Profits ARE Socially Responsible

Back in 1997 Gregory Bresiger penned a piece for the Free Market tearing apart the notion of "socially responsible investing" (SRI). Managers focused on social issues instead of profits will perform poorly as resources are diverted to unproductive uses. Bresiger looked to close the argument with this seemingly absurd proposition:

But SRI funds do point the way to solving a myriad of political debates in this country. Whenever a politician suggests a new tax, mandate, or regulation on business, let's first try it out on one of these "Socially Responsible" companies, purely on a voluntary basis. Let it pay higher taxes, insurance premiums, and wages, while adopting ever more rigid quotas and union rules. Then we can watch what happens to its stock price relative to everyone else's. Any takers?

More than a decade later there are takers. The Wall Street Journal reports that in seven states companies can register as benefit corporations, allowing the firms to pursue social and environmental goals without the worry of shareholders suing them for not maximizing shareholder value.

These corporate charters aren't tax exempt or nonprofit. Companies choosing to be benefit corporations pay Uncle Sam like any other for-profit company, but have… (Read on)

Source: Mises.org

Money and Freedom

By Joe Salerno

 

The historical embodiment of monetary freedom is the gold standard. The era of its greatest flourishing was not coincidentally the 19th century, the century in which classical liberal ideology reigned, a century of unprecedented material progress and peaceful relations between nations. Unfortunately, the monetary freedom represented by the gold standard, along with many other freedoms of the classical liberal era, was brought to a calamitous end by World War I.

 

Also, and not so coincidentally, this was the "War to Make the World Safe for Mass Democracy," a political system which we have all learned by now is the great enemy of freedom in all its social and economic manifestations.

 

Now, it is true that the gold standard did not disappear overnight, but limped along in weakened form into the early 1930s. But this was not the pre-1914 classical gold standard, in which the actions of private citizens operating on free markets ultimately controlled the supply and value of money and governments had very little influence.

 

Under this monetary system, if people in one nation demanded more money… (Read more)

 

Source: Mises.org

Money Makes the World Go Round

By Eugen-Maria Schulak

 

In his debut work, the Principles of Economics, Menger considered whether money developed "without any agreement, without legislative compulsion, and even without regard to the public interest" (Menger 1950/2007, p. 260; emphasis in the original). Accordingly, money had a "natural" origin and is not an "invention of the state." "Even the sanction of political authority is not necessary for its existence" (ibid., pp. 261–262). Menger did not move beyond this original explanation. Later economists ascertained that determining the value of money with the principle of marginal utility led to a circular argument, as the exchange value of money determines the demand for money; but the demand itself is in turn dependent on the value of money (cf. Wicksell 1898/2006, pp. 38, 50; and Helfferich 1903, pp. 487–488). A young Viennese economist is reminded of the "everlasting circle" in a Viennese song, in which gaiety comes from merriness and merriness is in turn derived from gaiety (cf. Weiss 1910, p. 515).

 

During his inaugural lecture in 1903 at the University of Vienna, Friedrich von Wieser tried to explain the phenomenon of rising prices using the theory of marginal utility for the first time. Wieser emphasized that growing incomes lead to decreasing marginal utility, to lower exchange values, and finally to increased prices. Because increases in income result from the steady expansion of monetary economy at the expense of the household economy, a rise in prices would thus be nothing but "a necessary, developmental syndrome of the spreading monetary economy" (cf. Wieser 1904/1929, p. 64). Wieser's income theory of money found few adherents and changed little in the way of the older Austrian School's abstinence from monetary theory. But things changed abruptly with the… (Read more)

 

Source: Mises.org

Computer Programmer Arrested for Stealing Proprietary Code from the Federal Reserve Bank of New York

Preet Bharara, the United States Attorney for the Southern District of New York, and Janice K. Fedarcyk, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”) announced today the unsealing of a complaint charging BO ZHANG, a computer programmer, with stealing proprietary software code from the Federal Reserve Bank of New York, where ZHANG worked as a contract employee. ZHANG was arrested this morning by agents of the FBI and the Department of the Treasury Office of Inspector General (“OIG”) and is expected to be presented in Manhattan federal court later today.

