Mises: Commerce and Civilization

[shanek]

I don't have much time so I have to stick to quick anwsers here:

Quick insults, more like.

Yeah right, like they are going to site that. Textbooks are nest to useless for learning anything significant, thats just stupid drivel for the masses.

Hoo boy...

It is more productive, its just counter to human instinct many times, people are just too stupid to see the big picture.

Well, then I guess we're just so fortunate to have the collectivists all ready and willing to save us from ourselves and to take our money and spend it the way they think it should be spent, and to tell us how to live our lives.

It does not HAVE to, but it often HAS.

No, it hasn't. Creation of wealth does not come at the expense of others. Ever.

Hell, look at Iraq! Thousands of people killed, and some American companies are going to make millions or even billions from the situation. Americans arms makers have made bilions over the past 20 years and been the leading arms dealers in the world most of that time, even selling to Saddam.

That was hardly an instance of welath creation. Much wealth was destroyed. Try again.

Look at the Spanish Empire. They made trillions of dollars and killed millions of people in the process. The money they made was directly realted to the deaths of people.

Again, that's not creating wealth. That's killing and plundering, not part of free enterprise at all.

Do you not even realize that these are all instances of government interference?

The early Americna economy was dependant on slavery and killing of natives, thousands of slaves died in the process, making money for the whites in a "free-market" slave trade system.

No, the free market system was making slavery obsolete. Go learn history.

Wealth is never created by force. Wealth is created by work. When you mow your lawn, you're creating wealth. When you bludgeon someone and take their wallet, you aren't.

 

[Malachi151]

I don't think anyone said that this was anything new.

BTW, the biggest reason for the bad economy after the Revolutionary War was because the government funded it with a fiat currency, much like we have today. This led to an economic panic in 1780. How did they fix it? They left the economy alone! Even the strong central Federalist Alexander Bidlack—er, I mean, Hamilton—understood that the merchants could increase the wealth of society on their own. He wanted the government to control the money supply (in fact, one of the big reasons they got into that mess in the first place was that Hamilton issued the bonds with no commodity backing them up), but not the individual businessmen.

There was no real US currency until really the Federal Reserve. Especially in the 1700s and early 1800s though they mostly used Spanish currenty and tobacco for money. Currency was a huge problem in America UNTIL THE GOVERNMENT opted to create the Federal Reserve, which is a private bank acutally. The "currency" of the 1700s was nothing at all like our currency today.

 

[Malachi151]

Cohen: No 'Superpower Fatigue' Secretary Says U.S. Military Presence Promotes Stability

By Stephen Trimble Military.com Staff Writer

WASHINGTON (May 24, 2000) -- Defense Secretary William Cohen, rebutting recent critiques of U.S. foreign policy, vowed to preserve the military's strong presence overseas.

Addressing a U.S. Chamber of Commerce crowd here, Cohen said other countries are starting to ask whether U.S. leaders are showing signs of "superpower fatigue." That is, some critics claim that 50 years of bearing worldwide leadership have begun to weaken the government's resolve abroad.

For example, some lawmakers threatened to order U.S. troops to withdraw from peacekeeping efforts in Kosovo by next July, defying Cohen's claims that troops may be needed there for years longer.

But Cohen reminded the audience that 100,000 U.S. troops remain stationed in Europe and an equal number stands guard in Asia, including nearly 40,000 soldiers in South Korea. Another roughly 25,000 troops stand watch in the Persian Gulf region, he said.

"Does this sound like a nation suffering from superpower fatigue?" he asked. "We cannot rest on our laurels and, indeed, our lasers."

Cohen also cited an economic reason for maintaining America's superpower role.

"Business follows the flag," he said. "Where there is stability and security, there is likely to be investment."

 

[Jude]

It is more productive, its just counter to human instinct many times, people are just too stupid to see the big picture.

*tries to fit the square peg in the triangle hole*

It seems to me that an economic system built around human instinct will be more successful than one counter to it.

