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Archive for the ‘Capitalismo’ Category

Hace un tiempo estaba sentado en el Hospital San Antonio de Padua, esperando que llegara alguna guardia al Servicio de Salud Mental, cuando encontré un panfleto sobre la mesa de la «cafetería» (donde se hacen los cambios de guardia, las supervisiones y se espera cuando el lugar está tranquilo).

Como ese día me había olvidado mi infaltable Atlas Shrugged, que siempre leo allá porque me ayuda a pasar el tiempo, de paso aprendo y nunca está de más re-leerlo, agarré el panfleto, lo leí un rato, lo releí, lo analicé un poco más, lo hice un bollo, pensé este post y lo tiré a la basura. Iba a quemar la basura, pero eso hubiera sido demasiado.

Básicamente el panfletodecía que había alguien que necesitaba un medicamento, y que era obligación de los médicos dárselo, al igual que su tratamiento. Que los profesionales habían estudiado para servirlos a ellos, piqueteros firmantes (sí, estaba firmado por una organización de ese tipo), y que los médicos básicamente eran unas basuras porque tenían pensado irse de vacaciones en vez de ser sus lacayos.

No, señores piqueteros, nosotros no estudiamos 5 o 10 años (lo que lleva Medicina y la Residencia) para servirlos a ustedes en sus caprichos. Nosotros estudiamos porque nos gusta la carrera, y porque esperamos vivir de ella, es decir, ganar plata con lo que hacemos, y si, en el caso de este tipo de carreras, se salva o se ayuda a algún ser humano, eso es beneficio secundario. ¿O el médico y psicólogo deben ser esclavos, y el abogado es libre de hacer lo que quiere? (Con el perdón de los abogados, no tengo nada contra ellos, sólo los uso como ejemplo)

Ninguna Universidad te da un título de esclavo del inútil, del inhábil, del que no estudió, etc., es más, la esclavitud se abolió cuando nacimos como país, y tenemos el derecho casi natural de qué hacer con nuestros conocimientos, atender a quienes queramos y cobrar lo que queremos; y sobretodo, no atender a nadie si no nos pagan; ¿o creen que ir a un Congreso es un regalo que nosotros le hacemos a la sociedad?, es para mejorar nosotros, y nuestro conocimiento tiene un precio, los libros son caros, los congresos son caros… y si trabajamos gratis, ¿quién va a pagar la mejora en nuestras habilidades?, ¿o también es nuestra obligación?

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Volviendo a lo que trajo el título del post. Hace un tiempo decía que el Capitalismo era un acuerdo entre caballeros (o damas, señoras del INADI) en que se intercambiaba lo mejor de dos personas, y en el campo de la salud no se hace una excepción.

Yo pongo lo mejor de mí, mis años de estudio, mi especialización, mis prácticas, y a cambio de mi servicio quiero poner el precio que me parezca más adecuado. Vivimos en una sociedad suficientemente libre, por ahora, en que el del frente puede aceptar el precio o mandarme al carajo por parecerle un exceso; y si todos están de acuerdo con él, yo no tendré más opción que bajar mis honorarios.

No va a ser el estado, ni va a ser un piquetero, ni mucho menos el Colegio de Psicólogos el que me diga cuánto cuesta el producto de mi cerebro, de mi preparación y de mi esfuerzo, va a ser el mercado, es el más imparcial de todos. Cuando por fin dejen de intentar fijar el precio a nuestro cerebro, la competencia hará que todos mejoren y los precios bajen, yo quiero ser el mejor, y los servicios del mejor cuestan más que los de los mediocres, no es mucho más complicado que eso.

Yo no trabajo, estudio ni produzco gratis para otros. Si quieren el fruto de mi cerebro, paguen mi precio.

‘When I die, I hope to go to heaven — wherever the hell that is — and I want to be able to afford the price of admission.’
‘Virtue is the price of admission,’ Jim said haughtily.
‘That’s what I mean, James. So I want to be prepared to claim the greatest virtue of all — that I was a man who made money.'»

