The whole notion of capitalism is that those with capital are incentivized to invest it in order to obtain a profit. If profits are outlawed or significantly reduced through confiscatory taxation, the incentive to invest is reduced or eliminated. If profit is forbidden, I have no incentive to invest rather than consume. Why would I delay gratification and take on risk to plant a field or build a factory if I don’t stand to make a profit by doing so?
Tag: profits
Tariffs, Pickpockets, and the Nationalist Snake in the Moral Grass
Protectionism, as it is misleadingly known, has always been an insider’s game, a political gambit aimed at enriching those to whom the government is especially beholden or seeks to seduce at the expense of other people. Incumbent producers who produce products on which tariffs are imposed succeed in repelling competition by force of the government’s customs officers, which is to say that they succeed in increasing their profits by force, not by offering consumers a better deal.
Why Black Market Entrepreneurs Matter to the World Economy
In his book, “Stealth of Nations: The Global Rise of the Informal Economy,” Neuwirth points out that small, illegal, off-the-books businesses collectively account for trillions of dollars in commerce and employ fully half the world’s workers. Further, he says, these enterprises are critical sources of entrepreneurialism, innovation, and self-reliance. And the globe’s gray and black markets have grown during the international recession, adding jobs, increasing sales, and improving the lives of hundreds of millions. It’s time, Neuwirth says, for the developed world to wake up to what those who are working in the shadows of globalization have to offer.
Countries Are Not Companies
One of the most persistent false beliefs held by American voters is that someone with “business experience” would do a better job “running the economy” than politicians have. Let’s put aside the idea that an economy is something that needs to be, or can be, “run” and explore whether a CEO of a major company as president really would be better for the economy.
The Lament of the Merely Decent Economist
The first eye-opening moment for an attentive student in a good introduction-to-economics class occurs when that young man or woman learns to see – or learns to look for – that which remains invisible to most people. Such a student starts to search for the unseen jobs lost as a result of the ‘seen’ jobs created or protected by tariffs. He or she begins to understand that government-imposed prohibitions on the free movement of prices and wages have unseen consequences – invariably bad, and typically borne disproportionately by the very persons the prohibitions are ostensibly meant to help. The man-in-the-street has lots of wrong-headed ideas about economics.
Ten Fundamental Laws of Economics
In the midst of so many economic fallacies being repeatedly seemingly without end, it may be helpful to return to some of the most basic laws of economics. Here are ten of them that bear repeating again and again.
Collective Intelligence in Action: The Self-Directed Education Movement
We humans form institutions for the value they offer to society. Collectively these structures function with an intelligence based on what works. Ideally, whatever works persists and whatever doesn’t work fades away. But sometimes institutions become resistant to change or change in ways that make them more rigid and therefore less responsive. When that happens, people who work for or are served by that institution tend to suffer.
The Trouble With Socialist Anarchism
Written by Per Bylund. The new movie “V for Vendetta” has provoked public discussion of the meaning of anarchism. Murray Rothbard was an advocate of the stateless society, but he was never accepted by the anarchist movement and is still considered more a “capitalist lackey” than anarchist thinker. Indeed, anarcho-capitalism has always been considered an…
So-Called Intellectual Property
Property ownership is central to liberty and civilization. Property rights prevent conflict over the use of scarce resources. Ironically, the term “intellectual property” (aka “IP”) represents a hodgepodge of concepts that generally introduce artificial scarcity and needless conflict.
The Five Institutions of the Market Economy
Let us see what the basic institutions of the market economy are. We may subdivide them for convenience of discussion into (1) private property, (2) free markets, (3) competition, (4) division and combination of labor, and (5) social cooperation. As we shall see, these are not separate institutions. They are mutually dependent: each implies the other, and makes it possible.