During his recent presidential campaign, Donald Trump has repeatedly floated the idea of eliminating personal income taxes and replacing them with tariffs on imports. The proposal, which was never developed in a detailed and coherent plan, was met with hostility by mainstream media and analysts. The latter did not consider the proposal serious enough, because (i) it would be almost impossible to make up for the lost revenue from the income tax with higher tariffs, and (ii) sky-high tariffs would have very negative consequences on international trade and domestic consumers, while shifting a larger share of the tax burden onto low- and middle-income households.Some Austrian school economists met the proposal with scepticism too. Ryan McMaken argued that the US needs a significant cut in

What is the Mises Institute?

The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard. Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.

The West is getting increasingly worried about China’s export prowess as its companies are rapidly gaining market shares in green and high-tech industries. Recently, U.S. Treasury Secretary Janet Yellen accused China of industrial overcapacity and urged Europeans to respond jointly to the latter’s nonmarket practices. Allegedly, China is flooding international markets with cheap products of good quality primarily due to industrial subsidies. The U.S. and its allies are ramping up protectionist measures such as punitive tariffs, technology controls and a reinforcement of their own industrial policies. What if they are wrong and China is just providing better incentives to work, save and invest?Is overcapacity boosting China’s EV exports?Sales of Chinese electric vehicles in Europe soared to

What is the Mises Institute?

The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard. Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.

With more than 130,000 certified signatures, the “Pro Switzerland” civil movement asked the Swiss government to organize a national referendum on strengthening the country’s international neutrality. After the authorities followed the European Union’s sanctions on Russia and bolstered the cooperation with the North Atlantic Treaty Organization (NATO), the referendum organizers want to prevent a gradual erosion of Switzerland’s traditional neutrality.They also want to avoid Sweden’s fate, which all of a sudden asked to join NATO once Russia invaded Ukraine. The Swedish government was quick to overturn a position of neutrality stretching back to the Napoleonic period without even organizing a popular consultation. This cautionary tale offers interesting insights about the will and capacity

So-called populist political parties and politicians gained considerable traction with Western voters in recent years, despite being dismissed in many cases as “a threat to democracy” and “extremists” by mainstream politicians. With the election of Donald Trump in the US and of Javier Milei in Argentina, the surge in polls and electoral wins of right and far-right parties in several European countries sent shockwaves through the political establishment.The Cambridge Dictionary defines populism as “political ideas and activities that are intended to get the support of ordinary people by giving them what they want.” If populism caters to the wishes of the people, then how could it be a threat for democracy? This sounds paradoxical together with the blunt refusal of mainstream parties to

In the wake of the financial meltdown fifteen years ago, some countries placed strict limits on piling on public debt. Despite cries that this harms investment opportunities, the ”debt brakes” have worked well.
Original Article: Fiscal Rules Do Not Undermine Investment, But Government Profligacy Does

To prevent public debt from soaring in the wake of the global financial crisis in 2009, Germany has enshrined a “debt brake” in its constitution. The debt brake sets strict limits on federal public debt levels and restrains government borrowing. This fiscal rule has served its purpose, and public debt has been on a downward path, dropping by about 15 percentage points of gross domestic product (GDP) since its introduction. Yet the government suspended it during the pandemic and raised an extra €370 billion of debt in 2020 and 2021. It also tried to circumvent this rule on several occasions by setting up off-balance sheet funds, such as a €100 billion special fund for military spending during the war in Ukraine.
In 2022, the German parliament decided to shift about €60 billion from the

In his latest defense of bloated military spending, President Joe Biden claims that the military budget creates real wealth. Instead, military spending is destroying it.
Original Article: President Biden Is Wrong. Military Spending Does Not Produce Wealth

So far, the White House has justified its unwavering support for Ukraine on lofty grounds such as defending democracy and freedom—both in Ukraine and in the West. However, with the American public—who bears the cost of the war in Ukraine—turning against it, several Republican lawmakers questioning its purpose and affordability, and elections approaching, the Biden administration has changed the messaging on the war. Its new line is that sending weapons to Ukraine is actually an investment in American industry, strengthening the economy and creating new jobs.
Joe Biden’s new argument fits well into the flawed Keynesian logic of “Bidenomics” in which economic prosperity is built upon generous public spending for infrastructure, semiconductors, and clean energy rather than on free markets. It

