Mark Thornton Joins Glenn Beck to Talk Skyscraper Curse

Mark Thornton Joins Glenn Beck to Talk Skyscraper Curse

01/10/2019Mark Thornton

Dr. Mark Thornton joined Glenn Beck for an interview on how Austrian economists have predicted every major crisis of the last century. 

The interview begins at the 44:50 mark.

The Skyscraper Curse is available now as a hardback, paperback, e-book, and audiobook at the Mises Store.

The book and audiobook are also available for free in the Mises Library

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There's No Evidence that Women Were "Forced" to Enter the Work Force "Just to Keep Up"

03/11/2019Ryan McMaken

In discussions about the ease or difficulty with which one may attain the so-called "American Dream" it is not uncommon to hear that in the past, a family needed only a single wage earner in order to attain the alleged dream.

This is generally based on assumptions about the the past in which it is imagined that most married women stayed home and provided domestic services such as cooking and cleaning and childcare. They did the family's shopping, took the children to school, and managed the household.

Now, since the rise of industrialization and departure of working men to a place of work other than the home (of the fields surrounding it) there is no doubt that women took on a role of household management, which grew in economic importance as time went on.

The question remains as to whether or not most households could afford to have the wife do nothing other than household chores and household management.

It appears plausible that many upper middle-class women could indeed afford to do this. Outside of households in the upper reaches of household income, however, attaining the much-vaunted "single-income family" wasn't as easy as many today assume. This can be seen in the fact the number of wage-earning married women, contrary to myth, slowly grew continually throughout the first half of the twentieth century. Moreover, some observers tend to attribute changes in the the working habits of married women only to economic need. But, as we will see, changes in the social acceptability of wage-earning married women changed over time, and not necessarily as a result of economic need. Thus, it is inappropriate to assume women enter the workforce primarily in order to maintain a standard of living that had allegedly been attainable with only one income previously.

A Brief History of the Housewife

Prior to industrialization, the idea of the stay-at-home housewife didn't even exist in most families, largely because it was simply assumed that both husband and wife needed to constantly attend to a wide variety of productive tasks at home. Those tasks were often segregated, but it was assumed that while the husband worked in the fields, the wife would spin yarn on a wheel, attend to the dairy animals, prepare meals, and wash clothing. These were not minor or quickly-accomplished tasks.

As an ideal, the housewife gained increasing popularity during the nineteenth century in part because it seemed possible for middle-class women to possibly attain what was seen as the "idle" lifestyle of upper-class women. Thus, a woman who did no wage work or production work was seen as having attained a higher status.

Over time, this became ingrained in the idea of proper "womanhood," but rarely — prior to the twentieth century, at least — did it ever have much to do with everyday reality. Susan Cruea writes:

The vision of women as wan, ethereal, spiritualized creatures bore little relation to the real world,especially of the working class, where women operated machines, worked the fields, hand-washed clothing, and toiled over great kitchen stoves. Even middle-class girls raised to be idle and submissive found themselves overwhelmed when it came to managing household duties as wives and mothers.

Nor was avoiding this fate a simple matter of finding a quality husband.

Massive economic changes in America also made arranging a desirable marriage difficult. Carroll Smith-Rosenberg notes that commercialization, industrialization, and advancements in transportation led to a mass departure of young men from the New Eng-land agricultural area "either to the West or to the new urban frontier." As a result, women's marital opportunities became limited, and more were forced to seek employment.

Economic historian Claudia Goldin has pointed out the importance of wage work to young and single women who greatly swelled the ranks of wage workers in the late nineteenth century. Once they married, however — assuming the new household was relatively well off — the women usually left the workforce.

This avoidance of wage work, however, could not be assumed in most cases. Sociologist Juliet Schor writes:

At least until late in the nineteenth century, most families could not afford to devote the labor of an adult solely to housecleaning, cooking, and mothering. Although social mores confined them to the home, married women, especially among the working classes and the poor, remained enmeshed in the cash economy. They earned income by taking in laundry, accepting boarders, or doing piecework. In rural areas, they worked on family farms. A large fraction of the population relied on this money for survival.

Throughout the early twentieth century, much of this work done by women in the cash economy remained informal because more institutional types of employment were closed to married women as part of the so-called "marriage bar."

