Audio: Andy Duncan and Ryan McMaken on Trump's Tariffs

Audio: Andy Duncan and Ryan McMaken on Trump's Tariffs

03/08/2018Mises Institute

Andy Duncan of Mises UK interviews Ryan McMaken on tariffs, income taxes, and the importance of free trade [20 minutes]:

Trade Wars and Trump's Trade Tariffs, with Ryan McMaken

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Of Course the UN Is Considering Legitimizing Maduro's Next Election in Venezeula

03/15/2018Tho Bishop

Venezuela continues to be one of the great humanitarian crises of our times. Every day brings new horrific headlines of starvation, violence, and chaos. Not only should this tragedy serve as a reminder of the true evils of socialism, but is vivid illustration of what hyperinflation looks like in the modern world.

While the Venezuelan government has tried it hands with modern gimmicks - like the largest cryptocurrency scam since Prodeum - the citizens continue to struggle with the realities of a currency so worthless that thieves don’t even bother picking it up off the floor.

The question now is simply how long this horror story continues.

Elections in the country are set for May, but of course no one expects politics to offer much hope for the Venezuelan people. What’s interesting here is that it provides another fascinating example of how dangerous the United Nations truly is.

Stalin is credited to have said, “It's not the people who vote that count, it's the people who count the votes.” Understandably his ideological heir, Nicolás Maduro, feels pretty good about his re-election chances in Venezuela. His opponents  have no delusions to think elections will be handled fairly, and are calling boycotting elections.

In enters the UN, who is considering sending in observers to ensure the integrity of the election process. Of course this is precisely what the Maduro government desires. After all the Venezuela people, beaten and starved, are unlikely to take the presence of a few foreign bureaucrats as the protection they need to stand up to their oppressive leaders. The UN’s presence will only serve to prop up Maduro, at least until complete economic collapses leads to military intervention – which some analysts think could be in the next 12 months.

Still, the fact that the UN would ever consider serving the desires of Venezuela’s socialist government is simply another reminder that the UN is worse than useless.  

Of course, at the end of the day, any inevitable change in leadership in the country will not solve the plight of the country without a revolution in ideology. As Jose Nino has noted in several great articles for us, socialist ideology was a Venezuelan problem before Hugo Chavez, and risks outliving the rein of Maduro

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Why Gun Control Doesn't Explain Australia's Low Homicide Rates

03/14/2018Ryan McMaken

Gun control advocates often point to Australia as an example of how "banning" guns leads to significant declines in homicide rates.

Whether or not the much vaunted gun laws were ever fully implemented remains a matter of debate, but data does indeed suggest Australia's already-low homicide rates continued to slide downward in the twenty years following the alleged banning of guns. Unfortunately, as Leah Libresco writes at the Washington Post, this doesn't give us enough information to draw many conclusions:

I researched the strictly tightened gun laws in Britain and Australia and concluded that they didn’t prove much about what America’s policy should be. Neither nation experienced drops in mass shootings or other gun related-crime that could be attributed to their buybacks and bans. Mass shootings were too rare in Australia for their absence after the buyback program to be clear evidence of progress. And in both Australia and Britain, the gun restrictions had an ambiguous effect on other gun-related crimes or deaths...

That sample sizes should be so small in Australia is not a surprise. Commentators on Australia often neglect to note that the country has a population smaller than that of Texas. Obviously, the demographics, geography and history of the two regions are extremely different as well. 

But with so few homicides to analyze in the first place, any asserted causality between the gun "ban" and homicide rates is indeed ambiguous. 

Other data suggests that Australia's experience is less than useful as an example to the rest of the globe. One of our readers, who goes by the pseudonym Alex Great, sent along a number of useful links in his own commentary which follows: 

Proponents of gun control will point to the declining homicide rate and claim that Australia has seem zero mass shootings since the NFA was enacted.

However, analyses like this are quite simple and miss a lot of important data. For example, looking at official homicide data from the Australian government, we can see that the sharp decline occurred years after the NFA was enacted. A 2003 study backs this up, noting that homicide rates were already falling before the NFA.

A report from 2007 titled “Gun laws and sudden death: Did the Australian firearms legislation of 1996 make a difference?” also noted that homicides were already falling prior to the NFA being enacted, and found that the NFA did not speed up the declining rate of homicides in Australia. More recent studies still find that the decline in homicides can not be attributed to the NFA, since non firearm homicides also sharply declined in the same period:

There was a more rapid decline in firearm deaths between 1997 and 2013 compared with before 1997 but also a decline in total nonfirearm suicide and homicide deaths of a greater magnitude. Because of this, it is not possible to determine whether the change in firearm deaths can be attributed to the gun law reforms.

