Austrian Knights

We will Win the Battle

2011-06-14T23:54:00.000-04:00

Lawrence Reed, President of the Foundation for Economic Education, makes a remarkable speech at Americans for Prosperity's 2011 Defending the American Dream Summit in Jasper, GA. The video does not need any other comment except that it is worth your time. Enjoy!

Remeber: The battle is not over. We, Classical Liberals, Free-Markets, and Humanity, will WIN.

There is no Doubt: There is Terrorism all over Latin America

2011-04-20T00:06:00.002-04:00

Sadly, for Latin America rumors have become truths. Terrorism exists in Latin America. Reports from different sources validate, the fact, that various suspicions are no longer speculations but reality. Terrorism is in countries like Nicaragua, Honduras, Brazil, Argentina, Paraguay, Bolivia, Ecuador and Venezuela.

Jaime Daremblum, of the Hudson Institute, Washington, D.C., and Costa Rica’s former ambassador to the United States, confirms that terrorist cells are working in Brazil, Argentina, and Paraguay. Daremblum says that terrorism has been present in Argentina since the attacks perpetrated by Hezbollah in the 1990’s. The former diplomat also explains that Iran’s influence in Latin America is so powerful that Iranians are not required a Visa to enter Venezuela. In his article that appears in the Hudson Institute website titled “Al Qaeda in Brazil?” Daremblum says:

“Terrorists have long found haven in South America's so-called Triple Frontier, which encompasses the intersection of Brazil, Argentina, and Paraguay. This area is known for being a Wild West of lawlessness, drug trafficking, and organized crime. Argentina is especially sensitive to increased terrorist activity in the region. During the 1990s, it suffered two deadly bombings orchestrated by Hezbollah and Iran. The first (in 1992) destroyed the Israeli embassy in Buenos Aires; the second (in 1994) demolished a Jewish community center in the same city.”

Furthermore, the Ecuadorian newspaper El Comercio reports the existence of terrorist cells in Quito and other cities in the country. Ecuadorian police captured a few people from the Middle East due to their participation in drug trafficking. Six of the detainees were extradited to the United States because their red profiles under the FBI database. The article titled “Celulas del Terrorismo Circulan por el Ecuador,” says:

“El nombre de Ahmed A., uno de los aprehendidos por los agentes, coincide con otro que aparece en los archivos del FBI por vínculos con Osama bin Laden, líder de la organización Al Qaeda.”

(The name A. Ahmed, one of those arrested by the agents, similar and matches to another, which is on file with the FBI for ties to Osama bin Laden, leader of Al Qaeda.)

Wilson Toainga, a former public prosecutor, who investigated the case of a terrorist cell in Ecuador in 2005, has explicitly acknowledged the presence of cells in Ecuador. Toainga expresses concern not only about terrorism but also organized crime.

Additionally, Honduras has reinforced security around various foreign embassies. According to a report, Oscar Alvarez, Honduras’ Security Minister, expresses his concern about possible terrorist attacks. Alvarez says that these acts of terrorism would be plotted by Al Qaeda and carried out by Hondurans. Here an excerpt from the article that appears on CBS’ website:

“We are facing a state of preventative national alert, because our intelligence services report that al Qaeda foreigners have made offers for Hondurans to carry out sabotage both here and abroad”

These three reports from various sources show that terrorism is present in Latin America. There is no doubt about it now. Moreover, it is not terrorism a danger to Latin America but also drug trafficking and organized crime. The question should be: When are these cells going to be operational? And, whether any action can be taken in order to prevent attacks from extremists and fanatics or just wait and deal with the pain of terrorist acts.

More Info: Updates 7/21/11
Is Ecuador Becoming the 'UN of Crime'?

Get the Hell Out!

2011-04-06T00:41:00.008-04:00

The Ecuadorian government has declared “Persona non grata” to the United States Ambassador, Heather Dodges. Ricardo Patiño, Ecuador’s Foreign Minister, asked Hodges to leave Ecuador as soon as possible due to a WIKILEAKS cable where the Ambassador alleged police corruption, which was known by Ecuador’s government (FOXNEWS)

Patiño requested Hodges to leave after she did not provide the explanation Patiño looked for. Ecuador’s Foreign Minister was unsatisfied with Hodges’ explanation. Hodges said that the information was stolen from the United States Government. Therefore, she had nothing to explain to Ecuadorian authorities. The cable leak first appeared in the Spanish newspaper El País.

