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Posts Tagged ‘free-markets’

Why We Need Free Markets To Fight Pandemics | Mises Wire

Posted by M. C. on March 24, 2020

But what if I told you that none of that was true? What if I told you that all you need in this situation is what you need every day in a free society: prices that can rapidly and easily adjust to changes in supply and demand?

Allowing prices to work in healthcare is of the most vital necessity. Rather than the crude strategy of canceling care not considered “urgent” while stockpiling resources in preparation for the worst, it is better to allow resources to be directed to where they are most needed via the price mechanism.

https://mises.org/wire/why-we-need-free-markets-fight-pandemics?utm_source=Mises+Institute+Subscriptions&utm_campaign=934aaa93c0-EMAIL_CAMPAIGN_9_21_2018_9_59_COPY_01&utm_medium=email&utm_term=0_8b52b2e1c0-934aaa93c0-228343965

The natural response in the face of a pandemic like the one we are experiencing today with COVID-19 is to take immediate and direct action to curb the crisis. We are told we need to have extensive quarantines, citywide lockdowns, and shelter-in-place orders. We supposedly need to limit the number of goods people can buy so they don’t hoard them up, and definitely keep prices where they are at so people can afford to get what they need. Hospitals and clinics must cancel surgeries and new treatment plans to ensure that they are prepared for the waves of patients catching the illness. Restaurants need to switch to takeout models! Stores need to switch to online-only, close their retail establishments, and prioritize important shipments! Government needs to make sure everyone does what they should to ensure we all make it out alive!

But what if I told you that none of that was true? What if I told you that all you need in this situation is what you need every day in a free society: prices that can rapidly and easily adjust to changes in supply and demand?

I can almost hear teeth grinding and fists shaking in response, with exclamations that I must not care about my fellow man. But hear me out as I walk through the effects that such prices would have.

Let’s start with what has occurred so far. People have flooded grocery stores to stock up on everything from canned goods to toilet paper, emptying the shelves in the process. Hospitals and clinics have, “in line with CDC guidance” (this phrase is ubiquitous), canceled various appointments and planned treatments or surgeries. Amazon has limited third-party shipments to its warehouses to “high-demand” items. Increased remote work has crashed remote coordination services.  Governments everywhere have engaged in various levels of forced quarantining and shut down numerous businesses or ordinary ways of doing business.

None of these effects or approaches of mitigation and avoidance are a problem per se. Much of this would naturally be done in response to a pandemic and the effects on demand would be similar. But what can be said is that such measures are taken crudely and mostly blindly in the absence of free prices.

The empty shelves would not be so prevalent were prices allowed to rise in contradiction of governmental laws against “price gouging.” Such a result would lead to natural rationing by consumers and would incentivize the ramp-up of production of goods in high demand. At current prices, it is true that some companies could potentially bear a short-term loss to increase production as a charitable endeavor. However, marginal producers (and even nonmarginal ones as the crisis continues) will only be able to ramp up production, even temporarily, if the prices rise.

A rise in prices informs producers of shifts in relative demand. That hypothetically the price of milk does not rise as much as the price of eggs or canned beans is a vitally important piece of information that cannot be conveyed through empty shelves alone. Rising prices would induce makers of the latter goods to expand production much more than producers of the former, and they would also encourage new entrants to prioritize accordingly.

We can observe the same mechanism at work in price drops, which are normally allowed to happen. The decreased demand for certain goods, such as tickets to events, flights, or crowded dine-in restaurants, signals these industries to find alternatives. These may include restaurants shifting to a takeout model, closing their main dining areas for the duration of the crisis, as has occurred in some places, or turning those dining areas into temporary warehouses for needed items (though this option seems foreclosed due to frozen prices disincentivizing the additional production that would make this helpful). Firms may also temporarily shutter their doors and send their workers into the labor force as potential temporary employees in areas that need them to produce vital necessities. (Instead, the government approach has been to propose bailouts and universal income checks while in some cases mandating the clear waste of resources.)

Price changes also differ by location, which naturally encourages the market to focus on the hardest-hit areas. A pandemic will not hit the entire country all at once, and although it may seem obvious (particularly at first) which areas are the worst off, the information that prices convey is vital to determining what the actual needs are. It may be that Seattle and New York City are the worst hit right now, but that alone does not tell you that Seattle is really needing ventilators while New York is short on nurses.

