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.

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!

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. 

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.

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.

Mises wholly rejected this notion. As he explained in his 1942 essay “Social Science and Natural Science,” originally published in the Journal of Social Philosophy and Jurisprudence (Vol. 7, No. 3), while he was working for the National Bureau of Economic Research, the social and natural sciences require different methods. Economics is a human science that derives laws that take into account the complexity of human experience. These laws have the same status as the laws of the natural sciences, but due to the complexity of human action different methods are needed to derive them.

This position of methodological apriorism was not completely new to Mises, it was also the approach of the earlier Austrian tradition emphasized by Carl Menger and Eugen Boehm-Bawerk. Experiments are very important to the natural sciences but as Mises explains, “the social sciences cannot make use of experiments. The experience with which they have to deal is the experience of complex phenomena… The social sciences never enjoy the advantage of observing the consequences of a change in one element only, other conditions being equal.” So, unlike in a laboratory, economists cannot verify their statements using experience.

But by the 1950s, however, the economics profession had followed Paul Samuelson’s lead, rather than Mises’s, using the methods of formalism and positivism. Formalism had become synonymous with logical rigor and positivistic testing was the only means of conducting empirical analysis. To not follow in this direction was considered unscientific. By the 1960s economists had come to distance themselves from the exact laws of Menger and the apriorism of Mises. Indeed, with the exception of a handful of Austrian followers, they had become things of the past.

Today many have come to misinterpret the Austrian position on the role of theory and history in economics. Perhaps due to the fact that economics has become dominated by what many have called “physics envy”, most are ignorant of what Mises’s position truly was. The caricature of the position seems to be that Austrian theory places no importance on empirical analysis. In fact, empirical work is completely rejected and thus ignored. Nothing could be further from the truth.

The role of empirical analysis is still very important, but you cannot treat statistical findings in the real world as you would treat a laboratory experiment. Material provided by statistics is the outcome of historical complex forces. Thus theory is necessary to aid historical investigations. As Mises said, “There is no doubt that up to now in history only nations which have based their social order on private ownership of the means of production have reached a somewhat high stage of welfare and civilization. Nevertheless, nobody would consider this an incontestestable refutation of socialist theories.” The advancement of economics requires blending of both deduction in theory and empirical induction.

There is no doubt the profession has steered away from aprioristic approach. It is born out of the confusion over the role knowledge plays within economic theory. Austrian economics has an important place in better understanding of this problem. More economists should take the time to read the methodological work of Mises and the Austrians.

Download “Social Science and Natural Science” by Ludwig von Mises here.

Spend a full or partial day at one of our Freedom University Summer Seminars getting to know more about economics and FEE as an organization.

Please visit our summer seminar webpage for more information and a detailed schedule.

Pick a date from the schedule below that works for you and come experience first-hand all that FEE Summer Seminars have to offer!

OPEN HOUSE REGISTRATION FORM

Thursday, June 2, 2011 – Freedom University: Basic Economics

9:00 am – 10:15 am: Index Card Activity (FEE staff)

10:30 am – 11:45 am: Public Choice (Frank Stephenson)

11:45 am  – 1:00 am: Lunch

1:00 pm – 2:15 pm: Protectionism (Bob Ewing)

2:30 pm – 3:45 pm: Protectionism Skits (Staff)

4:00 pm – 5:15 pm: Monopoly and Antitrust (Ivan Pongracic)

5:15 pm – 6:15 pm: Dinner

6:15 pm – 8:30 pm: The Cartel (movie)

Friday, June 10, 2011 – Freedom University: Introduction to Austrian Economics

9:00 am – 10:15 am: Austrian Economics Today (Steve Horwitz)

10:30 am – 11:45 am: Institutions, Policies, and Economic Development (Frederic Sautet)

11:45 am – 1:00 pm: Lunch

1:00 pm – 2:15 pm: A Critique of Protectionism (Lawrence W. Reed)

2:30 pm – 3:45 pm: Austrians and Other Schools of Thought (Frederic Sautet)

4:00 pm – 5:00 pm: Hot Seat (with Faculty Involvement) (FEE staff)

5:00 pm – 5:30 pm: Action Plan Activity (FEE Staff)

Tuesday, June 14, 2011 – Freedom University: History

9:00 am – 10:15 am: Foundations of Economics and Prosperity Reading Discussion

10:30 am – 11:30 pm: Money & Inflation (Lawrence W. Reed)

11:30 pm – 12:00 pm: Activity

12:00 pm – 1:00 pm: Lunch

1:00 pm – 2:30 pm: Competition & Monopoly (Edward Lopez)

