Hillary Clinton Doesn’t Think Business Creates Jobs?

Hillary Clinton seems to forget basic economics all too frequently and this time her Marxian rhetoric has finally come out in full force. We have to tackle this stupidity, there is no way we can let someone like Mrs. Clinton say something so terribly misinformed as this.

Minimum Wage:
The genius economic philosopher Ludwig Von Mises disagrees with Hillary. He says “Minimum wage rates, whether decreed and enforced by the government or by labor union pressure and violence, result in mass unemployment.”1 This makes perfect sense from inductive reasoning and the study of human action. Wage rates are a price. In a freemarket, the employer does not own the employee. Rather, the employee is selling his skills, labor and time much like how any other entrepreneur sells a commodity. The employer must then purchase the employees skills, labor and time at set market prices or wages.

From this logic, the rates paid for labor of various types must be profitable for the employer and satisfactory for the employee. Much like when you walk into the store and see a product you may want, you check the price. If the price is higher than you are willing to pay for the product, you decide to hold onto your money as you believe that you will be better off keeping the money rather than spending it on the high priced product. If the product is priced appropriately, and you judge it better to have the product than your money, an exchange will occur.

Labor is just like this product in our example. If the wages are higher than what the employer deems the labor worth, the employer will not hire anyone. The fact that Hillary Clinton thinks that she can ignore this basic economic truism shows that she either does not understand economics in the slightest, or she is being purposefully deceitful. Either option shows that she has no business leading anyone in anything pertaining to economics. The facts are rather simple. The higher wages are, the higher the cost of production is. Higher production costs means higher prices. Higher prices mean less demand for products. Less demand means a smaller quantity of goods are produced. Smaller quantities of goods being produced means less jobs available.2 It’s really that simple.

If only Hillary would listen to Murray Rothbard on the subject:

“In truth, there is only one way to regard a minimum-wage law: it is compulsory unemployment, period. The law says, it is illegal, and therefore criminal, for anyone to hire anyone else below the level of X dollars an hour. This means, plainly and simply, that a large number of free and voluntary wage contracts are now outlawed and hence that there will be a large amount of unemployment. Remember that the minimum-wage law provides no jobs; it only outlaws them; and outlawed jobs are the inevitable result.”3

Perhaps Hillary is confused. Hazlitt says that many of the confusions about wage rates occur in economics because wages, which are a price, are given a separate name other than “price” which leads the economically impaired to believe that the rules of other prices do not affect wage rates and that wage rates are somehow “special”.4 Hillary Clinton is most assuredly, economically impaired.

Business Doesn’t Create Jobs?
The central claim in this clip of Hillary is that she claims that business and corporations, or the private sector, do not create jobs. She is really trying to convey the idea that our supreme overlords do (our supreme overlords being her and her government friends). This idea is something that progressives and liberals are always trying to propagate, usually, without facts. Like Hillary, they simply proclaim it as truth, hoping that saying it over and over again will somehow make it true. Unfortunately, economic facts show the opposite. In order for government to “create” anything it must take resources and capital from individuals.

This leads to another problem. Hillary is just flat out proclaiming communism and Marxism at this point. She wants the Federal government to direct all economic activities. As F.A. Hayek points out, the more a government plans, the harder planning becomes for the individual.5 Central planning necessarily leads to a limitation of choices for the individual as well as market distortions. Ludwig Von Mises explains these market shortages and distortions rather well in the two following examples:

“The government believes that the price of a definite commodity, e.g., milk, is too high. It wants to make it possible for the poor to give their children more milk. Thus it resorts to a price ceiling and fixes the price of milk at a lower rate than that prevailing on the free market. The result is that the marginal producers of milk, those producing at the highest cost, now incur losses. As no individual farmer or businessman can go on producing at a loss, these marginal producers stop producing and selling milk on the market. They will use their cows and their skill for other more profitable purposes. They will, for example, produce butter, cheese or meat. There will be less milk available for the consumers, not more. This, or course, is contrary to the intentions of the government. It wanted to make it easier for some people to buy more milk. But, as an outcome of its interference, the supply available drops. The measure proves abortive from the very point of view of the government and the groups it was eager to favor. It brings about a state of affairs, which, again from the point of view of the government,is even less desirable than the previous state of affairs which it was designed to improve.”6

“The whole entrepreneurial class is, as it were, in the position of a master builder whose task it is to erect a building out of a limited supply of building materials. If this man overestimates the quantity of the available supply, he drafts a plan for the execution of which the means at his disposal are not sufficient. He over sizes the groundwork and the foundations and only discovers later in the progress of the construction that he lacks the material needed for the completion of the structure. It is obvious that our master builder’s fault was not over investment, but an inappropriate employment of the means at his disposal.”7

The “creations” of government never economically work. This is because these government creations and interventions ignore human action. They view men as raw material that can be formed much like how an engineer forms materials into a machine or a bridge. Unfortunately for would be social engineers like Hillary, men are not raw materials to be formed in whatever image she chooses. Men act to better their own circumstances in the future, otherwise they would not act. As stated above, the more economies are centrally planned, the more they ignore and make difficult the actions of individuals trying to better their circumstances.

