Tuesday, December 2, 2008

Mourning Beth Hoffman

On Monday, December 1st 2008, I got sad news. Beth Hoffman passed the way at the age of 58. For those who do not know who Beth was, she was the editor of The Freeman and longtime member of the prestigious group at The Foundation for Economic Education. Beth was also a true fighter for liberty, but most importantly Beth was a great, inspiring, and captivating woman.

I remember the time I met Beth at the Austrian Economics Seminar in the summer of 2007. Since that moment, Beth impressed me with her caring charisma. If you knew Beth, it seemed that anyone who went to a seminar, worked, or visited FEE was welcomed to her family. To Beth everyone counted, there were no favorites.

I will have in mind the conversations that I had with her. I will keep in mind Beth’s believe in the pursuit of freedom and the importance of consistently encourage people to never cease in this battle.

My prayers and thoughts go to her family, friends, and to FEE and its community.
R.I.P. Beth Hoffman. We will always remember you!

Monday, November 24, 2008

Wisdom from the Gossip Crowd

Last week, Dan Klein had met with a group of students on a draft of his recent paper. During the discussion he had raised a question that all students with the love for liberty usually ask themselves , "How come I get it? How come all these other people I know get it, but the everyday citizen does not get it?" The "it" being government intervention within our personal lives being more harmful and not as efficient as the market.

Those in the room shared his agony with the question and for me coincided with the question, "Why does the battered wife not leave her beating husband?"

The solution was simple when I sat around a table with my cousins and my wife and heard a discussion of a guy who felt he owned the world going out with other girls and yet his girlfriend stays by him. When the remark was made that his girlfriend was stupid for staying by him, I heard the words that made me understand why people still don't get "it". "She believes she can change him."

That was it; so simple and yet so profound. Most people believe that the government has problems, they will agree on this and will even have claims to back up this argument. Yet when push comes to shove, they side with government leaving all the liberty minded individuals to ask why. So why is it they stick by the government who never keeps their promise; they believe that they can change it. Perhaps they don't trust the market because they don't feel that they can impact the market in any form compared to the measure of impact they can have within government.
What do you think? Or should we commend such a spirit of hope?

Monday, November 10, 2008

The Need for Government or Anarchy?

Mises and Friedman are in agreement "The consistent liberal is not an anarchist."
To Mises and Friedman it is a rather simple argument: How do you enforce your rules upon society to protect your property, your life, and your liberty without a government?
Mises' explained the need for government with ease:
"Life in society would be quite impossible if the people who desire its continued existence and who conduct themselves accordingly had to forgo the use of force and compulsion against those who are prepared to undermine society by their behavior. A small number of antisocial individuals, i.e., persons who are not willing or able to make the temporary sacrifices that society demands of them, could make all society impossible. Without the application of compulsion and coercion against the enemies of society, there could not be any life in society.
We call the social apparatus of compulsion and coercion that induces people to abide by the rules of life in society, the state; the rules according to which the state proceeds, law; and the organs charged with the responsibility of administering the apparatus of compulsion, government."
Their main questions is, what are the chances of everyone agreeing upon the said terms in a voluntary society with no government? What guarantees are in place to make sure that later generations do not choose against those very terms?

As much as they opposed government with the notion the market is more proficient than the government in most tasks, both intellectual greats, Mises & Friedman, conclude that life could not function without some sort of coercion, albeit a constrained coercion.

Is the market a better enforcer than the government? Can we not apply the same questions they had asked about life without a government to life with a government? What guarantees individuals agree to the terms? Let us take in mind that the market is not capable of extending its might through coercive social programs such as the government.

Wednesday, November 5, 2008

Moral Man in an Immoral World

Mises had written, "There is a world of difference between a man who risks his life and property for a good cause and the man who sacrifices them without benefitting society in any way."

Now which should we believe that politicians fall under?
Which should economists fall under?

Mises picks up again with, "Everything that serves to preserve the social order is moral; everything that is detrimental to it is immoral."

Would most citizens view austrian economists as the first or the latter off of this statement?
and government?

Is then perception reality or just a faux pas?

Wednesday, October 8, 2008

Step by Step


On Sunday September 28 of 2008, Ecuador adopted its 20th Constitution. The new elected Constitution has 444 articles and by far give more power to the state in what respect to the economy and the political system. About 64.04% of Ecuador’s voting population approved the new Magna Carta, while 28.01% voted “NO”, the null votes added to 7.21% (vote that represents neither yes or no) and blank votes were roughly 0.74%. The decision is clear; Ecuador is following the steps towards a socialist economy or what Mr. Chavez has claimed “Socialism of the 21st century.”