Schor continues:

Why were housewives effectively excluded from the market? Among middle-class women, outright prohibitions on suitable jobs played a crucial role. In teaching and clerical work, women faced "marriage bars" - restrictions against the hiring of married women, or the firing of single women once they did marry. According to economic historian Claudia Goldin, at their peak, these bars were used by 87 percent of local school districts and covered 50 percent of office workers. Teaching and office work were two of the most important occupations for middle-class women whose class position would prevent them from going into factories or other work from which they were not barred.

In the working class, married women were also excluded from the labor market. Their (male) trade-union movement had long argued against women's employment in manufacturing industries. ... Men fought to be paid a "family wage" — remuneration generous enough to "support" a wife at home. But it was not only outright discrimination that kept women out of the labor market. There was also the sense that a family with a full-time housewife had achieved a privileged position in society.

In other words, the number of women "who stayed home" was artificially inflated by the presence of marriage bars and social mores. The number who stayed home was not simply a matter of economic abundance making a single-income household easily attainable.

But even with these marriage bars in place (which nonetheless went into steep decline in the 1940s), the number of married women going into wage work increased throughout the 1930s to the 1950s. Goldin notes:

From 1930 to 1950 the labor force participation rate for married women 35 to 44 years old in-creased by 15.5 percentage points, or from about 10 percent to 25 percent. Whereas just 8 percent of employed women were married in 1890, the number rose to 26 percent in 1930 and 47 percent in 1950. The fraction of single women in the labor force had not declined by much.Rather, the labor force participation of married women had increased substantially.


For married women in the 35- to 44-year-old group, participation increased from 25 to 46 percent from 1950 to 1970.

Some of this was facilitated by the new appearance of "scheduled part time work" which allowed many married women to enter into employment involving fewer than 35-hours per week.

"Need" vs Preference

There are a few things we can extrapolate from this information, and which are relevant to the idea that, allegedly, women did not "need" to engage in any wage work in the past.

First of all, it is simply not true that mothers and married women did not take on wage work or participate in the cash economy prior to the second half of the twentieth century. Agricultural women, of course, did manual labor all day long. But even as these households transitioned to industrial-based economies, married women still took on other types of additional work to supplement incomes. This was especially true in the working classes and lower-middle classes.

Secondly, it's important to remember that the number of women in the workforce was suppressed by social convention and by active, concerted efforts to keep married women out of the work force. Essentially, the marriage bar and efforts by labor unions acted to make it much harder for women to find "respectable" employment. While the marriage bar did not cover all types of employment, social convention prevented many middle-class women from taking jobs as laborers or factory workers. This sort of work was socially unacceptable. Thus, it is not appropriate to assign "economic need" the same level of importance in all time periods. Even if need existed in the days of the marriage bar, many families elected to simply do without in order to conform to social rules.

Thirdly, it is likely many women entered the workforce as a matter of personal preference and due to the desire for an even higher standard of living.  The fact that many women chose to enter the work force over these decades cannot be just assumed to be a function of a supposed decline in real wages. The increase may just as much be a function of the fact that many women chose to enter the workforce because they wanted to — and because it became more socially acceptable — and not just as a function of income needed to maintain a certain standard of living.

In fact, from 1950 to 1970, real wages increased considerably. This would not be the case if women had to enter the workforce "just to keep up" or just to maintain a formerly affordable standard of living as many contend to be true when they point to women joining the workforce after World War II. If that were true, real wages would be flat or nearly flatduring the period in question. As Goldin has described, nearly half of married women in the 35-44 year-old group — right in the middle of child-raising years — chose to enter the work force by 1970, either on a full time or part time basis. And this occurred while household incomes were increasing over the previous two decades.

So, it is not evident that because more women chose to enter the workforce after 1950 that this somehow "proves" the standard of living open to single-earner households was declining.

Moreover, while many contend the "American Dream" was becoming unattainable, we actually find that households were expanding their ownership of homes and cars at the same time more women were joining the work force.

As we've seen, the average size of homes US homes increased by two-thirds from 1967 to 2017, and increased from around 1,000 square feet to over 1,600 square feet from 1950 to 1970. All the while, the number of women joining the workforce increased. At the same time, the number of automobiles available to US households increased significantly during the 1960s, 1970s, and 1980s. The number of households with no car was nearly cut in half from 21 percent to 12 percent from 1960 to 1980. The number of households with access to two or more cars nearly doubled from around 22 percent in 1960 to about 53 percent in 1980.