In fairness, a review of the literature from Harvard did find that states that had more guns bought back experienced more rapid declines in homicide. However considering Australia was experiencing a decline in non firearm homicide at the same time, it is difficult to pinpoint exactly how much of an effect the NFA actually had. Even the review admits that no study was able to explain exactly why gun deaths were falling.

The claim that Australia has had no mass shootings since the NFA is also blatantly inaccurate, for example, there was a school shooting in Melbourne in 2002 that killed two and injured five. The 2014 Sydney Seige, where a man armed with a shotgun took a cafe hostage, also shows that despite the NFA, Australia has been unable to get rid of gun violence in public places.

This lack of causality is also reminiscent of the gun control experience in Britain. As I noted in this article, England and Wales already had very low homicide rates — both historically and globally — by 1900. But given that gun control measures were not enacted until years later, it would be inaccurate to simply refer to gun control as the cause of low homicide rates in the region:

The first significant modern gun control law in the UK was the Firearms Act of 1920. The Act abolished what had been up until then an assumed right to carry arms.  The Act was likely introduced as an anti-Irish and anti-communist measure, as there was no evidence (then or now) of rising crime at the time. The 1920 act was followed by increasingly restrictive gun control laws in 1937, 1968, and 1988. From the 1950s into the early 2000's however, the homicide rate grew steadily.

Thus, these examples do not really provide a historical experience that we can point to and say "gun control led to low homicide rates in the UK and Australia." 


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Explaining the Economic Calculation Problem in a Principles Class

03/14/2018Jim Cox

A microeconomics principles class presents professors with the opportunity to at least briefly explain the economic calculation problem. Almost every text spends a page or two on the production function — the relationship between inputs and outputs by a firm.

Here is the relevant data and graphs from one such text.


The professor can ask the students, “at what output should the firm produce?”— which is a central issue in microeconomics. Looking at the figures and the graphs the students will likely answer, “at the peak of Total Product”, or “at the highest Marginal Product”, or “at the highest Average Product”.

None of these responses is correct, as there is no rational way to answer based on the limited information given. There is no rational way to answer because the data only include quantities of inputs and quantities of outputs. There is no value in the form of prices attached to either the inputs or the outputs. Until the prices of these are included there is no answer.

Here’s an example to illustrate this point:

If the outputs are valued by consumers in the market at a price of $1.00 while each input costs the firm $100.00 it is obvious that to produce any of these outputs would be a financial disaster for the firm in the way of major losses (and thus the firm will be destroying value in the world). Conversely, if the consumers in the market value the outputs at a price of $50 each and the input costs are $2 for each, the firm can make major profits (and thus the firm can be adding value in the world).

Socialists had proposed abolishing both money and prices leaving them in the same position as our students in trying to determine which output quantity would be best. Pointing this out allows the professor to recount Ludwig von Mises’s highlighting this problem in his 1920 article, "Economic Calculation in the Socialist Commonwealth" and the resulting debate over the issue in the 1920s through the 1930s.

While Mises — and Hayek who also participated in this debate — maintained their views, the socialist critics retired from the debate self-satisfied that they had answered the challenge by claiming that the socialist authorities could direct the managers to adjust production by simulating markets, that is non-existent markets! They would just be “playing market”.

As Mises pointed out, even the best intentioned socialist manager would be lost in trying to discover just what the best output would be.

I also like to make the point in my classes that playing market with assets one does not own is far removed from risking personal assets one does own! When one owns the assets, such decisions will have a major impact on the owner’s personal financial well-being.

(By the way, I have never in my many years of teaching principles classes seen a text that raises the economic calculation issue at all.)

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Democrats Side with FDA over Terminal Patients

03/14/2018Tho Bishop

Often the worst of Washington is a bipartisan affair, but late last night a solid Democratic voting block stopped legislation that would allow terminally ill patients the ability to seek help from non-FDA approved treatments. 

Needing a two-thirds vote to expedite right to try legislation, 140 Democrats voted against patient rights. Representative Frank Pallone Jr. of New Jersey, the senior Democrat on the Energy and Commerce Committee, defended his vote by saying "By defeating this bill tonight, we protected patients and supported F.D.A.’s continued role in approving experimental treatments that may help save a patient’s life.” 