Whether Heather Hodges sent a cable or not. Ecuador’s government has no support to base diplomatic decisions of expelling a foreign diplomat on those grounds. Ecuador’s government is not only battling domestic disagreement with Rafael Correa’s administration but also foreign. What is next?

Is Hugo Chavez a Terrorist?

2011-04-04T00:47:00.015-04:00

Hugo Chavez, Venezuela’s President, has established an anti-American agenda since he became president. It is not a surprise to some people to read articles like the ones posted on America’s Forum web site. However, the implications for Latin America exposed in the articles linked bellow are real and dangerous.

According to the articles, Hugo Chavez hosted a terrorist summit in Venezuela’s Military Intelligence Fort Tiuna in Caracas back in August 2010. The meeting had representatives from Hamas, Hezbollah, and Palestinian Islamic Jihad. Chavez has become the perfect seed that terrorism needs to spread its radical ideas.

Chavez’ influence in countries like Bolivia, Nicaragua, Ecuador, etc., is an asset to terrorists’ cells. In Ecuador, terrorists have a different incentive to promote their fight against the western hemisphere. Ecuador uses the United States Dollar as currency. Money laundering in dollars is an advantageous tool for terrorism to finance its operations. The Financial Action Task Force’s (FATF) 2010 report shows that in Ecuador money laundering takes place at an alarming rate.

As America’s Forum article, “Chavez Hosts Terrorist Summit in Venezuela” reads the following:

"We assume that they are virtually present in all Latin American countries, and these people have the determination to attack America… We believe this is the kind of things that would be discussed at the summit, their ability to take their fight to the Western Hemisphere.''

Two questions come to mind:

1)How far will Chavez go to execute his anti-American agenda?

2)Which countries in Latin America are following Venezuela’s lead and opening up their borders to terrorists?

Links:

Chavez Hosts Terrorist Summit in Venezuela

Is there a Chavez terror network on America’s doorstep?

The Failure of the “Market Failure” Argument

2010-11-10T15:33:00.010-05:00

Dr. John Hasnas, Law professor at Georgetown University, gave a lecture to the Students for Liberty (Webminar Series) on November 8, 2010. Hasnas lecture was not on the Market Failure (MF) but rather the FAILURE of the Market Failure argument. Hasnas exposed his arguments against the MF from his knowledge in law and ethics. Hasnas could not being more eloquent in establishing the distinction of what constitutes for him the disappointment in the argumentation of the defenders of the subject in question.

I will now share my notes from Hasnas’ lecture:

The Market Failure (Definition according to Hasnas):

The market is full with transactions that happen simultaneously. There are unregulated voluntary as well as regulated voluntary transactions. However, the market failure occurs when the good outcome(s) of these transactions affect negatively third parties. Advocates of the MF often mention the following examples when the “market fails;” air pollution, deforestation, water contamination to name a few. Economists call these consequences of market forces “negative externalities”; while lawyers call them “negative social transactions.” Therefore, MF happens when:

Negative Social Transactions or Negative Externalities > Benefits produced by market transactions.

The Law:

According to Hasnas, the US’ Law System has two forms: the Statutory Law and Common Law.

Statutory Law: Governments create the general rules and the citizens must follow the statutory law. Hence, legislators write statutory laws; it reflects the political interest. It does not represent individual interest.

Common Law: It settles disputes. Property Law, Tort Law, Contract Law are parts of the Common Law. Common Law implies that there is a victim.

The Real World Conception (Market + Law):

Hasnas expresses that in the real world market and law meet in one place. This place should be the Common Law rather than Statutory Law. Hasnas proceeds to explain in detail his interpretations of market and law as follows:

Market: Voluntary transactions regulated by customs, ethics plus common law.

Law: Legislation is the regulation of voluntary transactions by the state to serve the politically dominant interest plus the common law.

John Hasnas describes the need for a self-correction of the market through the Common Law Regulatory Process (CLRP). Professor Hasnas describes the CLRP in this way:

“Exercise the degree of care that a reasonable person would use to avoid causing harm to others by his/hers actions.” (Hasnas’ Lecture PP Slide)

According to Hasnas, if you deny the claim listed above you deny Common Law. Its denial constitutes an abuse on others. People can an always will be able to regulate themselves without the intervention of the government.

