Gary Galles

Gary Galles

Gary M. Galles is a professor of economics at Pepperdine University. He is the author of The Apostle of Peace: The Radical Mind of Leonard Read.

Articles by Gary Galles

Why Biden’s Spending Is Unsustainable

It’s popular for politicians to claim they will never cut Social Security. But doing nothing now about the program means imposing an even larger hit on seniors in the future. 

Original Article: "Why Biden’s Spending Is Unsustainable"
This Audio Mises Wire is generously sponsored by Christopher Condon.

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Fiscal Illusion and Entitlements

As the State of the Union address and subsequent pronouncements have made clear, American politics is in the firm grip of fiscal illusion.
One example is President Biden’s bragging that “In the last two years, my administration has cut the deficit by more than $1.7 trillion—the largest deficit reduction in American history,” which implied that we should only look at a short run effect which had little, if anything, to do with the policies he adopted, in evaluating his fiscal policy.
However, he did not mention that the CBO estimates that the average yearly federal deficit over the next decade will be $1.6 trillion (under current policies, not including any expansions that have not yet been enacted), which implies his current policies continue to massively rip off future generations.

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Joe Biden and Protectionism: Continuing to Make America “Grate”

Nobel Prize–winning economist George Stigler once wrote of economists as preachers, which he described as involving offering “a clear and reasoned recommendation (or, more often, denunciation) of a policy or form of behavior by men or societies of men,” particularly with respect to the ethics of market competition. With regard to defending those ethics (i.e., defending mutually voluntary arrangements that individuals make with one another versus involuntary arrangements forced on some by others), I fit in his preacher category. I find the violation of people’s rights and of public policies that impose or necessitate such abuses immensely grating.
When Donald Trump announced his intent to “Make America Great Again” (soon advertised on MAGA hats), the preacher in me applauded the tax

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Why You Should Fear “Bipartisan” Agreements in Congress

After the recent midterm election, when it became apparent that Americans would have a divided new Congress, it wasn’t long before the word bipartisan started showing up as an adjective to modify a whole host of legislative proposals and discussions. While in many cases the word has been aspirational rather than descriptive—as in, “the other side should follow our lead in agreeing to this”—it has often also been used as a magic modifier in an effort to reduce criticism and grease the skids to more political support for proposals.
Unfortunately, especially with the country as sharply divided as it is now, what is advertised as political efforts at bipartisanship often founders on the shoals of claims that only “comprehensive” reforms are worthy of support. And President Biden’s State of the

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Subsidizing Higher Education Is Not Creating Widespread External Benefits

Contrary to the claim that taxpayer subsidies for higher education provide great social benefits, these subsidies actually are a wealth transfer from the less-well-off to wealthy people.

Original Article: "Subsidizing Higher Education Is Not Creating Widespread External Benefits"
This Audio Mises Wire is generously sponsored by Christopher Condon.

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Can We Have Scarcity but Reject the “Scarcity Mindset?” in a Word, No

Since I am an economist and my school year is not too far along, my classroom discussion of how all of economics traces back to the fact of scarcity (the combination of limited resources, which implies a limited ability to produce, along with wants that always exceed the amount that can be produced) facing everyone was quite recent.

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A Cliché of Socialism: Under Public Ownership, We the People Own it!

Foundation for Economic Education founder and cornerstone Leonard Read always had an ear out for widely accepted but misleading clichés that served to aggrandize government power and limit liberty. In his 1965 “A Cliché of Socialism: Under Public Ownership, We the People Own It!” He focused his attention on the large gap between public ownership of assets and the idea that “we the people” own them.

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The Government Runs the Ultimate Racket

"Seniors hurt in Ponzi scam" headlined the story of elderly Southern Californians bilked in a pyramid scheme. While sad, the story reminded me of Social Security, since it is also a Ponzi scheme involving those older, with high payoffs to early recipients coming from pockets of later participants. With Social Security, however, it benefits those older at others’ expense.

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Why “Macro” Thinking in Economics Is Such a Problem

As someone who teaches public finance (better termed the economics of government), I can’t count how many times I have heard politicians promise “comprehensive” reforms to some major problem. But what such efforts actually produce is always different from what is promised, because such achievements are beyond government’s competence.

