One of the most popular economic fallacies of our time is the belief that the absence of a minimum wage would lead to limitless exploitation of employees in the economy. Minimum wage legislation prevents employees from being hired at pay rates below the mandated amount. Proponents of minimum wage laws claim that not having a minimum wage would lead to employees being paid very little for the amount of work they do. They also claim that everyone ought to be entitled to some standard of living and that minimum wages are instrumental in ensuring better conditions for everyone. Ultimately, arguments for minimum wage laws do not stand up to scrutiny.The most important reason to oppose minimum wage laws is that they violate freedom of association and freedom of contract. It

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 “middle of the road” has become a popular position among those who find both free market capitalism and communism both to be extreme opposites. Despite the fall of the USSR, many still believe in various, often moderate, forms of socialism. This leads many to oppose a pure free market economy because they believe it is a radical idea prone to failure. With the failure of several socialist countries and systems, many are now becoming aware of the problems presented by the adoption of socialism and of excessive government intervention. What they fail to realize is that there is no such thing as “excessive” government regulation because all government regulation is excessive. An economy will not prosper by “correctly regulating” free markets, but rather by simply allowing them to be.A

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.

Socialists are obsessed with eliminating the need to work. They contend that it amounts to coercion that is oppressive. However, they fail to understand the implications of what it means to choose to work and why working is a necessary part of life.Working in the context of a job refers to exchanging labor for money. Most jobs work on a voluntary basis where an employer and employee agree upon the nature of the work and wages to be paid. Such an agreement is found because an employer realizes he values the labor of the employee more than the wages he must pay, while the employee realizes he values his wages more than the amount of work he must contribute to his job. When these conditions are satisfied, a job is created, and work occurs in exchange for monetary

Fair trade is an increasingly politically popular idea, and opponents of the free market see it as a moral way to fix market abuse. Proponents of fair trade argue that free trade favors developed countries or bigger corporations and that steps should be taken to correct the balance of power to ensure equitable outcomes. However, fair trade fails to work because of misplaced grievances toward the free market.The idea of fair trade rejects the free market as a viable mechanism for the facilitation of goods and services. Fair-trade supporters argue that the free market does not lead to equitable outcomes and therefore is not suitable for modern society. In effect, they essentially argue that the free market does not lead to outcomes that they would prefer. Barring coercion,

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.

In many developing countries, protectionism is on the rise. It promises hope that a country can build their economy from the ground up and grow into a developed economy. A common obstacle to that goal is a poor understanding of economics which often hinders the country as politicians create roadblocks on the path toward prosperity. Protectionists in developing countries often argue that their economies are not resilient enough to compete in global markets yet and therefore require government intervention to survive. In reality, promoting industries that cannot survive on their own is a waste of time, money and resources.It is easy to see why such reasoning appeals to the common layman. Start-ups fail often and have a hard time competing with established businesses, so

“Work or starve” is a common argument used against free-market capitalism. Proponents of the “work or starve” argument argue that capitalism forces one to work or be forced with the prospect of starvation or destitution. This is a mistaken approach since “work or starve” is not a feature of capitalism but rather of the world we live in. By conflating positive rights with negative rights, a perverted type of justice is imagined.We know that humans must regularly consume some basic necessities in order to survive. For such necessities to be procured, they must be produced in some way. For example, water can be found, and food can be cooked. Regardless of the way in which these necessities are produced, it is known that their production is a necessary step prior to their

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.

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.

In a world full of hatred for the free market, the people calling for the nationalization of industry aren’t scarce. Despite their political popularity, nationalizations are terrible for economies and represent a stepping stone on the path to destitution and collapse.

A prominent topic that economics students anywhere cannot avoid is market failure. Students everywhere are taught that the free market is inherently unstable and causes problems that can only be fixed through legislation and regulation. As a result, most of those who take an economics class come out of it believing that the state helps counter the shortcomings of the free market.However, the concept of market failure is fallacious as it is based upon faulty economic reasoning. Belief in market failure is often complementary with seeking to promote politically desirable goals rather than to promote economic growth.First, a free market operates on freedom of association and property rights. Therefore, for any transaction or exchange to be conducted on a free market, it must be voluntary.