Allowing prices to work in healthcare is of the most vital necessity. Rather than the crude strategy of canceling care not considered “urgent” while stockpiling resources in preparation for the worst, it is better to allow resources to be directed to where they are most needed via the price mechanism. Regulations restricting the supply of care, including the construction of new facilities, the licensing of existing ones, and the number of people allowed to be licensed should be suspended (or, better, repealed). High prices for care, particularly for specialized laborers such as doctors and nurses, would invite the sector to expand its capacity by accepting med school trainees or professionals with lapsed licenses as temporary employees. High prices for emergency coronavirus care, particularly if permitted to be higher in the worst-off regions, would induce medical professionals to temporarily switch specialization and move to areas where they can do the most good. People taken in from shuttered businesses might be able to provide basic care and monitoring with minimal training, allowing those with more specialized training to prioritize the care that needs it most.

Insurance companies facing these high emergency costs would be heavily incentivized to come up with additional ways to mitigate the risk of spreading the illness. Tests that people could take at home and drop off at collection points, for instance, might allow for testing to be done without queues of potentially sick people that will almost certainly be sick when they get done. Even payments (and possibly delivery of necessities) to at-risk patients to incentivize a self-quarantine would be possible. And, most importantly, there are likely very many other possibilities that I, as a single person, have not and might not even be able to come up with. This kind of innovation and adaptation can only be optimally handled by entrepreneurs responding to changing prices, not central planners, no matter how intelligent, knowledgeable, or well intentioned.

The free market price system allows for the rapid and intensive reallocation of resources that is necessary in a crisis scenario like a pandemic. What needs to be done in such a crisis is not to attempt to steer the market to ensure that it provides what is needed (this approach is almost guaranteed to make the situation worse than it has to be), but to let it free to do what it always does: match the goals of entrepreneurial producers with the needs of the populace.

Originally published at disinthrallment.com.

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The Libertarian Movement Needs a Kick in the Pants – Reason.com

Posted by M. C. on January 3, 2020

Jacob Hornberger of the Foundation For Freedom says he will campaign as a Libertarian. Best news in a while.

https://reason.com/2020/01/03/the-libertarian-movement-needs-a-kick-in-the-pants/

In a provocative yet thoughtful manifesto, economist Tyler Cowen, a major figure in libertarian circles, offers a harsh assessment of his ideological confreres:

Having tracked the libertarian “movement” for much of my life, I believe it is now pretty much hollowed out, at least in terms of flow. One branch split off into Ron Paul-ism and less savory alt right directions, and another, more establishment branch remains out there in force but not really commanding new adherents.  For one thing, it doesn’t seem that old-style libertarianism can solve or even very well address a number of major problems, most significantly climate change. For another, smart people are on the internet, and the internet seems to encourage synthetic and eclectic views, at least among the smart and curious. Unlike the mass culture of the 1970s, it does not tend to breed “capital L Libertarianism.” On top of all that, the out-migration from narrowly libertarian views has been severe, most of all from educated women.

As an antidote, Cowen champions what he calls “State Capacity Libertarianism,” which holds that a large, growing government does not necessarily come at the expense of fundamental individual rights, pluralism, and the sort of economic growth that leads to continuously improved living standards. Most contemporary libertarians, he avers, believe that big government and freedom are fundamentally incompatible, to which he basically answers, Look upon Denmark and despair: “Denmark should in fact have a smaller government, but it is still one of the freer and more secure places in the world, at least for Danish citizens albeit not for everybody.”