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Un comentario reciente decía que el Capitalismo saca lo peor del ser humano, que lo convierte en una máquina ambiciosa que destruye a todos en su afán de lucro…

Y en lugar de responderle al comentario, preferí hacer una entradita para plasmar qué es para mí, estudiante de psicología con un par de libros leídos y nada más, lo que es el Capitalismo.

Para mí, el Capitalismo es simplemente el intercambio de lo mejor de nosotros. Es un acuerdo de caballeros en el que dos personas dan un valor al fruto de su producción, y la intercambian, o la intercambian por algo (oro) de ese valor, que luego podrá ser intercambiado por la producción de otro.

En el Capitalismo la competencia es buena, si todos le compran al mejor, los menos buenos tienen como opción mejorar o desaparecer. Cuando eligen la primer opción, los precios bajan naturalmente, porque en productos de igual calidad, se suele optar por el más barato. Cuando alguien elige la segunda opción, nace la UIA a reclamar subsidios, dólar alto y demás porquerías para defender cosas de mala calidad.

El Capitalismo es el sistema por el cada cual tasa en cuanto quiera lo que produce, y otro ser humano, con las mismas libertades, acepta ese precio o no; es el sistema de las opciones, lo que a muchos les molesta; en el Capitalismo no es el fuerte contra el débil, es el hábil contra el inútil, el trabajador contra el vago, el que tiene amor propio y el que quiere vivir de la limosna que el estado le da, robándosela al que trabaja.

No es casualidad que todos los regímenes despóticos y tiránicos, reales o ficticios (desde los jerarcas del Comunismo Ruso o Cubano, hasta el Gran Hermano de 1984), vieran en los Capitalistas a sus más férreos enemigos solamente porque eligen.

El Capitalismo nos salva de la barbarie, el Socialismo reparte miseria.

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Daily Article by | Posted on 7/7/2008

The recent political controversies over record oil prices have underscored the sad truth that even nominal friends of the market don’t understand how it really works.

Because they have only a superficial grasp of this complex «organism» and how it coordinates interactions among billions of Homo sapiens spread across the entire planet, they quickly denounce its operations whenever things depart from the ordinary. The market is apparently good enough to be allowed to work when things are monotonous, but (we are told by its fair-weather friends) the politicians need to take the wheel when the road gets bumpy.

In particular, what has happened is that because most commentators — even some professional economists — don’t really have a good intertemporal mental construct of the market, they can’t really fathom how prices would guide people to properly allocate scarce resources. These commentators then succumb to the promises of the politicians to outperform the silly ol’ market economy, since the politicians have a plan. In contrast, nobody can even picture what the market does over the course of a decade, and so nobody can contrast the market’s performance versus the politician’s objective five-year plan.

In the present article, we’ll discuss the proposed regulation of commodities futures investors. In a follow-up article, we will see the same ignorance of how markets allocate across time, in the context of opening up ANWR to drilling.

What Good Do Futures Markets Do?

It is immediately obvious that the people criticizing «speculation» as leading to oil being overpriced by 100% really have no idea how futures markets shower benefits on everyone. This isn’t their fault, since very few economists could even give a story explaining why the existence of futures markets promotes «efficiency.»

Very briefly, futures markets allow people today to lock in exchanges that won’t occur until a future date (specified contractually). An oil futures contract, for example, is a legally binding arrangement that commits a buyer, such as a refinery, to purchase a certain amount of oil at a future date, in exchange for a locked-in futures price. The seller of the futures contract would in turn be committed to show up on the relevant day with the appropriate quantity of oil, to be handed over for money.

Futures markets thus greatly mitigate the uncertainty of prices in the future, and allow more mutual gains from trade than would be possible in the absence of futures markets. For example, suppose an airline could add another city to its destinations, but this new route would only be profitable if oil prices stayed below $90. At the same time, suppose an oil producer determines that opening up a new field would only be profitable if oil stayed above $80. Without being able to use futures contracts, these two enterprises might refrain from expansion.

