Mises Wire |
- The Rise of Economic Fascism in America
- When a Fallacy Isn't Really a Fallacy
- This Is a Sign that Price Inflation Will Soon Get Worse
- Kingsley Amis's Lucky Jim
- The Market — Not Government Planning — Brings Relief from Natural Disasters
| The Rise of Economic Fascism in America Posted: 03 Sep 2021 12:00 PM PDT When people hear the word "fascism" they naturally think of its ugly racism and anti-Semitism as practiced by the totalitarian regimes of Mussolini and Hitler. But there was also an economic policy component of fascism, known in Europe during the 1920s and '30s as "corporatism," that was an essential ingredient of economic totalitarianism as practiced by Mussolini and Hitler. So-called corporatism was adopted in Italy and Germany during the 1930s and was held up as a "model" by quite a few intellectuals and policy makers in the United States and Europe. A version of economic fascism was in fact adopted in the United States in the 1930s and survives to this day. In the United States these policies were not called "fascism" but "planned capitalism." The word fascism may no longer be politically acceptable, but its synonym "industrial policy" is as popular as ever. The Free World Flirts With FascismFew Americans are aware of or can recall how so many Americans and Europeans viewed economic fascism as the wave of the future during the 1930s. The American Ambassador to Italy, Richard Washburn Child, was so impressed with "corporatism" that he wrote in the preface to Mussolini's 1928 autobiography that "it may be shrewdly forecast that no man will exhibit dimensions of permanent greatness equal to Mussolini. . . . The Duce is now the greatest figure of this sphere and time.1" Winston Churchill wrote in 1927 that "If I had been an Italian I am sure I would have been entirely with you" and "don the Fascist black shirt.2" As late as 1940, Churchill was still describing Mussolini as "a great man." U.S. Congressman Sol Bloom, Chairman of the House Foreign Relations Committee, said in 1926 that Mussolini "will be a great thing not only for Italy but for all of us if he succeeds. It is his inspiration, his determination, his constant toil that has literally rejuvenated Italy . ."3 One of the most outspoken American fascists was economist Lawrence Dennis. In his 1936 book, The Coming American Fascism, Dennis declared that defenders of "18th-century Americanism" were sure to become "the laughing stock of their own countrymen" and that the adoption of economic fascism would intensify "national spirit" and put it behind "the enterprises of public welfare and social control." The big stumbling block to the development of economic fascism, Dennis bemoaned, was "liberal norms of law or constitutional guarantees of private rights." Certain British intellectuals were perhaps the most smitten of anyone by fascism. George Bernard Shaw announced in 1927 that his fellow "socialists should be delighted to find at last a socialist [Mussolini] who speaks and thinks as responsible rulers do."4 He helped form the British Union of Fascists whose "Outline of the Corporate State," according to the organization's founder, Sir Oswald Mosley, was "on the Italian Model." While visiting England, the American author Ezra Pound declared that Mussolini was "continuing the task of Thomas Jefferson."5 Thus, it is important to recognize that, as an economic system, fascism was widely accepted in the 1920s and '30s. The evil deeds of individual fascists were later condemned, but the practice of economic fascism never was. To this day, the historically uninformed continue to repeat the hoary slogan that, despite all his faults, Mussolini at least "made the trains run on time," insinuating that his interventionist industrial policies were a success. The Italian "Corporatist" SystemSo-called "corporatism" as practiced by Mussolini and revered by so many intellectuals and policy makers had several key elements: The state comes before the individual. Webster's New Collegiate Dictionary defines fascism as "a political philosophy, movement, or regime that exalts nation and often race above the individual and that stands for a centralized, autocratic government." This stands in stark contrast to the classical liberal idea that individuals have natural rights that pre-exist government; that government derives its "just powers" only through the consent of the governed; and that the principal function of government is to protect the lives, liberties, and properties of its citizens, not to aggrandize the state. Mussolini viewed these liberal ideas (in the European sense of the word "liberal") as the antithesis of fascism: "The Fascist conception of life," Mussolini wrote, "stresses the importance of the State and accepts the individual only in so far as his interests coincide with the State. It is opposed to classical liberalism [which] denied the State in the name of the individual; Fascism reasserts the rights of the State as expressing the real essence of the individual."6 Mussolini thought it was unnatural for