Tag: F. A. Hayek

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free trade & free markets ideological culture

Competition in Currency

Monopoly control of money is at the root of all kinds of evil.

As the Euro faces collapse, and the dollar’s value becomes increasingly unsteady, central bankers the world over worry about what to do next.

But it doesn’t have to be this way.

Last Thursday I mentioned monetary experimentation, including Ron Paul’s support for F.A. Hayek’s idea of competing currencies. In my Townhall column this weekend, I noted that Rep. Paul has done more than promote the idea “that government policy should allow all currencies to float, favoring none.… Last year he introduced the Free Competition in Currency Act, as Hayekian a piece of legislation as you could imagine.”Monopoly Money

Paul’s proposal is not merely a sign of the times, it is a sign of intellectual seriousness — in a politician, no less. In the early 1980s he had introduced a measure to return the United States to the gold standard. But now he is willing to let “the market decide” which monies should circulate.

We may know a lot more about money than we used to, but one of the things we’ve learned is that no one knows for sure how to manage an entire monetary system, the whole kit and kaboodle.

So, just as we don’t need a grocery czar or an “industrial policy” to micromanage either technological production or R&D, centrally managed money is just too hard for any one set of persons … to manage.

Competition in money and banking (sans today’s progressivist doctrine of “too big to fail”) would not only work, it would keep politicians from the extremity of irresponsibility.

For yes, today’s politicians rely upon the Federal Reserve. They need to keep the “printing presses” running to supply that special, hidden tax that funds their deficits: inflation.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Ziggy Stardust Bucks

Josiah Warren Time Store note for Three Hours Labor

When times get tough, the tough … switch currencies.

A fascinating report in The Atlantic tells of the upswing in “local currencies.” In the United Kingdom, the Brixton Pound is being floated, engraved on its paper notes the likes of “David Bowie in his Ziggy Stardust era.” Pegged to the British pound, it serves mainly as a scheme to promote local business and trade, though maybe it’s a tad more than mere boosterism.

Bavarians are also “enthusiastically using the local currency as a protest” — the local currency being the Chiemgauer. And “similar currencies have popped up around the world,” including in Canada and the United States.

The Atlantic story also mentions the idea of a “time bank,” a one-​step-​up-​from-​barter method based on labor hours and (in some cases) accounting for a variety of skill levels. Such “systems are in use all over the world … though the organizers are careful to make sure that the time is never given a specific value in a hard currency, which would open the door to taxation from governments.”

That caveat shows how barter and labor time exchanges might seem the more “revolutionary,” from, say, an establishment point of view. It’s worth noting that the idea’s greatest early proponent was Josiah Warren, America’s genius utopian experimenter and theoretician of “individual sovereignty.”

Less of a radical, Rep. Ron Paul echoes eminent monetary economist and Nobel Laureate F.A. Hayek by promoting the “denationalization of money,” arguing that government policy should allow all currencies to float, getting rid of all taxation on trade amongst currencies as well as repealing all legal tender laws.

For my part, I would greatly enjoy spending a Ziggy Stardust banknote.

This is Common Sense. I’m Paul Jacob.

Categories
ideological culture too much government

The “Obamacare” Conspiracy

Some “unintended consequences” aren’t.

The order of the market is an unintended consequence of market participation. By buying and selling, we’re just trying to get what we want. But we also send signals that help other folks accommodate our values and plans, which then allows markets to form some semblance of orderliness.

In government, on the other hand, laws get advanced to help this person or that, or whole groups of people. But economists often note that the actual consequences of many policies are at great variance with their advertised benefits. These often negative outcomes we term (following F.A. Hayek) the “unintended consequences.”

It’s worth noting that sometimes politicians do intend those hidden, bad consequences.

Economist David Henderson brings up an instance of this:

One insurance agent I spoke to speculated that politicians and other government officials who support these regulations not only understand these effects, but also like them. Why? Because they cause more people to go without insurance and thus create a demand for government-​provided insurance.

Henderson then cites a provision of Obamacare, now kicking in: Regulations mandating medical insurance companies to spend a prescribed percentage of premiums “on actual medical care.” The result will be, almost certainly, the demise of whole hunks of the health insurance industry.

Thereby increasing political demands for government-​provided insurance.

Some of the folks who concocted this regulation, and some who voted for it, certainly knew the likely result. And welcomed it.

Politicians are not equally clueless.

This is Common Sense. I’m Paul Jacob.