Tag: laissez faire

How I Became An Austrian Economist

Jozef Martiniak | Slovakia

In March of 2018, I attended a seminar on Austrian economics in Slovakia that was organized by an institute whose statements I had been following for a long time. The event lasted four days with lectures on economics, money, and business cycle theory among other things, and the statements made seemed consistent to me. The rhetoric remained the same – what was said ten years ago was still relevant to today.

Moreover, these views have somehow all given awareness to me, a man with common sense. Suddenly you find out that something that you feel intuitively has a 150-years-old historical tradition and that there is a school that studies and develops this tradition.

Surprisingly, the majority of the attendees ended the seminar with a conviction against Austrian economics, but I experienced a change. Out of the blue, I became an Austrian. My ideas were synthesized and I found out it all makes sense. I used to talk about this moment like the story of St. Paul’s fall off of his horse. It was a moment after which you start looking at the world through different eyes and you know it will never change, you will never get back. You start to realize the connections in everyday situations. Not long ago, you have not seen them, but now you can clearly. Tom Palmer says that suddenly you look at the world through the lenses of freedom, through a filter that the majority of people do not have.

You start to become aware that this change is not so obvious like you feel it is. You have a feeling that everybody must see it, so you control yourself, you dose your knowledge to people around you just in bits. Then you find out that people around you do not care about you at all and most of them have not noticed any change in you, they are preoccupied by their own problems.

The impression that you understand the world better is followed by the impression that people will not understand you anymore. Suddenly, it is clear to you how some things will end up, because you distinguish responsibility from irresponsibility. And that is what really irritates the eminent experts who somehow see the change happening in you, though they do not know what has happened, they just see that you can say something responsibly and hold your ground, because you simply know it is true. They do not like debating with you because instead of trying to understand your point of view, they focus on trying to humiliate you in rhetorical competition.

A side-effect of the “conversion” is that you suddenly start to understand the Idealists whom you did not understand before.

Hazlittian awareness of invisible consequences of the events that already happened is another consequence of the ‘conversion’. Only few people realize it. Most people simply analyze their lives and only see the closest area of consequence of the acts that happened and that are related to their past.

In the summer of 2018, I completed a course at Mises University and henceforth joined a sect of people with an Austrian point of view in economics. I have used the word “sect” on purpose since we fit into the characteristics of the word ‘sect’ – we are in minority, we look at the others like those who do not understand yet, but if they are insistent, they will find out where the truth is. The lecturers at the Mises Institute say we belong to the two percent of the population who understands economics better than the majority. Even if it is said as a joke, it seems to me inappropriate since those who really understand the nature of Austrian economics know that they really belong to that small percentage. And those who do not understand are uselessly given a false feeling of exceptionalism, because they do not know why and in what they should be exceptional.

I like working in a world where your steps have meaning. Since we are homo sapiens, we should stop and think about future consequences of our present actions. The economists of the mainstream cannot explain how debt of countries will impact their future. They cannot explain how long the FED and ECB control will work and the public will trust it. In these aspects, they have adopted Austrian rhetoric of “laissez faire” – let it be, it is working somehow.

The Austrians are not satisfied with an explanation that it will work out somehow, because everything has always ended up working somehow. They want to change this system – even though it is very corrupted – so that it is the furthest possible from disaster. I do not know how other Austrian economists came into existence, perhaps they were born like this (at least Carl Menger, as he was nobody’s pupil and he was quintessential to the marginal revolution), but I am for sure a convert.


Get awesome merchandise. Help 71 Republic end the media oligarchy. Donate today to our Patreon, which you can find here. Thank you very much for your support!