Manhattan U.S. Attorney Preet Bharara said: “As today’s case demonstrates, our cyber infrastructure is vulnerable not only to cybercriminals and hackers, but also alleged thieves like Bo Zhang who used his position as a contract employee to steal government intellectual property. Fighting cyber crime is one of the top priorities of this office and we will aggressively pursue anyone who puts our computer security at risk.”

FBI Assistant Director in Charge Janice K. Fedarcyk stated: “Zhang took advantage of the access that came with his trusted position to steal highly sensitive proprietary software. His intentions with regard to that software are immaterial. Stealing it and copying it threatened the security of vitally important source code.”

According to the complaint unsealed today in Manhattan federal court:

The Government-Wide Accounting and Reporting Program (“GWA”) is a software system that is owned by the United States Department of the Treasury (“DOT”). It is used principally to help keep track of the United States government’s finances. Among other things, the GWA handles ledger accounting for each appropriation, fund, and receipt within the DOT, and provides federal agencies with an account statement—similar to bank statements provided to bank customers—of the agencies’ account balances with the United States Treasury. The proprietary computer source code associated with the GWA is maintained by the Federal Reserve Board of New York (“FRBNY”) in an access-controlled electronic repository. The FRBNY is further developing the source code for the GWA.

As alleged in the complaint, between May 2011 and August 11, 2011, BO ZHANG was a contract employee assigned to the FRBNY to work on further developing a specific portion of the GWA’s source code (the “GWA Code”), which the United States has spent approximately $9.5 million to develop. In the summer of 2011, ZHANG allegedly stole the GWA Code. According to the complaint, ZHANG admitted that in July 2011, while working at the FRBNY, he checked out and copied the GWA Code onto his hard drive at the FRBNY; he subsequently copied the GWA Code onto an FRBNY-owned external hard drive; and he connected that external hard-drive to his private office computer, his home computer, and his laptop. ZHANG stated that he used the GWA Code in connection with a private business he ran training individuals in computer programming.

***

ZHANG, 32, of Queens, New York, faces a maximum term of 10 years in prison, a maximum term of three years of supervised release, and a fine of the greatest of $250,000, or twice the gross pecuniary gain derived from the offense or twice the gross pecuniary loss to the victims.

Mr. Bharara praised the outstanding investigative work of the FBI. He also thanked the Department of the Treasury OIG and the FRBNY for their assistance in the investigation.

This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Niketh Velamoor and Nicholas Lewin are in charge of the prosecution.

The charge and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

The Value of Money

By Jeffrey M. Herbener

 

Although 1870 saw a breakthrough in price theory, the advances of the marginalist revolution had not yet penetrated to monetary theory by the early decades of the 20th century. Most economists were still content to work with the centuries-old quantity theory of money even though it took an aggregated approach while the key insight of the new price theory was the link between a good's price and the valuation of it made by individual consumers.

 

Benjamin Anderson was among a handful of economists, led by Ludwig von Mises in his pioneering work The Theory of Money and Credit in 1912, who set out to integrate monetary theory into a general theory of value.

 

Like Mises, Anderson devoted a major portion of his The Value of Money, published in 1917, to a refutation of the "mechanical" quantity theory of money. Many of Anderson's arguments will be familiar to any student of Mises: the causes and effects from which the data of the quantity equation are constructed are disaggregated and complex; whatever the correlation between the aggregate variables of the quantity equation, correlation is not causation; causation cannot be established in the equation because there are no quantitative constants in human action (in particular, velocity is not constant); the quantity theory ignores time; there is no unambiguous way to define the variables in the theory: the money stock, velocity, the quantity of goods, and the price level.

 

Additionally, Anderson holds that whatever true propositions the quantity theory offers can as well be deduced from a correct theory of value and that many true theories of modern economics… (Read on)

 

Source: Mises.org

Twin Deficits!

