Quite interesting to read what proponents of inflation, like Donald Luskin, said in 2001, when they saw a deflation threat. Read more.
I have written a simple acoustic song with a Hayekian flavor. Click here to see the lyrics and find a link to download the .mp3 file.

There have been a lot of articles criticising Paul Krugman's ideas. People like Robert Murphy, William Anderson and many others have written great articles on the subject. Modestly, I have tried to contribute to these critiques with one article in which I try to summarise several points. The article was titled "Los errores de Krugman: una crisis de deuda no se resuelve con más deuda" (Krugman's errors: A Debt Crisis Cannot Be Solved With More Debt) published in Spanish at the economics section of LibertadDigital.com. Previously, I published another article describing the main ideas Krugman defends.

Several points of the critique: no logical rigor, bad diagnosis of the causes of the crisis (or ignorance about them) confusing cause with effect, likely unsustainability of the huge public debt and ultimately risk of default (even Krugman wants more debt), does public spending really improve the state of the economy?, the keynesian liquidity trap and absence of crowding-out (from an empirical and theoretical perspective), the role of the inevitable and necessary deflationary price readjustment Krugman seems to ignore, and regime uncertainty (Robert Higgs)

Some may argue that Krugman is a nuts and doesn't deserve to be argued against. But he has a huge influence and his ideas should be refuted.

Other articles on this:

La Alternativa Austriaca Frente a Keynes by me.

Henry Hazlitt and the Failure of Keynesian Economics by Ebeling. in Spanish http://www.libertaddigital.com/opinion/autores-invitados/hazlitt-y-el-fracaso-de-la-economia-keynesiana-51553/

Taking the Name of Lord Keynes in Vain by Mario Rizzo. in Spanish http://www.libertaddigital.com/opinion/autores-invitados/tomando-el-nombre-del-lord-keynes-en-vano-51322/

Rizzo has made an excellent job at ThinkMarkets by clarifying Keynes' own views: 1, 2, 3. He also establishes several points in common between Keynes and Austrian ideas: radical ignorance, subjectivism, or some methodological point (he was quite skeptic on the use of maths, for instance). Gabriel Zanotti, an argentinean philosopher, also wrote on this subject: “Keynes, austriaco”.

The Debt Crisis Cannot Be Solved with More Debt by David Saied. in Spanish: http://www.libertaddigital.com/opinion/autores-invitados/la-crisis-de-deuda-no-puede-resolverse-con-mas-deuda-50466/

Also, this recent debate on crowding-out between several Austrians and Brad DeLong is quite interesting. I have put some relevant pieces of the debate in this post, along with some comments of mine.

If you are interested in the Chinese economy and its current developments, and you can read Spanish, this post will be of interest for you. (You can also translate it into English here, though the translation is not too reliable). In it I have put together several articles I have written dealing with these matters. Even if you don't read Spanish, there are several interesting graphs, and almost all the information I got is from English sources, which I have credited linking them.

My opinion is that the current huge growth of the Chinese economy is not very real: 1) statistics manipulation, 2) big stimulus packages based on public spending, 3) huge credit expansion. Of course, we should also have in mind that China still has important proportions of central planning, specially in its banking and financial sector. This, as you all know, creates important misallocations of resources and capital, and malinvestments. Credit expansion + Central planning = Huge malinvetsments


Today I have just realized the title of my blog is very similar to a quote from THE ECONOMICS OF TIME AND IGNORANCE, an excellent book by M. Rizzo & G. O'Driscoll.

"The competitive market process is a never-ending learning process... Error is part of the very market process itself, part of the stimulus to further adjustments" (p. 126)

Another great quote: "Since the essence of real time includes novelty and causal efficacy, the future cannot be logically derived from the present because the former has not yet been created" (p.65)

It has excellent and beautiful quotes and it may be the best book comparing the Austrian versus the neoclassical approach to microeconomics. Has anyone of you read it? What do you think?

Here it is what Leviathan has been doing since 1930: grow, grow, grow.

It seems spending during the WWII was quite small compared to what happened next.

It also seems Nixon did the best he could have done to the benefit of government growth by breaking down the Bretton Woods system and making the US dollar an irredeemable paper currency.

"Every irredeemable paper currency in history has failed. Yet, the experiment of the US dollar and the rest of the fiat paper world continues."