a government to protect individual rights: "The maxim that society exists only for the well-being and freedom of the individuals composing it does not seem to be in conformity with nature's plans."7 "If classical liberalism spells individualism," Mussolini continued, "Fascism spells government." The essence of fascism, therefore, is that government should be the master, not the servant, of the people. Think about this. Does anyone in America really believe that this is not what we have now? Are Internal Revenue Service agents really our "servants"? Is compulsory "national service" for young people, which now exists in numerous states and is part of a federally funded program, not a classic example of coercing individuals to serve the state? Isn't the whole idea behind the massive regulation and regimentation of American industry and society the notion that individuals should be forced to behave in ways defined by a small governmental elite? When the nation's premier health-care reformer recently declared that heart bypass surgery on a 92-year-old man was "a waste of resources," wasn't that the epitome of the fascist ideal—that the state, not individuals, should decide whose life is worthwhile, and whose is a "waste"? The U.S. Constitution was written by individuals who believed in the classical liberal philosophy of individual rights and sought to protect those rights from governmental encroachment. But since the fascist/collectivist philosophy has been so influential, policy reforms over the past half century have all but abolished many of these rights by simply ignoring many of the provisions in the Constitution that were designed to protect them. As legal scholar Richard Epstein has observed: "[T]he eminent domain . . . and parallel clauses in the Constitution render . . . suspect many of the heralded reforms and institutions of the twentieth century: zoning, rent control, workers' compensation laws, transfer payments, progressive taxation."8 It is important to note that most of these reforms were initially adopted during the '30s, when the fascist/collectivist philosophy was in its heyday. Planned industrial "harmony." Another keystone of Italian corporatism was the idea that the government's interventions in the economy should not be conducted on an ad hoc basis, but should be "coordinated" by some kind of central planning board. Government intervention in Italy was "too diverse, varied, contrasting. There has been disorganic . . . intervention, case by case, as the need arises," Mussolini complained in 1935.9 Fascism would correct this by directing the economy toward "certain fixed objectives" and would "introduce order in the economic field."10 Corporatist planning, according to Mussolini adviser Fausto Pitigliani, would give government intervention in the Italian economy a certain "unity of aim," as defined by the government planners.11 These exact sentiments were expressed by Robert Reich (currently the U.S. Secretary of Labor) and Ira Magaziner (currently the federal government's health care reform "Czar") in their book Minding America's Business.12 In order to counteract the "untidy marketplace," an interventionist industrial policy "must strive to integrate the full range of targeted government policies—procurement, research and development, trade, antitrust, tax credits, and subsidies—into a coherent strategy . . . ."13 Current industrial policy interventions, Reich and Magaziner bemoaned, are "the product of fragmented and uncoordinated decisions made by [many different] executive agencies, the Congress, and independent regulatory agencies . . . . There is no integrated strategy to use these programs to improve the . . . U.S. economy."14 In his 1989 book, The Silent War, Magaziner reiterated this theme by advocating a coordinating group like the national Security Council to take a strategic national industrial view."15] The White House has in fact established a "National Economic Security Council." Every other advocate of an interventionist "industrial policy" has made a similar "unity of aim" argument, as first described by Pitigliani more than half a century ago. Government-business partnerships. A third defining characteristic of economic fascism is that private property and business ownership are permitted, but are in reality controlled by government through a business-government "partnership." As Ayn Rand often noted, however, in such a partnership government is always the senior or dominating "partner." In Mussolini's Italy, businesses were grouped by the government into legally recognized "syndicates" such as the "National Fascist Confederation of Commerce," the "National Fascist Confederation of Credit and Insurance," and so on. All of these "fascist confederations" were "coordinated" by a network of government planning agencies called "corporations," one for each industry. One large "National Council of Corporations" served as a national overseer of the individual "corporations" and had the power to "issue regulations of a compulsory character."16 The purpose