By Gary North

 

There are two deficits that we hear about most: the federal government's deficit and the balance of payments of the United States. They are linked, but they are very different in their effects.

 

The federal deficit is seen by Keynesians as mostly a benefit and by Austrians as mostly a liability, and for the same reason: higher government spending.

 

The balance-of-payments deficit is seen by virtually all economists as a benefit for Americans and their creditors. Otherwise, the exchanges would not take place.

 

At some point, the twin deficits will become unsustainable. Then the debtors will have a choice: either default or else adopt a systematic reversal of policies: debt repayment. This means a federal-budget surplus and a balance-of-payments surplus. Balanced budgets won't do it. There will have to be surpluses.

 

That day is coming. That will be the day of reckoning — of counting up.

 

The participants give no indications that they believe that day is coming.

 

Neither did Greece's politicians in early 2010… (Read more)

 

Source: Mises.org

International Bank of Commerce Robbery Lands Former Bank Teller in Federal Prison

HOUSTON—Estefany Danelia Martinez, a former bank teller convicted for bank robbery and embezzlement of bank funds arising from a robbery of the International Bank of Commerce (IBOC) has been sentenced to federal prison, United States Kenneth Magidson announced today. U.S. District Judge Keith Ellison handed down the sentences for Martinez, 18, as well as Arturo Solano, 22, in federal court this morning.

 

The two were indicted along with Ricky Gonzalez, 19, the boyfriend of Martinez, and Anna Margarita Rivera, 19, another former IBOC bank teller, on May 11, 2011. All four pleaded guilty to the charges earlier this year.

 

On March 23, 2011, two men wearing masks and hooded sweatshirts and who appeared to be armed with semi-automatic pistols entered the Eldridge Parkway branch of the IBOC. They robbed the bank by threatening the two bank tellers on duty, Martinez and Rivera. The tellers were allegedly forced to empty their teller drawers of cash as well as to fill bags provided by the robbers with cash from the vault. After the two men left the bank, the two tellers—who had remained in the vault, called 911. The tellers described the events and provided a false description of the two robbers to police.

 

Shortly after the robbery, an anonymous tip to Crimestoppers claimed that bank employees, Martinez and Rivera, had actually staged the bank robbery along with Gonzalez and another male and directed investigators to the Facebook pages of Martinez and Gonzalez. Through further investigation, investigating agents ultimately identified Gonzales and Solano as the two males who had robbed the IBOC bank with the assistance of former bank tellers Martinez and Rivera and recovered a portion of the money stolen from the bank.

 

Today, Judge Ellison sentenced Martinez to 15 months on each count to run concurrently, while Solano will serve 10 months in federal prison. Gonzalez and Rivera are pending sentencing on Jan. 5, 2012, and Dec. 8, 2011, respectively.

 

The investigation leading to the filing of federal charges against these four defendants was conducted by the FBI and the Houston Police Department and substantially assisted by a tip called into Houston Crimestoppers.

 

Assistant United States Attorney Suzanne Elmilady is prosecuting the case.

United States Mint Lowers Prices for Several 2012 Numismatic Products

WASHINGTON - The United States Mint is pleased to announce that it is reducing or maintaining 2011 prices for some of its most popular products to be offered in 2012.  The bureau was able to set these lower prices and maintain others by refining the product costing process, taking advantage of current lower prices for precious metals and negotiating better pricing from its suppliers. 

"We hope these prices will allow us to attract more Americans to coin collecting, while increasing collecting opportunities for our current customer base," said United States Mint Deputy Director Richard A. Peterson.

