It’s true that the US health-care system is a mess, but this demonstrates not market but government failure. To cure the problem requires not different or more government regulations and bureaucracies, as self-serving politicians want us to believe, but the elimination of all existing government controls. It’s time to get serious about health-care reform. Tax credits, vouchers, and privatization will go a long way toward decentralizing the system and removing unnecessary burdens from business. But four additional steps must also be taken: FULL ARTICLE

Like Hutt, I want to attack the following notion: that money held in cash balances and deposit accounts is somehow “unproductive,” “barren,” or “sterile,” offering a “yield of nil;” that only consumer goods and producer (investment) goods are productive of human welfare; that the only productive use of money lies in its “circulation,” i.e., in its spending on consumer or producer goods; and that the holding, i.e., the not spending, of money diminishes future consumption and production. FULL ARTICLE

Here I present the outlines of a theory of empire, particularly democratic empire. While all states must be expected to have aggressive inclinations, the incentive structure faced by traditional kings on the one hand and modern presidents on the other is different enough to account for different kinds of war. Whereas kings viewed themselves as the private owner of the territory under their control, presidents consider themselves as temporary caretakers. The owner of a resource is concerned about the current income to be derived from the resource and the capital value embodied in it (as a reflection of expected future income). His interests are long-run, with a concern for the preservation and enhancement of the capital values embodied in “his” country. In contrast, the caretaker of a resource (viewed as public rather than private property) is concerned primarily about his current income and pays little or no attention to capital values. FULL ARTICLE

Mankind being what it is, murderers, robbers, thieves, thugs, and con-artists will always exist, and life in society will be impossible if they are not deterred. How and by whom is this enforcement of law and order accomplished? The answer given by classical liberals and by almost everyone else is that the indispensable task of maintaining law and order is the unique function of the state. But the very institution of government is nothing less than a contradiction in terms: an expropriating property protector, “producing” ever more taxes and ever less protection. In order to be just and efficient, the production and maintenance of law will have to be undertaken by freely financed and competing individuals and agencies. FULL ARTICLE

Contrary to Radnitzky’s assertion, it is not difficult to imagine peaceful human cooperation without any collective decision-making. Indeed, “ordered anarchy” the very idea of such a social order. From the diversity of individual interests it does not follow that conflict is necessary. Conflict can be avoided, if only all goods are privately owned by specified individuals and it is always recognizable what belongs to whom and what not. The interests of different individuals may then be as divergent as can be, and yet no conflict arises, insofar as these interests are concerned exclusively with one’s own property. FULL ARTICLE

In this transcript of a lecture at Mises University, I explain the neglected role of insurance in a free market economy. Any insurance involves the pooling of individual risks. Under this arrangement, there are winners and losers. This is a form of income redistribution , but the characteristic mark of insurance is that no one knows in advance who the winners and losers will be. Also, there are many uninsurable risks; for the state to intervene only creates choas. FULL ARTICLE

In this excerpt from my new book, I argue that any form of taxation implies a reduction of income a person can expect to receive from original appropriation, from production, or from contracting. Since these activities require the employment of scarce means — at least time and the use of one’s body — which could be used for consumption and/or leisure, the opportunity cost of performing them is raised. The marginal utility of appropriating, producing, and contracting is decreased, and the marginal utility of consumption and leisure increased. Accordingly, there will be a tendency to shift out of the former roles and into the latter ones. FULL ARTICLE

Here is my preface to the newly published Polish edition of Democracy–The God that Failed.

In human history, for better or worse decisive turns in the course of events occur. The most recent of such turns was in 1989 with the implosion of communism all across central and eastern Europe. This had been predicted seventy years before by the Austrian economist Ludwig von Mises (1881-1973), a native of the Polish city of Lemberg (Lwow).

Clearly, the downfall of communism was a change for the better. However, what could have been a triumph in the history of human liberty turned out to be a meager victory that quickly waned.

Of all countries liberated from communism, Poland held particular promise. Poland was once a thoroughly aristocratic nation, and it has always been the aristocracy in particular, the natural elite, which has embraced and promoted the idea of liberty. Poland was an elective monarchy from 1572 to 1791 and in its parliament – the Sejm – a single member had the power to annul any proposed legislation. Throughout Europe, Poland was hailed for its religious tolerance. As Erik Ritter von Kuehnelt-Leddihn has noted, Poles thrice played a decisive role in saving Western civilization: in 1241 at Liegnitz, when, despite their defeat, Poles and German knights held off the Mongol invasion of Western Europe; in 1683, when Poles defeated the Turks at Vienna; and in 1920, when Poles defeated the Bolsheviks at Warsaw.However, rather than resuscitating its glorious liberal-libertarian past and choosing a radical path toward desocialization and privatization as proposed in Chapter 6 of this book, Poland, like most other formerly communist countries, chose to adopt the western European model of the social-democratic welfare state. This was in part because the Polish leaders did not know better, but more importantly it was because they were bribed and advised to do so by the political leaders of Western Europe and their intellectual ‘bodyguards,’ who were fearful of a truly liberalized central and eastern Europe. Such a liberal Poland would have put Western Europe’s own over-taxed and over-regulated countries at a competitive disadvantage and forced them to engage in radical domestic reforms. It would have required the rollback of the economically unsustainable Western welfare state. Instead, Poland imitated the West with a large government-controlled sector of the economy, government-produced paper money, high taxes, an abundance of economic regulations, and a multitude of tax-financed ‘welfare’ provisions. Moreover, lured by the promise of huge transfer payments and high-paying jobs in Brussel’s ever-growing bureaucracy, Poland decided to join the European Community, a government cartel set up for the purpose of an upward harmonization of the tax and regulation structure throughout Europe. Following some initial spurts of economic growth due to a certain degree of privatization and liberalization, the results have been predictable: widespread corruption, inflation, stagnation, and unemployment.