 

[muckraker]

from malchi151

Free enterprise is behind expansionism, imperialism, etc. Free enterprise is what was behind Columbus' Voyage of Discovery and the enslavement of millions of natives for mining gold and gems, etc.

If you look at the economic policies of Europe during the colonial era, you will see that they bear little resemblance to what we would call "free-market capitalism" today.

European colonial economic policies were more geared toward establishing government-approved monopolies (like the Dutch East India Company) and strictly regulating free trade (like forbidding Indians in India from making their own salt, and forbidding the American colonies from trading directly with continental Europe).

 

[Segnosaur]

Ok, does anybody here find it strange (or perhaps a little humourous) that 2 of the most vocal opponents over the Iraqi invasion are fighting each other over the Iraqi war, in a debate as earth-shattering as the famous "tastes great/less filling" debates?

 

[Mike B.]

WWI and WWII were decidedly profitable for America, America was the winner both times. Its typically only profitable its its offensive and you win. No, defensive war isn't going to be profitable, nor a failed offensive war.

Since "free markets," according to you cause war, and since Shane showed how it was bad for the Brits and everyone else. It must have been then that World War I was caused by the US. Do you have proof that the US was behind Gavrillo Princip and his assassination of the Archduke Franz Ferdinand?

Or is this not a reason for the war...Is Shane as well as myself part of the deluded masses that have false conscioussness?

 

[Malachi151]

Since "free markets," according to you cause war, and since Shane showed how it was bad for the Brits and everyone else. It must have been then that World War I was caused by the US. Do you have proof that the US was behind Gavrillo Princip and his assassination of the Archduke Franz Ferdinand?

Or is this not a reason for the war...Is Shane as well as myself part of the deluded masses that have false conscioussness?

No, without US intervention WWI and WWII could have been profitable for whoever won. Had Germany and Japan won those wars they likely would have profited.

Its not a guarentee, just like starting a business is not a guarentee of being profitable, however wars are started for economics reasons and becuase the war is deemed from the start to be able to be profitable. People don't start wars that they think will put them ina worse position than before the war, you start a war on the assumption that after the war you will be better off, that you will have gained something.

Had Japan gained control of South East Asia and the Indies you bet that would be profitable, just as us ganing control of everything outside the origional 13 colonies has been profitable. We had to wage war on the Natives to do that. The drive to do it was economic, pushed on my people looking for more profits.

Wars are ways of aquiring new resources and stimulating economies. This is basic history here. Just look at any empire you want.

 

[shanek]

There was no real US currency until really the Federal Reserve. Currency was a huge problem in America UNTIL THE GOVERNMENT opted to create the Federal Reserve

That's just not true. During the Revolutionary War, the paper currency was issued by the states, not by the Federal Government. However, there was such a thing as the bonds that I mentioned. That allowed the Congress to run a debt to finance the Revolutionary War (with drastic consequences to the economy).

Ever heard the phrase, "Not worth a Continental"? That's in reference to the fact that Continental bonds fell to 1/1000th of their initial value after the Revolutionary War.

US coinage has existed since the formation of the Constitution. Later on, banks started issuing currency on their own in the form of promissory notes. These notes said that you were the owner of a certain amount of gold. They were transferrable, so if you wanted to buy something you didn't have to cash in your note and give the merchant the gold; you just gave him the promissory note. The banks also recognized each others' notes, and would hold the reserves of gold in exchange for them.

In 1861, the government, needing the finances to pay for the Civil War, permitted the Department of the Treasury to issue and circulate money. This money was in the form of demand notes. Here's an 1861 $5 note:

The Federal Reserve was created, not to create a national currency, which already existed, but to create a central banking authority run by the government. The Federal Reserve has the authority to set interest rates for the district banks, and control the money supply by the issuing of Federal Reserve notes (which is what our current paper money is) and by setting a mandatory reserve rate (i.e., saying that the banks must keep, say, at least 10% of deposits in reserve, meaning they can lend out no more than 90% of the value of their deposits). This control of the money supply led to the Great Depression, the biggest banking crisis in American history, and the biggest run of sustained inflation (which is still going on).

which is a private bank acutally.

