Wednesday, August 11, 2010

Depression in Color

These images, by photographers of the Farm Security Administration/Office of War Information, are some of the only color photographs taken of the effects of the Depression on America’s rural and small town populations. The photographs are the property of the Library of Congress and were included in a 2006 exhibit Bound for Glory: America in Color.


Tuesday, March 23, 2010

What Could Possibly Go Wrong?


Wednesday, March 3, 2010


Cole Thomas - The Course of Empire, 1836


Tuesday, March 2, 2010

The Destruction of Empire

Cole Thomas - The Course of Empire, 1836


Monday, March 1, 2010

The Consummation of Empire

Cole Thomas - The Course of Empire, 1836


Sunday, February 28, 2010

The Arcadian or Pastoral State

Cole Thomas - The Course of Empire, 1836


Saturday, February 27, 2010

The Savage State

Cole Thomas - The Course of Empire, 1836


Thursday, February 11, 2010

On the Minimum Wage

All this is not to argue that there is no way of raising wages. It is merely to point out that the apparently easy method of raising them by government fiat is the wrong way and the worst way.

This is perhaps as good a place as any to point out that what distinguishes many reformers from those who cannot accept their proposals is not their greater philanthropy, but their greater impatience. The question is not whether we wish to see everybody as well off as possible. Among men of good will such an aim can be taken for granted. The real question concerns the proper means of achieving it. And in trying to answer this we must never lose sight of a few elementary truisms. We cannot distribute more wealth than is created. We cannot in the long run pay labor as a whole more than it produces.

The best way to raise wages, therefore, is to raise marginal labor productivity. This can be done by many methods: by an increase in capital accumulation — i.e., by an increase in the machines with which the workers are aided; by new inventions and improvements; by more efficient management on the part of employers; by more industriousness and efficiency on the part of workers; by better education and training. The more the individual worker produces, the more he increases the wealth of the whole community. The more he produces, the more his services are worth to consumers, and hence to employers. And the more he is worth to employers, the more he will be paid. Real wages come out of production, not out of government decrees.

So government policy should be directed, not to imposing more burdensome requirements on employers, but to following policies that encourage profits, that encourage employers to expand, to invest in newer and better machines to increase the productivity of workers — in brief, to encourage capital accumulation, instead of discouraging it—and to increase both employment and wage rates.

Economics in One Lesson - Henry Hazlitt p. 139


Wednesday, February 10, 2010

On Government Price Fixing

The government may try to assure supply through extending its control over the costs of production of a commodity. To hold down the retail price of beef, for example, it may fix the wholesale price of beef, the slaughter-house price of beef, the price of live cattle, the price of feed, the wages of farmhands. To hold down the delivered price of milk, it may try to fix the wages of milk truck drivers, the price of containers, the farm price of milk, the price of feedstuffs. To fix the price of bread, it may fix the wages in bakeries, the price of flour, the profits of millers, the price of wheat, and so on.

But as the government extends this price-fixing backwards, it extends at the same time the consequences that originally drove it to this course. Assuming that it has the courage to fix these costs, and is able to enforce its decisions, then it merely, in turn, creates shortages of the various factors — labor, feedstuffs, wheat, or whatever—that enter into the production of the final commodities. Thus the government is driven to controls in ever-widening circles, and the final consequence will be the same as that of universal price-fixing.

The government may try to meet this difficulty through subsidies. It recognizes, for example, that when it keeps the price of milk or butter below the level of the market, or below the relative level at which it fixes other prices, a shortage may result because of lower wages or profit margins for the production of milk or butter as compared with other commodities. Therefore the government attempts to compensate for this by paying a subsidy to the milk and butter producers. Passing over the administrative difficulties involved in this, and assuming that the subsidy is just enough to assure the desired relative production of milk and butter, it is clear that, though the subsidy is paid to producers, those who are really being subsidized are the consumers. For the producers are on net balance getting no more for their milk and butter than if they had been allowed to charge the free market price in the first place; but the consumers are getting their milk and butter at a great deal below the free market price. They are being subsidized to the extent of the difference—that is, by the amount of subsidy paid ostensibly to the producers.

Now unless the subsidized commodity is also rationed, it is those with the most purchasing power that can buy most of it. This means that they are being subsidized more than those with less purchasing power. Who subsidizes the consumers will depend upon the incidence of taxation. But men in their role of taxpayers will be subsidizing themselves in their role of consumers. It becomes a little difficult to trace in this maze precisely who is subsidizing whom. What is forgotten is that subsidies are paid for by someone, and that no method has been discovered by which the community gets something for nothing.

Economics in One Lesson - Henry Hazlitt p. 121-122


Tuesday, February 9, 2010

The Price System

Everything, in short, is produced at the expense of forgoing something else. Costs of production themselves, in fact, might be defined as the things that are given up (the leisure and pleasures, the raw materials with alternative potential uses) in order to create the thing that is made.

It follows that it is just as essential for the health of a dynamic economy that dying industries should be allowed to die as that growing industries should be allowed to grow. For the dying industries absorb labor and capital that should be released for the growing industries. It is only the much vilified price system that solves the enormously complicated problem of deciding precisely how much of tens of thousands of different commodities and services should be produced in relation to each other. These otherwise bewildering equations are solved quasi-automatically by the system of prices, profits and costs. They are solved by this system incomparably better than any group of bureaucrats could solve them. For they are solved by a system under which each consumer makes his own demand and casts a fresh vote, or a dozen fresh votes, every day; whereas bureaucrats would try to solve it by having made for the consumers, not what the consumers themselves wanted, but what the bureaucrats decided was good for them. Yet though the bureaucrats do not understand the quasi-automatic system of the market, they are always disturbed by it. They are always trying to improve it or correct it, usually in the interests of some wailing pressure group. What some of the results of their intervention are, we shall examine in succeeding chapters.