Yes, in the twisted world of Washington politicians limiting the choices of dying patients is "protecting them."  

While Democrats desperately clung to the narrative that non-FDA approved drugs represented "false hope", we are given examples every day of how absurd this notion truly is. Rather than being some sort of scientific seal of approval, the FDA approval process is a bureaucratic nightmare, taking years of testing and millions of dollars to complete. The numbers of lives lost due to the FDA's actions is incalculable. As Timothy Terrell has noted:

The American public tends to think of the FDA as a protector against dangerous side effects, as we saw with Thalidomide decades ago. But how many Americans have died because of lags in approval? A five-year delay in bringing the antibiotic Septra to the US market may have cost 80,000 lives. A lag in the approval of beta blockers may have cost 250,000 lives.1 The FDA's ban on advertising aspirin as an effective preventer of first heart attacks may have caused the deaths of tens of thousands of Americans every year. But because it's easy to identify those harmed by side effects, and difficult to identify who might have been saved by earlier introduction of Septra to the marketplace, the FDA tends to be over-conservative in its regulatory process.

In spite of yesterday's vote, this right to try legislation isn't dead yet. Legislators supporting the measure have made it clear that it will be reintroduced and go through the standard voting process. Of course this delay, coupled with what will be required to get it through the Senate, could prove fatal for many of  Americans who could possibly benefit from medical freedom. 

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Rand Paul's Attacker Should Never Have Been Tried in Federal Court

03/13/2018Ryan McMaken

Rene Boucher, who attacked Rand Paul at his Kentucky home last year, has pled guilty in Federal court:

At first glance, this appears to be as things should be. Given what information is publicly available, it seems clear that Boucher was the aggressor ,and attacked Paul, although Paul posed no threat to Boucher. 

But there's a problem here. The case was tried in federal court even though there is no shortage of state laws that forbid assault and battery. So why is the federal government involved? Well, it should surprise few people that there are two sets of laws in the United States: one for high ranking government officials, and another set of laws for everyone else. 

By attacking a very-special member of the American ruling class, Boucher opened himself up to federal charges of "assaulting a member of Congress resulting in personal injury, a felony under federal law."

This situation is relatively new, however. 

Once upon a time, attacks against federal politicians were handled by state law. As one legal blog correctly notes, this changed with the adoption of 18 U.S.C. 351into the US code: 

This law provides for a death penalty for killing a member of Congress, a presidential or vice presidential candidate, or a Supreme Court justice, as well as imprisonment up to life for attempting to kill such a person...

The background of this law is interesting. When President John F. Kennedy was assassinated in Dallas in 1963, it was not a federal crime to kill a U.S. president. Had alleged assassin Lee Harvey Oswald been tried, the trial would have taken place in a Texas state court. In 1965, Congress passed a law, 18 U.S.C. 1751, making it a federal crime to kill, kidnap, or assault the President or the Vice President.

In 1968, presidential candidate and U.S. Senator Robert F. Kennedy was assassinated in Los Angeles. That was not a federal crime at the time, and Sirhan Sirhan was convicted in California state court for the murder and sentenced to death. (That sentence was commuted to life in prison in 1972, when that state abolished the death penalty, and Sirhan remains in a California state prison.) In 1971, Congress enacted 18 U.S.C. 351, which extended the protection of the Federal criminal law to members of Congress, paralleling that extended to the President and the Vice President.

One can be sure, of course, that when important federal personnel are victims, federal investigators will bring to bear a large amount of focus and resources. On the other hand, when it's just ordinary school children, as in the case of the Parkland school shooting in Florida, the FBI is much too busy to pay attention. 

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Tariffs Are Not the Answer

03/13/2018Ron Paul

President Trump’s planned 25 percent tariff on steel imports and 10 percent tariff on aluminum imports may provide a temporary boost for those industries, but the tariffs will do tremendous long-term damage to the American and global economies. Tariffs raise the price of, and reduce demand for, imported goods. Tariffs ensure the preferences of politicians, instead of the preferences of consumers, to determine how resources are allocated. This reduces economic efficiency and living standards.

Some justify these economic inefficiencies as being worth it to save American jobs. This ignores how tariffs increase costs of production for industries reliant on imported materials to produce their products. These increased costs lead to job losses in those industries. For example, President Trump’s proposed steel tariff could cost nearly 40,000 jobs in the steel-dependent auto manufacturing industry. Tariffs also cause job losses in industries reliant on exports. This is especially true if — as is likely to be the case — other countries respond to President Trump’s actions by increasing tariffs on US products.

