Planned Chaos" by Ludwig von Mises, Chapter 02
The Liberty Mindset, Season 02 Episode 04 (02/08/2023)
Ludwig von Mises is the guidepost for the Mises Caucus of the Libertarian Party. Over the next several weeks, I want to go through this book. Just a reminder, this was revised in 1949. Seventy-four years ago, the attitude he describes got worse, with failures in abundance. Yet the Progressives, Democrats, and Republicans keep putting their pile on 23 and wonder why the Roulette wheel only pays them rarely.
Economics is no longer taught in school. Modern economists miss the boat on how things work.
You can listen or watch the chapter on the VLOG here:
The Dictatorial, Anti-Democratic, and Socialist Characteristics of Interventionism:
How often do we hear that "Capitalism is evil" because it is founded on profit? The entrepreneur's desire to make a profit. And profit is bad. Yet, if you look at what capitalism really is, several things:
"Greed, for lack of a better word, is good!"
– Gordon Gekko (1987 film "Wallstreet" played by Michael Douglas)
Capitalism is based on the market:
The most people drive the market, and though the "rich" have more "votes" in the sense of dollars, the number of people has the most influence. It is the most honest expression of small "D" democracy. Every dollar is a vote, Von Mises said, every penny, but inflation is a harsh mistress.
NOTE: "The Jetsons" took place in 2022. Last episode I spoke about the fallicy of the "catalytic converter" and how the government forced that and destroyed the free market of the automobnile. I supposed that this is essentially why I do not have the flying car I was promised as a kid. Just sayin'.
This interventionism is why we have inflation and limited production today.
There are two ways that the government can lower prices.
1. Buy the product at a fair market value, and then sell it to the folks who need it at a lower price—taxing everybody to be able to afford that by driving up the cost, inflation, and so on.
2. Regulate the Price: This means lower profits for producers; in some cases, the price will be too low, and the less productive will have to find something else to do. If you regulate pieces, you also have to regulate every aspect of the supply chan to accomplish the goal. That lowers the amount available, driving up prices and creating shortages. This brings us back to a lack of innovation, and you end up with an inferior product, like the internal combustion engine with a catalytic converter.
Did you know that milk should be about $6 a gallon? Our current price of $3.59 (02/08/2023 Fred Myer/Insta Cart online). One of my local farms promises $9 a gallon plus a $4 deposit for the glass bottles (2 half gallons). And this milk is pasteurized, but it is whole milk. Not the chalk water of skim or non-fat. The US government pays corporate dairies to keep the price down. You pay for the dairy, even if you are lactose intolerant.
And yet, congress often wants to "regulate" the market just a little. They make kings and economic giants, videlicet, Pfizer et al.
On February 7th, President Biden lamented the cost of insulin. He announced the Trump-era plan to limit the monthly fee. This, of course, will only work if the producers get subsidies, so everybody will have to pay for insulin you do not use.
Intellectual property, a by-product of the Nazis?
As much as I am a supporter of intellectual property, I wonder what would happen if the Federal Government stopped paying producers to sell cheap and started testing the product and letting anybody produce the product?
Let any corporation produce insulin, submit it for testing to be sure it is safe, and then sell it at the market price. Companies could keep their process secret, but anybody could find a better way.
Of course, the challenges here are that companies will steal production methods.
One essential medication that could be drastically helped, in a similar manner to the catalytic converter, is Epi-Pens.
Epinephrin Applicators are patented not in the medication but in the delivery device. That is where they cost it. Epinephrine is a long-known generic medication that is relatively inexpensive. And every time the current Epi-Pen becomes public domain, they lobby to have this new Epi-Pen set as the new standard. Only the new one can be sold. And the prices are outrageous, even with insurance, if it is covered. 2 doses can cost over $100. Granted, you hopefully will not need those doses. But they expire after a year (Officially 18 months after manufacture). So you are stuck buying more unless you are willing to risk using an old one. Note there is research that the pens can last up to 4 years (50 months at 84% effective). I was always cautioned to verify that the pen's window was clear before use. I am not suggesting you keep your pens too long.