Ludwig von Mises erred when he dismissed what is known as the Fullarton Effect. In 1844 John Fullarton of the Banking School described how low interest rates were resisted by savers in selling their gold bonds and hoarding gold instead. Mises ridiculed the idea, calling gold hoards a deus ex machina in Human Action (3rd revised edition, p 440). My theory of interest corrects this mistake in giving due recognition to the Fullarton Effect. I can well understand the frustrations of Robert Blumen, Sean Corrigan, and other detractors of mine reluctant to read the voluminous outpourings of this “inflationist monetary crank”. Rather than finding a weak point in my argument they call me names, stonewall Adam Smith, conjure up the bogyman of John Law, set up straw men only to knock them down again, and quarrel bitterly with my ad hoc examples while ignoring my comprehensive theory of interest. For the benefit of discriminating students of Carl Menger and Eugene Böhm-Bawerk I restate this novel theory in a concise form.

The rate of interest is a market phenomenon. It is defined as the rate at which the coupons of the gold bond amortize its price as quoted in the secondary bond market. The mathematician has shown us formulas expressing the rate of interest in terms of the price of the gold bond. They confirm that the two are inversely related: the higher the bond price, the lower is the rate of interest and vice versa. As a consequence, the lower bid price of the gold bond corresponds to the ceiling and the higher asked price to the floor of the range to which the rate of interest is confined. The question is what economic factors determine these constraints and how.

The floor is determined by the time preference of the marginal bondholder. If the rate of interest falls below it, then he takes profit in selling the overpriced gold bond and will keep the proceeds in gold coin. When the rate of interest bounces in response to bondholder resistance, he will buy back the gold bond at a lower price. The gold hoards are no deus ex machina: they are the very tool of human action in setting a limit to falling interest rates.

The ceiling is determined by the marginal productivity of capital, that is, the rate of productivity of the capital of the marginal producer. If the rate of interest rises above it, then he sells his plant and equipment and invests the proceeds in the underpriced gold bond. When the rate of interest falls back in response to producer resistance, he will sell the gold bond at a profit and use the proceeds to deploy his capital in production once more.

There is no valid reason to denigrate the productivity theory of interest following Mises. The theory of time preference and the productivity theory are not mutually exclusive. On the contrary, they are complementary. The fratricidal wars between the two schools have been in vain: they did not serve the advancement of science. They merely contributed to its retardation. Only a synthesis of the two theories can adequately explain the formation of the rate of interest.

I submit that my theory of interest brings about such a synthesis. It is in the spirit of Menger and is in harmony with the insights of Böhm-Bawerk. It represents a breakthrough that provides solid foundation for further development of the theory. In Mises, time preference is no more than a pious wish. It is the gold hoards that lend teeth to those wishes. Nothing else can. Mises was not alive to the arbitrage of the marginal bondholder between bonds and gold, the most potent form of arbitrage between present and future goods. Likewise, Mises failed to explain how changes in the rate of interest guide production, to wit, through arbitrage of the marginal producer between bonds and capital goods.

Mises also criticized the Banking School on the subject of reflux (op.cit., p 444). He charged that banks regularly short-circuit reflux by putting retired bank notes back into circulation: “The regular course of affairs is that the bank replaces bills expired and paid by discounting new bills of exchange. Then to the amount of bank notes withdrawn from the market through the repayment of the earlier loan there corresponds an amount of newly issued bank notes.” This ignores the fact that the credit to which each and every non-fraudulent bill gives rise is self-liquidating. Moreover, if the Reichsbank of Germany, for example, had discounted new bills on the same old merchandise, then it would have violated the law. At any rate, the argument of the Banking School refers to the transparent case of bill circulation. Slow or fraudulent bills can take no refuge in the portfolio of conspiring banks. The bill market is fully capable of ferreting out delinquent bills and will refuse to discount them.