Products with reduced prices in 2012 include the following:

* United States Mint Uncirculated Coin Set® - reduced from $31.95 to $27.95

* America the Beautiful Quarters Three-Coin SetTM - reduced from $14.95 to $9.95

* America the Beautiful Quarters Uncirculated Coin SetTM - reduced from $21.95 to $12.95

* America the Beautiful Quarters® 100-Coin Bag - reduced from $49.95 to $34.95

* American Eagle Proof Silver Dollar - reduced from $68.45 to $61.95*

* Presidential and Native American $1 Coin Rolls - reduced from $39.95 to $32.95

* United States Mint Presidential $1 Coin Proof SetTM - reduced from $19.95 to $18.95

* Presidential $1 Coin Uncirculated SetTM - reduced from $19.95 to $16.95

* United States Mint Presidential $1 Coin & First Spouse Medal SetTM - reduced from $14.95 to $9.95

In addition, 2012 prices will be the same for the United States Mint Proof Set®, priced at $31.95, and the United States Mint Silver Proof Set®, priced at $67.95.*

* Pricing for products containing silver, gold and platinum are subject to change throughout the year based on market volatility.

Please check our Web site at http://www.usmint.gov/ for product release dates. 

The United States Mint, created by Congress in 1792, is the Nation's sole manufacturer of legal tender coinage and is responsible for producing circulating coinage for the Nation to conduct its trade and commerce.  The United States Mint also produces proof, uncirculated and commemorative coins; Congressional Gold Medals; and silver, gold and platinum bullion coins.

Investment or Malinvestment?

By Igor Karbinovskiy

 

Every administration wants to create jobs. There can never be too many jobs, if you ask them, so they're always interested in making more, even in times of low unemployment. Every administration, therefore, proposes its own jobs bill. Last year, for example, President Obama spent some time touring the country to promote his own jobs bill as a way to address the deepening economic crisis. This seems like a no-brainer. After all, jobs are clearly and unambiguously a good thing, right?

 

Suppose I write an article on the economy that no one wants to read, much less pay me for. Now suppose that the government pays me for it anyway — as part of a jobs bill. Presto! A new job has been created; a person who was previously unemployed is now working. Better yet, that person is me! This job certainly increased my standard of living. But what have I produced? What have I contributed to the economy? Because no one wants my article, the value of my contribution to the economy is zero. The time I've spent in writing, and the money the government paid me, have been wasted. Worse, because this money allows me to consume things that I (and other people) want — things like food and shelter — the net effect on the economy is negative: zero value in, positive value out. This, then, is an example of a "bad" job.

 

On the other hand, if someone wanted the article I'd written, at the price I was charging for it, then the situation would be quite different. My contribution to the economy would be positive; its value is determined by my customers, who prefer my work to the money they paid for it. I obviously gain the money, which I value higher than my labor. In this latter example, I was productive. In the former, I was not. This, then, is the difference between a productive job and an unproductive one: whether or not someone freely decides that its output is worth buying…  (Read more)

 

Source: Mises.org

Treasury Sanctions Three Drug Traffickers Tied to Mexican Drug Lord Chapo Guzman

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today designated three individuals with ties to Sinaloa Cartel leader Joaquin Guzman Loera (a.k.a. Chapo Guzman) as Specially Designated Narcotics Traffickers (SDNTs) pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act). As a result of today’s action, U.S. persons are prohibited from conducting financial or commercial transactions with the designees and any assets they may have under U.S. jurisdiction are frozen.

 

“Today marks the fourth time in the past year that OFAC has targeted and exposed the support structures of the organization led by Chapo Guzman, the world’s most powerful drug trafficker,” said OFAC Director, Adam J. Szubin. “OFAC will continue to work with law enforcement and foreign counterparts to help disrupt, and eventually dismantle, Chapo Guzman’s criminal empire.”

 

Two of the individuals designated today, Mexican nationals Oscar Alvarez Zepeda and Joel Valdez Benites, are from Culiacan, Sinaloa, Mexico. The other individual, Colombian national Carlos Mario Torres Hoyos, is from Medellin, Colombia. These three individuals provide material support to the drug trafficking activities of Guzman Loera and the Sinaloa Cartel and also have ties to Colombian drug trafficker Jorge Milton Cifuentes Villa. Oscar Alvarez Zepeda is the brother of the previously-designated Mexican national Alfredo Alvarez Zepeda. The Alvarez Zepeda brothers are relatives of Chapo Guzman.

