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Ten Recurring Economic Fallacies, 1774–2004

mises.org — As an American historian who knows something of economic law, I became intrigued with how the United States had remained prosperous, its economy still so dynamic and productive, given the serious and recurring economic fallacies to which our top leaders (have subscribed and from which they cannot seem to free themselves.

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  • jeffiek, on 01/11/2008, -8/+61This won't go anywhere. It makes too much sense.
    • voisine, on 01/11/2008, -13/+1This article is Ron Paul spam... but I'm a Ron Paul fan and the article is right. He's written several books and articles published by the mises institute.
      • airwalkery2k, on 01/11/2008, -0/+17Not once is Ron Paul mentioned in this article.
      • rkbabang, on 01/12/2008, -0/+4Don't you understand? Not only is anything written by or about Ron Paul just spam, but anything written that Ron Paul or his supporters would agree with is also spam. You just don't understand the bury-bots.
  • ScienceDoc, on 01/11/2008, -4/+34This demonstrates one of the reasons why politicians and political appointees need an education. Not a freebie from Yale.
    • jsmu, on 01/12/2008, -1/+3Oh, it was anything but free. I'm sure Georgie Porgie's degree was at least a new building or two.
  • kaelyiesta, on 01/11/2008, -7/+27Number 8 is one I bring up all the time. Any time anyone attacks my belief in the ideals of free market, they always point to problems in industry that are not even remotely free. I have to constantly explain that the evidence they use is in fact ammunition for MY argument, which is to keep government from colluding with business.
    • Eccles, on 01/11/2008, -3/+7The problem for me is how do you make the U.S. truly a free market, or at least move it in that direction? It's all very well and good to argue the benefits of a free market, but what's going to stop businesses from using government to promote their agenda? Any business is going to act in its own best interests, not in the interest of creating a free market.
      • tomek77, on 01/11/2008, -5/+11What´s there to stop them? The US Constitution.
        It´s one of the reasons it was written.
      • kaelyiesta, on 01/11/2008, -2/+6Arguments for feasibility of keeping capitalism pure are probably the best criticisms around(I mention Orwells arguments about this from time to time). Still, the solution is easy. The solution is to keep government small, in line with Constitutional limits. No income tax, no lobby to steal your and my money and pay off corrupt politicians who secretly champion them.

        Off topic, I don't see why Eccles comment is being buried. Its not blatantly deceiving nor insulting.
      • jbmcb, on 01/12/2008, -1/+4> but what's going to stop businesses from using government to promote their agenda?

        If the government doesn't have the power to play around with tax structures, or levy tariffs, or pass targeted regulatory laws, or spend enormous sums of money in the private sector, exactly how would government be able to promote the agenda of a particular private interest?

        The reason that business gets involved with government is BECAUSE of government regulation - either to benefit from it, or to protect themselves from it. Microsoft had one lobbyist, and spent nothing on political endorsements before the government went after them for antitrust. Now they spend a TON on lobbying and supporting political campaigns. The whole thing was utter garbage, and believe me, I'm no M$ apologist.
    • captZEEbo, on 01/11/2008, -4/+8vote ron paul...the only politician that believes in small govt.
    • sensoukami, on 01/11/2008, -4/+8Ditto. i have a liberal friend who is always going on about competition being bad (typical liberal stupidity). He fails to understand he is giving the speical interests he hates the very thing they want, which is restraint from competition. Shockingly short sighted.
      • chaosium, on 01/12/2008, -3/+2Any "Truly Free Market" will lead towards monopolistic abuses of the people. There still have to be some protections in place.
        • sensoukami, on 01/13/2008, -0/+2Yes indeed. Maintain competition and bust monopoly.
        • sensoukami, on 01/13/2008, -0/+2Sorry, had to be more clear. Monopolies are almost always a product of government favoritism, they rarely survive the market for long because the market will seek to undermine them. One of the more common misconceptions out there.
    • bruce86, on 01/12/2008, -5/+0You all forget that fact that a "true free market" allows slavery, child pornography, child labor, and drug trade. I understand this is digg and at lease 3 of the four are accepted here, but to the average joe, this is bad mmm'kay?

      Not to also mention, that the free market does not actively prevent monopolies. Also it assumes that the consumer is all known and that business is not actively lieing. It also assume that the consumer is a rational being that chooses the best option for themselves. Both are while are NOT true.

      Admit it, Free market is basically Right wing's version of Communism. Works great in theory but fails in reality.
      • sensoukami, on 01/13/2008, -0/+2Did you just pull that out of your ass?

        "allows slavery, child pornography" -> Uhhh...no it doesn't. Why not say "the free market allows murder". it's not anarchy. Jeez, where do people get these idiotic ideas from.

        re: Monopolies. 1st, the vast majority of monopolies only exist or can survive with government help. nature abhors a vacuum, and the market abhors a monopoly. But go back to Adam Smith. About the only economic regulation required is the prevention of monopoly. That is pretty standard Econ 101.

        Consumer being all knowing. No, but it assumes the consumer knows his business better than a politician or bureaucrat would. A far more "real world" assertion that the blind left wing belief that some politician knows what is best for me and I don't.

        I could go on, but I'm tired. Suffice to say, you are utterly clueless. Please buy AND READ a basic Econ 101 book, and then try and be clever. Right now, you're just being ignorant.
        • bruce86, on 01/13/2008, -3/+1Why don't you understand the basics of the free market.

