how many of you know anything about Mise? Yet his ideas are catching on in South america. the happy land of socialist dreamers who produce concret nightmares.
that government must intervene is a given and necessary but then poorly applied. A simple example. minimum wage establishes a price point but merel yinsists that an employer must pay as per standard and otherwise the unhired must starve or something. How wrong is that?
A minimum wage needs to be a market bid for labor priced at the level of sustainability for that labor. This is called market making and it is done by specialists in every stock market. my point is that this is practical and wil actually uniformly boost wages.
the main trick is to make it built in and automatice which removes additional intervention
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Brazilian UFC Fighter Delivers Economic Punch to the Face
APRIL 30, 2024
Why is CNN suddenly highlighting an Austrian free-market economist?
You can thank a Brazilian UFC fighter.
After a recent victory, a bruised and bloodied Renato Moicano gave a shoutout to Ludwig von Mises and the U.S. Constitution.
“I love America. I love the Constitution. I love the First Amendment. I want to carry f—ing guns. I love private property. Let me tell [you] something. If you care about your f—ing country, read Ludwig von Mises and the six lessons of the Austrian economic school motherf—ers.”
And with that, Mises wormed his way into the American conscience. You might call it a punch in the face!
After the post-fight comments, Moicano was interviewed by Fox Business and was the subject of a 9-minute feature by Ben Shapiro.
Who Was Ludwig von Mises?
Mises was born in Austria in 1881. He served as an economic advisor for the Austrian government before fleeing the country to escape the Nazis in 1940. He settled in New York and taught at New York University.
Mises was as much a philosopher and a psychologist as an economist. He had a keen understanding of human nature and used this to build his economic theories. He started with the most basic observation – human beings act purposefully to achieve their desired goals.
Mises was a fierce advocate of free markets. As his Mises Institute biography explains, “Mises was able to demonstrate that the expansion of free markets, the division of labor, and private capital investment is the only possible path to the prosperity and flourishing of the human race.”
His ideas led him to fiercely oppose socialism. He recognized that it would be disastrous “because the absence of private ownership of land and capital goods prevents any sort of rational pricing or estimate of costs, and that government intervention, in addition to hampering and crippling the market, would prove counter-productive and cumulative, leading inevitably to socialism unless the entire tissue of interventions was repealed.”
And that leads us to Moicano.
One might wonder why a Brazilian UFC fighter would champion, as CNN put it, “a dead Austrian economist.”
The answer is that Moicano has experienced the ravages of socialism first-hand.
Mises and the Austrian school have gained significant influence in not just Brazil but throughout South and Central America. As the CNN report put it, they are “having something of a moment.”
“In recent years, the free-market economist and the contrarian Austrian school he led midcentury have been turned into a hashtag deployed by tax-wary workers. A rash of think tanks and media influencers who champion his ideas have consolidated his influence. And in El Salvador and Argentina, Mises’ ideas have made their way into the speeches and policies of presidents.”
Nowhere is that influence more obvious than in Argentina. Voters in that country recently elected Javier Milei president. Milei is a disciple of Mises. He even named his dog “Rothbard” after Mises’s protégée economist Murray Rothbard.
During the World Economic Forum in Davos Milei asserted that socialism leads to poverty.
That explains the popularity of Mises in Latin America. People in countries like Brazil, Argentina, and Venezuela have suffered under socialism for decades. They want a change.
Moicano has said he started studying economics after paying huge taxes on his first UFC winnings. It goes to show that socialism may sound like a good theory to affluent American college students, but the reality of impoverished Latin Americans holding worthless currency at a grocery store with empty shelves is quite different from the theory.
The Six Lessons
Moicano referenced the six lessons of the Austrian school. What was he talking about?
He referred to Mises’s book Economic Policy: Thoughts for Today and Tomorrow. It was published in Brazil under the title, “As Seis Lições” (“The Six Lessons”).
According to the Mises Institute, their bookstore sold out of physical copies of the book after Moicano’s endorsement and there were over 50,000 downloads of the free PDF.
Economist Jonathan Newman published a good summary of the six lessons at the Mises Institute. It is republished here in its entirety under the institute’s Creative Commons license.
