The essence of the socialist outlook is this: individual self-interest cannot be trusted, because it leads to exploitation of the weak. In order to defend the weak, the socialist claims that the civil government must interfere with private property rights, and plan society from the point of view of the nation as a whole, or the people as a whole, or the vanguard of the proletariat, or whatever group is identified as representing the best interests of the nation.
Showing posts with label Gary North. Show all posts
Showing posts with label Gary North. Show all posts
Friday, September 5, 2014
On mercantilism . . .
"Mercantilism is the system in which politicians gain control over the state, and then use the state to grant monopolies of trade to special interest groups."
"To the extent that people say they believe in Adam Smith's concept of the free market, they ought to oppose mercantilism. The problem is this: the mercantilist mentality is best represented in the defense of tariffs. Tariffs are sales taxes imposed on imports of foreign-made goods. Yet most people who insist that they are defenders of the free market, meaning defenders of Adam Smith's economics, are overwhelmingly in favor of tariffs. They think they are free marketers, but they are mercantilist. They think they are defenders of private property, when they are in fact defenders of the welfare state."
- Gary North
"How is it that people who claim to be free market advocates, and who even claim to be libertarians, join with the special-interest groups to persuade Congress to pass sales taxes on imported goods? How is it that all of this is done in the name of the free market, when it is clearly a form of mercantilism, which was the target of Adam Smith's critique in 1776? How is it that modern mercantilists have deluded themselves to such an extent that they deny that they are mercantilists, and insist they are defenders of the free market, when in fact they hold the position that Adam Smith rejected? (As for someone who argues this way in the name of Austrian school economics, my mind boggles. But there is at least one such person.)"
About Adam Smith
"Smith was not the greatest defender of free markets, nor was he anywhere near the greatest defender of economic theory. But he was unquestionably the most famous and most influential early defender of free trade and free markets. . . ."
"Smith did make one claim that, in his day, was the most important claim that he made. It laid the foundation of modern economic theory. He claimed that the free market system is autonomous. It would exist apart from legislation by the state. He called this "the system of natural liberty." He described how the free market would work if the state did not intervene to pass special-interest legislation that benefited one group or another."
"The system of natural liberty would maximize the wealth of nations, he said, but far more important, it would maximize the wealth of individuals. The central idea of Adam Smith's book is this argument: the pursuit of individual self-interest, when pursued by all the residents of the nation, will result in an increase of the wealth of the nation. His link between the pursuit of individual self-interest and the maximization of the wealth of their nation is the essence of Smith's logic, and it is also the essence of the argument of most free enterprisers."
"Mercantilism is the system in which politicians gain control over the state, and then use the state to grant monopolies of trade to special interest groups. It was against this outlook that Adam Smith wrote his book."
"To the extent that people say they believe in Adam Smith's concept of the free market, they ought to oppose mercantilism. The problem is this: the mercantilist mentality is best represented in the defense of tariffs. Tariffs are sales taxes imposed on imports of foreign-made goods. Yet most people who insist that they are defenders of the free market, meaning defenders of Adam Smith's economics, are overwhelmingly in favor of tariffs. They think they are free marketers, but they are mercantilist. They think they are defenders of private property, when they are in fact defenders of the welfare state."
About Christian Economics . . .
"In my view of economics, I begin with God as the final authority, but as I have spent the last 45 years attempting to show, the God of the Bible is overwhelmingly the defender of private property rights. This is encapsulated in the commandment: 'Thou shalt not steal.' I keep contrasting this concept with the assertion of all modern welfare-state economists: 'Thou shalt not steal, except by majority vote.'"
On libertarianism . . .
"There are many ways to defend the free market economy, including its efficiency, but the starting place, according to libertarian theory, is the moral and legal right possessed by an individual to own property, which implies the right of an individual to disown property. It is ownership and disownership that serve as the foundation of libertarian social theory, and also serves as the foundation of free-market economic theory."
"The collectivist begins with the concept of the state as the final authority. Libertarian theory begins with the concept of the individual as the final authority."
About statists . . .
"The difference between the statist and the libertarian has to do with methodology. The statist begins his discussion of the economy from the perspective of the collective enterprise known as civil government. He equates the state (the monopoly of coercion) and society (voluntary institutions). He also identifies the state and the nation. He sees the state as the agency which alone legally represents the nation. In some cases, he actually believes that the state is the same as the nation."
On autarky . . .
"Where there is free trade, foreign competition would even in the short run frustrate the aims sought by the various measures of government intervention with domestic business. When the domestic market is not to some extent insulated from foreign markets, there can be no question of government control. The further a nation goes on the road toward public regulation and regimentation, the more it is pushed toward economic isolation. International division of labor becomes suspect because it hinders the full use of national sovereignty. The trend toward autarky is essentially a trend of domestic economic policies; it is the outcome of the endeavor to make the state paramount in economic matters." -- Ludwig von Mises, Omnipotent Government(1944), p. 4.