          "If the government legally prevents a merchant from selling his goods at any prices he wishes and that buyers agree upon, that is not a free market."
          - http://en.wikipedia.org/wiki/Free_market#Voluntary ...

          The free market calls for no regulation, no limitation of trade. Hence why in a free market there is no child labor laws, pornography laws or slavery laws, THESE ARE REGULATIONS IN THE MARKET. If you have laws limiting the trade of something its no longer a free market. Don't deny it just because it makes your blind right wing belief seem evil. Economics doesn't deal in morality, you should know this.

          Oh, Whats that? Free market needs regulation to prevent monopolies?!?! Regulation? Where is the invisible hand? A market isn't truly free if it has regulations.

          why don't you think before you write. Right now you're just being ignorant.
          • sensoukami, on 01/13/2008, -0/+2I've forgotten more about economics than you will ever know dumbass. Read Adam Smith's the Wealth of Nations to start with. Your quote is also irrelevant. That deals with PRICES. You were talking about completely different things. Until you've actually read/studied some economics for real, shut the ***** up. ALL ECONOMICS is based on prevention of monopoloy and the enforcement of property rights and contracts. You are dumb and you know nothing.
        • bruce86, on 01/13/2008, -2/+0Why don't you try talking about the issues, Instead of trying to write me off with your rhetoric.Economics are inherently A-moral(different from immoral), with all your econ knowledge you should know that.

          "Free trade is a market model in which trade in goods and services between or within countries flow unhindered by government-imposed restrictions. Restrictions to trade include taxes and tariffs, and other non-tariff barriers"

          -http://en.wikipedia.org/wiki/Free_trade

          Note, the non-tariff barriers. These barriers are the child labor laws, anti-slavery laws, anti child porn laws. These laws thankful restrict the trade in these matters. BUT! In order to have a truly "Free Market" you would need to get rid of these laws and many other to enable unhinder commerce. You have yet to address this. Tell me how you can have a truly free market when you impose bans on good and services(no matter how immoral or evil they are)?

          Additional, you have yet to address the mechanism in the free market that prevent monopolies. Since "all economics is based on prevention of monopoly" this should be easy. Tell my how the invisible hand breaks up monopolies.

          Until you actually address the issues instead of calling me dumb, i am gonna assume i am right.
          • sensoukami, on 01/13/2008, -0/+2Find me an Economist anywhere or any economic writer/journal that says that anti-child porn laws are against the concept of "Free market economics". You can't. You make stuff to try and be cute, and you fail miserably. Newsflash. Just because the word "free" is in it doesn't mean it is lawless anarchy. Not a hard concept, even for you.
        • bruce86, on 01/13/2008, -2/+0Just because you or other economist don't want to acknowledge the effects of the theory, does not mean its not true. Again i mention the majority of economist aren't concerned with morality. So your point is moot. Again you dodge my simple criticisms.

          Anti-child porn laws are regulations on trade maybe inspired by morality, but still in essence like an embargo on a specific product.(A no no in the free market, right?). You can't pick and choose what regulations you want and pretend its a free market. Care to explain:

          How Anti-child porn laws aren't regulation?
          or
          How anti-trust laws aren't regulations either?

          Admit it in the real world, the market needs at least some regulation to survive(you can argue not alot and i wouldn't disagree with you at that point). The ideal free market is flawed.
  • jurow, on 01/11/2008, -7/+38This is the most important piece of writing I've seen on Digg in quite a while. Every person (not just Americans) should be taught how to think in these terms from a very early age.


    /opens umbrella for impending rain of Ron Paul comments.
    • h4ppydotcom, on 01/11/2008, -2/+14A wonderfully well written and well thought through article. You don't have to agree with everything he says, but he has put together his considered opinion in an engaging and accessible way. Writers of the world take note (not to mention politicians and policy makers)!
    • noodless, on 01/11/2008, -15/+3Every American should be indoctrinated in right wing free market rhetoric. Im glad you will never run any country. As Ludvig Von Miser points out, even "free market" politicians who come into power soon realise their ideas have no relevance in how to build an economy.
      • jurow, on 01/11/2008, -3/+7Notice that I very consciously said a couple things there that you ignored:
        1. I said every person. Not just Americans. This is important.
        2. Even more importantly I said they should be taught HOW to think like this. Not that they should be taught TO think this. The ability to critically analyze something as complex as economy in simple and realistic (i.e. fact-based) terms is exceedingly important in understanding what's going on in our lives...not just the economy.

        Without such skills, you end-up sounding like a reactionary jerk hiding behind anonymous comments and misspelling the names of those you quote out of context ;)
        • noodless, on 01/11/2008, -5/+3Your right, im trying to start a fight, forgive me im bored. Ive got to correct you, yours wasnt an open statement "taught HOW to think like this" it was "taught how to think in these terms". I took that to mean, correctly i think, the terms of 'free market rhetoric'.
          I would definately agree in trying to teach critical thinking, but these Austrian school economists are pretty lacking in it im afraid.

          And my misspelling wasn't a mistake it was a comment on the selfish essence of the Misers work.
      • jurow, on 01/12/2008, -0/+2Understood. I'm also a fan of occasional forum pissing-contests while at work. Despite my efforts, I can see how that wording can be taken in several ways...I guess we'll have to just disagree on Austrian economic theory.

