Another Four Falsehoods About the Free Market
1. The Free Market Must Be Regulated
2. Innovation in a Free Market Causes Chronic Unemployment
3. Capitalists Love Deregulation
4. The Free Market Increases Inequality
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Another Four Falsehoods About the Free Market
Which economist is demanding a supply of your love this Valentine’s Day?
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For which economist does the marginal return of spending time with never diminish? For which economist is your demand curve inelastic?
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It has been 50 years since the Beatles arrived in the United States, forever altering the landscape of popular music. But contrary to the general notion that the mop-tops hopped off a plane in 1964 and were just so talented and lovable that they took the states by storm, the Beatles’ conquering of America was actually the result of a long and complex struggle. It was the end result of the actions of numerous people acting in their own interests, with little knowledge of or concern about what the other was up to.
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Hong Kong is rated as the freest economy in the world. What makes it so free is music to the ears of everyone who loves liberty: Relatively little corruption. An efficient and independent judiciary. Respect for the rule of law and property rights. An uncomplicated tax system with low rates on both individuals and business and an overall tax burden that’s a mere 14 percent of GDP (half the U.S. rate). No taxes on capital gains or interest income or even on earnings from outside of HK. No sales tax or VAT either. A very light regulatory touch. No government budget deficit and almost nonexistent public debt. Oh, and don’t forget its average tariff rate of near zero. That’s right—zero!
Learn more about what makes Hong Kong the world’s freest economy: http://FEE.org/hongkong
Libertarianism is a powerful vision. If the technocrat’s dream was a man standing on the moon, the libertarian’s dream is of a peaceful, prosperous city-state (perhaps on the sea) built after bright, creative, and conscientious people. That’s because ours is a philosophy of peaceful cooperation, real community, and lateral relationships. Indeed, it is only through cooperation, community, and lateral relationships that free people get things done. Technocrats look around at the world and feel that society—and especially the economy—is like a rocket they have to launch and keep fixing in flight. But you have to have the right people at mission control, they believe. You have to have the right technicians designing this thing. But society is not like a rocket at all. It’s like a coral reef, which rises up from the ocean floor thanks to billions of interactions none of which anyone planned. Ordinary people are starting to grok that.
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For years economists and others were perplexed that the price of diamonds is far greater than the price of water, even though water is far more valuable than diamonds.
This diamond-water paradox wasn’t resolved until the 1870s when the Austrian economist Carl Menger and the British economist William Jevons independently recognized the difference between marginal value and total value.
Price reflects the value people place on one more unit of something (its marginal value), not the value of all of it (its total value). The total value of water is obviously much greater than the total value of diamonds—we would pay orders of magnitude more to avoid living in a world without water than we would to avoid living in a world without diamonds. But because water is so plentiful (except in unusual circumstances), the amount people are willing to pay for one more gallon is close to zero—the marginal value of water is low. On the other hand, diamonds are so rare that people are willing to pay thousands of dollars for one more.
There are three principal effects of raising the minimum wage:
1. Employers will tend to reduce non-wage compensation in an effort to minimize their overall production costs. That is, employer-provided benefits are a casualty of increases in the minimum wage.
2. As labor costs (generally) rise, producers will hire less labor and more capital. There is no worse time for labor generally (and unskilled labor specifically) to contemplate an increase in the minimum wage than when technological advances are reducing the cost of capital. The high cost of middle-management labor combined with rapid reductions in the cost of computer-processed information was the driving force behind the corporate restructuring of the late 1980s and early 1990s that put hundreds of thousands of white-collar workers in the unemployment lines.
3. Although it may appear that ratcheted-up wages benefit lower-wage employees, the appearance is deceptive. In the long run, less-skilled workers are disproportionately harmed by artificially induced increases in wages.
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The cops have revenue to generate. Protecting your rights is your (expensive) problem, says Jeffrey Tucker: http://FEE.org/policework
Many newly minted libertarians have come out of America’s indoctrination factories feeling a mix of guilt and sanctimony. They’re still libertarians, but they admonish you to “check your privilege” and caution that you may unwittingly be perpetuating a culture of oppression.
Identity politics has come to the freedom movement. But does it fit?
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