In many ways, Cowen’s post condenses his recent book Stubborn Attachments, in which he argues politics should be organized around respect for individual rights and limited government; policies that encourage long-term, sustainable economic growth; and an acknowledgement that some problems (particularly climate change) need to be addressed at the state rather than individual level. You can listen to a podcast I did with him here or read a condensed interview with him here. It’s an excellent book that will challenge readers of all ideological persuasions. There’s a ton to disagree with in it, but it’s a bold, contrarian challenge to conventional libertarian attitudes, especially the idea that growth in government necessarily diminishes living standards…

Cowen is also misguided in his call for increasing the size, scope, and spending of government. “Our governments cannot address climate change, much improve K-12 education, fix traffic congestion,” he writes, attributing such outcomes to “failures of state capacity”—both in terms of what the state can dictate and in terms of what it can spend. This is rather imprecise. Whatever your beliefs and preferences might be on a given issue, the scale (and cost) of addressing, say, climate change is massive compared to delivering basic education, and with the latter at least, there’s no reason to believe that more state control or dollars will create positive outcomes. More fundamentally, Cowen conflates libertarianism with political and partisan identities, affiliations, and outcomes. I think a better way is to define libertarian less as a noun or even a fixed, rigid political philosophy and more as an adjective or “an outlook that privileges things such as autonomy, open-mindedness, pluralism, tolerance, innovation, and voluntary cooperation over forced participation in as many parts of life as possible.” I’d argue that the libertarian movement is far more effective and appealing when it is cast in pre-political and certainly pre-partisan terms…

Our polemic, later expanded into the book The Declaration of Independents, was as much aspirational as descriptive, but it captured a sense that even as Washington was about to embark on a phenomenal growth spurt—continued and expanded by the Obama administration in all sorts of ways, from the creation of new entitlements to increases in regulation to expansions of surveillance—many aspects of our lives were improving. As conservatives and liberals went dark and apocalyptic in the face of the economic crisis and stalled-out wars and called for ever greater control over how we live and do business, libertarians brought an optimism, openness, and confidence about the future that suggested a different way forward. By the middle of 2014, The New York Times was even asking on the cover of its weekly magazine, “Has the ‘Libertarian Moment Finally Arrived?

That question was loudly answered in the negative as the bizarre 2016 presidential season got underway and Donald Trump appeared on the horizon like Thanos, blocking out the sun and destroying all that lay before him. By early 2016, George Will was looking upon the race between Trump and Hillary Clinton and declaring that we were in fact not in a libertarian moment but an authoritarian one, regardless of which of those monsters ended up in the White House. In front of 2,000 people gathered for the Students for Liberty’s annual international conference, Will told Matt and me:

[Donald Trump] believes that government we have today is not big enough and that particularly the concentration of power not just in Washington but Washington power in the executive branch has not gone far enough….Today, 67 percent of the federal budget is transfer payments….The sky is dark with money going back and forth between client groups served by an administrative state that exists to do very little else but regulate the private sector and distribute income. Where’s the libertarian moment fit in here?

With the 2020 election season kicking into high gear, apocalypticism on all sides will only become more intense than it already is…

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Morality of Free Markets

Posted by M. C. on December 11, 2019

Free markets are morally superior to other economic systems. To have a claim on what my fellow man produces, I’m forced to serve him. Contrast that requirement to government handouts, where a politician says to me: “You don’t have to get out in that hot sun to mow your fellow man’s lawn. Vote for me and I’ll take what your fellow man produces and give it to you.”

https://www.lewrockwell.com/2019/12/walter-e-williams/morality-of-free-markets/

By

…For many people, profit has become a dirty word and as such has generated slogans such as “people before profits.” Many believe the pursuit of profits is the source of mankind’s troubles. However, it’s often the absence of profit motivation that’s the true villain. For example, contrast the number of complaints heard about profit-oriented establishments such as computer stores, supermarkets and clothing stores to the complaints that one hears about nonprofit establishments such as the U.S. Post Office, the public education system and departments of motor vehicles. Computer stores, supermarkets and clothing stores face competition and must satisfy customers to earn profits and stay in business. Postal workers, public teachers and department of motor vehicles employees depend on politicians and coercion to get their pay. They stay in business whether customers are satisfied with their services or not…

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Auchter's Art: Free market capitalism charade | Michigan Radio

 

 

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EconomicPolicyJournal.com: Toronto Discovers Free Markets: The Toronto Apartment Boom Miracle?

Posted by M. C. on October 12, 2019

https://www.economicpolicyjournal.com/2019/10/toronto-discovers-free-markets-toronto.html#more

Well, how about that, Toronto’s apartment crunch is finally easing, reports Bloomberg.

The city is starting to see vacancies again.

The vacancy rate rose to 1.5% in the second quarter, the highest since 2015 and things are looking up.

