How The Grinch Stole the Free Market

By Sarah Skwire

Originally posted at FEE.org

 

All the folks
Down in Galt’s Gulch
Liked Markets a lot…

But the Grinch,
Who lived just North of Galt’s Gulch,
Did NOT!

The Grinch hated Markets! Especially free ones!
Now, please don’t ask why. No one quite knows the reasons.
It could be that his head wasn’t screwed on quite right.
It could be, perhaps, that his rings were too tight.
But I think that the most likely reason of all
May have been that his brain was two sizes too small.

But,
Whatever the reason,
His brain or his rings,
He stood there on his mountain top, hating the things,
Staring down from his cave with a sour, Grinchy frown
At the warm lighted windows below in their town.
For he knew all the folk down in Galt’s Gulch below
Were busy now, trying to sell high, buy low.

“And they’ll say it’s beneficial!” he snarled with a sneer.
“Tomorrow they’ll barter! It’s practically here!”
Then he growled, with his grinch fingers nervously drumming,
“I MUST find a way to keep Markets from running!”
For, tomorrow, he knew…

…All the Gulch gals and guys
Would wake up bright and early. To the market they’d fly!
And then! Oh, they’d buy! Oh, they’d buy! Buy! Buy! Buy!
That’s one thing he hated! They’d BUY! BUY! BUY! BUY!

Then Galt’s Gulch, young and old, would all make a profit.
And they’d profit! They’d profit!
And they’d profit! profit! profit!
They would start innovating and make money off it!
It made him so mad that he punched through the soffit !

And THEN
They’d do something he liked least of all!
All the people of Galt’s Gulch, the tall and the small,
Would stand close together, with no thoughts of raiding.
They’d stand face to face. And then they would start trading!

They’d trade! And they’d trade!
AND they’d TRADE! TRADE! TRADE! TRADE!
And the more the Grinch thought of this peaceful exchanging
The more the Grinch thought, “This requires rearranging!
“Why for fifty-three years I’ve put up with it now!
I MUST stop Markets from running!
…But HOW?”

Then he got an idea!
An awful idea!
THE GRINCH
GOT A WONDERFUL, AWFUL IDEA!

“I know just what to do!” The Grinch laughed in his throat.
And he made a Hayekian hat and a coat.
And he chuckled, and clucked, “What a great Grinchy trick!
“With this coat and this hat, I’ll look just like Friedrich!”

“All I need is a moustache…”
The Grinch looked around.
But since moustaches are scarce, there was none to be found.
Did that stop the old Grinch…?
No! The Grinch simply said,
“If I can’t find a moustache, a moustache I’ll make!”
So he gathered supplies. Then he sewed up a fake
And stuck it just under his nose. What a snake!

Then the Grinch said, “I’m ready!”
And he started down
Toward the Gulch where the folk
Lay a-snooze in their town.

All their windows were dark. Quiet snow filled the air.
Everybody was dreaming sweet dreams without care
When he came to the first house in the square.
“This is stop number one,” the old fake Friedrich hissed
And he stepped to the door, velvet glove on his fist.

Then he walked right inside. Didn’t ring, didn’t knock.
(Property rights are respected by folks who read Locke.)
Then he slithered and slunk, that legislation-mad demon,
Around the whole room, and he took every freedom!
Cigars! Motorcycles! The schools! And their guns!
Freedom to travel! He took every one
And he made regulations
to stop them all. (Grinches adore legislation.)

Then he slunk to the icebox. He took the trans-fat!
He took the raw milk! And the sauerkraut vat!
He cleaned out the fridge; took their bathtub-brewed booze.
Why, that Grinch even took their last freedom to choose!

So he shut it all down with a heart filled with glee.
“And NOW!” grinned the Grinch, “For a tax on this tree!”

And the Grinch grabbed the tree, and he started to tax it
When he heard a small growl like a rattling ratchet.
He turned around fast, and he said, “Who are you?”
It was Dagny-Lou Taggart, who was not more than two.

The Grinch had been caught by this little Gulch daughter
Who’d got out of bed for a cup of cold water.
She stared at the Grinch and said, “Herr Hayek, why,
“Why are you taking our liberties? WHY?”

But, you know, that old Grinch was so smart and so slick
He thought up a lie, and he thought it up quick!
“Why, my sweet little tot,” the fake Hayek confessed,
“There’s a wee knowledge problem I have to address.
“So I’m taking it home to my workshop, my dear.
“I’ll direct things up there, then distribute them here.”