But if they can exchange a futures contract when the futures price is (say) $85, then the airline can confidently add its route and the oil producer can confidently open up the new field. However much the actual (spot) price of oil deviates from this projection of $85, the futures contract (over which the airline is «long» and the oil producer is «short») will credit or debit the accounts of the two parties when it is periodically «marked to market.» That’s why the airline and oil producer, armed with net long or net short positions in oil futures, can now blaze ahead, indifferent to the world events causing the price of crude to bounce all over the place. The airline can focus its attention on its customers, and the oil producer can listen more carefully to its geologists rather than its economists.

Within this general context, speculators provide the valuable service of moving futures prices to more accurate levels. Speculators earn profits or suffer losses in proportion to how much they either correct or disturb market prices.

How Do Institutional Investors Help?

Even if one concedes that (profitable) speculators in their pure form perform a useful service, one might dispute the benefits of large institutional investors in oil futures. That is actually the position of Michael Masters, a hedge-fund manager who provided key testimony to Congress on the alleged distortion of oil prices. Masters said,

There is a crucial distinction between Traditional Speculators and Index Speculators: Traditional Speculators provide liquidity by both buying and selling futures. Index Speculators buy futures and then roll their positions by buying calendar spreads. They never sell. Therefore, they consume liquidity and provide zero benefit to the futures markets. (p. 6, emphasis original)Download PDF

Actually, as Masters himself knows, «Index Speculators» are net sellers whenever the futures prices rise, and are net buyers whenever they fall — so long as the rises or falls don’t cause the fund managers to change their forecasts about price trends. If a fund has decided to devote, say, 1% of its total portfolio to a commodities index, then when the index goes up, so does the value of the fund. But the value of its commodities portion goes up disproportionately. If the fund managers still want only 1% exposure to commodities, during the next rebalance they will sell off some of their futures contracts. But this process itself will tend to lower futures prices, thus offsetting some of the initial rise. Therefore, the presence of large institutional investors actually acts as a brake on how quickly oil prices bounce around. It’s as if the futures prices have to spike and crash through syrup.

More subtly, institutional investors provide liquidity to the futures market, which enables the commercial producers and consumers of oil to rely more heavily on futures contracts than they otherwise would. The financial analysts on CNBC and Bloomberg have been somberly explaining for months why the credit markets are in such bad shape: they are very shallow, and the prices are meaningless, because there are so few buyers. Having a deep and liquid oil futures market enhances its ability to coordinate intertemporal actions.

Banning Institutional Investors Helps No One

Even if it were true that institutional investors were driving up oil prices above their «correct» level, it still wouldn’t help the average Joe to ban such investments. Speculators the world over would still dabble in oil futures and still drive up the price of oil (assuming speculators were indeed doing that in today’s world). So the oil price would still be just as distorted (or not) as it is today.

However, there would be one major difference that we can count on: If certain politicians get their way and ban «speculative» investment by institutions, then the people managing Joe Sixpack’s pension won’t be able to shield him from skyrocketing oil prices.

Right now, motorists are getting killed at the pump, but at least they can invest in oil futures (either personally or through a professional intermediary).

Yet the government may soon heavily regulate or even ban that option for beleaguered gasoline consumers.

Conclusion

If people better understood how the market actually works, then they might stand back and watch it work its magic. But since they have only a dim perception of its mechanics, these people instead clamor for more laws giving men with guns the permission to order people around.

[VIEW THIS ARTICLE ONLINE]

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Robert Murphy is an economist with the Institute for Energy Research and author of The Politically Incorrect Guide to Capitalism. Send him mail. See his articles. Comment on the blog.

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Estoy suscrito al Mises Institute desde donde diariamente recibo interesantísimos artículos, y aquí subo algunos de ellos; ahora estoy bastante ocupado con un Congreso de Psicología al que voy a asistir este jueves, así que en lugar de hablar sobre algo dejo este artículo. Que lo disfruten.

Daily Article | Posted on 5/19/2008 by Llewellyn H. Rockwell, Jr.

