Obama versus Ludwig von Mises
by Robert Wenzel: Jim
Rogers: Buy Real Assets; Inflation Is Here and It Is Going to Get
Obama has an Op-Ed
in today's WSJ calling for a review of all government regulations.
In his commentary surrounding this review, the views of the president
and those of the great economist Ludwig
von Mises could not be in greater contrast.
begins his Op-Ed by writing:
centuries, America's free market has not only been the source
of dazzling ideas and path-breaking products, it has also been
the greatest force for prosperity the world has ever known. That
vibrant entrepreneurialism is the key to our continued global
leadership and the success of our people.
our history, one of the reasons the free market has worked is
that we have sought the proper balance. We have preserved freedom
of commerce while applying those rules and regulations necessary
to protect the public against threats to our health and safety
and to safeguard people and businesses from abuse.
labor laws to the Clean Air Act to our most recent strictures
against hidden fees and penalties by credit card companies, we
have, from time to time, embraced common sense rules of the road
that strengthen our country without unduly interfering with the
pursuit of progress and the growth of our economy.
that the President speaks of can be viewed as a "middle-of-the-road"
policy. It is not unbridled free markets, but free markets with
restraints. This is what Professor Mises said about such a middle-of-the-road
simply no other choice than this: either to abstain from interference
in the free play of the market, or to delegate the entire management
of production and distribution to the government. Either capitalism
or socialism: there exists no middle way.
may appear at first harsh, but upon reflection it can be understood
that he is making a very important point. Mises is saying that any
intervention in the economy leads to other interventions, until
the full economy is engulfed in a sea of regulation, which we can
not call anything but socialism. Indeed, President Obama, in a way,
is acknowledging Mises view, when he calls for a review of regulations.
The President writes:
those rules have gotten out of balance, placing unreasonable burdens
on business burdens that have stifled innovation and have had
a chilling effect on growth and jobs
But how can
it be any other way, when we attempt a middle-of-the-road policy?
Consider an obvious situation, price controls. Once price controls
are placed on an economy shortages will develop. The regulation
won't stop there. The government then generally steps in to relieve
the shortages by rationing goods, but the price controls and rationing
leads to black markets, which results in a police force formed to
"protect" against the black market. To be effective, the
police force must expand surveillance of citizens to catch the black
marketeers. The black marketeers counter by using even more clever
ways of operating, which leads to even more loss of privacy, as
the police use ever more intrusive methods to attempt to catch them.
Interventionism never stops at the first regulation. Indeed, every
new regulation is like a starter gun being shot off, signaling for
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