One is viewed as among America’s greatest presidents; the other perhaps the worst of all. One is hailed as a savior; the other as a failure. One is given memorials to enshrine his name for all time; the other is pushed into the sea of forgetfulness.
Driven by academia, this is where American history has placed Franklin Delano Roosevelt (in office 1933-1945) and Warren Gamaliel Harding (in office 1921-1923). It is impossible to see FDR absent a “great presidents” ranking; it is likewise impossible to see Harding absent the lowest rungs.
Both men came into office with an economy in tatters and both men instituted ambitious agendas to correct the respective downturns. Yet their policies were the polar opposite of one another and, as a result, had the opposite effect. In short, Harding used laissez faire-style capitalism and the economy boomed; FDR intervened and things went from bad to worse.
Despite these clear facts, in C-SPAN’s latest poll ranking US presidents, FDR finished third in the rankings, while Harding finished 37th. Surveying how both handled the economy, scholars ranked FDR third in that category, while Harding came in at 32. This is a tragedy of history.
America in 1920, the year Harding was elected, fell into a serious economic slide called by some “the forgotten depression“. Coming out of World War I and the upheavals of 1919, the economy struggled to adjust to peacetime realities, falling into a serious slump.
The depression lasted about 18 months, from January 1920 to July 1921. During that time, the conditions for average Americans steadily deteriorated. Industrial production fell by a third, stocks dropped nearly 50 percent, corporate profits were down more than 90 percent. Unemployment rose from 4 percent to 12, putting nearly 5 million Americans out of work. Small businesses were devastated, including a Kansas City haberdashery owned by Edward Jacobson and future president Harry S. Truman.
The nation’s finances were also in shambles. America had spent $50 billion on the Great War, more than half the nation’s GNP (gross national product). The national debt jumped from $1.2 billion in 1916 to $26 billion in 1919, while the Allied Powers owed the US Treasury $10 billion. Annual government spending soared more than twenty-five times, from around $700 million in 1916 to nearly $19 billion in 1919.
Harding campaigned on exactly what he wanted to do for the economy – retrenchment. He would slash taxes, cut government spending, and roll back the progressive tide. He would return the country to fiscal sanity and economic normalcy.
“We need a rigid and yet sane economy, combined with fiscal justice,” he said in his inaugural address, “and it must be attended by individual prudence and thrift, which are so essential to this trying hour and reassuring for our future”.
The business community expressed excitement about the new administration. The Wall Street Journal headlined on Election Day, “Wall Street sees better times after election”. The Los Angeles Times headlined the following day, “Eight years of Democratic incompetency and waste are drawing rapidly to a close”. Others read “Harding’s Advent Means New Prosperity” and “Inauguration ‘Let’s Go!’ Signal to Business”.
The day after Harding’s inauguration, the Times editors predicted “good times ahead”, writing, “The inauguration yesterday of President Harding and the advent of an era of Republicanism after years of business harassment and uncertainty under the Democratic regime were hailed” by the nation’s business leaders. I. H. Rice, the president of the Merchants and Manufacturers Association, told the press, “Good times are now ahead of us. Prosperity is at our door. We are headed toward pre-war conditions … Business men are well pleased with President Harding’s selections for his Cabinet and by the caliber of men he has chosen we know that he means business”.
Under Harding and his successor, Calvin Coolidge, and with the leadership of Andrew Mellon at Treasury, taxes were slashed from more than 70 percent to 25 percent. Government spending was cut in half. Regulations were reduced. The result was an economic boom. Growth averaged 7 percent per year, unemployment fell to less than 2 percent, and revenue to the government increased, generating a budget surplus every year, enough to reduce the national debt by a third. Wages rose for every class of American worker. It was unparalleled prosperity.
Ryan S. Walters, “The Two Presidents Whose Economic Policies Are Most Misunderstood by Historians”, Foundation for Economic Education, 2022-03-05.
