Occupy Gotham?

By Zach Foster

There have been a few articles and snippets on the Mises Blog about Batman, but most are about the Batman Chronicles issue where German Batman saves Ludwig von Mises's library — this just goes to show that I'm not the only student of Austrian economics who's a recovering comic-book nerd — though there is a short and sweet review of Batman Begins by Joe Salerno and a well-thought, in-depth analysis of The Dark Knight by Jeffrey Tucker. Let this article be the corresponding piece to The Dark Knight Rises.

One of the remarkable things about this Batman series is the way Hollywood — a bastion of tired, often-rehashed, leftist propaganda — has unwittingly allowed an obscenely wealthy capitalist who lives a decadent bourgeois lifestyle (when not fighting crime) to be the hero! It was noted somewhere that Murray Rothbard was a fan of the James Bond films partly because Bond was unrepentantly bourgeois and knew how to live it up in style. I think Rothbard — who has forgotten more about Austro-libertarianism than I could ever hope to learn in my lifetime — would have liked Christian Bale's portrayal of Bruce Wayne, neither afraid to make large investments nor afraid to be seen driving the ladies around in his European sports cars.

Another thing about Bruce Wayne/Batman is that he's a shining example of what can be accomplished by the private sector. None of Wayne's state-of-the-art technology is sponsored by government grants, though there would be little doubt Wayne Enterprises sells to the government. Nonetheless, Wayne's research is fueled by his own profits, not government grants or subsidies, and with the help of his top man, Lucius Fox, he develops the technology that enables him to be an effective one-man army and fight organized crime that borders on terrorism, while responsibly avoiding the corruption of the military-industrial complex.

Jeffrey Tucker was correct to note that the mob's extensive operations and violence (as well as law enforcement often turning a blind eye) are fueled by prohibition — that is, government intervention — much the way Prohibition fueled the gang wars and the rise of organized crime in the 1920s. The utopian idea held by leftists and neoconservatives alike…

(Read more)

Source: Mises.org

The Consumption Tax: A Critique

By Murray Rothbard

The Alleged Superiority of the Income Tax

Orthodox neoclassical economics has long maintained that, from the point of view of the taxed themselves, an income tax is "better than" an excise tax on a particular form of consumption, since, in addition to the total revenue extracted, which is assumed to be the same in both cases, the excise tax weights the levy heavily against a particular consumer good. In addition to the total amount levied, therefore, an excise tax skews and distorts spending and resources away from the consumers' preferred consumption patterns. Indifference curves are trotted out with a flourish to lend the scientific patina of geometry to this demonstration.

As in many other cases when economists rush to judge various courses of action as "good," "superior," or "optimal," however, the ceteris paribus assumptions underlying such judgments — in this case, for example, that total revenue remains the same — do not always hold up in real life. Thus, it is certainly possible, for political or other reasons, that one particular form of tax is not likely to result in the same total revenue as another. The nature of a particular tax might lead to less or more revenue than another tax. Suppose, for example, that all present taxes are abolished and that the same total is to be raised from a new capitation, or head, tax, which requires that every inhabitant of the United States pay an equal amount to the support of federal, state, and local government. This would mean that the existing total government revenue of the United States, which we estimate at $1.38 trillion — and here exact figures are not important — would have to be divided between an approximate total of 243 million people. Which would mean that every man, woman, and child in America would be required to pay to government each and every year, $5,680. Somehow, I don't believe that anything like this large a sum could be collectible by the authorities, no matter how many enforcement powers are granted the IRS. A clear example where the ceteris paribus assumption flagrantly breaks down.

But a more important, if less dramatic, example is nearer at hand. Before World War II, Internal Revenue collected the… (Read more)

Source: Mises.org

The Washington 1 Percent

By James E. Miller

The Associated Press recently reported that half of all new college graduates are either unemployed or underemployed. These fresh-faced bachelor-degree holders are finding themselves opting for waiting tables and serving coffee just to pay off a trillion dollars in student loans. They are coming to grips with a lie perpetuated by university professors, faculty unions, and politicians that deluded them into thinking college by itself was the golden ticket to success.

Meanwhile, the rest of America is still muddling through years of high unemployment. The jobs connected to Alan Greenspan's housing bubble are gone and will likely never return. Federal Reserve chairman Ben Bernanke met the financial crisis with an unprecedented amount of monetary-base expansion, which has failed to significantly affect the unemployment rate. President Obama and his allies in Congress threw $800 billion at the economy to no avail and have been running federal deficits to the tune of over $1 trillion for three years now. This orgy of money printing and spending has done little for the residents of Main Street but has done wonders for Wall Street and other politically connected interests.

Last fall's Occupy campaign was representative of a growing distrust of the American economic system. Although many occupiers were misled into believing capitalism is the culprit behind the sluggish economy, the protest's focus on income inequality was not wholly inaccurate. Of course the inequality in income that is a byproduct of an unhampered market economy is not something to demonize. As Ludwig von Mises wrote in Economic Freedom and Interventionism, “Inequality of wealth and incomes is an… (Read more)

Source: Mises.org

The Fiasco of Fiat Money

By Thorsten Polleit

I.

