Action always is essentially the exchange of one state of affairs for another state of affairs. If the action is performed by an individual without any reference to cooperation with other individuals, we may call it autistic exchange. An instance: the isolated hunter who kills an animal for his own consumption; he exchanges leisure and a cartridge for food.
In a recession or a crisis, the right approach for individuals is to save. So too for the national economy. A looming recession will prompt a pullback in consumer spending as a rational response to the perception of economic troubles. This action does not cause the economy to fall into recession any more than more spending can save it from recession. The downturn is a fact that cannot be avoided. We don’t blame umbrellas for floods, and, in the same way, we shouldn’t blame tightfisted consumers for recessions.
When entrepreneurs and business owners and managers face difficulties in the market, it is rare for them to throw in the towel, blame the customer, increase prices and hope that the problem goes away. A business that does not live up to the expectations of the customer becomes marginalized and on the long run goes out of business. Because a business must survive on free exchange, it has to continually overcome the challenge of providing goods and services.
Falling Behind, by Robert H. Frank, belongs to an unfortunate genre: books by well-known economists that endeavor to justify crude soak-the-rich policies, writes David Gordon. Paul Krugman and, from an earlier day, John Kenneth Galbraith are perhaps the best-known authors of such works; but Frank fully equals these eminent figures in his railings against the well-off.
With recession looming or already here, the time has arrived for finding scapegoats. Expect a long list of these. Here is the target of the day: tightfisted consumers. A decline in personal consumption, writes the New York Times, “would be the first since 1991, and it would almost certainly push the entire economy into a recession in the middle of an election year.”
When asked why the RIAA is going after an easy target--college students--the response made me cringe: “College students have reached a stage in life when their music habits are crystallized,” Duckworth said. “And their appreciation for intellectual property has not yet reached its full development.” Sadly, this statement tells you everything you need to know about the RIAA.
Credit expansion is responsible not only for the boom-bust business cycle, as Mises showed, but also that it is a major source of artificial economic inequality and sharply increases profits relative to wages. These are processes that come to an end and are actually thrown into reverse as soon as credit expansion stops and the recession/depression that is its ultimate consequence begins. In wasting capital through malinvestment, it undermines the rise in production and accompanying rise in real wages.
Income tax revolt is slowing making its way to the ballot in Massachusetts, and it’s picking up a few enemies along the way.
I can vaguely recall a time when the person who helped kids across the street was called a “crossing guard.” It seems like not to long ago, the person parked and watched cars was called a “parking attendant.” The people directing traffic at construction sites were just construction workers. The police were called the police.
Now, however, all these jobs seem to have been upgraded. They are variants of “security personnel.” And they all wear shirts with big letters: SECURITY.
