- Booms and busts - Mises actually put his business cycle theory in the “free market” side of his theories. He believed it can arise from the free market. So do I. Anytime new money is injected into the banking or financial sector at a disproportionate rate to the rest of society, you will get a subsequent boom and bust. If a new gold mine is found, and all the prospectors rush all the new gold to the bank, and the bank loans it out with lower than prior interest rates, you can get a business cycle. With wildcat banking of the 1800’s, where banks were permitted to practice fractional reserve banking, allowing massive credit issuance beyond the money backing up these claims, you had business cycles. The thing is, natural limits on gold and bank runs kept the booms and busts fairly small. And the busts had no government protection. The banks couldn’t create more gold, or satisfy a bank run with more credit. Today, through government, they can create more money, subject to neither credit restraints or bank runs. Thus, today, our downturns are much longer and spread out…often avoided altogether (by further making malinvestments temporarily profitable - delaying a larger bust).
Further, Mises believed that bank runs more effectively policed fractional reserve banking than government could. He believed outlawing the practice would have simply turned into a legal protection of some arbitrary fractional backing, like we have now. Of course, he was also opposed to fiat currency, which we also have. …There are also “Real Business Cycle Theory” people who claim the business cycle is completely natural phenomenon, although I haven’t given it any notice…
- Housing the poor - To do A with some set of resources, means to not do B. Thus, to build public housing means to not build private housing. Thus, private housing costs increase, and you have more poor people who need public housing. The tax increase to build public houses onto those who are marginally homed pushes them out of a home. Essentially, there are two reasons not to advocate public housing. One is they must be paid for by taxes, which are unjust and adversely affect private production. The second is that government suffers from serious problems in being a producer. If they are to hire a firm to do the work, they will likely pay more than they should for the quality of work returned. This is simply because the government doesn’t earn the money they use to pay, and thus cannot understand its value. Often, due to perverse practices of budgeting, agencies aim to pay the maximum amount rather than the minimum. Also, the agent distributing the money may wish to reward a crony, who possibly made campaign contributions (or bribes). This is the principle-agent problem. If the government attempts to build them itself, from raw materials to houses, it suffers from Mises’s calculation problem. This basically says that profitability cannot be calculated through each stage of production, so there is no idea whether something is being done horribly inefficiently. Rest assured, nearly all nationalized industries are highly inefficient.
Basically, if we’re inefficiently using taxes to produce houses for poor people who pay nothing for them (and often leave them in shambles, with the logic that it isn’t theirs anyway) the result is less money to pay towards all industry that operates at a profit. Profit here doesn’t mean the private coffers of rich men. It means that society is offered products at prices that promote mutual gain. The buyer values the product more than the price. The seller creates a product that is worth more than its raw material and labor costs.
Basically, free enterprise grows the economy and increases everyone who is productive’s quality of life, relative to the amount of work they perform. Government enterprises often are paid for by those who contribute, while rewarding those who don’t. The process is further compounded by perverse incentives in government management. The result is diseconomy - increasing the cost of living for everyone, except those who the government takes care of.
The solution is a mixture of economic growth and private charity. Contractors can still make profit through the charity of others. Ideally, it is not contractors, but all of society that wish to house and clothe the poor. Thus, the burden shouldn’t be passed to specific groups. Charity always comes at a loss of quality of life of those providing it. Thus, charity is naturally limited, especially among those marginally homed. No one is going to donate their home if they can’t afford another one. Thus, private charity tends to balance economic growth against itself. In this manner, most of the poor are housed while houses keep getting cheaper. The more profitable making houses is, the more production is devoted to that area (unless its through government decree - this makes some builders highly profitable while others not at all).
Section 8, or subsidized housing is simply the same thing - forced charity and diseconomy. Rent controls make landlords less profitable, meaning you get less landlords and aggravate the problem. Also, zoning and contruction regulation hampers the ability to build homes cheaper.
Of course, no solution here is perfect, but that’s life. It also isn’t perfect that some members of society can’t produce anything and have no families or communities to rely on for support. And neither is it perfect that public housing has produced large-scale negative consequences for its tenants.
