What is Classical Liberalism?

If you ask most people what classical liberalism is, then they’ll say, it’s essentially free-market economics. It’s all about low taxes, laissez faire, reducing the government intervention in the economy. But in fact, that’s a rather impoverished and narrow idea of what classical liberalism is. It’s actually a comprehensive philosophy, a way of thinking about human society, human life, and the world, which has implications for all of the major academic disciplines. And as such, it has made major contributions in all of the different disciplines over the last 250 years or so. And what I’m going to do is explain what those are.

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Isn’t it rather naive of the Guardian to suggest that Edward Snowden gives himself up to face trial in the US? This is the country that has 166 men locked up illegally in Guantánamo, 86 of whom have been cleared for release; a country that justifies the use of torture and the killing of innocent civilians with its drone attacks; a country that pardons members of its armed forces who have admitted the indiscriminate killing of civilians in Iraq and Afghanistan. Continue reading

The Yield from Money Held by W. H. HUTT

MY AIM in this essay is to attempt to carry the tenor of Mises’ teaching a step further in the field of monetary theory. A feature of his great contribution, Human Action, is its insistence that all goods and services have the same scarcity significance, i.e., that they all stand in an identical relation to human choice and exchange. Continue reading

How are wages and productivity related?

Motivated by an article in yesterday’s NY Times, a reader asks me to clarify the linkage between real wages and productivity as a matter of economic theory. Here is the basic logic taught in economics textbooks:

Economic theory says that the wage a worker earns, measured in units of output, equals the amount of output the worker can produce. Otherwise, competitive firms would have an incentive to alter the number of workers they hire, and these adjustments would bring wages and productivity in line. If the wage were below productivity, firms would find it profitable to hire more workers. This would put upward pressure on wages and, because of diminishing returns, downward pressure on productivity. Conversely, if the wage were above productivity, firms would find it profitable to shed labor, putting downward pressure on wages and upward pressure on productivity. The equilibrium requires the wage of a worker equaling what that worker can produce. Continue reading

Meretricious? Senator Whitehouse Is Projecting

June 5, 2013 at 6:15 pm


Credit: Michael Bryant/MCT/Newscom

Credit: Michael Bryant/MCT/Newscom

Senator Sheldon Whitehouse (D-RI) spent eight minutes berating me at a Senate Budget Committee hearing yesterday. He disliked the facts I presented on austerity, so he called into question my professional honor and integrity. Continue reading

12 Clear Signals That The U.S. Economy Is About To Really Slow Down

 By Michael, on June 5th, 2013

A lot of things that have not happened since the last recession are starting to happen again.  As you read the list below, you will notice that the year “2009” comes up again and again.  There is a reason for that.  Many of the same patterns that we witnessed during the last major economic downturn are starting to repeat themselves.  In fact, many of the things that are happening right now have not happened in quite a few years.  For example, manufacturing activity in the U.S. has contracted for the first time in four years.  The inventory to sales ratio is the highest that it has been in four years.  Average hourly compensation just experienced the largest decline that we have seen in four years.  We also just witnessed the largest decline in the number of mortgage applications that we have seen in four years.  After everything that Barack Obama, the U.S. Congress and the Federal Reserve have tried to do, there has been no real economic recovery and now the U.S. economy is suddenly behaving as if it is 2009 all over again.  A whole host of recent surveys indicate that the American people are starting to feel a bit better about the economy, but the underlying economic numbers tell an entirely different story.  The following are 12 clear signals that the U.S. economy is about to really slow down… Continue reading


Even as the US exports are on the increase by 1.2 % ($187.4 Billion), imports grew faster by 2.4 precent ($227.7 Billion).  US is exporting telecommunications equipment, parts for machinery and airplanes as well as autos and auto parts and importing consumer goods, foreign cars, cell phones…

US trade deficit is now up 8.5%  ($40.3 Billion) for the month of April. The deficit so far this year is running at an annual rate of $491.9 billions.

We hear a lot about our supposed increased productivity. But how is this possible? One way to see that this claim of increase in productivity is suspect is by our trade deficit. If we are really producing more, why has the trade deficit been growing steadily from $16 Billion in 1981 to $500 Billion today? We consume a lot more than we produce and the difference can be seen in an unfavorable trade balance. Last time we had a positive trade balance was long time ago, in 1975.

dsg91_500_350 Continue reading