MISES INSTITUTE


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By: Jörg Guido Hülsmann (Excerpt from chapter 17 of Mises: The Last Knight of Liberalism, pp. 770–73.)It was through the writings of Carl Menger and Eugen von Böhm-Bawerk that Mises had come to understand the market economy as a rational social order in which all factors of production are geared toward the satisfaction of consumer wants. Not only the allocation of the production factors, but also the incomes of the owners of these factors ultimately depended exclusively on their relative contribution to the satisfaction of human wants. All values, all prices, as Frank Fetter had put it, depend on a daily referendum in the market democracy.24But in none of his predecessors did Mises find a satisfactory account of the process through which the structure of production was brought in line with consumer preferences. His fellow Böhm-Bawerk seminar member, Joseph Schumpeter, had brilliantly shown how entrepreneurs drive the market. According to Schumpeter’s Theory of Economic Development,25 entrepreneurs are innovators who constantly interrupt the smooth operation of an inert economy.Schumpeter had a point. Innovation does play a central role in the market economy. But how does this fit with the Mengerian picture of the market economy as a rational social order? Was there [...]
Mon, Jan 22, 2018
Source: MISES INSTITUTE
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By: Ryan McMaken The Chinese state's "news" service Xinhua on Sunday mocked the United States for the current federal-government non-shutdown, called a "shutdown." The Chinese agency claimed the current legislative stalemate — which has hardly "shut down" the federal government — demonstrates "chronic flaws" in the US federal political system. Even worse — from Xinua's point of view — is that " the spirit of non-cooperation across party lines" is the only aspect of the previous administration that has survived into the current one. A lack of continuity, it seems, is a problem for the Chinese ruling-party hack writing the piece, as he or she notes the current administration has "backtracked" on policies implemented by the previous one. In the mind of a Chinese propagandist, it seems, once the US government adopts a policy, that policy ought never to be rescinded. To undo previously-supported policies, it seems, would be "chaos." Unfortunately, this attitude reflects the ideas of many Americans themselves who like to condemn "gridlock" in Washington — which is greatly overstated, by the way — because it prevents the federal government from doing "the people's business." What exactly is "the people's business," of course, is never quite clear. Usually when [...]
Mon, Jan 22, 2018
Source: MISES INSTITUTE
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By: Tate Fegley In a previous post, I argued that there is little evidence for the existence of a “war on cops,” at least when measured in terms of the number of police officers feloniously killed. Some readers suggested that such a measure is too simplistic and does not capture precisely what is meant by commentators when they call it a war. In response to this, I consulted one of foremost proponents of the war on cops narrative, Heather Mac Donald of the Manhattan Institute. According to her book, The War on Cops: How the New Attack on Law and Order Makes Everyone Less Safe, the war does not consist primarily of violence against police officers, but rather lack of proper fealty to what Will Grigg so appropriately dubbed “the punitive priesthood.” That is, the main artillery in this war is criticism of the police, with premeditated violence against the police only being a manifestation of that criticism.Mac Donald argues that such criticism has created a “Ferguson Effect” by which police officers are now hesitant to engage in the type of proactive policing (e.g. stop-and-frisk, zero tolerance, enforcement of low-level misdemeanors) she claims was so effective in helping to reduce crime [...]
Mon, Jan 22, 2018
Source: MISES INSTITUTE
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By: William L. Anderson In the days and weeks following the demise of the Berlin Wall near the end of 1989, West Germans saw a most curious sight: East German residents, finally able to travel a bit, flooded western streets and roads with Wartburgs and Trabants. Like so many vehicles built in Eastern Europe and the Soviet Union during the days of communism, they were a throwback to earlier days of the post-war European automobile.The Wartburgs and Trabants were especially items of curiosity. They had three-cylinder, two-stroke engines that produced large amounts of both exhaust smoke and noise, and East Germans that wanted one waited an average of 12-15 years for delivery. As one might expect, the cars were boxy, slow, not very comfortable, and prone to breaking down, but in East Germany in 1989, at least they were not obsolete. It was a different story in the West, as these kinds of cars long ago had been “replaced” by vehicles that performed far better than their communist-produced counterparts.Socialists and critics of the market claim that one of the evils of capitalism is that it promotes “planned obsolescence,” which, according to the AFP news site, “is a widely criticized commercial practice [...]
Mon, Jan 22, 2018
Source: MISES INSTITUTE
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By: Llewellyn H. Rockwell Jr. [Editor's note: As we face another so-called government shutdown, some may recall that we've been down this road before. In this 1996 article, Lew Rockwell explains that government "shutdowns" are neither as unpopular, or as troublesome, as the media and Washington politicians assume.]According to official history, the 104th Congress doomed itself when it shut down the government to force its budget priorities on the president. People got up in arms and demanded that government be reopened. This taught the people and their representatives a valuable lesson. As much as we may complain, we truly need big government. Today, we all agree with the White House vow to never allow the government to shut down again.Of course, everything about this story is nonsense. Shutting down the government was this Congress's most noble act. Though the freshmen, who forced the closing against the leadership's wishes, didn't properly prepare for the inevitable response from the media and the bureaucracy, they were on the right track. It may have been the only principled act in two years of political compromise.Moreover, nobody has produced a shred of evidence that the government shutdown was as unpopular as the media claimed it was. [...]
