Last Knight Live Blog 13 Kraus

What was Mises’s most important contribution to economic science? My answer, which coincides with the theme of maybe the central chapter of the entire book — chapter 10, A Copernican Shift, is: his analysis of the exact nature and the importance of economic calculation in a division-of-labor economic system.The substance of his contribution first appeared in a paper titled Economic Calculation in the Socialist Commonwealth.

Greenspan Absolves Himself

Now that Alan Greenspan is no longer the Fed chairman, some financial commentators are daring to suggest that perhaps the present financial crisis is the result of the extremely low interest rate policy of Greenspan’s Fed between December 2000 to June 2004 that fueled the housing bubble. Greenspan denies it on grounds that the Fed has no control over long-term interest rates.

Donating just to bug the establishment

National Review—I can vaguely, hazily recall that this publication has some doubts about the merit of the crusading leviathan state—is throughly disgusted that Ron Paul raised $4.2 million in 24 hours online. It proves that we need not be “impressed by anybody able to gather cash over the net.” It only demonstrates “that lot of people will donate money just to extend a middle finger to the establishment”...and we can’t have that!

The Federal Home Loan Banks to the Rescue!

For those who have been speculating on how the government might bail out participants in the collapsing US subprime mortgage market, John Paul Koning writes that an unlikely savior has stepped forward: the Federal Home Loan Banks (FHLB), established in the midst of the Great Depression to provide a stable source of funding for member thrifts, otherwise known as savings & loan associations. The FHLB system is hardly fair. Those with privileges — the member banks — get to borrow at rates below what the market would pay. Customers of these member banks are also privileged in that they can take out low-rate mortgages. This privilege is not free, though; it comes at the expense of all other taxpayers. Should the system experience some sort of setback, the implicit federal-government guarantee suggests that taxpayers will foot the bill — a select few bureaucrats, lenders, and house buyers benefiting at their expense. The FHL Banks do not put themselves at risk by stepping in and lending to iffy members. They put FDIC at risk. And as we know from FSLIC’s demise in the 1980s, any failure of FDIC would probably be funded by taxpayers to the tune of billions.

Mining, Risk, and Profit

On November 2, 2007 the US House passed a new mining law that mandates a 4% gross royalty on existing mines and an 8% royalty on future mines on public lands. The royalty, if imposed, represents expropriation over and above the corporate income tax mining companies presently have to pay. It also represents the common view that the proceeds from mining — or any other endeavor for that matter — if carried out on public lands are the property of the general population. In other words if a miner goes to the effort of looking for, finding, developing, and producing copper in Utah, everyone in Florida is entitled to the fruits of his labor just because people in Florida happen to live within a political area that also encompasses the mine. This argument sounds awfully like slavery. Making prospecting in the United States unprofitable reduces the portion of the earth prospectors have to work with, thereby raising the costs of living for all people, regardless of where they live. The only beneficiaries of such a royalty would be the state and the privileged groups to whom it decides to dispense the proceeds.
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