Profits Are Bad?

This is socialist indoctrination. Glorifying a man for his charity, yet implicitly criticizing all those that profit from their work. Perhaps if the people charged with the responsibility of educating the world's youth were better equipped with some sound economic understanding they would recognize that profits, or losses, are morally neutral. Profit is neither good nor bad. In fact, a world without capitalism and the market economy would still feature profit and loss. Every person engages in actions that strive to establish a superior state of affairs to whatever exists presently. Whether or not the chosen action achieves the desired result determines if there is a "profit" or a "loss". Profits and losses are psychic qualities that exist wherever human beings employ reason and will in determining particular modes of action. But only in the market economy--in capitalism--can people attribute specific values to the results of their actions and recognize which are more or less profitable. As Mises explained, profits and losses are ubiquitous.

HT: Captain Capitalism

A Confession

I have a confession to make. I have developed an unhealthy hatred for all things Barack Obama. Living in Ohio, I've been bombarded with campaign commercials. McCain on how wimpy and inexperienced Obama is, Obama on the need to develop alternative energy and reform healthcare, you the get the drift, standard campaign stuff. But the most recent commercial had to be designed to give me a brain hemorrhage. Though I tried to find a link to the video (and failed), the commercial is roughly a 30 sec clip featuring Obama telling us all how "Speculators are bad, evil people" and that as a solution to the energy crisis he plans to give everyone a $1000 check to cope with the high prices, and to pay for all this he will introduce a "windfall profits tax" as retribution against those greedy oil gougers. Big Oil? Come on!

Now, I want to ignore the headspinning lack of coherent logic employed by the Obama campaign economically. (If you need a few reasons why those policies can be described as moronic at best, follow the links: On Speculation Here, Here, and Here; on "windfall profits" here.) What I want to focus on is my reaction to these commercials. I think it's obvious that Obama is a savvy guy. The man was a law professor at the University of Chicago. He is not stupid! Obama, and the folks running his campaign, make these commercials because it is what they believe the public wishes to hear from their president. The name of the game is to get elected, and rarely is it that a candidate comes onto the scene as a true reformer and driver of an entirely new political paradigm. (Reagan is a glaring example of this.) This is how democracy functions, for better or worse.

I guess what I find most unfortunate and distressing about these commercials is that there is an actual electorate that is eating this up. Barack Obama is the current favorite to be our next president! So these are not marginal ideas but, arguably, mainstream. I remain optimistic for the future, though this optimism is being challenged with each passing day knowing so many of my peers are susceptible to being duped by such contradictory and harmful ideas.

Orwell as Blogger

The people who manage George Orwell's trust had the brilliant idea to start posting Orwell's personal diaries online at their blogsite. The entries begin on Aug 9th, 1939 and each new post will be added on the same day, just nearly 70 years later. It should be interesting to learn more about someone who remains relavant nearly 60 years after his death.

Step Brothers

Will Ferrell has another comedy movie out with John C. Reilly called Step Brothers. Expecting it to be about as funny as their previous film poking fun at Nascar, I went with a few friends this afternoon for a matinee showing.

Although at times it's completely outrageous and, basically, just Ferrell and Reilly acting like childish idiots (the sleep-walking scenes), the film is worth watching for Will Ferrell's singing opera towards to end. He actually sings--without lipsinking--Por Ti Volare (Time To Say Goodbye), a song made famous by Andrea Bocelli. He did a surprisingly wonderful job and I think just watching him sing this song makes the movie worth seeing. Oh, and it's pretty funny.

Here's the song by Bocelli and Sarah Brightman:

Mises: The Last Knight of Liberalism

I recently finished reading Jorg Guido Hulsmann's new book titled Mises: The Last Knight of Liberalism. It's a detailed biography (1143 pages) of the economist Ludwig von Mises. Hulsmann does a superb job humanizing Mises by overlapping insightful explanations of his overall contributions to economic science, while also focusing on aspects of Mises' eventful personal life. This book is highly recommended for anyone interested in the development of the Austrian School of Economics post-Carl Menger Bohm-Bawerk, as well as serving as an introduction to the historical context of this development.


Few people not already versed in the history of economic thought are familiar with von Mises and his weighty contributions to general human knowledge. It is not altogether unreasonable to suggest that he was the top social philosopher of the 20th century, which makes it ever more unfortunate that more people have not familiarized themselves with his writings. Despite the publication of his first major theoretical treatise, The Theory of Money and Credit in 1912, it took nearly a decade before Mises was recognized as a top monetary theorist. By 1920, with the early release of an excerpted essay from his forthcoming book on Socialism, Mises set off what would later be called the Socialist Calculation Debate. In the essay Mises argued that Socialism was not merely an inferior method of economic organization than capitalism, but that socialism as an economic system was altogether impossible because under an order where all property had a sole owner--the government--there would be no basis for market exchange, the very thing that generates the relative exchange ratios so useful for determining the effective and efficient allocation of resources within an economy. Later in the decade Mises would go on to demonstrate through his theory of intervention that government restrictions (ie. price controls, minimum wage laws, etc) are both counterproductive and bad economic policies, not from his own value judgements but because the restrictive policies were unsuitable to achieve the very ends sought by the government in their justification to implement them. Mises would go on to do significant work on the epistemology of economics, while also developing a systematic, integrated whole of economic theory derived from his initial axiom that "humans act". His magnum opus Human Action: A Treatise on Economics was first published in 1949.


For some the above may be nothing new. I already had a familiarity with many of Mises' works prior to reading Hulsmann's book, but what I did not have much familiarity with was Mises' personal background and his life story, which I find interesting because, after all, no matter how significant his intellectual output, he was still just a man like any other.


Mises was born in an eastern province of the then still intact Austro-Hungarian Empire to a recently ennobled Jewish family. Mises moved, along with his family, to Vienna and attended one of the prestigious gymnasiums (equivalent to middle and high school) and then later the University in Vienna. It was at the University in Vienna that Mises became acquainted with economics after reading Menger's famous 1871 work, the same book mentioned in previous posts. At this time Mises was also fulfilling his military training requirements where he was later commisioned as an officer in an artillery unit of the Austro-Hungarian army. With the outbreak of WWI, Mises fought on the northeastern front against the Russians. After two years of intense fighting, Mises was transfered to an economic bureau in Vienna where he wrote a brief essay outlining what he believed to be the proper method for running the war economy, in which he spelled out that it would be best to maintain as many components of a capitalistic method of production as possible because it was this form that is most flexible and capable of adapting to the dynamic requirements of munitions output and weapons supply. I stop there, though the story is told in splendidly compelling detail in Hulsmann's book.

Mises did many other heroic and impressive things throughout the rest of his life. He stood up to, and spoke out against, some of the most evil and repressive regimes, as well as combating the intellectual ideas that drove them. He barely escaped Europe alive. In all of human history, I doubt there is a single person more impressive and admirable than Ludwig von Mises.

Economics 101

Demand for something rises as the price for it decreases. This is obvious stuff. So what do you think would happen when Papa John's decided to apologize to the greater Cleveland area for their decision to distribute 'crybaby' 23 t-shirts to Washington Wizards fans by offering all of northern Ohio 23 cent pizzas? If you guessed long lines and shortages then give yourself a gold star.

"Lines were so long Thursday at some of the 86 Papa John's stores offering a large one-topping pizza for 23 cents that police stood nearby to make sure people didn't get unruly."

Obviously.