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Working together is success.
Henry Ford
Reason's Nanny of the Month
Say, Say, Say
From the Mises wiki:
Say’s Law or Say’s Law of Markets is a principle attributed to French businessman and economist Jean-Baptiste Say, stating that there can be no demand without supply. He theorized that the activity of production opens a demand for the products produced. Thus the mere creation of one product immediately opens an avenue for other products. To put it another way, Say was making the claim that production is the source of demand. One’s ability to demand goods and services from others derives from the income produced by one’s own acts of production. Wealth is created by production not by consumption. My ability to demand food, clothing, and shelter derives from the productivity of my labor or my nonlabor assets. The higher or lower that productivity is, the higher or lower is my power to demand other goods and services.A good little essay from Patrick Barron points out that Keynes put Say's Law on its head; instead of a horse leading the cart, the cart leads the horse. That is, demand drives supply. Recession is the result of a demand problem; government or their surrogate central banks print money--but this money does not reflect new widgets in the economy; it's basically more pieces of money chasing the same goods: as Barron argues: "Keynesian aggregate demand theory is nothing more than a justification for counterfeiting. It is a theory of capital consumption and ignores the irrefutable fact that production is required prior to consumption."
Savings are distorted as the natural incentive for future consumption (rising interest rates reflecting a competition for scarce resources) are offset by the central banker manipulations. As a result, savings that would mitigate cost pressures in new long-term production projects don't occur since the thumb of bankers favors a more short-term perspective of profiting from short-term capital consumption. The result: some businesses will fail because of an unsustainable model over and beyond financing; further, in the cases of viable projects, the artificially low interest rates may be offset by increasing future costs in other factors of production (labor, materials, etc.)
Barron's concluding paragraph is worthy of reprinting in its entirety:
The governments and central banks of the world are engaged in a futile effort to stimulate economic recovery through an expansion of fiat money credit. They will fail due to their ignorance or purposeful blindness to Say’s Law that tells us that money is the agent for exchanging goods that must already exist. New fiat money cannot conjure goods out of thin air, the way central banks conjure money out of thin air. This violation of Say’s Law is reflected in loan losses, which cannot be prevented by any array of regulation or higher capital requirements. In fact rather than stimulate the economy to greater output, bank credit expansion causes capital destruction and a lower standard of living in the future than would have been the case otherwise. Governments and central bankers should concentrate on restoring economic freedom and sound money respectively. This means abandoning market interventions of all kinds, declaring unilateral free trade, cutting wasteful spending, and subjecting money to normal commercial law, which would recognize that fiat money expansion by either the central bank or commercial banks is nothing more than outright fraud. The role of government would revert to its primary, liberal purpose of protecting life, liberty, and property and little more.Ippon!
Choose Life: Big Brother Sings to Baby Brother, Big Sister Loves Baby Sister
Facebook Corner
(IPI). Illinois’ per-gallon gas tax is the eighth highest in the country. Illinois drivers pay, on average, $0.39 per gallon in state gas taxes.
They are trying to make it more expensive to escape Illinois.
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| Varvel via IPI Note: I embedded this same csrtoon recently reprinting for convenience of readers |
This makes reference to the fact a large segment of the teen/young adult is unemployed because of the prohibition on employment at the market-clearing price . Payne from a standpoint of economics is spot on
IPI wants to keep people on welfare instead of making corporations pay a living wage.
Ah, the economically illiterate resident troll even comments on cartoons. "Living wage" is Marxist nonsense. If you knew anything about business, you would know thst compensation reflects 2 basic facts: productivity of the worker and supply/demand. If my labor costs are such and such a percentage of a widget, and my worker is able to increase his widgets per hour, I can pay him more without compromising my business model. But in the fastasy world of trolls, troll tells worker, "Hey, I've picked a number out of my ass that I decree is the proper wage for widget making, regardless of how many widgets you make." And Mr. Market is going to tell troll, "And I can sell a machine to Mr. Employer that will pay him back in 6 months of Mr. Troll's ass wages.
A follow-up to yesterday's comment on a Catholics for a Free Market thread, where some prelate in the hierarchy says Catholicism and libertarianism don't mix:
First of all, cut out all the anti-corporate crap, which is anti-free market. There are thousands of businesses out there, most of which have negligible influence on the government agenda and in fact bear the brunt of nearly $2T worth of anti-growth economically illiterate regulations. Even if you try to bore me with the crackpot delusions about banking, look at historically unstable our banking system has been compared to Canada's: we had, for most of our history, anti-competitive restrictions against branch banking, which meant, for example, we ran into liquidity crunches at harvest time for farmers; there were regulated restrictions on banking assets (e.g., Treasuries, at the same time, unlike today, when the feds actually paid down on debt). Yes, of course, the small banks were happy that the government didn't let the big banks compete against them--sort of the anti-WalMart hysteria in a banking context. Government, when it stepped in with idiotic deposit insurance, created moral hazard, not unlike the moral hazard of open-ended social welfare programs.
Most of the comments here come across as defensive, as if you are trying to legitimatize cartoonishly bad, intellectually vacuous criticisms by a populist Pope whom is doing little more than recycling discredited leftist crap. In his lazy, trivial, dishonest, grossly caricatured conception of capitalism in his insipid exhortation, he paid lip service to Statist politics as a "noble profession"--and the so-called anarchists among you are fine with that? He also buys into the BS of social darwinism--which is a deliberate distortion of Herbert Spencer.
None of the classical liberals--of which I consider myself one--excluded private-sector institutions, voluntary charities, mutual societies, etc. I'll give you just an example in today's Reason stream: a volunteer driving cancer patients to their appointments got busted for being a "gypsy cab" and hit with a $2000 fine. It was eventually dropped, but how many times have we seen petty bureaucrat tyrants rule against charitable acts, even feeding or sheltering the homeless? These are not the tools of some phantom plutocrat conspiracy; the State exists for its own sake; it uses trickle-down, misallocated "charity" to justify its existence, and the pontiff naively buys into the bullcrap.
I do not deny that popes have been critical of capitalism before, but I submit first of all, it's not a matter of faith and morals. That some insipid, overrated prelates, whom were born and raised in a perverse populist anti-capitalist culture, have lacked the integrity to go beyond a superficial understanding of free market principles and reject this straw man they have created doesn't impress me much. So some idiot prelate argues that Catholicism and libertarianism are incompatible, you take him seriously? He doesn't understand either Catholicism or libertarianism, and you should be taking him on full on, not trying to feebly argue that he has right-libertarians (like me) in mind.
Have you noticed, by the way, many Catholic libertarians, like Woods and Napolitano, are more traditionalist than fans of the excesses of Vatican II? Food for thought...
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The Beatles, "Yesterday"