February 21, 2026
QotD: Warren G. Harding’s successful depression-breaking policies
January 5, 2026
Friedman on Orwell
On his Substack, David Friedman considers some of the things that George Orwell was mistaken about in his non-fiction writings:
It cannot be said too often – at any rate, it is not being said nearly often enough – that collectivism is not inherently democratic, but, on the contrary, gives to a tyrannical minority such powers as the Spanish Inquisitors never dreamed of. (George Orwell, The Observer, April 9, 1944)
George Orwell got some things right; unlike most political partisans, he saw the problems with the position he supported. He also got quite a lot of things wrong. The quote is from Orwell’s review of two books, The Road to Serfdom by Friedrich Hayek and The Mirror of the Past by K. Zilliacus, a left-wing writer and politician. The conclusion of the review is that Hayek is right about what is wrong with socialism, Zilliacus is right about what is wrong with capitalism, hence that “the combined effect of their books is a depressing one”.
But Zilliacus was wrong about capitalism, as was Orwell, who wrote:
But he [Hayek] does not see, or will not admit, that a return to “free” competition means for the great mass of people a tyranny probably worse, because more irresponsible, than that of the State. The trouble with competitions is that somebody wins them. Professor Hayek denies that free capitalism necessarily leads to monopoly, but in practice that is where it has led, and since the vast majority of people would far rather have State regimentation than slumps and unemployment, the drift towards collectivism is bound to continue if popular opinion has any say in the matter. (“As I Please”, pp.117-119)1
The problem is that Orwell, like many of his contemporaries (and ours), did not understand economics and thought he did. Since he wrote we have had extensive experience with free competition, if not as free as Hayek would have wanted, and the result has not been the nightmare that Orwell expected. “The trouble with competitions is that somebody wins them” sounds right only if you don’t actually understand the logic of a competitive market. In most industries organizational diseconomies of scale, the effect of more layers between the head office and the factory floor, limit the size of the firm to something considerably below the size of the market for what the firm produces. In some fields, such as restaurants or barber shops, the result is an industry with thousands of firms, in some five or ten, in only the rare case of a natural monopoly can one large firm outcompete all of its smaller competitors.
The effect of free competition is not the only thing that Orwell got wrong. Consider his essay on Kipling.2 He gets some things right, realizes that Kipling is not a fascist, indeed less of one than most moderns, and recognizes his talent:
During five literary generations every enlightened person has despised him, and at the end of that time nine-tenths of those enlightened persons are forgotten and Kipling is in some sense still there.
But he gets quite a lot wrong. In arguing that Kipling misunderstood the economics of imperialism, Orwell writes:
He could not understand what was happening, because he had never had any grasp of the economic forces underlying imperial expansion. It is notable that Kipling does not seem to realize, any more than the average soldier or colonial administrator, that an empire is primarily a money-making concern.
In explaining his own view of the logic of empire, what he thought Kipling was missing, Orwell writes:
We all live by robbing Asiatic coolies, and those of us who are “enlightened” all maintain that those coolies ought to be set free; but our standard of living, and hence our “enlightenment”, demands that the robbery shall continue.3
Britain let go of its empire, starting with India. British standards of living did not collapse; by the time all of the colonies were independent, the average real wage in the UK was 50% higher than when Orwell wrote. He could not know the future but he could observe that Switzerland, before the war, was richer than England, Denmark, with no significant colonies, almost as rich, Portugal, with an enormous African empire, much poorer. Whether Britain ran its empire at a net profit or a net loss is, I think, still an open question, but Orwell’s view of colonialism is strikingly inconsistent with the observed effects of decolonization.
Economics is not all that Orwell got wrong about Kipling; he badly underestimated the quality of Kipling’s work, due to having read very little of it. The clearest evidence is Orwell’s description of The Light that Failed as Kipling’s “solitary novel”. Kipling wrote three novels, of which that is by a good margin the worst. Orwell not only had not read Kim, Kipling’s one world class novel, he did not know it existed. In a recent post I listed eighteen works by Kipling that I liked. Orwell mentions only one of them.
- That free capitalism would ultimately fail was still Orwell’s view in 1947:
In North America the masses are contented with capitalism, and one cannot tell what turn they will take when capitalism begins to collapse (“Toward European Unity“)
- Discussed in more detail in an earlier post.
