[F]or whom are essays of this consequence written: only for specialists, the students of economics, or for all of the people?
To answer this question we have to keep in mind that the citizens, in their capacity as voters, are called upon to determine ultimately all issues of economic policies...
American public opinion rejects the market economy... Full government control of all activities of the individual is virtually the goal of both national parties. The individual is to be deprived of his moral, political, and economic responsibility and autonomy, and to be converted into a pawn in the schemes of a supreme authority aiming at a “national” purpose...
It is a fateful error on the part of our most valuable contemporaries to believe that economics can be left to specialists in the same way in which various fields of technology can be safely left to those who have chosen to make any one of them their vocation. The issues of society’s economic organization are every citizen’s business. To master them to the best of one’s ability is the duty of everyone.
Tuesday, March 24, 2009
Friday, March 20, 2009
Yesterday was a beautiful, warm day in the Carolina Piedmont; but early evening showers were in the forecast. So, as soon as I got in from work I pulled off my dress shirt, got out the front-end tiller from the garage and broke up an area of ground off the back porch. When I finished Ethan got to work building a fence around it. You can view photographs of his project on my wife’s blog.
Ethan’s older brother is an artist and builder. He spends hours in the garage building boats – real boats that can be paddled in a pond – or wood-carving. His younger sister excels in animal care; she seems headed for a career in a veterinary office or pet grooming and boarding facility. For the longest time it was not clear what Ethan’s passion was. He has always loved to make fires (a trait he must have picked up from his ancient ancestor Old Hop). But he has emerged as a gardener, if not a full-bore farmer in the making. Last year, all three children had to maintain gardens as part of their homeschooling. David and Erin passed, but Ethan made an A+, far out-producing his siblings. He hoed and weeded and suckered and just generally messed with his plants everyday – a faithful husbandman. This year he will try to raise a little silver queen corn in addition to vegetables.
He also loves to smoke meat. That’s something else he probably has in common with John Taylor and the Agrarians.
Thursday, March 12, 2009
Obviously, it is the Keynesian school that informs our public policy, not the Austrian school. Read all of Richards’ entertaining article here.
Austrian economists deny that economics is an empirical science, that is, one whose theories can only be known to be true by experimental verification. Economics is a science in the same sense that mathematics and logic are sciences. Its claims are based on logical deduction from indisputable axioms, and may be illustrated historically, but never verified or falsified experimentally. In the same way, we do not ask for experimental verification that a straight line is the shortest distance between two points on a two-dimensional plane.
The Austrian economists have not fallen victim to the invasion of logical positivism that has wrought so much havoc in our intellectual landscape. The logical positivists wished to eschew metaphysics, to escape transcendence, to leave behind forever the tyranny of an immaterial world of ideas. And so they devised a rigid criterion of knowledge: you cannot know anything you cannot empirically verify...
[If] the weatherman misses with his temperature forecast by five degrees, that’s one thing. If he misses the fact that a class-five hurricane the size of Texas is speeding directly for New York City — not only fails to predict it but explicitly denies its existence up until the moment it hits — I’d find another weatherman.
Austrian economists said a hurricane was coming. They didn’t know precisely when, but it was coming, and it was a big one. Keynesians denied its existence. Austrian economists don’t claim to be doing empirical science. Keynesians do. What is ironic to me as an empirical scientist, is that it is the Austrians who get their predictions right, while Keynesians seem to have been caught like deer in the headlights.
Wednesday, March 11, 2009
Employees were invited to make suggestions on a web bulletin board of how our organization might trim operational costs. Far and away the leading suggestion was simple: pay cuts. Employees are willing to take a cut in salary if in any way it would ensure their jobs being retained.
This vindicates a basic axiom of free market economics – and the vindicators aren’t even economists. They understand intuitively that during a downturn the cost of doing business is costly, and are willing to negotiate a lower price for their services in order to stay employed.
I don’t know if we will see pay cuts or eventual job cuts. What I do know is that our salaries have wiggle room. The most vulnerable victims, however, are those who earn minimum wages; because their pay is mandated by law, they cannot negotiate their way to a lower price for their services. That price is fixed at a rate beyond what many employers are willing and able to pay (if I had the means of drawing a simple supply and demand function here, the graphical illustration would make this clear as a bell).
For the umpteenth time: if the state would get out of the market’s way, living and breathing human beings could work out solutions that would benefit more people. Admittedly, not every job can be saved – some businesses are simply no longer competitive, or so malinvested that efficiency requires radical retooling. Some organized blocs of employees are simply unwilling (perhaps due to coercion) to accept lower pay.
But I know some who are.
Monday, March 9, 2009
A caring congregation is one that cares for one another and who actively seeks to help those in need. Currently we have three parishioners who are very ill. Are we reaching out to them as well as their families? Do we regularly pray for them? Have we visited them?
