We all want to live well and no one wants their living standard to decline. No one likes recession. It’s just the way we are made. This is one reason that the official environmentalist movement has an uphill battle. The poverty that comes with living without industrial civilization lacks public support—once people clue in that this is what they are after.
A central occupation of economists is to analyze the nature, causes, and effects of incentives—the circumstances that are held to motivate human action. Economists agree on the positive role that “good” incentives play to increase production. They also agree that “perverse” incentives have an opposite impact. One of these perverse incentives is called moral hazard.
Punditry is seriously exercised about the worldwide shortage of food, which is real enough, but not an act of nature or a result of market failure. Rather, it stems from the combined failures of government, and with results that are potentially catastrophic.
A quick scan of any newspaper suggests that high fuel prices have disrupted our daily affairs. While politicians and pundits across the political spectrum are fretting about the need for a national energy policy, wringing their hands about the apparent un-American-ness of our dependence on foreign oil, and worrying that the massive run-up in gas prices in recent months will lead to an economic downturn, market forces are quietly adjusting so as to soften the blow and solve the problems that arise.
You are uptown in a shopping district of a small community, and you pass by the meat shop, the wine shop, the coffee shop, two churches side by side, a coin shop, an antique store . . . and hold it right there.
The Paulson bailout failed in the House. It wasn’t a death blow to the plan, but it should have been. This wasn’t an economic plan: it was a heist.
It will go down as The Great Bank Robbery of 2008.
The economics behind it were nonsense, but we are naïve if we spend much time even considering the “arguments” for it. This was a money and power grab, pure and simple.
Writing the introduction to Economics in One Lesson by Henry Hazlitt was a labor of love for me. You know how women sometimes say to each other “This dress is you!”? Well, this book is me! This was the first book on economics that just jumped out and grabbed me. I had read a few before, but they were boring. Very boring. Did I mention boring?
We are now hearing ominous warnings about imminent deflation. Checking the welcome page at AOL this morning, I see that the lead item in the financial news section heralds “The Looming Threat of Deflation.” This headline encapsulates two highly problematic ideas. The first is that deflation would necessarily be a bad thing. The second is that deflation is likely to occur in the near term.
Today the highest-price good that people buy besides their houses is their car, and this reality leads people to believe that we can’t possibly let the American car industry die. We couldn’t possibly be a real country and a powerful nation without our beloved auto industry, which is so essential to our national well-being. In any case, this is what spokesmen for the big three say.
We are fortunate to be living in these times, for we are seeing the unfolding of events long explained and predicted by the Austrian tradition. Maybe that sounds implausible. What is fortunate about our times? The economy is tanking, stocks have been pummeled, unemployment is rising, and Washington is pursuing the worst combination of economic policies since Hoover and FDR. Nor does the new guy in charge seem to have a clue about the limits of what government can do.