This talk was delivered at the Mises Circle in Seattle on May 17, 2008.

I’m sure that you have had this experience before, or something similar to it. You are sitting at lunch in a nice restaurant or perhaps a hotel. Waiters are coming and going. The food is fantastic. The conversation about all things is going well. You talk about the weather, music, movies, health, trivialities in the news, kids, and so on. But then the topic turns to economics, and things change.

You are not the aggressive type so you don’t proclaim the merits of the free market immediately. You wait and let the others talk. Their biases against business appear right away in the repetition of the media’s latest calumny against the market, such as that gas station owners are causing inflation by jacking up prices to pad their pockets at our expense, or that Wal-Mart is, of course, the worst possible thing that can ever happen to a community.

You begin to offer a corrective, pointing out the other side. Then the truth emerges in the form of a naïve if definitive announcement from one person: «Well, I suppose I’m really a socialist at heart.» Others nod in agreement.

On one hand there is nothing to say, really. You are surrounded by the blessings of capitalism. The buffet table, which you and your lunch partners only had to walk into a building to find, has a greater variety of food at a cheaper price than that which was available to any living person — king, lord, duke, plutocrat, or pope — in almost all of the history of the world. Not even fifty years ago would this have been imaginable.
All of history has been defined by the struggle for food. And yet that struggle has been abolished, not just for the rich but for everyone living in developed economies. The ancients, peering into this scene, might have assumed it to be Elysium. Medieval man conjured up such scenes only in visions of Utopia. Even in the late 19th century, the most gilded palace of the richest industrialist required a vast staff and immense trouble to come anywhere near approximating it.

We owe this scene to capitalism. To put it differently, we owe this scene to centuries of capital accumulation at the hands of free people who have put capital to work on behalf of economic innovations, at once competing with others for profit and cooperating with millions upon millions of people in an ever-expanding global network of the division of labor. The savings, investments, risks, and work of hundreds of years and uncountable numbers of free people have gone into making this scene possible, thanks to the ever-remarkable capacity for a society developing under conditions of liberty to achieve the highest aspirations of the society’s members.

And yet, sitting on the other side of the table are well-educated people who imagine that the way to end the world’s woes is through socialism. Now, people’s definitions of socialism differ, and these persons would probably be quick to say that they do not mean the Soviet Union or anything like that. That was socialism in name only, I would be told. And yet, if socialism does mean anything at all today, it imagines that there can be some social improvement resulting from the political movement to take capital out of private hands and put it into the hands of the state. Other tendencies of socialism include the desire to see labor organized along class lines and given some sort of coercive power over how their employers’ property is used. It might be as simple as the desire to put a cap on the salaries of CEOs, or it could be as extreme as the desire to abolish all private property, money, and even marriage.

Whatever the specifics of the case in question, socialism always means overriding the free decisions of individuals and replacing that capacity for decision making with an overarching plan by the state. Taken far enough, this mode of thought won’t just spell an end to opulent lunches. It will mean the end of what we all know as civilization itself. It would plunge us back to a primitive state of existence, living off hunting and gathering in a world with little art, music, leisure, or charity. Nor is any form of socialism capable of providing for the needs of the world’s six billion people, so the population would shrink dramatically and quickly and in a manner that would make every human horror ever known seem mild by comparison. Nor is it possible to divorce socialism from totalitarianism, because if you are serious about ending private ownership of the means of production, you have to be serious about ending freedom and creativity too. You will have to make the whole of society, or what is left of it, into a prison.

In short, the wish for socialism is a wish for unparalleled human evil. If we really understood this, no one would express casual support for it in polite company. It would be like saying, you know, there is really something to be said for malaria and typhoid and dropping atom bombs on millions of innocents.
Do the people sitting across the table really wish for this? Certainly not. So what has gone wrong here? Why can these people not see what is obvious? Why can’t people sitting amidst market-created plenty, enjoying all the fruits of capitalism every minute of life, see the merit of the market but rather wish for something that is a proven disaster?