 

Guzman Loera and the Sinaloa Cartel were identified by the President as drug kingpins pursuant to the Kingpin Act in 2001 and 2009, respectively. OFAC designated Cifuentes Villa as an SDNT in February 2011 along with more than 70 other individuals and entities. Guzman Loera and Jorge Milton Cifuentes Villa were indicted on drug trafficking and/or money laundering charges in the U.S. District Court for the Southern District of Florida in November 2010. In February 2011, Jorge Milton Cifuentes Villa was also indicted on drug trafficking charges in the U.S. District Court for the Southern District of New York.

 

OFAC coordinated on this investigation with the Drug Enforcement Administration. Today’s action is part of ongoing efforts pursuant to the Kingpin Act to apply financial measures against significant foreign narcotics traffickers and their organizations worldwide. Treasury has designated more than 1,000 individuals and entities pursuant to the Kingpin Act since June 2000.

 

Penalties for violations of the Kingpin Act range from civil penalties of up to $1.075 million per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines up to $5 million. Criminal fines for corporations may reach $10 million. Other individuals face up to 10 years in prison and fines pursuant to Title 18 of the United States Code for criminal violations of the Kingpin Act.

Malware Targets Bank Accounts

‘Gameover’ Delivered Via Phishing E-Mails

 

Cyber criminals have found yet another way to steal your hard-earned money: a recent phishing scheme involves spam e-mails—purportedly from the National Automated Clearing House Association (NACHA), the Federal Reserve Bank, or the Federal Deposit Insurance Corporation (FDIC)—that can infect recipients’ computers with malware and allow access to their bank accounts.

 

The malware is appropriately called “Gameover” because once it’s on your computer, it can steal usernames and passwords and defeat common methods of user authentication employed by financial institutions. And once the crooks get into your bank account, it’s definitely “game over.”

 

Gameover is a newer variant of the Zeus malware, which was created several years ago and specifically targeted banking information.

 

How the scheme works: Typically, you receive an unsolicited e-mail from NACHA, the Federal Reserve, or the FDIC telling you that there’s a problem with your bank account or a recent ACH transaction. (ACH stands for Automated Clearing House, a network for a wide variety of financial transactions in the U.S.) The sender has included a link in the e-mail for you that will supposedly help you resolve whatever the issue is. Unfortunately, the link goes to a phony website, and once you’re there, you inadvertently download the Gameover malware, which promptly infects your computer and steals your banking information.

 

After the perpetrators access your account, they conduct what’s called a distributed denial of service, or DDoS, attack using a botnet, which involves multiple computers flooding the financial institution’s server with traffic in an effort to deny legitimate users access to the site—probably in an attempt to deflect attention from what the bad guys are doing.

 

But that’s not the end of the scheme: Recent investigations have shown that some of the funds stolen from bank accounts go towards the purchase of precious stones and expensive watches from high-end jewelry stores. The criminals contact these jewelry stores, tell them what they’d like to buy, and promise they will wire the money the next day. So the next day, a person involved in the money laundering aspect of the crime—called a “money mule”—comes into the store to pick up the merchandise. After verifying that the money is in the store’s account, the jewelry is turned over to the mule, who then gives the items to the organizers of the scheme or converts them for cash and uses money transfer services to launder the funds.

 

In many cases, these money mules are willing participants in the criminal scheme. But increasingly, as part of this scheme, we see an increasing number of unsuspecting mules hired via “work at home” advertisements who end up laundering some of the funds stolen from bank accounts. The criminals e-mail prospective candidates claiming to have seen their resumes on job websites and offer them a job. The hired employees are provided long and seemingly legitimate work contracts and actual websites to log into. They’re instructed to either open a bank account or use their own bank account in order to receive funds via wire and ACH transactions from numerous banks…and then use money remitting services to send the money overseas.