Visiting sick people who are at home or at the hospital is sometimes awkward. Very often we do not know what to say or we might be shy and do not want to go alone. This is very normal. However, if we take another person with us or if two couples want to go together, this will make the visit more enjoyable. Even Jesus sent out his disciples “two by two” to do ministry. Two people can share the burden, not just one! The actual visit does not have to be long. Many of my pastoral visits to the hospital are not more than a few minutes. The important thing is not the length of the time spent but that you showed up in the first place! Below is a short “how to” list regarding visiting someone at home or at the hospital.
1. Call ahead to make sure it is okay to visit. Sometimes people do not want to receive visitors. You can always say, “is there a better time to come?”
2. If you do not want to go alone on the visit ask someone else at Church; you can say, “I would like to visit Mrs. X, would you want to come along with me?” A good time to go is after Church on Sunday. That way you can leave Church and follow each other to the home or the hospital and then go right home afterwards.
3. Feel free to bring flowers, or candy, or even a small stuffed animal. People always like to receive small gifts; it brightens up their day. Stuffed animals are not just for children, adults like them too!
4. Don’t feel the need to talk only about “churchy things,” just talk about life. Most of my conversations are not specifically “churchy” in that respect. People just want to know that they are loved and people care about them.
5. You can say a prayer together, such as the Lord’s Prayer; nothing fancy, keep it simple.
6. As far as time is concerned usually you will know when the person is tired. You can say, “Well, we will have to go now, it was good seeing you. We are praying for you and we love you very much” or something to that effect. Again, it is not the length of time that matters, showing up is what is more important.
Wednesday, March 4, 2009
Our friend believes that Obama is FDR to George W. Bush’s Hoover. He argues passionately that these measures, all taken by the benevolent State, will achieve a much needed “stabilization” of our economy.* “Oh, it will be stabilized, alright” I replied, “at a standard of living lower than either you or I have ever known. Plus, we’ll pass the debt on to our children and their children.”
This morning, Steve Saville of The Speculative Investor wrote,
Although we are anticipating another great depression we want to emphasise that we are NOT anticipating a replay of the 1930s. We are anticipating a drawn-out period of economic contraction, but the details will almost certainly differ markedly from previous depressions.
One of the most important differences between the coming -- actually, “current” is a more appropriate word since it has probably already begun -- great depression and the 1930-1945 episode is that today’s version is likely to be inflationary. An inflationary depression is potentially worse because the inflation (money-supply growth) leads to more mal-investment (more wasted savings) and higher living costs relative to incomes.
Another difference is that the government of today will provide a more extensive ‘safety net’ for people who fall on hard times. Paradoxically, this could lead to even greater economic weakness than occurred during the 1930s. The reason is that the government pays for the safety net with money that would otherwise have been used in productive endeavours.
On a related matter, the government could all but eliminate unemployment during a depression by giving every unemployed person a government job, which is effectively how the Soviet Union eliminated unemployment (that, and by sending millions of people to forced labour camps). Such a massive expansion of government is our greatest fear because it would make the depression permanent. (emphases added)
Now, Christians have nothing to fear – not even fear itself (2 Timothy 1:7, KJV). But part of the job (or mine, at least) is to remind folk that Caesar is no savior. Live faithfully, live frugally. And give no credence to the sirens of the State.
*Our friend forgets that under FDR the Great Depression persisted for twelve miserable years, with the unemployment rate hovering between 15-20% during the entire period. The nation was stabilized - in the doldrums.
Tuesday, March 3, 2009
Pure Keynesian hogwash.
We debate this topic in my office on a regular basis. Our sales analyst contends that the economy is in trouble because the public has, psychologically-speaking, “lost confidence.” People, he says, are irrationally cutting back “way too much” on spending. “People are going without because they are panicked.”
Going without? Is he serious?
Looking around, I observe enough rotundness to convince me that very few are “going without.” What is really happening is private citizens are taking stock of their incomes and expenses, factoring in the uncertainty of businesses correcting their productive capacities, and making the perfectly rational decision to forego luxury consumption. This proves one of the fundamental axioms of logical economic analysis: that human action is directed toward the future. Each person is asking, “How much money will I need to meet future needs?”
In the recent past, for example, the (central bank) credit-stimulated housing bubble deceived the public into thinking that real estate values would ascend unhindered into the starry heavens forever. They made purchases, borrowing against their home equities, based on contorted market signals. But now, a growing number of prudent citizens are finally putting hard-earned money back into sundry rainy day funds.
Present-day saving lays the groundwork for future economic growth. The public saves while businesses reassess and reallocate resources to more productive and profitable means. But the prudent are being forced to swim upstream. As the Federal Reserve, rather insidiously, drives interest rates toward zero in order to “stimulate” more borrowing, investors lose return on their savings.
Our sales analyst, like the voice on the airwaves, believes in the Keynesian (statist) stimulus-response dogma. The public are a bunch of lab rats in need of a good shocking towards more frivolous spending and debt. Put another way, what the junkie needs is another hit of smack.
The very behavior that got us into the present unpleasantness.