"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.'"
Friday, September 5, 2014
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 China . . .
"During the period in which China was under the rule of Comrade Mao, it had virtually no foreign trade. It had no products that could find markets in the West. The nation could barely feed itself. In some time periods, it could not feed itself. It had nothing of value to export. It had no foreign exchange reserves. It had no large-scale industrial production at all. It was a Third World nation. The only thing it could produce in large quantities was weaponry. It did not export anything to the West."
"Today, China is a major competitor in Western markets. Its economy is basically Keynesian. Its workers can move wherever they want. We are seeing the largest migration in the history of man from rural poverty to urban middle-class living. Hundreds of millions of people have moved from the rural countryside to large cities. This is not slave labor; this is free labor. There are no government restrictions on the movement of laborers. There are very few government restrictions on hiring these workers. There is almost no social welfare system imposed by the state. The Chinese labor market is vastly freer than labor markets in the West, which are dominated by trade unions that have gotten government support, meaning the threat of violence, to support the demands of union members. This is one of the reasons why Western manufacturers are having so much trouble competing against Chinese workers."
"Chinese workers are free to move from job to job, and Chinese employers are legally allowed to hire anyone they want. Under these conditions, it is the Western workers who are closer to slavery than Chinese workers are. Western workers who are not trade union members in Western Europe are forced to take less desirable jobs, because labor union members have locked out competition from nonunion workers. Unions have used the government to send out people with badges and guns to prohibit employers from hiring nonunion workers. This is not the free market; this is a government-rigged market."
"So, the next time you hear someone argue that Western workers need to be protected against foreign goods produced by slave labor, point out to him that the reason why Western workers want protection is because they are the slave laborers. They are finding it increasingly difficult to compete against workers who live in a nation that honors the principle of the free mobility of labor and voluntary contracts between employers and employees. China is a fierce competitor, not because it is a slave labor society, but because it is competing against workers who live in a regime of government-rigged labor markets."
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."
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