No, it isn't. It's run by the Board of Governors which has just as many representatives from the US Government as it does from the district banks. They have to claim it's private on paper because it's unconstitutional for the government to run a central bank, but run it they do.

 

[shanek]

[bits of an article without comment]

How interesting...So, the status of a suprtpower is determined solely by how many troops they send aroind worldwide, how many countries they decide to intrude into? Give me a break...

 

[shanek]

No, without US intervention WWI and WWII could have been profitable for whoever won.

Total BS. WWI was basically over by the time the US stepped in. Both sides were weary and receptive to a quick end. The entry of the US made the end of WWI more decisive than it was, and laid the seeds for WWII. If the US hadn't intervened, the allied forces wouldn't have been able to impose the Treaty of Versailles (drafted with the eager help of President Wilson) on Germany, causing the ruination of their economy and the sentiments that allowed Hitler to come to power in the first place. Without US intervention in WWI, there would have been no WWII, and in any event there's no way it would have been profitable for anybody. War destroys wealth, it does not create it.

It's also amazing to me that you blame the free market for this but state flat out that wars are waged by governments for their own advantage.

 

[Mike B.]

No, without US intervention WWI and WWII could have been profitable for whoever won. Had Germany and Japan won those wars they likely would have profited.

Its not a guarentee, just like starting a business is not a guarentee of being profitable, however wars are started for economics reasons and becuase the war is deemed from the start to be able to be profitable. People don't start wars that they think will put them ina worse position than before the war, you start a war on the assumption that after the war you will be better off, that you will have gained something.

Had Japan gained control of South East Asia and the Indies you bet that would be profitable, just as us ganing control of everything outside the origional 13 colonies has been profitable. We had to wage war on the Natives to do that. The drive to do it was economic, pushed on my people looking for more profits.

Wars are ways of aquiring new resources and stimulating economies. This is basic history here. Just look at any empire you want.

This is not evidence. It is Marxist speculation on your part. You have failed to show evidence about the free market causing World War I.
In particular a link between the assassination of Franz Ferdiand and any scheme for someone to make money...

 

[shanek]

By the way, in continuation of my support for my above post, here is a 1776 Continental dollar:

The issuance of these was a huge act of rebellion by the colonies, since the Crown had expressly forbade them from minting their own money. In a show of solidarity, each colony agreed to adopt and mint this coin, designed by Benjamin Franklin (note his motto: "Mind Your Business"), and were struck out of pewter, brass, and silver.

In 1792, Congress passed the Coinage Act, and the first official US Currency was minted in 1793. Here is a 1795 US Dollar:

A 1794 half dollar:

A 1796 quarter:

(continued next post because of image limitations)

 

[shanek]

A 1796 dime:

A 1794 half dime (they weren't called nickels until 1866, when they started minting them out of nickel):

And a 1793 cent piece:

They even had a half cent piece:

The notion that there never was an official US currency until the Federal Reserve was formed in 1913 is patently ludicrous.

 

[Malachi151]

I guess I'll have to get more detailed on Americna currency.

Yes there has alwasy been "Americna currency", but it was never widely adopted until around the Civil War. Banks were few and far between, and with no regulations they almost always overprinted money leading to inflation and the money being worthless.