 

If you think you’ve been victimized by this type of scheme, contact your financial institution to report it, and file a complaint with the FBI’s Internet Crime Complaint Center.

 

How Can You Protect Yourself?

- Obviously, make sure your computer’s anti-virus software is up to date.

 

- Don’t click on e-mail attachments from unsolicited senders. NACHA, FDIC, and the Federal Reserve all say they don’t send out unsolicited e-mails to bank account holders. If you want to confirm there’s a problem with your account or one of your recent transactions, contact your financial institution directly.

 

-Don’t accept unsolicited jobs online that require you to receive funds from numerous bank accounts and then wire the money to overseas accounts—you could get caught up in a criminal investigation.

The Greatest Economic Charity

By F.A. Harper

 

When asked to contribute an essay to Professor Mises's Festschrift, I was at first inclined to dip my pen in the well of humility and then lay it aside unused. On what economic theme has Professor Mises himself failed to write with a superiority to anything I could offer? Yet honor is due him. So I trust that friends of this great and patient teacher will tolerate an essay's imperfections for the sake of the spirit of an offering.

 

Professor Mises's main renown is as an economist. Yet to me he is a charitable person even more than an economist. His charity is not of the fashionable kind that ladles out economic pleasantries from a caldron filled with socialist loot obtained by theft. His is not even primarily of the material sort at all but is, instead, in the form of his inspiring mind and spirit. In my opinion there can be no greater charity than this, for it endures beyond any material form of benevolence.

 

In this essay I shall be dealing, however, with one aspect of economic charity — a form inferior to charity of the mind and the spirit. People spend vast sums trying to do good with economic alms in forms which, to me, seem open to serious question. In their haste to do good and to bask in the glow of immediate glory as purveyors of alms, they are being exceedingly wasteful of the… (Read more)

 

Source: Mises.org

United States Mint Announces 2012 Presidential $1 Coin Designs

WASHINGTON - The United States Mint today announced the designs that will appear on the Presidential $1 Coins in 2012.  The obverse (heads sides) of the coins will bear striking portraits of former Presidents Chester Arthur, Grover Cleveland (first term), Benjamin Harrison and Grover Cleveland (second term). 

 

Inscriptions on the obverse of each coin include the President's name, the years of his term in office, a number indicating the order in which he served, and the inscription IN GOD WE TRUST.  The portraits of Chester Arthur and Grover Cleveland were designed and sculpted by United States Mint Sculptor-Engraver Don Everhart.  The portrait of Benjamin Harrison was designed and sculpted by United States Mint Sculptor-Engraver Phebe Hemphill.

 

All coins in the Presidential $1 Coin Program bear a common reverse (tails side) featuring the iconic Statue of Liberty, designed and sculpted by Everhart.  Inscriptions on the reverse are $1 and UNITED STATES OF AMERICA.  The year of minting, or issuance, E PLURIBUS UNUM and the mint mark are incused on the edge of the coins.

 

The Presidential $1 Coin Program is authorized by Public Law 109-145.  Although production of circulating Presidential $1 Coins was recently suspended, collectible versions of the coin will continue to be available in select United States Mint offerings.  For information on the availability and pricing of products featuring Presidential $1 Coins, visit http://www.usmint.gov/catalog or call 1-800-USA-MINT (872-6468).

 

The United States Mint, created by Congress in 1792, is the Nation's sole manufacturer of legal tender coinage and is responsible for producing circulating coinage for the Nation to conduct its trade and commerce.  The United States Mint also produces proof, uncirculated and commemorative coins; Congressional Gold Medals; and silver, gold and platinum bullion coins.

Secretary Geithner to Travel to China and Japan Next Week

Trip to Highlight Issues Including State of the Global Economy, Stronger Growth and Increased Pressure on Iran

 

WASHINGTON – The U.S. Department of the Treasury today announced that Secretary Tim Geithner will travel to Beijing, China and Tokyo, Japan January 10-12, 2012, for meetings with senior government officials in both countries to discuss the state of the global economy, policies to strengthen global growth and other economic issues of mutual importance. Secretary Geithner will also discuss our continued coordination with international partners in the region to increase pressure on the Government of Iran, including financial measures targeting the Central Bank of Iran.

