Ask a D.C. insider what’s the best way to solve the debt crisis. Nine times out of ten, they’ll recommend taking on more debt. That’s how things operate in the Potomac swamp. Up is down, right is left, digging yourself into more debt is the best way to get out of it. But it wasn’t always like this. In fact, there used to be common sense when it came to the economy. So where did it all go wrong?
Politicians talk about the uninsured. Special interests argue on behalf of those with pre-existing conditions. But why is no one wondering how doctors are affected by the new law? They’re the ones on the frontlines dealing directly with new patients, as well as the red tape that makes bureaucracies go round.
Politicians proclaim the benefits of small business while on the campaign trail. But when they meet in the seedy halls of Congress, they have no problem doing whatever they can to stifle, regulate, and subdue their progress. Instead of siding with entrepreneurs, these politicians often side with political allies and cronies that helped put them into office.
Just because you’re retired doesn’t mean you have to stop working. Especially now that you have all the time in the world to do what you really want. Entrepreneurs don’t only come out of Silicon Valley. They come from all walks of life, from all different ages. If you’re retired and want to stay active while you relax, then find out the steps you need to take in order to start, manage, and grow your next small business.
Austrian economics does more than tell you what happens when the government disturbs market forces. In the hands of knowledgeable investors and entrepreneurs, it can tell you exactly what to expect from the market. Market behavior depends on how people behave. And how people behave is central to the Austrian perspective.
The U.S. dollar has been the world's reserve currency for almost a century, and already there are signs it may be in decline. But that doesn't mean it's not still valuable. On the contrary... As Chris Mayer explains, there are many reasons the U.S. dollar will remain relevant on the world stage for years to come. Read on...
World War II might have dragged the country out of the Great Depression, but it did so at a great price. Central planning took center stage, and politicans and bureaucrats suddenly knew what was best for America, the economy, and your life. On top of that, they replaced the free market with a new economic system… Creditism.
If you’re good at something should you be penalized so others have a chance at success? Should award winning actors and actresses be barred from future Oscar ceremonies to give other men and women the chance to succeed? Success should always be rewarded and encouraged. But what happens when you have a government that wants to even the playing field and take away the spoils of success. Gregory Bresiger finds out...
Practical people often pooh-pooh fiction reading as a time wasting dalliance, dominated by a Marxist coloring of the world. However, fiction readers were given a scientific reason recently for spending hours absorbing fanciful figments of someone’s imagination.
Argentina is suffering the ravages of government debasement of the currency -- i.e., inflation, the process by which government pays for its ever-increasing debts and bills by simply printing more paper currency. The expanded money supply results in a lower value of everyone’s money, which is reflected in the rising prices of the things that money buys.
When government expansion is allowed to continue unabated or when it casts a heavy regulatory shadow on America’s entrepreneurial spirit, the freedoms that we’ve come to know, and perhaps take for granted, slowly begin to slip away.
Its acceptance is as widespread as its justification is important, for it provides the rationale for the Federal Reserve’s unprecedented monetary expansion since 2008. While critics may dispute the wealth effect’s magnitude, few have challenged its conceptual soundness. Such is the purpose of this article. The wealth effect is but a mantra without merit.
Baron Rothschild, the famous French financier, was once heard to say that he knew of only two men who really understood money -- an obscure clerk in the Bank of France and one of the directors of the Bank of England. “Unfortunately,” he added, “they disagree.”
The new reality of Obamacare’s tax credits has left finance reporters to pen articles warning readers to “take care” when considering a tax credit and providing strategies for how best to “protect yourself.” So what do finance reporters know that the White House doesn’t?
Nihilo ex nihilo fit. Out of nothing, nothing comes. First put forward by ancient Greek philosopher Parmenides in the fifth century B.C., Thomas Aquinas and St. Augustine later used this axiom to prove that the universe needed a “first mover” to get things going. Even if the whole thing began with some kind of “Big Bang” moment, it still needed a banger to bang it. Who? God, of course.