of this byzantine regulatory arrangement was so that the government could "secure collaboration . . . between the various categories of producers in each particular trade or branch of productive activity."17 Government-orchestrated "collaboration" was necessary because "the principle of private initiative" could only be useful "in the service of the national interest" as defined by government bureaucrats.18 This idea of government-mandated and -dominated "collaboration" is also at the heart of all interventionist industrial policy schemes. A successful industrial policy, write Reich and Magaziner, would "require careful coordination between public and private sectors."19 "Government and the private sector must work in tandem."20 "Economic success now depends to a high degree on coordination, collaboration, and careful strategic choice," guided by government.21 The AFL-CIO has echoed this theme, advocating a "tripartite National Reindustrialization Board—including representatives of labor, business, and government" that would supposedly "plan" the economy.[22 The Washington, D.C.-based Center for National Policy has also published a report authored by businessmen from Lazard Freres, du Pont, Burroughs, Chrysler, Electronic Data Systems, and other corporations promoting an allegedly "new" policy based on "cooperation of government with business and labor."23 Another report, by the organization "Rebuild America," co-authored in 1986 by Robert Reich and economists Robert Solow, Lester Thurow, Laura Tyson, Paul Krugman, Pat Choate, and Lawrence Chimerine urges "more teamwork" through "public-private partnerships among government, business and academia."24 This report calls for "national goals and targets" set by government planners who will devise a "comprehensive investment strategy" that will only permit "productive" investment, as defined by government, to take place. Mercantilism and protectionism. Whenever politicians start talking about "collaboration" with business, it is time to hold on to your wallet. Despite the fascist rhetoric about "national collaboration" and working for the national, rather than private, interests, the truth is that mercantilist and Protectionist practices riddled the system. Italian social critic Gaetano Salvemini wrote in 1936 that under corporatism, "it is the state, i.e., the taxpayer, who has become responsible to private enterprise. In Fascist Italy the state pays for the blunders of private enterprise."25 As long as business was good, Salvemini wrote, "profit remained to private initiative."26 But when the depression came, "the government added the loss to the taxpayer's burden. Profit is private and individual. Loss is public and social."27 The Italian corporative state, The Economist editorialized on July 27, 1935, "only amounts to the establishment of a new and costly bureaucracy from which those industrialists who can spend the necessary amount, can obtain almost anything they want, and put into practice the worst kind of monopolistic practices at the expense of the little fellow who is squeezed out in the process." Corporatism, in other words, was a massive system of corporate welfare. "Three-quarters of the Italian economic system," Mussolini boasted in 1934, "had been subsidized by government."28 If this sounds familiar, it is because it is exactly the result of agricultural subsidies, the Export-Import bank, guaranteed loans to "preferred" business borrowers, protectionism, the Chrysler bailout, monopoly franchising, and myriad other forms of corporate welfare paid for directly or indirectly by the American taxpayer. Another result of the close "collaboration" between business and government in Italy was "a continual interchange of personnel between the . . . civil service and private business."29 Because of this "revolving door" between business and government, Mussolini had "created a state within the state to serve private interests which are not always in harmony with the general interests of the nation."30 Mussolini's "revolving door" swung far and wide:
Such practices are now so common in the United States—especially in the defense industries—that it hardly needs further comment. From an economic perspective, fascism meant (and means) an interventionist industrial policy, mercantilism, protectionism, and an ideology that makes the individual subservient to the state. "Ask not what the State can do for you, but what you can do for the State" is an apt description of the economic philosophy of fascism. The whole idea behind collectivism in general and fascism in particular is to make citizens subservient to the state and to place power over resource allocation in the hands of a small elite. As stated eloquently by the American fascist economist Lawrence Dennis, fascism "does not accept the liberal dogmas as to the sovereignty of the consumer or trader in the free market . . . . Least of all does it consider that market freedom, and the opportunity to make competitive profits, are rights of the individual." Such decisions should be made