I answered this question on Quora. My answer was “No.” But it was a very detailed no. Here’s an excerpt:
Chavez was a true, dyed-in-the-wool socialist. He passed many reforms that would have crippled another nation. For instance, he made it illegal for private employers to fire anyone. Hiring an employee in Venezuela means paying that person a living wage until he quits or retires, regardless of whether he does any work or not. Imagine trying to run a business under that constraint! Chavez expanded state control of the economy in the name of socialism, but the country didn’t fall into chaos. As late as 2013, David Sirota was declaring it an “economic miracle.” This might seem like a win for socialist economics, but the truth is more dull than that.
Chris Stewart’s excellent podcast, The History of China, had an interesting discussion of an economic debate that happened in 734. The debate in the Tang court was between Chang Chiu-lin, a Confucian who favoured legalizing illicit minting, and many Legalist officials who opposed legalization. I was so intrigued that I read through the source material on the debate, a 1976 article by Penelope A. Herbert.
The background for the debate was an ongoing crisis of too little coinage to “meet the demands of trade.” This apparent shortage of coinage led many people to take up counterfeiting. Counterfeiters would mint coins with lower precious metal content than the official coins. They risked the death penalty if caught, but the privately minted coins were widely traded nonetheless. All the historical sources seem to agree that this was the problem, but as we know, economic problems are easy to misdiagnose.
This apparent lack of currency was confusing to me because any amount of currency can meet the demands of trade at the right price level. Herbert (1976) writes,
“For the first half of the [Tang] dynasty, the administration succeeded in confining the large scale activities of the merchants in the provincial urban centres and capitals to official markets, supervised by bureaucrats. The administration reserved the right to manipulate prices by a system of officially imposed price controls, based on the standard coinage.” (p. 258)
That clears things up. “Not enough coinage” apparently means that there’s not enough coinage to facilitate trade at the official prices. In other words, the official prices were habitually set too high! Nobody in the debate seems to have realized that you can just let prices float and they’ll converge on the appropriate price level for the amount of coinage you have. Continue reading The Tang Coinage Debate of 734→
Many accounts of the fall of Rome focus on military problems and the barbarian invasions. However, the Empire was in decline long before the barbarians showed up to finish it off. The barbarians didn’t kill the Roman Empire; the Roman Empire committed suicide. There were six important factors in the Empire’s decline:
1. Political violence became normalized.
The populist reformer Tiberius Gracchus redistributed public farmland to Roman citizens. His reforms angered the Senate, and his political enemies clubbed him to death in 133 BCE. This was the first open political assassination in Rome in nearly four centuries, but it wouldn’t be the last. Suddenly, it became acceptable for powerful Romans to kill their political enemies, and this would spell doom for Rome’s republican government.
2. The Roman state gave ever-increasing amounts of free food and entertainment to the masses.
Despite having killed Tiberius Gracchus, the senate did not repeal his reforms in an effort to assuage the masses. Tiberius’ brother Gaius Gracchus would take his brother’s position and further his reforms, also introducing a system of subsidized grain for the masses. When Gaius also succumbed to political violence, most of his reforms died with him, but not the grain dole. The dole was retained and expanded, proving a huge burden on the Roman state. Successive generations of Roman leaders would buy political popularity with panem et circenses (bread and circuses). The Roman people came to value the dole over all other values. When the emperor Caligula was assassinated, there was a brief opportunity to restore the Republic, but the people preferred the rule of strong men who could provide them with ever more panem et circenses.
What sounds more difficult to you, figuring out supply and demand, or accurately measuring the Earth’s circumference? It must be supply and demand, because Eratosthenes figured out the other one two thousand years before anyone really managed any progress on that supply-and-demand stuff.
So now that we’ve established that supply and demand is much harder than accurately measuring the Earth’s circumference, we should ask ourselves why it is so. If you don’t know how Eratosthenes managed it, try thinking for a moment about how you might go about accurately measuring the Earth’s circumference with only the tools available in Ancient Egypt. Hint: you can compute the circumference of a sphere with the arc length and angle between two points. Continue reading Economics and the Cognitive Minefield→
…it’s Aladdin’s attitude towards wealth and poverty. That’s what struck me while re-watching this thoroughly enjoyable movie. After being called a “street rat,” Aladdin tells Abu, “Someday, Abu, things are gonna change. We’ll be rich, live in a palace, and never have any problems at all.”
This is an extraordinary view for a peasant orphan in thirteenth century Arabia! It is a thoroughly modern view. Throughout most of history, if you were born into the lower classes, you lived in poverty. Your entire extended family lived in poverty. Everyone you knew, and all their ancestors stretching back as far as anyone could remember, lived in poverty. Imagining life without poverty would have been as fanciful as imagining life without gravity. Continue reading Aladdin’s Biggest Anachronism isn’t Genie’s Jack Nicholson Impression…→
As a Canadian, it’s very strange hearing Americans talk about the Great Depression. The American public education system apparently has a monolithic view on the subject. Based purely on my interactions with people who have passed through that system, I imagine their kindergarten classes must be something like this:
TEACHER: Alright students, what’s 1 + 1?
TEACHER: What’s 2 + 2?
TEACHER: What do you call someone who doubts the efficacy of FDR’s policies in bringing an end to the Great Depression?
