by Alex Chafuen
Before jumps in inflation I used to see articles like this in Argentina. This piece by Steve Conover appearing in the AEI magazine argues that the “[l]ack of sufficient economic growth is behind most if not all of our fiscal and monetary problems,” and so printing money is not so bad. The current manipulation of money and credit is very dangerous. No doubt that an increase in the demand for cash holdings (what some call “velocity of circulation,” as if money would have an engine. . .) can off-set the printing of money, but there is a limit.
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You will soon discover that Human Action by Ludwig von Mises is the monumental and magisterial economic treatise of the 20th century. As the owner, you will return to it constantly throughout your life. You will likely never master its contents. It has a way of seeming to be new every time you pick it up. It’s a focussed book with one big distraction: you can’t help but wonder how one man could have achieved this.
What strikes me as especially remarkable are the circumstances under which it came to be written. Ludwig von Mises went into exile from Austria in 1934 ahead of the German invasion and Nazi Party takeover of the country. He landed in safety in Geneva. He went to work there, quietly for fully six years. At the end of that period, the mighty book first appeared. But it appeared in German in the midst of the war, and had no chance for any kind of literary success. Sadly, the first iteration made no impact whatsoever.
He was now sixty years old, and under pressure to leave Geneva. He came to the United States, and chose to live in New York. He had no job. His book had been burned by the German armies. His papers were confiscated. He had nothing but a reputation as the last of a dying breed of intellectuals. He did have a few friends, among them Henry Hazlitt, a well-connected editor at the New York Times. Hazlitt put him in touch with an editor at Yale University Press, which published over the following four years two books.
Then the editor came to him, perhaps in 1947, and asked him to translate his 1940 book. Mises was reluctant but Hazlitt talked him into it. It was completed two years later, but it came in at 1,000 pages. Yale started getting cold feet. They looked for academic peers to endorse the effort but failed to find them. Some of the rejection letters came from people who should have known better. Finally, Fritz Machlup, then teaching at Harvard, came to the rescue and it was published.
The sales were surprisingly good for an academic book. But even then, it was far from enjoying popular fame. That would have to wait until after the botched 2nd edition (1963) and then finally the 3rd edition which came out in 1966. Mises died 7 years later, before the collapse of the Keynesian consensus, the collapse of socialism, and the mess made by central banking in the 1970s. It was these events that caused so many to turn to the master for explanations. They found them in Human Action.
To review, Mises started working on this book in 1934. It didn’t achieve fame and influence until perhaps 40 years later. Think about that when you consider the power of ideas and the job of an intellectual. We absolutely must think about the long term, do our best possible work, and have confidence in the future. That’s the great lesson of this amazing book.
Now you own it. Learn from it. Return to it again and again. May it always be with us, widely circulated in every land and every language, forever.
Related Articles – History, History of Economic Thought
The economic and ethical case for a policy of free trade does not depend upon the actions of other governments. Contrary to protectionists’ incessant insistence, residents of the home country gain from their own government leaving them free to trade even if foreign governments – as foreign governments almost always do – use tariffs, subsidies, and other interventions to obstruct and distort their own citizens’ global commercial relations.
The case for free trade, in short, is unilateral. It’s a case that most economists from Adam Smith onward have endorsed and further strengthened. (Note to pedants: I’m aware that Adam Smith mentioned theoretical exceptions to a policy of unilateral free trade. But if you assert that, in doing so, Smith thereby denied that there should be a strong presumption in favor of a policy of unilateral free trade you reveal that, if you’ve read Smith at all, you’ve done so only cursorily.)
Protectionists, of course, dissent from economists’ support for a policy of unilateral free trade. Yet protectionists do so using legerdemain designed to permit them to pose as the only real and most righteous of free-trade’s defenders.
Free Trade Is a Domestic Policy, Not a Global Condition
Protectionists define free trade differently than do economists. Economists (and all knowledgeable free traders) define free trade exclusively as a domestic condition – that is, as a policy to be adopted or not by the home government. If adopted, the home government remains blind to the nationality of its citizens’ trading partners; the home government neither uniquely obstructs nor stimulates its citizens’ trade with foreigners. In any country in which individuals and firms are left free by the government there to buy, sell, invest, and disinvest as they choose regardless of the nationality or location of their trading partners, there reigns free trade.
In sharp contrast, protectionists define free trade as a global condition. For protectio0nists, free trade reigns if and only if no government on earth intervenes in any way that might affect the details of how its citizens engage commercially with people in other countries. With free trade defined as such, nearly all protectionists today gaudily announce their allegiance to it.
This stance might be called the “I’m a free-trader but….” position. For protectionists, standing firm in this position is convenient and cheap. It allows them to pose as free-trade’s staunchest friends in principle without their ever having to abandon protectionist sentiments in practice. Because in practice the world will always feature governments that use tariffs and subsidies, and in practice protectionists will never be without a ready excuse for their governments to use tariffs and subsidies.
Indeed, even if by some happy miracle all foreign governments immediately, unconditionally, and permanently eliminated all tariffs and export subsidies, protectionists would nevertheless offer ample excuses for their own governments’ continued use of tariffs and subsidies. If history is a guide – and, of course, it is – protectionists would allege that economic policies apparently internal to foreign countries are ones that nevertheless, when their full effects are traced out, negatively affect the international economy and, therefore, warrant protectionist policies at home.
One familiar such foreign-government policy involves legislated labor standards. Protectionists in the United States and other wealthy countries today are quick to call for tariffs to be levied at home in response to the failure of governments of poorer countries to impose workplace-safety rules, collective-bargaining privileges, and other labor standards that are as high as those imposed by governments of wealthy countries.
Lower government-imposed labor standards abroad are not only said to give firms and workers in poor countries “unfair” advantages over firms and workers in rich countries. Lower labor standards abroad also are declared by rich-country protectionists to be such an affront to human decency that rich-country governments are bound by the precepts of morality to impose tariffs on imports from poor countries in order to ‘punish’ poor-country governments for their inhumanity.
Similarly, protectionists often point to foreign governments’ lower environmental standards, and even to their lower taxes, as justifications for the use at home of tariffs and subsidies.
In short, almost every conceivable act by any government will have some effects that potentially ripple out, if unintentionally, to affect global commerce. It follows that the typical protectionist, who declares that a policy of free trade at home is advisable only when the policies of other governments have zero effects on global commerce, will in practice always have excuses for tariffs and subsidies.
Likewise, because no two governments follow precisely identical policies on all matters, protectionists will forever be able to point to foreign-government policies that allegedly so offend human decency that the home government is declared to be ethically obliged to prevent its citizens from trading freely with citizens of those benighted foreign countries. The fact that trade restrictions at home are presumptively unjust and economically harmful to protectionists’ fellow citizens seems, curiously, never to occur to protectionists.
The coherent and correct case for free trade is, again, a case for unilateral free trade, one that applies to each country individually. While exceptions might be acceptably carved out in isolated circumstances – such as if a solid case is made that free trade in (say) plutonium creates excessively high national-security risks – the strong presumption ought always to be that private citizen Smith should never be obstructed by his or her government from engaging peacefully in whatever commerce Smith wishes to engage in with Jones. This presumption should hold not only regardless of Jones’s nationality or place of residence, but also regardless of whatever particular trade and other policies are, or are imagined to be, practiced by the government that asserts sovereignty over Jones.