Nine new buildings totaling 3,078 units began occupancy in the 12 months through June, a 25-year high for annual completions. And things are only going to get much better.

The number of units proposed by builders reached a record 44,093 units in the second quarter.

The secret ingredient that is causing the Toronto apartment boom miracle? Free markets.

“The growth in purpose-built rental applications follows the provincial government’s recent removal of rent control for new buildings,” according to the research firm Urbanation.

Someone should forward this news to California Governor Gavin Newsom (See: California Governor Signs Law to Prevent Easing of Housing Crisis).

RW

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Housing and Gentrification | Chicago Socialists

Chicago progressives…err…Socialists

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Do We Need a ‘Department of Children’?

Posted by M. C. on July 29, 2019

https://www.targetliberty.com/2019/07/do-we-need-department-of-children.html?m=1

I am sure glad Democratic presidential candidate Marianne Williamson is not registering at significant levels in the polls. I hope it stays that way.

She appears to have no idea as to the problems with central planning. She talks about the problems inner-city pre-school children have but appears to have no ability to link it to government programs that encourage the split-up of families, programs of coerced public school cockroach education that create multi-generational problems and government minimum wage laws which prevent inner-city youth from getting that very important first job.

She doesn’t notice any of this government failure and instead calls for more government “solutions”!

The answer is, of course, free markets and the end to government interventions in families, education and employment, not an expansion of government in the abuse, and that is what it would be, of pre-schoolers.

Quite frankly, Willaimson wouldn’t pass a background check for babysitting even Donald Trump.

According to a 1992 Skeptical Inquirer magazine article by Martin Gardner, in the past she has been “mired in a series of unhappy love affairs, alcohol and drug abuse, a nervous breakdown, and endless sessions with therapists” and she holds the view that “sickness is an illusion and does not actually exist.”

UPDATE

From a new Willaimson press release:

One of the pillars of my campaign for the presidency is a commitment to see every child in America — regardless of their zip code — attend schools that are, as I have called them, palaces of learning, culture and the arts…

Even in the most advantaged schools, children’s needs often go unmet…

This new department will implement integrated and systemic “wrap-around services” that focus on providing a whole-systems approach through intensive family and community-based programs focused on addressing and improving factors that impact ALL children living in the U.S.

RW

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How Boris Johnson Can “Make Britain Great Again” | Mises Wire

Posted by M. C. on July 13, 2019

In twentieth-century Britain, the success of free markets bred a peculiar form of envy, based on the erroneous idea that the accumulation of wealth was at the expense of the labouring classes. It also played to intellectual and middle-class guilt. In defiance of all the evidence, it was popularised by the followers of Karl Marx. This was the basis upon which the Labour Party became a force in British politics.

https://mises.org/wire/how-boris-johnson-can-make-britain-great-again

A future prime minister must have a clear understanding of his enemy, the socialist myth, why it fails, and why free markets succeed.

Successful societies all have one thing in common: the freedom of individuals to cooperate socially in the pursuit of their needs and desires. Uniquely in the animal world, the human race deploys individual skills to produce what others want, and those others reward the individual on the basis of his or her ability to do so. Despite his inferior physical characteristics compared with other animals, it is through specialisation, the division of labour, that the human race has become dominant. The key to human success is the ultimate democracy inherent in the division of labour. It means the customer is king and all economic effort is expended toward his satisfaction. Individual success is rewarded by the improvement in living conditions for all. It defines human progress.

Truly, it is proof that free-market competition is more successful than any form of consensus.

The full economic potential of a free society is hardly ever realised. Island states, such as Hong Kong and Singapore have achieved it, but in the larger nations the development of true economic liberalism reached its zenith in Britain following the repeal of the Corn Laws and eventually all other tariffs. The improvement in living standards for the British people was truly remarkable, and the subsequent accumulation of productive wealth was unprecedented…

Socialism is incapable of fostering progress, because it cannot exercise commercial judgement unfettered by non-commercial considerations. It is a monopoly becoming less efficient by the day. The state is only able to assume that what happened in the past will happen in the future. There is no room for progress in the state’s static calculations.

