Wednesday, September 16, 2020

Economists' Almanac

 Mises on the blessings of the production structure in the market division of labor:

To drink coffee I do not need to own a coffee plantation in Brazil, an ocean steamer, and a coffee roasting plant, though all these means of production must be used to bring a cup of coffee to my table. Sufficient that others own these means of production and employ them for me.
From Socialism: An Economic and Sociological Analysis, (Indianapolis, IN: LibertyClassics),  p. 31.

Monday, September 14, 2020

HUMAN ACTION Turns 71!

Ludwig von Mises' magnum opus Human Action was published on this date in 1949. Mise once said that it was his reading Carl Menger's Principles of Economics that made him an economist. Well the same thing happened to me when I read Mises' Human Action. I documented the importance that book had on my life as a student in an address I gave at a conference celebrating the publication of the Scholars Edition of Human Action by the Ludwig von Mises Institute. What I said those many years ago are still true today:

It is impossible to calculate the full benefits I have taken from Mises's Human Action. It showed me the truth of economics. It made me want to become an economist. It inspired me to be a scholar, and it set forth the rational case for liberty. It does the same for my students.

I more recently discussed the importance of Human Action, explaining why everyone should read the book on the Human Action Podcast:


 

God providentially used Mises' work to confirm me in my calling as an economist and college professor. For that I continue to be grateful.

Monday, August 3, 2020

The Government Needs to Stop

In my most recent post, I directed the interested reader to a lecture in which I suggest a macroeconomic framework which could form the basis for better economic policy analysis in our present situation.

Here are some wise words from Benjamin Powell who applies the framework of which I speak:

Republicans and Democrats are debating what to include in yet another federal coronavirus relief bill. Meanwhile, the states are in various stages of “opened up” or “locked down,” with state and local politicians regulating the minutiae of our interactions right down to what constitutes a “meal” in order to determine which establishments may serve alcoholic beverages.

The politicians all need to stop. Just stop.

To read the rest click here.

Friday, July 24, 2020

Theory That Allows for Macroeconomic Analysis

Not a day goes by it seems without another call for government spending to aid our failing economy. Policy advice not rooted in sound economic theory is prone to error and when we error in economic policy, it causes real harm to people. Instead of flourishing, we get relative impoverishment.  I have already written on the weaknesses of Keynesian Macro. Robert Murphy has done yeoman work analyzing Modern Monetary Theory.

Here is a lecture I gave at the most recent Mises University. It provides a very broad-brush view of Austrian economics and how it helps us analyze macroeconomic issues and how it differs from Keynesian theory and Modern Monetary Theory:


Tuesday, April 9, 2019

Ritenour on Socialism on the Human Action Podcast

I was honored to be a guest on the Human Action Podcast hosted by Jeff Deist,  President of the Ludwig von Mises Institute. We had a wide ranging discussion about Mises' monumental work Socialism: An Economic and Sociological Analysis, which is as relevant now as when it was first published in 1922.



The Human Action Podcast is an program dedicated to in-depth discussion of issues related to Austrian Economics.

Thursday, January 24, 2019

Higher Minimum Wage, Fewer Restaurant Jobs

That's the news from New York anyway. As of December 31 of last year, New York City businesses with over ten employees must pay their workers at least $15 per hour. That is an increase up from $13 previously. Employers are responding according to economic law, not surprisingly. As the price of a good increases, the demand for that good will at some point decrease. What is true for apples, tennis balls, and t-shirts is also true for labor.

Jon Bloostein operates six New York City restaurants that employ between 50 and 110 people each. The owner of Heartland Brewery and Houston Hall, Bloostein said the effect of the higher minimum wage on payroll across locations represents "an immense cost" to his business.
"We lost control of our largest controllable expense," he told CBS MoneyWatch. "So in order to live with that and stay in business, we're cutting hours."

 The minimum wage does not help all workers. It helps some workers at the expense of others.

Friday, December 14, 2018

Hoffer on the Importance of Time Preference

While looking over recent posts of Terry Teachout's blog About Last Night, I came across a quotation from Eric Hoffer Teachout posted:

“One wonders whether a generation that demands instant satisfaction of all its needs and instant solution of the world’s problems will produce anything of lasting value. Such a generation, even when equipped with the most modern technology, will be essentially primitive—it will stand in awe of nature, and submit to the tutelage of medicine men.”

Eric Hoffer, Reflections on the Human Condition
Hoffer does not use the term time preference, but that is what he is talking about. If someone is not willing to forego present gratification, he will not be willing to save, but spend all his income on consumption. Without savings there can be no investment in capital maintenance let along accumulation. Productivity and incomes will fall, along with the standard of living.

On the other hand, if we have social institutions that foster the accumulation of capital and if people have low enough time preferences, capital accumulation and prosperity will follow. As Mises puts it in Human Action (p. 562):
The characteristic mark of economic history under capitalism is unceasing economic progress, a steady increase in the quantity of capital goods available, and a continuous trend toward an improvement in the general standard of living.