Lastly, Hillary makes fun of “trickle down economics” saying it doesn’t work. But isn’t she one of the biggest advocates of trickle down economics? She clearly advocates for government stimulus which is government giving money to its rich friends in order for them to create jobs. Clearly, Hillary and her followers are economically illiterate.

What is Hillary Saying?
Hillary Clinton is essentially saying that you are too stupid and ineffectual at making your own choices. You need a strong central authority that can point guns at one group in order to support you. You are a raw material, a slave, and what ever dreams and goals you may have are unimportant to governments goals and plans. This is the underlying message she is giving you.

1. Mises, Ludwig Von. Planning for Freedom, and Other Essays and Addresses. South Holland, IL: Libertarian, 1962. 27. Print.

2. Reisman, George. “How Minimum Wage Laws Increase Poverty.” Mises.org. Mises Institute, 14 Apr. 2014. Web. 30 Oct. 2014. <http://mises.org/daily/6714/How-Minimum-Wage-Laws-Increase-Poverty>.

3. Rothbard, Murray N. Making Economic Sense. Auburn, Ala.: Ludwig Von Mises Institute, 1995. Print.

4. Hazlitt, Henry. Economics in One Lesson. London: n.p., 1952. Print.

5. Hayek, Friedrich A. Von, and Bruce Caldwell. The Road to Serfdom: Text and Documents: The Definitive Edition. New York: Routledge, 2008. Print.

6. Mises, Ludwig Von. Middle-of-the-road Policy Leads to Socialism. South Holland, IL: Consumers-Producers Economic Service, 1951. Print.

7. Mises, Ludwig Von, and Ludwig Von Mises. Human Action: A Treatise on Economics. N.p.: n.p., n.d. Print.


Warlords and Anarchy

I have had discussions with many people about the topic of anarchy. They of course think I am crazy for thinking that a system of voluntary exchange and relationships could order society in a sufficient manner. They argue that a central monopoly on force is necessary in order to create an environment conducive to social order. In their eyes, a little bit of violence perpetrated by the State is more desirable than the potential violence perpetrated by marauding gangs that could take formation in market anarchy.

Objection 1
This first objection is already fallacious on certain levels. The logic that we need to have a “gang” now (and even of our own choosing) in order to keep any other competition from a rival gang from gaining power makes no sense. Essentially what these state apologists are saying is that we need a central authority of some sort, which is capable of abusing its powers, right now in order to combat any potential monopoly that could abuse its powers in the future.

As you can see, this logic makes absolutely no sense. We need a monopoly on the initiation of violence now in order to combat any potential monopolies on the initiation of force in the future? It is self defeating logic.

Objection 2
There are those that argue that under market anarchy, there would be competing defense factions all vying for control of the market. They could then, theoretically, use the powers at their disposal to wage war with opposing defense firms. The apologist of the state then argues that it is more beneficial for this theoretical society to put aside any differences they have in interpreting law and supporting one monopoly defense firm.

This argument is fallacious as well. If a society is enlightened enough to understand that solving problems through violence is not beneficial, why would they need to support one defense faction? If they are capable of coming together with a peaceful (though incorrect) solution in the statist argument, why would they be incapable of solving their disputes in a peaceful manner under anarchy?

The other problem with this argument is that it is also fallacious in another way. Warfare is expensive. Unlike a government, a defense firm in the market place cannot really conscript individuals in order to fight its battles. It has to hire workers, like any other business, at competitive market wages. This means each employee is an investment and an asset that cannot be thrown away foolishly. What the state apologist is doing is imposing the lack of care concerning soldiers and war that the state exercises onto a competing market defense firm in a theoretical situation. If anything, it highlights the dangers of granting one group of individuals monopoly powers; as they can conscript people to fight for them and wage useless and reckless wars to advance their own agenda. The market is competitive in the sense that whoever brings the best product to the market for the consumer wins. Governments negate this feature of the market in the realm of defense because government is itself a monopoly on force and accomplishes everything by pointing guns at people. The state is not concerned with offering competitive services simply because it uses violence to stamp out all competition. In this regard, it can offer poorer quality services like we see with police abuse and reckless military campaigns in the Middle-East.