Today's worldwide paper-, or "fiat-," money regime is an economically and socially destructive scheme — with far-reaching and seriously harmful economic and societal consequences, effects that extend beyond what most people would imagine.

Fiat money is inflationary; it benefits a few at the expense of many others; it causes boom-and-bust cycles; it leads to overindebtedness; it corrupts society's morals; and it will ultimately end in a depression on a grand scale.

All these insights, however, which have been put forward by the scholars of the Austrian School of economics years ago, hardly play any role among the efforts of mainstream economists, central banks, politicians, or bureaucrats in identifying the root cause of the current financial and economic crisis and, against this backdrop, formulating proper remedies.

This should not come as a surprise, though. For the (intentional or unintentional) purpose of policy makers and their influential "experts" — who serve as opinion molders — is to keep the fiat-money regime going, whatever it takes.

II.

The fiat-money regime essentially rests on central banking — meaning that a government-sponsored central bank holds the money-production monopoly — and fractional-reserve banking, denoting banks issuing money created out of thin air, or ex nihilo.

In The Mystery of Banking, Murray N. Rothbard uncovers the fiat-money regime — with central banking and fractional-reserve banking — as a form of embezzlement, a scheme of thievery.

Rothbard's conclusion might need some explanation, given that mainstream economists consider the concept of fiat money as an economically and politically desirable, acceptable, and state-of-the-art institution.

An understanding of the nature and consequences of a fiat-money regime must start with… (Read more)

Source: Mises.org

Charting Fun with Krugman

By Robert P. Murphy

In a few recent blog posts, Paul Krugman used bar graphs and tables to (allegedly) prove the superiority of his views over those of the Austrians. Yet, as I'll show in this article, I can use Krugman's own data to demonstrate the exact opposite.

Krugman on the Fed and Banking Panics

Perhaps spurred by his Bloomberg debate with Ron Paul, Krugman posted the following regarding financial panics and the US central bank:

There's a very widespread belief on the right that banking crises only happen because either the Fed or Barney Frank cause them; go back to a gold standard, and there would be no need for financial regulation or anything like that.

This is, of course, nonsense; Walter Bagehot knew all about financial crises, which have been a constant feature of modern economies since at least the early 19th century. Just to drive the point home, I thought it might be worth posting Gary Gorton's chart of "panics" before the Fed went into operation:

Panics will happen; the question is how they are contained. (emphasis added)

Now although Krugman doesn't explicitly say "Ron Paul" or "Austrian economists," I think he has to have them in mind here. After all, before the Austrians rose in popularity, hardly anybody talked about the gold standard, let alone abolishing the central bank. It was the Austrians, and most notably Ron Paul, who put those ideas back into the limelight so that Paul Krugman feels the need to address the issue.

In that light, Krugman is simply making stuff up when he says such people think banking panics never happened before the Fed. Murray Rothbard's doctoral dissertation was The Panic of 1819, and Rothbard also wrote on the history of the Fed, so I'm pretty sure he wouldn't be shocked by Krugman's table.

But besides the cheap debating ploy — setting up his opponents as believing something obviously ridiculous — Krugman leaves open the door to his own demise in his final sentence, after the chart, when he writes, "Panics will happen; the question is how they are contained."

Fortunately, Krugman himself provides the answer in a… (Read more)

Source: Mises.org

The NFL Draft and the Division of Labor

By Doug French

[From April]

Tonight, the second-most-popular televised football broadcast of the year takes place from New York's Radio City Music Hall. ESPN will broadcast round one of the NFL Draft, with the remaining rounds to be broadcast on Friday and Saturday. An estimated 40 million people will watch the draft, an event that even for the most interested fan moves at a snail's pace.

"We all thought, way back when, how can this become the most watched non-movement sporting event in professional sports?" former NFL executive Carl Peterson says. "That's what it is. Nobody's moving. We're just drafting. Now it's prime time. Thursday night?"

The draft has come a long way since beginning in 1936, when teams selected players based on rumors and gut feelings. Now the business of drafting is big business, and the business of scouting and projecting what teams will pick which players is equally big.

In 1979, the brand new ESPN petitioned the league to televise the draft live. The network was initially turned down by a unanimous vote of the league owners. But ESPN persisted, and in April 1980, the cameras rolled as Oklahoma running back Billy Sims was selected first by the Detroit Lions on an early Tuesday morning.

But it was one man's work that provided the inspiration to televise the draft, leading to an entire industry that revolves around pro football's spring ritual. Joel Buchsbaum was a small, frail recluse who left his apartment in Brooklyn only to walk his dog, visit his mother, or go to the gym. He would leave Brooklyn only once a year — to attend the NFL draft in Manhattan. But the five-foot-eight-inch, 100-pound Buchsbaum was a giant in player analysis, who, as Dallas Morning News reporter Juliet Macur writes,

    could tell you anything about football, anything about players — even from 10 years ago. Heights. Forty-yard dash times. Injuries. If a guy sprained an ankle, he knew which ankle.

When a Police Athletic League coach told Buchsbaum he was too small to play sports he began a lifelong obsession with player analysis.

Buchsbaum wrote for Pro Football Weekly and each year produced… (Read more)

Source: Mises.org