When the US Government implements a new law or policy, it’s here to stay. Virtually no amount of complaining (short of serious civil unrest) from the taxpayers will lead to a swift reversal in Obamacare, or the TSA, or the US Patriot Act, or NSA spying, or Net Neutrality, at least not without years of “studies” and hearings, and a national “debate” which of course must answer the question: “what will you replace [government program x] with?”
L. Outlawing Basing-Point Pricing
An important example of the monopolizing effects of a program supposedly designed to combat monopoly is the court decision outlawing basing-point pricing. On the free market, price uniformity means uniformity at each consuming center, and not uniformity at each mill. In commodities where freight costs are a large proportion of final price, this distinction becomes important, and many firms adopt such price uniformity, enabling firms further away from a consuming center to “absorb” some freight charges in order to compete with local firms.
K. Antitrust Laws
It may seem strange to the reader that one of the most important governmental checks on efficient competition, and therefore grants of quasi monopolies, are the antitrust laws. Very few, whether economists or others, have questioned the principle of the antitrust laws, particularly now that they have been on the statute books for some years. As is true of many other measures, evaluation of the antitrust laws has not proceeded from an analysis of their nature or of their necessary consequences, but from an impressionistic reaction to their announced aims.
Per Bylund spoke about why Sweden is held up as an example of socialist success on the Political Badger show.
J. Penalties on Market Forms
Any form of governmental penalty on a type of market production or organization injures the efficiency of the economic system and prevents the maximum remuneration to factors, as well as maximum satisfaction to consumers. The most efficient are penalized, and, indirectly, the least efficient producers are subsidized. This tends not only to stifle market forms that are efficient in adapting the economy to changes in consumer valuations and given resources, but also to perpetuate inefficient forms.
I. Subsidies to Unemployment
Government unemployment benefits are an important means of subsidizing unemployment caused by unions or minimum wage laws. When restrictive wage rates lead to unemployment, the government steps in to prevent the unemployed workers from injuring union solidarity and union-enforced wage rates. By receiving unemployment benefits, the mass of potential competitors with unions are removed from the labor market, thus permitting an indefinite extension of union policies. And this removal of workers from the labor market is financed by the taxpayers—the general public.
H. Minimum Wage Laws and Compulsory Unionism
Compulsory unemployment is achieved indirectly through minimum wage laws. On the free market, everyone’s wage tends to be set at his discounted marginal value productivity. A minimum wage law means that those whose DMVP is below the legal minimum are prevented from working. The worker was willing to take the job, and the employer to hire him. But the decree of the State prevents this hiring from taking place. Compulsory unemployment thus removes the competition of marginal workers and raises the wage rates of the other workers remaining.
Tim Knight At Slope of Hope posted some interesting charts regarding margin debt at the New York Stock Exchange and the S&P 500. It shows that margin debt and the S&P are both near all time record levels. When Austrian economists talk about the Fed’s ultra low interest rate policies engineering higher stock markets, this is the most obvious and direct channel for that flow of funds.
First, he started up a new blog, and now Ben Bernanke has agreed to an exclusive interview with the Mises Institute for Mises Wire. We sent our correspondent Mateusz Machaj to speak with Ben about business cycles, 100 percent certainty, and why it’s different this time.
Matt Machaj: Are you happy about the work you did at the Fed?
G. Conscription
It has rarely been realized that conscription is an effective means of granting a monopolistic privilege and imposing restrictionist wage rates. Conscription, like child labor laws, removes a part of the labor force from competition in the labor market—in this case, the removal of healthy, adult members. Coerced removal and compulsory labor in the armed forces at only nominal pay increases the wage rates of those remaining, especially in those fields most directly competitive with the jobs of the drafted men.