President Correa has aligned his government with the social, economical and political structures those countries such as Venezuela, Bolivia, and others in the Latin American continent. These socio-economic and political structures have been implemented through the region with more emphasis in the last five years. However, it is important to mention that Latin America has always suffered from high levels of dependency in governments. Latin America’s history is full of state intervention through mercantilism, wealth transfers (privileges), and political corruption. Alvaro Vargas Llosa in his essay, The Case of Latin America, says the following about Latin America’s history:

“Reform meant replacing inflation with new taxes, high tariffs with regional trading blocs, government monopolies with private monopolies, price controls with regulatory bodies.”

Ecuador needed to clean its old and corrupted political system; Rafael Correa, who is an economist by education, became the “savior” of the country. He promised to clean after the decadent political system and change the country’s direction for a better future. However, Ecuadorians have forgotten to ask Correa (if he does all what he said he would do) at the cost of what? In addition, to who ultimately will pay for it?

The new Constitution gives Correa the possibility to stay in power until 2017. It gives Correa control over the central bank, judiciary and electoral authority. Correa’s new tool (Ecuador’s 20th Constitution) will create a quasi-Congress, which will be integrated mostly by politicians from his own political party, Alianza Pais. Correa is certainly creating in the short-run but even more in the long-run higher levels of bureaucracy, less property rights protection, fewer incentives for entrepreneurial activity, and more unemployment.

Ecuador is sadly, “Step by Step” moving towards a socialist economy that will only lead the country to a social chaos. It seems that President Correa forgot about his economic education and has become a senseless politician. Ecuadorians are losing their individual liberty, and economic freedom. Robert Lawson mentions in his essay, Economic Freedom and Property Rights;

“After over a decade of research, the empirical evidence is overwhelmingly clear: Societies that organize themselves with private property, rule of law, and free markets outperform, on almost every measurable margin, societies that are less economically free”

Ecuadorians must not allow Correa to become a dictator. If we want a better country for our future and the future of our children then open your eyes and see beyond the false promises of a corrupt politician like Correa.

Monday, September 29, 2008

The Economic and Political Implications of the Bail-out

After listening to President Bush about the Bail-out plan, I could not stop but wonder why once again the government is getting people out of trouble at the expense of others who have not made the same mistakes. The government has intervened one more time in the economy (and not for good). It was not enough already for the law makers to worked by privatizing profits and socializing rick and costs. The current solution according to President Bush is a 700 billion dollars bail-out. In other words, this bail-out will make you and me pay for companies and other people who became blind folded and put themselves at a high risk. Now, social cost of government intervention in the economy has spread throughout the nation and it also will impact in the international markets.

The political campaigns of Senators Obama and McCain have blamed the greed of Wall Street for this crisis. Greed is a factor in life that is always going to be present. It (greed) is a quality among people like gravity is what holds us down and keeps our feet on the surface of Earth. Both political campaigns have not come up with an actual plan that may lead us out of this situation (I am not surprised either). But financial markets do not need of a plan created by politicians or governments. The financial markets need not to be interrupted by any form of intervention.

People think that companies are taking advantage of this crisis and helping themselves to increase their profits. Well, this is not the case; the intervention of the state in the market has created misleading information taken by for-profit companies. When prices are been manipulated by governments entrepreneurial activity is condemned to die, companies will not generate profits and people will lose their jobs.

The interventions of the government in the financial markets have falsely shown people that jumping off from the 5th floor of a building is a great idea. People are going to keep on jumping after this bail-out passes through Congress. However, people now are going to jump from the 20th floor. Now more people will jump off the building at a cost that is also been paid by the people who know that jumping is not an option and then we will have a higher social cost. Professor Peter Boettke has said, in his latest blog entry called “PLEASE, just Say No!,” that intervention or government bail-out is not going to get us out of this crisis.

“To try to throw money at a problem that was caused by a system of incentives that said we will bail you out when your risky investments go sour is merely to reinforce the perverse incentives that caused the problem in the first place --- JUST SAY NO.”

People need to know that good intentions are not equal to good results. Politicians as greedy people are going to make you think that they are doing the best for all of us. But reality shows us the opposite. History reveals us that excessive intervention in the market economy will lead us to failure. Let us hope that the government would not screw up the set of rules and let the market take of its illnesses.