What we have here is a failure of understanding. That is to say, a failure to connect causes with effects. This is a wholly abstract idea. Knowledge of cause and effect does not come to us by merely looking around a room, living in a certain kind of society, or observing statistics. You can study roomfuls of data, read a thousand treatises on history, or plot international GDP figures on a graph for a living, and yet the truth about cause and effect can still be evasive. You still might miss the point that it is capitalism that gives rise to prosperity and freedom. You might still be tempted by the notion of socialism as savior.
Let me take you back to the years 1989 and 1990. These were the years that most of us remember as the time when socialism collapsed in Eastern Europe and Russia. Events of that time flew in the face of all predictions on the Right that these were permanent regimes that would never change unless they were bombed back to the Stone Age. On the Left, it was widely believed, even in those times, that these societies were actually doing quite well and would eventually pass the United States and Western Europe in prosperity, and, by some measures, that they were already better off than us.

And yet it collapsed. Even the Berlin Wall, that symbol of oppression and slavery, was torn down by the people themselves. It was not only glorious to see socialism collapse. It was thrilling, from a libertarian point of view, to see how states themselves can dissolve. They may have all the guns and all the power, and the people have none of those, and yet, when the people themselves decide that they will no longer be governed, the state has few options left. It eventually collapses amid a society-wide refusal to believe its lies any longer.

When these closed societies suddenly became open, what did we see? We saw lands that time forgot. The technology was backwards and broken. The food was scarce and disgusting. The medical care was abysmal. The people were unhealthy. Property was polluted.

It was also striking to see what had happened to the culture under socialism. Many generations had been raised under a system built on power and lies, and so the cultural infrastructure that we take for granted was not secure. Such notions as trust, promise, truth, honesty, and planning for the future — all pillars of commercial culture — had become distorted and confused by the ubiquity and persistence of the statist curse.

Why am I going through these details about this period, which most of you surely do remember? Simply to say this: most people did not see what you saw. You saw the failure of socialism. This is what I saw. This is what Rothbard saw. This is what anyone who had been exposed to the teachings of economics — to the elementary rules concerning cause and effect in society — saw.

But this is not what the ideological Left saw. The headlines in the socialist publications themselves proclaimed the death of undemocratic Stalinism and looked forward to the creation of a new democratic socialism in these countries.

As for regular people neither attached to the socialist idea nor educated in economics, it might have appeared as nothing more than a glorious vanquishing of America’s foreign-policy enemies. We built more bombs than they did, so they finally gave in — the way a kid says «uncle» on a playground. Maybe some saw it as a victory of the US Constitution over weird and foreign systems of despotism. Or perhaps it was a victory for the cause of something like free speech over censorship, or the triumph of ballots over bullets.

Now, if the proper lessons of the collapse had been conveyed, we would have seen the error of all forms of government planning. We would have seen that a voluntary society will outperform a coerced one anytime. We might see how ultimately artificial and fragile are all systems of statism compared to the robust permanence of a society built on free exchange and capitalist ownership. And there is another point: the militarism of the Cold War had only ended up prolonging the period of socialism by providing these evil governments the chance to stimulate unfortunate nationalist impulses that distracted their domestic populations from the real problem. It was not the Cold War that killed socialism; rather, once the Cold War had exhausted itself, these governments collapsed of their own weight from internal rather than external pressure.

In short, if the world had drawn the correct lessons from these events, there would be no more need for economic education and no more need even for the bulk of what the Mises Institute does. In one great moment of history, the contest between capitalism and central planning would have been decided for all time.

I must say that it was more of a shock to my colleagues and me than it should have been, that the essential economic message was lost on most people. Indeed, it made very little difference in the political spectrum at all. The contest between capitalism and central planning continued as it always had, and even intensified here at home. The socialists among us, if they experienced any setback at all, bounded right back, strong as ever, if not more so.

