Comments (5)

• Fephisto

• Reminds me of an old tale I heard about the government trying to conserve resources...

  Back in the early 1900's or late 1800's there was a lot of shipbuilding going on. Someone in congress got the idea we should preserve some of our forestry to be able to continue to have a large navy. Not even a decade later all-steel ships became popular.

• Published: August 4, 2008 9:50 AM

• severin

• As soon as the market comes up with a solution, there will be some politician running out in front of the parade with some Johnny-come-lately bill, and then claim he "solved" the problem. The sad part is the the sheeple will believe it and that politician will go down in history as someone important. Even though it is much more likely the politicans bill at best did nothing, at worse it would have made things worse.

• Published: August 4, 2008 1:21 PM

• Dick Fox

• "...the market is a process by which people discover effective (and not so effective) ways to satisfy our needs and wants. Entrepreneurship is essential; this consists of appraising the factors of production in the market and undertaking new production plans based on the expectation that such an endeavor will be profitable. Those who choose wisely are rewarded with profits. Those who choose poorly are punished with losses.

  Toyota did not need to follow the diktat of a centralized bureau of automobile construction and distribution. They made their decision based on their expectations of the future structure of prices for inputs and outputs, complements and substitutes. They decided that their resources were better spent improving and building hybrids rather than larger vehicles. Money talks, and firms have to listen."

  Sorry Art but I have to take issue with what you wrote in the quote above. Toyota did indeed follow the diktat of central planning. First there is the direct intervention of subsidies for hybrids, but then there is the inflation and regulation wedges to oil production created by (Fascist) central planning.

  Those in government today use the distortions of markets to manipulate behavior. The result is the destruction of wealth and efficiency, even wealth redistribution.

  We must always distinguish between "market" driven behavior and "free market" behavior. Sometimes market reactions of Fascist central planning can be just the opposite of what was intended. We need only look to the gross abuse Hitler made of Mussolini's Fascism. Fascism is the tool of the state used to manipulate whether by the US congress passing legislation to prevent the production of new sources of oil, the US Supreme Court giving municipalities the right to confiscate property of one individual and give it to another, or Hitler and FDR establishing quotas for production and distribution.

• Published: August 4, 2008 7:28 PM

• Robin Anderson

• Art Carden is correct that market will respond to price signals. Good article in that sense. Agree with Fox above though, the flaw is using the Toyota Prius as an example of free market response.

  Toyota reportedly loses money on the Prius. This may or may not be true but the company has kept this secret. The original reason for selling the Prius was to please the fleet efficiency regulators. The more Prius units it sold (at a loss), the more Tacomas (large profits per unit) it would be allowed to sell.

  There are many reasons why Toyota is performing better than GM, Ford, and Chrysler. But the Prius is not one of them. It is a PR gimmick at best.

  While there has been a move to smaller cars, the selling price on a Corolla is still below that of the larger Toyotas such as Camry.

  The coercive nature of Corporate Average Fuel Economy (CAFE) standards should not be underestimated.

• Published: August 6, 2008 12:37 PM

• marius spiridon

• 
  I read with interest your article on the ongoing actions at the market level intended to deal with the high oil prices.

  I have just one observation: you refer, in the second paragraph, to the fact that "profits and losses are the signals that tell entrepreneurs whether they are choosing wisely or choosing poorly in their undertakings". And you go on with "Profits and losses also tell entrepreneurs how to adjust these undertakings to ever-changing conditions".

  In my opinion this is a widespread error, even in the ranks of the Austrians. Profits do not definitely signal anything for the future, they are just the reward for wise decisions in the past. They do not speak a word to any entrepreneur regarding how to successfully arrange the factors of production in the future. This is just plain Hayekian nonsense (although I do concede that, from time to time Mises falls into the same trap). I regret that Hulsmann's studies are not more widely read and used by our fellow American Austrians.

• Published: August 11, 2008 3:05 AM