And there is the Problem "If the Federal Government would just say…." yet if the federal government would just say, any device that delivers 03. ml into the thigh effectively is fine. The price would probably drop.
What if a free market?
Let us imagine what happens in an unregulated market. There are no "Federal guidelines." What would happen:
One of the things about a true democracy is the voter must be educated. She must know what is real or fake; he must know what is healthy and toxic. They must use common sense. We will also toss a little torte reform in just to make things even.
You purchase a product, and the manufacturer gives you some guarantees.
Let's say a car. Mike's Mad Roadster makes a car that runs on Cocoa Puffs. And it gets 500 miles to the box of standard 10.7 ounces. You can also run it on Fruity Pebbles, but your mileage may vary.
At $3.79 a box for 500 miles, such a deal.
So you purchase the car, and let us say it works perfectly. The car costs $70k and smells like Hershey, Pennsylvania, when you drive. Oh, and no Carbon emissions. A little block of Graphene is all the waste.
You tell your friends, and the manufacturer has to build and automate a factory.
General Motors is stunned. A car that runs on chocolate cereal. How did they do that?
Well, now Mike's Mad Roadster company has to compete. Because of their large manufacturing, GM gets to work and sells a simial Cocoa Puff powered car for $60K. But it does not produce Graphine, it makes carbon fiber sheets. So he streamlines his manufacturing and figures out how to make the car go on just a pound of sugar for 700 miles!, with just a 10-gram block of Graphene as a waste. Mike has been using Graphene in his process. He offers to buy your blocks of Graphene for $1 each. That is far below the $5 a gram on the open market, but all you have to do is drop your blocks off at any nationwide Graphene bins.
GM's car producing the Carbon Fiber finds that it can't compete with Mike. Mike is making a killing not only on his cars, but he gets so much Graphene Mike can start supplying it to GM to manufacture their cars. And those profits allow him to lower the prices of his cars to $50k, plus the graphene subsidy.
If either company makes a bad product, they go out of business. Except for GM, because the US Government owns it, they subsidize GM so it can make sugar-powered carbon fiber polluting cars for $40k.
As soon as the government steps in, you no longer have a free market.
The market for Carbon fiber is flooded, and you can't get rid of it. As long as the free market prevails, the customer bnefits. As soon as the government steps in, sure you get cheaper cars, but are they better?
Some greed drives both companies, but Mike knows he must produce a product people want. It is like Tesla Motors, being the most popular despite the limited government subsidy. Elon does get some.
If greed is the driver, it is also the moderator. A company can not perform unless it desires to PLEASE THE CUSTOMER! Without that, there is no market.
To open the market from our current "Crony Capitalism" (AKA Crony Fascism), we would need to remove the industrial and some public protections.
If a product is defective or poorly designed, you should be able to bring a civil suit. Yet we should leave the free market alone to determine the best.
Especially with social media, no company will produce a really inferior or unsafe product and make any money.
We have not seen a free market since the 19th century. As the Federal Government took more and more control, they started picking the winners and losers.
In a free market, would we need Lobbying firms?
I like the idea that by reducing federal involvement, the billions currently spent on lobbying can then be moved to research and development. And who knows, maybe even Boeing could start producing competent products?
Profit is not a bad word. It is necessary to improve and make the supply line more efficient.
The consumer is in control of a free market. The more agile and efficient company will be the most successful.
Failure of the incompetent or inflexible (Go woke, go broke) will require the means of production to the more efficient or to the next new entrepreneur who wants to purchase the equipment of the failed.
Competition is good. The more adversaries, the better the quality and price.
Next week on Monday the 13th, I am interviewing Dr. Jason Dean, then on the 15th, I will read Chapter Three of Planned Chaos.
Until then, seek the truth and stay curious.