Talking Austrian Economics with Tom Woods

Today I was the guest on The Tom Woods Show. We discussed my book, Foundations of Economics and the nature of Austrian economics and how is it different in theory and practice from other economic frameworks. You can listen to the program which lasts just a touch over 27 minutes by clicking here.

George Frederick Handel

On this date in 1684 the great composer George Frederick Handel was born. In addition to celebrating his music, we should also recognize that he did so while facing the challenges of the entrepreneur. Those who have read this blog for a long time might remember a post I wrote over two years ago:

While browsing through Newman Flower's biography of Handel the other day, I came across a passage explaining why his opera Deborah failed and was surprised to see that much of the blame due to entrepreneurial error. In addition to other factors such as the lack of assistance from Court patronage (due to the public's being dissatisfied with its perceived preoccupation with all things German), Handel decided to significantly increase his ticket prices. He was led to do so because of his successes in the immediate past.

Raising prices was a mistake, because as the law of demand implies, many fewer buyers patronized his performances because they refused to pay the higher prices. And he did so at the worst possible time.

As Flower relates the story:

The greatest mistake of all was made by Handel himself. He increased the prices of admission all round. The boxes were a guinea: sets in the gallery half a guinea, so that only 120 people paid for admission to the first performance; the others forced themselves in.

Handel could not have made a greater blunder, for increased prices were at that time the principal topic of conversation. Sir Robert Walpole was floundering in a morass of the national excises, and, to save the Government from bankruptcy, he had revived the salt tax the year before, and now was about to impose a tax on tobacco, and two shillings on spirits and wine. The people were flaming. The muddle had been brought about by Walpole's reduction of a shilling off the land tax, which benefited, of course, the moneyed classes. Therefore he was not taxing the multitude to release those who had money enough to sp;are for taxation purposes. National hatred against Walpole surged up once; there should be, the mob declared, no taxation of the commodities of life. For Handel to put up his prices on top of the commotion, meant adding fuel to fire. They could not do without salt, tobacco, or wine, but they could do without Handel. Such was the import of the outcry.

The Politics of Envy Are Misguided

So says Grove City College Psychologist Joseph J. Horton. In his excellent essay, "The Politics of Envy" he notes that in a free market people get rich by productively serving others. Horton notes that if our rulers and their intellectual supporters promote envy, "Political points may be scored, but it will not improve our standard of living. If Americans succumb to the politics of envy we will be less happy and poorer for it."

Why Is Healthcare So Expensive and What Can be Done about It?

Peter Klein, economist at the University of Missouri and the Ludwig von Mises Institute, helps answer this question in this brief but informative video:



The main culprits, according to Klein, are various forms of government intervention in the health care industry. To work toward a more reasonable situation, we need to move toward a free market in health care.

Alexander Hamilton: Economic Fascist?

That's the conclusion of Virgle Glenn Wilhite in his book Founders of American Economic Thought and Policy.  Wilhite's book was published in 1958 and is an attempt to introduce the reader to the economic thought and policy advocacy of various thinkers  from Ben Franklin and Hamilton to lesser known Albert Gallatin and Pelatiah Webster.  Near the end of the final chapter, in which Wilhite attempts to classify various early American thinkers according to their economic thought he provides a rather radical judgement on the economic thought and policy of Hamilton.  He writes:

Alexander Hamilton was a nationalist and a mercantilist. His thought contains strong traces of the sort of political and economic doctrines characteristic  of modern Italian Fascism and pre-World War II German National Socialism (Wilhite, p. 426).

Wilhelm Röpke (1899 - 1966)

"I champion an economic order ruled by free prices and markets...the only economic order compatible with human freedom." ~ Wilhelm Röpke, A Human Economy, p. 6.

On this date in 1966 Wilhelm Röpke entered his eternal rest.

Wilhelm Röpke devoted his scholarly career to combating collectivism in economic, social, and political theory. As a student and proponent of the Austrian School, he contributed to its theoretical structure and political vision, warning of the dangers of political consolidation and underscoring the connection between culture and economic systems. More than any other Austrian of his time, he explored the ethical foundations of a market-based social order. 

He defended the free market from socialist cultural critics by pointing out that social crises and cultural decline are not the product of the free society; one needs to look to state control, political centralization, welfare, and inflation as a primary source of social decay. Röpke influenced the direction of post-war German economic reform, became a leading intellectual force in shaping the post-war American conservative movement, particularly its "fusionist" branch, and has been compared with Mises as an archetype of the individualist thinker

Röpke was born on October 10, 1899, at Schwarmstedt in Hannover, Germany. He was the son of a physician who brought him up in the classical and Protestant Christian tradition. Serving in the Germany army during World War I, he was shocked by the sheer brutality of war, and it had a profound effect on his life. He became, in his words, "a fervent hater of war, of brutal and stupid national pride, of the greed for domination and of every collective outrage against ethics."

Consistent with intellectual trends, Röpke initially blamed war on capitalist imperialism and was drawn toward socialism as its only alternative. But he had a change of mind after reading Ludwig von Mises's Nation, State, and Economy, published in 1919. That work was, "in many ways the redeeming answer to the many questions tormenting a young man who had just come back from the trenches." A socialist economy was, necessarily, an internationally planned economy. Such a regime would seriously hinder international trade, which generates cooperation between nations and decreases the likelihood of war. The only form of socialism compatible with international trade, he concluded, is the national variety, which Röpke could not abide. He then recognized socialism for what it is: collectivism through empowerment of the state.

Read the rest here

For some of the best of Röpke's economic work, I recommend his Economics of a Free Society and Against the Tide.

Mises Quote of the Day: Christianity and Capitalism

From Theory and History by Ludwig von Mises:

"There is nothing in any ethical doctrine or in the teachings of any of the creeds based on the Ten Commandments that could justify the condemnation of an economic system which has multiplied the population and provides the masses in the capitalistic countries with the highest standard of living ever attained in history. From the religious point of view, too, the drop in infant mortality, the prolongation of the average length of life, the successful fight against plagues and disease, the disappearance of famines, illiteracy, and superstition tell in favor of capitalism" (Theory of History, p. 343).

There  are some who wish to drive an immovable wedge between the economics of Ludwig von Mises and Christian faith and practice. Some have even argued, that Mises himself thought that sound economics was incompatible with Christianity. However, by the end of his life, (Theory and History was published in 1958, when Mises was 76 years old) he does not seem to have thought that there is such an inseparable gulf.