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Leaving behind the Labor Theory of Value

The labor theory of value has long undermined people’s understanding of the miracles created by markets and rationalized various incarnations of socialism which mangle those miracles. Leonard Read understood why undoing that misunderstanding by all who hold to it, as well as those who just use it as an excuse for what they want government to impose on unwilling citizens, is of immense value to each of us.

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How to Cheat with Cost-Benefit Analysis: Double Count the Benefits

Because my economics courses focus on public policy, I often deal with benefit-cost analyses (BCA) in them. While little discussed, the central idea is simply to identify and include all the relevant benefits and costs of a decision, do our best to estimate their values, then choose the option that provides the greatest net benefits. Hardly a radical idea. It can be useful in disciplining our thinking to be more consistent. Benjamin Franklin employed a version of it.

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There’s Nothing Wrong with Short Selling

The recent GameStop short-squeeze drama has riveted financial markets. Given the historic unpopularity of short sellers (e.g., Holman Jenkins has written that “short-selling is…widely unpopular with everyone who has a stake in seeing stock prices go up”), the resulting heightened invective against them is not a surprise.

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Why the Marketplace Is Not a Zero-Sum Game

Twenty-twenty marks the twenty-fifth anniversary of a book that has had an expanding influence on the public conversation about market competition. Robert Frank and Philip Cook’s 1995 The Winner-Take-All Society argued that there are an increasing number of markets in which small differences in performance give rise to enormous differences in rewards.

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Why Congressional “Oversight” of the Bureaucracy Is No Such Thing

I have long been fascinated by both public policy and the interesting crooks, crannies, and oddities found in the English language. Recently, I came across one such tidbit which connected both of those interests. Hugh Rawson, in “Janus Words—Two-faced English” on the Cambridge Dictionary blog, was discussing a number of English words that are sometimes called Janus words, after the Roman god depicted with two faces pointing in opposite directions, because they have opposite meanings within themselves (e.g., cleave, hew, sanction, scan, peruse).

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The Folly of “Ask What You Can Do for Your Country”

Recently, I was reminded of John F. Kennedy’s most famous line, “Ask not what your country can do for you; ask what you can do for your country,” when I heard it among several famous sound bites leading into a radio show segment. It also reminded me that we will hear it more soon, as we are approaching JFK’s May 29 birthday. However, it is worth reconsidering what it means.

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How Words Like “Essential” and “Need” Are Abused by Politicians

Over the years, one of the most common trump cards used to justify government treating people differently, rather than equally, has been the word need. And when used to override individuals’ ownership of themselves and what they produce, its usage has created confusion rather than clarity. In public discussion, “need” has increasingly morphed into one of its synonyms—essential, as in “essential jobs.” But it still suffers from many of the same analytical problems.

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Be Thankful for Those Who “Only Do It for the Money”

At least since I first read George Orwell’s Politics and the English Language, I have been a student of the use of weasel words. I have joined what he called the “struggle against the abuse of language,” because “Political language…is designed to make lies sound truthful…and to give an appearance of solidity to pure wind.”

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The Real Cost of Anti-Price-Gouging Laws

Supply and demand diagram

As has happened before with many natural disasters, the COVID-19 panic is leading to complaints of shortages and “gouging,” which about two-thirds of US states have passed laws against (often in terms so vague that it makes any enforcement discretionary, and thus discriminatory). But rather than complaining of shortages and gouging, critics should realize that “gouging” is the solution to shortages, not a cost in addition to them.

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Why Democracy Doesn’t Give Us What We Want

That Americans are in the throes of a crisis in democracy has become a commonplace refrain of late. I have noticed that almost all such commentary treats political democracy, implicitly or explicitly, as the ideal. Yet in truth it is a seriously flawed ideal. In fact, as F. A. Hayek noted years ago.

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Peaceful Market Exchange—Not Politics—Harnesses the Value of Diversity

That there are inherent benefits in diversity is a common article of faith in our democratic/populist times. We hear it in and about universities, businesses, politics, entertainment, etc. Typically, though, we hear about it in terms of forcing more diversity on those whose diversity in a particular dimension doesn’t measure up to someone else’s arbitrary standard.

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“Low” Tax Rates Often Mask Much Larger Tax Burdens

Discussions about the incentive effects of taxes can be misleading. The focus is usually on the tax rates imposed. But one’s incentives are not best measured by tax rates, but by how much value created for others (reflected in consumers’ willingness to pay) is retained by the creator, which I refer to as take-home income.

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