Hazlitt vs. Hansen

This is the second of my completed research papers here at the 2006 Ludwig von Mises Institute Summer Student Fellowship program. In this paper I write about the differences in each author's analysis of the General Theory and their own arguments against and for Keynesian economic doctrine.

Hazzlit vs. Hansen: Differences in the Analysis of the General Theory

Reflections

When I was younger, probably around the age of nine, I remember attending a Cuban banquet with my parents. During this stage of my life, my parents were very social and often attended events held by family friends. However, later on in my life my parents no longer began to go to these social events and it bothered me quite a bit for I whole-heartedly enjoyed these get-togethers. The groups were separated into kids and adults but often times my interests never matched those of my fellow youth. Throughout my youth I had two passions, politics and video games; seldom were there other youth that shared my interests. That said, at this specific banquet there were many exiles and the number conversations of Cuba's unnecessary demise were endless. At some point in time at this banquet, I remarked to one of my fellow youth that there was one good thing that came out of Cuba's unfortunate situation, my birth. This is completely true, if it were not for the communist revolution in Cuba my parents would have never fled the island and subsequently been introduced to one another in the United States.

I stated this with the primal understanding of life; that it is better to be alive than dead. What I had not realized, that I later would, were the ethical consequences of my statements. Why should thousands of people suffer and die, involuntarily may I add, solely to bring about my birth. Such a comment was wholly selfish and unethical. I look back at that statement and am somewhat embarrassed. It is important to understand, especially in libertarianism, that one's life is not worth the lives of others; such a claim is foolish and immoral. As time goes by individuals must understand that the means don't justify the ends. A better Iraq doesn't justify an invasion that killed thousands and maimed many more; inflation isn't justifiable because it stabilizes the market, even though this is completely false; and my birth doesn't justify the thousands that died. The hardest task for some individuals is recognizing that compassion is righteous and that selfishness, when defeating the natural institution of property rights, is evil.

On Decommissioning The Penny

It seems as if the decommissioning of the penny is the new "hot topic" in the business and economics sections of current publications. There are quite a number of individuals calling for the demise of the copper colored coin yet others find it to be a worthwhile “tradition” that should be continued for the sake of it. The pork-barrelers in Washington seem to love the idea of decommissioning the penny and significant changes in monetary policy as long as it allows for a increase in the amount of revenue collected for their wasteful plans. Congressmen propose rounding up taxes and prices once the penny is put to rest; rounding up mind you, never down. Government never decreases its size nor does it reduce taxation through its own volition and the American people can be certain that any monetary change that will come about will not be in our favor. One can almost picture the politicians in Congress scrambling over this issue, trying to find a way to make a few bucks off the misery of the citizenry.

That said, what is neglected by those individuals that pay so much attention to the upcoming death of the penny is how we got to this scenario in the first place. How is it that a penny is now virtually worthless while in the 19th century such a coin could have bought much more? How is it that if an individual walked down the street and saw a glimmering penny on the floor that they would not pick it up yet back in the day such a waste of purchasing power was unthinkable. In order to become better acquainted with the true devaluation of the penny, individuals should take a look at catalogs left over from the 19th century. Individuals will find that a couple pennies could have bought quite a lot and that most things in these catalogs are priced at a certain number of pennies. This scenario is comparable to the grandmother that gives fifty cents to her grandchild to go indulge in sweets yet the child immediately recognizes that those fifty cents are going to purchase very little.

So, how is it that our money has become so worthless? The answer is simple, inflation. Inflation has been the scourge of our monetary system for sometime. It has served no purpose but to richen the coffers of the government and sap the hard earned wealth of all individuals who actively use the dollar for commercial transactions. The Federal Reserve and its cronies are constantly in the process of printing up more money and degrading the purchasing power of all outstanding bills. These scoundrels print up this new money and then use it to purchase goods by masking these dollars in their current purchasing power and not at their real purchasing power. This creates a differential in the relationship between investment and genuine saving. When new money is printed and introduced into the economy, mainly vis-a-vis bank loans and open market operations, investment begins to surpass genuine savings. How is this bad you ask? This creates the economic phenomenon of malinvestment. These investments that should have not, or otherwise would have not, been made. These investments later fail and due to a decrease in the creation of new money, these malinvestments fall and a recession immediately follows. Austrians view a recession not so much as a negative occurrence but as the market's answer to the malinvestment that has taken place. This expansion of the money supply spurs a rise in prices, making it harder on those who live on fixed salaries to adjust their incomes to the increasing costs of living (i.e., a decrease in the real wage sets in as the money supply is increased).

Hence, when individuals speak in favor of the decommissioning of the penny, they must look deeper into the problem and find the source of our monetary devaluation. Individuals must understand that the Federal Reserve is comparable to a band of thieves that roam the land robbing individuals of the fruits of their labor. We must not seek the decommissioning of the penny as much as an end to this horrid inflationary central bank and push for a resurgence of hard money policy.

LewRockwell.com Post

Take a look at my article on The Economics of 'World of Warcraft' that was posted on Lew Rockwell. Got quite a few humorous remarks from the post!

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The Economics of World of Warcraft

Here I delve into the economic fundamentals present within one of the most famous computer games of all time, World of Warcraft.

The Economics of World of Warcraft

Benjamin Franklin, a proto-Keynesian?

Here I explore the mercantilist writings of Benjamin Franklin and compare his thoughts concerning economic activity to the same branch of flawed economic reasoning that gave birth to Keynes' General Theory.

Benjamin Franklin, a proto-Keynesian?

New Mises Institute Freedom Calender

This is the new Ludwig von Mises Institute Freedom Calendar I helped create with Mr. Tucker. Check it out, it is very interesting.