About No, They Can’t:

From the myth that government can spend its way out of a crisis to be mistaken belief that labor unions protect workers, Stossel, a true libertarian, provides evidence that the reality is very different from what intuition tells us. His evidence leads to the taboo conclusions that:
· Government already dominates health care—and that’s the problem.
· The state keeps banning foods, but food bans don’t make us healthier.
· Government-run schools and teachers’ unions haven’t made kids smarter.*

The event will take place at the Renaissance Waverly Hotel in Atlanta, GA. For ticket information and sponsorship, visit: www.fee.org/stossel.

It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a “dismal science.” But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.

In the current world, however, there are fewer excuses for not familiarizing ourselves with economics. This is because, as Peter Boettke often says, while economics is a deadly serious subject, it can explain in simple terms the world around us. Issues such as inflation, the financial crisis, unemployment, unionism, protectionism, taxation, the war on terror, the war on drugs, and more are all tied in with economics and our everyday lives. And as Ludwig von Mises said,

A man who talks about these problems without having acquainted himself with the fundamental ideas of economic theory is simply a babbler who parrot-like repeats what he has picked up incidentally from other fellows who are not better informed than he himself.

In today’s document Mises explains Capital and Interest should be read not only be professional economists, but also by the average person. Capital and Interest is a technical work, but as Mises put it,

Although Böhm-Bawerk’s great opus is “mere theory” and abstains from any practical application, it is the most powerful intellectual weapon in the great struggle of the Western way of life against the destruction of Soviet barbarism.

While our current threats may no longer include Soviet barbarism, technical works in economics are important for any concerned citizen hoping to sound off on our current issues in an informed and intelligent manner. While Capital and Interest may not be the most exciting book on economics it is important and insightful.

Download Mises Review of Böhm-Bawerk’s Capital and Interest here.

Listen to Lawrence Reed’s interview on The Mike Slater Show.

Fairchild, at the time a professor of economics at Yale University, attacked the ability-to- pay-principle of taxation, which states that the rate at which one is taxed should increase as income increases. And as Read told Hazlitt in the letter, “It is extremely important at this particular moment.”

So why might Leonard Read and the other founders of FEE have wanted to start with that topic?

The answer lies in what the principle truly means to a free society. Like the income tax itself, the ability-to-pay principle threatens the very foundation of a free society. It attacks private property and the wealth creation that comes with it.

Progressive taxation hides behind the mirage of social justice. But the principle itself is vague and lacks any true logical foundation. If followed to its logical conclusion, it would mean complete financial equality among all citizens. For any excess amount that one person has over another, no matter how small, would indicate an ability to pay more in taxes. And as Ludwig von Mises put it, “The only logical stopping place of the ability-to-pay doctrine is at the complete equalization of incomes and wealth by confiscation of all incomes and fortunes above the lowest amount in the hands of anyone.”

This is dangerous and counterproductive for a free and wealthy society. The only realistic way to achieve such equality is to level downwards, making us all worse off. It would cut away all the incentives to be productive. After all, money does not make money. As Murray Rothbard put it,

“To be earned, money must continually be justifying itself in current service to consumers. Personal income, interest, profits, and rents are earned only in accordance with their current, not their past, services. The size of accumulated fortune is immaterial, and fortunes can be and are dissipated when their owners fail to reinvest them wisely in the service of consumers.”

By taking away the profits of those who had previously and successfully satisfied consumers, we are taking away their incentives to do so again in the future. This also takes away the incentives of anyone new from similarly trying to create wealth.

Thus this justification of taxation attacks the very nature of what makes our society wealthy. It undermines our property rights and the incentives to be productive. It is not the justice of a free society but rather of highway robbers. We should be vigilant against anything that attacks the foundation of a free and prosperous society. Leonard Read and the rest of FEE’s founders understood this.

Download Read’s Letter to Henry Hazlitt from December 12, 1945 here. 

Dates & Times:

Monday April 2, 5:00 PM – 7:00 PM – Welcome Reception

Tuesday April 3, 10:00 AM – 2:00 PM – Entrepreneurship

Wednesday April 4, 10:00 AM – 2:00 PM – Free Enterprise

Thursday, April 5, 10:00 AM – 2:00 PM – Limited Government

Featured Speakers: Lawrence W. Reed, Dr. Burt Folsom, Representative Ed Setzler, Alastair Walling,  and more!

This mini-seminar will take place at the Georgia-Pacific building auditorium in downtown Atlanta. Monday evening will feature a dinner reception and keynote presentation by FEE President Lawrence W. Reed. Parents are strongly encouraged to attend the reception to become acquainted with the themes of the event (registration required). Tuesday through Thursday, the seminar will focus more on student audiences, featuring a catered lunch, activities, and lectures designed specifically for high school students.

Cost: This seminar is provided free of charge to the first 80 accepted applicants, thanks to the generous support of FEE donors. Participants are responsible for their own transportation and lodging.

*For questions or to volunteer to help staff this event, please contact Aaron Ensley at aensley@fee.org

Accepting applications now through March 15, 2012.

CLICK HERE TO APPLY

FEE seeks candidates who may be unfamiliar with the ideas of a free and prosperous society, but are eager to discover the driving forces behind the maximization of human potential. We strive to impart these principles to our students in order for them to articulate, debate, and defend them when they return home.

For a third consecutive year we will host seminars in our branch office location: Atlanta, Georgia. Taking place in the Georgia Pacific building, our exciting Freedom University seminar series are designed to introduce college students to: Austrian economics, history and current events. For the first time this year we offer a summer seminar only for FEE alumni. Communicating liberty is designed to teach FEE alumni techniques of how to become effective communicators and spread the ideas of liberty.

Our Advanced Austrian economics seminar will take place at the FEE headquarter office in Irvington, NY.

Beautiful Salt Lake City will be the home of two seminars specifically designed for high school-aged students.

The goal of our seminars is not only to educate and engage students with the ideas of the free and prosperous society, but also to create life-long associations between our alumni and the Foundation for Economic Education.

Please visit the seminars page to download and complete the application, and do a friend a favor by forwarding this link!

May you have a prosperous and liberty-filled New Year!

Take for example the issue of bureaucracy. Most bureaucracies are seen as terribly inefficient. The average person may even rant about how terrible the DMV or post office is (no matter how much it tries to appear like a normal business). Most people may understand that the problem has to do with incentives, but they will still probably think there is no choice but for the State to perform such functions. They likely believe that making a few changes or putting in the right bureaucrats can fix things.