Some might claim that was because married women "were forced" to get jobs, and thus needed transportation to that jobs. However, one might just as plausibly claim that many women wanted access to their own automobiles, and preferred wage work and an automobile to no wage work and no automobile.

And this brings us to the fundamental problem of assuming that women "have to" enter the workforce. Given that the US standard of living is far, far above subsistence levels, it's obviously not the case that average American households "cannot survive" on a single income. On the contrary, it's obvious that most American households today could certainly attain what would have been considered a middle-class standard of living during the 1950s and 1960s: a 1,000 square foot two-bedroom, one-bath house with a carport for the family's one car. There were rarely annual vacations to resort-like places out-of-state or overseas. In-home electronic entertainment consisted of a single television with four or five channels.

The fact is, however, that most American households don't want that sort of standard of living. They want smart phones, and an automobile for each adult. They don't want the children to have to share a bedroom. They want cable television.

Consequently, many households have elected to choose the benefits of higher incomes — and the downside of less leisure time and child-parent time — for the benefits of a higher material standard of living. It is also entirely possible that many couples would have preferred to do the same in the first half of the twentieth century had it been more socially acceptable to do so.

Usually, when people contend that in the past a single income brought a cornucopia of wealth manifested in the American Dream, they tend to base this on anecdotal experience from the point of view of a middle-class person who grew up in the mid twentieth century. These people forget that the standard of living was much lower then, and they also don't realize that the number of hours worked by the one household breadwinner tended to be higher than in later decades.

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Europe's Latest Attack on Free Speech

03/11/2019Ryan McMaken

p> A European court has ruled that people can be fined and prosecuted in criminal court for saying things about religious figures. Specifically, saying things about the Muslim prophet Mohammad is verboten, and state punishment is appropriate:

The European Court of Human Rights has ruled a woman convicted by an Austrian court of calling the Prophet Mohammed a paedophile did not have her freedom of speech rights infringed.

The woman, named only as Mrs. S, 47, from Vienna, was said to have held two seminars in which she discussed the marriage between the Prophet Mohammad and a six-year old girl, Aisha....Mrs S. was later convicted in February 2011 by the Vienna Regional Criminal Court for disparaging religious doctrines and ordered her to pay a fine of 480 euros plus legal fees.

The court's primary reasoning, it appears, is that the woman's comments ought to condemned because they might "stir up prejudice and threaten religious peace..." Notably, however, Mrs. S is not accused of saying anything that encourages violence either generally or in any specific way.

In other words, human rights go right out the window if the exercise of those rights might cause other people to feel bad.

This sort of thing is shocking to Americans, of course, but it's old hat by now in Europe (and Canada) where one can face large fines , and even imprisonment for saying unpopular things.

Moreover, it reflects a larger disdain for private property that is so widespread in Europe. Consider, that the comments made by the woman in question were apparently made at "two seminars." Presumably, no one who didn't wish to listen to the ideas of Mrs. S was forced to do so. And there is no claim that Mrs.S trespassed on anyone's property to express these ideas.

As noted by Murray Rothbard, the right to free speech is not a special right, but is intimately connected to property rights. If Mrs. S was expressing her ideas in a place and in a way that did not violate anyone else's property rights, then she was acting peacefully and in a way that respects the rights of others.

In other words, it appears that there was no coercion or violence of any sort involved in Mrs S's expression of her ideas.

The Court, however, has decided that the proper response to her peaceful activities is to use violence — by imposing fines.

Moreover, the court appears to be unconcerned as to whether the facts relayed by Mrs S, relating to Mohammad's marriage to a young girl, are accurate or not. This would appear to be important, but presuming that Mrs S comments about Muhammad's child bride are accurate — which they appear to be — the court is basically taking the position that stating well-known historical facts constitutes some sort of hate speech.

The larger goal, it appears is to pander to certain interest groups at the expense of basic freedoms. One is left wondering, however, if the Court would react with equal enthusiasm to equally disparaging remarks about Christianity or Christians.

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Galles: Remembering Gustave de Molinari

03/08/2019Gary Galles

March 3 marked the bicentennial of Belgian-born philosopher/economist Gustave de Molinari’s birth. Based on self-ownership and the private property derived from it, he forcefully defended every form of liberty. No wonder Frederic Bastiat named Molinari his successor.

