September 26, 2011

For the 27th

September 27th has some quite interesting reading. Particularly interesting was Mises' remark that bad ideas can be fought by good ones; I can't criticize that. Really, I can't criticize anything that he has to say. Any criticism that I could point to could easily be brought down by the fact that the government has applied force to influence the market's course. I recall asking about if intervention in what are called natural monopolies, suppliers of those goods and services that gravitate towards a single producer, with utilities being the classic example. When I think of utilities, I think primarily of electricity and water. In the late 19th century, I probably would have thought of the railroads, because they were the most economical way to travel across the width of the United States. However, in the 20th century, the advent of affordable cars and air travel shattered that monopoly. Similar events are happening to water and electricity, with the advent of more efficient water using technologies, and electricity may be generated by private solar panels. Amazing what innovation can do in the absence of force.

It is also amazing what inflation can do in the absence of force. Or is that "with the backing of force"? The example that Mises lists of inter-war Germany having to completely change its currency because inflation was so bad that even the most perishable good held its value better is horrifying. It's interesting how this unique example makes for the first good argument that I have ever heard in favor of the gold standard for backed currency, because backed currency checks inflation. It makes me wonder, why is it that rapid deflation is what is called a currency crisis? Aside from the cynic's answer that it gives the World Bank an excuse to intervene, that it's all politics in its definition.

I really have no answer for any of these charges that Mises levels at policies that influence the market. Everything can, it seems, and I am forced to agree in the absence of evidence indicating otherwise, be traced to policy. Mises' lighting of the dark with new ideas depends on there being no force to oppose them. Free markets for all!

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