If you doubt it, consider that it only took a few months for these groups to start kvetching about the horrible onslaught that was being wrought by the unleashing of capitalism in Eastern Europe, Russia, and China. We began hearing complaints about the rise of a hideous consumerism in these countries, about the exploitation of workers at the hands of capitalists, about the rise of the garish super rich. Piles and piles of news stories appeared about the sad plight of unemployed state workers, who, though loyal to the principles of socialism their entire lives, were now being turned out onto the streets to fend for themselves.
Not even an event as spectacular as the spontaneous meltdown of a superpower and all its client states was enough to impart the message of economic freedom. And the truth is that it was not necessary. The whole of our world is covered with lessons about the merit of economic liberty over central planning. Our everyday lives are dominated by the glorious products of the market, which we all gladly take for granted. We can open up our web browsers and tour an electronic civilization that the market created, and note that government never did anything useful at all by comparison.

We are also inundated daily by the failures of the state. We complain constantly that the educational system is broken, that the medical sector is oddly distorted, that the post office is unaccountable, that the police abuse their power, that the politicians have lied to us, that tax dollars are stolen, that whatever bureaucracy we have to deal with is inhumanly unresponsive. We note all this. But far fewer are somehow able to connect the dots and see the myriad ways in which daily life confirms that the market radicals like Mises, Hayek, Hazlitt, and Rothbard were correct in their judgments.

What’s more, this is not a new phenomenon that we can observe in our lifetimes only. We can look at any country in any period and note that every bit of wealth ever created in the history of mankind has been generated through some kind of market activity, and never by governments. Free people create; states destroy. It was true in the ancient world. It was true in the first millennium after Christ. It was true in the Middle Ages and the Renaissance. And with the birth of complex structures of production and the increasing division of labor in those years, we see how the accumulation of capital led to what might be called a productive miracle. The world’s population soared. We saw the creation of the middle class. We saw the poor improve their plight and change their own class identification.

The empirical truth has never been hard to come by. What matters are the theoretical eyes that see. This is what dictates the lesson we draw from events. Marx and Bastiat were writing at the same time. The former said capitalism was creating a calamity and that abolition of ownership was the solution. Bastiat saw that statism was creating a calamity and that the abolition of state plunder was the solution. What was the difference between them? They saw the same facts, but they saw them in very different ways. They had a different perception of cause and effect.

I suggest to you that there is an important lesson here as regards the methodology of the social sciences, as well as an agenda and strategy for the future. Concerning method, we need to recognize that Mises was precisely right concerning the relationship between facts and economic truth. If we have a solid theory in mind, the facts on the ground provide excellent illustrative material. They inform us about the application of theory in the world in which we live. They provided excellent anecdotes and revealing stories of how economic theory is confirmed in practice. But absent that theory of economics, facts alone are nothing but facts. They do not convey any information about cause and effect, and they do not point a way forward.

Think of it this way. Let’s say you have a bag of marbles that is turned upside down on the ground. Ask two people their impressions. The first one understands what numbers mean, what shapes mean, and what colors mean. This person can give a detailed account of what he sees: how many marbles, what kinds, how big they are, and this person can explain what he sees in different ways potentially for hours. But now consider the second person, who, we can suppose, has absolutely no understanding of numbers, not even that they exist as abstract ideas. This person has no comprehension of either shape or color. He sees the same scene as the other person but cannot provide anything like an explanation of any patterns. He has very little to say. All he sees is a series of random objects.

Both these people see the same facts. But they understand them in very different ways, owing to the abstract notions of meaning that they carry in their minds. This is why positivism as pure science, a method of assembling a potentially infinite series of data points, is a fruitless undertaking. Data points on their own convey no theory, suggest no conclusions, and offer no truths. To arrive at truth requires the most important step that we as human beings can ever take: thinking. Through this thinking, and with good teaching and reading, we can put together a coherent theoretical apparatus that helps us understand.
Now, we have a hard time conjuring up in our minds the likes of a man who has no comprehension of numbers, colors, or shapes. And yet I suggest to you that this is precisely what we are facing when we encounter a person who has never thought about economic theory and never studied the implications of the science at all. The facts of the world look quite random to this person. He sees two societies next to each other, one free and prosperous and the other unfree and poor. He looks at this and concludes nothing important about economic systems because he has never thought hard about the relationship between economic systems and prosperity and freedom.