Remembering Molinari’s across-the-board defense of liberty is particularly necessary at a time Americans pay lip service to it, but constantly say “there ought to be a law” that restricts it.

His recognition that individual sovereignty is a far superior replacement for government sovereignty from the perspective of justice, respect for natural rights, and of effective social cooperation is worth revisiting on 200 years after his birthday.

Read the full article at The Orange County Register

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Bylund: 3 Fundamental Ideas on How to Succeed as an Entrepreneur

03/08/2019Per Bylund

It's widely agreed that we need more entrepreneurship for economic growth and a higher standard of living. But more is not always better.

In fact, there can be too much of a good thing, in entrepreneurship as in so many other things. The reason is that economic growth comes from successful entrepreneurship that is also productive. And not all entrepreneurs who earn profits contribute to economic growth if they have unproductive -- or, worse, destructive -- effects on the economy.

Unfortunately, many entrepreneurs fail to consider what it is that they're contributing to the economy, and for that reason don’t always end up being productive. Sure, you don’t have to be productive to make money. And to the degree that "success" is a matter of getting big figures at the end of your P&L statement and being "in the black," you can succeed as an entrepreneur without contributing much to the economy or society.

Read the full article at Entrepreneur

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Fed Reports Big Drop In Household Net Worth for 4th Q 2018

03/07/2019Ryan McMaken

The Federal Reserve Board of Governors today released a new report today noting changes in net worth for households and nonprofit organizations.

As a result, the Drudge Report featured, at the page top, the headline " Households see biggest decline in net worth since the financial crisis... "

The placement and asserted urgency of the headline may overstate things. This number could potentially signal a brewing recession, although, since the data is highly aggregated, it tells us little about how a sizable number of households are actually affected.

Using the Fed's data, we find that net worth dropped quarter-to-quarter by 3.45 percent. That's the largest drop since the fourth quarter of 2008, when it dropped 5.87 percent.


Taking the numbers year-over-year, growth in the fourth quarter was slightly positive, increasing 0.8 percent, which, however, is the smallest growth rate since the third quarter of 2009.


The drop was due to the fourth quarter's sizable drop in the stock markets. For households with heads not near retirement age, this isn't much of a problem. For older household heads, however, the drops could serve as a wake-up call. If the stock market does enter a short-term down cycle this could be a problem for those who won't have time to wait around for stocks to recover their value again following another recession.

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January "Underlying Inflation" Measure Falls, but Gap with CPI Widens

03/07/2019Ryan McMaken

According to the Federal Reserve's Underlying Inflation Gauge, the 12-month inflation growth in January 2019 was at 2.9 percent. That's a 12-month low, and reflects the anemic economic growth the Federal Reserve has recently identified as a reason to slow down or stop the earlier-stated plans to raise the target interest rate and sell-off the Fed's 4-trillion-dollar portfolio.

The Fed began publicly reporting on new measure in December of 2017, and takes into account a broader measure of inflation than the more-often used CPI measure.

Not shockingly, the UIG has shown a higher rate of inflation than the CPI, most of the time in recent years. Moreover, this gap between UIG and CPI has been generally higher in recent years.


In January, the UIG was 2.9 percent, the CPI growth rate was 1.6 percent. The gap was 1.4 percent, which was the largest gap in 39 months.

In other words, price inflation in both the UIG measure and the CPI have slowed. But it's slowed more in the CPI than in the UIG measure. Not surprisingly, the FED concludes that inflation is not problem at all, while a broader look at the economy shows considerably more price inflation.


The use of consumer prices only in the CPI has long been a problem, in that the cost of living and planning for the future does not involve only the basket of goods used in the CPI calculations. A wide variety of assets affect the American economy as well.

As explained by the New York Fed's summary of the UIG measure:

We use data from the following two broad categories: (1) consumer, producer, and import prices for goods and services and (2) nonprice variables such as labor market measures, money aggregates, producer surveys, and financial variables (short- and long-term government interest rates, corporate and high-yield bonds, consumer credit volumes and real estate loans, stocks, and commodity prices).

But don't expect the Fed to abandon its fondness for the CPI and the arbitrary "2-percent inflation" goal any time soon.