Sat, Jan 20, 2018
Source: MISES INSTITUTE
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By: Frank Shostak In the slump of a cycle, businesses that were thriving come to experience difficulties or go under. These errors aren't specific to any one firm. They occur in tandem with whole sectors of the economy. People who were wealthy yesterday have become poor today. Factories that were busy yesterday are shut down today, and workers are out of jobs.Businessmen themselves are confused as to why. They cannot make sense of why certain business practices that were profitable yesterday are losing money today. Bad business conditions emerge when least expected — just when all businesses are holding the view that a new age of steady and rapid progress has emerged.In his writings, Ludwig von Mises argued against the prevailing explanation of the business cycle of overproduction and under-consumption theories, and he critically addressed various theories that depended on vague notions of mass psychology and irregular shocks.In the psychological explanation, an increase in people's confidence regarding future business conditions gives rise to an economic boom. Conversely, a sudden fall in confidence sets in motion business stagnation.Now, there can be no doubt that during a recession people are less confident about the future than during good times. But to observe this [...]
Sat, Jan 20, 2018
Source: MISES INSTITUTE
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By: Gary Galles Have you ever been birdwatching? If not, how well do you think you would recognize the birds around you the first time you tried? Even if you were specifically looking for a species present in your area, you might fail to recognize it. The reason is simple. Without additional training, there are many ways to identify birds you are unaware of — you often would not know what to look at or listen for, or where or when to look. An experienced birder might well see what you missed.Applying economics to public policy is akin to birdwat­ching in this way, except for the fact that few untrained birdwatch­ers presume they have the expertise to “educate” others to their views, while almost everyone seems to assume they have sufficient expertise in economics to pontificate on public poli­cies. This leads to ignor­ance of the predictable, even if unintended, adverse side effects that can turn seemingly helpful economic policies into harmful ones, because people don’t know where or how to look to recognize them, and massive overconfidence in government’s ability to effectively solve societal problems.At its core, economic analysis reduces to the proposition that “incentives matter.” Changes in the relevant costs [...]
Sat, Jan 20, 2018
Source: MISES INSTITUTE
Mises Weekends with Jeff Deist
By: Ryan McMaken, Jeff Deist By every measure extreme poverty in Third World nations is decreasing rapidly. But what about the US and the West? Economist and mises.org editor Ryan McMaken joins Jeff Deist for a wide-ranging discussion of what makes people rich, and how economists should measure wealth. This great discussion explains the decline of real incomes and savings rates in the West, the moral hazards created by central banks, and how a happy combination of technology and market innovation often manages to outpace rapacious governments. Is deflation, horribly mischaracterized by economists, the real source of wealth in a society? And should we judge our personal finances in terms of net worth or lifestyle? [...]
Fri, Jan 19, 2018
Source: MISES INSTITUTE
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By: Chris Calton In 1962, the first version of Spacewar! was completed. Technically, this wasn’t the first video game ever created, but it was probably the first one that really mattered, as it serves as the beginning of the long line of advances in video game technology that continues into the present day.The invention of the game is generally credited to Steve Russell, who was the primary programmer. But the development of the game was the product of a handful of programmers working with an early computer known as the PDP-1. The original version of the game employed two “ships” – really just shapes on a screen – that could shoot a missile (a dot) at the other ship. It was a two-player game, and the goal was to destroy your opponent.But the programmers made their code available to anybody who asked for it, and innovation in the game flourished. A gravity simulation was developed by another programmer who added a sun that would pull on the ships, creating a new obstacle for players to contend with. Another programmer altered the randomly placed dots on the screen that represented stars so that they actually reflected the real-world constellations and even mirrored [...]
Fri, Jan 19, 2018
Source: MISES INSTITUTE
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By: Doug French The Skyscraper Index shows a correlation between the construction of the world’s tallest buildings and economic busts. It was created by economist Andrew Lawrence in 1999. Mark Thornton of the Mises Institute expanded on Lawrence’s work combining Austrian Business Cycle Theory to the analysis. Dr. Thornton said in an interview,Record-setting skyscrapers are a prominent example of how distortions in interest rates (i.e., actual rates below “natural” rates) alter the economy’s structure of production in an unsustainable manner, but obviously it is not the building of a very tall building that causes an economic crisis. The most general impact on the economy is that the structure of production is reoriented toward longer run and more roundabout production processes. Record-setting skyscrapers usually require a multitude of new technological processes and systems all of which have to have their own production, distribution, installation, and maintenance systems. This is symptomatic of the entire economy in an artificial boom.What those of us in Vegas are wondering (h.t. Jeff Barr); wouldn’t this theory apply to large scale public works projects? The improvements are horizontal instead of vertical, but what happens at the end massive of highway infrastructure projects like the ones continuing in [...]
Fri, Jan 19, 2018
Source: MISES INSTITUTE

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