Today’s document, Henry Hazlitt’s New York Times review of Ludwig von Mises’s Bureaucracy, shows why we come to view bureaucracies as inefficient. They simply lack the knowledge and incentive to perform efficiently no matter how benevolent the bureaucrats may be. As Hazlitt states, “For the main thesis of Professor von Mises is that bureaucracy is merely a symptom of the real disease with which we have to deal. That disease is excessive State domination and control.”

The issue, as Mises puts it, is whether society should be organized on the basis of private ownership or government control of the means of production. Should goods and services be provided by market or State bureaucracies. It’s one or the other; there is no compromise. With each you get a different set of incentives as well as a different ability to collect and use the information necessary to make efficient decisions.

In a totally free market a private firm (or department within) is guided by the profit motive. It has discretion to expand and experiment as it sees fit. If it fails it will know and if it succeeds it will be rewarded. Bureaucracies, on the other hand, are not guided by the profit motive. The quality of their work cannot be judged in monetary terms. They can have little-to-no discretion since their work must be centralized and operate under the detailed controls of their superiors. Market value cannot be attached to their “product.” In other words, they cannot engage in economic calculation.

The irony is that the decentralized market may seem chaotic and out of control, but in reality it produces efficient outcomes. Resources get channeled to where consumers most want them, to the betterment of everyone. On the other hand, the seeming control of centralized State power is actually a mess of inefficiency that is simply unable to achieve the stated ends.

Incentives do matter, and correcting those incentives starts with picking the right institutions for our society to operate under. Once we understand this, we will choose the free market.

Download Hazlitt’s Review of Mises’s Bureaucracy here.  

In his book, Peikoff, who became Ayn Rand’s intellectual heir, explains the parallels between America and Nazi Germany. This is not about the atrocities the Nazi’s perpetrated, but the ideas rampant in Germany that lead to the rise of National Socialism. The irrationalism and collectivism concerning the nature of man, knowledge, morality, and politics, in Peikoff’s opinion, all helped give rise to the terrible acts of the Nazi State and threaten America in a similar way.

Sadly, we have not improved. The Occupy Wall Street movement, while correctly seeing a problem, is mostly pointing their fury in the wrong direction, attacking the productive sector of our economy. In seeing evil in businessmen, they miss the point, and they fail to understand how wealth is created. It is true that much of Wall Street is in bed with the State, but is more government the correct solution to that problem?

This mistake made by the OWS movement should surprise no one. The movement is strongly steeped in collectivist thinking (sometimes creepily so). The movement truly believes it fighting for liberty. Individuals, in their eyes, seem to have a right to freedom from debt, freedom from need, etc. And it is the State that is to deliver us all from these chains caused by capitalism. But what they fail to see is that it is the State that is at fault in the first place, and giving more power to the State empowers it to perform the atrocities that Childs believes defines the history of the twentieth century.

If we continue down this path we may find that the stronger parallel may actually be to Ayn Rand’s Atlas Shrugged, a parallel that  is just as dangerous, if not more so. Businessmen will not take the antibusiness rhetoric forever; eventually the rise in State power will drive their production down more and more. In the novel Rand correctly shows how such a situation would be devastating. With the lack of business comes a desperate attempt by the State to set things right and to do so by force and planning, which sets us exactly on the road to serfdom that Hayek warned us about. But until we start to realize that the State is the negation of liberty and that freedom must be accompanied by self-responsibility, maybe the continuous growth of State power is exactly what we deserve.

Download Roy A. Childs, Jr.’s review of Leonard Peikoff’s Ominous Parallels here.

Dear Friend of FEE,

A short time ago, a good friend and supporter of FEE explained the importance of what we do. I could not say it better myself, so I share his thoughts with you:

What FEE truly offers are intellectual lifelines for people who are drowning in the contemporary educational system. The painful isolation of being surrounded by left-wing orthodoxy, the thirst for politically-incorrect educational material that just isn’t available in many of our high schools and colleges, the courage of local parents looking for ways to help their children out, the kids’ gratitude at finding the rich resources at your website and finding both mentors and companions for their intellectual journey. There is a lot at stake emotionally that people can relate to from their own experience.

Plenty is also at stake when it comes to educating the future generation of leaders. The U.S. Department of Education last conducted an assessment of economic knowledge for 12^th graders in 2006. Of the 11,500 students surveyed, only 42 percent were rated as “proficient” in economics by the study. A mere 36 percent of students could identify the federal government’s primary source of revenue. And only 46 percent could determine the effects of a price control. Of course, being a government test, it was biased from the beginning. The questions go on about abstractions like interest rates, unemployment rates, and trade agreements without ever mentioning that economics is the study of real people. Ludwig von Mises would be horrified to know this is how the knowledge of human action is tested. This is why FEE’s educational services are needed.

To read the rest download the 2011 Year-End Appeal in PDF:

Having trouble downloading the PDF? Try clicking here:
http://www.fee.org/wp-content/uploads/2011/11/FEE_EOY_LET_Online_PROOF1.pdf

The Foundation for Economic Education is a leader in the liberty movement. Through our seminars, books, publications and lecture series and on behalf of our generous donors we are working to counter the efforts that threaten our freedoms.

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Today’s document is a review of Henry Hazlitt’s A New Constitution Now from The Nation on December 5, 1942, by an unknown author. It’s titled “Constitutional Practices vs. Constitutional Revolution.” The author seems skeptical of Hazlitt’s main and radical point, but is overall just descriptive. Hazlitt wanted to replace our current system with an English parliamentary system. Why? Because by 1942 Franklin Roosevelt had almost a complete disregard for the Constitution. Presidential power had grown. The constitutional constraints simply were not working. Hazlitt’s case can still be made today.

Hazlitt’s proposal was radical, not because of what he suggests we replace our current system with, but rather because he saw a problem in the first place. The reviewer wrote, “I feel that it indulges in rather too much exaggeration to be as effective as it might have been.” Such attitudes can cause massive problems. It can lead to adoptions of amendments such as the 18^th amendment (Prohibition), which was not meant to restrain the government’s power but to actively extend it. Such attitudes can make a constitution no constitution at all.

The constitutional political economy project, which James Buchanan and Gordon Tullock revived in economics back in the 1960s, is no easy task. Politicians are not so noble as Ulysses, and are unwilling to bind themselves to the mast. And as Tullock pointed out, any government strong enough to create the chains to bind themselves are strong enough to break them anyway. The fact that Hazlitt saw the need for a constitutional revolution back in 1942, and that the case can still be made today, are not good signs.

Hazlitt’s solution, a parliamentary system, might not be the way to go either. As he admitted later in life, his proposal didn’t explain how to check the parliamentary power. No one has produced a real solution for how to maintain a limited government. Maybe there is no way. As Ludwig von Mises put it, “The state is the negation of liberty.” The State’s tool is coercion after all. Hazlitt was right about one thing though: The first step is to admit there is a problem.