Lecture One: Capitalism
Mises begins his first lecture with an overview of the development of capitalism out of feudalism. Businesses began “mass production to satisfy the needs of the masses” instead of focusing on producing luxury goods for the elite. These big businesses succeeded because they served the needs of a larger group of people, and their success wholly depended on their ability to give this mass of consumers what they wanted.
Despite the amazing and undeniable increases in standards of living, even for a growing population, capitalism had its detractors, including Karl Marx, who gave capitalism its name. Mises says that while Marx hated capitalism and that Marx dubbed it thusly as an attack on the system, the name is a good one
because it describes clearly the source of the great social improvements brought about by capitalism. Those improvements are the result of capital accumulation; they are based on the fact that people, as a rule, do not consume everything they have produced, that they save—and invest—a part of it.
Prosperity is the result of providing for the future—more precisely it is the result of setting aside consumption today by saving and investing resources in production. Mises says that this principle explains why some countries are more prosperous than others. When it comes to economic growth, “there are no miracles.” There is only “the application of the principles of the free market economy, of the methods of capitalism.”
Lecture Two: Socialism
In the second lecture, Mises takes a closer look at Marx’s proposed system: socialism. Economic freedom means that people can choose their own careers and use their resources to accomplish their own ends. Economic freedom is the basis for all other freedoms. For example, when the government seizes whole industries, like that of the printing press, it determines what will be published and what won’t and the “freedom of the press disappears.”
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Mises acknowledges that there is no such thing as “perfect freedom” in a metaphysical sense. We must obey the laws of nature, especially if we intend to use and transform nature according to our ends. And even economic freedom means that there is a fundamental interdependence among individuals: “Freedom in society means that a man depends as much on other people as other people depend upon him.” This is also true for big businesses and the entrepreneurs who lead them. The true “bosses” in the market economy are not those who shout orders to the workers, but the consumers.
Socialists despise the idea of consumer sovereignty because it means allowing mistakes. In their mind, the state should play the paternalistic role of deciding what is good for everyone. Thus Mises sees no difference between socialism and a system of slavery: “The slave must do what his superior orders him to do, but the free citizen—and this is what freedom means—is in a position to choose his own way of life.” In capitalism, this freedom makes it possible for people to be born into poverty but then achieve great success as they provide for their fellow man. This kind of social mobility is impossible under systems like feudalism and socialism.
Mises ends this lecture with a short explanation of the economic calculation critique of socialism. When the private ownership of the means of production is prohibited, then economic calculation is made impossible. Without market prices for factors, we cannot economize production and provide for the needs of the masses, no matter who oversees the socialist planning board. The result is mass deprivation and chaos.
Lecture Three: Interventionism
Interventionism describes a situation in which the government “wants to interfere with market phenomena.” Each intervention involves an abrogation of the consumer sovereignty Mises had explained in the two previous lectures.
The government wants to interfere in order to force businessmen to conduct their affairs in a different way than they would have chosen if they had obeyed only the consumers. Thus, all the measures of interventionism by the government are directed toward restricting the supremacy of consumers.
Mises gives an example of a price ceiling on milk. While those who enact such an intervention may intend to make milk more affordable for poorer families, there are many unintended consequences: increased demand, decreased supply, non-price rationing in the form of long queues at shops that sell milk, and, importantly, grounds for the government to intervene in new ways now that their initial intervention has not achieved its intended purpose. So, in Mises’s example, he traces through the new interventions, like government rationing, price controls for cattle food, price controls for luxury goods, and so on until the government has intervened in virtually every part of the economy, i.e., socialism.
After providing some historical examples of this process, Mises gives the big picture. Interventionism, as a “middle-of-the-road policy,” is actually a road toward totalitarianism.
Lecture Four: Inflation
There can be no secret way to the solution of the financial problems of a government; if it needs money, it has to obtain the money by taxing its citizens (or, under special conditions, by borrowing it from people who have the money). But many governments, we can even say most governments, think there is another method for getting the needed money; simply to print it.