Tuesday, June 10, 2008

Why I am Proud to be Studying Economics at Mason.

In the April’s issue of The Southern Economic Journal there is an article in which you can find the ranking of 129 schools’ Economics-PhD programs in the United States. The article ranks George Mason University Economics in the 41st place in the overall ranking. (Not too shabby for a school that only a few know about, or know because of its success two years ago when the men’s basketball team made it to the NCAA Final Four).

In specific categories Mason Economics rank very well. For example, 3rd in Methodology and History of Economic Thought, 9th in General Economics and Teaching, 11th in Law and Economics, and 25th in Microeconomics and Public Economics.

This review is indeed great news for the faculty members at George Mason. It demonstrates that Mason is gaining momentum in the field of economics. However, I must stress what is missing in this review. I think that this review does not account for the opinions of student’s comments. A program of study can be great but couldn’t success also be measured by how passionate and satisfied the students within a program are?

Furthermore, in the review there is no acknowledgment of how successful professors are at transmitting ideas outside of class. GMU faculty has been on top on the game when it comes to the use of technology. A variety of well known blogs should be credited to the effort of professors who enjoy teaching and like to translate the world of ideas to their students. Blogs such as Marginal Revolution, The Austrian Economists, and Café Hayek are known for shaping the minds of students outside of classrooms.

I am surprised with the review presented by The Southern Economic Journal because it did not include as one of their categories which school is better at introducing, teaching, and learning Public Choice and Austrian Economics. I have no doubt that Mason will be above all schools.

After reading the review, I think that faculty and students at Mason should be proud of where we are. However, we must know that there is still work to be done. I believe that Mason Economics can be in the top 10 in the next 20 years.

Note: If you want to find more information on the article by The Southern Economic Journal, and comments from GMU faculty and other professors please visit The Austrian Economists blog.

Wednesday, April 9, 2008

Too Good to be True

The Foundation of Economic Education is hoisting (Co-host GMU Economics Society) an event at George Mason University April 18th and 19th. The topics of the seminar vary from; Foreign Aid, International Labour, US Foreign Policy, Institutions, Constitutions, and Economic Growth. However, FEE has put together a top of the shelve list of speakers. The list includes the names of; Geoffrey Lea, Bryan Caplan, Doug Bandow, and Josh Hall. Here is a link to the event.

Liberty and Economics

I want to share this with you. I think that this video put together by the Ludwig von Mises Institute shows the importance and connection between liberty and economics. In the world of ideas it is important to convey people that free markets is the only way to achieve economic growth. Socialism is meant to fail. Socialism cannot use economic calculation as a tool to benefit society. Socialism denies freedom and kills society.

Saturday, February 23, 2008

Christopher Coyne on After War


I want to start this post by apologizing to the audience for not posting in the last two weeks. However, what I have to share this. It is too important to just let it go. On Thursday February 23, 2008, I attended a book signing of, After War written by Christopher Coyne, at the Institute for American Studies (IAS) in Washington, DC. Christopher Coyne’s event was hosted by the Mercatus Center at GMU.

Coyne is alum of George Mason University. He obtained his Master and PhD degrees from GMU. In that respect Coyne and my self have the pleasure of being thought by Professor Peter Boettke. I know that Coyne’s book is set to be one of the greatest of our age, and adding the emotional connection of being a student of GMU, I knew I had to be at the event. Once we (Astrid, Ian, Bret, Triya, Rossy and I) arrived and joined other GMU students at the IAS. The environment was like being at home. GMU was well represented on that event and yet we met other interesting individuals.

Around 7:30pm Christopher Coyne took the podium and the audience went silent. Coyne staged a flawless performance. Coyne’s speech was clear and defined. He exposed his book in three main categories;

The basics of exporting democracy at gunpoint

Somalia and Haiti cases

The democratic enforcement of Afghanistan and Iraq

Solutions and consequences of exporting democracy for the future.

After Coyne’s speech there was a question-answer time period. During this time I encounter interesting how Coyne is willing to enter in the challenge of doing research in the implication of other factors in this topic. Coyne would like to engage in telling people the influence of international organization in the emancipation of democracy. Coyne expressed his interest in studying other countries which have forced or tried others into democracy.

I think that Coyne’s book is a superb piece of literature that should be read by people in the fields of economics, politics, conflict analysis, peace development, global affairs, government, and sociology. Coyne’s book I must say gives the opportunity to others to engage in further research on the topic of exporting democracy.