Featured Image Source

Advertisements

Democracy: Perpetually at Odds with Unmolested Capitalism

Tu Lee | United States

America was birthed not just as a reaction to expensive tea, but as part of a more bedrock fight to preserve unfettered capitalism. As such, it should be expected that any notion to undermine this with socialist ideals would deeply offend even the most flimsily rooted patriots. As to not offend these types, welfare was initially pitched as “the opportunity to live in decency and dignity” by LBJ or even adherent to a more adequate “second Bill of Rights” by FDR. As a stale Democratic Party struggles to maintain their hold on an American public which increasingly views Revolutionary era capitalism as a decorative fantasy we are merely obligated to include in high school history textbooks, these niceties have been quickly abandoned. Just recently Democratic Senator Kamala Harris introduced $6,000 lump-sum checks to the poor and Democratic Senator Cory Booker flashed plumper $50,000 cash prizes to those who elect to prop up him and his regime. Our political discourse has reached a tipping point; politicians have ditched the previous sensitivity to blatantly bribe the remaining non-voting poor on the taxpayer’s dime. The politicians offer these bribes out in the open with their backs turned to those still expecting better acting on the American Playhouse stage. Disappointed as we may be as spectators, this new jump from our politicians erodes away a crucial truth about the relationship between Democracy and Capitalism.

Seemingly out of a Bernie Sanders daydream, the Pareto principle describes a widely present phenomenon where a small section of a population controls a vast majority of a resource. More commonly this is called the 80/20 rule, and it can apply to anything from wealth to consumption of healthcare resources. Essentially, most people are more or less mediocre producers, and those who happen to be good producers are exponentially amazing producers (think the Bill Gates or Trumps of the world). Interestingly, this general distribution occurs in wealth-generating economies regardless of historical or geographical context. If Democracy is equally representative, the Pareto principle tells us it will advocate for the worst 80% of contributors to the economy in disregard to the exceptionally great top 20% of contributors. While the advocation for the lazy majority could be peaceful, it’s often too effective for politicians to resist energizing the lower class against the upper class to maximize voter turnout. Jealously is stirred up and the democratic mass easily swallows the narrative of a rigged playing field or even the scapegoating of unrelated everyday problems. So long as historically inevitable Pareto distributions continue to exist in society, then Democracy, if truly representative of the masses, will fundamentally serve to throttle the economy’s greatest producers and therefore the fuel of the economy itself.

Why should the genius working day and night for the bettering of the society, his only roadblocks the laws vomited out of his country’s legislative belly have no recourse against the bum and his mindless kin? What is usually pitched as a loophole in our Democracy is actually one of it’s greatest unintended features. It makes sense that someone intelligent enough to sit on the peak of a Pareto distribution would be smart enough to tweak the governmental game when unfairly pressed. Whether it be through Super PACs, lobbying, or revolving doors, the nudging is not boundless and must happen within a degree reasonable enough to stay under the public radar. The natural tendency of those at the top to weasel into power over politics is a healthy restraint of Democracy, even if this assertion occurs in largely unsavory ways. Regardless of this, in Democracy’s immutable quest to serve the unconstrained will of the masses there will always be inherent toxicity, economic asphyxiation, and demonization of those who serve the country most by the very same masses who are simultaneously surrendering their own wealth voluntarily to those demonized.


Get awesome merchandise. Help 71 Republic end the media oligarchy. Donate today to our Patreon, which you can find here. Thank you very much for your support!

Featured Image Source

The Difference Between Austrian and Chicago Economics

By Jack Parkos | United States

When it comes to economics, libertarians tend to subscribe to one of two schools of thought: The Chicago School and Austrian School. Both of these ideologies are rooting in laissez-faire capitalism and believe in the power of the free market. Yet both have unique differences between them that can divide people who believe in free market capitalism. It is important to understand the differences between the two for one to decide which school they agree with.

“Mainstream” Recognition

The Chicago School, which is sometimes called the Monetarist School, belongs to the neoclassical school of thought. It tends to get more attention from “mainstream” economists and politicians. Milton Friedman, arguably the most famous and influential economist of the Chicago School, served as an unofficial advisor to President Ronald Reagan as well as winning many awards for his books. While many Austrians have won awards for their work, they are not nearly as “popular” as their Chicago counterparts. In a high school economics course, you’re more likely to learn about Milton Friedman and Chicago economics than Ludwig von Mises and Austrian economics. Austrians are seen as outside the mainstream, meaning it is “heterodox”. Perhaps someone may be asking why this occurs.

Difference in Methods

One reason that Austrians tend to be seen as economic “outcasts” is that they tend to use different methods to come to conclusions. As stated before, Austrians are not seen in the mainstream, unlike their Chicago counterparts.