        If the misspelling was intentional, then *whoosh*. Otherwise, good save.

        edit:
        nested this wrong...dammit.
    • voisine, on 01/11/2008, -6/+3This article is clearly a plug for Ron Paul. He's got a bunch of books and articles published on that site... and they're right.
      • CanTheSpam, on 01/12/2008, -0/+4Not so much. I remember this article making rounds in 2004.
    • cybrguy, on 01/11/2008, -2/+9Ah, historical precedence. People who deny history usually make fools of themselves.

      Great article.
  • milesthang, on 01/11/2008, -4/+7my AP us class should really read this
  • AdrianBisson, on 01/11/2008, -3/+24This is simply a great article. If the American people would simply understand what's here, there would be a lot more hope for peace and prosperity in our future. EVERYONE should read this.
  • GoneFishing, on 01/11/2008, -0/+15This resonates with many of the current fiscal policies US has, and that's not good.
  • whalefarmerjohn, on 01/11/2008, -25/+8The only recurring economic fallacy here is that the Von Mises institute is anything but a rightist joke of an economic institute.
    • j0ew00ds, on 01/11/2008, -8/+5why doncha just go spend us out of this debt then, kind sir!
    • jmpeagle, on 01/11/2008, -7/+13damn those classical liberals and their right wing economics....oh wait...right wing economics is corportism, not capitalism
      • zephc, on 01/11/2008, -1/+7The fallacy is to separate things into the left-right spectrum. I think its more a spectrum of more vs less central power/planning. More things fall in line (as it were) when you look at it like that.

        The 2D Political Compass illustrates this pretty well by increasing the level of detail along this more/less authoritarian spectrum by adding the 2nd dimension (splitting social from economic policies).

        You could add more and more dimensions to increase detail, but i think after two you reach diminishing returns, and you make it harder to render on flat surfaces like computer monitors :-)
        • scubasteve377, on 01/12/2008, -1/+1True. And if you look at the 'more/less authoritarian' spectrum you describe, you will find free market capitalism at one end, and socialism and fascism (the 'left' and 'right' of the conventional spectrum) coexisting comfortably at the other. Unfortunately authority seems to be winning, and freedom is fast becoming a distant memory for this nation. In the end, what is left for those of us who reject the ideologies of both Stalin and Hitler?
    • dave6, on 01/11/2008, -1/+16Huh? The article calls out the failures and irresponsibility of pretty much every major Bush administration policy from warmongering to deficit spending to corporate handouts . In #5 it even criticizes Ronald Reagan, who is above criticism in most Republican circles.
    • sensoukami, on 01/11/2008, -3/+2Care to make intelligent rebuttals? Or are you just gonna blow smoke up your own ass? (what a ***** idiot)
  • MxM111, on 01/11/2008, -22/+14Please, stop saying that it is a great article. It has lot's of unfounded conclusions, some of them true, some of them probably are not. I am not arguing with the facts that are presented, only the many conclusions are not founded enough (I am too lazy to list all of them, but for the kicks he argues that government spending does not help recession, which is simply wrong. Government spending does help shorten recession, but it reduces the economy growth after that) This is bad writing, but good food for thought.
    • OnlyShawn, on 01/11/2008, -2/+6...and yet, economists that I've heard on econtalk would agree that government spending does not help recession. I believe that they are more consistently of the mind that that's actually the case...
    • voisine, on 01/11/2008, -4/+10No, you're wrong about government spending. You've fallen victim to the Keynesian view which has been widely discredited after the stagflation of the 70's. Mises was the only other economist to put forward a systematic theory of the business cycle and his model has been shown to be the correct one historically. He's the only one who predicted the great depression and also the economic collapse of communism.
    • jeffiek, on 01/11/2008, -1/+7"which is simply wrong"

      Thanks for rebutting unfounded conclusions with an unfounded conclusion.
    • cybrguy, on 01/11/2008, -0/+5You should cite yourself to keep yourself honest, where in the article does it say government spending doesn't shorten recessions?

      "Students are taught that World War II ended the Depression; many Americans seem to believe that tax revenues spent on defense contractors (creating jobs) are no loss to the productive economy; and our political leaders continue to believe that expanded government spending is an effective way of bringing an end to a recession and reviving the economy."

      That is the quote. And it is TRUE.
  • stinkythegrump, on 01/11/2008, -5/+11Wow. Very good basic summary of a few economic principles that everyone should know. My wife has an Economics M.S. and I think I'll have her read this.
  • thejokker, on 01/11/2008, -2/+9this list was in one of my economics textbooks word for word
  • tomek77, on 01/11/2008, -4/+11This is simple common sense.. should be taught in school
  • lOvOl, on 01/11/2008, -4/+13Since when did the federal government ever do anything in the national interest?

    What a lot of people just don't get is that our government is unaccountable. Yah we have elections where you have the choice of Republican Douchebag A or Democrat Douchebag B, but whether they stay in office or get kicked out has almost nothing to do with how they vote.

    Usually it is because if things are in the ***** on any particular election year, the people who are ideologically on the fence will take out their frustration on the political party they blame for the nation's ills. Barring some sort of racist slip of the tongue or sexual affair (if they are a Democrat this of course does not apply because moral relativism is the name of the game for most Democrats), incumbents always get re-elected I think 98% of the time (I could be wrong on that but last I heard it was that high).