And his fib fooled the child. Then he patted her head
And he got her a drink and he sent he to bed.
And when Dagney-Lou went to bed with her mug,
HE went to the chimney and planted a bug!

So the last thing he took
Was their privacy right.
Then he left, with his grinchy heart filled with delight.

And the one speck of freedom
He left in the house
Was a crumb that was even too small for a mouse.

Then
He did the same thing
To the other Gulch houses

Leaving crumbs
Much too small
For the other Gulch mouses!

It was quarter past dawn…
All the Gulch, still a-bed
All the Gulch, still a-snooze
When he packed up his sled,
Packed it up with their freedoms! Their hopes and their choices!
Their work! Innovations! Inventions! Their voices!

Three thousand feet up! Up the side of Mount Crumpit,
He rode with his load to the tiptop to dump it!
“Pooh-pooh to the Gulch!” he was grinch-ish-ly humming.
“They’re finding out now that their markets aren’t running!
“They’re just waking up! I know just what they’ll do!
“Their mouths will hang open a minute or two
“Then all the folks down in Galt’s Gulch will all cry BOO-HOO!”

“That’s a noise,” grinned the Grinch,
“That I simply must hear!”
So he paused. And the Grinch put a hand to his ear.
And he did hear a sound rising over the snow.
It started in low. Then it started to grow…

But the sound wasn’t sad!
Why, this sound sounded merry!
It couldn’t be so!
But it WAS merry! VERY!

He stared down at Galt’s Gulch!
The Grinch popped his eyes!
Then he shook!
What he saw was a shocking surprise!

Everyone down in Galt’s Gulch, the tall and the small,
Was trading! Despite regulations and all!
He HADN’T stopped markets from running!
They RAN!
Somehow or other, they ran, ‘cause they CAN!

And the Grinch, with his grinch-feet ice-cold in the snow,
Stood puzzling and puzzling: “How could it be so?
It came without laws! It came without orders!
“It came without bureaucrats! Or walls at our borders!”
And he puzzled three hours, `till his puzzler was sore.
Then the Grinch thought of something he hadn’t before!
“Maybe Markets,” he thought, “don’t need regulating.
“Maybe Markets…perhaps…should go on percolating!”

And what happened then…?
Well…in Galt’s Gulch they say
That the Grinch’s small brain
Grew three sizes that day!
And the minute his brain didn’t feel quite so tight,
He whizzed with his load through the bright morning light
And rolled back legislation! The whole nasty range!
And he…

…HE HIMSELF…!
The Grinch learned to exchange!

The Backfire Effect

You Are Not So Smart

The Misconception: When your beliefs are challenged with facts, you alter your opinions and incorporate the new information into your thinking.

The Truth: When your deepest convictions are challenged by contradictory evidence, your beliefs get stronger.

Wired, The New York Times, Backyard Poultry Magazine – they all do it. Sometimes, they screw up and get the facts wrong. In ink or in electrons, a reputable news source takes the time to say “my bad.”

If you are in the news business and want to maintain your reputation for accuracy, you publish corrections. For most topics this works just fine, but what most news organizations don’t realize is a correction can further push readers away from the facts if the issue at hand is close to the heart. In fact, those pithy blurbs hidden on a deep page in every newspaper point to one of the most powerful forces shaping the…

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Is the Cost of Living Really Rising?

By Steve Horwitz

One contemporary economic myth is that the cost of living has consistently risen over the last hundred years and is now been higher for most Americans. At first glance, this seems to be true, as the sticker price of most goods and services is higher than it’s ever been. One thing we need to take into account there is inflation of course. But beyond inflation, the reality is that most goods and services have never been cheaper. The way to see this is to think about the cost of goods and services in terms of the amount of labor time it takes to purchase those at the average industrial wage. So for example, when the average industrial wage is low, it takes a lot more labor hours to purchase the average good than it does when the average industrial wage is high. What we discover is the cost of pretty much everything is dramatically cheaper than it was hundred years ago or even a generation ago. For example, in 1920, the average private sector wage was less than a dollar an hour and a 3-pound chicken took about two and a half hours of labor time to purchase. If we fast forward to the turn of the 21st century, when the average private sector wage was about 12.50 / hour, that same 3-pound chicken took about 14 minutes worth of labor to purchase.

