to special interests.
In the process Keynes helped undermine what had been three of the essential institutional ingredients of a free-market economy: the gold standard, balanced government budgets, and open competitive markets. In their place Keynes’s legacy has given us paper-money inflation, government deficit spending, and more political intervention throughout the market.
Without getting into the complexities of the various economic theories, simply put, the Keynesian model has an important place for the full time politician while maintaining the air of capitalism. As a full time politician with little or no economic background (or simply a flawed one), which system would you go for? The one that gives you a job of course! and an important one at that…