If the government taxes citizens to build a new hospital, then the citizens are forced to reduce their spending, and the government “replaces” their spending with its own. If, however, the government uses newly printed money to finance the construction of the hospital, then there is no replacement of spending, but an addition, and “prices will tend to go up.”
Mises, per usual, explodes the idea of a “price level” that rises and falls, as if all prices change simultaneously and proportionally. Instead, prices rise “step by step.” The first receivers of new money increase their demands for goods, which provides new income to those who sell those goods. Those sellers may now increase their demands for goods. This explains the process by which some prices and some people’s incomes increase before others. The result is a “price revolution,” in which prices and incomes rise in a stepwise fashion, starting with the origin of the new money. In this way, new money alters the distribution of incomes and the arrangement of real resources throughout the economy, creating “winners” and “losers.”
The gold standard offers a strict check against the inflationist tendencies of governments. In such a system, the government cannot create new units of money to finance its spending, so it must resort to taxation, which is notably unpopular. Fiat inflation, however, is subtle and its effects are complex and delayed, which makes it especially attractive to governments that can wield it.
In this lecture, Mises also executes a thorough smackdown of Keynes and Keynesianism, but I’ll leave that for readers to enjoy.
Lecture Five: Foreign Investment
Mises returns to a principle he introduced in the first lecture, that economic growth stems from capital accumulation. The differences in standards of living between countries are not attributable to technology, the qualities of the workers, or the skills of the entrepreneurs, but to the availability of capital.
One way that capital may be accumulated within a country is through foreign investment. The British, for example, provided much of the capital that was required to develop the rail system in the United States and Europe. This provided mutual benefit for both the British and the countries on the receiving end of this investment. The British earned profits through their ownership of the rail systems and the receiving countries, even with a temporary “unfavorable” balance of trade, obtained the benefits of the rail system including expanded productivity which, over time, allowed them to purchase stock in the rail companies from the British.
Foreign investment allows the capital accumulation in one country to speed up the development of other countries, all without a one-sided sacrifice on the part of the country providing the investment. Wars (especially world wars), protectionism, and domestic taxation destroy this mutually beneficial process. When countries impose tariffs or expropriate the capital that belongs to foreign investors, they “prevent or to slow down the accumulation of domestic capital and to put obstacles in the way of foreign capital.”
Lecture Six: Politics and Ideas
The classical liberal ideas of the philosophers of the eighteenth and early-nineteenth centuries helped create the constrained governments and economic freedom that led to the explosion of economic growth Mises discussed in the first lecture. But the emergence of minority “pressure groups,” what we would call “special interest groups” today, directed politicians away from classical liberal ideals and toward interventionism. The groups that would benefit from various interventions lobby the government to grant them favors like monopoly privileges, taxes on competition (including tariffs), and subsidies. And, as we have seen, this interventionist spiral tends toward socialism and totalitarianism. The “resurgence of the warlike spirit” in the twentieth century brought about world wars and exacerbated the totalitarian trends even in the once exemplary nations.
The concomitant rise in government expenditures made fiat money and inflation too tempting. The wars and special projects advocated by the pressure groups were expensive, and so budget constraints were discarded in favor of debasement.
This, Mises says, explains the downfall of civilization. He points to the Roman Empire as an example:
What had taken place? What was the problem? What was it that caused the disintegration of an empire which, in every regard, had attained the highest civilization ever achieved before the eighteenth century? The truth is that what destroyed this ancient civilization was something similar, almost identical to the dangers that threaten our civilization today: on the one hand it was interventionism, and on the other hand, inflation.
Mises finds hope in the fact that the detractors of economic freedom, like Marx and Keynes, do not represent the masses or even a majority. Marx, for example, “was not a man from the proletariat. He was the son of a lawyer. … He was supported by his friend Friedrich Engels, who—being a manufacturer—was the worst type of ‘bourgeois,’ according to socialist ideas. In the language of Marxism, he was an exploiter.”
This implies that the fate of civilization depends on a battle of ideas, and Mises thought that good ideas would win:
I consider it as a very good sign that, while fifty years ago, practically nobody in the world had the courage to say anything in favor of a free economy, we have now, at least in some of the advanced countries of the world, institutions that are centers for the propagation of a free economy.
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