- As late as 1947, Orwell wrote:
The European peoples, and especially the British, have long owed their high standard of life to direct or indirect exploitation of the coloured peoples. (“Toward European Unity“)
December 13, 2025
Misunderstanding the causes of wealth
As most economists could point out, there’s no point asking what are the causes of poverty, because poverty is the default condition. Getting people out of poverty, that is a much more interesting discussion. Tim Worstall responds to a recent video from someone who clearly doesn’t understand where wealth comes from:
From this video here. Given that Grace [Blakeley] herself posts it she must approve the content.
Because the way that capitalism generates prosperity for some is by generating misery for others. You cannot have universal prosperity in a capitalist system. Just think about, like, this phone. What has happened for me to be able to hold this phone in my hands right now? A bunch of kids in the Democratic Republic of the Congo, at gunpoint, have been sent to scratch coltan out of the ground …
So, first thought. If the world, the economy, is a zero sum game then yes, we can only have some prosperous if others are not — some can only have more pie if others have less. On the other hand if we know how to bake the pie bigger then all can have more at the same time.
So, do we know how to make the pie bigger?
That source of Brad DeLong means yes, this is correct. Where’s that inflexion point, that bend in the curve? About where we start doing capitalism with free markets. As Marx, K himself pointed out capitalism is really very productive.
OK, so we know how to increase the size of the pie, it is possible for all to gain. It is not necessary for some to get less in order for others to gain more. The central contention is wrong. Provably, obviously, wrong.
Oh, sure, sure, it could work out that we take stuff off others in order to feed some. You know, say taxing child carers in order to pay train drivers massive salaries, as we do. But it’s not in fact necessary.
We can also check this another way:
So, lots and lots have become better off in this period of capitalism. Sure, sure, we should do better as a civilisation, we want all to do so. But while so many have got better off no, it is not possible to say that this has been done at the expense of those in extreme poverty. Because extreme poverty itself is set at the subsistence level. If you take stuff off the extreme poor then they die — that’s what subsistence level means. So that majority of humanity has not got rich by nicking it off the extreme poor. Because if they had there would be no extreme poor as they’d all be dead.
So, the overall claim is simply wrong. But it’s also wrong in specifics.
September 25, 2025
David Friedman on markets, governments and whether we need either?
Adam Smith Institute
Published 16 May 2025When markets go awry, who is to blame? Some blame greedy profiteers, whilst others blame governments for tinkering with incentives and supply chains. Where does the truth lie? And what role should the government play when markets go wrong?
Professor David Friedman is a physicist, leading free-market economist and Professor Emeritus of law at Santa Clara University. The son of Nobel Prize-winning economist Milton Friedman, David has authored many textbooks on free-market and libertarian theory. In 1973, he published The Machinery of Freedom, which has been ranked by Liberty magazine as one of the “Top Ten Best Libertarian Books” of all time.
TIMESTAMPS
0:00 – Intro
1:00 – What is a market failure?
2:44 – Restaurant analogy
4:15 – Negative externalities
5:00 – Positive externalities
5:50 – Malls
6:55 – Radio
7:40 – Price System
8:48 – Why most economists aren’t libertarians?
9:26 – Government action is a political market
12:30 – Secure property rights for future benefits
15:27 – Stalin
16:15 – Military examples
18:20 – Teaching
19:47 – Desert example
20:55 – Conclusion
22:19 – End
July 12, 2025
Noah Smith on how surprisingly well free market policies are working in Argentina
In the headline, you should read the unstated “surprising to far too many mainstream economists and political commentators”, but full credit to Noah Smith for admitting that Milei’s radical agenda has started to make life much better for ordinary Argentinians:
Javier Milei at CPAC in National Harbor, Maryland 20 February, 2025.
Photo by Gage Skidmore via Wikimedia Commons.
So to be clear, when I say that criticism of free markets has been overdone, I’m partly talking to myself. A couple of months ago, horrified by Trump’s tariff policies, I wrote an apology to libertarians, admitting that I had failed to see the political usefulness of their project in terms of maintaining economic sanity on the Right.