The nexus between drawer and drawee of the bill of exchange is not the same as that between lender and borrower. The drawer is no lender, discounting is no lending, and the discount rate is not the same as the rate of interest. The drawee is the active protagonist in the drama of supplying the consumer with urgently needed goods; the drawer is passive. It is the drawee who promptly reacts to changes in the height of the discount rate. These changes are governed by the consumers. The discount rate is not regulated by the savers, still less is it set by the banks. The drawee, typically a retail merchant, has the unconditional privilege of prepaying his bills. The discount serves as an incentive. If demand is brisk, it will take a lower discount rate to induce him to prepay; if sluggish, a higher one. Moreover, in the latter case, the marginal retail merchant will not re-order his usual quota of consumer goods from his suppliers. Instead, he will carry part of his circulating capital in the form of bills drawn on more productive merchants until demand picks up again. Evidently Mises misconstrued the problem of discounting. Insisting that retail inventory was financed through loans at the bank, Mises failed to notice that the marginal retail merchant was doing arbitrage between bills and consumer goods. He would thin out merchandise on his shelves while beefing up his portfolio of bills in response to the consumer’s reining back spending, while he would sell bills from his portfolio and use the proceeds to replace the missing merchandise on his shelves upon renewed interest of the consumer in buying. Wrongly, Mises blotted out the important distinction between the discount rate and the rate of interest which are governed by entirely different economic factors and move quite independently of one another.

Not until these three most important forms of human action, the arbitrage of the marginal bondholder, the arbitrage of the marginal producer, and the arbitrage of the marginal retail merchant are more widely recognized can further significant progress in the theory of interest be made.

© 2005 Antal E. Fekete
Editorial Archive


Robert Blumen, Real Bills, Phony Wealth, www.financialsense.com, July 2005.
Sean Corrigan, Unreal Bills Doctrine, August 8, 2005.
Sean Corrigan, Fool’s Gold,  http://lewrockwell.com, August 9, 2005.
Sean Corrigan, Fool’s Gold Redux, http://lewrockwell.com, August 12, 2005.
Sean Corrigan, Clearing the Air, http://lewrockwell.com, September 8, 2005.
Antal E. Fekete, Gold and Interest, www.goldisfreedom.com, January, 2003.
Antal E. Fekete, Towards a Dynamic Microeconomics, Laissez-Faire, Revista de la Facultad de Ciencias Económicas, Universidad Francisco Marroquín, No. 5, Sept. 1996.


The foregoing piece was written as a rejoinder to Sean Corrigan’s series of papers criticizing me by name, posted on the website LewRockwell.com. I sent it to Lew whom I have known for over twenty years and with whom I thought I have had a cordial relation. I asked him to post my rejoinder so that his readership could see both sides of the argument. Lew refused.

The late Percy Greaves, the author of the pamphlet “Mises Made Easier”, used to be upset whenever economic research was mentioned in his presence: “Research? What research? All the research has already been done by Mises. All that is left is to explain Mises to the public.

I am also an admirer of Mises. I have acknowledged my intellectual indebtedness to him many times. I have made a conscious effort to use his terminology in preference to others. I have approached the criticism of Mises carefully and modestly. I have not rushed into print with it. I even withheld the publication of my own theory of interest for several years because it was in conflict with that of Mises on several points.

Bettina Bien, the widow of Percy Greaves, is a good friend of mine. She used to invite me to her home in Irvington-on-Hudson for dinner. We discussed Mises and economics a great deal. She had attended the Mises seminar at New York University for 18 years. She is a serious, devoted, and honorable student of Mises. She painstakingly put together the most complete bibliography of Mises. Years ago I asked her if she could explain some inconsistencies that I thought I have discovered in Mises’ work. While she agreed that they appeared to be inconsistencies, she couldn’t offer an explanation.

I welcomed Lew’s founding of the Mises Institute because I believed that it was dedicated to the search for and the dissemination of scientific truth, as was Mises himself. I am sadly disappointed to see that Lew is outdoing Percy. Not only does he think that all the research has been done and all we need to do is to regurgitate it again and again; he also thinks that Mises needs an “intellectual bodyguard”.

Science has nothing to fear from an open debate. Feeling of insecurity is characteristic of a cult. Mises would have abhorred the idea that his scientific heritage has fallen to the care of a self-appointed “thought police” that would censor and suppress all dissent.

The style and approach of Corrigan and Blumen fall short of the high ideals of Mises. These gentlemen cannot for a moment assume that their selected targets may write and act in good faith. They do not want to dispute. They want to discredit. In refusing to publish my rejoinder Rockwell has stooped to their level. I am sorry for him. He prefers sycophants to thinkers.

September 9, 2005
Antal E. Fekete, Professor Emeritus
Memorial University of Newfoundland

This has been taken from Today's Daily Recknoning, July 9, 2008: http://www.dailyreckoning.com/

*** Ron Paul explains how we got into this mess:

“There were several stages. From the inception of the Federal Reserve System in 1913 to 1933, the Central Bank established itself as the official dollar manager. By 1933, Americans could no longer own gold, thus removing restraint on the Federal Reserve to inflate for war and welfare.