Download the book review of A New Constitution Now here. 

The closest the Soviet Union came to actual pure socialism was the period known as War Communism, 1918 to 1921. This period is unanimously seen as a disaster, even among socialists. Production fell in most if not all industries, and millions starved to death. From then on the Communist Party struggled to keep hold of both their Marxist ideology and their power. Naturally the latter took precedence, and as a result the price system, which they originally wanted to abolish, took on a larger and larger role. Henry Hazlitt discusses Josef Stalin’s struggle with exactly this problem in today’s document, the October 20, 1952, Newsweek Business Tides column, “Stalin as Classical Economist.”

The Soviets certainly liked to keep up appearances. At a glance the Soviet economy looked centrally planned. The planning board for each industry set output levels, and the State owned de jure all means of production. A closer look, however, revealed a different story. As Boettke and Anderson pointed out, the Soviet economy was closer to that of a mercantilist economy, a heavily regulated market economy effectively run by rent-seeking government officials and factory managers. De facto, the factory managers were the owners and residual claimants. They paid the State for the right to run the factory, and in return the State created a monopoly for them, just as in the mercantilist system of old.

Middlemen, known as the Tolkachi, worked on behalf of the State enterprises to sell surplus commodities on the one hand and purchase needed products on the other. They essentially created a market that allowed for economic calculation not possible under a pure socialist system.

This system of course was highly inefficient and unstable, but it allowed the Soviets to stay in power a lot longer than would have been possible under their socialist dream. As Hazlitt put it, “[B]ureaucratic price fixing is a farce, a fraud, and a disaster, . . . economic planners are presumptuous blind men groping in the dark, and . . . there is no substitute for free markets.” In reality, as Hazlitt shows of Stalin, the Soviet rulers were simply putting on a show. Playing the role of the productive socialist economy was capitalism itself.

Download Hazlitt’s “Stalin as Classical Economist” here. 

Download and print out your own flyers
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Click here to download the one page Summer Seminars flyer.

Click here to download the front page of the Summer Internship flyer.

Click here to download the back page of the Summer Internship flyer.

“The Foundation for Economic Education is a fantastic resource for students in the liberty movement. My experience at their Austrian Economics summer seminar was excellent. Not only did I learn more that week about economics than I have my whole time as a student, but I had fun while doing it!” – Morgan Freeman, Students For Liberty Campus Coordinator & FEE Alumna

Reed served as the president of the Mackinac Center for Public Policy for twenty years and founded the “Champions of Freedom” award fifteen years ago. He has been president of the Foundation for Economic Education since leaving the Mackinac Center in 2008.

The Mackinac Center issued a Press Release which, in part, reads:

The award was conferred unanimously by the Center’s Board of Directors. It reads in part, “Lawrence W. Reed has championed the virtuous circle of self-help and civil society, maintaining, as he once wrote concerning the dozens of oppressed nations he had risked visiting: ‘We need to take time to assist our brothers and sisters who are laboring in the same vineyards, on behalf of the same causes. When we strengthen others, we all grow stronger.’”

Mackinac Center President Joseph G. Lehman introduced Reed, saying, “Larry Reed is a good man, but he’s also a great man. He’s been my friend and professional mentor for 17 years. His resume is stuffed with great achievements that you don’t hear him blowing his own horn about.”

Read the Mackinac Center for Public Policy’s Press Release about the award here and watch the ceremony here.

Today’s document is from the letters section of the New York Times. Eugene Davidson, the editor of Yale University Press at the time, responded to Galbraith’s attack, and Galbraith in turn responded to him (hat tip to Emily Skarbek). Davidson pointed out that “[i]t is an important thesis of the book, and therefore of the jacket copy . . . that government intervention in the market economy produced systems of increasing economic and political coercion that have led to totalitarianism in some countries and to near bankruptcy in others. This intervention in his opinion was supported by erroneous popular economic theories that have swept through Europe and made great headway in the United States.” As a result Davidson claims the jacket is merely condensing Mises’s view, as any good book jacket would. But Galbraith still didn’t buy it, claiming that Yale University Press took authorship of the plug.

Galbraith’s position seems strange. Why wouldn’t a publisher promote the book it has put out? Yale University Press, like any good academic press, will publish works on a wide range of topics and positions in order to engage in scientific discourse. It wants individuals to read the books.

Galbraith strangely ignores that this is a work of positive economic science; he viewed Human Action as a mere polemic, completely overlooking the value-free, means-ends approach Mises took. Human Action is a work of economic science and should be judge accordingly.

This exchange between Davidson and Galbraith raises a few questions. What is the role of a university press in the science of economics? How should a press go about promoting the works it puts out? Between the publisher and Galbraith, who do you think is right?

Download the Yale University Press’s response here. 

Since 2008, Kofi has managed the Africa Youth Peace Call (AYPC), an independent, non-profit, research and educational organization devoted to the principles of individual liberty, private property rights, free markets, the rule of law and limited government. Kofi’s Facebook page (which I invite you to visit) declares that AYPC “is dedicated to the study and advancement of classical liberalism in Africa.”  Much like FEE, AYPC seeks “to change ideas and opinions by research, seminars and publications.” Its goal is nothing less than “to become the leading libertarian organization in the freedom education of young people in Africa.”

Through its “Liberty and Entrepreneurship Camps,” AYPC seeks “to arm students with ideas to be self sufficient instead of looking to the state to employ them after graduation.” Kofi says that, “Giving these future leaders the right ideas will free them and many others from the lies and depravity of socialist ideals which are so pervasive in Africa, especially in our institutions of higher learning.”

FEE publications have been a regular feature at AYPC’s camps and other programs. A favorite is the classic essay, “I, Pencil” by our founder, Leonard Read. As you can see from the accompanying pictures, copies are in the hands now of promising young students who just might change the future of Africa in the right direction. In a note to me in early November, Kofi wrote:

“I‘m proud to say that your moral, spiritual and financial support to the camps are paying off. In his speech at the last camp, Chris Kuranchie affirmed that we can only win the battle against poverty and tyranny if we expose our future leaders to free market principles at a very tender age. He’s collaborating with AYPC and his teacher colleagues to set up more clubs in other schools and communities. After showing John Stossel’s video on Greed, the leadership and the 12-to-16-year-old attendees affirmed a new motto: Liberty: Do Harm to No One; Take From No One His Own; Gold is Coined Freedom.

A reading session featuring “I, Pencil” at AYPC’s camps involves the students reading and discussing the essay one paragraph at a time. Kofi says it’s “amazing” how it teaches the students an appreciation for the “spontaneous order” of free markets.