2:30 pm – 3:45 pm: The Meaning of Liberty During the American Founding (Brad Birzer)

4:15 pm – 4:45 pm: Student Tests

4:45 pm – 6:15 pm: Amazing Grace / Cinderella Man

Tuesday, June 21, 2011 – Freedom University: Current Events

9:00 am – 10:15 am: Public Choice (Matthew Mitchell)

10:30 am – 11:45 am: Business Cycles (Ben Powell)

11:45 am – 12:15 pm: Team Tests Activity

12:15 am – 1:00 pm: Lunch

1:00 pm – 2:15 pm: The Housing Boom and Bust (Ben Powell)

2:30 pm – 3:45 pm: Money & Inflation (Anthony Carilli)

4:00 pm – 5:00 pm: Skit Activities

5:00 pm – 6:30 pm: Dinner

6:30 pm – 8:30 pm: The Cartel (movie)

OPEN HOUSE REGISTRATION FORM

Beautiful Estes Park, CO will be the home of the two Freedom Academy seminars for high school-aged students. These seminars are specifically designed to teach students at that level about the economic system that respects individual rights and human dignity.

Our new branch office location: Atlanta, Georgia will be the home of summer seminar series designed to introduce college students to: basic economics, Austrian economics, history and current events.

The goal 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. We would like to welcome all our applicants to the liberty community with FREE 3 month subscription to The Freeman.

If you would like to be on our mailing list and receive notifications from FEE on seminars and other high school and college events, please go to our seminars page and sign up.

For the audio file of this lecture click here.

Common Sense Radio is sponsored by the Ethan Allen Institute with a mission to communicate the fundamentals of free society: individual liberty, private property, and limited government.

Find Lawrence W. Reed’s “Seven Principles of Sound Public Policy” here.

For the audio file of this lecture click here.

For the audio file of this lecture click here.

“In this age of the great struggle in favor of freedom and the social system in which men can live as free men, you are our leader. You have indefatigably fought against the step-by-step advance of the powers anxious to destroy everything that human civilization has created over a long period of centuries…. You are the economic conscience of our country and of our nation.”

Henry Hazlitt spent his career in journalism promoting the works of the Austrian School of economics. What separated Hazlitt from the rest, and lead Mises to call him our leader, was his understanding of economics. Although he had not been an economist by training or profession, his work proved he understood the economic concepts better than many with doctorate degrees. Through his work in journalism and organizations like the Foundation for Economic Education and the Mont Pelerin Society he was able to spread the ideas of liberty and economics to audiences that would not dare to pick up professional journals or technical tomes, like Human Action.

Today’s document, a letter from the Canton Supply Company to Hazlitt on April 17, 1951, illustrates how Henry Hazlitt spread important ideas of liberty through his work. The letter is a piece of fan mail praising Hazlitt for his book The Great Idea, which was republished later as Time Will Run Back. This book is a distinctive and often forgotten work by Hazlitt. It is different because in the form of a fictional novelit attempts to illustrate the knowledge problems associated with socialism. While few may find the tale of dystopia where an ignorant young man inherits the role of dictator of a world communist system to be classic literature, it is nevertheless a brilliant economic step-by-step reasoning from the failure of communism back to the success of a purely free market.

Henry Hazlitt’s book explains why socialism as a means is impossible for achieving the desired ends of an advanced material society. The idea that socialism fails to connect the means with the desired ends come from Mises’s “Economic Calculation in the Socialist Commonwealth” and Hayek’s “The Use of Knowledge in Society.” While in debates on the merits of socialism college students commonly respond “but socialism is perfect in theory,” Mises and Hayek illustrate why this socialism is complete nonsense even in theory. Sadly, Mises and Hayek were not known to be good communicators. Hazlitt, on the other hand, was a skilled, clear, and entertaining writer. He may be gone, but because his work lives on he is, in many ways, still our leader.

Download the Canton Supply Company to Hazlitt letter of April 17, 1951 here.

So when statists denounce spending cuts, especially reductions in “sacred cow” entitlements, we must explain not only why their position is lousy economics and poor planning for the future. We must question their very moral fiber. They should be embarrassed by what their stance says about them. They should have a guilty conscience about perpetuating a system that jeopardizes the financial solvency and the freedoms of not just the present generations but of those innocent and yet-unborn. We need to ask them why they can’t muster the courage to do what’s right. We have to call them on the carpet for their apparent willingness to fund failed and unaffordable programs for some constituency’s short-term gratification. We need to ask them why they are such eager participants in massive theft that takes from the hard-earned treasuries of private people and transfers those earnings to the squandering wastrels of the federal treasury. If they have a conscience, let it be pricked now before it’s too late.