The Great Depression is a complex historical event, so the level of confidence I see from American laymen certainly makes it seem like they’ve been brainwashed from a young age. Maybe it’s just the sort of Americans who make internet comments.
If you believe that it is clearly and obviously true that (1) the New Deal ended the Great Depression or that (2) World War 2 ended the Great Depression, this article is for you. I’m not going to make a slam-dunk case against these notions; if you’re looking for one, you’ll need to read something far longer than a blog post. I recommend Robert Higgs or Bob Murphy. My goal here is to make the case that these ideas, far from being obvious, are actually very counter intuitive given the facts. Continue reading The Prima Facie Case that Great Depression Policy was Really Really Bad→
JIMMY: Ever since Alan Greenspan became the Federal Reserve Chairman in the mid-80s, he’s just been bailing out Wall Street every chance he can get: the S&L crisis, the Tequila crisis in Mexico in the early 90’s, and the dot com bubble. You know, whenever there’s a problem he just prints and prints and prints, and so over the course of twenty years, Wall Street realized this. They took the risk out of the situation because they could make money when things were good and then when things were bad, bailouts would be there.
GARRETT: Greenspan…had a reputation as a free-market guy. Some people got the wrong idea that Greenspan’s policies were somehow free market.
JIMMY: It’s funny, Greenspan wrote an article in favour of the gold standard in the 60s, and a lot of people point to that and talk about it, but when you look at somebody’s life, what matters is what their actual policies were and the things that they did. And the fact was that this is a guy that created bubble after bubble, and at the end he was creating a billion dollars a day just to keep everything going.
Jimmy Morrison is an independent filmmaker who is currently directing two films: The Housing Bubble and The Bigger Bubble. The Housing Bubble deals with the history of business cycles in America, spanning from the First World War to the 2008 crash. The Bigger Bubble deals with the aftermath of the 2008 crash. These films began as a single project, but Jimmy chose to split it into two films in order to tell the full story.
The Bubble is coming out at a crucial time in American history. Numerous films have blamed the free market for the economic woes of the country. Uniquely, Tom Woods has teamed up with experts such as Ron Paul, Peter Schiff, Jim Rogers, Marc Faber and Doug Casey to explain the economic problems America is facing and what is needed to restore prosperity.
You can’t watch the news today without hearing more calls for regulation. Deregulation is consistently the boogey man when it comes to sound bite explanations of this economic crisis. The public currently believes the government saved us during the Great Depression and that it will save us again today. America needs a simple economics lesson on this recession and Tom Woods has done just that in his book Meltdown. The Bubble successfully adapts Meltdown into a feature-length documentary.
The Bubble features interviews with numerous economists and financial analysts who actually predicted the housing crisis and recession. The people we are trusting to solve this problem claim no one saw it coming. The fact is Austrian economists predicted this recession years ago, and they are the only ones with the insight necessary to bring us out of this economic slide. This film asks them why this crisis happened, how we recover, and what America is facing.
Yes. Murray Rothbard was a prolific thinker whose contributions to economics were numerous, original, and significant.
His magnum opus, Man, Economy, and State, was the first complete treatise on economics in a half century. The book was originally meant to be a textbook version of Mises’ Human Action, but Rothbard built on Mises’ work to create a more complete body of thought. He contributed his own theory of production and supply, while critiquing Mises’ theory of monopoly as a static conception that did not fit with his generally dynamic view of the economy. Rothbard argued persuasively for a return to the original definition of a monopoly as a government grant of exclusive privilege.
His work in economic history is excellent. His book, The Panic of 1819: Reactions and Policies is the definitive work on the titular panic. America’s Great Depression applied Mises’ theory of the business cycle to the Great Depression, showing how the Fed under Benjamin Strong pumped up an inflationary bubble in the 1920’s, which led to the 1929 crash. He also demonstrated that Herbert Hoover was not a laissez faire President but a big-state interventionist, in opposition to what was commonly (and wrongly) believed at the time.
An Austrian Perspective on the History of Economic Thought, Rothbard’s two-volume work on the history of thought, is by far the most exhaustive history of economic thought up to 1870 (he tragically died before he could write a third volume covering the developments after 1870). While most histories of economic thought focus on a few key figures, maybe Smith, Ricardo, John Stuart Mill, Marx, and Keynes, Rothbard covers everyone. If someone had a passing thought about economics before 1870, and it came down to us in print somehow, Rothbard probably discusses it. While most histories of economic thought will treat Adam Smith as the inventor of the discipline (maybe with a passing nod to the French Physiocrats), Rothbard spends over 500 pages discussing the economic thinkers who preceded Smith, beginning with Aristotle. It turns out that economics had a rich history before Smith, and some earlier thinkers (Turgot and Cantillon) even surpassed Smith in many respects. Even if you disagree with Rothbard on absolutely everything else, he deserves credit for being an outstanding historian of economic thought.
In this episode, James Caton discusses the classical and inter-war gold standards. James is an economics PhD student at George Mason University.
Gold has many qualities that make it an ideal money: It is valuable, scarce, divisible, and easy to transport. It is also easy to verify the value of a given amount of gold: The Old Testament references weights and scales being used to measure gold. Ancient people could verify the purity of the gold by observing its water displacement.