Until recently, most macroeconomic forecasters, assisted by mathematical models, were predicting economic recovery and rising stock indices. But the market has reminded us that reality doesn’t always correspond to the predictions of those who claim the mantle of “science.” As is so often the case, those economists who were more humble in their pretensions to knowledge avoided such embarrassment.
Bruce Caldwell has disputed a number of points in Salerno’s earlier account of the development of the Austrian school of economics from Carl Menger to Ludwig von Mises and F.A. Hayek. The issues in contention regard Friedrich von Wieser’s intellectual affiliation with Hayek and his influence on the formation of Hayeks economic thought; Wieser’s status as a general equilibrium theorist; and the reason for Hayek’s early flirtation with general equilibrium theory.
Social Security was not just about the provision of publicly funded old-age pensions in the name of social insurance. It was designed as a tool of macroeconomic policy, a social arm of central planning passed in age of boundless faith in the power of the state. As such, the program was steeped in economic fallacy and became an integral part of the discredited Keynesian plan to turn stones into bread. Far from achieving its stated aims, it helped prolong the Great Depression and has contributed mightily to the decline of American liberty.
You have left your house for a walk. You intend to pass through some woods on your way to town to meet a friend. After about 25 minutes of walking, however, you stop, puzzled. The trail through the woods should have put you in town several minutes ago. What happened?
Suddenly, you remember the fork in the trail by the big chestnut tree. You always had trouble remembering whether the left or the right trail led to town. You must have turned the wrong way!
This article is excerpted from Gregory Bresiger’s large monograph, The Revolution of 1935: The Secret History of Social Security, published in the Mises Institute series Essays in Political Economy.
The argument may be tired and hackneyed, but advocates never grow weary of presenting the same scenario, which goes as follows: Free markets are desirable, and unnecessary government regulation may stifle business growth, but we are living in a period of the Big Exception. Today, markets are in trouble, betrayed by the very practitioners of capitalism, and only new, outside regulations imposed by the state can bring back investor confidence and permit free markets to flourish once again.
As soon as Abraham Lincoln and the new Republican Party gained power, the average tariff rate was quickly raised from a nominal 15 percent to 47 percent and higher, and remained at such levels for decades after the war. South Carolinian John C. Calhoun’s free-trade arguments, as eloquent and advanced as they were, were no match for a federal military arsenal.
Last week, headlines around the world were screaming out the sad tale of WorldCom and its $4 billion or so misstatement of earnings. But should we really be surprised that another poster child of the boom--especially one whose growth has come through rapid-fire acquisitions led by a rock star CEO--has been revealed to be a hotbed of malpractice?
Insider trading laws, writes Dale Steinreich, have empowered the SEC to undertake a mission in information egalitarianism that favors certain classes of investors and strategies, and not others. Martha Stewart and ImClone have the book thrown at them, while the stock sales of Apple Computer’s executives are ignored.