----------------------------------------End of Notes----------------------------------------

I believe that Hasnas insights on the MF and its invalidity give us a different approach to the subject. The law approach is a fascinating tool to analyze policies. The understanding of the significance of Common Law and its use constitutes a strong tool to demonstrate the Failure of the MF argument. During, Hasnas lecture I could not help myself but to think in the words of Israel Kirzner.

Kirzner says the following:

“Efficiency for a social system means the efficiency with which it permits its individual members to achieve their individual goals.” (Kirzner 1963)

Kirzner expresses that inefficiencies may occur when the means of achieving a goal it is inconsistent with the goal itself. So the question, is the Market Failure a valid argument? I agree with Kirzner and Hasnas the Market Failure argument FAILS to demonstrate itself.

Was it a Coup d'etat?

2010-10-01T19:07:00.008-04:00

On September 30th, 2010, Quito the capital of Ecuador was in shock by the police riots that took place at the Regimiento Quito 1 (Police Headquarters in the North side of the city). The police was (and still might be) unhappy with a new law for the public sector. This law, the police thought, would cut their bonuses and promotions. However, in reality the benefits still there but paid differently. The controversy and conflict took place when President Correa tried, mistakenly and wildly, to confront the crowd.

Police men gathered at the Regimiento Quito 1 Thursday morning, they burned tires and declared themselves on strike. President Rafael Correa went to the Police Headquarters hoping he could calm the police force and get them back to work. However, things were about to take a wrong turn. As Correa, from a window, tried to convince the police that this law will not take away their labor benefits; police men chanted in favor of Lucio Guitirrez, Ecuador's former President and Correa's opponent. Correa could not take the pressure from the police and he lost it. He removed his necktie and unbuttoned his shirt Superman style. Correa told the crowd "if you want me, here I am," implying he did not fear for his life. The situation went from unsafe to unsafer.

Correa's security crew tried to get the President away from harms way. But any effort was in vain, a tear-gas bomb exploded right next to Correa's face. Correa walked, wearing a gas-mask and using a cane, to the Police Hospital located right next to the Headquarters. He was treated for a swollen knee that went under surgery last week and breathing problems due to the tear-gas used by police. While Correa was in the hospital he never stopped giving orders to his ministers, government, and military. On the streets the mood was different. Businesses, shopping centers, banks, schools got closed to prevent looting due to the lack of police force on the streets.

Around 2 PM the nation went under state of siege or emergency. According to article 165 of Ecuador's Constitution;

"165. The President can suspend or limit citizens rights of inviolability of residence, inviolability of correspondence, property, freedom of information, freedom social gathering, freedom of transit, in terms in which the Constitution points out."

Following the declaration of state of emergency, all TV and Radio channels had to broadcast the signal produced by Ecuador TV (ECTV) a state-run entity. Ecuador's citizens and the international community were at the expense of the information given by Correa's government. All information given by ECTV, not surprisingly, came onto the broadcast one-sided. It was Correa and his government in charged of orchestrating the information. Information that made it look like a coup d'etat was on its way.

Correa went public from the Police Hospital using Ecuador TV a couple hours after he checked in. He told reporters that he was a victim of a "cowardly attack." He sent a message to everybody by saying "this is a coup attempt" and "they (police men) are trying to get to my room and attack me...But, forget it. I won't relent. If something happens to me, remember my infinite love for my country, and to my family I say that I will love them anywhere I end up." (CNN)

So, was it a coup d'etat?

Doris Solis, who is a president's policy coordination minister, said "this is not a coup." Solis mentioned that the military supported Correa and he was their commander in chief. (FOXNEWS).

A coup d'etat implies that there is a declaration to oust the president and to replace him/her with someone else. However, it never happened in Ecuador. In history most coups, the people who want to overthrow a government are supported by the military, or it is the army the rebel group. Yesterday, the military expressed his support to Correa and his government. (It is important to mention that Correa has always been in good terms with the military. Unlike the police, Correa has increased the salaries of high ranked army officials.) What took place in Ecuador, it was a illegitimate strike by police forces that thought that their bonuses and promotions were taken away by the new law. Also what happened on September 30th was an act of reckless committed by Correa when he decided to confront the police.