Progress is the defining feature of dynamic free markets. In socialism we observe the state removing productive resources from the individual by confiscating his property, and in free markets the individual in his own interests serves his fellow men to their greatest satisfaction. The baker bakes bread for the builder; the builder builds shelter for the tech entrepreneur; the tech entrepreneur provides the media for the baker and the builder to enjoy their leisure. The state simply cannot devise an economic role for itself by interposing in these transactions.

Public support for socialism is not based on reason, but emotion. It draws on Christian values and morality, in which a concern for the welfare of the common man is expressed. As a competitor to religion, socialism replaces the deity with the head of the state: this was Karl Marx’s creed, considering himself as the head of a unified world state and Engels as his enforcer. Christians were the useful idiots on the way to this godless nirvana…

If Boris Johnson is to succeed in “Making Britain Great Again” he must understand the fundamental differences between socialism and free markets. He must observe and learn from Trump’s errors to not fall into the traps Trump has set for himself. He must be guided by free market principles, despite the howls of outrage that will continue to be a feature of his premiership, just as they have been of Trump’s presidency.

A nation is only successful despite its government.

 

 

 

 

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Socialism for Dummies – LewRockwell

Posted by M. C. on March 15, 2019

https://www.lewrockwell.com/2019/03/no_author/socialism-for-dummies-and-nature-for-the-savy/

By Jane ten Brink

I wrote the following to a friend who is now retired, but who worked for most of his life for the Austrian National Railroad (the ÖBB), an entity that has been strongly governed by socialist thinking. It therefore came as no surprise to me early on that my friend was completely governed by a socialist mindset (when I first got to know him about three years ago, he was reading some biography of Karl Marx!)

While this friend has never lived in luxury, his standard of living throughout his life and unto this day would most certainly be considered “luxury” by a good portion of the world population.

And, yet, my friend complains that he does not have enough (he thinks he should have more), and blames for this the evil, capitalist system.

My friend’s reason for blaming the evil, capitalist system for his allegedly „struggling-to-survive“ existence is that according to him, a bunch of greedy, rich guys have exploited „us“ by not turning over to „us“ more of their wealth (he believes that wealth should be more evenly distributed).

But my reason for why my friend is blaming capitalism is „envy“. Read the rest of this entry »

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Why the Left Isn’t Convinced by Your Economics Arguments | Mises Wire

Posted by M. C. on February 10, 2019

The Left has spent many decades putting their ideas into practice through classroom instruction at all levels of education, and by creating and writing songs, books, movies, and a host of other media for communicating their historical and moral views. It remains unclear if many advocates for free markets have much interest in putting a similar amount of effort into promoting their own views.

https://mises.org/wire/why-left-isnt-convinced-your-economics-arguments

Among advocates for free-markets, I’m often told that the unconverted will embrace free-markets if only we explain to them “good economics.”

But here’s the problem — many anti-capitalists  don’t think economics is a real thing, a real science, or anything other than corporate propaganda. They think it’s something invented by wealthy people to create a fake philosophical justification for why they should be allowed to keep their riches.

In other words, these leftists think that your appeals to “economic science” are just a ruse for pushing an ideology invented to keep poor people poor and powerless.

Economics as Corporate Propaganda

But don’t take my word for it.

In an essay on “corporate propaganda and global capitalism,”1 Sharon Beder explains how the promotion of “neoclassical orthodoxy” by “neoconservative economists” [by which she just means free-market economists] in the past was little more than a propaganda campaign to convince people that their own interests coincide with those of private businesses.2 These economic theories have a patina of real scholarship so as to look like:

An elegant body of microeconomic theory [which] shows that under certain circumstances the general good… will be promoted by a set of competitive markets and integration into the world economy.

But really, these theories exist to give “a public-interest rationale to liberalisation, deregulation and privatisation that provided cover for the self-interested motivations of corporations.”

This conspiratorial view is likely far more widely held than many economists would like to believe.

In his book Financial Literacy Education: Neoliberalism, the Consumer and the Citizen, Chris Arthur regards “economics education” as little more than a form of social conditioning, and relates how “the expansion of business propaganda” was made possible by organizations like “Junior Achievement founded in 1919 to teach American students the importance of learning to ‘work effectively and to become a useful, self-supporting, honorable member of society.'”

Needless to say, Arthur does not quote the mission statement from Junior Achievement with approval. Read the rest of this entry »

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