[jmherbener]

Yes, the statistics are calculated for both the first and the second world wars. You will find them on the relevant lectures in Parts 1 (1st world war) and Part 2 (2nd world war).

The use of monetary inflation actually diminishes the government’s war effort by reducing the productive capability of the economy, more than either debt financing or taxation. You will find some comments on these points on the lectures mentioned above.

[jmherbener]

The Fugitive Slave Act of 1850 reduced the instances of runaway slaves and the resulting costs of their recapture by the slave owners. As a consequence, investors buying slaves were willing to pay higher prices. In a similar fashion, the Dred Scott decision also strengthened the legal claims of slave owners over slaves who were asserting their freedom. Investors were more willing to pay for slaves who lacked legal rights to their freedom (under certain conditions).

[jmherbener]

Good question. I’ll find out and post the answer here.

[jmherbener]

Here’s the data for manufacturing employment since 1939:

https://fred.stlouisfed.org/series/MANEMP

Manufacturing employment is sensitive to booms and busts for the entire data set. The Fed is clearly to blame for this volatility. The big drop-off in manufacturing employment, however, occurs between 2000 and 2010. From 2010 to 2019 there is a steady rise.

Here is the personal saving rate of Americans since 1959:

https://fred.stlouisfed.org/series/PSAVERT

There appears to be some correlation between MANEMP and PSAVERT. However, the correlation is not very strong. The time of falling MANEMP (2000-2010) doesn’t correspond completely with the time of falling PSAVERT (2004-2005). The Fed’s inflationary policy since 1971, however, is strongly correlated with the decline in personal saving rates.

In any case, I think the causation between MANEMP and PSAVERT is relatively weak. One reason for the weak causation is that manufacturers in the U.S. can access world capital markets. So, even though American’s save very little, this isn’t a binding constraint on American companies as foreigners save and invest in America too.

Here are a few other points:

https://www.stlouisfed.org/on-the-economy/2017/april/us-manufacturing-really-declining

https://mises.org/library/job-killing-labor-costs-and-manufacturing-sector

[jmherbener]

Any good that has value as a means in different lines of use will be allocated across the different uses so that its marginal value is the same in each line of use. Iron ore, e.g., is allocated across its use in steel production and iron fences so that the price of iron is the same in those two lines of use. If it were allocated as an input in steel and commanded a higher price than it fetched if sold into iron fencing, then iron producers would shift their supply to steel manufacturers. They would continue this reallocation until the price was the same in the two lines of use.

So, if a new gold mine adds 10% to the stock of gold, then the new stock of gold will be allocated into gold coins and jewelry so that the market exchange value of an ounce of gold is the same in gold coins as it is in jewelry. We can only know in retrospect what the percentages are in the two uses. But the factor that determines the percentages is the relative demands in the two uses.

[jmherbener]

Interesting. You might consult Rothbard’s treatment of Mill in the second volume of his history of economic thought, Classical Economics:

https://mises-media.s3.amazonaws.com/Austrian%20Perspective%20on%20the%20History%20of%20Economic%20Thought_2_Classical%20Economics.pdf

[jmherbener]

You might take a look at the following:

https://mises.org/library/mantle-science

https://mises-media.s3.amazonaws.com/Praxeology%20The%20Methodology%20of%20Austrian%20Economics_6.pdf

https://mises.org/library/epistemological-problems-economics

https://mises.org/library/theory-and-history-interpretation-social-and-economic-evolution

[jmherbener]

Both the PowerPoint slides for each lecture and a bibliography for the course should be posted soon. That they were not posted with the launch of the course was an unfortunate oversight. Thanks for alerting us to the problem.

[jmherbener]

The additional profit from having a legal-privilege monopoly can be taken either in the form of additional annual net income or in the form of a one time capital gain. They are equivalent. The gain, then, accrues to the initial owner of the special resources used. All latecomers, who must buy the assets to enter the market, earn no additional profit. That is why the latecomers continue to lobby for additional legal privileges.

Take the case of the taxi medallions in NYC. If you acquired one from the city in the 1950s, its price today might be $500,000, which is the present value of the future additional revenue generated by owning the legal privilege. The original owner of the medallion can either stay in the business and get the additional annual revenue or sell out and get the capital value of the medallion. They are equivalent monetary sums. But the new entrant only earns a normal rate of return because he must pay for the medallion. It is part of his cost structure. Of course, it is also part of the (opportunity) cost structure of the original owner as well if he stays in business.

https://mises.org/wire/theres-bubble-new-york-city-taxi-medallions

[jmherbener]

Businessmen tend to think that additional money is necessary to fund the expenditures of a growing economy. An insufficiently increasing money stock would choke off economic growth.