    When will people wake up and realize "the system" is the problem and representative government is antiquated and obsolete. We need direct democracy plain and simple and we have the technology and infrastructure to enable direct democracy today. Until people stop drinking the "if you don't vote for someone, then you are part of the problem" Kool-Aid, then literally nothing is going to change.

    People should not be voting for politicians, people should be voting on issues. Until that happens, there is no hope for a country that entrusts corrupt, incompetent blowhards they only know through the prism of campaign commercials, with absolute power over their lives.

    Seriously, if there was a need for a draft, why should a bunch of ***** in Congress make that decision and why should they make the decision to go to war as well (even though they have pretty much allowed the President to wage war by proxy for the last 50 years).
    • scubasteve377, on 01/12/2008, -0/+7The republican (small 'r') system created by the founders of this country, is in place to protect the minority from having their rights voted away by the 51%. Direct democracy centralizes power, and instead of empowering the people, as you suggest, will empower the whomever is the most skillful propagandist. Direct democracy encourages collectivism (group thought), instead of individualism. A lynch mob is democracy in action. You're right that the government is the problem, but it is the size and regulatory power in particular, not the system itself, that must be dramatically downsized if we are ever to get back to a free society with a strong and productive economy.
  • aleandro, on 01/11/2008, -13/+6actually I would disagree with much of what was said. this is an opinion that is not shared by the majority of scholars. Some stuff is viable but the majority is no really worth it.
    • trebuchet03, on 01/11/2008, -3/+4Link?
    • cybrguy, on 01/11/2008, -2/+6Any historical basis? He gave historical basis for much of his arguement.
  • alsahir, on 01/11/2008, -7/+15My biggest question after reading this is how it got to Digg's front page? It doesn't involve Jessica Alba, it isn't from Cracked or Double Viking, and it doesn't have a picture of a dog's backside that might resemble Jesus. What happened?
    • Dischorran, on 01/11/2008, -1/+6Who would have thought that a libertarian article would do well on Digg? After all, it's not as if there's anyone rabidly supporting a libertarian candidate in these parts...
  • trollick, on 01/11/2008, -5/+9#1 is the most retarded. It it was true, then why even wait for a broken window? Why not just start huge pointless projects just for the sake of generating activity?
    • jeffiek, on 01/11/2008, -3/+3Uh, hello? It's a list of FALLACIES.
    • hyrate, on 01/11/2008, -2/+13"Huge pointless projects just for the sake of generating activity" already describes FDR's policies during the Great Depression.
    • cybrguy, on 01/11/2008, -0/+3Thats a bad example, but saying that the governement spending money fixing and re-fixing our road system over and over again is good for the economy IS a fallicy and jives better with the article.

      Building of the dams was beneficial long term. Now as for what the ROI was? thats up to debate.
  • cosmicdreams, on 01/11/2008, -3/+12Holy Crap that was a good article!
  • dagoonmaster, on 01/11/2008, -1/+6yay people that understand how economics work, government interventionism never helps in the long run, the short run may seem to be better but the long run will always suffer, and i would like to bring up federal reserve and the fact that they really hold the most control over the economy
  • GrantRobertson, on 01/11/2008, -3/+18What the author, as expert as he may be, misses is that these fallacies are not propagated because those propagating them believe them to be true. They are propagated because the propagators know most of the public will fall for them at least enough to not do anything about it. This then allows the propagators to continue funneling taxpayer money into the pockets of big business.
    War isn't good for the economy, we can see that right now. But war is good for Haliburton, so another war we must have. Disasters aren't good for the economy. Just ask the residents of New Orleans. But allowing disasters to occur is good for builders and developers, especially those who have enough connections to get no-bid contracts.
    We will never be able to fight the big business interests if we continue to believe that big business and politicians - in any way - believe what they say. Everything they say, including tis list of reapeating fallacies, is merely to continue fooling or distracting the public.
    • cybrguy, on 01/11/2008, -1/+1good point. religion in government was forbidden in the constitution, they should have said the same for business(to some extent).
  • mancfrank, on 01/11/2008, -1/+3This article is not just for Americans, maybe they think it applies to them most currently but it applies to all nations who either take up arms against each other or other nations. Who'd have thought economists would preach about peace, love and understanding? This is all +/-0, the money moves around, some become richer, some become poorer, some live, some die. Man takes two steps forward with the ingenuity used in war and one step back in humanity.
  • elguando, on 01/11/2008, -1/+4If WWII didn't end the Depression, what did? I'm not saying the article's wrong, I'd just like to know.
    • kreneskyp, on 01/11/2008, -1/+3our economic prosperity was a result of the outcome of wwII not just that we fought in the war. After WWII we had a few things going for us. We had a massive army that was now "protecting" much of the world, and by protecting i mean influencing, Much of europe was in ruins, These countries now had to rebuild so much. As described in the first fallacy they are spending money to rebuild what they had instead of moving forward from where they were.
      • stix213, on 01/12/2008, -1/+4Incorrect for one simple reason. The depression was over the moment America mobilized for the war. America had basically full employment from that point on. You are absolutely correct in your reasoning for the US's post war boom, but that wasn't the question you were answering. During the war the job market was doing so well that all those "useless" women even had to work, businesses that didn't require raw materials needed in the war effort did great, businesses involved in the war effort were doing even better, and the stock market shot up and never looked back.

