June 2009

Volume 59, 2009


Mr. Obama, Tear Down This Wall!

MAY 21, 2009 by BECKY AKERS

All of us should worry, if not panic, when we remember that the walls keeping others out also keep us in.

Higher Education in America: Individualism or Central Planning?

MAY 21, 2009 by GEORGE C. LEEF

In education individual decisions are determinative. Each person (for children, with the assistance of parents) is able to choose the best kind and the ideal duration of education. That is why it's foolish to talk about the "national education level" as too low or too high. There is no "national level." If any individual should decide that he would benefit from more education, he will act accordingly. There is no more need for government action here than on the "national fitness level" or "national artistic level."

Think of a Number: A Theory of Rational Forecasting


We don't know how many blood-curdling economic forecasts are the result of career planning rather than sincere professional conviction. What we do know, though, is that such forecasts are the best method of deepening the gloom, frightening the credulous, and making the worst more probable.

Land-Use Controllers Never Quit


I have more than a small suspicion that those who promote urbanization will do so no matter what it does for the climate. The answer for them is always the same: more urbanization. Don't worry about the exact question.

The "Watchful Eye" Fallacy

Government Regulators Can't Rise Above the Human Limitations that Apply to Everyone Else

MAY 21, 2009 by JAMES L. PAYNE

Because they are made of the same human stuff, it is unreasonable to expect government officials to correct errors being made in the marketplace. A look at the market failures Obama alluded to in his speech bears this out. Take the speculative bubble in housing. Did senators see the danger before the rest of us and pass laws to limit the purchase of real estate? Of course not. They participated in the housing boom along with everyone else.

The Dynamics of Disintervention

MAY 21, 2009 by SANDY IKEDA

1) government interventions into the market process tend systematically to generate unintended consequences; 2) many of these unintended consequences frustrate the announced goals of those who support the interventions; 3) the response to these frustrated intentions tends strongly in the direction of further intervention; 4) the economic system performs less effectively in coordinating the plans of buyers and sellers as it becomes burdened with the cumulative effects of an increasingly chaotic mix of interventions; and 5) the process comes to an end when these cumulative effects result in a major system-wide crisis and public choosers decide to reject interventionism in favor either of comprehensive planning or radically freer markets.

The Great Depression and World War II

MAY 21, 2009 by ART CARDEN

What about World War II? Did it end the Great Depression? More generally, is war good for the economy? I answer both in the negative and borrow here from Ludwig von Mises: "War prosperity is like the prosperity that an earthquake or a plague brings." As Higgs points out, because of the array of interventions in the wartime economy, war materiel was valued incorrectly and therefore the GDP data overstate economic conditions. Moreover, conscription and arms production gave a misleading employment picture

Deficit Spending and Future Generations: Not What You Might Think

MAY 21, 2009 by ROY CORDATO

Ultimately, the real choice is not between deficit-financed and tax-financed spending. The moral question is whether we should have more spending and bigger government with less liberty or less spending with a smaller government and more liberty. The hand-wringing on the left and right about passing the cost of "stimulating" our economy onto future generations is misplaced. No matter how it's financed, Obama's new spending has the potential to stimulate only one thing: the size, scope, and power of government.

Who Watches Our Guardians?


Predictably, the leading inquisitors into the causes of the financial turmoil are themselves among the most culpable: Rep. Barney Frank, Sen. Chris Dodd, and New York Attorney General Andrew Cuomo. AIG got into trouble because it in effect wrote insurance policies (credit default swaps) against the failure of securities based on mortgages, many of which were waiting to blow up when the housing bubble burst. Who created the housing bubble?

Oil Prices Are Rigged?

MAY 21, 2009 by ROBERT P. MURPHY

In reality, all prices are determined by supply and demand, properly defined. Outside investors with lots of money can certainly influence prices, but there are always risks. Funds that had large "long" bets on commodities took a bath as oil fell from its July 2008 high of $145 down to well below $50 a few months later. Futures markets allow producers and consumers to hedge against needless risk by locking in prices, and they allow speculators with superior foresight to improve the allocation of resources over time. Our Time authors think they've shown that the oil market is rigged, but it just ain't so!

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December 2014

Unfortunately, educating people about phenomena that are counterintuitive, not-so-easy to remember, and suggest our individual lack of human control (for starters) can seem like an uphill battle in the war of ideas. So we sally forth into a kind of wilderness, an economic fairyland. We are myth busters in a world where people crave myths more than reality. Why do they so readily embrace untruth? Primarily because the immediate costs of doing so are so low and the psychic benefits are so high.
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Essential Works from FEE

Economics in One Lesson (full text)


The full text of Hazlitt's famed primer on economic principles: read this first!


Frederic Bastiat's timeless defense of liberty for all. Once read and understood, nothing ever looks the same.


There can be little doubt that man owes some of his greatest suc­cesses in the past to the fact that he has not been able to control so­cial life.


Leonard Read took the lessons of entrepreneurship with him when he started his ideological venture.


No one knows how to make a pencil: Leonard Read's classic (Audio, HTML, and PDF)