If friends of FEE wish to communicate and/or donate to AYPC, feel free to write directly to Kofi at kofi@aypcghana.org. The organization’s web site is http://www.aypcghana.org/.

Kofi’s next Liberty and Entrepreneurship Camp is scheduled for January and as of today, AYPC is about half-way toward its fundraising goal for it. With only a $5 donation toward his “chip-in fundraiser,” you can help him spread liberty in Africa via this link: http://aypc2011finalpush.chipin.com/african-peace-youth-call-ghana

Thus Hazlitt is a perfect individual to trust when it comes to advice on what individuals interested in economics and freedom should read. It is no surprise that throughout his life, as a writer for many prominent newspapers and magazines, including the New York Times  and Newsweek, Hazlitt’s advice would be sought by eager readers. This prompted him to write The Free Man’s Library. Published by D. Van Nostrand Co. Inc. in 1956, the book contained 550 titles on the philosophy of liberty, covering a wide range of topics: from why free trade and free markets work to the evils of excessive State power. The Free Man’s Library, however, doesn’t simply list the books but also provides a critical description of each work.

Today’s document (sorry for the faded quality) is a short list of the best economics books in The Free Man’s Library.  Hazlitt hoped “that it will answer most inquires by readers along these lines.” He presents his own Economics and One Lesson (no sense being modest with such an amazing book!) and Faustino Ballve’s Essentials of Economics as the best introductory books. Wilhelm Röpke’s Economics of the Free Society is listed as the best intermediate work. The best works critical of government intervention are Röpke’s A Humane Economy and F. A. Hayek’s The Road to Serfdom. The dangers of inflation are explained in Gottfried Haberler’s Inflation: Its Causes and Cures and Hazlitt’s own What You Should Know About Inflation.

Finally, he presents four books he thinks are the best comprehensive and advanced works on the principles of economics. To anyone who knows Hazlitt’s work the first two should be no surprise: Human Action and Murray Rothbard’s Man, Economy, and State. A third is Hayek’s The Constitution of Liberty. The last is Philip Wicksteed’s 1910 book, The Common Sense of Political Economy.

All these books deserve to be read more than they are today, particularly Wicksteed’s, which developed a system of political economy from reflection on and careful study of the everyday conduct of human beings. Economics concerns all people whether they know it or not. Thus we need to understand the economy as a system. Understanding this is more likely to make us free.

Download Hazlitt’s best of The Free Man’s Library here. 

The first edition of Human Action was 889 pages. It was, after all, a treatise on economics. Galbraith, however, barely mentions this. Instead he concentrates his review on Mises’s view of the State. Written in a tone of “Can you believe how irrational this is?,” Galbraith shows how Mises paints the government to be the enemy of the market. There is no need to deny Mises’s distrust of the State. As Galbraith points out, to Mises “Government is in the last resort the employment of armed men, of policemen, gendarmes, soldiers, prison guards and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing and imprisoning.”

Galbraith does seem to show some respect for Mises’s defense of the market. As Galbraith put it, “The market, even more than the wheel, is one of the great commonplace servants of man. Professor Mises powerfully defends it against those who would subvert it to the service of the selfish or shortsighted ends.” But, he continues, “it is possible that the defense is stronger when in the hands of somewhat more moderate men.”

Should the defense of the market, and liberty, be left to more moderate men? I would argue no, it should not. What is moderate will depend on what is popular. Liberty and free markets are not in fashion, just as they were not when Human Action was written. Moderate men would compromise liberty away, just as Mises had warned. And a major reason for this is that many do not see the State for what it truly is. It may make one a radical to claim, as Frederic Bastiat did one hundred years before Mises wrote Human Action, that “the state is the great fiction by which everyone tries to live at the expense of everyone else.” And the State does this through the use of coercion. What the State gives it must take violently away from someone else. One need not be an anarchist to recognize this. (Neither Mises nor Bastiat was an anarchist). If someone doesn’t recognize the danger of fire, we shouldn’t be surprised when he gets burned (which is not to claim that the state is as necessary or useful as fire).

The critics of Human Action should take more time to carefully read it. Mises builds a system of economics from the ground up; thus his beliefs expressed about the State do not appear out of thin air. Perhaps if they read more carefully, those who share Galbraith’s view would realize that such a blind faith in the State to cure the ills of society is really the naive position.

Download Galbraith’s review of Human Action here. 

The Foundation for Economic Education has been hosting these Evenings With FEE for several years with speakers like Robert Levy (Chairman of the Cato Institute’s Board of Directors), Steve Horwitz (Professor of Economics at St. Lawrence University), and John Blundell (Former Director General & Ralph Harris Fellow at the Institute for Economic Affairs).

Couldn’t make it to the Evening At FEE? Watch it in HD here: http://youtu.be/v4nbgZH3xrQ

It is no surprise that the ideas contained in The Road to Serfdom would raise a certain passion in those who still held on to a belief in a free society. It represented a viable alternative to the zeitgeist of the time, which was defined by socialism and scientism. By World War II, both ideas had become presumptions for all Progressive intellectuals. In other words, positivism and formalism had become the norm for scientific discourse, and this paved the way for a “science” of control. The result was a marriage of science and statism. Denying either was tantamount to rejecting logic and reason.

During a book tour, Hayek spoke in Switzerland with businessmen who asked him to recommend ways to propagate a free society in spite of the zeitgeist. “The professor wisely responded that it was not his job to make propaganda – that he could only concentrate on the search for truth,” Hunold said. In other words, it is not the task of the intellectual to publicize the ideas; this is a job for others. It does not mean, however, that there is nothing to be done. Hayek, by gathering like-minded intellectuals together, as well as a few businessmen and activists such as FEE’s Leonard E. Read, was able to spread classical liberals ideas, bringing them back to a greater prominence.

Hunold notes one result: When Ludwig Erhard lifted price controls, shooting Western Germany into prosperity. Hunold credits the intellectual seeds sewn by Walter Eucken and Wilhelm Röpke. The increase in popularity of free markets in the 1980s can also be considered another example. Both Ronald Reagan in the United States and Margaret Thatcher in the Great Britain espoused the ideals of free markets (at least rhetorically). The roots, however, lie in intellectual efforts years earlier by groups such as the Mont Pelerin Society and the FEE.

Now such intellectual movements may not by themselves explain the changes in policy and may not guarantee success, but they are undoubtedly important for social change in any direction. When fighting for unpopular ideas, we are bound to be ridiculed, ignored, and treated with downright hostility. Hunold showed how Joseph Schumpeter mocked the Mont Pelerin Society in its early day when he said that the best proof his thesis that liberal ideas no longer played any role whatsoever in public life was that meeting of liberal economists “on the top of a Swiss mountain of which I have forgotten the name.” Similar mocks and jeers occur today from economists and other intellectuals, but this should not be discouraging. After all, it is always time to stand up for what we believe to be the truth. It is always time to defend and work for a free society.

