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March 11, 2019 at 8:25 am in reply to: Who took a haircut, who were the barbers, how were foreign purchases paid for? #21905
jmherbener
ParticipantThe debts to foreigner governments were mostly paid and paid in specie, although, payments were suspended for a time and not paid in full until after the war. The bonds issued by states and the general government were sold to bondholders at large. They were mainly wealthy Americans. Much of this debt was assumed by the Federal government and the states, but to the extent that these bonds were not paid it was generally American bond holders who suffered the loss. Regular Americans suffer losses in the monetary inflation of the war financing to the extent that the government obtained goods with printed money before prices rose. So, the other beneficiaries of the war spending were those who obtained the new money early in the process. Morris made sweetheart deals, for example, with companies other than his own in war procurement spending.
It is Murray Rothbard’s thesis that the war could have been won and won more readily through guerrilla tactics instead of by a conventional army approach.
ParticipantThe case is somewhat mixed, but mainly it’s different cargo. Luxury goods were imported from England into the colonies, which commanded higher prices with lower physical volume than raw materials.
You can find discussion of this issue in the book: E.R. Johnson et al., History of Domestic and Foreign Commerce of the United States(Carnegie Institution of Washington, 1915).
Participanta. Government bureaus make estimates of aggregate demand. Conceptually, they seek to add together all monetary expenditures on final goods, which they call Gross Domestic Product.
b. Say’s Law implies that there cannot be insufficient aggregate demand. If demand in insufficient to buy all of some goods that have been produced, there must be a corresponding excess demand of other goods produced.
https://mises.org/library/says-law-markets
Moreover, any case of insufficient demand for a particular good puts in motion entrepreneurial reallocation to eliminate the unprofitable production. Facing losses, entrepreneurs reduce output production. Their demands for inputs decline, which lowers input prices, and their reduced supply of output raises output prices. Both of these changes restores profitability at a smaller output production. The resources no longer used find employ in other lines of production at their now lower prices.
c. You might consult the book of collected essays edited by Henry Hazlitt, Critics of Keynesian Economics:
ParticipantSocial benefit accrues anytime a good moves out of the hands of persons who value it less into the hands of persons who value it more. Any voluntary exchange accomplishes this social benefit. The persons who might be mutually benefited from trade between them could be aided by a middlemen who buys the good from the person who values it less and then sells it to the person who values it more. The middleman generates a social benefit by bringing the trading partners together more efficiently than they could do themselves. Speculators are middlemen between persons in the present and persons in the future.
In Hazlitt’s example of farmers, the speculators buy grain from the farmers at harvest time (which, by increasing demand for grain, pushes grain prices up benefiting the farmers as sellers) and then they store the grain (relieving the farmers from the expenses of storing it themselves) and then they sell the grain at higher prices in the future (which, by increasing supply, pushes prices down benefiting users of the grain as buyers). As long as speculators deal more efficiently with the uncertainty of future grain markets than farmers would, the speculators generate a social benefit.
ParticipantYes, the cargo volume was roughly the same, but the monetary value of the cargo shipped was lower among the colonies than between the colonies and England.
ParticipantThe subsidies were funded mainly by taxes and fees. Here’s a article on the early colonial imposition of fees and taxes:
https://www.hoover.org/research/colonial-roots-american-taxation-1607-1700
ParticipantThe classic works in this area are by Frederic Bastiat, especially Economic Sophisms and Harmonies of Political Economy.