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Block in Real Clear Markets on Austrian Economics

03/07/2019Walter Block

In addition to being a libertarian in political philosophy, I am also a member of the Austrian school of economics.

Austrian economics has nothing to do with the economy of that European country. It is so named because its founding fathers all emanated from that part of the world. They include such European scholars as Carl Menger, Eugen von Bohm-Bawerk, Ludwig von Mises, Friedrich A. Hayek (Nobel Prize winner in the dismal science in 1974) and Joseph Schumpeter.  Murray N. Rothbard and Israel Kirzner are the most high profile American Austrians. In like manner, the Chicago School of economics does not at all focus on the commercial well-being of that particular city. Rather, this perspective too takes its name from the fact that its progenitors were all in some way associated with the University of Chicago. Luminaries include Aaron Director, Henry Simons, Milton Friedman, George Stigler, Gary Becker and Ronald Coase.

Read the full article.

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Americans Aren't Giving Up Their Cars

03/06/2019Ryan McMaken

Auto loan delinquencies surged in 2018, rising to 2.36 percent, which was the highest rate since the third quarter of 2010.

Bloomberg reports:

More Americans than ever are at least three months behind on their auto loans, a sign that the U.S. economy may have little growth left in the tank.

The number of loans at least 90 days late exceeded 7 million at the end of last year, the highest total in the two decades the Federal Reserve Bank of New York has kept track. Expressed as a percentage of total debt, the delinquency rate is the highest since 2012, as overall borrowing has also increased.


Source: Federal Reserve Bank of New York, Household Debt and Credit Report.

This isn't to say that automobiles are going away as an industry. In spite of repeated claims that people aren't buying cars anymore — and that millennials would rather walk everywhere — overall spending on auto sales reached new highs in 2017 and 2018.

[RELATED: "How Long Will Cheap Debt Bail Out Automakers?" by Ryan McMaken]

On the other hand, per capita spending on auto has still not recovered from the high of the year 2000. This, however, does not prove that people are getting rid of their cars. It may only mean that they are economizing on cars.


Source: Census Bureau, Monthly Retail Trade

For example, the American Community Survey's data through 2017 suggests very little change in recent years, as far as vehicles per households. According to the survey, the number of households with one vehicle has been virtually unchanged since 1990 around 33 percent. Since 2000, the number of households with two vehicles has only slightly ticked downward from 38 percent in 2000 to 37 percent in 2017.


Source: Transportation Energy Data Book, Table 8.4, Oak Ridge National Laboratory. 2010-2016 data – U.S. Bureau of the Census, American Community Survey, Table CP04, 2018.

Meanwhile, since 2000, the number of households with three or more cars has increased from 18 percent to 21 percent. (Household size has decreased over the same period.)

In other words, we don't see anything here to suggests that American households are scaling back the number of vehicles per household, even if they do cut back on how much they are spending.

After all, not everyone concludes he absolutely needs an $80,000 pickup truck.

It remains unclear if the Great Recession or the allegedly different attitudes of the Millennials has fundamentally changed auto availability per household.

The short term effects of the Recession are clear. Looking at the average number of vehicles per person or per household, we do indeed see a drop off in the number of light vehicles in the period following the recession. Looking at a broader timeline for the past twenty-five years, however, the trend remains remarkably flat.


As far as Millennial demand goes, CNBC reported in 2017 that "Consumers, ages 21 through 34, are taking out new auto loans at a 21 percent higher rate than Gen X borrowers did when they were that age." And in 2016, the Associated Press pointed out "millennials — especially the oldest ones — are these days buying cars in big numbers. They just had a late start." The article also noted that in California, the country’s biggest car market, millennials outpaced boomers for the first time as car buyers. Millennials’ share of the new-car market jumped to 28% in 2015.

Moreover, as USAToday reported last week, low interests rates have continued to feed demand for ever-pricier cars:

A decade ago, the best-selling segment of vehicles was affordable small cars, like the Ford Focus sedan, she said. Today, it’s entry-level crossovers like the Toyota RAV4 and Ford Escape, which carry starting prices of several thousand more dollars.

“Fundamentally consumers have changed what they’re buying,” Zabritski said. “That’s part of where we’re seeing these rising prices.”