by a "dominant class" he labeled "the elite."32 German Economic FascismEconomic fascism in Germany followed a 'virtually identical path. One of the intellectual fathers of German fascism was Paul Lensch, who declared in his book Three Years of World Revolution that "Socialism must present a conscious and determined opposition to individualism."33 The philosophy of German fascism was expressed in the slogan, Gemeinnutz geht vor Eigennutz, which means "the common good comes before the private good." "The Aryan is not greatest in his mental qualities," Hitler stated in Mein Kampf, but in his noblest form he "willingly subordinates his own ego to the community and, if the hour demands, even sacrifices it."34 The individual has "not rights but only duties."35 Armed with this philosophy, Germany's National Socialists pursued economic policies very similar to Italy's: government-mandated "partnerships" between business, government, and unions organized by a system of regional "economic chambers," all overseen by a Federal Ministry of Economics. A 25-point "Programme of the Party" was adopted in 1925 with a number of economic policy "demands," all prefaced by the general statement that "the activities of the individual must not clash with the interests of the whole . . . but must be for the general good."36 This philosophy fueled a regulatory assault on the private sector. "We demand ruthless war upon all those whose activities are injurious to the common interest," the Nazis warned.37 And who are these on whom "war" is to be waged? "Common criminals," such as "usurers," i.e., bankers, and other "profiteers," i. e., ordinary businessmen in general. Among the other policies the Nazis demanded were abolition of interest; a government-operated social security system; the ability of government to confiscate land without compensation (wetlands regulation?); a government monopoly in education; and a general assault on private-sector entrepreneurship which was denounced as the "Jewish materialist spirit."38 Once this "spirit" is eradicated, "The Party . . . is convinced that our nation can achieve permanent health from within only on the principle: the common interest before self-interest."39 ConclusionsVirtually all of the specific economic policies advocated by the Italian and German fascists of the 1930s have also been adopted in the United States in some form, and continue to be adopted to this day. Sixty years ago, those who adopted these interventionist policies in Italy and Germany did so because they wanted to destroy economic liberty, free enterprise, and individualism. Only if these institutions were abolished could they hope to achieve the kind of totalitarian state they had in mind. Many American politicians who have advocated more or less total government control over economic activity have been more devious in their approach. They have advocated and adopted many of the same policies, but they have always recognized that direct attacks on private property, free enterprise, self-government, and individual freedom are not politically palatable to the majority of the American electorate. Thus, they have enacted a great many tax, regulatory, and income-transfer policies that achieve the ends of economic fascism, but which are sugar-coated with deceptive rhetoric about their alleged desire only to "save" capitalism. American politicians have long taken their cue in this regard from Franklin D. Roosevelt, who sold his National Recovery Administration (which was eventually ruled unconstitutional) on the grounds that "government restrictions henceforth must be accepted not to hamper individualism but to protect it."40 In a classic example of Orwellian doublespeak, Roosevelt thus argued that individualism must be destroyed in order to protect it. Now that socialism has collapsed and survives nowhere but in Cuba, China, Vietnam, and on American university campuses, the biggest threat to economic liberty and individual freedom lies in the new economic fascism. While the former Communist countries are trying to privatize as many industries as possible as fast as they can, they are still plagued by governmental controls, leaving them with essentially fascist economies: private property and private enterprise are permitted, but are heavily controlled and regulated by government. As most of the rest of the world struggles to privatize industry and encourage free enterprise, we in the United States are seriously debating whether or not we should adopt 1930s-era economic fascism as the organizational principle of our entire health care system, which comprises 14 percent of GNP. We are also contemplating business-government "partnerships" in the automobile, airlines, and communications industries, among others, and are adopting government-managed trade policies, also in the spirit of the European corporatist schemes of the 1930s. The state and its academic apologists are so skilled at generating propaganda in support of such schemes that Americans are mostly unaware of the dire threat they pose for the future of freedom. The road to serfdom is littered with road signs pointing toward "the information superhighway," "health security," "national service," "managed trade," and "industrial policy." Originally published in The Freeman, June 1994