But it’s not just the political benefits of free markets that have been undersold; I think the purely economic advantages are also too often ignored.
Exhibit A is Javier Milei’s track record in Argentina. A year and a half ago, when Milei was elected President of Argentina, a bunch of left-wing economists warned darkly that his radical free-market program would lead to economic devastation:
The election of the radical rightwing economist Javier Milei as president of Argentina would probably inflict further economic “devastation” and social chaos on the South American country, a group of more than 100 leading economists has warned … [S]ignatories include influential economists such as France’s Thomas Piketty, India’s Jayati Ghosh, the Serbian-American Branko Milanović and Colombia’s former finance minister José Antonio Ocampo …
The letter said Milei’s proposals – while presented as “a radical departure from traditional economic thinking” – were actually “rooted in laissez-faire economics” and “fraught with risks that make them potentially very harmful for the Argentine economy and the Argentine people” … [T]he economists warned that “a major reduction in government spending would increase already high levels of poverty and inequality, and could result in significantly increased social tensions and conflict.”
“Javier Milei’s dollarization and fiscal austerity proposals overlook the complexities of modern economies, ignore lessons from historical crises, and open the door for accentuating already severe inequalities,” they wrote.
Milei won anyway. His first big policy, and the one the lefty economists fretted about the most, was deep fiscal austerity. Argentina’s long-standing economic model, created by dictator Juan Peron in the 1950s, involved a large and complex array of public works projects and subsidies for various consumer goods like energy and transportation. Milei slashed many of these, as well as cutting pensions, civil service employment, and transfers to provinces. Overall, he cut public spending by about 31%, resulting in a near-total elimination of Argentina’s chronic budget deficit:
The point of all this cutting wasn’t just to remove state intervention in the economy — it was to stop inflation. Basically, macroeconomic theory says that if deficits are high and persistent enough, then they convince everyone that the government will eventually inflate its debt away by printing money (which becomes a self-fulfilling prophecy). And most or all countries that experience hyperinflation end up escaping it only when they get their fiscal house in order. Perpetual deficits were part of Argentina’s “Peronist” system, and it’s probably a good bet that this has been responsible for the periodic bouts of hyperinflation that it experiences.
[…]
But still, Milei’s success so far should make us somewhat more confident about free-market policies — especially when we evaluate them against the new socialist ideas that have been gaining currency in the U.S. In the past, socialists and other left-leaning economic thinkers advocated central planning and nationalization of industry; in recent years, they have taken to calling for expansion of the state through fiscal policy, mixing macroeconomic justifications with micro. At all times, they call for deficit-financed expansion of social programs; when fiscal hawks want to tame the deficits, the lefties warn of the short-term macroeconomic harms of austerity.
If you’re always more terrified of austerity than you are of deficits, expansion of the state — and of the deficit — becomes a one-way ratchet. This approach is very different than Keynesianism, which advocates stimulus to overcome recessions, followed by austerity during boom times. You’ll recognize it as bearing a distinct similarity to MMT; that pseudo-theory has largely fallen out of favor, but there are plenty of more respectable progressive types whose ideas nonetheless have a lot of this “macroleftist” flavor.
December 17, 2024
QotD: Capitalism is a combination of laziness, stupidity, and greed
Tim Worstall, “Folks Are Copying SpaceX – That’s How Capitalism Works”, It’s all obvious or trivial except …, 2024-09-16.
September 17, 2024
Unbearable anti-humanism
Tim Worstall responds to a recent dispatch-from-dystopia from Christopher Ketcham, decrying the “Unbearable Anthropocentrism” he sees in the world:
To true miserablists, this chart is pure bad news. How will we get to the revolution this way?
No idea who Ketcham is built then he doesn’t know who I am so we’re equal there. His complaint is that Our World in Data tends to show that the world is becoming a better place. Poverty is decreasing, infant mortality rates are falling, more folk have at least a square and ever increasing numbers are getting three and so on.
This is, as the cool kids say, problematic. Because if the thing to be opposed — capitalism and markets — is making the world a better place then where will we get the revolutionary fortitude to get rid of what is making the world a better place?