About stable money . . .
"What strengthens the nation's domestic population is a predictable currency. This makes forecasting easier. It reduces people's concern about fluctuating currency values. But you cannot get a predictable currency internationally, because other nations are constantly tampering with their currencies, almost always by expanding the money supply. In other words, foreign central banks inflate. So, a domestic currency that is in fixed supply is going to appreciate in relationship to those foreign currencies. In other words, there will be an increase in purchasing power. . . ."
"So, a stable money economy benefits a majority of citizens, who are constantly able to buy at ever-lower prices. Defenders of mercantilism argue that this is a bad policy. They are convinced that the subsidy involved to the export sector from the central bank that is inflating the currency is a greater value to the nation than the reduced quantity of goods and services that are available to domestic customers. The defenders of mercantilism never discuss the economics of redistribution. They never point out that a majority of citizens experience economic losses, when compared to the gains that they would have made, had they been able to buy foreign goods at ever-lower prices."
"The world is adopting policies of competitive monetary depreciation. This is going to work to the disadvantage of the vast majority of citizens in every nation. They will not be allowed the benefit of having a strong domestic currency, which would enable them to import more goods from abroad. They would be able to get the goods and services they want, at an ever-declining price, if the domestic currency were based on a gold coin standard. If they had full gold coin redeemability on demand -- if they could go to a bank and get a fixed quantity of gold coins in exchange for digital money -- they would experience an ever-rising living standard. But they do not understand economics, so they consent to policies of mercantilism. This ultimately means monetary debasement. It steals from the masses for the benefit of the exporters. It sends desired goods to foreigners."
On central banking . . .
"We are now in a situation in which central banks around the world are expanding their holdings of government debt. They are doing this by creating money out of nothing. That is what central banks do. So, there is the so-called race to the bottom. All the nations are inflating, so that their exporters will not suffer from an appreciating currency. Central bankers regard appreciating currency as a disaster. They are mercantilists."
"I think the central banks of the world are now trapped. I do not think they can go back to anything like the conditions in 2007 or earlier without creating a huge recession. I really do think there is what appears to be a race to the bottom. I also think that, before the bottom is reached in industrial countries, central banks will cease inflating. That is when we will get the Great Default. But, for the moment, the race is on."
About economic ignorance . . .
"The people who believe that tariffs are good for the nation are literally incapable of deductive economic reasoning. This argument has been used by mercantilists ever since the late 17th century. Adam Smith'sWealth of Nations is a refutation of the mercantilist position. Nevertheless, people who are incapable of following a line of economic argumentation, and who get patriotic when they hear the word 'nation,' rush to promote tariffs. Thus, the combination of an ignorant patriotism and an ignorant economic analysis produces the statement: 'Protectionism is good for the nation.'"
"Unfortunately, so few people understand economic logic, that this subsidy from the majority to the minority is not understood as being a coercive wealth-transfer program for the benefit of the minority. Very few Americans understand this. Very few Chinese understand it. Whenever a nation adopts mercantilism, which is approximately 100% of the time, it does so on the basis that almost no one understands that the policy inflicts damage on the vast majority of citizens, and it benefits only a minority who are in the export sector of the economy."
"It is a shame that most people do not understand economics, but not a shame for favored exporters, who benefit from the theft of purchasing power. You cannot get something for nothing. A minority group of exporters get a lot. The masses get rising prices for almost everything."
Wednesday, September 3, 2014
On American problem . . .
"The problem is not China. It is not India. It is not imports. The problem is the endless call from each special-interest group for the government to Do Something to Save America. The problem is that the government has done way to much for too long, all in the name of Doing Something to Save America." - Gary North
On reduction of bureaucracy . . .
" State and local governments all over the country are dead broke, and an atmosphere of austerity is sweeping the nation. Right now state and local governments are slashing jobs at an unprecedented rate."
"This is bad? The states are firing people? This means less bureaucracy. I see this as one of the greatest developments in my lifetime. The states' payrolls are shrinking."
"In the past, government jobs were considered to be very secure and they definitely paid a lot higher than average. But now that era is coming to an end, at least on the state and local government levels."
"According to the Center on Budget and Policy Priorities, state and local governments have eliminated more than half a million jobs since August 2008. UBS Investment Research is projecting that state and local governments in the U.S. will cut 450,000 more jobs by the end of 2012."
On creating jobs . . .
"The politicians talk about little else than creating jobs, as if the government had the power to create jobs. The government has the power to reduce business regulations, reduce taxation, and let entrepreneurs create jobs." - Gary North
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