Download Albert Hunold’s “The Story of the Mont Pelerin Society” here. 

FEE is offering cash prizes to the top three student-produced YouTube videos based on this essay about the Great Depression. Here are the rules, which you should feel free to forward to anyone:

“Great Myths of the Great Depression” Video Contest

1.     Maximum length of a video: 8 minutes. No minimum length, though the shorter a video the better chance of more views on YouTube. It should be concise, in good taste and visually appealing. Must be in English.

2.     Video must explicitly mention FEE and the essay the video is based on, though other sources may certainly be used as well, if properly cited.

3.     Video may be a synopsis or the entire essay or it may focus on one or more particular aspects of the Depression. It doesn’t matter which of these two possible courses a student may choose to pursue.

4.     Description section must include link to FEE.org, the “Great Myths” essay on the FEE website, as well as a link to the FEE Facebook page.

5.     Video must have active hyperlink to FEE’s website.

6.     Multiple people may be involved in the production of a video though only one person will receive payment if selected as a winner.

7.     Video must not be political in any way, i.e., favor a particular candidate for election, or bill before congress.

8.     Infringements of copyright will disqualify a video. Please cite all sources and use other elements legally.

9.     Participating students must be between the ages of 14 and 24 or otherwise a full-time student in high school or undergraduate college/university.  Winners will be asked for proof of age.

Deadline for submission of YouTube link is midnight, January 15, 2012 EST. Students are to notify us of their posting on YouTube, via e-mail to greatmyths@fee.org by including: first and last name, phone number, e-mail address and link. Questions about the contest not answered here should be sent to that same address.

Judging by a panel of experts selected by FEE will begin February 15th after each entrant has had a full month to promote his or her video. Winners will be announced in the month of April.

Each video will be judged by the following criteria:

·      Qualitative assessment by FEE judges–how effectively and creatively it conveys the major points and message of the essay. In other words, “Is this persuasive? How well does this video keep its audience, educate and inspire them?” – 75% weight.

These additional criteria will be given a combined weight of 25%:

·      Number of hits on YouTube;
·      Number of “Likes”;
·      Number of comments;
·      Number of favorites.

First Prize: $1,500

Second Prize: $1,000

Third Prize: $500

Honorable Mentions if appropriate.

Thanks and Good Luck!

What seems to be motivating the protests? At least in part the goal seems to be equality. The protesters apparently think it as unfair that only a small percentage, the very rich, has so much while everyone else has much less. Today’s document, an article from 1948 by economist Wilhelm Ropke titled “Crusade Against Luxuries,” is relevant. Ropke’s article shows the fallacies related to the prohibiting of luxuries in order to provide more for the poor. Similarly the protesters are revolting against the wealth of the “fat cat” bankers and other large corporations, while most people can’t get simple jobs, afford health care, or pay off their student loans. True, there are individuals with yachts while others barely making a living. The fallacy, however, is in the solution.

Ropke shows that prohibiting certain luxuries does not translate into more for the poor but instead “substitutes” certain luxuries for other less desired luxuries. What we end up with is the same amount of luxuries, or only slightly less, with lower utility throughout society. If the Wall Street protesters get their way, however, things could be even worse. The socialization of industry and banking would be a disaster and overregulating would simply incentivize businesses to produce less, which would mean higher not lower prices. Again we would all be worse off, not better.

So what is the solution? It’s all in the institutions. As David Hume put it, we need to assume all men are knaves. Thus we should want a society were bad men can do the least harm. Right now government power is backing the large corporations and large banks, protecting them from the difficulties of competition. This is the “capitalism” libertarians are attacking. It is crony capitalism, the use of government coercion to back certain individuals and businesses at the expense of everyone else. We want to eliminate this cooperation between government and business. Let free markets and real competition reign. This competition will result in a process that will produce more and more products at lower and lower prices.

The hurdle we need to get over is exactly what Ropke brought up back in 1948: Public Choice problems. There are a lot of vested interests that will not give up their power without a fight. But as a first step we need to recognize the true enemy to progress and freedom: government involvement in the economy. We need to realize that voluntary interactions are superior to any form of coercion, including by government. The protesters want to fight fire with fire and in doing so, they ignore Public Choice issues to their own detriment.

Download “Crusade Against Luxuries” by Wilhelm Ropke here. 

Writers of all ages are invited to address the following:
“Should the Federal Reserve be abolished? What monetary system should replace it?”

Deadline: Midnight, Dec. 31, 2011
Length: 2,000 words. No footnotes or endnotes.
Email Word file to: essaycontest@fee.org
(One entry only.)

The winner will be awarded $2,000 and have his or her essay published in The Freeman.

Eligibility: The Eugene S. Thorpe Writing Competition is open to writers from around the world, including students, freelance writers, teachers and professors, and business professionals. There is no minimum or maximum age for entrants. FEE employees (and their immediate family members), trustees, and Freeman editors and columnists are not eligible.

Eugene Stephenson Thorpe (1913–2001) was born in Elroy, Wisconsin, and graduated from Cornell University with a degree in civil engineering. An early critic of FDR and the changes his policies made in the fabric of American life, Mr. Thorpe’s core beliefs included hard work, free trade, small government, and self-reliance.  He was a longtime supporter of the Foundation for Economic Education and a devoted reader of The Freeman. His children have fittingly established the Eugene S. Thorpe Award as a tribute to his life and ideas.

There is nobody in this country who got rich on his own. Nobody. You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

In part she is right. Our economy is based on social cooperation under the division of labor. Our ability to become as wealthy as we have rests on this cooperation, where each of us specializes in the things we do best. The problem is the jump in logic taken from there. As Sheldon Richman points out, her argument is a non sequitur. The jump from working together to higher taxes, particularly for wealthy businesses, doesn’t necessarily follow. Further, the “social contract” she mentions was signed and agreed to by no one. In fact some of the only, if not only, historical examples of real social contracts can be found in medieval trading towns in Germany and on pirate ships, and certainly neither are applicable to our modern and complex society. Providing certain services does not imply complete ownership over us.

There is, however, more wrong with Warren’s words. In Philosophical Society: The Tale of the Slave, the obligation to “pay forward for the next kid who comes along,” she seems to be implying that businessmen, at least in part, should work for the good of others. Going into business requires you to work for others because others worked for you, making your profits possible. This is the Cliché of Socialism number 41, as Leonard Read pointed out.