Something must be wrong here, right? Well, yes, it is:
For obvious reasons, Roser’s cheerful view of capitalist business-as-usual – and the data that would seem to support it – has made him a darling of libertarian market fundamentalists, who have lavished praise on his work.
See, this is problematic. So, what?
Given the support that Roser enjoys from billionaire oligarchs at the pinnacle of the capitalist system, one wonders if it is a coincidence that so much of the data he headlines for public consumption happens to valorize that system.
Oooooh, no, the claim isn’t that he’s writing lies. It’s just a question that is being asked. Could it, you know, I wonder if …
To which the correct answer is that Ketcham is a tosser. For it really is true that these last 40 years of global neoliberalism have coincided — at the very least coincided with — the greatest reduction in abject poverty in the entire history of our species.
But because capitalism, markets, the ghastly little tosser has to spread shade on someone reporting — honestly reporting — this truth. Hey, sure, we can have lots of lovely arguments about causation and so on. But reporting facts is wrong if they’re politically inconvenient? Someone will only report facts if they’re being paid — bribed — to do so?
Fuck off laddie, go die in a ditch.
Like, you know, far too many of us all did before this capitalism, markets, shit.
Fuck off.
June 21, 2024
“Neoliberal ideology is antidemocratic at its very core. Its aim is to give free-reign over our societies to corporations, not citizens”
Tim Worstall responds to a recent Medium essay by Julia Steinberger which illustrates that “neoliberal” has joined “fascist” as a generic term to indicate strong disapproval of a person, organization, or idea:
The idea that an adult woman can believe these things is just amazeballs. But here we are. A tweet from Julia Steinberger leads to her Medium essay about what’s wrong with the world.
An upheaval in 10 chapters:
1. The cause. We know the climate crisis is brought to us by highly unequal and undemocratic economic systems.
Err, no? Emissions are emissions. 100 people emitting one tonne each is exactly the same as 1 person emitting 100 tonnes. Sure, it’s true that a more unequal society will have more people emitting those 100 tonne personal amounts. But a more equal society will have more people able to emit another 1 tonne each. For, more equality is by definition the movement of some of those assets of the richer to those poorer — the economic assets which either allow or do the emitting. Sure, Jim Ratcliffe’s £50,000 private jet flight emits more than my £100 Easyjet one. But if we take the £50k off Jim and give it to 500 folk like me then all 500 of us might spend the marginal income on an Easyjet flight each — which would be more emissions than Jim’s spending of the money.
It simply is not true that economic inequality is the heart, the core or the cause of climate change. It’s idiocy to think it is too.
Of course, we know what’s happening here. Climate Change is Bad, M’Kay? Which it is, obviously. Economic inequality is Bad, M’Kay? Well, there the evidence is a great deal more mixed but whatever. But in the minds of the stupid all bad things have the same cause. So, if inequality is bad, climate change is bad, then they must be the same thing because they’re Bad, M’Kay?
2. The rise. The recent history of these economic systems, in the Americas and Eurasia, is dominated by the ascendance of neoliberal ideology.
Oh, that is good. Given that I am a neoliberal — a fully paid up one, Senior Fellow at the Adam Smith Institute and all — that’s very good. Given HS2, looming wealth taxation, the increased bite of idiot regulation and all that I can’t say that I see neoliberalism as winning right now but that might depend upon your starting point. If you’re a socialist — or an idiot but I repeat myself — you might well regard the plenitude of bananas in the supermarket as neoliberal. After all, that is something that socialism never did achieve.
3. The threat. Neoliberal ideology is antidemocratic at its very core. Its aim is to give free-reign over our societies to corporations, not citizens.
And, well, you know, bollocks. The very beating heart of neoliberalism is that corporations need to be controlled and they’re best controlled by the citizens. In the form of free markets rather than voting on which bureaucrats get the gold plated pension, true. But neoliberals are between indifferent and actually against capitalist power. The whole nub of the idea is that markets do the job of controlling capitalists better than bureaucrats, politicians or, obviously, capitalists.