Economic theories don’t lend themselves to laboratory testing, so the work of a national appraisal firm is especially enlightening. A new study lends support to the Austrian business cycle theory, which says that the less government is involved, the faster a market will recover.
What positive steps can we take? The energy that is now expended by well intentioned, freedom-seeking individuals on the destructive course of politics can be turned into powerful steps that will have a positive effect on the future. All are moral, right and just. None require aggressing. Consider the following...
The Affordable Care Act creates a new health insurance marketplace (the exchange). But because of the great uncertainty about what buyers will enter the market and who will buy what product, the law creates three vehicles to reduce insurance company risk.
Politicians and bureaucrats are notorious for manufacturing euphemisms -- clever but deceptive substitutes for what they really mean but don’t want to admit. That’s how the phrase “revenue enhancement” entered the vocabulary. Some of our courageous friends in government couldn’t bring themselves to say “tax hike.”
It’s easy to be negative about the U.S. economy these days. Find a glint of silver, and folks come running to point out all of the dark clouds looming about. This, of course, is what we got last week when the monthly jobs report was released from the U.S. Department of Labor (DOL). Folks pooh-poohed the number of jobs and whining that they’re not enough or that it’s less than a bunch of economists thought that it might be. But you know what? Stuff ’em.
Facts are easy. You can check facts. What supporters of the Affordable Care Act are doing, on the other hand, transcends factual bungling. It’s far more advanced: a warping of reality so debauched it looks like something out of a tale by H.P. Lovecraft.
The east coast and parts of the southern U.S. were to varying degrees paralyzed by blizzards a few weeks ago. The snow as expected rendered the roads treacherous, and in anticipation of slick streets, shoppers flocked to the grocery stores in advance.The rush into grocery stores, and its aftermath, offers worthwhile lessons in economics.First up, […]
The highest form of charity, argued the 12th-century Jewish philosopher Maimonides, is when the help given enables the receiver to become self-sufficient.But our systems of state charity — aka welfare — have too frequently had the opposite effect: They have actually created dependency. It is time to rethink the way we help people.I’m going to […]
Last year was quite the year for Bitcoin. We’ve seen exponential growth in Bitcoin’s exchange rate and extensive coverage in the media. Another phenomenon we have witnessed is the proliferation of alternative cryptocurrencies, five of which we’ve provided below.What all of these cryptocurrencies have in common is that they rely on a decentralized network to […]
President Obama crowed in his State of the Union speech about the economy, even mentioning “a rebounding housing market.” Maybe he was referring to friends in high places, like the seller of Penthouse One in New York, which just closed for $50.9 million, all cash. Millions of mere-mortal homeowners likely wanted to throw something at […]
The nonpartisan Congressional Budget Office is acting in a bipartisan way to cover up the biggest single threat to the bipartisan political alliance that is stripping America of its wealth: the United States Congress.There is no question that the following policy is bipartisan. Democrats and Republicans in Congress are completely agreed that the following information […]
Recent difficulties with implementing the Affordable Care Act have increased opposition to the program. A majority of Americans now oppose it. Problems with the HealthCare.gov website are in all likelihood temporary. However, there are serious long-term problems, particularly considering long-term finance and labor supply issues. Given the mounting difficulties with and growing concerns about the […]
There’s a Mexican restaurant I like (I’m not saying where it is) that seems to thrive in good times and bad. It never has a shortage of servers, cooks and people to bus the tables, even when there are only a few customer cars out front. Actually, it is hard to tell the workers from the customers, and extended family seems to appear from nowhere, people of all ages, sometimes eating, sometimes just visiting and sometimes going back and forth to the kitchen.
How does this place handle the high costs of this labor? It’s the sort of question that is impolite to ask. A passing familiarity with the existing labor regulations, mandates, taxes and edicts on resident documentation permits anyone to figure this out. The place survives and thrives because all these niceties are ignored. The whole arrangement works through quid pro quos, barter, cash, underage labor and undocumented workers.
They know it. We know it. No one is hurt.