        Since you don't own a dictionary see below

        Economic Depression definition: a period during which business, employment, and stock-market values decline severely or remain at a very low level of activity.
  • ZenMojo, on 01/11/2008, -6/+6Very good points neutered by a jerk-off, unfounded nationalist conclusion. Too bad. I can't believe he actually implies that Americans aren't envious of one another. Not only are we envious, we're really damn greedy.
    I'm also amused by his glaring omissions of slavery, expansionist theft, child labor, and an absence of safety standards in industry.
    By the way, there's a reason these presidents are considered failures.
    Fillmore -- Fugitive Slave Act
    Buchanan -- Other than the Panic of 1857 were deficit spending finally caught up to him, 7 states had seceded by the time he left office. You can't even BLAME Lincoln for the Civil War, it's Buchanan's damn fault.
    Pierce -- Did nothing.
    Actually, come to think of it, 1848-1860 WAS NOT A PERIOD OF PEACE AND PROSPERITY. It was actually an unstable, hostile political and social climate that collapsed in 1857 and exploded in 1860.
    So, seriously, that's why scholars call them horrible presidents. And the fact that the clearly Libertarian author thinks this was a fantastic golden age of peace and prosperity is proof that we should never elect someone with his political views into office.
    • cybrguy, on 01/11/2008, -2/+6The author wasn't writing a book,
      "Ten Recurring Economic Fallacies, 1774–2004"

      Not top Ten, not THE Ten, just 10. He picked the 10 based on his criteria. not yours.
  • Look4Truth, on 01/11/2008, -7/+8The dollar:
    http://quotes.ino.com/chart/?s=NYBOT_DX&v=dmax

    Gold:
    http://monex.com/prods/gold.html

    Silver:
    http://monex.com/prods/silver.html

    Charts don't lie people. The longer you wait to get out of stocks, bonds, and the dollar, the less you'll be able to buy when the collapse begins. Don't wait, get out NOW, like yesterday.

    Don't say nobody warned you. I cashed out of the markets months ago and have bought gold, silver, and storable goods. If you care the least bit about the future of your family and friends, you had better turn off Faux and CNN and do some real research. This house of cards IS coming down, it's just a matter of when.

    This is no game people, do it now.
    • cybrguy, on 01/11/2008, -2/+3While I'm not jumping out to do that yet, I am considering silver as an investment form. If it gains as it has over the last 5 years, its about as good as a solid mutial fund, but has almost no risk.
      • Look4Truth, on 01/12/2008, -1/+2Silver has out gained gold and would be easier to barter in case of collapse so it would be smart to own some. I purchased 2-1 silver to gold myself.
  • Frnnkdlxx, on 01/11/2008, -9/+9For all those who are not going to read through the entire treatise, the moral of the story is:

    Vote Ron Paul.

    lol. I'm serious! If you read the entire thing, at the end, the author asks you to consider freedom as the grandest amplifier of prosperity, rather than taxation and disdain of public ingenuity. In short, Democracy in action is bad for national welfare and Liberty in full is the only possiblity of beneficence, therefore, choose those who seek liberation of all instutitions in society. Who advocates that? Ron Paul. So therefore, the conclusion one would come to is that there is only one presidential candidate available for you to attain wealth and happiness.

    Now, I disagree with a few of the points the author made. It seemed like a longwinded half minded non intellectual approach to 200 and some odd years of incredible change in the human condition and it's history. Watch: The money masters, free on google for a better understanding of how the real world works.
    • jeffiek, on 01/11/2008, -2/+2Didn't you see this? "Posted on 7/26/2004" It was right below the title and authors name.

      The first fallacy is from Bastiat in 1850 - more than ONE HUNDRED AND FIFTY YEARS ago. http://en.wikipedia.org/wiki/Parable_of_the_broken ...

      Somehow I don't think Bastiat had Ron Paul in mind. The truth? Yes. Paul? No.

      Paul is a follower of Austrian economics, none of the others are. So if this article made sense, then of course Paul would be the only logical choice.

      "Now, I disagree with a few of the points the author made."
      How nice of you to let us know what they are. How nice of you to make some factual and/or logical statements. I don't expect as much as the author of the article gave. Just something, anything. Your word alone is worthless.
    • Frnnkdlxx, on 01/12/2008, -2/+2"Now, I disagree with a few of the points the author made."
      How nice of you to let us know what they are. How nice of you to make some factual and/or logical statements. I don't expect as much as the author of the article gave. Just something, anything. Your word alone is worthless.


      Wow. What a pit bull you are. I take a more conspiratorial stance on history. When you look at the establishment of institutions like the FBI and CIA, through use of the Hegelian Dialectic, and manipulation of the media to support their lies, it becomes apparent that these organizations have a lot more interest in hurting America than doing any good. I would direct anyone interested in how history really is to go watch: The Money Masters. Endgame: Blueprint for global enslavement. Those two examples document without a shadow of a doubt the fact that their is a conspiracy behind these orgnaizations.