“By 1945, further restraints were removed by creating the Bretton-Woods Monetary System making the dollar the reserve currency of the world. This system lasted up until 1971. During the period between 1945 and 1971, some restraints on the Fed remained in place. Foreigners, but not Americans, could convert dollars to gold at $35 an ounce. Due to the excessive dollars being created, that system came to an end in 1971.

“It’s the post Bretton-Woods system that was responsible for globalizing inflation and markets and for generating a gigantic worldwide dollar bubble. That bubble is now bursting, and we’re seeing what it’s like to suffer the consequences of the many previous economic errors.

“Ironically in these past 35 years, we have benefited from this very flawed system. Because the world accepted dollars as if they were gold, we only had to counterfeit more dollars, spend them overseas (indirectly encouraging our jobs to go overseas as well) and enjoy unearned prosperity. Those who took our dollars and gave us goods and services were only too anxious to loan those dollars back to us. This allowed us to export our inflation and delay the consequences we now are starting to see.

“But it was never destined to last, and now we have to pay the piper. Our huge foreign debt must be paid or liquidated. Our entitlements are coming due just as the world has become more reluctant to hold dollars. The consequence of that decision is price inflation in this country – and that’s what we are witnessing today. Already price inflation overseas is even higher than here at home as a consequence of foreign central bank’s willingness to monetize our debt.

“Printing dollars over long periods of time may not immediately push prices up – yet in time it always does. Now we’re seeing catch-up for past inflating of the monetary supply. As bad as it is today with $4 a gallon gasoline, this is just the beginning. It’s a gross distraction to hound away at ‘drill, drill, drill’ as a solution to the dollar crisis and high gasoline prices. It’s okay to let the market increase supplies and drill, but that issue is a gross distraction from the sins of deficits and Federal Reserve monetary shenanigans.

“This bubble is different and bigger for another reason. The central banks of the world secretly collude to centrally plan the world economy. I’m convinced that agreements among central banks to ‘monetize’ U.S. debt these past 15 years have existed, although secretly and out of the reach of any oversight of anyone – especially the U.S. Congress that doesn’t care, or just flat doesn’t understand. As this ‘gift’ to us comes to an end, our problems worsen. The central banks and the various governments are very powerful, but eventually the markets overwhelm when the people who get stuck holding the bag (of bad dollars) catch on and spend the dollars into the economy with emotional zeal, thus igniting inflationary fever.

“This time – since there are so many dollars and so many countries involved – the Fed has been able to ‘paper’ over every approaching crisis for the past 15 years, especially with Alan Greenspan as Chairman of the Federal Reserve Board, which has allowed the bubble to become history’s greatest.

“The mistakes made with excessive credit at artificially low rates are huge, and the market is demanding a correction. This involves excessive debt, misdirected investments, over-investments, and all the other problems caused by the government when spending the money they should never have had. Foreign militarism, welfare handouts and $80 trillion entitlement promises are all coming to an end. We don’t have the money or the wealth-creating capacity to catch up and care for all the needs that now exist because we rejected the market economy, sound money, self reliance and the principles of liberty.”


Traducción del artículo:


Does Welfare Diminish Poverty? Por Howard Baetjer Jr.


Publicado en ‘The Freeman: Ideas on Liberty’ - Abril 1984, Vol. 34 No.  4




Traducido por Ángel Martín Oro

¿Disminuye el estado del bienestar la pobreza?

 ¿La ayuda gubernamental a los pobres disminuye la cantidad de pobreza? Que sí la disminuye es una idea que está en la raiz de los grandes programas antipobreza de nuestra nación. De hecho, estos programas eran instituidos con el propósito de hacerlos desaparecer. Poco antes de aprobar la Ley de la Seguridad Social en 1935, por ejemplo, Franklin Roosevelt declaró al Congreso: "El Gobierno Federal debe abandonar la cuestión de la asistencia social... una prolongada dependencia sobre la ayuda social induce a la desintegración espiritual y moral, fundamentalmente destructiva para el carácter de esta nación". Treinta años después, mientras firmaba el primer proyecto antipobreza de la Gran Sociedad, Lyndon Johnson dijo: "No estamos dispuestos a aceptar el aumento interminable de la ayuda humanitaria o de los programas de bienestar. Queremos ofrecer a la olvidada quinta parte de nuestra población oportunidades y no subsidios... Los días del subsidio en nuestro país están contados".