This is mainly due to the fact that Chicago economists tend to use similar methods as most other economists. Monetarists tend to use mathematics to test their theories. Chicago economists believe economics is like a science with rules that cannot be broken. Meanwhile, the Austrians believe that since the economy is based on the actions of individuals, no mathematical formulas can accurately predict how people would act. Thus, Austrians base their work on philosophy, logic, and reasoning. Praxeology, the study of human nature, is an important part of the Austrian School of economics.

Monetary Policy

While both schools criticize the Federal Reserve, they have different reasoning for it. The Chicago school calls out the Federal Reserve’s failures but still believe it should exist and be used in the right way. Monetary policy is a big part of Chicago economics, hence sometimes being called the Monetarist School. For example, Milton Friedman criticized the federal reserve for not printing enough money during the Great Depression.  Friedman also believed the monetary supply should be increased by about 2.5-3.5% each year.

Meanwhile, the Austrians do not believe the government should print more money ever. They tend to believe in a fixed supply, typically a standard based off of precious metals. The Austrians do not want the government inflating the currency at all. They blame many economic problems on government creating inflation through printing money.

 

Famous Economists

Here are some famous economists from the Austrian and Chicago schools.

Austrians

Ludvig Von Mises- Big leader and teacher of the Austrian school of thought.

Murray Rothbard- A leading pioneer of both Anarcho-Capitalism and Paleo-Libertarianism.

Frédéric Bastiat- Developed the concept of opportunity cost.

Chicago

Milton Friedman- Won Presidential Award for Freedom, possibly most famous Chicago economist.

Thomas Sowell- National Humanities Award winner, theorist on welfare economics.

Gary Becker- Awarded Nobel Memorial Prize in Economic Sciences.

Friedrich Hayek (who also belonged to the Austrian School) – Award-winning economist who contributed to the Business Cycle Theory and The Economic Calculation Problem.


Get awesome merchandise. Help 71 Republic end the media oligarchy. Donate today to our Patreon, which you can find here. Thank you very much for your support!

Featured Image Source

Free Markets Are The Ultimate Tool To Destroy Bigotry

By Indri Schaelicke | United States

If you turn on the news today, you will likely see stories of the most recent case of racism, sexism, or another form of terrible discrimination. Just over 3 weeks ago, national news blew up when the story of 2 black men being arrested at Starbucks Coffee was widely reported. Or take the infamous story of a Christian baker who refused to bake a cake for a gay wedding.

Should the government make laws that force people to go against their beliefs? There is a simpler solution that does not require legislation, enforcement and protects everyone’s rights: Let the forces of the market interact to boycott what the public views to be bigoted behavior by companies.

If a business it engaging in bigoted practices that the public does not agree with, they can boycott the business to deprive them of income. If the owner is smart, they will realize their profits have decreased and cease their discriminatory practices. If not, they will be driven out of business and discrimination will no longer exist in the community.

We now live at a time when many people have access to the internet and social media, which makes it especially easy to organize boycott efforts and raise awareness of bigoted behavior by companies. The online outrage can be manifested by mass boycotts that will send a clear message to the organization affected.

The Civil Rights Act of 1968 mandated equal housing opportunities regardless of race, religion, or national origin and made it a federal crime to “by force or by threat of force, injure, intimidate, or interfere with anyone … by reason of their race, color, religion, or national origin.” This act is a clear violation of private property rights because it prohibits people from doing certain things with their own property. The government should never be able to dictate what people can and cannot do with their own legally purchased and owned property. This can easily lead to conscription or forced labor as the government is forcing people to do things.

A concern of solving issues of discrimination through legislation is that it expands the size and scope of government. Whenever a piece of legislation is enacted, a government agency is usually responsible for overseeing the enforcement of the regulations and mandates. Issues of discrimination often do not have an agency to enforce them (otherwise there would be no need for the bill), meaning yet another agency must be created.

Issues of discrimination can be solved by manipulating market forces to send a clear message to the business or entity engaging in the bigotry. This avoids issues of the encroachment of rights and expansion of the government.