A Couple Quick Questions, Ed. 15
Posted on January 14, 2012 at 5.34 pm
Q. Under the Austrian School of Economics, and indeed by the predictions of its proponents, the huge, expansionary policies of the Federal Reserve should be causing run-away Inflation. Indeed, the cry for years has been to warn of dire hyperinflation should any of the no in place expansionary policies by tried. Yet this flies in the face of what we have seen, namely price stability (save for rising Oil Imports) resulting in an entirely normal inflation rate of 3%. How do you square this with your avowed Austrian view? — Whimsical Eloquence, from tumblr.
A. Most of my answer can be summed up in this graphic:
As you can see, the value of the dollar has steadily declined over the course of the last hundred years. It was also on the decline before then. If you’d like to play with the numbers on a year-by-year basis, try this inflation calculator. As the results of my calculation put it, “What cost $1 in 1900 would cost $25.85 in 2010. Also, if you were to buy exactly the same products in 2010 and 1900, they would cost you $1 and $0.04 respectively.”
That’s a lot of inflation, especially considering the lowering of prices which has been produced by technological advances, economies of scale, etc. Moreover, as you mentioned, I subscribe to Austrian economics, which sees inflation not primarily as a rise in prices — the rising prices are merely a symptom of the underlying problem of the (fiat) growth of the money supply, which has grown precipitously. Learn more here.
Q. I like Ron Paul, for the most part, however why do Ron Paul fanatics never mention his millions of dollars in earmarks he asks for (and mostly receives) every year? — The Modern Patriot, from tumblr.
A. I’m not sure that it’s accurate to say that this issue is “never” mentioned. On the contrary, it’s brought up quite regularly as a supposed “gotcha” ostensibly showing Dr. Paul is not as consistent as he’s cracked up to be. This is far from the case, especially as even his harshest detractors on the subject admit that “Paul’s campaign-finance record shows little indication of a politician who is tied to special interests. Individuals have provided the vast majority of his campaign cash, supplying 91 percent of the money since his first bid for office.”
Here’s a speech (including transcript — and on a pro-Ron Paul website, by the way) of the congressman explain his reasoning behind his stance on earmarks. The shortest version of his argument is that, constitutionally, he’d rather see money appropriated by Congress than the executive branch, so he puts in the earmarks his district requests and then votes against them because he doesn’t want the money spent at all.
Q. How can you legitimately believe that you are supporting the preservation of liberty when you are against taxes on the rich and for deregulating our economy. There is the freedom to do something and then there is the freedom from something. In the case of corporations, the question is whether they should have the freedom to exploit their workers and consumers without consequences, or whether the workers and consumers should have freedom from this exploitation. For whatever reason you side with the corporate opinion. Your attempt at forming a philosophy based around anti-authoritarianism has completely ignored the authority that capital accumulation gives the rich. There is nothing “libertarian” or “hip” about supporting neoliberal economics. — David, from the internet.
A. Woah, woah, woah. So many unfounded assumptions here. Let’s start at the end: The title of my tumblr is very much tongue in cheek based on some amusing Google Analytics results I got one time.
But moving back to the beginning, let’s go through these accusations one by one.
1. How can you legitimately believe that you are supporting the preservation of liberty when you are against taxes on the rich and for deregulating our economy. Well, I’m actually against taxes for everybody, not the rich in particular. As for deregulation, the rest of your question indicates that you have rather different ideas about the nature and consequences of this idea than I do. As it happens, the economic mess we’re in now is not due to a lack of regulation.
2. There is the freedom to do something and then there is the freedom from something. In the case of corporations, the question is whether they should have the freedom to exploit their workers and consumers without consequences, or whether the workers and consumers should have freedom from this exploitation. For whatever reason you side with the corporate opinion. Do we really have to go through this again? I am not advocating special benefits for corporations. I am not transferring trillions from the poor and middle class taxpayer to Wall Street. I am not permitting the wealthy to get away with fraudulent activity without prosecution. The government — the entity you want to give more control over our economy — is. My goodness, what do they teach in schools these days?
3. Your attempt at forming a philosophy based around anti-authoritarianism has completely ignored the authority that capital accumulation gives the rich. I’ve argued above that it hasn’t, but I’d contend that yours has. You object to the government using its powers to give special favors to its rich friends, but you want to give the government more of those same powers. Do you really think the rich friends won’t come knocking again? Really? I find that I am the more suspicious of the wealthy of the two of us.
Bonnie, In reference to the question from David – I think a lot of people confuse corporate welfare as being generated from capitalism. As you know, it is not. Corporate welfare is a consequence of socialistic tendency in government. It is Wall Street to tightly bound to Pennsylvania Avenue. The auto industry, oil industry, pharma industry, the military complex, and many others no longer operate under capitalist rules. The companies pay for the elections of their cronies to make regulations to allow them to continue their monopolies. A complete divergence from what our constitution allows for. In a capitalistic system, while not perfect, the consumer has the ultimate choice in demanding what the market will provide, and workers benefits are tied to how well those choices are met.
That’s extremely well put, Tom. This is a really important distinction which it seems I have to make constantly — but which is possibly the most important economic argument to make these days. As long as so many continue to assume that we currently have a free market (especially where big business is concerned), we’ll never make progress toward actually getting a free market.
Thanks for reading!
You make the assumption that private enterprise is in opposition to government growth. That simply is not true, and it reveals how your mindset is politically identical to both democrats and republicans. Capitalism could not even exist without government. There needs to be a monopolistic coercive entity to protect private property in order for capitalism to exist. I never even said that government intervention was the answer to regulating corporate welfare, you made the assumption that that was my argument. My argument is that you cannot proclaim yourself to be a champion of liberty if you protect the existence of government.