      Now, the guy I disagreed with is Alexander Hamilton. The nit picking of specific quotes and not including what he really thought and did, as if he was some foolish man who made mistakes, when he knew full well what he was doing. Hamilton was a criminal, through and through. I tire of white washing.

      But other than that, if you want to debate economics, contact me through frnnkdlxx@gmail.com and i'll reach you through my real email from there. Digg debates are pointless.
  • BabyWookie, on 01/11/2008, -14/+8Buried for being a bunch ludicrous Libertarian hogwash and disguised Ron Paul spam.
    • sensoukami, on 01/11/2008, -3/+4Good comeback. I admire your reasoned and well thought out counter arguments.
    • cybrguy, on 01/12/2008, -3/+2err... author didnt' mention ron paul. I suppose if we posted an article on universal health care since it would OBVIOUSLY be pro-democrat spam.

      Or a post about ak-47s being instantly labeled an article about terrorists.
      • stix213, on 01/12/2008, -4/+0So promoting the agenda of a candidate then has nothing to do with promoting a candidate? Errrr......
    • scubasteve377, on 01/12/2008, -1/+4Basic economics is Ron Paul spam.... apparently.
      • ChaosMotor, on 01/13/2008, -0/+2Anything well-reasoned that doesn't drink the kool-aid or believe obvious fallacies or eschews official propaganda is Ron Paul spam.
  • DestroyFascism, on 01/11/2008, -0/+4So great presidents trash the economy and bad presidents pay their debt? I guess this means the US is fooked, er, economically...
  • jerbaker, on 01/11/2008, -6/+3"What was never mentioned was that resources devoted to repair, security, and war-fighting are resources that cannot be devoted to creating consumer goods, building new infrastructure, or enhancing our civilization."

    "During war, the productive powers of a country are diverted to producing weapons and ammunition, transporting armaments and supplies, and supporting the armies in the field."

    Um, what do they think the profits made from cleanup and reconstruction will be spent on? Surely mises.org is not making the argument that corporations will not invest their profits into anything that "enhances our civilization." More amusingly, the author writes, "Nothing is more basic; yet it continues to elude the grasp of our teachers, writers, professors, and politicians." Of course there's no irony in implying that this basic truth has escaped so many great minds, but not the great mind of this blogger.

    "... the consequences were ... a massive redistribution of wealth to federal bondholders."

    Now mises.org is arguing that investors making a profit off of investment is a redistribution of wealth. I wipe my eyes in disbelief. Are you sure a liberal didn't hack their site? Maybe, just maybe, their beliefs are internally inconsistent.

    "However, Keynes taught that once the recession was over government spending should be reduced, taxes increased, and the deficit eliminated."

    Dude, is this mises.org? Are they saying that Keynes' countercyclical fiscal theories might be good? My eyes are burning.
    • scubasteve377, on 01/12/2008, -0/+4"Um, what do they think the profits made from cleanup and reconstruction will be spent on?.... Now mises.org is arguing that investors making a profit off of investment is a redistribution of wealth. I wipe my eyes in disbelief. Are you sure a liberal didn't hack their site? Maybe, just maybe, their beliefs are internally inconsistent."

      You have completely missed the point. Who paid for the reconstruction of Japan and Iraq? Was it the Japanese and the Iraqis? Oh no, that's right, it was the American taxpayers. The reason that these reconstruction efforts cannot be considered productive is that there is no mutually beneficial producer/consumer transaction taking place. Money is forcefully lifted from one group and handed out to corporations. The beneficiaries of the services provided are not those who paid for them, and considering the taxpayers already paid for the war, it simply adds to the injury to pull resources from the same group to pay for the reconstruction. The broken window analogy applies here, because the government dictates resources are to be allocated to fix what the government broke in the first place. These resources are being diverted away from goods and services that are actually beneficial and productive for those whose money is being spent. Diverting funds away from the competitive, voluntary market, and funneling them to government contractors (another form of corporate welfare), is about as anti-free market as one can get. Less money being spent in the regular economy, means a weakening of that economy. It's as simple as that.
      • jerbaker, on 01/15/2008, -0/+1"government dictates resources are to be allocated to fix what the government broke in the first place."

        The only other alternative, which Laissez-Faire supporters seem to advocate, is that private individuals shoulder the burden of fixing what is broken by businesses in their pursuit to privatize profits and publicize costs. Why is it that Libertarians believe that when people organize themselves into a group for the purpose of making money (a corporation), it's the best thing since sliced bread, but when people organize themselves to do things that are impossible to do on an individual level, and which don't generate a profit (i.e., government), it's the worst thing ever?
        • scubasteve377, on 01/19/2008, -0/+1In a laissez-faire market, there is no such thing as 'publicizing costs.' Costs are private, paid by individual consumers, not through coercion of unwilling participants. Government is not a simple organization of people, as you imply, because a simple organization of individuals (for profit or otherwise) does not have the power to (legally) use force of violence against other individuals. So, yeah, a organization that employs violence or the threat of violence to forcefully remove the rights of others definitely is "the worst thing ever."
          • jerbaker, on 01/22/2008, -0/+1But it is OK if it's done through the threat of starvation, homelessness, and lack of medical care? That's the motivation for forcing people to prostitute half of their waking hours to the corporation willing to place the highest bid. Somehow that's OK? You are truly odd.
          • scubasteve377, on 01/25/2008, -0/+1That's reality, my friend. Since the dawn of mankind, people have had to work and be productive in order to survive. In order for a society to exist and thrive, it takes productive workers. To believe that people would be productive without any incentive to do so is beyond 'odd', it's asinine.
    • sorpigal, on 01/30/2008, -0/+1"Are they saying that Keynes' countercyclical fiscal theories might be good? My eyes are burning."

