Basic Economics

 

A Reading List

1. Economics in One Lesson / Henry Hazlitt
2. Socialism: An Economic and Sociological Analysis / Ludwig Von Mises
3. Economic Policy: Thoughts for Today and Tomorrow / Ludwig Von Mises
4. Economics 101 / Murray N Rothbard

 

Basic Economic Concepts

• Supply and Demand
  
• Unintended Consequences - Intentions are not results, judge a policy not by stated goals, but by the incentives it gives stakeholders
  
• Opportunity Cost
• Pricing Theory
• Incentives (very important)
• Malinvestment

 

Why Does Austrian Economics Matter

A Lecture By: Mark Thorton

 

Both types of economists are worried about how an economy can be successful and why economies fail.

 

Non-Austrian economists use mechanical and computer models to study how they think the economy operates. When their models don't work they try to get the government to change people to fit their models

 

Austrian economists start their theorizing with deductive reasoning about who people are and how they react. Austrians also emphasize property rights which are needed for economic success.

• Right to your body
• Right to the fruits of your labour and goods you rightfully own
• Right to sell your labour, exchange with others and enter into contracts with others
• Right to any unclaimed natural resources

 

Violations of the above property rights are what makes people poor, why would you produce something if you knew it was going to be taken away from you.

 

If you are slave, you are poor. If someone takes your stuff, you are poor. If you are taxed, you are poor.

 

If theft or taxation are regular, you lose incentive to produce anything and everyone gets poorer, including the thieves and governments that did the taking.

 

The #1 Economics Fallacy

 

The most common fallacy of economics, that you can make everyone richer by violating their property rights

 

The government has no money or resources on its own, so in order to give money it MUST take money away from someone else (just an advanced form of theft and malinvestment)

 

Taxpayers (after paying the taxes) have less resources to solve their own problems and have less incentive to work hard, earn money and save for their future.

 

Even if governments solves some problems by the above policy of stealing, which it almost never does, or never does efficiently, it actually creates many more problems.

 

The Broken Window Fallacy in Action

 

This applies to government attempts to simulate the economy

 

For government to spend money on a stimulus package, must take the money from taxpayers or borrow that money from future taxpayers (which causes higher taxes and more inflation)

 

4 Results:

 

• Taxpayers have less recources to deal with day to day problems
• People have less incentive to work hard
• Investment in our future is discouraged, which undermines economic growth
• Government spending rarely creates stimulus and is usually malinvested

 

In Austrian economics everything is measured by opportunity cost because opportunity cost is the real driver of the choices people make.

 

 

 

 

 

 

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