https://mises-media.s3.amazonaws.com/The%20Bastiat%20Collection_4.pdf
Milton Friedman’s book, Free to Choose, has a few relevant chapters:
Robert Higgs’s book, Against Leviathan addresses the issue:
https://www.goodreads.com/book/show/1033406.Against_Leviathan
F.A Hayek grappled with the issue in two famous articles, The Use of Knowledge in Society and Competition as a Discovery Procedure:
https://home.uchicago.edu/~vlima/courses/econ200/spring01/hayek.pdf
https://mises.org/library/competition-discovery-procedure-0
Israel Kirzner’s works discuss the issue. For example, Competition and Entrepreneurship:
https://books.google.com/books/about/Competition_and_Entrepreneurship.html?id=E9DAt745zhIC
For some modern “spontaneous order” works, you might consult the article by Peter Leeson, “Anarchy Unbound: How Much Order Can Spontaneous Order Create,” in Handbook of Contemporary Austrian Economics.
https://www.elgaronline.com/view/9781847204110.xml
Also, take a look at the book, Out of Poverty, by Ben Powell in which he explains how markets give the proper social context for helping the poor and how state regulation makes their condition worse.
ParticipantSay’s law covers all outcomes in a market economy, whether progressing normally or experiencing boom, crisis, bust, and recovery.
The import of Say’s Law is that there can be no general overproduction on the market economy as a whole.
Here’s Murray Rothbard on Say’s Law:
https://mises.org/library/says-law-markets
The cluster of error occurs during the boom as cheap credit makes certain lines of production unsustainably profitable. Investment, then, is the locus of errors that must be corrected during the bust. As you say, consumption declines tend to follow declines in investment during the bust.
One can look for asset price bubbles during a credit expansion as evidence of an underlying cluster of error. Of course, these are easier to see after the fact.
Here’s Frank Shostak on asset price bubbles:
https://mises.org/library/can-asset-price-bubbles-be-harmless
ParticipantRaising the minimum wage does not affect overall price inflation. It merely shifts entrepreneurial demands away from low-wage labor and toward capital equipment and higher-wage labor. To the extent that the reduced production of output increases price of goods produced by minimum-wage labor, consumers must demand less of other things to maintain their demands for such output. Prices go up on some goods and down on other goods.
Monetary inflation which causes price inflation will, as you suggest, reduce the impact of a particular level of the minimum wage over time. As the general purchasing power of the dollar falls, a given level of minimum wage declines relative to the rising prices of other inputs. As a result, the unemployment generated by a particular level of the minimum wage is reduced over time.
Here’s a wiki on minimum wages:
ParticipantThe PPF is usual thought of as the maximum potential output of the economy, given its resources and technology. If so, then a free market (with its array of prices) will result in production at a point on the PPF. Prices distorted by government intervention will result in production at a point interior to the PPF. The economy will produce less than its potential.
ParticipantYou’re most welcome. I hope to meet you at MU some day. They do have low cost housing and scholarships:
ParticipantYou can track such data from the Bureau of Labor Statistics, Consumer Expenditure Survey:
Here is a BLS study using such data:
ParticipantEconomists tend not to go beyond the general claim that entrepreneurs can use the technique of either withdrawing or augmenting some of the labor service and then note the decrease or increase in overall revenue. Of course, the entrepreneur does not have to actually conduct such an experiment, he can anticipate what would occur and then compare the result to the wage he must pay to hire that labor service in deciding whether or not to hire.
You might take a look at Book 3, Chapter 10 of Eugen von Bohm-Bawerk’s book, The Positive Theory of Capital:
ParticipantHere are a few pieces on syndicalism:
https://mises.org/library/syndical-syndrome
https://mises.org/library/anarcho-syndicalism-recipe-ruin
Here is Peter Klein on CSR:
https://mises.org/power-market/stakeholders-and-corporate-social-responsibility
ParticipantThe economic calculation argument is that socialism, defined as state ownership of the means of production, does away with monetary prices for the means of production entirely. There are no money wages, no land prices, no prices of capital goods. Without such prices, there cannot be an economizing arrangement of resources.
The empirical evidence supporting this theory is overwhelming: West Germany v. East Germany; South Korea v. North Korean; Hong Kong v. mainland China before market reforms.
The freedom indexes show the correlation between freer enterprise and higher and faster growing standards of living. For example:
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