Morally the libertarian should be outraged by such a notion. Nozick’s tale of the slave may even come to mind. But again, it is a non sequitur. Those things, which “we” have paid for, that benefit the factory owner and other businessmen are just that: beneficial! So much so, in fact, that most would be willing to pay for these services. There is little-to-no reason businesses should pay more in taxes so the State can provide these and many other “services.” They could be provided, at least for the businesses, privately.

Moving your goods to market is all part of the costs of doing business. It is in their own self-interest to make sure they have the roads necessary to get them to the customer (meaning they have a willingness to pay). Roads in fact were historically provided privately, and some still are today.

Employees have an incentive to educate themselves. When we go, or our parents send us, to school we are investing in our future. In other words, we are hoping education will result in higher wages in the future. And employers prefer this because it means a higher productivity. There is already an embedded incentive to educate.

And security. Many businesses don’t even rely on the police but instead hire their own private security. Making sure their goods are secure is another cost of doing business that firms have their own incentive to provide. Some of the safest places in the world are safe not because of public police but because of private security and commerce.

Businesses are willing or would be willing to pay for these things because it is in their own self-interest. And similarly other individuals and businesses would be willing to provide them. There is no need to rely on the coercive tools of the State or some notion of a mythical obligation towards a social duty to provide these goods. As Adam Smith put it,

He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. . . . By directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it.

By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.

In other words, these selfish businessmen earning a profit are benefiting society. They are providing society with goods that it wants; it is making us better off. The larger the profits the more it has paid it forward.

The above is not necessarily an argument for anarchy in the broad sense. A case could be made for the need of a State, but that is an argument for another  time and place. What it shows, albeit in an overly simplistic form due to space constraints, is that these goods which make most businesses possible are in themselves the products of businesses. This could all be up for debate. After all a case can be made that these are public goods that would be underprovided by the market. But they certainly can be provided. Even if it is true that they cannot, businesses still pay it forward through the value they generate.

Warren’s argument seems unjustified; the State she envisions is much greater than it needs to be. Thus higher taxes are not necessary; a cut in government is. We are in debt because the State does too much. This type of collectivist thinking will only undermine the incentives that make social cooperation under the division of labor work.

Download Leonard E. Read’s Cliché of the Socialism Number 41 here.  

September 29 is the 130th anniversary of Ludwig von Mises’s birth.

Click here for a selection of Mises’s Freeman writings.

See also:

“The Philosophy of Ludwig von Mises,” by Edmund Opitz

“Salute to von Mises,” by Henry Hazlitt

“Ludwig von Mises (1881-1973): A Prophet without Honor in His Own Land,” by Bettina Bien Greaves

For more: search on “Mises” in our archive.

Many of Leonard Read’s works, including “I, Pencil,” which was subsequently featured in Read’s book Anything That’s Peaceful, can be found in our Archives.

Read passed away on May 14, 1983 at the age of 84. He is greatly missed by those who knew him but his legacy continues to live on through the work of the Foundation for Economic Education.

Learn more about Leonard Read here Leonard E. Read: A Portrait and here Leonard Read, the Founder and Builder.

A large motivation in the early days of economics as a discipline was to fight that fallacy. The mercantilists were seen as the villains in Adam Smith’s work, and this continued into the nineteenth century and up to today. Today’s document, a Henry Hazlitt Newsweek Business Tides column from March 13, 1961, helps to show how alive and well protectionism was in the 1960s.

So why is protectionism a fallacy? First, wealth is not money. When we buy goods and services from abroad, the money leaves the country but something we value even more replaces it; trade is mutually beneficial. Wealth is an increase in the things that make us better off, money is our medium of exchange. Second, when domestic producers are outcompeted by foreign producers this frees up domestic producers to make something else that we were not able to make before. Now we get the goods we purchased abroad plus other goods we value. Society sees a net gain, not a loss. And finally, trade is two-sided. When we buy something from abroad with dollars, in the long run those dollars must come back, either through the purchase of domestic goods or investment in domestic industries. So buying foreign goods eventually stimulates domestic production.

As a result protectionist policies hurt domestic consumers. The extent of the division of labor is reduced, and resources are made more scarce. With the scope production narrower than it would have been, we are less, not more, wealthy.

Economists have long pointed out the absurdities of protectionism. Frederic Bastiat, in one of the most famous and best allegories in economics, ironically “called for” measures to protect French candlestick makers from unfair competition from —  the sun! If we are to protect domestic producers from other foreign competitors why not stop one that competes with them for half the day?

Clearly this would be an absurd use of resources and would make everyone worse off.

This is why nineteenth-century economists had such an affinity for the smuggler. As Nassau Senior put it, “[T]he smuggler is a radical and judicious reformer.” In countries which excessively prohibit the importation of foreign goods, he said, “the smuggler is essential to the well-being of the whole nation.” Economists such as Senior saw those who defy these bad laws as our only protection against the ruin these laws bring.

Protectionism may sound like a good idea but it misses most of the picture. In reality it helps a few at the expense of everyone else. It is pretty obvious that the sun is not our enemy, but neither are foreign producers of the goods we love to consume. If they can be consumed at lower cost than domestic producers can provide them, then this is a good thing.

Download “Protectionism” by Henry Hazlitt here. 

It is not surprising that to an untrained eye the current crisis may appear to be the result of greedy businessmen and the failure of capitalism. After all, banks failed and individuals invested too much in housing. But as Chicago economist Gary Becker recently pointed out, markets work extremely well and the failures we have seen are a result of government intervention, not the workings of the market itself.

So why then do some economists jump the train of economic theory? It could be that they do not see economic theory as matching the real world. Homo economicus (economic man) does not reflect reality. This maybe true at some level, but after all, these are only models. They are not supposed to map reality. Their purpose is to use abstractions to simplify and render understandable the complex world we live in.

When the real world does not match reality it is certainly easy to abandon the models, say they are not accurate enough, and move on to something else, and many have done this. The problem, though, is that since Adam Smith, much economic theory has been shown time and again to be correct. Its abandonment is likely a matter of lazy analysis and/or a lack of fundamental understanding of economic theory itself. A deeper look at what is going on often shows that economic theory is indeed correct.

John Kenneth Galbraith in the late 1970s produced a television series and book titled The Age of Uncertainty, which like many economists today abandoned much of economic theory. Today’s document is a review of Galbraith’s ideas by Chicago economist George Stigler:  “John Kenneth Galbraith’s Marathon Television Series: A Certain Galbraith in an Uncertain Age.” Stigler is rightly critical of much of what Galbraith presents and, like Becker’s recent article, shows why economic theory is being misunderstood and misused.

Take, for just one example, Galbraith’s interpretation of Adam Smith’s notion of self-interest, an idea that is constantly misunderstood even today. Galbraith seems to believe that self-interest might not lead us to the socially optimal outcome, as the invisible-hand idea would suggest. This is a terrible misunderstanding of the role of self-interest in economics.

