The idea of using a minimum wage to overcome poverty is old, honorable—and fundamentally flawed.— The New York Times…. in 1987.
To undertake the direction of the economic life of people with widely divergent ideals and values is to assume responsibilities which commit one to the use of force; it is to assume a position where the best intentions cannot prevent one from being forced to act in a way which to some of those affected must appear highly immoral. (244-5)— F.A. Hayek, The Road to Serfdom
One has only to visualize the problems raised by economic planning of even an area such as western Europe to see that the moral bases for such an undertaking are completely lacking. Who imagines that there exist any common ideals of distributive justice such as will make the Norwegian fisherman consent to forego the prospect of economic improvement in order to help his Portuguese fellow, or the Dutch worker to pay more for his bicycle to help the Coventry mechanic, or the French peasant to pay more taxes to assist the industrialization of Italy? If most people are not willing to see the difficulty, this is mainly because, consciously or unconsciously, they assume that it will be they who will settle these questions for the others, and because they are convinced of their own capacity to do this justly and equitably. (243)—
F.A. Hayek, The Road to Serfdom
"If most people are not willing to see the difficulty, this is mainly because, consciously or unconsciously, they assume that it will be they who will settle these questions for the others."
Modern liberalism, FTW.
To me the Bitcoin phenomenon illustrates at least two important concepts: competition is good, and technology moves faster than lawmakers or regulators do.—
— Peter Schiff, The Real Crash, Chapter 4
A good example of confused deregulation was the Gramm-Leach-Bliley Act of 1999, removing some barriers to what banks could do. It was heralded by conservatives at the time as free market reform and then blamed by liberals in 2008 as reckless deregulation. But both critics and defenders tried to defend and explain Gramm-Leach-Bliley outside of its context. Here’s the context. The 1933 law that created the FDIC was sponsored by Senators Glass & Steegall […]
In addition to creating the FDIC, Glass-Steagall also prohibited bank holding companies from owning other sorts of financial institutions. Basically, commercial banks couldn’t also be investment banks. In the event of the financial crisis of 2008, when liberals were blaming deregulation for our problems, most of the blame was placed on “the repeal of Glass-Steagall.” This was a reference to Gramm-Leach-Bliley, signed by President Clinton in 1999. But Gramm-Leach-Bliley did not repeal Glass-Steagall. If it had, it would have abolished the implicit bailout provided by the FDIC. But instead, it just removed the regulation that had tried to contain some of the moral hazard created by the FDIC. In other words, the market used to regulate banks; Glass-Steagall killed the market regulation and replaced it with government regulation; Gramm-Leach-Bliley killed the government regulation but didn’t replace it with anything.
Right now the markets are going to continue to decline as long as the Fed stays on this taper timeline, and I think the Fed is going to be cognizant of that. If you remember, they are basing the taper on the recovery, which is the result of the wealth effect of a rising stock market and a rising real estate market that allows us to […] borrow more money and buy more stuff that we can’t afford. But as these asset bubbles deflate—because the Fed threatens to remove the props—now all of a sudden the recovery disappears, we’re headed right back into recession, and the only way to stop the markets from falling and to revive the illusion of a recovery is to do more QE. And that is exactly what the Fed is going to do, unfortunately […]
…You should be getting out of the US dollar. Because ultimately that’s going to be the big casualty here. When the Fed surprises everybody and does more QE, and people realize the box that we’re in—that it’s QE infinity, that there is no exit strategy, exit is impossible, that it’s ever larger doses of this monetary heroin—the bottom is going to drop out of the dollar. An economy that lives by QE, dies by QE.
We will attempt intelligent and courageous deflation, and strike at government borrowing which enlarges the evil, and we will attack high cost of government with every energy and facility which attend Republican capacity. We promise that relief which will attend the halting of waste and extravagance, and the renewal of the practice of public economy, not alone because it will relieve tax burdens but because it will be an example to stimulate thrift and economy in private life.—
President Warren Harding, about the depression of 1920-21. If only we had a president with the courage to prescribe the same medicine.
Harding, unlike our political class today, actually understood [economics]. The 20th-century president we’re most taught to hate saw the United States through an even worse downturn than the one we’re experiencing now by simply allowing the free market to make the necessary adjustments. And Harding, as his remarks indicate, pursued the policies he did not out of inertia or because he was incapable of conceiving of alternative approaches. This despised figure was in fact a far better economist than most of the geniuses who presume to instruct us now.
I came across Harding’s quote while listening to Peter Schiff’s The Real Crash.