I’m enrolled in Macro Economics this term, from what I’ve heard the professors at my school are overwhelmingly Keynesians; the very separation of Macro Economics from Micro Economics is contrary to the Austrian School, with which I place myself, so this semester I will be posting, each week, what I learned in the class and whether I agree with it or not.
The Free Speech board has, unfortunately, only had ‘how to get better’ topics so far this year, hopefully nest week I can post about it again.
Protectionism
One of the biggest challenges I’ve faced while debating about libertarianism is related to protectionism, which basically means stopping other countries from trading with the US or stopping US companies from exporting jobs out of the US.
The biggest arguments for this, which are related, are:
Americans will lose jobs
This is a first level problem; that is, it is a problem with people only looking at the first level of the situation, but not looking further.
When jobs are exported or companies lose business as a result of foreign competition Americans will likely lose jobs, that’s how it works. However, it does not just stop there, the people don’t lose their jobs and then go live on the street and starve to death, while all other variables stay the same; the world is not just some senseless Twilight Zone episode.
After these jobs are transferred overseas Americans are allowed to move into jobs which make more economic sense (because the wages are bidding their scarce labor into them) and they probably prefer (if they liked their old job enough they would have taken a lower wage).
Also, the moving of these jobs increases the specialization and division of labor; it is similar to someone moving up the ranks in a company. Just as it would be possible and more efficient for a CEO (one who worked his way up from the bottom) to do a job in the factory, but it is too expensive and nonsensical for him to do this job when he would do a lot better running the company, it would be possible for Americans to do certain jobs but it makes more sense for those jobs to be allocated elsewhere.
Dumping
While the first argument is for stopping American companies from sending jobs out of America, the second is for instituting tariffs to keep foreign companies out of American markets (which in turn force the loss of American jobs).
It is an extremely fallacious argument to contend that it would be bad foreign companies to compete at all with American companies. Competition is the reason the free markets works well, consumers choose which ever product they feel is best suited to their needs, if that product is made by a foreign company, then so be it.
The argument with dumping is that a foreign company (supported by the government or not) will sell goods to American consumers at less than cost to gain market share, and then raise the price to levels unaffordable to Americans.
This should take, at most, a few minutes of thought before the argument is tossed away. The company in question would need to drop prices so low to completely push all other competitors out of business that not only would it be likely to ever happen, but it would take years to gain the money back, during that time there is nothing stopping the old competitors from coming back or new entrepreneurs from entering the business and competing with the dumping company. Also, I find it hard to believe a company could sustain while losing this much money to push competitors out of business.
Even if dumping did work and happened how could it logically be stopped? There is no real possible way to find the cost a company has in making something, its future goals and how it decided on its price.
Abortion
During the past few weeks I have been struggling to reconcile my beliefs against abortion and its legality with anarchism.
At first I thought there’s no way abortion can be illegal, a baby can be an unwanted presence who is an invasion and a parasite. Though many pro-lifers will deny this statement, it is technically true (in some cases, when the mother does not want the baby) and it is extremely not useful to take one sheltered look at something, without considering the other side of the argument.
If a bum walked onto someone property and stole his food and refused to leave, in libertarianism, it would be within someone’s rights to kill that man, or at the very least make him leave, which could possibly result in his death.
How then can the illegality of abortion be justified?
Let’s go back to the bum, what if the owner of the property had forced him onto the property and he had no way to escape? It would then not be legal for the owner to kill the bum.
In the same vein it should be illegal for a woman to kill the baby who she and her partner have created.
Economics in One Lesson
This book, by Henry Hazlitt, is perhaps the most prolific in leading people into the Austrian School. Hazlitt was not an economist as much as he was a journalist; he edited Mises’ Human Action and also wrote a book, The Failure of the New Economics, which refuted Keynes’ General Theory line by line.
In this book Hazlitt uses his ‘one lesson,’ which is, in a policy, to look at every outcome for all groups of people, not just the immediate outcome for one group. He then proceeds to apply it to all the popular policies of the day, which coincidentally are all pretty popular today as well.
Hazlitt’s book holds up very well today, and is a great way to introduce the free-market economics which are usually contrary to what one first thinks about policies. Plus the book is less than 200 pages long so it can be read in a couple of days or weeks, even by the busy libertarian.
Quote of the Week
It is error alone which needs the support of government. Truth can stand by itself.
– Thomas Jefferson
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