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| When a Fallacy Isn't Really a Fallacy Posted: 03 Sep 2021 09:00 AM PDT Students often ask me to recommend a good introduction to philosophy, and now the question can be answered more easily than in years past. Michael Huemer's Knowledge, Value, and Reality, published last April, contains a profusion of arguments on important topics and is written in a conversational style that is easy to follow, and is often very funny as well. Huemer is especially good at coming up with objections and counters to these objections, in a way that shows how contemporary analytic philosophers work. In what follows, I'm going to discuss a few of his points about fallacies in reasoning. He notes that some philosophers misuse "begging the question." "The philosopher starts out with the idea that an argument begs the question (and therefore is fallacious) when someone who rejects the conclusion wouldn't (or shouldn't, or couldn't reasonably be expected to) accept all the premises. That italicized phrase is treated as something like a definition of the fallacy." (p.70, emphasis in original) Consider the following argument:
Suppose a statist looks at this argument and says, "I think that people in the government should be able to initiate force against others. I reject the conclusion, so something is wrong with this argument." (It is likely that he will reject the first premise: denying the second doesn't seem promising.) Are those who use the argument guilty of begging the question against statists? No, they aren't. Huemer points out that the definition given of "begging the question" is wrong: "People who fall for this mistake often fail to notice that it represents a rejection of all valid deductive reasoning. In a valid deductive argument, by definition, if all the premises are true, the conclusion must be true. That is logically equivalent to the following: If the conclusion is false, then one of the premises must be false. So if you start by assuming the conclusion is false, and the argument was valid, you can always deduce that (at least) one of the premises is false." (pp.70-71, emphasis in original) I would add to what Huemer says that some followers of Karl Popper do hold the view, which Huemer rightly takes to be absurd, that all deductive arguments beg the question. But they mean by this no more than that the premises in a valid argument entail the conclusion. They do not mean that all deductive arguments are fallacious. But why, then, do they use a phrase, "begs the question," that in common use suggests something is amiss? Huemer suggests that a better definition of "begging the question" is: "You beg the question when the justification of one of the premises depends upon the justification of the conclusion." (p.71, emphasis in original) An example would be: Statements about political questions made by A are always wrong A said "p" about a political question "P" is wrong. Here, unless some general characteristic about A's making a statement about a political question guarantees its falsity, the truth of the first premise depends on looking at all of A's political statements and seeing they are all wrong. But "p" is one of these statements, so the justification for the first premise depends on the justification of the conclusion. This is an example of what Huemer calls a "false fallacy," in which a common understanding of a fallacy is wrong and leads people wrongly to dismiss good reasoning. I'd like to turn to another example of this phenomenon, although Huemer just includes it on his list of fallacies and not on the "false fallacy" list. (My comments on this fallacy are, however, related to what he says about ad hominem arguments.) This fallacy is "poisoning the well," about which Huemer says, "This is a rhetorical strategy of trying to undermine an interlocutor by warning the audience that he can't be trusted for some reason. This is supposed to make it impossible for the interlocutor to defend himself, since the audience won't listen to what he might say in his own defense." For poisoning the well to have a chance to work, it must be the case that accepting what the person says involves trust. If, for example, a politician says that he won't raise taxes and you tell people he is a habitual liar, then you meet a necessary condition for poisoning the well. (That isn't to say that you have poisoned the well: if he really is a liar, are you guilty of a fallacy in pointing this out?) But sometimes, this condition is ignored, and if you make any unfavorable comment on someone, you are accused of poisoning the well against them. In one such case, a self-styled philosopher suggested that because I had said in a book review that he made mistakes, I was guilty of this fallacy. If this wrong account of poisoning