Thursday, May 27, 2010

Quiz

Okay, here’s a quiz for you.

In a plush downtown Auckland hotel yesterday a man got up in front of a well-dressed and well-fed audience and announced the following:
I have a dream job.
My product is in daily use.
The government jails my competitors.
We ourselves set the selling price.
Our production costs are only a fraction of the product’s value.
And we make hundreds of millions of dollars profit every year.
So here are my two questions for you:
  1. Who is this man? 
  2. Who does he work for?
  3. And what do they produce?
And here’s a clue for you: Despite what you might think, the answers are not 1) William Burroughs, 2) a gang, and 3) drugs.

Answers over the fold—or click the link above for a definitive clue.


The answers, of course, are
  1. Reserve Bank flunky Simon Tyler speaking at yesterday's INFINZ Capital Markets Forum at the Langham Hotel
  2. The Reserve Bank of New Zealand, and
  3. Money.
I'll leave it to you to ponder the ethics involved. (Did he really say "jail"? Yes, he sure as hell did. Wwhy not email him asking for the cartoon he used to laugh about it?])

To help you with your pondering on the ethics of putting the gun in the service of dollar production, I invite you to first to reflect on the historical fact that money originated completely in private hands, and not by government fiat; and, second, to peruse The Ethics of Money Production, a pioneering work by Jörg Guido Hülsmann, professor of economics at the University of Angers in France and the author of the first full study of a critically important issue today: the ethics of money production.
    "Hülsman is speaking not in the colloquial sense of the phrase 'making money,' [says this review at the Mises Blog] but rather the actual production of money as a commodity in the whole economic life. The choice of the money we use in exchange is not something that needs to be established and fixed by government.
    "In fact, his thesis is that a government monopoly on money production and management has no ethical or economic grounding at all. Legal tender laws, bailout guarantees, tax-backed deposit insurance, and the entire apparatus that sustains national monetary systems, has been wholly unjustified. Money, he argues, should be a privately produced good like any other, such as clothing or food."

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3 Comments:

Anonymous Mark Hubbard said...

There's a great article from Donald Boudreaux (Cafe Hayek fame) connected with this- well similar them when it gets to free banking: 'The Private Provision of Public Goods'.

Quote: Nobel laureate economist Elinor Ostrom’s important work shows that people are very good at using voluntary action to solve problems that economics textbooks insist require the forceful hand of government. Producing “public goods” (such as irrigation systems for a community of farmers) often promises large enough gains to stir the creative juices of people—who, given enough freedom of action and security of rights, then figure out how to cooperate to provide them. This cooperation often takes different forms from what we witness in markets for typical private goods (such as shoes).

Along similar lines other scholars over the years have discovered countless historical examples of the successful private provision of public goods. Sometimes it is achieved by firms seeking monetary profit, while other times it is achieved by people cooperating for gains that are real but not monetized or exchanged in conventional markets.

The discovery of any such instance always surprises the typical economist, whose thinking is stymied by too many wrongheaded models of economic interaction.

Perhaps the most surprising of these discoveries is the issue of private currencies (or “free banking”). F. A. Hayek, George Selgin, and my George Mason University colleague Larry White led the way in showing not only that sound money can be supplied privately but that it has been supplied privately—most notably in Scotland from 1716 until 1844.

5/27/2010 12:55:00 pm  
Blogger StephenR said...

Hmm...my first thought was that he was the head of the TAB...?

5/27/2010 01:48:00 pm  
Blogger Richard McGrath said...

PC, I think you were right in your suggested answer for #2 - he is part of a democratically elected gang that has no concern for individual rights.

5/28/2010 09:48:00 am  

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