They’ve changed so much that the Focus, in fact, is gone. Ford is discontinuing the car, along with the Fusion and Fiesta sedans. And General Motors is killing the Chevrolet Cruze, a Focus competitor, along with several other car models.

Given all of this, these may be the takeaways about auto ownership right now:

1. Americans appear to still like their cars. The vehicles-per-household data from the Census Bureau shows little change at all since 2000, and overall averages suggest a flat trend over the past twenty-five years.

2. The American standard of living — in terms of household access to vehicles — does not appear to have changed significantly since the year 2000. During the 1980s, and to a lesser extent the 1990s, we did continue to see declines in the households with no vehicles, and increases in the number of households with three or more vehicles. After the 1990s, we see little change.

3. Millennials aren't necessarily abandoning the idea of auto ownership. There have been many claims that this is the case. But many have also claimed that Millennials mostly want to move to central urban areas. In both cases, the data has been inconclusive. It appears many Millennials do indeed wish to move out of the city — and many will need to own cars to carry on life in a suburban or exurban environment.

4. Nevertheless, when the economy softens, it's difficult to see how the current preferences for larger, more expensive cars can be sustained. We're likely to see a period of auto repossessions and a return in demand for lower-priced economy cars. Those who can pay cash for cars will benefit, while those who overextended themselves to buy pricier cars with big loans will suffer the most.

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No, Andrew Yang, Technology Is Not Killing Jobs

03/06/2019Atilla Sulker

Recently, 2020 Democratic presidential contender Andrew Yang appeared on Fox News . During the segment, Yang asserted that the increase in the amount of technology in the private sector, e.g., artificial intelligence, has lead to an increase in unemployment. Like the other candidates in the Democratic primary, Yang embodies the same principles of economic interventionism, though attempting to differentiate his views from those of his counterparts on the left. Unlike the other, however, he has allocated considerable attention to entertaining the notion that if artificial intelligence is not hindered in its progression, it will soon displace millions of Americans from jobs.

Yang has given the impression that he is the “reasonable” and most pragmatic candidate among all presidential contenders, garnering praise from both the left and the right. The entrepreneur is seen as a man of bold new ideas, particularly in regards to his economic protocols. But in essence, Yang’s arguments hearken back to the Technocrat movement of the 1930’s. These ideas seem to be correct superficially, but underscore a severe misunderstanding of the basic economic principles that guide human action.

Henry Hazlitt’s famous book Economics in One Lesson addresses the point raised by Yang, that machines are displacing humans, particularly the chapter titled “The Curse of Machinery”. Hazlitt reduces the problem to simple economic principles. He first asserts that if machines create unemployment, it follows that every technological innovation to this day has done so by improving the manufacturing process, gradually displacing jobs. This logic would lead to the conclusion that to achieve maximum employment, all the technological progression of the past millennia would have to be reversed.

While it may be true that in the short run a machine may displace jobs upon being introduced to a sector, the creation of the machine itself would bring in new jobs. The economizing entrepreneur would only adopt the machine if he sees it as an integral component in expanding his profits. These new profits could be used for expanding his operations, or his own personal consumption. If the former, the entrepreneur could invest in new machinery, in turn creating new jobs, and if the latter, money spent in any given industry would lead to an increase in employment in that industry.

Another point to consider is that goods produced in one industry could be used as capital in another industry. For example, a firm may use machines to create bolts at a faster rate. While this may lead to an initial decrease in the number of jobs in the bolt industry, it would lead to an increase in jobs in another industry. For example, car manufacturers may need to use these bolts, and so they now have more capital to use in manufacturing cars. This would lead to an increase in the amount of jobs in the automotive industry.

The view that jobs would be displaced by a rise in technological innovation is really rooted in the view that the economy is a fixed pie. Only so much wealth exists and only so many people can have it. This is a fallacy. It is the dynamic nature of the economy that leads to the constant expansion of industries, which in turn leads to the expansion of other industries who rely on goods produced by these industries. And as this process guides economic progress, new industries come about. This process of economic progression will never end, so long as we continue demanding goods, which will only lead to an increase in the quality of living.

Originally published at 71Republic.

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Is the Future of Europe Dutch?

03/05/2019Adam Bartha

Brexit has caused some turbulent political times in Westminster, but the hole left by the UK in Brussels will be felt throughout the continent.

