Sowing the Wind: Essays and Articles on Popular Economic Policies that Make Matters Worse

The Voluntary Mechanisms of Production and Exchange Produce Superior Results

The world we live in today is a global economy. Entrepreneurs, traders, and investors are always searching for opportunities to better serve consumers. As a result, we are all interconnected. When the United States sneezes, so to speak, China, Argentina, or Mexico catches cold.

In our economy of complex interrelationships, economic crises with wide-ranging consequences have become almost daily occurrences. Yet practically no one seems to understand what causes them. Most modern economists look at statistics and try to anticipate what will happen by extrapolation. Only Austrian economists understand the economy as the outcome of complex interpersonal relationships and transactions. Only Austrian economists trace economic crises back to the actions, decisions, and choices of individuals under various circumstances. As one of this country’s leading Austrian economists, Hans Sennholz not only analyzes many economic crises, but also suggests needed reforms.

This book contains 42 articles written during the years 1997 to 2003 by Professor Sennholz, who served as FEE’s president from 1992 to 1997. He was the first student in this country to earn a doctorate under Ludwig von Mises. During almost 40 years as a professor at Grove City College, Sennholz introduced Austrian economics to thousands. He retired from Grove City in 1992, but Sennholz can’t retire from teaching and communicating; he continues to lecture, write, and comment on current events.

When new technologies are developed, production can be improved and expanded. Economies in transportation and communication make the world smaller so that it costs less to deliver raw materials and finished goods to users. As information and money can now be transmitted almost instantaneously throughout the world, it is easier, faster, and less expensive to carry out transactions. Consumers throughout the world benefit. Despite all our progress, however, we still find that economic troubles beset many nations. The blame is almost always misplaced—on business greed, on foreigners, on the environment. Sennholz makes it clear that the seeds of economic troubles are sown by bad governmental policies.

Among the crises Sennholz considers here are stock-market bubbles, inflation in Mexico, the bankruptcy of Argentina’s government, economic recession in Japan, the collapse of the Thai exchange rate, Germany’s new welfare society, and the rise (or fall) of the Euro. According to Sennholz, a crisis creates the opportunity for a new beginning; it is never too late to reform.

Sennholz blames the Fed’s monetary policy for the United States’ soaring deficits and the shrinking purchasing power of the dollar: “No central bank on earth, not even the Federal Reserve, can continually inflate its currency and defy market rates of interest without harming both its currency and the economy,” he writes. He recommends that we abandon the Fed’s monetary manipulation and return to gold money. “[T]here cannot be any doubt that a gold dollar would restore justice in international relations and reassert American power and leadership. It would clear away much conflict and strife and pave the way toward a more equal and peaceful world order.”

Regarding Argentina’s disastrous experience with inflation and bankruptcy, Sennholz states, “Great crises call for extraordinary measures that redress the causes of the evil. The Argentinian crisis presents not only great dangers to the country’s political and economic order but also an opportunity for a new beginning. . . . In a free and unhampered contract system, creditors and debtors, banks and depositors would soon come to reasonable and fair agreements about their contractual relations. A contract system would call for no new taxes, not even compensation for harm done by law and regulation. It would reopen all banks and allow them to meet their obligations to the best of their ability. It would expect the government to honor its peso obligations. But it would also demand that government cease and desist from any more regulations, new outlays, new taxes, and new disruptions of any kind.Argentinians need time and a period of peace for recovery.”

That’s the essence of the Sennholz approach—freedom works; government control doesn’t.

Whether Sennholz is discussing an economic crisis in the United States or elsewhere, his analysis is always sharp, incisive, and enlightening. He makes understandable even the most complex situations. In the last analysis, he traces the origin of almost every crisis to government-fostered inflation and credit expansion. The scenario varies from time to time and country to country depending on many factors: government spending, regulations, interest rates, taxes, and more. But the culprit is always monetary manipulation.

The excellent essays in Sowing the Wind will convince just about any reader that the economic troubles of our times are rooted in government policies that interfere with the functioning of the free market and that the way to escape them is to rely on the voluntary mechanisms of production and exchange.

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