Many of President Trump’s critics do not themselves support true free trade, which is the voluntary exchange of goods and services across borders. Instead, they support the managed (by government) trade of NAFTA and the World Trade Organization (WTO). NAFTA and the WTO promote world government and crony capitalism, not free markets. Any libertarian or free-market conservative who thinks the WTO promotes economic liberty should remember that the WTO once ordered Congress to raise taxes!

Foreign manufacturers may make convenient scapegoats for the problems facing US industry. However, the truth is that most of the problems plaguing American businesses stem from the US government. American businesses are burdened by thousands of federal regulations controlling every aspect of their operations. The tax system also burdens businesses. Until last year’s tax reform bill, the US had the highest corporate tax rates in the developed world. The tax reform bill lowered corporate taxes, but the US corporate tax rate is still higher than that of many other developed countries.

The United States not only spends more on military weapons than the combined budgets of the next eight biggest spending countries, but also spends billions subsidizing the defense of developed counties like Germany, Japan, and South Korea. Bringing US troops home from these countries is an excellent place to start reducing spending on militarism.

The biggest cause of our economic problems is the Federal Reserve. America’s experiment with fiat currency has enabled a system based on private and public debt. This makes trade imbalances inevitable as the US government needs foreign investors to purchase its debt. Foreign investors get the money to purchase the US government’s debt by selling products to American consumers. A trade war could cause foreign investors to stop buying US debt instruments and could end the dollar’s world reserves currency status. This would cause a major economic crisis — but at least it would stop our shores from being flooded with “cheap foreign goods.”

President Trump’s claim that trade wars can be easily won is as credible as the neoconservative claim that the Iraq War would be a cakewalk. A trade war would likely push the global economy into a recession or worse. Instead of imposing costs on American businesses and consumers and putting those whose livelihoods depend on imports out of s job, President Trump should address the real causes of our economic problems: the welfare-warfare state, the IRS, and the Federal Reserve.

Reprinted with permission. 

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Shawn Ritenour Named a Mises Institute Senior Fellow

03/13/2018Mises Institute

The Mises Institiute is excited to announce that Dr. Shawn Ritenour is our newest Senior Fellow. Dr. Ritenour is a professor of economics at the historic Grove City College, where he assists with the annual Austrian Student Scholars Conference. 

Dr. Joseph Salerno, academic vice president of the Mises Institute, had this to say about the announcement: 

We are thrilled to have Shawn Ritenour accept our invitation to become a Senior Fellow.  Shawn is a renowned scholar in the Misesian tradition.  He is the editor of the Mises Reader, the most important compilation of selections from Mises's works yet published.  His own treatise, Foundations of Economics: A Christian View, is much more than a mere economics  textbook and can be read with great benefit by anyone wishing to achieve a foundational  understanding of modern Austrian economics in the tradition of Mises and Rothbard.

Dr.  Ritenour will be giving the Lou Church Memorial Lecture at this years Austrian Economics Research Conference. Read more from Shawn Ritenour here

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Another Reminder that Elizabeth Warren is a Fraud

03/13/2018Tho Bishop

Elizabeth Warren's entire career has been based on a lie. I speak, of course, of the notion that she's some sort of expert on the financial sector. Not only is the Senator from Massachusetts bad on basic economics — advocating policies that would grossly punish the poor, ignore the consequences of central banking, and being a general embodiment for everything bad about modern progressivism — but she is ignorant of basic facts that played out during the financial crisis. 

For example, today Warren unleashed a barrage of tweets targeting legislation designed to reverse some of the Dodd-Frank regulation that has helped further consolidate the banking industry and increase the size of Too Big to Fail banks. I have not yet gone through the legislation, and it's quite possible that there are objectionable parts to the legislation, but one tweet from Warren just doesn't hold up reality.

This is simply wrong. BB&T never took a bailout, because they had no need for one. In fact, the bank's CEO at the time, John Allison, was the loudest industry voice criticizing the entire scheme. While BB&T did receive TARP funds, it was only because they were forced to do so by the Obama Administration that once employed Warren. In fact, the North Carolina-based bank is perhaps the one of the large financial institutions who can honestly contend to be a victim in the Washington bailout, as they were forced to pay high rates on lending due the government forcing them to accept TARP funds

In short, Senator Warren's opinions on financial services matters should be treated with the same seriousness as her contributions to the Pow Wow Chow Native American cookbook. 

