One of my favorite Facebook pages, “Unbiased America”, posted a status update that details and refutes a persistent economic fallacy; that government regulation and control can lead to prosperity. If you like the quote, check out their page at http://www.facebook.com/UnbiasedAmerica
“Perhaps the biggest fallacy in economics is the idea that people can be coerced into prosperity. Many ideologies have prescribed to the notion that threats, penalties, regulations, redistribution, and other forms of coercion can shape an economy into the goals envisioned by its planners. Yet history has shown that freedom, not restriction, is far more effective in promoting growth, cooperation, and prosperity than coercion.
Compare North Korea with South Korea, China with Taiwan or Hong Kong, East Germany with West Germany. Look at what happened when the Soviet Union forced all farmers to give up their surplus crops to be redistributed. Crop yields plummeted. The same farmers who for years had grown plenty of food voluntarily, stopped producing a surplus when they were ordered to turn it over to the government. Mass starvation resulted.
One would think that such devastating consequences would have rendered coercive economics to the dustbin of history long ago. But we still hear calls for government wage controls, confiscatory taxation, limits on profit, etc. Such coercion will have the same negative impact today that it did a hundred or a thousand years ago.
As economist Lawrence Reed once wrote, slaves don’t produce great works of art, prisoners don’t innovate, and Edison didn’t invent the light bulb because he was ordered to do so. If you want the baker to bake a bigger pie, you don’t beat him up and steal his flour.”
Thomas E. Woods delivers this speech to the Ludwig von Mises institute crowd in 2008. It runs through a chronological history of excuses given by those who have rejected the capitalist system in America.
The Problem of Extrapolating into the Future
It has become the general consensus among most scientists that man has played some significant role in the changing of the climate. My purpose in this article is not to tackle the scientific aspects of climate change or to dispute the role of fossil fuels produced by man. For the purpose of this argument, I will accept the proposition that man has caused at least a significant role in altering the global climate. By extrapolating current trends of CO2 emissions, one can quickly fall into the trap that the only hope for the … Continue reading
Very good segment from Thomas Woods’ lecture “Applying Economics to American History”.
One of the main issues many people have with an unregulated economy is the issue of child “sweatshop” labor. Woods rebuts this popular complaint and exposes the underpinning fallacies from which it suffers.
Excellent video by Milton Friedman. The current tax system is broken, unequal, and hopelessly complex. Reform alone is not enough; the entire code must be scrapped and replaced with one that is simple, fair, and pro-growth.
The book Meltdown by Thomas E. Woods Jr. contains an explanation of the problems in the American economy in the recent past and the government’s attempts to fix them. It shows how bailouts, stimulus packages, and control of the interest rate and money supply through the Federal Reserve only increases the severity and length of the economy’s problems. For example, it gives a clear explanation of how the government, through the Community Reinvestment Act, forced banks to make mortgage loans to potential home buyers who were bad risks and did not have the income or qualifications to repay the mortgage. … Continue reading