Welfare states in Scandinavia are revered by the American Left. Many think that America could reduce social problems by copying their policies. To such people, the success of the Scandinavian states is evidence that socialism works. Confidence in the welfare policies of these places is so great that pundits even attribute the prosperity of Scandinavia to these policies. Few ponder why socialism leads to disastrous consequences elsewhere but fruitful outcomes in Scandinavia.

In 1903, a lawyer in Germany took out an insurance policy and made payments on it faithfully. When the policy came due in twenty years, he cashed it in and bought a single loaf of bread with the proceeds. He was fortunate. If he had waited a few days longer, the money he received would have bought no more than a few crumbs.

According to a relatively new economics field called Behavioral Economics (BE), one’s emotional state rather than reason influences their economic decisions. Vernon Smith, the BE economist who won a Nobel in economics, wrote:

Every day, Americans feel the political capture of the economy. Inflation, taxes, and regulatory costs hit our paychecks and savings. The regulatory capture of medical industries; food and energy production; and the various instruments of Big Tech empowers the regime with new tools to promote their latest ideological cause. The ever-growing burden of government debt has become a crisis without any political will to address it.

The July military coup in the west African country of Niger has once again brought attention to the fact that the US government runs a global military empire that serves Washington’s special interests, and not the national interest.

According to popular thinking, the definition of money is flexible. Sometimes the money supply could be M1 (currency and demand deposits); at other times it could be M2 (all of M1, plus savings deposits, time deposits, and money market funds) or some other M. According to popular thinking, what determines whether M1, M2, or some other M is considered the money supply is whether it is well correlated with key economic data such as the gross domestic product (GDP).

In the market economy, wealth generators do not produce everything for their own consumption. Part of their production is used in exchange for the produce of other producers. Hence, in the market economy, production precedes consumption.

This means that something is exchanged for something else. This also means that an increase in the production of goods and services sets in motion an increase in the demand for goods and services.

According to David Ricardo,

Various assumptions employed by mainstream economists are detached from reality. For instance, in order to explain the economic crisis in Japan in the 1990s, Nobel laureate in economics Paul Krugman employed a model that assumes that people are identical and live forever and that output is given. While admitting that these assumptions are not realistic, Krugman nonetheless argued that somehow his model could be useful in offering solutions to Japan’s economic crisis.