Correa never stopped governing Ecuador. Even though, he was "practically captive," as he mentioned to reporters. He kept on commanding the military, leading his ministers and secretaries, and no one stopped him, not even the police.

Yesterday was a horrendous day in Ecuador's history. It was the straw that broke the camel's back. It was the consequence of how Correa governs Ecuador. Correa has been in power since 2007 and he has never stopped being arrogant and despot. He has applied an abuse of power at all levels without taking into account the comments and suggestions from opposition.

After Correa was rescued from the Police Hospital; he went to Palacio de Carodelet, President's home. There, he was received by his supporters in the Plaza de la Independencia. While Correa spoke to his supporters back in the hospital a bloodshed took place. The armed fight between army and police lasted about a hour. The bloodshed's outcome was 6 dead and 193 wounded. It was a fight among Ecuadorean citizens, and Correa was celebrating with his supporters. This is by far Correa's regime worst event, yet.

Finally, here is Juan Fernando Carpio, Economics Professor at Universidad San Francisco de Quito, gives a great yet sarcastic example of the conflict between the police and Correa's government;

"My plan for today: I want to raise my popularity in the building so I'm going to ask them to lower the salaries of guards. If they complaint, I am going to stand by their post guards and provoke them. Then when they retain me until my mom to comes get me, I will ask for solidarity from other neighborhoods. When i leave them ... I will get the guards from the next door building to fight the guards in my building. Then I will throw a party with friends to recognize my courage."

Video

Subjective Value through Non-Austrians

2009-06-03T15:01:00.005-04:00

James Buchanan in his book The Reason of Rules(10.2.9) states:

The individual is the unique unit of consciousness from which all evaluation begins. Note that this conception does not in any way reject the influence of community or society on the individual. The value structure of an isolated human being may be totally divergent from that of such a person described by membership in one or many social relationships. The presupposition requires only that societal or communitarian influences enter through modifications in the values that are potentially expressed by the individual and not externally.

Armen Alchian and William Allen in Exchange and Production: Competition, Coordination, and Control:

Groups, organizations, communities, nations, and societies are best understood by focusing on the incentives and actions of their members. A business, union, or family may be formed to further some common interest of its members, but group actions are still the results of decisions of individuals. Therefore, do not ask, "Why does the U.S. government, or General Motors, or some union behave as it does?" Ask instead, "Why does the decision-maker decide as he does?"

It is followed with some postulates that I list below:

For each person, some goods are scarce
Each person desires many goods and goals
Each person is willing to forsake some of an economic good to get more of other economic goods
The more one has of any good, the lower its personal marginal valuation
Not all people have identical tastes and preferences
People are innovative and rational

Value must be subjective otherwise a planned economy would be the easiest solution, but as Postulate 5 shows, tastes and preferences differ b/w individuals even b/w identical twins.

Value: Subjective or Objective

2009-06-01T11:26:00.002-04:00

Is value objective or subjective?

I am not sure this is much debated today as most economists agree that value is subjective.

Objective value dictates that value is taken from the object. This would mean even if there were no one to purchase the apple; the apple still holds a certain value.

Subjective value, on the other hand, is taken from man's use of the object. Using the apple as a reference, the apple holds a value only because it is scarce and someone can use it. It is therefore from the individual that the value is taken and not from the apple itself. The cost of producing the apple does not influence it's value except to the person who went through the action of producing the apple.

There is then multiple amount of subjective values placed on an object as their could be numerous individuals who have use for it. Their value will allow them to bid on the item allowing those who value the object higher to be willing to give up more for it. If the producer values the object more than what others are willing to give, then he would not sell it.

The Empiricist Claim

2009-03-19T09:34:00.003-04:00

Last night, I was fortunate to lead the discussion.
I had tried to tackle the question, why we are the Austrian Knights and not the Smithian Souls.

The debate Austrians find themselves with mainstream economists is not over economics persay but a philosophical debate.

I am curious if when reading blog posts such as this one that claim Austrians don't like empirical data, do you get the same sense as I do? That this is not a debate over economics but of a philosophical nature that has long been in discussions.
Found an easy to follow Philosophy Forum on Kant vs Hume.

How can we best argue in this debate?

Austrian Knights to Smithian Souls

2009-03-04T22:12:00.002-05:00

Tonight, Dan Klein had lead the discussion at the weekly Austrian Knights event.

