Here’s a snippet from my article on Mises.org today:

“There is no denying that our economy is undergoing dramatic changes. That brings not just difficulty, but also opportunity for entrepreneurs. In fact, the “creative destruction” of the market is part of what drives economic growth.

Putting aside the causes of our current economic troubles (except to say free markets are not the culprit), we can’t forget that, though massive bubbles are not necessary, markets are by nature dynamic even in the most stable of times. This dynamism is not an evil to be avoided at all costs but the very thing that makes free economies so productive.”

And,

“…growth could not happen without both creation and destruction; it is the driver of growth, not a problem to be solved. If the economy were static — if jobs were never lost, prices never shifted up or down, investments never enjoyed large profits or major losses — we would not live in a stable utopia but a stagnant subsistence economy.”

Read the whole thing here.

For those who participated in Wednesday’s Tea Parties across the U.S. there seems a sense of both energy and confusion.  The energy appears largely to be generated by a motivation on the part of a large number of taxpayers to vent their frustration at big spending, taxing, debt, inflation and general government malfeasance.  The confusion seems to be on how to change it.

As I’ve said before, the real frustration should be (and largely is I think) at the entire political class, not at any one party or person.  Likewise if there is to be any positive outcome it can only occur with a major push towards policies aimed at curbing the grotesque appetite of the entire political class and returning to a more Madisonian conception of limited government.

Here are a few suggestions that I humbly submit to anyone who participated in the Tea Parties.  Any or all of these would, I think, create some real change in the direction of limited government, favorable to all taxpayers.

1. Vote out every single incumbent politician on both the federal and state level in the next series of elections.*

2. Enact term limits on all 538 federal lawmakers.

3. Impose a federal balanced budget amendment.

4. Require a 3/4 supermajority vote for any spending beyond the rate of inflation and population growth, state and federal.

5. Require a 3/4 supermajority vote for any tax or fee increase, state and federal.

6. Implement a strict monetary rule or commodity standard that the Federal Reserve must follow.

7. Put the entire government check register online at the state and federal levels.

*There may be a VERY small number of politicians who have not voted to increase spending, taxes, pork, earmarks or debt and who have respected the constitution through and through.  If so, I can probably count them on one hand and the odds are almost zero that your representative or senator is one of them.  The chance that you will take the time or even be able to find out who they are (or that you can trust any information you do find about them, especially considering much of it will come from their own office) is very, very small.  It’s better to simply vote out every single incumbent without exception than to search in vain (and expect others to do the same) for proof of innocence on the part of a few.  Ousting one or two or five good apples is a small price to pay for cleaning out hundreds and hundreds of rotten ones.

(Cross posted on the SFEblog)

Disagreeing with a man whose face appears on the necktie of many a freedom-lover is perhaps dangerous, but sound reason can’t be sacrificed on the altar of great men – and Smith was a great man.

Indeed, Adam Smith, in his depiction of the division of labor in a pin factory and his timeless prose on the invisible hand and the self-interest of the butcher, offers some of the greatest explanations and defenses of capitalism ever written, even some 230 years later. I consider Smith a great thinker, and a hero of liberty. That doesn’t mean he was never wrong; particularly when it comes to the question of value.

Some snippets from my article on generational wealth posted today on Mises.org:

"It is a great irony that prosperity affords posterity the luxury of forgetting its origins. Though not a hard-and-fast rule of societal evolution, generations who grow up wealthy often lack respect for or understanding of the values and ideas that generated the very wealth from which they benefit.

There is an honesty, realism, and practical virtue often accompanying generations that have to endure difficult labor that is sometimes lost on later generations that inherit a comfortable material life. This is not a new phenomenon but is present throughout history. Compare, for example, the life and work of the ancient Greek poet Hesiod with that of the great philosopher Aristotle some 300 years later." [...]

"Aristotle provided one of the best defenses for private property, and his work in logic and metaphysics remains unrivaled today. However, Aristotle’s political and economic thought leaves something to be desired by those who value free-market capitalism, the role of the entrepreneur, and the positive power of self-interest and individuality." [...]

"The main difference between these two men was their wealth and status. Hesiod, perhaps due to necessity, was a practical thinker. Extolling the virtues of hard work was not mere speculation; I doubt Hesiod could afford to look down his nose at labor. Aristotle, on the other hand, could afford to disparage trade and labor. The wealth of Greece provided opportunity for full-time teachers and thinkers to ponder anything they chose. Indeed, the power of wealth to fund such speculative philosophy is one of its greatest advantages, and as one who spends hours studying, I would not wish to return to a poor agrarian society. Still, such generational wealth carries with it a certain danger.

Anticapitalist theories share in common an inability to take human nature as it is. Rather than analyzing man as a complex creature who will always act to achieve what he perceives as good, anticapitalist theories tend to focus on what the theorist wishes man to be and often overlook the necessity of market exchange for human improvement. From the vantage of a moneyed aristocracy, it is easy to be “above” the hustle and bustle of the marketplace, and to pursue higher ideals than material prosperity — forgetting that such prosperity is what supports the hours of speculation.

I do not believe one must be poor to understand and appreciate capitalism, nor am I opposed to generational wealth or inheritances. It does seem, however, that there is a certain danger in living a life completely detached from market processes and the pursuit of wealth through production and trade." [...]