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Global Warming - if someone can prove that global warming is causing damage to someone or their property and can prove that someone else is causing it, they should have the right to sue for damages. considering the Earth has been hotter during human history, and conflicting scientific reports on greenhouse gases, etc. this is a very hard thing to prove. Ultimately, no government accords will really do anything. No carbon credit scheme can actually slow carbon emmissions to the point where the environment starts reducing carbon gases, and if it did it would come at a tremendous loss in quality of life. It is more likely future technology that will be able to make real strides in research of the issue and solving it if necessary, and the best (quickest/least cost) way to get to such is to get our energy sector unregulated.
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Cartels - read about actual cartels - they rarely are sustainable and soon revert back to competitive functions, pushing prices down again. One is much more inclined to find a de jure monopoly than a de facto one. Usually, the de facto monopolies occur because they have capital and efficient practices that are far ahead of competition. They usually offer higher wages and better working conditions, as well as lower consumer prices. Anti-trust law is used 95% of the time by one competitor against a bigger one (or even against smaller ones ironically), simply as a means to get competition out the way, rather than keep competition fair. The whole anti-trust thing started after corporations were put in a position where bigger equals better. This was simply because government is a monopoly and privilege was for sale. Remember the railroad subsidies and the ICC? Well, anti-trust didn’t follow long after. There is little doubt as to why. In a free market, there is no government privilege (probably bc there is no gov), so companies can only grow (and only have incentive to do so) by seeing increasing profit. But profit not only makes one business grow, but draws other entrepreneurs into the industry. The larger the profit margin is, the more resources are shifted from less profitable industries. When production is able to meet demand, prices must fall, and so will profit margins. With privilege, profit margins can ensure less competitors. In a free market, they can only ensure more. Standard Oil comes to mind. Their peak market share was > 90%, but they only had like 65% when they were sued for anti-trust (mainly because of railroad contracts, which were forbidden due to regulation, which came about bc subsidies created railroad monopolies). Gov is arbitrary, and so are its privileges.
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barriers to entry - of course there are natural barriers to entry! it isn’t regulation that prevents me from starting an automobile company; it’s a whole lot of capital. if you expect to be competitive, you must out-compete your competitors in some facet. If you don’t have as good capital, you must have better labor, profit models, or efficiency. Developing anything has a cost, and you must develop something before you can sell it! If the barriers are government imposed, like licensing, regulatory cost (esp when regressive), etc, they are not fair. If they are there because existing competitors have invested more of their own money in capital, labor, and land, then they are fair. If you don’t think they are, try to produce your own capital, and get your laborers to work for free. In the area of land, if emminent domain or discounted gov rates are used to acquire land cheaper than others, this is an unfair barrier. land should be homesteaded (at the cost of the labor to do so), but as long as government rates are the same, it isn’t an unfair advantage.
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cartel of the rich - well, we should ask ourselves if the rich are prevented by or use government to “team up”. also, how can the rich team up? How do they force the people to buy their goods? How do they prevent competitors from arising? How do they accumulate all capital goods? The only way to do so is through threat of violence, which government monopolizes. Thus, if there was no government, such teaming up would be unlikely and perhaps impossible. At the end of the day, the rich don’t simply want to be relatively more wealthy than the poor. They want to be actually rich. This means that we must have full scale productivity, giving us technological growth and affordable products. Usually cartels exist to restrict supply and expand profit margins. But even with greater production and less profit margin, they may make more money. And in terms of other goods, the same amount of money will go further. So why would two non-competing industries (like food and electricity) agree to lock out competition that could sell each other goods at less cost? In the end, all the rich “teaming up” schemes don’t make sense to anyone’s best interest. Rather, you have everyone naturally wishing to abuse the power of violence in the government. Labor unions want to use government to keep strikebreakers from working - basically claiming ownership to the capital they normally use. The poor want to use government to force those richer than them to give them charity. Really, there are no teams of classes, there are only pairs. Pairs who benefit from free exchange, or pairs of government and private groups forming privileges. With universal suffrage, we are simply likely to have everyone plunder everyone, rather than have one group plunder another. But in that resources are used in creating and fighting against these privileges, everyone suffers from diseconomy. For example, a steel tariff may be lobbied for by US Steel, but lobbied against by General Motors. Even if government chooses to guarantee a free market, its ability to prevent one requires resources to persuade it. Rather, in a true free market, General Motors does not have to lobby against US Steel, and if US Steel attempts to fight the free market and impose a steel tariff, it must do so at its own cost of enforcement.