For quite a considerable amount of time, the topics of job creation and unemployment have been central to every political campaign in almost every country. It hasn’t been without good reason, either, since job security is one of the most important factors in someone’s career. Therefore, a candidate who can promise to create more jobs and sustain job growth would appear on paper to be the better candidate. However, there are few policies that promote greater havoc than job-creation programs. This should not be a surprise since the state is ultimately not responsible for financing jobs, so it need not worry about profit or loss.Politicians are inclined to include job-creation programs in their promises because they are often popular with voters. After all, if there are more jobs in the

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.

In discussions of politics, it is common to see politicians praised for policies and programs that expand the welfare state. Politicians who sign off or approve spending at a greater magnitude than other politicians are often seen as more generous.

In our modern world, most states are democracies or at least call themselves “democratic.” The adoption of democracy is hailed as one of humanity’s greatest achievements. Once upon a time, humanity broke out of the shackles of monarchies and has never looked back since. Nowadays, all citizens in democratic countries are free and safe from despots. Except, that is far from the truth.Democratic systems have been around for a long time. Ancient Greece comes to mind as the most prominent example of democracy in antiquity. While modern democracies are wildly different from the ones in ancient Athens, they are still susceptible to the pitfalls applicable to all democracies.Democracies violate freedom of association. Proponents of democracies often argue that everyone is given a vote and that

The “ease of doing business” rankings is a list of countries ranked according to how easy it is to register, start, and maintain a business in that country. While its methodology is not perfect, it does attempt to take into account several important factors such as cost and time to start a business, property registrations, tax burdens, and the enforcement of contracts. It should be no surprise that the countries that hover around the top of these rankings are some of the most prosperous in the world.Politicians often use improvements in the ease of doing business as an electoral promise to boost their popularity. Fortunately, when some of these programs are implemented properly and serve to create a freer business environment, it can be good for economic prosperity. This was the case 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.

Frédéric Bastiat in his book The Law distinguishes between profit and plunder. Profit is financial gain earned through industrious behavior. Business owners make a profit by selling products at a greater amount than what it costs to produce that product. Plunder, by contrast, is the theft of property through nonvoluntary means, such as theft, coercion, or fraud. Bastiat noted that while most plunder is illegal, there remains one major exception: the state.All plunder is an act of aggression against someone else’s natural rights, hence why it is morally wrong. Regular plunder is a tough business, even for delinquent thieves. There is risk involved in robbing or defrauding someone, leading to no return on the effort of the thief. There is also the issue of the victim or potential victims of

Private property rights are crucial to economic prosperity. Without them, it becomes impossible to set up a system of free markets that allows for rational economic calculation. Despite this, property rights are under attack in today’s world by progressives seeking to build a more “just” society through equity.When property is originally appropriated, it belongs to its owner. The owner may use, transform, sell, or even not use his property at all, based solely on his own discretion. The owner of something has the most incentive to use his property responsibly. This might occur in the form of consuming a good with moderation or using a tool in the most efficient production process. The appropriation of property is a path towards wealth. In a free market system, one can acquire property,

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.

Time preference refers to the preference of satisfaction in the present as compared to a future time. A person who heavily prefers current consumption to future consumption has a high time preference as he places a heavy premium upon satisfaction as soon as possible. By contrast, a person who does not place a heavy premium upon instant satisfaction has a low time preference. People with low time preferences are more likely to save and invest their money for greater future rewards. This tendency to delay consumption for the sake of increased production leads to the accumulation of wealth that propels the process of civilization.In Democracy: The God That Failed, Hans-Hermann Hoppe states:However, no matter what a person’s original time-preference rate or what the original distribution of

Tu ne cede malis, sed contra audentior ito

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A recent video by CNN states that lower prices are bad for the United States economy and that consumers must get used to the newer, higher prices. The video goes so far as to say, “We’re never going to pay 2019 prices again.” The video claims that deflation is responsible for a long list of problems including layoffs, high unemployment, and falling incomes. Americans should simply get used to paying more and more each year and be happy about it. Except, deflation is actually good for consumers despite the contentions of inflation-supporting economists.The conclusion that inflation is a good thing is reached by the mishandling of economic terms. While Austrian economics accepts that inflation is the expansion of the money supply, mainstream economics contends that inflation is an increase