• Barnacles

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    are hard-shell-encased creatures often found on the sides of ships.
    They are of concern to people mostly because of the drag they increase,
    causing shipping companies increased cost; one
    led to the calculation that over 41 million barrels
    of oil are wasted due to them, costing over $2 billion with oil
    at $50 per barrel. Of course, the sides of ships are not their usual
    place of residence, which is typically near the shore and in the
    inter-tidal zone.

    The seacoast
    is a harsh but productive environment for life; waves constantly
    pound upon rock, to say nothing of the effects of storms. In this
    situation, one would expect that the inter-tidal barnacles, taking
    the constant assault of water and wind, would have sturdier shells
    than ones of the same species living on the calmer nearby ocean
    bottoms. In fact, the exact opposite effect obtains: barnacles in
    gentler waters have stronger shells. The reason is evolutionarily
    simple: barnacles exposed by the tides and battered by the waves
    are more subject to predation and early death, and so more of their
    life energy goes toward reproduction rather than building a tougher
    shell before death takes them; a barnacle near the shore that built
    a sturdier shell would get out-bred by faster-reproducing ones,
    and so become extinct.

    One attraction
    of Austrian economics reflects its grounding in the long tradition
    of natural law; economic laws are not made, but discovered, and
    they are in force whether one recognizes or chooses to acknowledge
    them. The same economizing that the barnacles must undertake in
    the face of strife should likewise apply with other living creatures,
    including man. In the area of constructing living quarters, one
    can see some of the same effects encapsulated in the expression
    "they do not build them like they used to."

    , each alike in dignity, show the effects of battering
    of stormy seas on economic life. One has recently undergone renovation,
    melding older and newer construction, and the other is largely unchanged
    from its original format; the renovated house is older.

    It is interesting
    to observe the construction problems of the older house: its dimensional
    is oversized for modern usage, with 2×4 studs actually
    measuring two inches by four inches. All other lumber likewise measures
    out to exact inch measurements. Thus when adding new
    to an older wall, it is necessary to take a current "2×6"
    and rip it down to a stud that measures exactly 4 inches deep, increasing
    material and labor costs. The older studs' wood is denser, having
    come from old-growth trees; it resists and holds nails much better
    than its shrunken modern counterpart. The older house's neighbor
    has studs that are about 1.75×3.75 inches; modern 2x4s are 1.5×3.5

    What could
    cause this degradation in language, and inflation in the amount
    of claimed wood offered for a fixed measurement? The older house
    was built in 1910, its neighbor in the 1920s; the renovation is
    a 21st-century affair. The older house was thus built
    at the end of what Murray Rothbard called "the
    golden age
    ," a time of more honest money, with a century
    from 1815 to 1914 of human productivity gradually
    deflating prices by about 2% annually
    when compared to gold;
    $20.67 was required to buy an ounce of gold when the house was built,
    a price that had been so fixed for over a century.

    In 1913, the
    Federal Reserve act went into effect, centralizing control over
    money and interest rates. Of course, gold coin would remain legal
    currency at $20.67 an ounce until 1933,
    when an enabling act, grown out of World War I, was used by Franklin
    Delano Roosevelt to forbid the private ownership of more than five
    gold coins per citizen; following this
    act in 1934
    , the dollar price of gold was changed to $35 per
    ounce. This nominal price, unavailable to citizens, was maintained
    until 1972. Thanks to the Gold
    Bullion Coin Act of 1985
    , it is set today at $50 per ounce.

    The dollar,
    then, which was once a relatively fixed measure like a pound or
    a foot, has changed its size with respect to gold, and realistically
    it is worth 1/40th of the amount it brought when the
    older and newer houses were built; the effects of currency debasement
    can already be seen in the decline in the standard of the 2×4. The
    effects on home construction appear elsewhere, as more costly materials
    and methods, which would last longer, are replaced with cheaper
    materials and methods.

    The craftsmanship
    required to nail (By hand! With no nail guns!) lathing to studs,
    and then apply three coats of plaster was made too expensive by
    the uncertainty that a floating dollar and World
    War Two manpower shortage
    introduced, and it was replaced by
    the now-ubiquitous wallboard, made of gypsum. Walls were now less
    prone to cracking, but less solid and soundproof, and more easily
    dented. Plywood gradually replaced sawn boards (to great detriment,
    as the
    glue wears out in 40 years
    , causing houses to literally come
    apart at the seams), and was replaced in turn by oriented strand
    board, each substituting cheaper lumber for more expensive. At the
    same time, artificially low interest rates caused labor in home
    construction to be replaced by capital (something that should cause
    labor unions to support honest money, but doesn't). The 1970s saw
    the nadir of construction, with aluminum wiring replacing the copper
    in many newly-constructed houses; not coincidentally, that era was
    a time of massive commodity inflation and shortages driven by the
    suspension of the gold window
    by Richard Nixon.

    More recent
    times have seen even greater price instability. After the
    relative calm of the Clinton years
    , gold prices started to gyrate
    wildly in the 21st century, hitting a new nominal high
    over $1000 an ounce. This instability was driven by Federal Reserve
    interest rates of 1%, which set off a housing construction boom.
    Because of the shifting standard in money, earning a return meant
    exposing oneself to a minimum of time before selling a newly-constructed
    house. As Christopher
    Leinberger notes
    , the "future is not likely to wear well
    on suburban housing. Many of the inner-city neighborhoods that began
    their decline in the 1960s consisted of sturdily built, turn-of-the-century
    row houses, tough enough to withstand being broken up into apartments,
    and requiring relatively little upkeep. By comparison, modern suburban
    houses, even high-end McMansions, are cheaply built. Hollow doors
    and wallboard are less durable than solid-oak doors and lath-and-plaster
    walls." He predicts that the exurban fringe will become the
    "next slum."

    One can thus
    see the effects of shifting tides of currency values, abetted by
    the battering of war. It has driven the construction of American
    living quarters to a lower standard than that obtained in time of
    peace. (Environmentalists
    will hopefully note
    that those old-growth forests are gone,
    a victim of both the tragedy
    of the commons
    seen when private ownership is lacking and the
    hypertrophic economic growth caused by fiat currency, reflecting
    the same public choice effect that causes democracy
    to be less stable, economically, than monarchy
    .) Fiat money
    and war cause a drag on the economy; allowed to build, like barnacles
    on the hull of the ship, they slow and eventually stop economic
    progress. If the encrustation goes far enough, their weight will
    eventually sink the economic ship.

    3, 2008

    Thomas M.
    Schmidt [send him mail],
    a native of Brooklyn, notes that the liberty-head dime he found
    in his attic from 1910 buys about the same amount that it did back

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