First, self-interest does not automatically equal greed in economic theory. It is not assumed that individuals are motivated solely by selfishness or material gain. Economics is not about the particular motivations individuals have but rather is a method of analysis. It assumes individuals attempt to maximize their welfare as they conceive it, which can be selfish, altruistic, spiteful, loyal, or even masochistic. Individuals are attempting to achieve their ends with the means they believe to be the best.

Second, institutional context matters. The rules we live under will determine whether Adam Smith’s invisible hand achieves socially beneficial outcomes or not. The invisible hand guides self-seeking individuals — people who are attempting to achieve their ends — to serve the public good, but only under the correct rules. Private property, freedom of contract, and competition are all necessary to achieve what Smith envisions with the invisible hand. As Sigler says in the review, “[T]o discuss Smith’s theory without mention of competition is to discuss Napoleon without mention of war.”

As Becker pointed out in the article mentioned above, the failure has not been with economic theory but with the disruption of the competitive process that markets operate in. The failures we see are not only compatible with economic theory, but are explained by it.

Both Becker and Stigler understand that when economists talk about market failure and abandon economic theory, it is more than likely that they simply do not fundamentally understand economic theory. This is why, when it appears markets are not working, we would do ourselves a great service by stepping back and using basic economic principles to analyze what is going on, rather than abandoning them all together.

Download the Stigler review here.

Anna has been with the Foundation for Economic Education for over a year and in that time has proven to be an integral part of the FEE team. She began her career with the Foundation as the Assistant Director of Programs and, just months ago, added the responsibilities of FEE’s new alumni outreach and retention initiative.

In her new position Anna will continue to oversee alumni relations but will also manage the programs department; mainly by ensuring the continued success of FEE’s high school and college summer seminars.

“Nobody looks forward to working with students more than Anna. Her passion for educating, inspiring and connecting future leaders through FEE programs is contagious. Congratulations, Anna, for your commitment to youth and for helping FEE’s donors get the biggest bang for their bucks in the liberty movement!” said Lawrence Reed, president of the Foundation for Economic Education.

From all of your friends at FEE, Congratulations Anna!

Rothbard articulates the economic way of thinking in a clear and straightforward way, making economic theory accessible to a wide variety of individuals. His discussion on price formation (not determination) is significant for understanding Austrian price theory. His elaborations on capital, production and entrepreneurship, money’s role in the business cycle, monopoly and competition, the role of the State, and political economy are all indispensable for economists to better understand the world outside our windows. Peter Boettke and Christopher Coyne have also pointed out the vital insights Rothbard contributed to the socialist calculation issue in Man, Economy, and State.

The bottom line is, despite being a principles text, Man, Economy, and State made important analytical contributions to economics. It also is taken for granted just how knowledgeable Rothbard was of mainstream economics of the time, which is illustrated by his footnotes. These footnotes deserve as much attention by scholars as the main text.

“It is in fact the most important general treatise on economic principles since Ludwig von Mises’ Human Action in 1949.” These closing words of Hazlitt’s review help to clearly illustrate my point. Hazlitt was not one to make such a statement lightly. Human Action was of earth-shattering importance for individuals like Hazlitt. Just as in 1962, both books are still as important today, along with F. A. Hayek’s Individualism and Economic Order and Israel Kirzner’s Competition and Entrepreneurship. These are the texts that anyone who claims to have mastered Austrian economics needs to have read and absorbed.

Download Hazlitt’s review of Man, Economy, and State, “The Economics of Freedom” here.

Capital without labor means machines with no operators, or financial resources without the manpower to invest in. Labor without capital looks like Haiti or North Korea: plenty of people working but doing it with sticks instead of bulldozers, or starting a small enterprise with pocket change instead of a bank loan.

There may be no place in the world where there’s a shortage of labor but every inch of the planet is short of capital. There is no worker who couldn’t become more productive and better himself and society in the process if he had a more powerful labor-saving machine or a little more venture capital behind him. Capital can refer to either the tools of production or the funds that finance them. It ought to be abundantly clear that the vast improvement in standards of living over the past century is not explained by physical labor (we actually do less of that), but rather to the application of capital.

This is not class warfare. I’m not “taking sides” between labor and capital. I don’t see them as natural antagonists in spite of some people’s attempts to make them so. Don’t think of capital as something possessed and deployed only by bankers, the college-educated, the rich, or the elite. We workers of all income levels are “capital-ists” too—every time we save and invest, buy a share of stock, fix a machine, or start a business.

And yet, we have a “Labor Day” in America but not a “Capital Day.”

Like most Americans, I’ve traditionally celebrated labor on Labor Day weekend—not organized labor or compulsory labor unions, mind you, but the noble act of physical labor to produce the things we want and need. Nothing at all wrong about that!

But this year on Labor Day weekend, I’ll also be thinking about the remarkable achievements of inventors of labor-saving devices, the risk-taking venture capitalists who put their own money (not your tax money) on the line and the fact that nobody in America has to dig a ditch with a spoon or cut his lawn with a knife. Labor Day and Capital Day—I don’t know why we should have just one and not the other.

Happy Capital Day, America!

Lawrence W. Reed

Larry has compiled this list of resources especially for viewers and listeners who would like to learn more about Grover Cleveland, the hard decisions he made, and the uncommon courage that made him the man he was.

Grover Cleveland, The Last Libertarian President by Paul Whitfield
Why Grover Cleveland Vetoed the Texas Seed Bill by Robert Higgs
Grover Cleveland: A Study in Character by Lawrence W. Reed
Was Grover Cleveland Freedom’s President? by Lawrence W. Reed
Grover Cleveland, The Veto President by Burton Folsom
Realignments to Remember by Lawrence W. Reed
My Kind of President by Lawrence W. Reed
Clinton vs. Cleveland and Coolidge on Taxes by Lawrence W. Reed
Just Say No to Farm Subsidies by Burton Folsom
Presidents and Poverty by Lawrence W. Reed
A Supreme Court to be Proud Of by Lawrence W. Reed
U.S. Presidents and the Money Issue by Greg Kaza
Grover Cared by Lawrence W. Reed
Grover Cleveland: Could He Be Elected Today? By Lawrence W. Reed
The Silver Panic by Lawrence W. Reed
VIDEO: The Panic of 1893 by Lawrence W. Reed

Two wonderful ladies, Juli Dalton and Ginger Hancock of the Yavapai Center for Constitutional Principles in Prescott, Arizona, organized local funding and brought several local students to Freedom Academy II in Estes Park, Colorado. During the week, the students did live interviews by phone on Prescott’s KYCA Radio about what they were learning. Upon their return, three of them appeared in the station’s studio to sum up their life-changing experience.