Wednesday, February 6, 2008

Austrian Knights the Beginning


In the fall of 2007 my friend Ian Dunois (you can find him on his blog Searching for Truth) and I (Jaime Artieda) began a study-discussion-reading group at George Mason University (GMU). Ian and I argued for a while about what we should call our group. Different names came to our minds, but when we came up with Austrian Knights, we knew that was the right choice.

The name Austrian comes from the understanding of Austrian Economics. In the spring of 2007 Dunois and I took a class at GMU called ECON 403 with Professor Geoffrey Lea. I must say that ECON 403 it was a changing experience in my life. The concepts of praxeology, apriorism, subjectivism, and economics all blended, got into my mind creating an exciting curiosity for it.

In the summer of 2007 I attended a summer seminar on Austrian Economics at the Foundation for Economic Education (FEE). Following that seminar, Dunois and I attended the seminar on the same subject at the Ludwig von Mises Institute. Professor Lea referred both (Dunois and I) to the seminars. And by the end of the summer Dunois and I were completely merged into the ideas, methodology, philosophy and believes of freedom, politics, philosophy and economics with an understanding of Austrian Economics.

Thus, Dunois and I came up with the word Knight. We needed a word that would be strong and yet passionate. A Knight’s principal duty is to serve, protect, lead and fight if necessary to preserve his kingdom, in our case freedom. This is a brief background on the name of this blog and also our GMU group.

I shall mention that this blog is a process like the market is. Therefore, all the references to Austrian Economics in this blog may not necessary represent what scholars, publications, and people who/which are better inform on this subject. This blog is a learning process for me; I will do my best to be accurate and precise.

Saturday, February 2, 2008

Brief History of the Austrian School of Economic Thought


The history behind the Austrian School of Economic Thought (known as Austrian Economics) is one of the most interesting stories to tell. Some of you may have never heard about this school. However, Austrian Economics has been part of the academia and our lives for over seven centuries. In this post I will do my best in telling the origin, development, and present of this school; from St. Thomas Aquinas teachings all the way to the influence of Ludwig von Mises.

The setting of the Pre-Austrian movement during the 15th century St. Thomas Aquinas thought at Salamanca University, Spain. His teachings and writings promoted social organization and the understanding of human action. Aquinas’ followers practiced his teachings and believed in the economic law of supply and demand. Furthermore, his disciples understood the importance of cause and effect (Causation), and the subjectivism of economic value. Aquinas’ believes were kept during time his supporters trusted the importance of property rights, trade, and most importantly freedom.

In the years of the Marginal Revolution Richard Cantillon, an economist who understood that the market is a process and it is always evolving. Cantillon was an Irish that established himself in France. In France, Robert Jacques Turgot followed the steps of Cantillon. Turgot published different articles in a variety of topics; some of those subjects cover the value of money, economic choice, and the ranking of individual preferences. This last topic is relevant to appreciate the subjectivism of Austrian Economics. But the French influence in the creation of what is known as the Austrian School of Economics did not end with Turgot. Jean Baptiste SayClaude-Frederic Bastiat developed the ideas of Turgot. However, at this point in history the Pre-Austrian movement decayed in emancipation within scholars. It was time for the British School, this school led to the rise of Marxist doctrine of capitalism exploitation. and

Carl Menger wrote in 1871 a master piece Principles of Economics. Menger is the founding father of the Austrian School. One of the biggest contributions to economics that Carl Menger did was the explanation of Marginal Utility. However, Menger never use that term (marginal utility) to express the idea behind diminishing returns of higher quantities of a good in a determined period of time. The creation of money for Menger was clearly a free market process. It was in the need of people to create money in order to trade goods, and Menger mention that money was not made for consumption but for exchange commodities.

Menger contributions to economics are numberless and in the world of ideas Menger had a tremendous antagonism from different groups. Menger mentioned that economics was a science of human action based on deductive logic. In the battle of ideas Menger was challenged by the German Historical School. The Historical School saw economics as a dismal science and rejected its theory. Menger rose and prevailed over the criticism and planted and seeded that would become into a mainstream of Austrian Economics.

