Stealth No More
11-Jan-06: "...it'll inevitably come down this year... however, we want it to come down slowly and not do damage to the economy" - Linda Nazareth on ROB TV this morning discussing a rebound in the weekly US MBA Index (mortgages / purchase applications).
A perfectly innocent statement provided that it does not call on an intervention by the state in the name of the public interest. Else, it surely would damage the economy, whether it comes down slowly or not. And whether Ms. Nazareth meant it or not the progressive mind today certainly does attach the additional meaning to her statement; it reaffirms their position that the state "should" ensure that the figure comes down slowly, since many have mortgages.
The policy of the central bank - manipulation of interest rates and a concomitant expansion of reserves - is as much an intervention as any... actually... it is the LARGEST single intervening fact in the "economy" as business cycle theory reveals. Ludwig von Mises, who developed the theory of the business cycle, said that:
"Economic interventionism is a self-defeating policy. The individual measures that it applies do not achieve the results sought" - Ludwig von Mises, Bureaucracy.
Liberty is not a static concept. Civilization is constantly moving toward or away from it. Moving toward it involves the repeal of many laws, especially those regulating commerce (in recognition of the fact that the market itself is a better and more just regulator of these affairs than one special interest lobby or other); moving away from it means expanding the role of law in regulating trade.
The gradual repeal of laws and securing of private property rights, the hallmark of the classical period of liberalism, will lead to a concept that Mises dubbed "consumer sovereignty", while expanding regulation often comes at the expense of property rights, and in any case leads to a form of "producer sovereignty." The former (consumer sovereignty) is a free market. The latter is what economists call mercantilism, defined as follows at Mises.org:
Mercantilism: "The theories of some sixteenth and seventeenth century writers based on the belief that the gain of one man or one nation must represent the loss of another [i.e. similar to Marx's Theory] and that the precious metals were always the most desirable form of wealth. In increase a nation's wealth, they advocated the national regulation of foreign trade in a manner thought would increase merchandise exports and hamper merchandise imports, thus creating of the precious metals. This is still called a "favorable balance of trade." The nineteenth century advocates of such policies are called neo-mercantilists" - Mises Made Easier
Not all gold bulls are free market types, after all. The precious metals are money, not wealth.
Missing in that definition is its relationship to the concept of industrial cartelization, which is an anti-competitive (and monopolistic) practice that sometimes shares with mercantilism in the booty derived of certain laws - at the expense of competition, and thus the consumer (which is effectively every individual - even the mercantilists themselves end up paying more for the goods and services that they have to buy in order to live - for as Mises said, quoted above, intervention is a self-defeating policy). These days, interventionism is almost a fad... one that is fundamentally at odds with freedom, justice and prosperity in the Mises-Rothbardian way.
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