The German economic powerhouse is slowing, weighed down by its costly green energy policies and a bloated welfare state. Germany’s economy needs market reforms, not more state intervention.
Original Article: How German Exports Lost the Race with China

Germany is the euro area’s economic powerhouse and most competitive economy. It accounts for close to 30 percent of the euro area gross domestic product (GDP) and has recorded sizable current account surpluses since the introduction of the euro. Substantial fiscal and labor market reforms in the early 2000s propelled the German economy.
However, these golden days seem all gone now. Years of misguided energy policies—part of the government’s interventionist green agenda—increased energy prices and uncertainty for investors. In addition, the business environment deteriorated due to heavy bureaucracy and taxation, seriously weakening Germany’s productivity and output growth. The real beneficiary of Germany’s economic woes seems to be China, which has replaced it as the top global

There are no more rabbits for the Fed monetary magicians to pull out of their hats. In an economy addicted to artificially low interest rates, any more moves by the Fed will trigger an economic downturn.

Original Article: There Is No Fed Magic Trick to Achieve a Soft Landing

Economic growth in the United States accelerated to a 2.4 percent annualized rate in the second quarter of 2023, picking up from 2.0 percent in the first quarter, and climbing well above the 1.8 percent rate predicted by economists. Many analysts are surprised that the US economy has continued to expand at a robust pace despite the Federal Reserve’s (Fed) aggressive tightening on monetary policy.
The Fed raised interest rates by more than 500 basis points (bps) since March 2022. And yet, the labor market remains tight with a very low unemployment rate at 3.6 percent while the Standard and Poor 500 stock index is up almost 20.0 percent since the beginning of the year. Economists are optimistic that the Fed could deliver a soft landing by reducing inflation close to the 2.0 percent target

The Ukraine war raises issues of the legitimacy and usefulness of the “rules-based” international order (RBO) that supposedly governs international relations. The United States and the North Atlantic Treaty Organization (NATO) have strongly condemned Russia’s invasion of Ukraine and its violation of international law and rules, and the US is also concerned about the economic and military rise of China and its alleged intentions to reshape the RBO.
In general, Western political analysts decry the perceived disintegration of the much-vaunted liberal international architecture promoted by the US. At the same time, both Russia and China reject both the West’s allegations and its international rules. However, what is the solution for a lasting peaceful international cooperation?
Pax Americana

We hear ad nauseum from political and media elites that the war in Ukraine is about preserving "our freedoms." Murray Rothbard had something to say about this sophistry.

Original Article: "Rothbard Was Right: Wars Don’t Enhance Freedom. They Destroy Liberty."

Since the beginning of the war in Ukraine, Western leaders have declared that Ukraine was defending not only its own freedom, but ours too. President Joe Biden, to whom apparently “freedom is priceless,” vowed to support Ukraine for “as long as it takes.”
In turn, President Volodymyr Zelenskyy stated that the American support for Ukraine is not charity but an “investment in global security”. Other commentators also argue that a Ukrainian victory would strengthen global freedom by deterring other aggressions from autocratic powers like China. Yet, these positions are at odds with the clear antiwar stance of Murray N. Rothbard, one of the most prominent American libertarians of the twentieth century.
Rothbard made a clear distinction between the interests of governments as opposed to those

It is easy to dismiss Chinese advancements in electric vehicles as the result of government subsidies, but private entrepreneurship also is playing a major role.

Original Article: "China’s Emerging Global Leadership Isn’t Just the Result of Subsidies: Entrepreneurship Still Matters in This Market"
This Audio Mises Wire is generously sponsored by Christopher Condon.