La afirmación de que el estado del bienestar[1] ayuda a los pobres también explica porqué tanta gente hoy rechaza en la práctica la vieja idea del liberalismo clásico de que el gobierno no debería tener favoritismos: que la fuerza de la ley no debería ser usada para beneficiar a alguna gente a expensas de otra. Mientras ellos reconocen, y quizás lamentan que el estado del bienestar implique que la fuerza de la ley beneficie a algunos (a aquellos considerados pobres) a expensas de otros (todos los demás), ellos piensan que violar este principio está justificado, ya que el estado del bienestar disminuye las necesidades. Pero, ¿es esta afirmación cierta? ¿Realmente el estado del bienestar ayuda a resolver el problema de la pobreza?


Hay buenas razones para creer que no. Lo que es peor, hay importantes evidencias de que el estado del bienestar obstaculiza el progreso en contra de la pobreza. En nuestro país, el estado del bienestar parece haber incrementado la pobreza. Lo que sigue es un breve resumen de las ideas y evidencias que llevan a esta sorprendente conclusión. Haríamos bien en considerarla seriamente, porque en caso de que sea cierta, nuestra política nacional contra la pobreza está provocando un gran perjuicio a aquellos que pretenden ayudar. En palabras de Walter Williams, profesor de economía en la Universidad George Mason, "las medidas compasivas para los más pobres requieren un análisis desapasionado" de los efectos de esas políticas. El análisis del estado del bienestar muestra que éstas son un problema, y no una solución.


La experiencia con la intervención del gobierno en Gran Bretaña llevó a Mr. Baetjer a la causa de la libertad.




Tres Pautas para el Análisis


Cuando uno considera el problema de la pobreza, se deberían tener tres verdades básicas en mente.


La primera es obvia: la pobreza solo es superada cuando las personas son económicamente independientes. No es suficiente que estén viviendo durante un periodo de tiempo en unas condiciones aceptables si permanecen dependientes, de la misma forma que uno no está curado de una enfermedad cuando está tomando la medicina que elimina sus síntomas. Así, un objetivo esencial de cualquier programa contra la pobreza debe ser el de maximizar la autosuficiencia.


La segunda verdad básica queda clara solo tras pensar un poco: la prosperidad depende de la producción. A no ser que los bienes físicos sean producidos en primer lugar, y luego intercambiados como sea necesario, no puede haber prosperidad para nadie. Si esta cantidad de bienes no se aumenta constantemente, es imposible conseguir mayores niveles de riqueza para todos. Todo lo demás igual, cuantos más bienes haya, por ejemplo: alimentos, viviendas, medicinas, luz eléctrica, zapatos, calentadores de agua, etc. existirá menos insuficiencia, y tenderá a haber menos pobreza. (Por supuesto las cosas no siempre son iguales, y gente diferente acaba con diferentes cantidades de estos bienes, pero este principio permanece así de todas maneras: si no hay suficiente comida para todos, algo de pobreza es inevitable. En el otro extremo, si los bienes llegaran a ser sobreabundantes, su precio se acercaría a cero y los más pobres se podrían permitir cualquier cosa). Así, un importante medio para reducir la pobreza es incrementar la producción.


La tercera verdad tiene que ver más con el método, esto es, parafraseando a Henry Hazlitt: la buena economía mira más allá de las consecuencias obvias y de corto plazo para ver las consecuencias de largo plazo y las que están escondidas. Aplicando esta idea a los programas de bienestar, debemos mirar más allá de las ventajas inmediatas que esos programas tienen sobre los receptores -cupones de alimentos, medicaid, aumentos en los ingresos, etc.- y ver otros efectos del estado de bienestar en su conjunto. Por ejemplo, cómo los programas de bienestar afectan al empleo, a los salarios, la productividad y los precios (todo ello importante para los pobres).


Con estas verdades en mente, antes de mirar ninguna estadística, veamos algunos efectos indirectos que esperaríamos que se produjeran debido al estado del bienestar.