The main point, at least as I took it, is the need for students to study Adam Smith.
Adam Smith had begun with the Theory of Moral Sentiments. It is important to note that it is the questions of morality that Adam Smith begin with, but to say that if other economists do not begin with such questions, they are not doing economics is rather short.

Economics is not the study of morals. We can not measure morals. It is only individual's making choices according to their preferences that help reveal the morality of the individual. This is not something that should be taken lightly. Morality and the study of ethics is a great assistance in learning about liberty, but they are not able to discuss economics. Economics defined famously by Lionel Robbins is "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses." This is not the study of morals on society. Only value that an economist can use in their studies is that of price which unveils a load of information for that period of time.

In the study of liberty, morality is essential as it answers many questions allowing each of us to comprehend why we strive so hard towards it. Communism attacks religion for the very reason that morality denies that government intervention is a worthwhile policy.

Let us take from this event that we can not use morality to argue on economics, but we can and should study morality to discuss liberty. Read your SMITH!

The People's Stimulus : What's your view?

2009-02-12T10:34:00.002-05:00

Michelle Muccio, the Rebel Economist has decided its time to say what we have all been thinking.
We don't need a stimulus plan, just give us our taxes back.

Watch the video and let me know what you think?
If you like, send it to a friend and give us their take.
Leave comments on the video, and best of all, let us begin again our economic lessons for President Obama.

Pete Boettke on Obama's Stimulus

2009-02-11T08:52:00.004-05:00

On the Austrian Economists blog, Professor Pete Boettke at GMU's Economics Department responds to Obama's outlandish claims during his first Presidential press conference.

Boettke is not known for his short blog posts, but a well said rebuttal it is.

President Obama, GMU is a short trip on the Metro away. You should make it out to one of Boettke's classes; perhaps you'll learn a thing or two.

OBAMA needs to Learn Economics Part 1

2009-02-09T20:17:00.006-05:00

"All things are subject to the laws of cause and effect." - Menger

This is not philosophy but truth on causation.
Physics teaches us that energy is neither created nor destroyed.

What do you think free market thinkers speak of when we discuss the market fluctuations?
Whenever there is an interference within the market, it will have to react in order to re-stabilize.
The more you interfere the more the market will have to fluctuate.

What Obama does not understand, is that by the government not interfering within the market the individuals will not have halted. They will still be buying and selling. Their actions will be the cause that effects other's actions. This is how the market fluctuates.

I would like someone to explain to me how this is philosophy, or does someone want to take the side of explaining how government action actually means individual citizens actions.
We act with or without governments actions. Our actions do not need government involvement for them to affect one another.

Let us remember the lesson Henry Hazlitt wanted everyone to learn in his first chapter of Economics in One Lesson.
"The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the con- sequences of that policy not merely for one group but for all groups."

Part Two following shortly on "Government will create more jobs"

Mourning Beth Hoffman

2008-12-02T18:10:00.001-05:00

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!

Wisdom from the Gossip Crowd

2008-11-24T08:24:00.007-05:00

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?

The Need for Government or Anarchy?

2008-11-10T16:05:00.003-05:00

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.

Moral Man in an Immoral World

2008-11-05T15:29:00.001-05:00

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?

Step by Step

2008-10-08T19:23:00.002-04:00

On Sunday September 28 of 2008, Ecuador adopted its 20^th 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 21^st 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 20^th 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.

The Economic and Political Implications of the Bail-out

2008-09-29T18:38:00.002-04:00

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 5^th 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 20^th 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.

Why I am Proud to be Studying Economics at Mason.

2008-06-10T21:08:00.002-04:00

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 41^st 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, 3^rd in Methodology and History of Economic Thought, 9^th in General Economics and Teaching, 11^th in Law and Economics, and 25^th 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.

Too Good to be True

2008-04-09T11:43:00.009-04:00

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

2008-04-09T11:28:00.006-04:00

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.

Christopher Coyne on After War

2008-02-23T22:22:00.006-05:00

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.

Austrian Knights the Beginning

2008-02-06T12:20:00.004-05:00

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.

Brief History of the Austrian School of Economic Thought

2008-02-02T02:46:00.002-05:00

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 15^th 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 Say Claude-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 20^th 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 20^th 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.

Welcome Note

2008-01-27T02:30:00.003-05:00

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 20^th 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!