To those in power whose pending decisions will set the course of America for years to come: Stop thinking as though almost every problem in every country is a reason for you to put your own countrymen’s lives and treasure at risk. Read the Constitution not just one day of the year, but at every moment when you are considering a measure without first asking yourself, “Is this really my responsibility? Is it really within the power granted to me?”

Few things speak “hypocrisy” more plainly than calling for peace publicly but promoting war on the personal, economic and political lives of others. Remember that every time you spend more, you don’t get the money by selling cookies like the Girl Scouts do. You deploy force against your fellow citizens. That raises moral issues and is something which you must stop doing in such a cavalier fashion.

Please don’t assume you’re doing your duty by minor spending reductions that leave whole agencies, programs and Cabinet departments intact, only to grow back. Pull out, root and branch, what you or your predecessors shouldn’t have created in the first place. Start with entire departments like Energy and Education, which have neither Constitutional justification nor track records worth keeping.

Stop labeling as “tough choices” major spending reductions when in fact they ought to be the easy ones. The really tough choices are the token nips and tucks that only yield endless whining and future battles. Muster the courage to make the big ones now and you’ll avoid problems later. Don’t torture us with mere tinkerings.

Empowering this Leviathan State we now have, at the expense of your fellow Americans, is shameful, anti-social behavior. It is not what we expect of responsible adults.

Do your duty. Balance the budget—now. Raise no more debt ceilings. If you do these things, you will receive the gratitude of a restored nation and the rewards of a forgiving God. If you do not, prepare to bear the judgment of both.

Jefferson warned us that we must make the choice between economy and liberty or profusion and servitude. Will you who are in power go down in history as leaders who saved their country or as just another crop of barbarians who flung open the gates to their country’s destruction? It’s your call.

Lawrence W. Reed is president of the Foundation for Economic Education—with offices in Irvington, New York, and Atlanta, Georgia.

For the Audio file of this lecture click here.

The audio file from the lecture can be found here.

What they fail to see is that we do want to help, just not through government action. This idea that helping means government action was the Clichés of Socialism Number 20. Written by economist and former FEE president Hans F. Sennholz and originally appearing in Christian Economics on February 7, 1961, this short article attempts to show the fallacy that we must to do something. As Sennholz points out, “Their premises must be rejected and their conclusions corrected. In reality the call for action is a manifestation of individual lethargy and inertness. It is tantamount to a call for government action rather than individual initiative.”

It is true that advocates of liberty call for “do-nothing” government policies but it is not out of not caring. Free market economists have often warned about unintended consequences of government intervention. For example, foreign aid, which Sennholz mention in the article, produces many negative result that produces ends in complete opposition to the desired goal. One example is that often, instead of helping a country grow the aid will produces dependence for the aid, leaving the country in a vicious circle of poverty (for more examples just read William Easterly’s blog Aid Watch).

Sennholz, in the article, touches on the other side of the coin. Those who advocate for action are usually unwilling to take the action themselves. What they want is for someone else, namely the government, to do it! As Sennholz points out, what they are really asking is, “Don’t you want the government to spend other people’s money on foreign aid?” Many of these people are unwilling to invest in these foreign countries (possibly because they know the money will be squandered by the foreign governments). Their cries for help are often simply cries for someone else to help.

Despite being written in 1961 this article deserves a read because it is still extremely relevant. The financial crisis has had the particularly terrible consequence of an increase, to an already high, call for government interventions. It is at this time that advocates of liberty need to be more vocal in opposition, no matter how controversial. As Leonard E. Read said in his pamphlet “Conscience on the Battlefield” (1980 reissue), “Of course, it does not follow that an unpopular analysis would be right merely because its unpopularity. But it does follow that unless it is highly controversial, and challenging to a great number of persons, it cannot be consistent with the advancement of human freedom. For popular ideas and liberty are now not in accord. Indeed, they are at odds.” If we can influence these ideas and correct the fallacies of government intervention, then maybe one day we can say we did something; even if it was radical today.

Download Clichés of Socialism Number 20 “Don’t you Want to do Anything?” by Hans F. Sennholz here.

For the video file of this lecture click here.

Download PowerPoint: Praxeology, Supply & Demand 2010

Power Point presentation for this lecture – Business Cycles 2010.