 

On Tuesday, January 10, Secretary Geithner will arrive in Beijing for a meeting with Chinese Vice Premier Wang Qishan. The following day, he will meet with Premier Wen Jiabao, Vice President Xi Jinping and Executive Vice Premier Li Keqiang to discuss measures to promote continued economic growth and level the playing field for U.S. workers and firms. The Secretary’s visit to Beijing comes ahead of Vice President Xi’s visit to Washington later this year.

 

On Thursday, January 12, the Secretary will be in Tokyo, Japan for meetings with Prime Minister Yoshihiko Noda, Finance Minister Jun Azumi and other senior government officials to confer on the U.S. and Japanese economies and cooperation on efforts to support strong, sustainable and balanced global growth.

 

Additional details will be announced in the coming days.

Keynes vs. Say

By Henry Hazlitt

Keynes's "greatest achievement," according to his admirers, was his famous "refutation" of Say's law of markets. All that it is necessary to say about this "refutation" has already been said by Benjamin M. Anderson, Jr., and Ludwig von Mises. Keynes himself takes the matter so cavalierly that all he requires to "refute" Say's Law to his own satisfaction is less than four pages.

Yet some of his admirers regard this as alone securing his title to fame:

Historians fifty years from now may record that Keynes' greatest achievement was the liberation of Anglo-American economics from a tyrannical dogma, and they may even conclude that this was essentially a work of negation unmatched by comparable positive achievements. Even, however, if Keynes were to receive credit for nothing else … his title to fame would be secure … [Yet] the Keynesian attacks, though they appear to be directed against a variety of specific theories, all fall to the ground if the validity of Say's Law is assumed.

It is important to realize, to begin with, as Mises has pointed out, that what is called Say's law was not originally designed as an integral part of classical economics but as a preliminary — as a refutation of a fallacy that long preceded the development of economics as a recognized special branch of knowledge. Whenever business was bad, the average merchant had two explanations at hand: the evil was caused by a scarcity of money and by general overproduction. Adam Smith, in a famous passage in The Wealth of Nations, exploded the first of these myths. Say devoted himself to a refutation of the second… (Read more)

Source: Mises.org

The Unit of Social Life

By Frank Chodorov

Beginning with the obvious — there must be men before there is a Society, and there must be a Society before there is a Government. Social institutions must seminate in the soil of which the individual is made. Therefore, we are compelled to ask the individual, the unit of social life, to tell us why he socializes, why he becomes political. The metaphysicians were on the right track when they inquired into the nature of the individual for an explanation of the State, even though they were sidetracked by their theological turn of mind. That way lies no positive answer, nor one that does not begin with making assumptions. Perhaps a surer light on the question will be thrown if we look at the human being externally, without reference to his spiritual composition.

What do we observe as a constant in his career? To that question there is but one answer: that he is always, and wherever we find him, concerned with making a living. We cannot even think of a human being who is rid of that preoccupation. He is, basically, an "economic man" — to use a term that is sometimes used derogatorily, but which is most appropriate when we reflect that man's primordial business is existence. His economic pursuit is ingrained in him as a matter of necessity. It seems logical to assume, then, that the Society in which we always find him is either a phase of, or is related to, the business from which he never retires. Is it not likely that if we apply ourselves to the means and methods he employs in the gaining of a living we shall learn that Society and Government are outgrowths of that process? Perhaps, after all, these institutions have their roots in economics. It is a plausible hypothesis at any rate.

The objection has been raised that the human being is far too complex to be treated only as a living creature. Other species that inhabit the earth are also on the constant prowl for the means of existence and they do not have anything like what we call Society and Government; the best they do in the way of socializing is a herd or a school or a flock… (Read more)

Source: Mises.org