The Problem with Bankruptcy Laws

Defaulting homeowners can walk away from their problem after declaring bankruptcy. There are significant advantages to this option. It allows these people to make a new start, and return to the labor market free from debt. The risk of such defaults is built into banking models, and the costs are distributed among other borrowers. However, this system has never been tested under the extremely stressful conditions of a bursting asset-price bubble.

Creating Disequilibrium, and Benefiting Society

It’s not just increases in production that create wealth but a radical reforming of the way production itself is done. Entrepreneurial innovations disrupt the unrealistic ideal of a stationary economy. They do destroy the old order — like the classic example of buggy makers losing their jobs when the automobile took hold — but they cause growth because what they create is more valuable than what they replace.

Let’s Stay Together: On Direct Exchange and the Social Order

The discovery of the law of association was a great achievement of the classical economists. It points the way toward social harmony, showing that the powerful and the weak have a better way to relate to each other than through exploitation. The nature of the market as a network of voluntary exchanges means that each participant must feel he is benefiting from a trade, or he would not enter into it.

What Keeps Us Safe?

Look at the back of your computer monitor, the bottom of your table lamp, or the label on your hair dryer. Chances are you will see the symbol “UL” with a circle around it. It stands for Underwriters Laboratories, a firm headquartered in Northbrook, Illinois, and an unsung hero of the market economy.

The real swine

Schwarzenegger has declared a state of emergency. The CDC is working on a vaccine. Medical muckymucks are warning of “pandemic potential” and telling people to reduce all human contact by 50% and stand 6 feet away from all people. New York schools are shutting down. In Chicago, school kids have been instructed not to shake hands. The Obama administration is being criticized for not declaring martial law.

My Lord, how many have died from this catastrophe? To quote MSNBC: “No deaths have been reported in the U.S.”

The Link Between Obama and John Law

President Obama sees himself as the new FDR, armed with a new New Deal. But the New Deal wasn’t new when FDR did it. The charismatic Roosevelt was more than 200 years behind John Law’s Mississippi Bubble. Just like Obama’s and FDR’s “deals,” John Law’s prescription for what ailed France required no sacrifice. But ultimately, his system would only serve to forestall France’s bankruptcy, not solve it. Law himself would die near poverty a decade later.
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