He merely accepts the existence of wealth in one place and poverty in the other as a given, the same way the socialists at a lunch table assumed that the luxurious surroundings and food just happened to be there. Perhaps they will reach for an explanation of some sort, but absent economic education, it is not likely to be the correct one.

Equally as dangerous as having no theory is having a bad theory that is assembled not by means of logic but by an incorrect view of cause and effect. This is the case with notions such as the Phillips Curve, which posits a tradeoff relationship between inflation and unemployment. The idea is that you can drive unemployment down very low if you are willing to tolerate high inflation; or it can work the other way around: you can stabilize prices provided you are willing to put up with high unemployment.

Now, of course this makes no sense on the microeconomic level. When inflation is soaring, businesses don’t suddenly say, hey, let’s hire a bunch of new people! Nor do they say, you know, the prices we pay for inventory have not gone up or have fallen. Let’s fire some workers!

This much is true about macroeconomics: It is commonly treated like a subject completely devoid of any connection to microeconomics or even human decision making. It is as if we enter into a video game featuring fearsome creatures called Aggregates that battle it out to the death. So you have one creature called Unemployment, one called Inflation, one called Capital, one called Labor, and so on until you can construct a fun game that is sheer fantasy.

Another example of this came to me just the other day. A recent study claimed that labor unions increase the productivity of firms. How did the researchers discern this? They found that unionized companies tend to be larger with more overall output than nonunionized companies. Well, let’s think about this. Is it likely that if you close a labor pool to all competition, give that restrictive labor pool the right to use violence to enforce its cartel, permit that cartel to extract higher-than-market wages from the company and set its own terms concerning work rules and vacations and benefits — is it likely that this will be good for the company in the long run? You have to take leave of your senses to believe this.

In fact, what we have here is a simple mix-up of cause and effect. Bigger companies tend to be more likely to attract a kind of unpreventable unionization than smaller ones. The unions target them, with federal aid. It is no more or less complicated than that. It is for the same reason that developed economies have larger welfare states. The parasites prefer bigger hosts; that’s all. We would be making a big mistake to assume that the welfare state causes the developed economy. That would be as much a fallacy as to believe that wearing $2,000 suits causes people to become rich.

I’m convinced that Mises was right: the most important step economists or economic institutions can take is in the direction of public education in economic logic.

There is another important factor here. The state thrives on an economically ignorant public. This is the only way it can get away with blaming inflation or recession on consumers, or claiming that the government’s fiscal problems are due to our paying too little in taxes. It is economic ignorance that permits the regulatory agencies to claim that they are protecting us as versus denying us choice. It is only by keeping us all in the dark that it can continue to start war after war — violating rights abroad and smashing liberties at home — in the name of spreading freedom.

There is only one force that can put an end to the successes of the state, and that is an economically and morally informed public. Otherwise, the state can continue to spread its malicious and destructive policies.
Do you remember the first time that you began to grasp economic fundamentals? It is a very exciting time. It is as if people with poor eyesight have put on glasses for the first time. It can consume us for weeks, months, and years. We read a book like Economics in One Lesson and pore over the pages of Human Action, and for the first time we realize that so much of what other people take for granted is not true, and that there are exciting truths about the world that desperately need to be spread.

To consider just one example, look at the concept of inflation. For most people, it is seen the way primitive societies might see the onset of a disease. It is something that sweeps through to cause every kind of wreckage. The damage is obvious enough, but the source is not. Everyone blames everyone else, and no solution seems to work. But once you understand economics, you begin to see that the value of the money is more directly related to its quantity, and that only one institution possesses the power to create money out of thin air without limit: the government-connected central bank.

Economics causes us to broaden our minds to look at the commerce of society from many different points of view. Instead of just looking at events and phenomena from the perspective of a single consumer or producer, we begin to see the interests of all consumers and all producers. Instead of thinking only about the short-run effects of certain policies, we think about the long run, and the spin-off effects of certain government policies. This is the essence of Hazlitt’s first lesson in his famed book.