the well were accepted, it would altogether destroy critical discourse. I won't mention the person in question; suffice it to say that he has not only kissed the Blarney Stone but has had a prolonged romantic involvement with it. Huemer also challenges misuse of the statement "correlation doesn't imply causation." He says, "The saying means that just because A and B go together regularly does not mean that one causes the other. Students learn the slogan in college and think it's sophisticated, but it's kind of simplistic. Granted, if there is a reliable correlation between A and B, that does not guarantee that there is a causal connection. It could just be a coincidence. But if the correlation is well established, it becomes vanishingly small that it's just a coincidence. There will be some causal explanation. Maybe A causes B, or B causes A, or some third factor, C, causes both A and B." (p.71-72, emphasis in original) The author says that there are errors not on the traditional list of fallacies that people need to take into account, and I shall close with one example. He points out that people often assume things that seem obvious to them but are not based on evidence and are in fact false. One example of this is especially interesting. "[S]uppose you hear a statistic saying that most family members are killed by a family member or someone they knew. You naturally assume that most murders result from domestic disagreements, and that the murders are committed by ordinary people who lost control during an argument with a family member, or something like that. In fact, it turns out that almost everyone who commits a murder had a prior criminal record. Also, the vast majority of the victims are also criminals." (pp 72-73, emphasis in original) Everyone interested in reasoning well should read Huemer's outstanding book. Had it been available years ago, I might have been able to avoid fallacies in my own reasoning, possibly including those committed in criticizing some of Huemer's arguments.
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| This Is a Sign that Price Inflation Will Soon Get Worse Posted: 03 Sep 2021 07:45 AM PDT Recently here on Mises Wire, Sammy Cartagena wrote a brilliant article demonstrating that Two Percent Inflation Is a Lot Worse Than You Think. In it, he demonstrates that the manageable 2 percent inflation year over year we all have gotten used to is a whole lot less manageable than we tend to think. But in it, he also cited explaining that "over 23 percent of all dollars in existence were created in 2020 alone." From that he explains that while future inflation is important, he is focused on past inflation for the sake of his article, which is where these two articles diverge because this will be questioning future inflation. Anyone paying attention has seen that there has obviously been inflation this past year whether through price increases or more subtle ways to sneak inflation into the economy. However, when we look at the massive spending bills and the aforementioned fact that over 23% of dollars have just recently been ushered into existence, it leaves many asking why has there not been proportionally drastic inflation? The major piece that is holding back even more inflation than we've already seen is a public expectation of a return to normal. The economy is exceedingly complicated and there are countless causal factors effecting this so I cannot say this is the only reason, but we can turn to The Mystery of Banking where we see Murray Rothbard go as far as claiming that "Public expectation of future price levels" is far and away the most important determinant of the demand for money. Rothbard goes on to cite his intellectual predecessor – Ludwig von Mises – to explain just how strongly expectations played a role in the German hyperinflation in 1923:
As Rothbard explains, prices not rising in proportion to a radical increase in the money supply is not only understandable, it is actually to be expected. Sure, this current situation is not a wartime economy, however, as far as Rothbard's explanation of the psychology of the average person goes, it is not all too different from the expectations during the war. Today the psychology of the average American leads to him thinking to himself "I know that prices are much higher now than they were in the good old days before 2020. But that's because of the pandemic, and because all goods are scarce due to the unemployment from people who had to stay home during this dangerous time. When the pandemic is over, things will get back to normal, and prices will fall back to 2019 levels." The problem with this expectation is that it cannot last forever. As Rothbard explains