It was Friederich von Wieser who developed Menger’s point of marginal utility. It was precisely Wieser who invented the term “Grenznutzen” German for border-use or commonly known as marginal utility. Wieser and Eugen von Boehm-Bawerk, both Menger’s students, took Austrian Economics to a different level. Boehm-Bawerk reflected on the fact of time preference and used it to explain economic phenomenon such as; value, price, capital and interest. Boehm-Bawerk put together his ideas and in 1884 wrote his book History and Critique of Interest Theories.

In the early 20th century Ludwig von Mises entered to the picture of Austrian Economics and not only that he entered it but he consolidated it as the school that it is in the present. One of Mises important contributions to the school it is the idea of the Austrian Business Cycle. Unlike other explanations of booms and burst within the economy Mises’ explanation is by far more enriching and more precise. Mises is an individual who can be studied for years and years and there will be more of him to learn and understand.

In 1921 Mises wrote his book Socialism. In this book Mises explains in detail how in socialism there is no private property, with no private property there is no exchange of capital goods. When humans are unable of exchange there is not a proper allocation of resources. To Mises socialism is nothing else than chaos and the end of civilization. Furthermore, Mises prolific master piece came out in 1949. During his exile, due to political persecution by the Fascist Government of Germany, in Geneva in World War II Mises wrote “Nationalokonomie” German for Human Action. This work is considered a must for Austrian Economist of all ages because it is the work that defines the Austrian School for once.

A disciple of Mises, Friederich A. Hayek took the teachings of his master (Mises) and brought them to the next level. Hayek wrote extensively on how expansion of credit would create currency crisis. Hayek’s counter part was John Maynard Keynes, British aristocrat who advocated for more government intervention within the market. Hayek and Keynes enjoyed of a battle of ideologies during the second half of the 20th century. In 1974 Hayek received the Nobel Prize in Economics for his contribution on theory of money and economic fluctuations, economics interdependence, social and institutional phenomena.

I hope that you have enjoyed this brief passage on the history of the Austrian School of Economic Thought. This post reflects to the most important years of the creation of this school. It is its history who calls upon brilliant minds to keep the work of St. Aquinas, Turgot, Bastiat, Menger, Boehm-Bawerk, Mises, and Hayek alive.

Note: This post is based on the article wrote by the Ludwig von Mises Institute.

Sunday, January 27, 2008

Welcome Note

I like to start this blog by introducing my self, my name is Jaime Artieda. I am currently pursuing a double degree in Economics and Global Affairs at George Mason University. If you got to this web blog home page you are either my family, friend, colleague, professor or you are naturally interested in the subjects of economics, politics, philosophy and liberty.

The name of this blog may sound a bit strange to some of you. However, behind the name of “Austrian Knights,” there is an emotional, historical and academic reason. In the fall of 2005 I was introduced to the documentary called The Commanding Heights of the Economy produced by PBS based on the book written by Daniel Yergin and Joseph Stanislaw. The battle of ideas of who should control the economy, debate that developed in between F.A. Hayek and John Maynard Keynes, is the main subject of the documentary’s first chapters. The argument of whether the state or the free market should control the economy takes the viewer to know about the Austrian School of Economic Thought.

The Austrian School believes that markets work and governments do not. The fight of capitalism against communism, socialism, and totalitarianism was the core of human history of the 20th century. In late 1980’s and early 1990’s with the Fall of the Berlin Wall some thought that the battle was over. Unluckily for all of us the battle is not near to its end. On a daily basis people who have little to none knowledge in economics blame the so called “market failures” and “capitalism” still grow a bigger gap among rich and poor, and among developed and developing world.

However, that is not true. It has been the government interventionism within the economy and our lives the reason why the free market has not been able to create a better society, a better us. History is full of examples of how big governments have denied people of important principles such as freedom, economic prosperity, and human growth. Just to name a few examples; Vladimir Lenin, Adolf Hitler, Kim Jong-Il, and Hugo Chavez, have or had neglected human principles and created totalitarian regimes.

Individuals like; Frederic Bastiat, Carl Menger, Eugen von Bohm-Bawerk, Friedrich von Wieser,Ludwig von Mises, F.A. Hayek, Murray Rothbard, and Israel Kirzner, to name a few were interested in how the free market would be a tool that will develop individual prosperity. All these exceptional individuals are members of the Austrian School of Economics. (In a coming post I will talk in more depth about the origins and history about this school)

After this brief introduction to this web blog, I want to thank you for your interest in this blog. This blog was created in the pursuit of freedom, seeks to promote free market values through the understanding of politics, philosophy, and economics.

Welcome to Austrian Knights!