According to the Austrian business cycle theory, the boom-bust cycle emerges in response to a deviation in the market interest rate from the natural interest rate, or the equilibrium interest rate. As a rule, it is held, the tampering with market interest rates by the central bank sets the boom-bust cycle in motion.

In last week’s column, I mentioned that regulation of drugs was among the important subjects Andrew Koppelman discusses in his thoughtful book Burning Down the House, and this week I’d like to look at what he has to say on this topic.

To understand his arguments, though, what he says needs to be put in a wider philosophical framework. As he sees it, both libertarians and nonlibertarians like him share a goal. Both have as an ideal the notion of human autonomy. As he puts it,

In his Nations by Consent, Murray Rothbard reminds us that the concept of a nation “cannot be precisely defined; it is a complex and varying constellation of different forms of communities, languages, ethnic groups, or religions.”

What would people use for money in a genuine free market? A lot of people answer the question in this way. We really don’t know the answer for sure. It would be up to the people who live in that society. Because in a genuine free market, there would be no state at all, there would be no money mandated by the state. People would compete to establish the money they liked best. Maybe people would settle on a gold or silver standard, as they had done in the past. But maybe they wouldn’t. They might prefer electronic currency like bitcoin.

Despite much anticipation, the economic recovery plan proposed by Britain’s Tory Party after the departure of former prime minister, Boris Johnson, is missing one key ingredient—spending cuts. The new “temporary budget” presented by short-term chancellor of the exchequer Kwasi Kwarteng proposed tax cuts and regulatory reform but not spending cuts.

Most economists hypothesize that in the real world there are relationships between various economic variables. For instance, the relation between personal consumption expenditure and income after tax can be hypothesized as:

Personal consumption = a* Income after tax,

With a being a parameter. Thus, if a is 0.8 then for income after tax of $100 this would imply that personal consumption is $80.