      Keynes' fiscal theories *are* provably good. The recent supply side economic nonsense that has somehow gained popularity is utter tripe which no respectable economist can defend.

      Just remember this: When you hear someone abusing Keynes you are either listening to a moronic parrot or someone who is a rich *****, not caring one whit for what's good for the country or the people.
  • captZEEbo, on 01/11/2008, -1/+5If you want to learn more, read this book:
    http://www.amazon.com/How-Capitalism-Saved-America ...
    • koroviev, on 01/15/2008, -0/+0Thnx Zeebo, you recommended this book earlier and im reading it right now. Pretty insightful.

  • Jarbow, on 01/11/2008, -0/+3The best part is when he calls Hamilton a "vainglorious popinjay" in #9
  • stix213, on 01/12/2008, -6/+8An interesting article worth reading, but it is so short on facts it is hard to take it seriously.

    My opinion:

    #1 The Broken Window - He is totally correct on this one

    #2 The Beneficence of War - His opinion here is very short sighted. He claims that war and the preparation for it are wasteful and the only gains are what you win from war - this is somewhat incorrect. Technological development spurred by military spending has been a driving force of many economies, especially the USA's. Many of the technologies everyone takes for granted today were originally developed from military spending (DARPA's involvement in the creation of the Internet, the US government creating the GPS system, the development of the jet engine during the WWII era, and the invention of nuclear power to name a few off the top of my head). That doesn't even include weapons sold as a very profitable product.(for better or worse) - it is no accident that most of the world's armed forces use Russian weapons. Weapon sales have long been a staple of the Russian economy.

    #3 - The Best Way to Finance a War is by Borrowing - He is correct that borrowing is not the best way to finance a war economically..... But, often the economy is a secondary concern when YOU ARE FIGHTING A FREAKING WAR HERE! I don't know about you, but if Hitler had defeated the world in WWII because we weren't willing to borrow money to fight him, do you really think the US economy would be better off? Converting all documents to the German language alone would have been a wasteful expense to say the least. Sometimes in war it is better to just win, and then work on the economy later when there is less of a chance of dieing.

    #4 - Deficit Spending Benefits the Economy and Government Debt - Even the title here is bad... Deficit spending DOES help the economy in the short term.... When the benefits of increased economic activity immediately out way the long term effects of accumulated interest. But, in the long term the reverse will become true. That does not mean that a strategy for short term economic repair like deficit spending should always be ignored in all instances.

    #5 - Government Policies to Promote Exports are a Good Idea - His answer here is very poor. Just because sometimes it backfires when the government tries to help exports does not mean that government policies indented to increase exports are always bad. He sights a few examples, but it is the victories of these types of government policies that don't make the history books, because in those cases it was the government just doing the government's job correctly.

    #6 - Commercial Warfare Works - His opinion that this type of economic pressure almost never works is a bit naive and he uses some very bad examples where the weaker economy (Americans) tried to put economic pressure on the more powerful economy (Britain). Yeah, that probably wasn't a very good idea.... But, it works a whole hell of a lot better when it is the more powerful economy putting pressure on a weaker one to gain a desired effect. For example: America's unofficial boycott of French goods and travel over France's objections to US policy regarding Iraq and the "war on terror" has by some estimates been costly to the French economy, and some even argue that it helped to elect the more pro-US Sarkozy (a warming of French policy to US efforts was the desired and arguably resulting effect here in this recent example, which was not even instituted by the US government but by the people itself).

    #7 - The Late Nineteenth Century was an Era of Laissez-Faire Capitalism - If you follow the author's description of Laissez-Faire than it has never existed. There always is some level of government manipulation of the economy, but this era has the reputation because it was as close as it is going to get. I'm not even sure why he included this in the list as he prefaced his list saying we are continually repeating these mistakes he listed, but is this mistake being repeated, or did a nice round number of 10 items sound better than 9 for his list?

    #8 Business Corporations Favor a Policy of Laissez-Faire - All business have there own agendas. Some companies do use the government to try to meet their financial needs by manipulating laws, tariffs, taxes, etc... But to blanketly say that corporations are in favor of more regulation than less is ridiculous, as are his examples. A corporation can be both in favor of a government without regulation of the economy and still promote government regulation that benefits the corporation because the reality of the economy is that government regulations exist and will likely be manipulated by competitors first if you are too slow to act. Also, it is not a corporation's role to promote a government policy of Laissez-Faire, nor do corporations have the means to do so. It is the nature of corporations to adapt to and manipulate when necessary the economic system in which they exist, but corporations alone cannot completely create their desired economic system from scratch. But following the author's reasoning, he would have you believe that a corporation accepting the realities of the existing economy by manipulating it to their advantage automatically means they are in favor of the very system they are forced to adapt to, which doesn't pass the logic test.

    #9 - Hamilton Was Great - Hamilton is less regarded for his genius than for his acts when in office to save the economy. He was in the right place at the right time and made the right decisions when it came down to it no matter what he believed. A person's actions are even more important than their beliefs, because it is the actions that make someone great.... It is the beliefs of those individuals that are only discussed after greatness is thoroughly established.