Economics in One Lesson - Henry Hazlitt p. 108-109


Economics in One Lesson

By far the most concise and easy to digest economics book I have read is Economics in One Lesson by Henry Hazlitt. It deftly dispatches a wide range of well worn economic fallacies in a little over 200 pages. It, along with an amazing amount of other economic literature, can be found for free at the Foundation of Economic Education ( It is a classic cornerstone of any economic library, and after reading the pdf, I certainly recommend getting your own copy.

The Lesson

In this lies the whole difference between good economics and bad. The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences. The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.

The distinction may seem obvious. The precaution of looking for all the consequences of a given policy to everyone may seem elementary. Doesn't everybody know, in his personal life, that there are all sorts of indulgences delightful at the moment but disastrous in the end? Doesn't every little boy know that if he eats enough candy he will get sick? Doesn't the fellow who gets drunk know that he will wake up next morning with a ghastly stomach and a horrible head? Doesn't the dipsomaniac know that he is ruining his liver and shortening his life? Doesn't the Don Juan know that he is letting himself in for every sort of risk, from blackmail to disease? Finally, to bring it to the economic though still personal realm, do not the idler and the spendthrift know, even in the midst of their glorious fling, that they are heading for a future of debt and poverty?

Yet when we enter the field of public economics, these elementary truths are ignored. There are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as the way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: “In the long run we are all dead.” And such shallow wisecracks pass as devastating epigrams and the ripest wisdom.

But the tragedy is that, on the contrary, we are already suffering the long-run consequences of the policies of the remote or recent past. Today is already the tomorrow which the bad economist yesterday urged us to ignore. The long-run consequences of some economic policies may become evident in a few months. Others may not become evident for several years. Still others may not become evident for decades. But in every case those long-run consequences are contained in the policy as surely as the hen was in the egg, the flower in the seed.

From this aspect, therefore, the whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence.

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.


Monday, January 25, 2010

A Battle For the Ages


Friday, January 22, 2010

Paved With Good Intentions

Heralded as a win for the consumer, the new federal rules governing credit cards will no doubt have many unintended consequences. Lenders have already begun to raise introductory rates. With other rates capped, it stands to reason that yearly fees for more consumers will be implemented or increased to offset risk. Those who are deemed less creditworthy can certainly expect to have less credit extended in their direction. I would think the individual would like to make the determination if he is charged 25% or unable to get credit at all, not to have that determination made for him. This, along with extra regulation on payday lenders, leads me to believe more people will be driven to even more unscrupulous lenders - perhaps the local loanshark can still fulfill their needs.

Covered here at

But our governments — instead of viewing the supposed consumer crisis in terms of the question of why such potential card holders are, in fact, a risk, or from the reference point of moral hazard (via Federal Reserve protection) — have become duped into thinking that they can change market fundamentals.

The fact remains that deserving creditors demand to be rewarded for such reliability, and competition (via low interest rates, cash-back rewards, etc.) is the vehicle that delivers these rewards. Likewise, uncreditworthy recipients carry with them a liability that can only be compensated by higher yearly fees or rates of interest.

There is no hidden racial agenda or vast conspiracy on the behalf of the bourgeoisie. There are simply lenders and borrowers engaging in what they deem to be mutually beneficial transactions. Whether these transactions are, in actuality, beneficial or not is not a political question at all. Instead, it is an educational question, and a function of time.


Saturday, January 16, 2010

On Haiti

- From, some thoughts on charity and aid: Helping Haiti.

Those folks need our charity. Consider finding a suitable private organization and give, if only a little. Rest assured that charity and liberty go together. And realizing a psychic profit through helping others does add value to your world.
- A concise history of Haiti and some insight into their crushing poverty, from Degrees of Freedom:

Degrees of Freedom: A Brief History Of Haiti: Politics, Philosophy and Economics from a libertarian point of view.

- I also recall a chapter in Jared Diamond's Collapse that covered Haiti and the Dominican Republic. The picture above clearly shows the border between the two nations, and highlights the deforestation that exacerbates poverty and intensifies devastation from natural disasters.

From Collapse:
The Dominican Republic is also a developing country sharing Haiti's problems, but it is more developed and the problems are less acute, per capita income is five times higher, and the population density and population growth rates are lower. For the past 38 years the Dominican Republic has been at least nominally a democracy without any military coup, and with some presidential elections from 1978 onwards resulting in the defeat of the incumbent and the inauguration of a challenger, along with others marred by fraud and intimidation. Within the booming economy, industries earning foreign exchange include an iron and nickel mine, until recently a gold mine, and formerly a bauxite mine; industrial free trade zones that employ 200,000 workers and export overseas; agricultural exports that include coffee, cacao, tobacco, cigars, fresh flowers, and avocados (the Dominican Republic is the world's third largest exporter of avocados); telecommunications; and a large tourist industry. Several dozen dams generate hydroelectric power. As American sports fans know, the Dominican Republic also produces and exports great baseball players.