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September 25 - October 30, 2021
The only exception is the item he makes himself: here he understands and appreciates the reason for the rise. But he is always likely to regard his own business as in some way an exception.
only must there be at least as much loss as gain from this political manipulation of prices; there must be a great deal more loss than gain, because price-fixing discourages and disrupts employment and production.
When these consequences are so clear that they become glaring, there is of course no acknowledgment on the part of the imposers of rent control that they have blundered. Instead, they denounce the capitalist system.
the more unrealistic and unjust the rent control is, the harder it is politically to get rid of it.
legal rents are held so far below market rents artificially increases the demand for rental space at the same time as it discourages any increase in supply.
rent control is not only increasingly futile, but increasingly destructive the more severe it is, and the longer it remains in effect.
You cannot make a man worth a given amount by making it illegal for anyone to offer him anything less. You merely deprive him of the right to earn the amount that his abilities and situation would permit him to earn, while you deprive the community even of the moderate services that he is capable of rendering.
There is no escape from the conclusion that the minimum wage will increase unemployment.
We cannot distribute more wealth than is created. We cannot in the long run pay labor as a whole more than it produces.
The more the individual worker produces, the more he increases the wealth of the whole community. The more he produces, the more his services are worth to consumers, and hence to employers. And the more he is worth to employers, the more he will be paid. Real wages come out of production, not out of government decrees.
THE BELIEF THAT labor unions can substantially raise real wages over the long run and for the whole working population is one of the great delusions of the present age. This delusion is mainly the result of failure to recognize that wages are basically determined by labor productivity.
overwhelming evidence that labor productivity is the fundamental determinant of wages,
as long as this situation exists, there will be a tendency for employers to bid workers up to their full economic worth.
pickets are really being used, not primarily against the employer, but against other workers.
These other workers are willing to take the jobs that the old employees have vacated, and at the wages that the old employees now reject. The fact proves that the other alternatives open to the new workers are not as good as those that the old employees have refused.
Another curious but persistent notion is that the interests of a nation’s workers are identical with each other, and that an increase in wages for one union in some obscure way helps all other workers.
many unions have insisted on rigid subdivisions of labor which have raised production costs and led to expensive and ridiculous “jurisdictional” disputes.
The real cause for the tremendous increase in real wages in the last century has been, to repeat, the accumulation of capital and the enormous technological advance made possible by it.
for the passion for economic equality, among union members as among the rest of us, is, with the exception of a few rare philanthropists and saints, a passion for getting as much as those above us in the economic scale already get rather than a passion for giving those below us as much as we ourselves already get.
either through government or private coercion, an attempt is made to lift prices above their equilibrium level, demand is reduced and therefore production is reduced. If an attempt is made to push prices below their equilibrium level, the consequent reduction or wiping out of profits will mean a falling off of supply or new production.
any attempt to force prices either above or below their equilibrium levels (which are the levels toward which a free market constantly tends to bring them) will act to reduce the volume of employment and production below what it would otherwise have been.
If we try to run the economy for the benefit of a single group or class, we shall injure or destroy all groups, including the members of the very class for whose benefit we have been trying to run it. We must run the economy for everybody.
Profits actually do not bulk large in our total economy.
some eminent economists believe that over a long period of years, after allowance is made for all losses, for a minimum “riskless” interest on invested capital, and for an imputed “reasonable” wage value of the services of people who run their own business, no net profit at all may be left over, and that there may even be a net loss. This is not at all because entrepreneurs (people who go into business for themselves) are intentional philanthropists, but because their optimism and self-confidence too often lead them into ventures that do not or cannot succeed.
One of the greatest dangers to world production today still comes from government price-fixing policies.
In a free economy, in which wages, costs and prices are left to the free play of the competitive market, the prospect of profits decides what articles will be made, and in what quantities—and what articles will not be made at all.
One function of profits, in brief, is to guide and channel the factors of production so as to apportion the relative output of thousands of different commodities in accordance with demand. No bureaucrat, no matter how brilliant, can solve this problem arbitrarily.
Free prices and free profits will maximize production and relieve shortages quicker than any other system. Arbitrarily fixed prices and arbitrarily limited profits can only prolong shortages and reduce production and employment.
a man will put forth greater efforts to save himself from ruin than he will merely to improve his position.
Contrary to a popular impression, profits are achieved not by raising prices, but by introducing economies and efficiencies that cut costs of production.
Profits, in short, resulting from the relationships of costs to prices, not only tell us which goods it is most economical to make, but which are the most economical ways to make them.
the answers supplied by profit and loss under competitive free enterprise are incomparably superior to those that could be obtained by any other method.
Even a relatively mild inflation distorts the structure of production. It leads to the overexpansion of some industries at the expense of others.
The value of money, as we have seen, depends upon the subjective valuations of the people who hold it. And those valuations do not depend solely on the quantity of it that each person holds.
when hyperinflation has once set in, the value of the monetary unit drops at a far faster rate than the quantity of money either is or can be increased.
It would almost seem as if no country is capable of profiting from the experience of another and no generation of learning from the sufferings of its forebears.
it is the nature of inflation to give birth to a thousand illusions.
Fundamentally what happens in an exchange economy is that the things that A produces are exchanged for the things that B produces.3
Inflation, indeed, throws a veil of illusion over every economic process.
Inflation is the opium of the people.
Deficit spending, once embarked upon, creates powerful vested interests which demand its continuance under all conditions.
Inflation itself is a form of taxation. It is perhaps the worst possible form, which usually bears hardest on those least able to pay.
Inflation is a kind of tax that is out of control of the tax authorities. It strikes wantonly in all directions.
Like every other tax, inflation acts to determine the individual and business policies we are all forced to follow. It discourages all prudence and thrift. It encourages squandering, gambling, reckless waste of all kinds. It often makes it more profitable to speculate than to produce. It tears apart the whole fabric of stable economic relationships. Its inexcusable injustices drive men toward desperate remedies. It plants the seeds of fascism and communism. It leads men to demand totalitarian controls. It ends invariably in bitter disillusion and collapse.
there have always been squanderers, and there have apparently always been theorists to rationalize their squandering.
“Saving” in short, in the modern world, is only another form of spending. The usual difference is that the money is turned over to someone else to spend on means to increase production.
They keep larger reserves against contingencies. This hoarding of cash may seem like a cause of a subsequent slowdown in business activity. The real cause, however, is the uncertainty brought about by the government policies.
once people have decided to deride a practice or an institution, any argument against it, no matter how illogical, is considered good enough.
Let us picture to ourselves, then, a nation that collectively saves every year about 20 percent of all it produces in that year.
What does this mean?
Now as a result of this annual saving and investment, the total annual production of the country will increase each year.
Why?