By the way, let me interrupt here to make an exciting announcement. This book was written more than 60 years ago, and it remains the most powerful first book on economics anyone can read. Even if it is the last book on economics you read, it will stick with you for a lifetime.

It is a hugely important tool, and though I’m glad that it has stayed in print, I’ve not been happy with the edition that has long been distributed. We had long hoped for a hardback version of this amazing classic to make available at a very low price. Now we have it.

For a person who has read in economics, and absorbed its essential lessons, the world around us becomes vivid and clear, and certain moral imperatives strike us. We know now that commerce deserves defense. We see entrepreneurs as great heroes. We sympathize with the plight of producers. We see unions not as defenders of rights but as privileged cartels that exclude people who need work. We see regulations not as consumer protection but rather as cost-raising rackets lobbied for by some producers to hurt other producers. We see antitrust not as a safeguard against corporate excess but as a bludgeon used by big players against smarter competitors.

In short, economics helps us see the world as it is. And its contribution lies not in the direction of the assembly of ever more facts, but in helping those facts fit a coherent theory of the world. And here we see the essence of our job at the Mises Institute. It is to educate and instill a systematic method for understanding the world as it is. Our battleground is not the courts, nor the election polls, nor the presidency, nor the legislature, and certainly not the wicked arena of lobbying and political payoffs. Our battleground concerns a domain of existence that is more powerful in the long run. It concerns the ideas that individuals hold about how the world works.

As we get older and see ever more young generations coming up behind us, we are often struck by the great truth that knowledge in this world is not cumulative over time. What one generation has learned and absorbed is not somehow passed on to the next one through genetics or osmosis. Each generation must be taught anew. Economic theory, I’m sorry to report, is not written on our hearts. It was a long time in the process of being discovered. But now that we know, it must be passed on — and in this way, it is like the ability to read, or to understand great literature. It is the obligation of our generation to teach the next generation.

«If the world had drawn the correct lessons from these events, there would be no more need for economic education and no more need even for the bulk of what the Mises Institute does.»

And we are not merely talking here of knowledge for knowledge’s sake. What is at stake is our prosperity. It is our standard of living. It is the well-being of our children and all of society. It is freedom and the flourishing of civilization that stand in the balance. Whether we grow and thrive and create and flourish, or wither and die and lose all that we have inherited, ultimately depends on these abstract ideas we hold concerning cause and effect in society. These ideas do not usually come to us by pure observation. They must be taught and explained.

But who or what will teach and explain them? This is the crucial role of the Mises Institute. And not only to teach but to expand the base of knowledge, to make new discoveries, to broaden the reach of the literature, and to add ever more abundantly to the corpus of freedom. We need to expand its proponents in all walks of life, not only in academia but in all sectors of society. This is an ambitious agenda, one that Mises himself charged his descendents with.

You are helping us take up this task, and for this we are so grateful.

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Llewellyn H. Rockwell, Jr. is president of the Ludwig von Mises Institute in Auburn, Alabama, editor of LewRockwell.com, and author of Speaking of Liberty. See his Mises.org archive. Send him mail. Comment on the blog.

This talk was delivered at the Mises Circle in Seattle on May 17, 2008.

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Imperdible pregunta que se le hace al Ministro del Poder Popular para Relaciones Interiores y Justicia de la República Bolivariana de Venezuela, el camarada Pedro Carreño. El camarada se despachaba contra el capitalismo, defendiendo  al socialismo, cuando una periodista que ahora seguramente aumentó la lista de desempleados de Venezuela le hizo una muy extraña y precisa pregunta que descolocó al camarada.

No hay que pelear contra esta gente para ganarles, basta dejarlos hablar para que se entierren solos. Este video debería ser distribuido, aunque Amerika y Mónika, Bobelly y Sylvestre nunca vayan a mostrarlo.

Visto en: No me Parece

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