Proof Nobody 'Gets It' About Economy

Mitt Romney, replying to a question by Gayle King on CBS This Morning said, "Well, of course, we have to have regulation on Wall Street and on every street to make sure that our economy works well..."

Do we, Mr. Romney? We cannot call our system 'free enterprise' when that phrase, meaning an economy run by the forces of the market place, is instead run by political ideology. It doesn't matter if we mean your ideology or Obama's or Marx's. If an economy isn't free of politics, then you can't use the phrase.

On the self-declared Marxist website Political Affairs, author John Case discussing science-based economics wrote, "You cannot ever make economics non-political." However, he then goes on to explain how libertarian, Austrian-school economics is not political. He even states unequivocally that "The 'Austrian School' is the opposite of a data or evidence driven framework." Case cites Paul Samuelson's Keynesian economics as "a more scientific framework for economics." Case doesn't like libertarian economics.

Austrian economics is exactly the opposite of government's Keynesian-driven 'evidence', dealing exclusively instead with business evidence, the kind business people deal with on a sometimes hour-by-hour basis. Business professionals make decisions based on whatever they need to know when they need to know it, such as the rising prices of their materials or the falling price of their goods, or of their competitor's goods; the cost of transportation; the cost of labor, etc. These are not the things about which a government should worry; in fact, a government which protects men's rights ought to stay completely away from the things business professionals need to worry about.

A free nation needs to worry about protecting society from men who set out to bilk victims and receive ill-gotten gains, not about men working within legitimate market forces. Artificially affecting market forces makes the economy less able--in some cases impossible--to operate. When a government manipulates market forces using the evidence it chooses to see, it has no objective basis on which to set those manipulations. What objective standards could it possibly use since it is not operating a business?

As one example, should government help the trucking industry maintain status quo rates to prevent drivers from being laid off, or leave it alone so that producers can ship more cheaply, thereby creating more jobs or paying workers more (or both)? How can competition properly lower production and consumer prices, when government helps trucking companies maintain their current rates instead of letting market forces determine those?

But not even the conservatives like Romney seem to get this fact. Paul Ryan is nothing more than a conservative who attracts Tea Party labeling by being less progressive. Romney's desire to 'regulate every street' makes him sound very threatening. Does he mean such things as retaining the corn ethanol requirements, part of the Renewable Fuels Standard, that caused farmers to sell or slaughter livestock this summer because corn became so expensive when the drought prevented corn and wheat from growing? Using corn for ethenol is predicted to cause the price of our food to rise by as much as 14% in 2013.

(Read how farmers switched from growing white corn to yellow corn, "making the base of most Mexican foods unaffordable." What happens in one place, affects other places. Should things be affected by honest markets, or political ideologies?)

Economist Richard M. Salsman wrote in The Objective Standard, "There is a lagged influence between academic economics and public policy, but increasingly since the 1970s academic economists have recognized that free markets work, that 'market failure' reflects poorly defined and ill-protected property rights, and that boom-bust cycles and sapped prosperity are consequences of bad public policies."

He uses as examples of 'academic economists' the Nobel Prize winners F. A. Hayek of the 'Austrian-school' of economics (1974), the idea of 'monetarism' from Milton Friedman (1976), 'rational expectations' from Robert Lucas (1995) and Thomas Sargent (2011), the 'public choice' of James Buchanan (1986), and of supply-side economics by Robert Mundell (1999).

These are the economics that John Case and other Marxists, and progressives like President Obama and Hillary Clinton, abhor. Let's see whether Romney and Ryan come anywhere near such "academic" standards as those which advocate a really free economy.

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© Curtis Edward Clark 2012