Efectos predecibles del estado del bienestar


Una primera observación es que los incentivos asociados con el estado del bienestar tienden hacia resultados no deseados (no es que causen necesariamente estos resultados, sino que producen una tendencia hacia esa dirección). Los beneficios van hacia gente que, por varias razones, son relativamente improductivos, mientras que los fondos que les llegan, a través de impuestos, provienen de gente que es relativamente productiva. Ya sabemos que para los seres humanos, los beneficios son incentivos positivos mientras que los impuestos son negativos. Así, el sistema del bienestar tiende a fomentar la improductividad y desincentiva la productividad. Una persona que pudiera ganar solo unos pocos dólares más a la semana trabajando que aprovechándose del sistema de bienestar, tiene un incentivo para no trabajar. Por consiguiente, el estado de bienestar tiende a disminuir tanto la autodependencia, ya que lleva a más gente a aceptar el desempleo, como la producción, ya que el potencial productivo de esa gente no se convierte en bienes. El efecto puede no ser muy notable, pero es algo a tener en cuenta.


Desde un punto de vista estrictamente económico, debemos mirar más allá de los beneficios visibles del estado del bienestar y compararlos con otros efectos positivos que podrían haber ocurrido en ausencia del mismo, pero que no pueden ocurrir en su presencia. Como ejemplo, tengan en cuenta que los billones de dólares que van dirigidos al sistema del bienestar, ya no están disponibles para otros usos -como por ejemplo la inversión. Muchos dólares gastados en asistencia social habrían sido invertidos en nuevas herramientas, nuevos edificios, etc. Esta inversión habría tenido efectos positivos creando nuevas oportunidades de empleo y aumentando la productividad. Sin embargo, con el estado del bienestar estos estímulos hacia una mayor auto-suficiencia y producción nunca se producen.


Un efecto final que podríamos esperar del estado del bienestar, teniendo en cuenta cómo los seres humanos nos comportamos, es la ineficiencia y el despilfarro. Este es un fenómeno que podríamos llamar "fallo del gobierno": la incapacidad inherente del gobierno de hacer nada bien. Los burócratas cobran a través de ingresos impositivos, que son recaudados independientemente de que la burocracia haga un buen trabajo o no, con lo que hay pocos incentivos para que mantengan una buena calidad. Ya que la cantidad de dinero que reciben de los contribuyentes depende del tamaño y la importancia de sus programas, los burócratas tienen un incentivo para expandir las cifras de sus programas, y para encontrar nuevas razones por las que incrementar los fondos que manejan. Ya que la asignación de los fondos debe ser por norma, se genera gran cantidad de tiempo y papeleo, y apenas hay oportunidad para que el juicio individual identifique cuánto merece quién. Otros problemas de este tipo se podrían identificar.


Una mirada a los datos


¿Se dan realmente estos problemas potenciales? Si así es, ¿son muy perjudiciales? Según las estadísticas del gobierno estadounidense, las respuestas a estas preguntas son "sí" y "muy perjudiciales", respectivamente.


En lo que respecta al fracaso del gobierno, hay una disparidad notable entre la cantidad de dinero que se gasta con el propósito de aliviar la pobreza, y lo que realmente reciben los pobres. En un artículo llamado "Where do all the welfare billions go?" ("¿Donde van todos los billones del gasto de bienestar?" Human Events, del 6 Febrero 1982) M. Stanton Evans apunta algunas estadísticas interesantes. En 1965, el desembolso conjunto a nivel federal, estatal y local para el "bienestar social" fue de 77 billones de dólares. Esto fue en el principio de la era de la Gran Sociedad. En 1978, esta cifra llegó a sumar 394 billones de dólares. "Esto significa que, en el periodo de unos doce años, incrementamos nuestro presupuesto nacional con el presunto objetivo de ayudar a los pobres en, anualmente, 317 billones de dólares." Pero el número de pobres en el país, según estimaciones oficiales, ha permanecido casi constante en esos años, sobre los 2,5 millones. Citando a Evans con más detalle:


Uno se tiene que preguntar cómo es posible gastar estas centenas de billones para aliviar la pobreza y seguir teniendo el mismo número de pobres que tuvimos, digamos, en 1968. Prescindan de esa objeción por un momento, y simplemente comparen el número de pobres con los dólares gastados para ayudarles: descubres que, si hubiéramos tomado los 317$ billones anuales en gasto extra de bienestar social, y entregado a los pobres, podríamos haber dado a cada uno de ellos una cantidad de 13.000$ -lo que es un ingreso de 52.000$ anuales para una familia de cuatro.