China has become a global leader in the electric vehicles (EVs) sector, and Western governments are worried that its comparative advantage will become entrenched. Once again, mainstream pundits blame China’s success on government subsidies and unfair competition. This is just a pretext to argue for more government support in a sector which, from the very beginning, has not been driven by genuine consumer demand but by a political green agenda.
China Leads in the Global EV Race
About a decade after overtaking the US automotive market, China has become the world’s largest EV market and producer. According to analyst forecasts, domestic EV sales are expected to surge to about eight to ten million cars in 2023, up from record sales of 6.5 million in 2022. This exceeds by far sales of nearly

Today’s intellectual framework considers government spending to be the solution to any economic and social problem. Be it helicopter money to households and businesses during the pandemic, subsidies for electric cars, or debt forgiveness to students, the government generosity must be growth and welfare enhancing by definition.

The recent hefty depreciation of the yen to a twenty-four-year low against the dollar has raised eyebrows due to the yen’s traditional safe haven role in times of turmoil, such as the war in Ukraine. The yen’s decline had already started when major central banks signaled a tightening of monetary policy to fight inflation while the Bank of Japan (BoJ) doubled down on its loose monetary policy and zero target for ten-year bond yields.

The Russian invasion of Ukraine has brought America’s foreign policy interventions under the limelight once again. Ryan McMaken argues that the US administration’s claim that countries should not have the right to a sphere of influence, implicitly addressing Russia, is hypocritical.

Vladimir Putin’s invasion of Ukraine was met with unprecedented economic sanctions by the United States and its allies in order to cripple Russia’s capacity to wage war. Never before in post–World War II history has an economy of Russia’s size been reprimanded with such force. Moreover, the sanctions could remain in place after the war ends and reach other major economies too, in particular China. In this case, current sanctions could be the harbinger of a longer-term economic war with dire consequences for global productivity and welfare.
Sweeping Sanctions Invite Countersanctions
The round of sanctions imposed on Russia following the annexation of Crimea in 2014 were limited to travel bans, freezing of the assets of certain Russian officials, and a prohibition of credit and technology

The financial woes of the giant real estate developer Evergrande, which carries an estimated debt of $300 billion, have rekindled global fears that China’s property bubble is about to burst. Such predictions have occurred repeatedly in the past, in particular since 2010, and have been fueled by the rapid rise of property prices, construction volumes, and real estate debt. Today, many analysts fear that if the property bubble collapses, the impact on the real economy will be devastating. Some expect China’s growth potential to decrease dramatically, to 4 percent per year from about 8 percent during 2010–19, or even lower. Yet the current property market turmoil originates in regulatory action to reduce financial leverage, and it may not lead to a full-fledged financial meltdown if

After three decades of promarket reforms, extreme poverty in China has been virtually eradicated. So President Xi Jinping now has the leverage to shift his attention to reducing the wealth gap in Chinese society. In a speech to the Chinese Communist Party in August, Xi touted "common prosperity" for all Chinese as an essential requirement of socialism and modernization.

The current surge in inflation is not due to a shortage of supply as central banks want us to believe. It is primarily due to soaring consumer demand fueled by monetary creation.

For central bankers and mainstream analysts the recent inflation outburst is only a transitory phenomenon which has nothing or very little to do with the massive monetary and fiscal stimuli unleashed during the pandemic. Although the Fed has recently conceded that price pressures are persisting longer than expected, the surge of inflation is allegedly due to supply bottlenecks caused by the pandemic.

Abstract: The new “secular stagnation hypothesis” developed by Lawrence H. Summers attempts to justify why the demand stimulus applied in the aftermath of the global financial crisis failed to revive growth in a satisfactory manner.

In a speech to the nation just ahead of Bastille Day on July 14 celebrating the French Revolution, President Emmanuel Macron delivered a paradoxical blow to the Republic’s famous slogan: Liberté, égalité, fraternité. He announced a series of measures to speed up the pace of covid-19 vaccinations which undermine individual liberties and threaten a strong political and economic backlash.

After unleashing a disruptive trade conflict with China, the Trump administration has also escalated the lingering “cold tech war” between the two rival powers. Over the last two years, the US has passed new rules limiting China’s investments in the US, restricting bilateral information and communications technology (ICT) trade and controlling exports of sensitive and emerging technology to China.