Hayek the Radical

May 24, 2009 11:10 AM by Max Raskin

Here is a video of Hayek speaking with some students at Stanford in the 1970s. Says Hayek, "If we want to preserve a free society we must take from government the monopoly of issuing money...the new thing will grow by itself."

Bribes, Bailouts, and Bastiat

September 26, 2008 6:45 PM by Max Raskin

If this week has proved anything it's Bastiat's famous dictum: Government is the great fiction through which everybody endeavors to live at the expense of everybody else.

When asked by U.S. News and World Report what he thought about bailing out consumers deep in all sorts of debt, Ron Paul, channeling Bastiat, answered, "If they've spent more money than they've had and can't pay their bills, they have to either quit spending and work hard to pay off the debt, or, if [necessary], file for bankruptcy. But they shouldn't ask other people, who may be poor themselves and just barely making it [for help.] If you ask taxpayers to do it, someone else gets stuck with the bill. Someone else always has to pay the price. This idea that there are no victims, that's a fallacy."

This may as well be the lesson of political economy...someone always has to pay the price. How are we going to finance these bailouts? Either massive inflation, taxation, or borrowing. Though this might temporarily stave off recession, it will also stave off the correction. Markets need to correct themselves.

With Bastiat's aphorism in mind, it shouldn't be too hard to understand why 61 Nobel Laureates recently endorsed Obama after he promised to double NIH funding.

On the free market people choose for themselves what they feel comfortable spending. The hallmark of the planned economy is that someone other than the individual decides how he spends his money. But if economists have taught us anything, it's that the fiction of socialism is untenable and leads to ruin, poverty, and war.

Here's the Bastiat Collection.

Our Crisis and The Communist Manifesto

September 25, 2008 4:04 PM by Max Raskin

We are reading The Communist Manifesto in one of my classes. Shocking, I know.

Marx lays down ten measures that he believes will revolutionize the capitalist mode of production. His fifth is especially relevant: "Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly."

Scott Horton in his interview with Peter Schiff points out that this is how socialism will/has come to America. In essentially buying out AIG, a failing insurance company, the government has set a dangerous precedent. That the company is failing is beside the point; the fact is the government decided the company needed to be bought out and therefore they bought the company out. Because it has the legal power to create credit out of thin air, this precedent allows the Federal Reserve to essentially "buy" the country if it wants.

Marx never intended agrarian countries like Russia and China to lead the Communist Revolution, but rather he thought industrialized nations like America and Great Britain would lead the way.