Quick Thoughts From A Critique Of Interventionism by Ludwig von Mises

The central thesis behind A Critique Of Interventionism is that interference in the price mechanism by the government will not achieve its intended result, which in turn will lead to further intervention, and eventually a centrally planned economy. 

A good example could be anti-price gouging laws within a crisis. Economist Mike Munger gives a great example from Hurricane Fran in North Carolina. Hurricane Fran was quite destructive, and millions of people were left without power for weeks. My parents always tell a story about how much I hated not being able to watch Barney, and the Lehrer Report that came on after (yep, I was a weird kid). 

During the hurricane, three good ole boy entrepreneurs hatched a plan and decided to take a truck full of ice from Goldsboro, which had power, to Raleigh, which had none.

The boys arrived, set up shop, and started selling the ice at $11 a bag, the line stretched on for quite a while-people needed ice for insulin, for baby formula, and all kinds of essential goods. 

Not long after they set up shop, the police showed up, our heroes were arrested for price gouging, which in this case meant charging more than 5% over the normal going rate for ice. The trucks were taken to the impound lot, and all of the ice melted. 

Why is this a problem? Not allowing the price mechanism to work means that no one else would be willing to load up a truck with ice, make the 55-mile drive from Goldsboro to Raleigh during a crisis, and sell ice for $1.57 a bag instead of $1.50. 

The only way forward from here would be for the government to create its own ice company (more interventionism), convince Goldsborians to bring the ice anyway at a loss (you would have to coerce them), or to repeal anti-gouging laws. 

This is the slippery slope that Mises describes throughout A Critique Of Interventionism. 

The real problem, that is somewhat ignored throughout the book, are the public choice implications of interventionism. Bureaucrats and lawmakers are self-interested agents themselves, and it is a sullen fact of life that few people get hired to do nothing. It is almost a given that they will continue to intervene.  Intervention validates their very existence and is therefore very difficult to dislodge. 

The modern federal bureaucracy is functionally immortal. Unlike a private company, it cannot die if it is sick from institutional rot. Constitutions and separation of powers can prove to be a drag on intervention, but those are limited safeguards. 

This does not mean there is no cause for hope, however. The simplest policy intervention to “reset” modern bureaucracies, is simply to move them. This can have a strong effect, as oftentimes, most bureaucrats are unwilling to relocate for their jobs. Perhaps Kansas City would make for a great new capital city, but alas, only time will tell. 

 

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