Under anarchy, no single group would be able to do that.

Conclusion
It is easy to conclude therefore, that the argument that warlords would take over is not a good argument against anarchy. It is important to point out that the anarchist is not saying that anarchy is perfect either. The anarchist is only saying that all services that are offered by the state could be offered on the free market at better prices and quality. Disputes and violence will of course still occur, but using peaceful means to solving these problems is far better than using violence. If we are civil enough to vote in the democratic process in order to try and exact change instead of using civil war and violence, we are capable of using non-violent means of dispute resolution within market anarchy.


Refuting Salon: 7 Huge Misconceptions Part 3

Today we continue our refutation of an older Salon article that can be found here. It asserts that communism/socialism is not all that bad or violent and that capitalism is actually more violent than communism. This is of course an unfounded and idiotic position. Let us continue.

3. Communism killed 110 million people for resisting dispossession

So by this point in the article, the author seems a little confused. This point seems to make absolutely no sense. The author sites Fox News host Greg Gutfeld, so you know whatever argument they are about to “destroy” really isn’t an argument to begin with. Of course, the modern progressive liberal thinks that if you can “refute” what Fox News says, you have refuted capitalism and the free market for good. Unfortunately, Fox News is not the central hub or banner carrier of those who lean towards classical liberal and free market ideas no matter how much the left wishes it to be so.

To get to the point of their argument, the author cites Mr. Gutfeld for saying “‘only the threat of death can prop up a left-wing dream, because no one in their right mind would volunteer for this crap. Hence, 110 million dead.’ In declaring this, Gutfeld and his ilk insult the suffering of the millions of people who died under Stalin, Mao, and other 20th Century Communist dictators.” The author then seems to go on to say, essentially, that there were good communists and bad communists. The bad communists killed the good ones even though the good ones were working towards collectivizing the means of production as well.1 The author then makes mention of the Great Chinese Famine in which millions starved. The author blames some decisions made by Chairman Mao but refuses to acknowledge that central planning is really the root of it all. The hilarious bit is the end of this claim, that “famine is not only a left wing problem.”

I have to ask a question though. Just like in the last few refuted claims of this article, are not the goals of a central planner enforced by violence and men with guns? “Our freedom of choice in a competitive society rests on the fact that, if one person refuses to satisfy our wishes, we can turn to another. But if we face a monopolist we are at his mercy. And an authority directing the whole economic system would be the most powerful monopolist conceivable.”2 What is government if it is not the most powerful and dangerous type of monopoly on the initiation of force and violence ever conceived by mankind? The state, especially a large central planning one like a socialist or communist regime, accomplishes all that it needs through pointing guns at peaceful acting people that only want to engage in voluntary exchange to better their situation.

Sure, 110 million were probably not all dissenters but lets ask a simple question the author likes to ignore in their article. Would all of those people have died through violence and starvation if they were under a more capitalistic and private property respecting economic system? Probably not. If anyone and their ilk are insulting the victims of human rights atrocities, it’s the apologists of the communist and socialist systems that think another go at central planning (the system that created monsters like Stalin and Mao) and economic tyranny is worth another shot.

The last point to talk about is the idea of famine in a communist system. Why are they inevitable? Mises points out that it is because central planners distort the market with their limitations on economic choices and actions. These distortions mean that socialism is impossible. I said it. It’s impossible. Socialism lacks the needed calculations and information needed in order to run a sustainable economy. The only way to make these calculations is through true market prices. The only way to achieve true market prices is to allow economic freedom and respect private property. Only then will prices reflect what a product, commodity, or raw material is actually worth. Shortages occur in socialism because the central planners can never accurately price commodities and services in a true way.

It is foolish to think that systems that grant powerful monopolies to violent and power hungry men are desirable. Communism was the leading ideological cause of death from the years 1900 to 2000.4 This is a fact. To pretend that if we try it one more time everything will be great is both intellectually dishonest and maniacally devious.

1. Myerson, Jesse. “Why You’re Wrong about Communism: 7 Huge Misconceptions about It (and Capitalism).” Saloncom RSS. Salon, 02 Feb. 2014. Web. 27 Oct. 2014. <http://www.salon.com/2014/02/02/why_youre_wrong_about_communism_7_huge_misconceptions_about_it_and_capitalism/?utm_source=twitter&utm_medium=socialflow>.

2. Hayek, Friedrich A. Von, and Bruce Caldwell. The Road to Serfdom: Text and Documents: The Definitive Edition. New York: Routledge, 2008. Print.

3. Mises, Ludwig Von. “Economic Calculation in a Socialist Commonwealth.” Economic Calculation in the Socialist Commonwealth Pocketbook.indb (n.d.): n. pag. 1920. Web.