Worse, limited as it was, the process of de-socialization was essentially a political one. That is, instead of being returned to their just owners, large parts of the national resources were privately appropriated by politicians and politically connected circles, who were frequently the former communist rulers and oppressors. Many people with most dubious pasts suddenly emerged as owners of great fortunes and wealthy businessmen.

It is no wonder, then, that “capitalism” and a “free market economy” both quickly assumed a highly negative connotation, for those were the names under which the new economic system was fraudulently advertised. If “capitalism” and “free markets” meant stagnation, misery, unemployment, and crooks becoming rich, who wanted it? The egalitarian envy directed against the rich, which was cultivated during four decades of communism, intensified.

In this book, it will be demonstrated that fundamental alternatives to the present order exist; that democracy is just a mild form of communism; that a monarchical system is preferable to mass democracy but can be improved upon through the establishment of a “natural order;” and that political centralization as represented by the European Community is economic nonsense. It will be argued instead that de-centralization – the model provided by cantonal Switzerland, Liechtenstein, Monaco, and the “free cities” such as the Free Royal Polish City of Danzig (Gdansk) before 1795 and “free cities” all across Europe during the Middle Ages – promotes liberty and prosperity; that the class of politicians and government bureaucrats are parasites living off the work of productive individuals; that under genuine capitalism and free markets only productive and thus deserving people, not crooks, will become and remain rich; and that under such circumstances the sentiment of envy, as the biblical commandments clearly recognize, is evil and counterproductive and must be suppressed.

I do not exaggerate when I say that the Polish reader will find this book highly provocative, even shocking at times. It attacks one popular myth after another head on. Whether or not the reader will accept all of my conclusions, I am confident that he will be awakened from his dogmatic slumber and view the world with different eyes than before.

Rothbard and Mises have been criticized by Nozick (1977) and Caplan (1999), for inconsistency in admitting the concept of indifference into economic analysis after all, even if only indirectly. These criticisms have been answered by Block (1980, 1999) and Hülsmann (1999). However, their answers, although largely correct, seem to bring less than full clarity to the matter. Setting out from Nozick’s criticism, I hope to remedy this deficiency here. FULL ARTICLE

In this excerpt from Democracy: The God That Failed, I explain why cities exist and how governments destroy them through interventionist politics. It is in the large cities where, as the subjective reflection of this complex system of spatio-functional allocation, citizens will develop the most highly refined forms of personal and professional conduct, etiquette, and style. It is the city that breeds civilization and civilized life. But once the state arrives on the scene, the process of de-civilization begins. FULL ARTICLE

Readers of this site probably know about my ordeal at my university, which has been covered quite extensively on this site and by the major mainstream press. Now that major combat operations have ended (to employ a phrase used by Bush in reference to Iraq…two years ago), I’ve had some time to reflect on what happened, why, and whether and to what extent I responded properly.

And so here are my thoughts on this incident that took my career as a professor of economics in a direction I would never had anticipated. Now that the case is more-or-less settled, I no longer feel bound by legal considerations to keep silent on important details. This article is the first to disclose the full details of the case.

[Full Article]

The idea of private property not only agrees with our moral intuitions and is the sole just solution to the problem of social order; the institution of private property is also the basis of economic prosperity and of “social welfare.” As long as people act in accordance with the rules underlying the institution of private property, social welfare is optimized. [full article]

My book Democracy: The God That Failed is now also available in a Spanish translation under the title Monarquia, Democracia Y Orden Natural. Una Vision Austriaca De La Era Americana. The book has been translated by Prof. Jeronimo Molina (University of Murcia), who has also written a Spanish introduction. The book can be ordered by email.

My book Democracy the God That Failed is now also available in a Spanish translation under the title Monarquia, Democracia Y Orden Natural. Una Vision Austriaca De La Era Americana. The book has been translated by Prof. Jeronimo Molina (University of Murcia), who has also written a Spanish introduction. It can be ordered through Professor Molina.

Demokratie: Der Gott, der keiner ist is the title of the German edition of Democracy: The God that Failed, and it was reviewed yesterday in Handelsblatt (Germany’s WSJ). Here is the text and here is the look in a pdf file. The review is by Roland Baader.