Rothbard explains that these new expectations will intensify the inflation rather than holding it back. Rothbard also claims that there is no way of knowing when these expectations will finally shift because so many cultural, technological, geographical, and other factors affect any given population. As a result, we unfortunately can't say when modern Americans will realize that prices are not headed back to their pre-pandemic levels and start having intensifying expectations. But however long it does take, the last point that we have to remember from Rothbard is his claim that "When expectations tip decisively over from deflationary, or steady, to inflationary, the economy enters a danger zone. The crucial question is how the government and its monetary authorities are going to react to the new situation." While it is too late to not have created all that new money supply, when the day does come that we enter that danger zone, it is not too late for us to react appropriately and avoid that final phase III of hyperinflation but rather allow for a healthy deflationary bust allowing the economy to recover as it so desperately needs.  This posting includes an audio/video/photo media file: Download Now |
| Posted: 03 Sep 2021 05:30 AM PDT Having branched to our first novel with All Quiet on the Western Front, the Human Action Podcast begs your indulgence for one of the works of 20th century British satire. Lucky Jim is the late Kingsley Amis's seminal send-up of campus life, and it's among your host's favorite books. The book takes place in 1951, and England is trying but failing to lose its class distinctions. The protagonist Jim Dixon is singularly unfit for the academic life he's chosen, and the opportunities for Amis to skewer both the academy and English society are manifest. Allen Mendenhall of Troy University joins the show to discuss the academic pretenses and foibles punctured by Amis, along with great insights about Amis's background and political views. If you like satire, don't miss this show or this book!  |
| The Market — Not Government Planning — Brings Relief from Natural Disasters Posted: 03 Sep 2021 04:00 AM PDT
I have heard and read such assertions many times, virtually any time there is an emergency or disaster anywhere, or whenever some good involved is considered by someone as essential or something they "need." That is why, when I found it at the head of Leonard Read's article "To Alleviate Misfortune," in the November 1963 issue of The Freeman, it acted just the way a pull quote is designed--it drew me in. And what I found was certainly better thought out than in the many times it has been repeated with an air of presumption that no one with any empathy could harbor a different opinion.
Read's core reason is an interesting version of a slippery slope argument about defending the private property rights and voluntary associations of markets.
It seems that when something is unusually scarce, as in a crisis or emergency, especially when it is something we allegedly need rather than just want, then making the best use of what is available could be considered even more important than usual, making an even stronger case for market mechanisms over clumsy and inefficient government allocation mechanisms, rather than conceding it is a cause for government takeover.
Read makes his case with an example few would have thought of--power tools.
Read then asks an interesting question I had never considered before: Isn't almost every economic effort we put forward an attempt to stave of some sort of misfortune or difficulty in a world of unavoidable scarcity? For example, don't we routinely work so we have the resources to avoid homelessness or hunger, or to combat illness?
Consequently, the principles of economics apply equally to crisis and disasters as they do to anything else. And they should inform our consideration of the fact that "Broadly speaking, two systems, now in heated contention, are advanced as the appropriate means to overcome economic misfortune."
The problem is that the market economy is based on defending people's property rights and freedom of association, which prevents expropriation of some for others, while socializing the choices is often the mechanism for enacting such expropriation.
Read then turns to the Pilgrims for a particularly clear and painful illustration, because the common property systems originally in use in both Plymouth and Jamestown produced terrible results. 66 of Jamestown's initial 104 colonists died within six months, most from famine. Only 60 of 500 arrivals two years later survived that long. The consequences of this "starving time" included cannibalism. Plymouth's first colonists fared little better, with only about half surviving six months. Some, in desperation, sold their clothes and blankets to, or became natives' servants.
Read then addresses another misconception that feeds into peoples' failure to see how markets (i.e., the mechanisms people adopt voluntarily when given the choice) serve them better than centralized allocation--that profits increase the costs of market mechanisms rather than arising from decreasing the costs to consumers.
With a very different analysis of the claim that "No one must profit from the misfortune of others" than we so often hear, it is no surprise he comes to a different conclusion.
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