Consider another case lately in the news. A report from ABC did some sleuthing on educational institutions all over Australia, where government demands that everyone sign up for public school or officially register as home schooling. The report estimates that 50,000 families completely ignore these rules. Some families don’t believe they should have to register. Others have discerned that there is more risk by going legal than schooling underground.
We all know of such cases. We know a person who bakes cheesecakes in her kitchen and sells them to friends — all while ignoring licenses, health regulations, mandates on oven size, zoning laws and all the rest. Her kids help her in exchange for a weekly allowance — an arrangement that looks a lot like child labor. We know of people who have one normal job but also a job on the side making jewelry, designing websites or tutoring. They prefer cash.
All these small anecdotes — and we know many of them — come from every place in the world, especially with the recession’s intense economic pressures. Faced with the choice of complying with government or making a decent life for themselves, people tend to choose the latter. So it is with hundreds of street vendors in San Francisco. It’s this way for thousands of workers in Shanghai who make licit products in the day and “pirated” products at night.
This will be increasingly true in the digital economy now that the US government has shown its teeth and arrested and destroyed property in the name of enforcing copyright. The Web will not suddenly become the great land of compliance. Instead, those providing gray-area services will become more anonymous, less traceable, more private and obscure.
This is already happening, as ever more people are being forced to use IP-scrambling proxies to surf and put their content behind impenetrable walls. There is a tragic loss here, but it might prompt the final showdown in the great struggle between power and market.
Digital or not, the state can’t make trading, sharing and associating go away. It only inspires the traders and entrepreneurs to avoid risks in different ways.
During Prohibition, the speakeasies sensing a threat would change the passwords to get in the door. With the massive increase in government all over the world, vast swaths of the world economy have begun to operate just like these speakeasies of old. They were zones of freedom, but their operations were distorted because they didn’t have access to law and courts and because the people who ran them were from a class of citizens that was willing to take crazy risks.
We know all of this anecdotally, but what does it all amount to in the macroeconomic sense? I’m right now reading Stealth of Nations by Robert Neuwirth. It is a mind-blowing book because it is the first in our time to attempt a broad look at the meaning of all this unregulated, untaxed, unofficial economic activity. Neuwirth estimates that fully half the world’s workers are involved at some level in what he calls System D.
This is the sector that is variously called the “underground” and the “informal sector.” He prefers System D (the street term derived from the African French word for highly motivated people) because it is nonjudgmental. It refers simply to the sector of economic life that exists “outside the framework of trade agreements, labor laws, copyright protections, product safety regulations, anti-pollution legislation and a host of other political, social and environmental policies.”
He documents the amazing workings of System D and demonstrates that it is the world’s second-largest economy, amounting to economic productivity of $10 trillion, which is probably a low estimate. At the pace at which government is growing, System D is set to employ as many as two of three workers by 2020. My own sense is that Neuwirth actually underestimates the size since he overlooks sectors like health, education and finance — which are surely three of the fastest-growing components of System D.
Neuwirth himself is not a libertarian or a free market thinker in any sense. He is a reporter with a lefty bias — a genuine leftist who believes in exalting the contribution of the poor and the working classes to the social and economic order. His reporting led him to discover that a main driving force for the classes is the need for economic relationships, and then also to notice that the state itself is the main barrier to their advancement.
He remains ideologically conflicted throughout the book. For example, he rails against child labor on one page, but then notes that were it not for child labor, many kids around the world would not be able to buy clothes, food and education and would likely turn to prostitution or some form of subjugation. But ideology is not the main contribution here. It is framing up the reality in a way that we can become conscious of the whole.
Reflecting on the sheer vastness of this sector of life, one realizes the fiction, for example, embodied in official government statistics that record only the on-the-books sector of economic life. These agencies are pumping out half-truths and whole myths every day. One further realizes the immense damage that would be done to humanity in general should there come a time when government actually managed to enforce all its edicts. It would be catastrophic. We owe much of our prosperity to people’s willingness to enter the rebel class.