November 4, 2014

Interventionism and Mises

Jake Miller
November 4, 2014
Austrian Economics
Blog Post Interventionism

Government interventionism is a topic that is discussed all the time in today’s economics classes and between political officials.  Interventionism has been around for a very long time and I learned a lot more about it in my intermediate micro economic class last year.  In this class I learned about government interventionism and its effects on the models mainly talking about price controls like rent and how the government interventionism affected these models.  These ideas were loosely based on classical liberalism which has a few key concepts that they believe in; free markets, free trade, and government but with a small amount of intervention, and lastly taxation of the people.
From reading more of Ludwig Von Mises and his ideas on classical liberalism and Austrian school of economics I have a much greater understanding of what I learned last year in intermediate micro economics.  I hear every day about how the government needs to stay out our business and not intervene in our individual rights and the markets because I personally believe in free market and free trade.  I hear it from my parents too about how the government’s involvement is detrimental to the current situation in the first place.  Reading Mises he explains this with examples from past history of cases of too much government involvement.   
Mises has a lot of examples that are described in greater detail than from last year’s class that was explained with the models.  Mises in his piece titled Economic Policy Thoughts for Today and Tomorrow he gives an example of how government interventionism is helpful to a certain point then everything goes wrong, "Thus, the isolated interference with one or a few prices of consumer goods always bring about effects and this is important to realize which are even less satisfactory than the conditions that prevailed before... And as the government goes farther and farther, it will finally arrive at a point where all prices, all wage rates, all interest rates, in short everything in the whole economic system, is determined but the government. And this, clearly, is socialism."  I agree with Mises to a point about this example because it is explained well, but I think that we do need some government interventionism.  
Mises does sort of back track with his idea of interventionism with this quote near the beginning of his section titled Interventionism, "Government ought to protect the individuals within the country against the violent and fraudulent attacks of gangsters, and it should defend the country against foreign enemies.  These are the functions of government within a free system, within the system of the market economy."  This quote to me seems like he just thinks that the government is supposed to protect us just because that is a basic ideal in some eyes, but they aren't supposed to help with market failures, shortages, and surpluses.  I do believe there is a middle of the road sort of government that isn't too involved with the consumers and let’s markets figure themselves out because we have to have government.  Mises did not cover in enough detail and the absolute need for government power to enforce private property rights of people and their property.  This is what I believe should be the most important point that the government should be involved with the most.

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