Here, read this:

http://www.sjprep.org/tclifford/USweb/Money/MONEY.html

http://odur.let.rug.nl/~usa/H/1994/ch5_p6.htm

From its inception, the second Bank was unpopular in the newer states and territories, and with less prosperous people everywhere. Opponents claimed the bank possessed a virtual monopoly over the country's credit and currency, and reiterated that it represented the interests of the wealthy few. On the whole, the bank was well managed and rendered valuable service; but Jackson, elected as a popular champion against it, vetoed a bill to recharter the bank. In his message to Congress, he denounced monopoly and special privilige, saying that "our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by act of Congress". The effort to override the veto failed.

http://www.ex.ac.uk/~RDavies/arian/northamerica.html

The American Revolution and the War of 1812
When he was in London in 1766 Benjamin Franklin tried in vain to convince Parliament of the need for a general issue of colonial paper money, but to no avail. The constitutional struggle between Britain and the colonies over the right to issue paper money was a significant factor in provoking the American Revolution.

When the war broke out the monetary brakes were released completely and the revolution was financed overwhelmingly with an expansionary flood of paper money and so the American Congress financed its first war with hyperinflation. By the end of the war the Continentals had fallen to one-thousandth of their nominal value. Yet although the phrase not worth a Continental has subsequently symbolized utter worthlessness, in the perspective of economic history such notes should be counted as invaluable as being the only major practical means then available for financing the successful revolution.

During the Revolution the Bank of Pennsylvania was established (with the support of Thomas Paine) in June 1780 but it was little more than a temporary means of raising funds to pay for the desperate needs of a practically starving army. The Bank of North America was a more permanent institution, granted a charter by Congress (by a narrow margin of votes) in 1781 and beginning its operations in Pennsylvania on 1 January 1782. It was followed after the war by the Bank of New York and the Bank of Massachusetts, which both opened in 1784, and the Bank of Maryland in 1790.

The financial chaos of the aftermath of the revolution and outbreaks of violent conflict between debtors and creditors led to the establishment of the dollar as the new national currency replacing those of individual states. However, owing to shortages of gold and silver bullion and the rapid disappearance of coins from circulation legal tender was restored to Spanish dollars in 1797 and it was not until 1857 that the federal government felt able to repeal all former acts authorizing the currency of foreign gold or silver coins, but by then coins were merely the small change of commerce.

After the revolution one might have expected the newly independent Americans to have welcomed with enthusiasm their freedom to set up banks but in fact there was a great deal of opposition to banking in general. The first true American bank, the Bank of North America had its congressional charter repealed in 1785. The first national bank, the Bank of the United States, though a financial success, was forced to close when its charter was not renewed. As a result, when the 1812 War broke out there was no government bank to exert a restraining hand on the commercial banks which issued far too many notes backed by far too little specie and the American financial scene reverted to its familiar inflationary pattern.

After the 1812 War the Second Bank of the United States was set up but once one of the heroes of that war, General Jackson, became president it was doomed to failure. Jackson admitted to Nicholas Biddle, the last president of the Bank, "ever since I read the history of the South Sea Bubble I have been afraid of banks." By killing the Second Bank Jackson delayed the establishment of a sensibly regulated banking system for eighty years. During this period the Treasury was left to carry out the increasingly difficult task of being its own banker. There was a divergence between the more settled areas of the country, such as New England where opinion veered towards sounder money, and the frontier states which tended to welcome easy credit but following the Californian gold discoveries in 1848 even the sound-money men became expansionist.

And that's all just the tip of the iceberg.

 

[Skeptic]

*tries to fit the square peg in the triangle hole*

It seems to me that an economic system built around human instinct will be more successful than one counter to it.

That's why there is no Marxist country without reeducation camps and gulags: the masses must be made to understand their human instincts are terribly wrong SOMEHOW.

 

[shanek]

Here, read this:

http://www.sjprep.org/tclifford/USweb/Money/MONEY.html

http://odur.let.rug.nl/~usa/H/1994/ch5_p6.htm

http://www.ex.ac.uk/~RDavies/arian/northamerica.html

And that's all just the tip of the iceberg.

Funny...All those are saying exactly what I did!

 

[Shane Costello]

Originally posted by shanek:
Heh heh. So true. You just reminded me of the Oingo Boingo song "Capitalism":

There's nothing wrong with making some profit
If you ask me, I will say it's just fine
There's nothing wrong with wanting to live nice
I'm so tired of hearing you whine
About the revolution, of bringing down the rich
When was the last time you dug a ditch?

