Venezuela today. The country is in open revolt. I cant even ride my bicycle to the beach anymore. I live on Margarita Island. The roads are filled with broken glass from molotov cocktails, barbed wire, tear gas canisters, nails, national gaurd and protestors. The pritestors are protesting because of scarcity - scarcity in food, public services, personal safety, standard of living, currency buying power etc. Ludwig Von Mises defined economics as the study of human reaction to scarcity. He also said that socialism must fail because it cannot do the economic calculation because it lacks the principle of induction. Inferential or inductive statistics is what producers use to determine how best to allocate capital to best serve consumer needs. A lot of embedded information is conveyed to producers in the price consumers are willing to pay. But the prices have to be freely and voluntarily determined by the consumers. Von Mises and Friedrich Hayek called this the price mechanism and argued that state intervention in the price mechanism through taxes, regulations, marketing boards, single source state monopolies, price controls etc distort the price mechanism and cause inefficient allocation of capital. On a purely technical level with no idealogical or political considerations they argued that the root cause of economic problems and scarcity was the waste of capital due to state intervention in the price mechanism. Do you agree?
Posted on: Sat, 29 Mar 2014 22:28:12 +0000
Trending Topics
Recently Viewed Topics
© 2015