    #10 - Agrarianism or Industrialism: We Must Choose - He has some good points here. It would be great if the government never had to make any choices in the economy and let it just play out in the best way possible. Unfortunately this never has and never will happen, and arguing about this is about as useful as arguing for world peace. Representative democracies are made up of individuals who were elected by their constituents to promote certain policies, and since money is important to voters it typically is why representatives are elected. The government will stop promoting policies that favor specific sectors of the economy only when voters stop caring about money at all.... You think that is going to happen soon?
    • larsonian, on 01/12/2008, -1/+0I'm sorry but I have to call Godwins Law here. You automatically lose for invoking Hitler/Nazism in point #3. If your argument has to resort to a Nazi reference, then it is not a strong one.
    • cardwell1972, on 01/14/2008, -0/+1Dude. I had I long articulate answer to your comment, but screw it. Your a fascist. Plain and simple.
    • gandhi2, on 01/26/2008, -0/+3Quickly in reference to 2 points

      #3: The author details a response for this. If the cost of the war is coming more directly from the citizens, then they are less likely to willingly finance UNWARRANTED wars. As is, it is in fact in best interest of FOREIGN nations from whom we borrow to start wars, and we pay the cost, via inflation, no matter whether the war is warranted or not.

      #7: The point he was trying to make is that more fiscally liberal politicians always point to the failure of that era to debunk free market economics on principle. They usually reference "robber barons" or something of that nature....but in reality, there never WAS a free market. These people were guaranteed a stronger foothold on their market from government subsidies and grants, or even worse, with market barriers. You are right, we have never had a free market, but you are wrong that 19th century industrialism was the closest we are going to ever get. For example, the internet market remains relatively unregulated, their are few barriers into the market, and yet it can support companies. The .com bubble saw a flood of companies founded on speculation...and today what remains are the companies which offered a solid, valuable product/service. Even today, there are companies which can capitalize on markets which giants like Google "monopolize," because they are offering value-adds to the product Google sells. The space is still very wide open, you just have to have a good product. Case in point; Digg.
  • djadamjay, on 01/12/2008, -2/+3that was a great read.
  • hackiavelli, on 01/12/2008, -3/+3I wish someone would develop a rigorous, empirical approach to economics with predictions and tests. From communism to libertarianism - and including this article - all we get is opinion with cherry-picked historical and market evidence to back it up. It's like Christians and Muslims arguing over which religion is true and using the Bible and Koran as "evidence".
    • jsmu, on 01/12/2008, -1/+1a 'rigorous, empirical approach' to a pseudoscience constructed out of whole cloth?
  • silentcollision, on 01/12/2008, -3/+1#4 is one of the 5 big economic debates. Don't take his word as gospel. One of the worlds top economists, Gregory Mankiw, believes in huge tax cuts even in the face of deficits.
    #5 is completely and utterly wrong. It has been repeatedly shown that government intervention to affect net exports doesn't work.
    I would far have preferred this article from an actual economist than a historian. He's got very liberal views, and tries to present this as a truth, when in reality its not that simple.

  • dkern, on 01/12/2008, -3/+2Actually the biggest problem began in 1791 with the founding of the First Bank of The United States by Alexander Hamilton (the scum *****) which eventually became known as the FEDERAL RESERVE BANK after linking all the branches together- Its all been *****-***** elitists getting rich (stealing) off the backs of hard-working Americans since then- only now the elite are getting rich (stealing more and obviously illegally) off the backs of hard-ly working Americans.
  • goes211, on 01/12/2008, -0/+4I think the whole point is it will never change as long as the government has the powers it currently does. It is just irresistible for someone with power not to give their friends and cronies special treatment. How many off duty cops get caught speeding or DUI and then their buddies let them go? It is just human nature.

    Companies or powerful interests will continue to seek special privileges from those in government because the (Federal) government has the power to assign winners and losers. Just look at the Congressional Republicans in 1994. For a while they ran a relatively conservative government with Clinton as president and things went fairly well, but the temptation of power just proved to be to great. By the end they had become more corrupt and even more fiscally irresponsible than the Democrats had in the previous 40 years. It is just as simple as "Power corrupts!"

    People need to realize that:

    "A government powerful enough to provide you with every thing you need is also a government powerful enough to take everything you have."

    At this point things seem pretty grim. With all the problems we have right now ( and we will probably have a lot more in the near future ), people will continue to beg for the government to save them, never realizing that it is that attitude that is the cause of many of the current problems. I wish the free market could save us but I don't think it will ever get a chance.
  • 3tcp, on 01/12/2008, -0/+3Best article I've seen on mises.
  • AdrewMc3, on 01/12/2008, -2/+1What nothing about the bell curve and reason by induction?
  • bloatedbelly, on 01/12/2008, -2/+0If economists truly understood economics then why are physicists using chaos theory in an attempt to understand an economy?
  • juventus1, on 01/12/2008, -1/+1"Deficit Spending Benefits the Economy and Government Debt "

    how the hell is that supposed to work?
  • fastupfront, on 01/17/2008, -0/+1Not only is it a good article, but I realized after I dugg it that I was #1000. Yay me!
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