If we think about other kinds of examples, in the early 1960s, one could have gone into an appliance store, and for 500 dollars bought the top-of-the-line home stereo system. Today that same 500 dollars you can go into the store and buy 2 new IPods. Not only that, the IPod can carry all of your music with you anywhere you go, whereas as the old stereo system had to stand in your home and can only play one thing at a time. More importantly if you think about the 500 dollars that someone would have spent to buy that system in the early 1960s and then convert that over the labor hours and think about what the same number of labor hours can buy today, what we find is that could buy a whole variety of electronic products from LCD TVs, to blue ray players, to home speaker systems, to an IPod, to a laptop, to a digital camera, all of them, and all of them being of much higher quality than before.

Some goods are actually more expensive than they used to be even if we calculate in terms of labor hours. One example of this are cars. Cars actually cost slightly more in terms of labor hours today than they did decades or even almost a hundred years ago. But one of the important things to realize here is that what we’re buying with our money is not quite the same. Cars early on of course were basically four wheels of seat in an engine. Today, they’re safer and they last longer. Today if you don’t get a hundred thousand miles out of your car, you feel like you’ve been ripped off. To get a hundred thousand miles out of a car in the 1920 or 1950 was nearly a miracle. So even though cars cost a little bit more in terms of labor hours, what we’re getting from them is a lot more. The dramatic fall in the cost of living over the course of the 20th century illustrates perfectly the power of market competition. As firms compete for consumer dollars, they have the incentive to come out with new and better products that are continually cheaper.

Firms have the incentive to innovate, to find more efficient ways to make those products and to make them available to more Americans. The result of all this is that poor Americans today have more standard household appliances in their homes such as microwaves, refrigerators, freezers, air conditioners, even cars, than did the average American family a generation ago. So clearly, over the course of the 20th century, the cost of living has fallen as most goods and services are cheaper, in terms of the labor time it takes to purchase them and as a result, all Americans, poor, middle class as well as upper class, are living better than ever before.

Also Check out the video edition of this at http://www.learnliberty.org/videos/is-the-cost-of-living-really-rising/

The Immorality of the State

Josey's Libertarian Page

by Mikhail Bakunin (1873)

0001_mikhail_bakuninThe Theory of Social Contract.
Man is not only the most individual being on earth – he is also the most social being. It was a great fallacy on the part of Jean Jacques Rousseau to have assumed that primitive society was established by a free contract entered into by savages. But Rousseau was not the only one to uphold such views. The majority of jurists and modern writers, whether of the Kantian school or of other individualist and liberal schools, who do not accept the theological idea of society being founded upon divine right, nor that of the Hegelian school – of society as the more or less mystic realization of objective morality – nor the primitive animal society of the naturalist school – take nolens volens, for lack of any other foundation, the tacit contract, as their point of departure.

A tacit…

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Wage Slavery

I think “Wage Slavery” is a false term.
Wages are what employees gain from their service and labor to their employer. It is an act of voluntary exchange on the part of both parties. If wages were not gained by this service then slavery would exist, in the presence of wages though it is merely employment by mutual terms.

Slavery, historically, is the position of a person who through compulsion is held against their will and forced (by threat of violence)to work for the gain of the “slaveholder or slave master”.

Using the word wages in conjunction with the word slavery does two things. One it lowers the definition of wages to the negative connotation of being forced to work for the benefit of another without ANY reimbursement. Secondly it tends to negate the real horrors of real slavery that has happened and is still happening around the world.

The term “wage slavery” defined deals with those wages that are so low that a person who is employed relies on them just for basic survival. Of course wages should be used in the pursuit of survival and any wants left to be pursued, if that is the want of the wage earner. One cannot force a person to use their own property in any other way that they do not wish.

Hereto we must interject on the reverse side of this issue. Mandatory wage and Minimum wage laws handed down from government bureaus and departments. These laws force businesses and businesses owners to provide wages beyond that of market value or personal labor value. These laws almost always lead to higher prices in market goods as the mandatory minimum wages are offset in the businessman’s pursuit to maintain certain levels of profit.

Wage Slavery is a false point being made by those that wish to direct the affairs of businesses that do not affect them in the personal way.

Deflating the Deflation Myth by Chris Casey

Originally posted to and reblogged from http://mises.org/daily/6709/Deflating-the-Deflation-Myth

Mises Daily: Wednesday, April 02, 2014 by

 

The fear of deflation serves as the theoretical justification of every inflationary action taken by the Federal Reserve and central banks around the world. It is why the Federal Reserve targets a price inflation rate of 2 percent, and not 0 percent. It is in large part why the Federal Reserve has more than quadrupled the money supply since August 2008. And it is, remarkably, a great myth, for there is nothing inherently dangerous or damaging about deflation.