Among mainstream economists, the main reason is the belief that price deflation is the cause of economic downturns. Ideally monetary policy would bring about stable money, neither price inflation nor price deflation. Since they believe that mild price inflation is not harmful, however, they advocate mild price inflation, like the Fed’s target of 2%, to avoid the possibility of the economy slipping into price deflation.

Ludwig von Mises discusses inflationism (the businessman’s view) and monetary stability (the economist’s view) in chapter 7 of his book, The theory of Money and Credit:

https://mises.org/library/theory-money-and-credit

[jmherbener]

You are correct. Mises discusses this point in the Human Action citation above. The monopolist receives a capital gain on the price of his assets when investors at large recognize the monetary advantage of the monopolist’s position. Proper accounting of the higher price of assets would render a normal rate of return. The historical case often cited to illustrate this is Alcoa’s exclusive ownership of bauxite mines. Once investors at large recognized the extra profitability of such a position, they bid up Alcoa’s stock price reflecting their view of the higher asset prices of the bauxite mines owned by Alcoa.

Rothbard also discusses the “capitalization” of asset prices in chapter 4, section 4, sub-section b on Property Taxes of his book, Power and Market:

https://mises.org/library/power-and-market-government-and-economy

[jmherbener]

His main point was that credit expansion would finance industrialization. Yeoman farmers didn’t need cheap credit. Empirically, it seems he was correct. The credit expansion in the north went to infrastructure and manufacturing. In the south it financed capital projects on large plantations. Jefferson was more troubled by the former since it fostered urbanization, which he thought was a life of dependence, at the expense of rural life, which he thought was a life of independence.

In reporting to President Washington, Jefferson made constitutional objections to the Bank of the United States, not economic objections:

http://avalon.law.yale.edu/18th_century/bank-tj.asp

Here’s a short piece on Jefferson’s views more broadly:

https://mises.org/library/jeffersons-philosophy

[jmherbener]

The force of the Austrian argument is that no matter the conditions of the market, each entrepreneur behaves in exactly the same way. Therefore, the social consequences of their actions are the same. Every entrepreneur, regardless of market conditions, asks a price that maximizes the revenue from sales (this is the unit elastic point on demand for his product). Every entrepreneur, regardless of market conditions, has a cost structure that is bid up to the point of earning just the interest rate of return. If an enterprise is profitable, then outside investors will bid more intensely for its assets (including share of its stock if it’s a public company). this bids up the opportunity cost for the entrepreneur to continue to use these assets in his production. So price is never permanently above MC, when opportunity cost is considered. There are no monopoly profits.

Take a look at Murray Rothbard on monopoly in chapter 10 of Man, Economy, and State:

https://mises.org/library/man-economy-and-state-power-and-market

Ludwig von Mises makes the same point in chapter 16, section 6 of Human Action:

https://mises.org/library/human-action-0

[jmherbener]

The provision concerning states admitted to the United States out of the territories is that “such state shall be admitted, by its delegates, into the Congress of the United States, on an equal footing with the original states in all respects whatever…” The text is in Art. 5 of the Northwest Ordinance:

https://www.ourdocuments.gov/doc.php?flash=true&doc=8&page=transcript

Whether or not new states could secede raises only the same issues as those for the original states.

[jmherbener]

Since I am not a philosopher, I asked Dr. David Gordon for his response to the comment, which follows:

“If someone denies the Action Axiom, he is not saying, “No actions are purposeful” He is saying, “There are no actions.” The contradiction he falls into is that his making this statement is an action, so his making the statement shows that there is at least one action. The contradiction is not that his statement shows that there is at least one action that is purposeful, so it is false that no actions are purposeful. “Non-purposeful action” makes no sense. It is true that the contradiction in denying the Action Axiom shows only that there is at least one action, but that isn’t the way we know there is more than one action..
“The statement ‘human action is purposeful’ is a definition, where by a definition is meant an account of the essence of action, not a stipulation. In other words, that’s what action is. We know that this definition is correct by thinking about the nature of action, That is, we realize that there is such a thing as purposeful behavior.”

https://mises.org/profile/david-gordon

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