En otras palabras, con esta colosal suma de dinero, podríamos haber hecho ricos a todos los pobres en América... Esto provoca que los más suspicaces nos preguntemos: ¿Qué pasó con ese dinero?... Buena parte de estos desembolsos domésticos van a pagar los salarios de gente que trabaja para y con el gobierno federal -incluyendo funcionarios bien pagados y una gran variedad de contratistas y "asesores", muchos de los cuales se han enriquecido gracias a programas de vivienda, estudios de "pobreza", subvenciones para investigación sobre energía, y cosas por el estilo.


En palabras de Thomas Sowell, "los pobres son una mina de oro" para la burocracia mayoritariamente acomodada.


Pero podríamos esperar que acabar con la pobreza es caro. La pregunta crucial es qué ha sucedido con la pobreza misma. Esa pregunta está parcialmente contestada en la estadística mostrada arriba, en la que el número de pobres oficiales ha permanecido alrededor de los 2,5 millones; claramente no se ha eliminado la pobreza. Pero, ¿y qué se puede decir sobre la pobreza como porcentaje de la población -estamos por lo menos reduciendo la proporción de pobres en el país? Desgraciadamente, no. En un artículo llamado "The two wars against poverty: economic growth and the Great Society" ("Las dos guerras contra la pobreza: crecimiento económico y la Gran Sociedad", The Public Interest, Fall 1982), Charles A. Murray demuestra que alrededor de 1968, cuando el gasto antipobreza de la Gran Sociedad estaba en auge y la tasa de desempleo estaba en el 3.5%, el progreso contra la pobreza se desaceleró, y luego paró.


El problema persiste


Desde 1950, el número de pobres (oficiales) como porcentaje de la población era aproximadamente del 30%. Desde entonces hasta 1968, la cifra cayó sin cesar, hasta alrededor del 13%. Pero entonces, justo en el apogeo de los años de la Gran Sociedad, cuando más dinero que nunca se estaba gastando para reducir la pobreza todavía más rápido, la línea de tendencia se hizo más plana. Después de más de diez años de desembolsos crecientes, el porcentaje de pobres en nuestra población había caído hasta solo el 11%. Dos años más tarde, en 1980, estaba de vuelta en el 13%. Cuanto más gastamos, menos se avanzó.


Murray también trata las estadísticas sobre la proporción de población dependiente del gobierno, esto es, aquellos que estarían por debajo de la línea de la pobreza si no fuera por ayudas gubernamentales. Esta medida, que Murray denomina "pobreza latente", es quizás el mejor indicador del progreso contra la pobreza, porque es como mejor se refleja la auto-suficiencia, o la carencia de ella. Como la pobreza oficial, la pobreza latente como porcentaje de la población disminuyó notablemente hasta finales de los '60, desde el 33% en 1950 hasta el 19% en 1968, aproximadamente. En 1968, sin embargo, la tendencia se invirtió; la proporción de americanos dependientes del gobierno empezó a aumentar. Con la excepción de un descenso después de 1975, se ha incrementado desde entonces, hasta el 23% en 1980.


En resumen, a pesar de haber duplicado y reduplicado los gastos para intentar eliminar la pobreza, ésta está aumentando en nuestro país. Avanzamos mucho más cuando estábamos gastando menos.


Estos tristes resultados encajan bien con lo que esperaríamos desde las expectativas teóricas mencionadas más arriba. Cuando hay incentivos en contra de la auto-suficiencia y el ser productivo, la gente tenderá a ser menos auto-suficiente y productiva. Cuanto mayores sean los incentivos, más fuertes serán las tendencias. El incremento de la dependencia no debe sorprender, ya que ésta se recompensa con beneficios importantes en efectivo y en especie. Quizás estas no son las razones que explican el fracaso del sistema; quizás son fuerzas totalmente diferentes las que están detrás de él. Sin embargo, no se me ocurre ninguna.


