When a free market goes on strike…

Economics Economics Questions
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1

I’d like to look at the current crisis from a theoretical point of view.

Consider the following model. Assume

  • we have a free market
  • everyone in this market can vote to and if more than 50% of the population votes for something, it becomes a rule.
    Let’s suppose that the majority (more than 50% of the population) made some bad decisions, for example, due poor risk estimation. The majority faces severe losses.

The majority may vote to tax everyone even those who didn’t make bad decisions. This situation creates a dangerous precedent and is not unreal. This is the case when the market becomes unstable. The taxation of those who didn’t make bad decisions to cover losses of those who made bad decisions stimulates making more bad decisions.

Can anyone point me to a section in the books of Mises, Hayek, or Rothbard? I’m more interested if Rothbard wrote anything about this.

2

If they could vote to make laws that there were allowed to force upon the rest of society it wouldn’t be the free market.

3

best i could find off a quick google search:

http://www.lewrockwell.com/rothbard/rothbard11.html

Also…

http://en.wikipedia.org/wiki/Murray_Rothbard#Anarcho-capitalism

4

Thanks. I guess I was searching using wrong keywords. This is exactly what I was looking for.

I didn’t realize that when I mentioned “voting” I really meant a democracy, i.e. a political system.