Great Myths of the Great Depressionn

Lawrence W. Reed discusses the latest edition of his primer, "Great Myths of the Great Depression." Recorded at the annual Austrian Scholars Conference, Ludwig von Mises Institute, 12 March 2009.

The Fallacy of the Short Run

Another great article on FEE entitled Not So Fast!: The Fallacy of the Short Run, by William Anderson. In this article, the author discusses, in greater detail, the problems with economic shortsightedness. In the article, he also quotes from Lawrence Reed’s 7 Fallacies of Economics.

"Some actions seem beneficial in the short run but produce disaster in the long run: drinking excessively, driving fast, spending blindly, and printing money, to name a few. To quote the venerable Henry Hazlitt again, “The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences.”

"Politicians seeking to win the next election frequently support policies which generate short- run benefits at the expense of future costs. It is a shame that they sometimes carry the endorsement of economists who should know better.

"The good economist does not suffer from tunnel vision or shortsightedness. The time span he considers is long and elastic, not short and fixed."

A Trillion Wrongs

There is a new article on the FEE website written by Lawrence W. Reed, entitled A Trillion Wrongs Don’t Make a Right. It is a scathing review of politicians and business men alike. A short but sweet article that helps put in perspective what is truly happening in our country. However, my favorite part is his quote of a portion of Resolution No. 2 of the 85th General Assembly of the State of Indiana, passed by that state’s House and Senate in January 1947. It reads as follows:

"Indiana needs no guardian and intends to have none. We Hoosiers—like the people of our sister states—were fooled for quite a spell with the magician’s trick that a dollar taxed out of our pockets and sent to Washington will be bigger when it comes back to us. We have taken a good look at said dollar. We find that it lost weight in its journey to Washington and back. The political brokerage of the bureaucrats has been deducted. We have decided that there is no such thing as ‘federal’ aid. We know that there is no wealth to tax that is not already within the boundaries of the 48 states.

"So we propose henceforward to tax ourselves and take care of ourselves. We are fed up with subsidies, doles and paternalism. We are no one’s stepchild. We have grown up. We serve notice that we will resist Washington, D.C. adopting us."

From the news reports, it sounds like we have a few governors that may still possess such resolve.

Mr. Smith Goes to Washington

Now, more than ever, we need Mr. Smith in Washington.  The principles and ideas introduced by Adam Smith in "An Inquiry into the Nature and Causes of the Wealth of Nations" brought a great measure of liberty and prosperity into this world.  The publication of his book back in 1776 had great influence over the minds of the founding fathers of this great nation.

On the FEE website this morning, Mr. Lawrence W. Reed has published a short, two-page reminder of some of the revolutionary ideas presented by Adam Smith.  For instance, consider the power of this one idea:  “The natural effort of every individual to better his own condition . . . is so powerful, that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often encumbers its operations.”

It is interesting that our nation is at a point where the ideas of Adam Smith are again revolutionary.

Inflation

There is a must read article on the FEE site today explaining the cause and effects of inflation. It is a another new article published by Lawrence Reed. I love the first line. “Government,” observed the renowned Austrian economist Ludwig von Mises, “is the only institution that can take a valuable commodity like paper, and make it worthless by applying ink.”

You rarely hear somebody explaining this stuff. Honestly, for most of my life I assumed that rising prices were the cause of inflation. Like the article says, that is like assuming that wet sidewalks cause rain. I heard on the news this morning that the inflation rate in Zimbabwe is over 230 Million percent. Ouch!

Of course governments cause inflation, they are the only ones that can. They can't get their spending under control, but they don't want to raise our taxes anymore because we won't vote for them if they do. So, instead, they just print more money. The price of everything goes up, the value of our dollar goes down, and none of us even suspect that our own government is the one stealthily picking our pockets. Brilliant! I'm the dummy that thought that taxes were the only way for the government to mug me. Silly me.

Is anyone out there scratching their head, and wondering where the money for the $750 Billion bailout came from? Maybe Uncle Sam had that cash sitting in a savings account somewhere.

What is Economic Development?

Lawrence W. Reed hits another home run with his article entitled "The Perversion of Economic Development."  This article was originally published in February of 1996, and recently appeared on the FEE website.  This is just another example of how timeless these economic truths really are.  With all this talk in the news about how the government should come to our rescue by stimulating the economy, we might forget what true economic development is.

"In recent decades, economic development has come to mean something other than the spontaneous, entrepreneurial phenomenon that built America. It is often thought of as a kind of activist, public-policy responsibility of state and local governments...."

"The bottom line is what every American with a good sense of history really ought to know: economic development is what happens when government protects life and property and otherwise leaves us alone."  (emphasis added) Click here to read the entire article.

Never Give Up On Conservative Ideals

Lawrence W. Reed, of the Board of Trustees of the Foundation for Economic Education published encouraging words the morning after the 2008 presidential election:

"For all of us who believe in liberty, yesterday’s ballot offerings all over the country were hardly inspiring. Predictably, the results this morning may be more than a little dispiriting. Just in case you might be feeling somewhat “down” at the moment, let me offer what I hope will be some cheerful thoughts...."

"If you want my advice, we should not squander a second feeling bad for ourselves. This is a moment when our true character, the stuff we’re really made of, will show itself. If we retreat, that would tell me we were never really worthy of the battle in the first place. But if we resolve to let these tough times build character, teach us to be better and smarter at what we do, and rally our dispirited friends to new levels of dedication, we will look back on this occasion some day with pride at how we handled it. It’s already past 9 am. Have you made any calls to cheer anybody up yet?" For entire article, click here.