Finn Kydland and Edward C. Prescott (KP), the 2004 Nobel laureates in economics think that technological shocks can explain 70 percent of economic fluctuations in postwar US data. Unfortunately their quantitative methods are simplistic and ignore the real problem: central banking.
After an old red barn was given "heritage protection" by the city council, the owner demolished it anyway. Many townspeople cheered the defiance of the council's blatant violation of property rights.
Government spending overall—not just deficits—is the real problem. Government spending diverts wealth away from truly productive people and toward the government and its favored groups.
How much licensing requirements are designed to “protect” the health of the public, and how much to restrict competition, may be gauged from the fact that giving medical advice free without a license is rarely a legal offense. Only the sale of medical advice requires a license.
Hazlitt and all of the other critics of Keynes never did get to the primary points with respect to what was wrong with Keynes. One point was theoretical. The other was practical.
Many advocates claim government intervention is necessary because markets are too unstable. The real instability, however, comes from the immense uncertainty over what government will do next with its vast and arbitrary power.
Behavioral economists say that since individuals are irrational, we need more state intervention in the economy. However, their criticism can be turned around: if individuals are irrational, government power is especially dangerous.
As Zimbabwe's economy worsens, its government now insists residents start using easily-inflated local currency again. This is sowing the seed of another devastating episode of hyperinflation.