We hope you will be impressed with what these three young people have to say and with the teaching FEE provided. We are changing the future by turning lights on in the young minds of today!

The interview is 43 minutes (commercials have been deleted). Several people called in during the show and made some great comments.

Here’s the link: http://www.kyca.info/includes/audioPlayer.php?showAudio=KYCAPM_2011-08-10

Thanks to FEE’s founder, Leonard Read, FEE has been able to educate and inspire thousands of students around the world; including Congressmen Paul and even Hollywood alpha-male John Wayne.

As a a tribute to Leonard Read’s work to advance freedom, we have created a commemorative t-shirt available in our newly opened merchandise store.

We’re very excited to announce the launch of our online merchandise store where you can find t-shirts, posters, coffee mugs and even iPod Touch cases.

For a short time you can use the promo code ‘DECKYOURDORM‘ to get 50% off the poster of Leonard Read. The discount expires at Midnight (PST) on September 1.

How accurate is the above story? It certainly sounds plausible. But is the real picture as black and white as the story suggests? Is it really the greedy businessmen vs. the powerless consumers? Is the government really helping?

In today’s document, the cliché of Socialism number 58 “Government should control prices, but not people,” Dean Russell points out that attempts at price controls require coercion on real people. Too many individuals divorce human action from prices and don’t see that the government does not control the price of commodities but rather controls the sellers of those commodities through coercion.

It might be argued that this is all well and good but in times of crisis, such as in preparation for a hurricane, coercion is necessary. Individuals, especially the poor, need to be able to afford certain items to help them get through the coming crisis, so government should control sellers to stop the price from rising.

This logic, however, is incomplete. Even if we assume that businessmen are completely greedy the increased price still services an important purpose. To see this purpose we must turn to basic economics.

As the hurricane approaches individuals’ demand for certain commodities, such as water, batteries, canned food, etc. increases, meaning they would like to buy more of these goods. This gives sellers an incentive to raise the price, as the goods began to fly off the shelves much faster than usual. While the motivation to raise the price might be purely greed-based, it actually benefits consumers and society as whole. The increased price has two important functions. First, it induces sellers to supply more of the good. At the higher price sellers will increase the quantity of the good, thus providing more of the good for individuals to buy (satisfying the increased demand). Second, it discourages other consumers from buying too much of the good. In other words, the higher price helps ration the good amongst more individuals. Demand curves slope downward, meaning the lower the price the higher the quantity each individual will buy. By raising the price each individual will by less of the good than if the price were to remain at the pre-storm level, leaving more for others. Thus, in an unhampered market, the price rises and more consumers get what they need.

If the government stops sellers from increasing the price then a shortage will ensue. Why? Well first, demand has risen but sellers are still only willing to supply the same amount as the pre-storm level. Thus eliminating the advantage of the increased quantity supplied mentioned above. Second, with the increased demand consumers see the lower price as an incentive to take more for themselves. Their motivation to conserve and take less (leaving more for others) is eliminated. This creates the shortage. Meaning many individuals will find the shelves completely empty when they arrive at the stores. The result is that more individuals will go without the very necessities the government, in enacting the price control, is trying to make sure they can get.

From this we should, even in cases of emergency, question the use of coercion to support prices. The price system after all channels resources to their highest valued use, benefiting society. In coercing certain individuals to maintain a certain price, the price system is distorted and channels resources from, not to, their highest valued use, which hurts many people. It should be clear that voluntary interaction tends to work better than coercion and this is especially true in the market.

Download the clichés of socialism number 58 here.

The following conditions apply:

1. Authors nominated must be members in good standing with the SDAE (check the Society’s website for information on how to join).

2. The books and articles nominated must have been published between January 1, 2009 and August 31, 2011.

3. Nominated articles should be emailed as an attachment or as a URL to the article to Chris Coyne – ccoyne3@gmu.edu

4. Nominations for the book prize should include the title and all other relevant information (publisher, date of publication, ISBN #) and be sent to the above email address. Those nominating books need not send copies. Edited volumes and short monographs are not eligible for the award.

5. All nominations must be received by Chris Coyne no later than October 15, 2011.

6. Self-nominations will not be accepted.

Each prize comes with a cash award of $500 thanks to the generous support of the Foundation for Economic Education. Recipients will be required to submit a short blog post on their winning book or article for posting on the FEE website.

Winners will be announced at the annual banquet of the SDAE, this year in Washington, D.C. in conjunction with the Southern Economic Association meetings from November 19-21, 2011. The SDAE dinner will be held on Sunday, November 20.

Questions may be directed to Chris Coyne at ccoyne3@gmu.edu

Chris Coyne
SDAE Vice President

In today’s document, Henry Hazlitt’s 1962 Business Tide Column article for Newsweek entitled “Worth the Price?”, the question of whether the Space Race was worth the price is addressed. It is particularly interesting to see Hazlitt’s perspective given it was written before we had reached the moon. Hazlitt ultimately sounds as if the price is far too high and the reason deals with the inability of the government to properly assess the costs and benefits of engaging in the space exploration.

For many, if space exploration was to occur at all, it needed to be conducted by the state. The costs are simply too great and the ability to transform the possible benefits, such as scientific and technological discoveries, were too difficult to transform into “profits” for private businesses to undertake. But with a new space race starting to develop this claim is becoming less true. The new race seems to be between NASA and private companies attempting to reach Mars. Back in 2007 NASA stated the goal of putting a man on Mars by 2037 and recently the private company SpaceX, which is already attempting commercial space travel, stated their goal of establishing a means of getting to and from Mars.

As technology is improving the discovery process of the market is in full swing with entrepreneurs finding new ways of improving and satisfying the desires of his fellow man. And space exploration seems to be in the cards.

The difference between NASA and the private companies is in the price. With NASA we need to ask, like Hazlitt did some 50 years ago, is it worth the price? But with the private company, no such question exists because the market, through the profit and loss mechanism, provides the answer. Going to Mars is a risk; it may or may not be worth the price. With NASA the government takes our money whether we like it or not and there are no signals to say whether it was truly what people want or not. With private companies, however, if the venture is not worth it, they would know because they would have lost money. Money, which was voluntarily provided at the investor’s own risk. If it pays off then the rewards will be in the form of profits and others will follow suit, further reducing the costs and increasing the availability for others.

Asking whether something, particularly expensive as space exploration, is worth the price is an important question. And it is a question we should have a real answer for. So, maybe this, as with so many things, is another example of the state overstepping its bounds.

Download Hazlitt’s “Is it Worth the Price?” here.