About This Blog

Ludwig von Mises (1881-1973) was the greatest economist of my time. His greatest works can be accessed here at no charge.

Mises believed that property, freedom and peace are and should be the hallmarks of a satisfying and prosperous society. I agree. Mises proved beyond a shadow of a doubt that the prospect for general and individual prosperity is maximized, indeed, is only possible, if the principle of private property reigns supreme. What's yours is yours. What's mine is mine. When the line between yours and mine is smudged, the door to conflict opens. Without freedom (individual liberty of action) the principle of private property is neutered and the free market, which is the child of property and freedom and the mother of prosperity and satisfaction, cannot exist. Peace is the goal of a prosperous and satisfying society of free individuals, not peace which is purchased by submission to the enemies of property and freedom, but peace which results from the unyielding defense of these principles against all who challenge them.

In this blog I measure American society against the metrics of property, freedom and peace.

Friday, February 24, 2012

The Fallacy Of Progressive Interventionism

As Ludwig von Mises reasons, in a capitalistic, free market economic system the consumer is sovereign, i.e., consumers decide which particular goods and services satisfy their most urgent demands. The dollars consumers spend on these goods and services find their way into the hands of entrepreneurs who produce them most efficiently. Those dollars determine whether a particular entrepreneur will succeed or fail, whether he will earn a profit or suffer a loss, whether he will remain a small business in a tiny niche of the market or grow into a big business with a huge market share.

Mises points out that this process is continuous. Past success is no guarantee against future failure. The big successful business of years past often becomes today's bankruptcy because of its inability to keep up with the changing tastes and demands of the consumers.

Progressives intervene in the marketplace for a single reason: they disdain the choices made by the sovereign consumers. They use the coercive power of government to limit or change consumer choices. They pass laws which impose regulations and restrictions on consumers and producers alike. As a result, some goods and services which the consumers wish to buy are forced out of production while others, which the consumers do not want, are forced upon them.

When asked why they intervene into the free marketplace, Progressives offer a host of reasons: to guarantee public safety, to protect human health, to ensure public morality, to save the environment, to lower the price of politically sensitive goods and services, etc., etc. Progressives justify all of these interventions by arguing they are in the "public interest" or that they are for the "common good."

However, such justifications are absurd in light of how the capitalistic system of private property and free markets operates. In the system of private ownership of the means of production and consumer sovereignty, traders are absolutely free to exchange goods and services with whomever they wish on their own mutually agreeable terms. This freedom to trade or not to trade with any particular individual implies that when a trade is made both parties to the trade expect to benefit from the trade. If both parties do not expect to benefit, then the trade would not take place. This is obvious, common sense.

Consider an enormous free market with trillions of trades taking place every day between billions of buyers and sellers. The lack of government coercion in such a market ensures that all traders expect to benefit, i.e., each trader expects to be personally and subjectively better off and more satisfied after his particular trade than before. Does intervening in such a market in order to preserve the "common good" or protect the "public interest" make any sense at all? How can the "common good" or the "public interest" be interpreted as anything superior to the expected satisfaction of all?

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