There’s not really any way for her thesis to survive after getting so much of the basics wrong, is there?
But just one more tidbit:
Hayek and his neoliberal colleagues now needed another, antidemocratic way, to organise society. They didn’t want democracy, but they wanted some kind of self-maintaining organisation — by which they meant hierarchy. Organisation was supposed to be supplied by the market, and hierarchy by competition within markets. (It’s worth noting that neoliberals in the 1950s did not, although they should have, predict that unfettered markets lead to concentrations in monopolies or cartels. They would arguably disapprove of the vast corporations running our current economies, even though their market-above-democracy policies predictably brought them into being.)
Well, that wasn’t actually the last tidbit. But the idea that Friedman, Mises, Menger, Hayek and the rest didn’t worry about monopolies? Jesu C is really bouncin’ on that pogo stick right now. And then the idea that democracy will be better bulwark against monopolies than markets? Can you actually do backflips on a pogo stick?
June 4, 2024
QotD: “Let the market handle it”
Rodrik’s argument appears to be the height of reasonableness. “It is dogmatic and dangerous,” the argument’s champions rightly note, “to assume that one solution or one approach is the answer to every problem. Some problems call for the use of screwdrivers, others call for the use of hammers. Only a benighted fool insists on using a screwdriver to hammer in nails and on using a hammer to insert screws. The wise, non-ideological, enlightened, open-minded, reasonable, and scientifically aware person sometimes uses a screwdriver and other times uses a hammer. What could be more reasonable?!”
The error in this formulation is that markets are many tools. Markets are a toolkit with far more tools in it than government has access to. While government has only a few tools – mostly hammers (some sledge), saws, and clamps – the market is filled with many, almost countless, tools. And the market’s tools are much more varied, nuanced, specialized, and creative than are the government’s simple set of tools.
Put differently, to say “Let the market handle it” is just a shorthand way of saying “Let whoever is most willing, most able, most experienced, most knowledgeable, and best equipped be free to try his or her hand at dealing with each specific problem.” And to say “Let the market always handle it” is not – contrary to what Rodrik’s argument suggests – to propose a single, simple fix for all problems; it is to propose that the field be left open for as many fixes as are feasible to be tried. To say “Let the market always handle it” is to warn that using government as a fix crowds out – prevents – experimentation with many other possible fixes.
In short, the choice is not between only two alternative possible fixes: the market or the government. Instead, the choice is between a gigantically large and varied set of possible fixes (the market, with its many detailed specialized carpenters and master builders) or a tiny set featuring one possible fix (the government, with its hammering, sawing, and clamping officials, none of whom – unlike the case with market participants – can be reasonably presumed to know enough of the finer details of any of the problems that they are called upon to “fix”).
The truly reasonable person – the one who understands the benefits of having access to as many “solutions” to problems as possible – supports the market because he or she knows that to turn to government solutions is to drastically reduce the number of “solutions” that will be tried.
Don Boudreaux, “Very Bad Framing, or In Defense of ‘Let the Market Handle It'”, Café Hayek, 2016-08-12.
November 23, 2023
QotD: The Austrian and Chicago schools of economics
War propelled the “Austrian” thinkers westward, and the fall of the Berlin wall propelled the “Chicago” school east. The terms no longer have geographical significance.
What all classical liberals have in common is the passionate vindication and defence of human freedom. That is what makes them, unlike progressives, readable in subsequent generations. Their subject matter cannot become dated. The “Austrians” are also necessary to understand modern history, positively as well as negatively, in the evolution of, for instance, the Christian Democratic movement that conceived a peaceful post-war Europe, in defiance of secularizing bureaucratic trends and mass-man “ideals”. Alas, this was overall defeated by the Eurocratic trend-setters, determined to build a magnificent autocratic monument to themselves.
I have the most enchanting memory of opening the box that contained an American reprint of Human Action (big thick book), which I had ordered at the age of fifteen. I no longer own a copy, but gather it still stands as a monument to the resistance — a study of “praxeology”, or purposeful human choices, stretching so wide that even religion and morality could be touched. (Conventional economics has no time for either.) A half-century later, I can even remember the construction of an earnest reading list, that was soon abandoned when I went on the road.