(Allison's book on the financial crisis is a personal favorite. If you purchase it — or any book — on Amazon using this link, the Mises Institute benefits thanks to Amazon Smile.)

Warren Tweet BBT.png
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Trump at His Worst Is the Status Quo

03/09/2018Tho Bishop

The presidency of Donald Trump continues to be an unpredictable one, with the latest twist being his announced plans to meet with North Korean despot Kim Jong-Un. Naturally the reaction from the beltway and the media was to condemn this diplomatic outreach.  Rachel Maddow perhaps did the best job as establishment media mouth piece, pointing out that Trump's decision goes against a policy that has long enjoyed bipartisan support - a label which in DC is used to demonstrate clear intellectual superiority: 

It has been through Republican and Democratic administrations, the whole strategy not only for the United States but for the United States as leader of the free world, to the extent that we are, has been to treat North Korea as a pariah state and thereby try to change their behavior.

Of course this same strategy has clearly failed to achieve its desired objective.

Trump's willingness to completely ignore what has been deemed acceptable by the leaders of both parties is, of course, an example of the Trump Administration at its best. 

On the flip side, we have been given many examples recently of Trump at his worst, where he adopts the policies and rhetoric that have often enjoyed bipartisan support in the past.

For example, though it is great to see the mainstream media come to condemn the intellectual fallacies inherent with protectionist trade policies, there is nothing particularly novel about a president imposing tariffs. We saw the Obama Administration impose tariffs of foreign solar panels, while the Bush Administration did their own version of steel tariffs. Similarly, Trump's concessions on gun rights make him sound more like Reagan, Bush, and Obama, than the populist "drain the swamp" candidate on the trail. 

So hopefully Trump's diplomatic outreach to North Korea will pay off. First and foremost to help de-escalate a truly dangerous threat to civilians in South Asia, but also to help illustrate the virtues of ignoring beltway group think here at home. The index card of allowable opinion has been a disaster for both the country and the world for far to long. 

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"The Mises Institute and the Impact it has had on my Life"

03/08/2018Mises Institute

Thanks to Luis Areizaga for his recent comments on the Mises Institute: 

Today I was at LibertyCon watching the panel discuss the value of university in the modern era. One of the speakers was Jeff Deist, President of the Mises Institute, an organization that has provided great value to me in my life. After a very active and interesting debate between employers and academics, I got the chance to go up and introduce myself. This conversation, among others that I had with a few members of the Institute that day, led me to want to write about the Mises Institute’s mission and the positive impact it has had on my life.

The Mises Institute was founded in 1982 with the mission of promoting and seeking a society based upon the principles of free-market capitalism, private property, and voluntaryism. It rejects the coercive use of force and the monopoly of violence the state holds. To achieve this, it employs the use of one of the most powerful tools there is, education and dissemination of information. Through its posts, free library, research, and educational programs it has helped spread the message of liberty to an untold number of individuals. The institute stands firmly and proudly as a bulwark against the forces who seek to rid us of our hard-earned liberties and freedoms.

I discovered the institute through a friend who I frequently had discussions of political and economic nature with. He had recommended me the articles as counterpoints to my arguments and as a tool which I could use to learn the arguments of the Austrian School. After a period of reflection, I recognized the logical arguments presented and conceded to their superiority. I have personal experience growing up in a socialist country where, among many other problems caused by state intervention, power outages and water shortages have become increasingly common due to the state monopoly on utilities, so it was not difficult to recognize the truth once I saw it.

The Institute gave me hope and taught me that there were solutions to these problems and that if we empower the individual to pursue innovation and competition in the marketplace we can solve the ills of society and create a better future. Today I seek to take these beliefs and act upon them in order to build a freer world. I have embarked upon a more entrepreneurial path by joining Praxis, an apprenticeship program, where I will be honing my skills and working with like-minded folk in the startup sector. I hope in the future to take these skills to build and develop ideas that innovate and empower the market forces which provide for so many of our needs.

Looking back, I realize that if not for the Mises Institute I might have never learned of these ideas, questioned that which so many take for granted, and taken the steps to reorganize my life in a way where I can contribute towards the cause of liberty. For that, I thank the Institute and implore them to continue their mission in which they have had such outstanding success. I would like to share a quote that I believe carries a greatly important and hard truth but which we must recognize nevertheless “Eternal vigilance is the price of liberty”. Never waver, the Mises Institute and the greater libertarian movement pays that price every day.

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