4. Walters, John J. “Communism Killed 94M in 20th Century, Feels Need to Kill Again.” Reason.com. Reason, 13 Mar. 2013. Web. 27 Oct. 2014. <http://reason.com/blog/2013/03/13/communism-killed-94m-in-20th-century>.


What is Money? (Part 2: Money Today)

So in the first article we talked about the origin (or theory of the origin) of money. To summarize, money started as a commodity that held value and was widely accepted as a media of exchange. One could expect to exchange the money he/she received in trade for other products they desired to consume. This all occurred through the market, so the idea of money was not created or instituted by a government force. Economic actors all mutually agreed on, and accepted, the money used at the time.

The question now is how do we define money today? It is most assuredly not a commodity based money we have today. If it were, we would not have all the financial woes and problems we see constantly occurring (the booms and the busts). So how is money defined today and why is it generally wrong?

Statists on Money:
First of all, and you can watch it here, Former Chairman of the Federal Reserve Ben Bernanke doesn’t think that gold is money. He calls gold an “asset”.1 Though, if we refer to what we have already established, gold has been used as a media of exchange, or money, for thousands of years. Why is that? Well, a long time ago, economic actors decided that gold was valuable. It was a voluntary decision to use it as a media of exchange. Our current monetary system however, is not a commodity based media of exchange. They are just paper or numbers in a bank account. In a voluntary system, why would economic actors decide to use worthless pieces of paper as a media of exchange? The answer is that they would not. Even Krugman acknowledges that the monetary system we have now is not backed by any sort of commodity or value but by men with guns forcing us to use them.2

If we, as actors in this economy, were given the choice, we would not use worthless pieces of paper to handle our economic activity but something else, a commodity like gold, to be used as a media of exchange in order to handle our financial affairs. We only use worthless paper money because we have a government pointing guns at us forcing us to use it. Because, lets be honest about this, would you rather use something that held value to store your wealth and handle exchanges or would you rather use inflated and constantly depreciating paper bills in order store your wealth? The economic answer is simple, you would choose the media of exchange that is most profitable for you and allows you to fulfill as many ends as possible. That means you would not freely use the worthless paper bills.

So why does someone like Bernanke not think gold is money? Simply because gold would be a competing currency if we were given the choice to choose a media of exchange for ourselves. If the market and the economic actors in it, did not have a government pointing guns at them in order to force them to use U.S. dollars, someone like Bernanke (and now Janet Yellen) would be out of a job.

These people are cheerleaders of the State. They think it is perfectly ok to point guns at people in order to force them to use a particular money and nothing else. It’s for our own good really… Right? They think that pointing guns, though violent, is the only way to reach prosperity. Any other idea, especially ones where voluntary exchange is involved, is not even considered. To these people, central control of all economic activity is the only tool, and when the only tool you have is a hammer, every problem looks like a nail.

Unfortunately, it seems the statist ideology is still firmly rooted as the only option when it comes to using a media of exchange. Hopefully someday, when enough people are sick of booms and busts due to distortions in the market created by government interventions, they will demand a return to the origin of money. A commodity based media of exchange.

“The whole entrepreneurial class is, as it were, in the position of a master builder whose task it is to erect a building out of a limited supply of building materials. If this man overestimates the quantity of the available supply, he drafts a plan for the execution of which the means at his disposal are not sufficient. He oversizes the groundwork and the foundations and only discovers later in the progress of the construction that he lacks the material needed for the completion of the structure. It is obvious that our master builder’s fault was not overinvestment, but an inappropriate employment of the means at his disposal.”3
This analogy of the master builder by Mises highlights how the modern definition and employment of money is all wrong. Every actor in the economy is this master builder and this is what causes the booms and the busts. The central bank pumps more fiat currency into the system, distorting prices and interest rates, thus making accurate calculations of resources impossible. This means a bust, or a return to normalcy in the market is inevitable.

1. “Ron Paul Asks Ben Bernanke – Is Gold Money? July 13, 2011.” YouTube. YouTube, n.d. Web. 26 Oct. 2014. <https://www.youtube.com/watch?v=G3TltMNbgGQ>.

2. “Consulting by RPM || Free Advice Blog.” Consulting by RPM Free Advice Blog RSS2. N.p., n.d. Web. 26 Oct. 2014. <http://consultingbyrpm.com/blog/2013/12/krugman-fiat-money-is-backed-by-men-with-guns.html>.

3. Mises, Ludwig Von, and Ludwig Von Mises. Human Action: A Treatise on Economics. N.p.: n.p., n.d. Print.