The Economic Philosopher's Outcast: Mises | Steve Mariotti - 1 views
www.huffingtonpost.com/...ic-philosophers_b_3787489.html
Ludwig-Von-Mises Libertarian Liberty-Tryanny
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Mises, the modern day creator of the Classical Liberal movement (today also called libertarianism) destroyed the intellectual arguments of socialism by proving that it was impossible to allocate scarce resources effectively without private property and free-market prices. He showed that the more the state limited economic incentives to individuals, the greater the harm to low-income people and the general population.
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Centralized planning, something that was characteristic of all three types of socialism: the Nazis, the Fascists and the Communists, led to the ruin of an economy, and resulted in more and more tyranny and the rise of the totalitarian state.
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What economists failed to understand was that massive government spending and a authoritative centralized government would bring economic ruin to Germany, Russia, and many other countries.
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Sooner or later government debt has to be repaid out of tax receipts. Our current revenue base is not strong enough to sustain a viable repayment program to service the debt. Today we create money -- billions a month -- to meet the debt repayments. As new money floods the market its value declines. The country experiences inflation destroying the savings, and pensions of its citizens.
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Similar conditions led to the downfall of the Weimar Republic. The rampant inflation of the 1920s in Germany was a contributing factor to the rise of Hitler, Himmler and the centralized planning of the ultimate socialist organization the National Socialist Workers Party (Nazis).
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The anticipation of future consumer demand impacts the output of entrepreneurs intent on meeting that demand in the future and thereby make a profit
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Author of dozens of seminal books and hundreds of articles, Mises works were studied by the Nazis in the 1930s as part of their assault on pro-democracy individuals, particularly those who were Jewish. Mises' unparalleled contributions to economic theory, which upheld a free market over one controlled by a coercive government, later fostered a world-wide movement. His books were significant for their discussions of money, credit, Socialism, central planning, and human action.
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Mises' most remarkable argument for the free market came in his 1922 piece, "Socialism: an Economic and Sociological Analysis." In a Socialist state, there were no prices, essential to allocating resources. Prices signaled information simultaneously to both entrepreneurs and consumers.
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The centralized decision making over both production and consumption is impossible because of the complexity of an economy composed of hundreds millions of people and trillions of decisions every second. This insight gave Mises a greater appreciation of the value of a market economy, one that allows for the change of prices based on changes in supply and demand.
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The recent bankruptcy of the City of Detroit is a harbinger of serious problems for the $2.9 trillion municipal bond market. Mises witnessed firsthand rampant government spending, overwhelming debt, and inflation in both Germany and Austria. The results of similar economic policies are threatening major urban centers around our country.
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This defense of limited government and the rights of all citizens made Professor Mises a threat to the ultimate central planners and explains why the Gestapo had sped to his home to arrest him.
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Mises, leader of the Austrian School of Economics, mentored the great Nobel Prize winner Friederich Hayek, who I studied with in 1979 at the Institute for Humane Studies. They influenced noted economists such as Israel Kirzner, Robert Higgs, Lawrence White, Peter G. Klein, Roger Garrison, Edward Stringham, Peter Boettke, and the novelist Ayn Rand who later made popular classical liberal economic policies. Mises disciples today see the threat of government intervention in our nation's economy as seriously undermining economic productivity and self-starting growth.
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People are increasingly disenchanted with mainstream Keynesian views of the economy. Keynesians were blindsided by the housing bubble and the financial crisis. Their response was to pump the economy with cheap credit and huge government spending which has only prolonged the agony. The Austrians led by Mises offer a compelling alternative explanation in which booms and busts are caused by central-bank manipulation of interest rates in vain attempts to stimulate or stabilize the economy.
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Klein further points out that monetary central planning, combined with misguided housing regulation led the economy to produce the wrong kinds of goods and services. For Klein recovery means getting the government out of the way and letting entrepreneurs fix the mistakes.
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According to Paul Wisenthal, the country's leading journalist authority on entrepreneurship education for young people, America was built on new small business development, led by its forefathers who were primarly entrepreneurs. He believes the U.S. may continue to diminish small business incentives as government expands on taxpayer dollars that don't exist.
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I've said for more than 40 years that "inflation is the cruelest tax of all." In a fiat currency economy, it is robbery, pure and simple; and the poor are hardest hit because they lack the capital to make investments that can outpace inflation. The net effect is to transfer wealth from the lower economic classes to the wealthy, most of all the investment banksters and "old wealth".