Abandonemos el tema de la ayuda


En cualquier caso, el estado del bienestar, los subsidios, la ayuda a los pobres -llámenlo como quieran- es un fracaso estrepitoso. Más que eso, si el razonamiento que se ha presentado es válido, es una de las trágicas ironías de nuestro tiempo. Surge del deseo de gente de buen corazón para reducir la pobreza, pero en la práctica, aparentemente aumenta la pobreza. La culpa no está en nuestras intenciones, sino en nuestros métodos, nuestro entendimiento económico, y en última instancia, quizás, en nuestros principios. "Para abandonar el tema de la ayuda", con el fin de acabar con "los días del subsidio", lo mejor es simplemente hacerlo. Hagamos que los funcionarios diseñen las políticas -esto es, suprimirlas- según el principio liberal según el cual "la fuerza de la ley nunca debería ser usada para beneficiar a unas personas a expensas de otras", ni siquiera si benefician a los pobres. Hagamos que el cuidado de los que realmente lo necesitan vuelva a la responsabilidad individual -a la caridad privada y genuina, y a organizaciones privadas y eficientes.




[1] Nota del traductor: he traducido "welfare" por "estado del bienestar", entendiendo los gastos públicos que se dedican con fines de asistencia social.

Posted Tue, Apr 22 2008 9:09 PM by martinf | with no comments
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I have edited a new video like the previous one. This time is Donald Boudreaux, chairman of Economics Department at George Mason University, talking about antitrust policies in an interview on EconTalk about market failure. He deals with its origins in the late 19th century and concludes that antitrust policies were means used by producers to halt competition in very dynamic industries.

LINK: http://uk.youtube.com/watch?v=ZMVad-rviDc

To read more information: http://www.econtalk.org/archives/2007/10/boudreaux_on_ma.html#highlight
You can download the whole interview there.

For more about antitrust policies, check these links out:


Armentano has published some very good works on this issue.
He says that the same things (as Donald says about beef and firms in the late 19th century) could be said for Microsoft, Standard Oil or other classic cases.

You may have already watched this video because I uploaded some days ago and appeared in Cafe Hayek.

I've uploaded a new video in my youtube channel:


It's an excerpt of: "Israel M. Kirzner, The Intellectual Portrait Series: A Conversation with Israel Kirzner [2000]" from Liberty Fund. You can find the complete interview here:


He talks about the differences between Lionel Robbins and Mises' view of economics, the possibility of making predictions in economics, according to both Robbins and Mises and the differences between mainstream and Austrian economics about competition. He makes these points quite clear.

Lionel Robbins was influenced by the Austrian school as he studied in the Private Seminar of Mises, but there are important and big differences. Kirzner says that it became apparent to him that the different between Robbins and Mises's approaches was fundamental. Whereas for Robbins the economic problem consisted of manipulating scarce means (which are given) to achieve some given ends; so, the economic problem consists of a mathematical problem, you just have to maximize an objective function with some given restrictions.
Nonetheless, Mises' view is about action rather than decision. In this approach, human beings, at the same time they are arranging means to achieve goals, they are identifying what he believes to be the right means (he may get wrong) to achieve the given goals. This is when subjectivism appears.
What Kirzner critiques of Robbins approach is not its usefulness but its completeness.

Robbins had a huge influence in neoclassical Microeconomics and his definition of 'economics' is one of the most known, specially in textbooks.
In the mainstream view, as everything is given, predictions are possible, because the solution of the mathematical problem is implicit in the data. But if we take Mises approach, it's not possible to make any predictions, we can't really know what individuals believe, expect or are going to do. Kirzner says that Mises didn't make predictions as an economist but as a wise man of the world.

The feature of entrepeneurship is essential for Austrians, they are the ones who drive the market process. But for Mainstream economics, entrepeneurs are an "analytical pest, a nuisance".
In this context, competition for both austrians and neoclassics is totally different. Mainstream economics see competition as a perfect competitive model, an ideal model we should be able to reach. But, this isn't what competition is in the real world. Austrians see competition as a discovery dynamic process driven by the entrepeneur, a process of rivalry.

Firstly, I would like to introduce myself. I don't know if I'll post much on here, but anyway an introduction is never inappropriate.

I'm Spanish, studying 2nd course of Economics. I'm very interested in Austrian economics, although I haven't read much, but thanks to Mises.com I'm learning quite a lot. I started reading about Austrian School thanks to 'Instituto Juan de Mariana', a Spanish libertarian think tank. As I study mainstream economics, I'm specially interested in contrasting both views and choose the right theory, to be able to refute the wrong one by giving reasonable arguments.

I hope to post frequently, whether in English or Spanish. I had thought of translating some short excerpts of Jesus Huerta de Soto or others Spanish scholars' writings into English. Time will tell.