One may see the great division in Western thought and politics, which the Austrian-school Friedrich Hayek traced back to Bacon and Descartes, and can be traced farther to the Nominalists of the later Middle Ages. Humans live in freedom and make choices, to be restrained only by the plainest moral codes. Or, by the alternative thesis, we are components of a machine, which the man with Power can monkey with, by implanting stimuli here and there.
We are creatures of God, or — we are replaceable parts in a bureaucracy.
David Warren, “Austrian schoolboy”, Essays in Idleness, 2019-09-17.
November 4, 2023
QotD: The munificent benefits of big government
This is the argument that government should run more of the economy of course.
No, don’t laugh, it is. Because these things are rising in price is exactly why, so the argument goes, government must regulate and control more, so as to lower the price.
Tim Worstall, “Ain’t Capitalism Great? Price Changes Over The Last 20 Years”, Continental Telegraph, 2019-07-13.
October 5, 2021
QotD: Entrepreneurship
In fact, one could almost create a new economic law: the amount of abuse raining down on entrepreneurs is directly proportional to the good they do. I haven’t seen much reason to doubt this law yet.
Johnathan Pearce, “Gordon Gekko goes to Germany”, Samizdata.net, 2005-05-05.
November 27, 2019
QotD: The evolution of markets
We believe that there is a natural inclination to promote our own welfare and that of our loved ones. We further believe that, given reasonable security of life and property, this inclination will lead to the emergence of a system of voluntary exchange. That is, we will seek to trade the things we have or can create for other things that we regard as of greater value to ourselves.
In doing so, ratios of exchange that we call prices will be revealed. These prices, in turn, will provide general information about what should be produced, in what ways and in what quantities. Furthermore, changes in price will provide information about changes in preferences or in abilities to produce. Custom will set aside one or more goods to serve as money. Institutions will emerge that channel savings into productive investment, that spread risk, and that moderate expected fluctuations in price. Laws will develop to police the transfer of property and performance of contracts.
We believe that market economies emerge spontaneously and are self-regulating and self-sustaining. This is not to say that all market societies will be the same. Their exact shape will depend on the intellectual and moral qualities of the individuals who comprise them. They will reflect pre-existing patterns of trust and honesty and the general cultural and religious values of a people. They will also be more or less distorted by government intervention. But we do say that market behaviour is natural — that, in the absence of extreme government coercion, or extreme disorder, buying and selling to increase our own welfare is what we naturally do.
Sean Gabb, “Market Behaviour in the Ancient World: An Overview of the Debate”, 2008-05.
November 23, 2019
Sir Charles Trevelyan, head of the Irish relief efforts during the potato famine, and creator of the modern civil service
By happenstance, after posting the OSP video on the history of Ireland, a post at Samizdata covered one of the questions I had from OSP’s summary, specifically that the famine was worsened by British “laissez-faire mercantilism”. Mercantilism is rather different from any kind of laissez-faire system, so it was puzzling to hear Blue link them together as though they were the same thing. Of course, I live in a province currently governed by the Progressive Conservative party, so it’s not like I’m unable to process oxymorons as they go by…
Anyway, this post by Paul Marks looks at the man in charge of the relief efforts:
Part of the story of Sir Charles Trevelyan is fairly well known and accurately told. Charles Trevelyan was head of the relief efforts in Ireland under Russell’s government in the late 1840s – on his watch about a million Irish people died and millions more fled the country. But rather than being punished, or even dismissed in disgrace, Trevelyan was granted honours, made a Knight Commander of the Order of the Bath (KCB) and later made a Baronet, not bad for the son of the Cornishman clergyman. He went on to the create the modern British Civil Service – which dominates modern life in in the United Kingdom.
Charles Edward Trevelyan (contemporary lithograph). This appeared in one of the volumes of “The drawing-room portrait gallery of eminent personages principally from photographs by Mayall, many in Her Majesty’s private collection, and from the studios of the most celebrated photographers in the Kingdom / engraved on steel, under the direction of D.J. Pound; with memoirs by the most able authors”. Many libraries own copies.