Deflation is feared not only by the followers of Milton Friedman (those from the so-called Monetarist or Chicago School of economics), but by Keynesian economists as well. Leading Keynesian Paul Krugman, in a 2010 New York Times article titled “Why Deflation is Bad,” cited deflation as the cause of falling aggregate demand since “when people expect falling prices, they become less willing to spend, and in particular less willing to borrow.”[1]

Presumably, he believes this delay in spending lasts in perpetuity. But we know from experience that, even in the face of falling prices, individuals and businesses will still, at some point, purchase the good or service in question. Consumption cannot be forever forgone. We see this every day in the computer/electronics industry: the value of using an iPhone over the next six months is worth more than the savings in delaying its purchase.

Another common argument in the defamation of deflation concerns profits. With falling prices, how can businesses earn any as profit margins are squeezed? But profit margins by definition result from both sale prices and costs. If costs — which are after all prices themselves — also fall by the same magnitude (and there is no reason why they would not), profits are unaffected.

If deflation impacts neither aggregate demand nor profits, how does it cause recessions? It does not. Examining any recessionary period subsequent to the Great Depression would lead one to this conclusion.

In addition, the American economic experience during the nineteenth century is even more telling.

Twice, while experiencing sustained and significant economic growth, the American economy “endured” deflationary periods of 50 percent.[2] But what of the “statistical proof” offered in Friedman’s A Monetary History of the United States? A more robust study has been completed by several Federal Reserve economists who found:

… the only episode in which we find evidence of a link between deflation and depression is the Great Depression (1929-34). We find virtually no evidence of such a link in any other period. … What is striking is that nearly 90% of the episodes with deflation did not have depression. In a broad historical context, beyond the Great Depression, the notion that deflation and depression are linked virtually disappears.[3]

If deflation does not cause recessions (or depressions as they were known prior to World War II), what does? And why was it so prominently featured during the Great Depression? According to economists of the Austrian School of economics, recessions share the same source: artificial inflation of the money supply. The ensuing “malinvestment” caused by synthetically lowered interest rates is revealed when interest rates resort to their natural level as determined by the supply and demand of savings.

In the resultant recession, if fractional-reserve-based loans are defaulted or repaid, if a central bank contracts the money supply, and/or if the demand for money rises significantly, deflation may occur. More frequently, however, as central bankers frantically expand the money supply at the onset of a recession, inflation (or at least no deflation) will be experienced. So deflation, a sometime symptom, has been unjustly maligned as a recessionary source.

But today’s central bankers do not share this belief. In 2002, Ben Bernanke opined that “sustained deflation can be highly destructive to a modern economy and should be strongly resisted.”[4] The current Federal Reserve chair, Janet Yellen, shares his concerns:

… it is conceivable that this very low inflation could turn into outright deflation. Worse still, if deflation were to intensify, we could find ourselves in a devastating spiral in which prices fall at an ever-faster pace and economic activity sinks more and more.[5]

Now unmoored from any gold standard constraints and burdened with massive government debt, in any possible scenario pitting the spectre of deflation against the ravages of inflation, the biases and phobias of central bankers will choose the latter. This choice is as inevitable as it will be devastating.

Notes

[1] Krugman, Paul. “Why is Deflation Bad?” The Conscience of a Liberal. The New York Times 2 August 2010. http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation-bad/?_php=true&_type=blogs&_r=0

[2] McCusker, John J. “How Much Is That in Real Money?: A Historical Price Index for Use as a Deflator of Money Values in the Economy of the United States.” Proceedings of the American Antiquarian Society, Volume 101, Part 2, October 1991, pp. 297-373.

[3] Atkeson, Andrew and Kehoe, Patrick. Federal Reserve Bank of Minneapolis. Deflation and Depression: Is There an Empirical Link? January 2004.

[4] Bernanke, Ben.“Deflation: Making Sure ‘It’ Doesn’t Happen Here.” Remarks by Governor Ben S. Bernanke Before the National Economists Club, Washington, D.C. 21 November 2002. http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/

[5] Yellen, Janet. A View of the Economic Crisis and the Federal Reserve’s Response Presentation to the Commonwealth Club of California. San Francisco, CA 30 June 2009. http://www.frbsf.org/our-district/press/presidents-speeches/yellen-speeches/2009/june/yellen-economic-crisis-federal-reserve-response/