Putting the tedious fight of Brexit negotiations aside for a moment; what kind of Europe are we going to see develop in the next 10 years, after the UK departs the union? Will France and Germany continue to take the lead and form an ever-closer union? Will the central European axis of populists in Poland, Hungary, and Italy halt any kind of reform attempts? Will the UK become a free-market, competitive paradise that will force the EU to implement market-friendly policies as well?

Liberal, free-market supporters should not bet on either. Instead, their best hope is to aid the Netherlands – to make Europe more Dutch.

Despite being one of the six founding members of the EU, the Netherlands has always been the neglected junior partner, stuffed between France, Germany, and the UK; countries that shaped the future of the union in more significant ways. However, with the UK’s departure, the balance of power is likely to change, and Dutch politicians are hoping to benefit from this realignment.

Even if the UK regains some of its international reputation after the Brexit blunders, it will lose its ability to shape the future of the continent in the same way, like it did for the past 40+ years. The European Council will lose a member that could stop the tax harmonisation attempts of the Commission. There won’t be British MEPs who could push for the completion of the single market in the service sector, or be the voice of reason when it comes to financial regulation.

France and Germany will continue to prioritise the issues most important to them; finding a common EU solution for the migration issue, more foreign policy and military cooperation, and further eurozone integration. Germany is also likely to continue endorsing further free trade negotiations, whilst remain the centrist, compromise-seeking voice within the EU (instead of a country that dares to push for bold liberalising reforms).

However, there are many new proposals from the European Commission and ideas floated by the Parliament that would be bad news for anyone who would like to see a more liberal, market-friendly Europe.

The Commission’s recent proposal to push for Qualified Majority Voting in the European Council on certain tax issues would mean that individual member states could no longer veto tax harmonisation attempts. If it passes, then the corporate tax reform, known as CCCTB, would become suddenly a lot easier to implement.

In practice this means an additional layer of tax bureaucracy, undermining member states’ tax sovereignty, and creating new hurdles for business expansion.

Multiple member states and the Commission floated the idea of a digital turnover tax, applied to major multinational tech companies. France and the UK are especially keen on this harmful policy, that would lead to less tech investment on the continent. (The fact that the whole debate revolves around misleading numbers about tech companies not paying their fair share of tax burdens is just a side note in the story.)

There are also plans to expand the social pillar of the EU – essentially protectionist measures disguised as welfare regulation and harmonisation.

Can a single EU member state, like the Netherlands, halt these harmful policy proposals and introduce ones that would truly help European citizens? The latter could include the completion of the single market in the service sector, conducting free trade agreements that lower tariff and non-tariff trade barriers alike, and passing Treaty reforms that would enable pan-European institutions to focus on big picture policies, instead of trying to micro-regulate all aspects of our lives.

The Dutch won’t be enough on their own, but they are better placed to become the behind-the-scenes brokers of EU compromises than most of their European counterparts.

The German political elite tries to avoid the image that the whole show is run by them, while the French politicians love grandiose ideas, but lack the political capital to implement them – which is often for the better, as they rarely mean more liberal, free market policies. The new EU member states still have not yet developed a significant diplomatic force – especially now that some of them have declared Brussels as their ‘#1 enemy’, they have little chance of suddenly becoming the efficient dealmakers of Brussels.

On the other hand, the Netherlands, in close partnership with the Scandinavian countries, could gather the majority support for significant reforms. It can certainly gather enough support to reduce tariff and non-tariff trade barriers with the help of Germany and the central European manufacturing powerhouses. It can work together with France, Spain, Italy, and Germany to find workable solutions for eurozone reform. It can cooperate with Scandinavian and central European countries to stop harmonising attempts in taxation policy and push for a competitive European tax environment.

Netherlands is far from a free-market liberal paradise, and it certainly has its own challenges and bad policy proposals. However, broadly speaking it is one of the most pro-trade, pro-competition, pro-decentralisation EU member states.

Despite some wishes to the contrary, the European project has become more important than ever. The policies decided in Brussels will have a significant impact on most of our lives throughout the continent, even if certain citizens in Europe will cease to be EU citizens.

It is important to make the case for a liberal, laissez-fair EU, that’s slim, efficient and enables member states to compete within the single market, whilst remaining open to the rest of the word.

First published at the Institute for Economic Affairs
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