Public domain, via Wikimedia.With Sir Edwin Chadwick (the early 19th century follower of Jeremy Bentham who wrote many reports on local and national problems in Britain – with the recommended solution always being more local or central government officials, spending and regulations), Sir Charles Trevelyan could well be described as one of the key creators of modern government. If, for example, one wonders why General Douglas Haig was not dismissed in disgrace after July 1st 1916, the first day of the Battle of the Somme when twenty thousand British soldiers were killed and thirty thousand wounded for no real gain (the only officers being sent home in disgrace being those officers who had saved some of them men by ordering them stop attacking – against the orders of General Haig), then the case of Sir Charles Trevelyan is key – the results of his decisions were awful, but his paperwork was always perfect (as was the paperwork of Haig and his staff). The United Kingdom had ceased to be a society that always judged someone on their success or failure in their task – it had become, at least partly, a bureaucratic society where people were judged on their words and their paperwork. A General, in order to be great, did not need to win battles or capture important cities – what they needed to do was write official reports in the correct administrative manner, and a famine relief administrator did not have to actually save the population he was in charge of saving – what he had to do was follow (and, in the case of Sir Charles, actually invent) the correct administrative procedures.
But here is where the story gets strange – every source I have ever seen in my life, has described Sir Charles Trevelyan as a supporter of “Laissez Faire” (French for, basically, “leave alone”) “non-interventionist” “minimal government” and his policies are described in like manner. […]
Which probably explains why Blue used the term in the previous video. Then these “laissez-faire” policies are summarized, which leads to this:
None of the above is anything to do with “laissez faire” it is, basically, the opposite. Reality is being inverted by the claim that a laissez faire policy was followed in Ireland. A possible counter argument to all this would go as follows – “Sir Charles Trevelyan was a supporter of laissez faire – he did not follow laissez faire in the case of Ireland, but because he was so famous for rolling back the state elsewhere (whilst spawning the modern Civil Service) – it was assumed that he must have done so in the case of Ireland“, but does even that argument stand up? I do not believe it does. Certainly Sir Charles Trevelyan could talk in a pro free market way (just as General Haig could talk about military tactics – and sound every inch the “educated soldier”), but what did he actually do when he was NOT in Ireland?
I cannot think of any aspect of government in the bigger island of the then UK (Britain) that Sir Charles Trevelyan rolled back. And in India (no surprise – the man was part of “the Raj”) he is most associated with government road building (although at least the roads went to actual places in India – they were not “from nowhere to nowhere”) and other government “infrastructure”, and also with the spread of government schools in India. Trevelyan was passionately devoted to the spread of government schools in India – this may be a noble aim, but it is not exactly a roll-back-the-state aim. Still less a “radical”, “fanatical” devotion to “laissez faire“.
August 10, 2019
QotD: Progressives and spontaneous order
Conduct an on-going experiment: whenever well-meaning “Progressives” (of which there are very many) propose this government intervention or oppose that policy of reducing government’s role in the economy, ask if these “Progressives'” stated reasons can be understood to be nothing more than a reflection of a failure to understand the power and range of spontaneous-ordering forces in private-property settings. The answer will almost always be “yes.” Very often, no further explanation for “Progressives'” policy stances is necessary.
“Progressives” simply don’t “get” spontaneous order in human society. They see a problem and leap to the only conclusion that for them is sensible – namely, that that problem’s only realistic “solution” is that it be directly addressed by government officials. Indeed, even “Progressives'” frequent misdiagnoses of the results of trade-offs as being “problems” (or “market failures”) reflect a failure to understand spontaneous-ordering processes. Many phenomena and patterns that “Progressives” assume to be problems – for example, increasing inequality of monetary incomes – are often the benign results of the countless and nuanced individual trade-offs made by individuals. For “Progressives,” though, these “outcomes” are often assumed to be the consequence of sinister designs.
Don Boudreaux, “Bonus Quotation of the Day…”, Café Hayek, 2017-06-24.