You're just a middle class socialist brat
From a suburban family, and you never really had to work
And now you tell me that you've got to get back
To the struggling masses, whoever they are
You talk, talk, talk about the suffering and pain
Your mouth is bigger than your entire brain
What the hell would you know about suffering and pain?

I think that song could have been written for Malachi...

I agree. What Malachi and his ilk don't realise is that while him and his ilk are moaning on about the phantom casualties of capitalism, the actual workers are earning time and a half doing overtime, while keeping one eye on their share options. Not that they're ever likely to find this out, since "socialist workers" and marxists wouldn't lower themselves to do manual work or trades.

OTOH this capitalist spent his summers grinding and buffing sheet metal, or mixing cement.

Actually, the main trigger for all of this was the assassination of the Archduke Ferdinand by ethnic Serbs in Austria, and Austria decided to go to war with Serbia as a result. The political ties and treaties of countries allied with Austria and Serbia brought them all in against each other, and poof! Instant world war.

What that has to do with capitalism completely escapes me.

The causes of WWI were represented very well by a contemporary illustration that made it's way into my high school history text book. The diagram should scrolls piled high, labelled with "secret diplomacy", "naval race", "colonial rivalry" etc. To this was added a lighted match labelled "Assasination in Sarajevo". The Austrians were aching for a chance to crush the Serbs for years, and used the assasination as the excuse. And as you said, poof!

WWI was basically over by the time the US stepped in. Both sides were weary and receptive to a quick end. The entry of the US made the end of WWI more decisive than it was, and laid the seeds for WWII. If the US hadn't intervened, the allied forces wouldn't have been able to impose the Treaty of Versailles (drafted with the eager help of President Wilson) on Germany, causing the ruination of their economy and the sentiments that allowed Hitler to come to power in the first place. Without US intervention in WWI, there would have been no WWII, and in any event there's no way it would have been profitable for anybody. War destroys wealth, it does not create it.

Don't forget that the Royal Navy had Germany blockaded, and that food shortages were having as big an effect as any allied military action. IIRC reinstatement of the blockade was used as a bargaining tool at the peace negotiations. It's hard to see how the US could have stayed out of the conflict, considering that Germany had started unrestricted u-boat warfare against neutral shipping, and was found to be actively encouraging Mexico to invade the US on the side of the axis. However the bottom line as far as this thread goes is that all the European combatants suffered economically, regardless of which side they were on.

 

[Malachi151]

OTOH this capitalist spent his summers grinding and buffing sheet metal, or mixing cement.

"Capitalists" don't do work, by definition. A capitalist is someoen who controls capital. They don't work, they invest and they employ. Someone who is mixing cement is not a capitalist, they are a laborer.

And anyway, I play by the rules of the game. I have my own business on the side, I am employed as a software developer, and I just sold my house after living it in for 1 year 4 months and renovating it myself for a $10,000 profit in pocket after all expenses, and I'm going to buy another house and do the same, and I'm currently looking into buying a small software development company.

So, while you're busy moaning about me I'm busy making money as both a capitalist and a "worker".

I understand quite well how the game is played, and I'm playing it myself because there are no other options for success in America, you have to play by the rules or not play at all. I simply recognize that the rules need to be changed.

 

[Skeptic]

I understand quite well how the game is played, and I'm playing it myself because there are no other options for success in America.

So why don't you leave to a Marxist country, such as Cuba or North Korea? Surely, one can succeed there without playing the evil capitalistic game. Enjoying the fruits of success in a capitalistic system while whining how horrible it is sounds awfully hypocritical to me.

Besides, why would you WANT to succeed in a capitalistic game in the first place? Doesn't that make you an evil tool of the system? Wouldn't you be happier as a laborer? At least that way you are not opressing the workers, like you must do if you employ anybody according to the rules of the current, evil system...