Incentivizing Bad Behavior: HUD, Freddie Mac, and Fannie Mae

To this day, private companies are castigated for “predatory lending.” Yet, it was government policy that incentivized loans to those who couldn’t afford to repay them.

Confusions about Capitalism

Three common accusations against capitalism are that it is exploitation, it is cronyism, and it destroys the planet.

Inflation: The Myth of the “Price Level” (2 of 5)

When people talk of a "price level," they have in mind the image of a level of a liquid which goes up or down according to the increase or decrease in its quantity, but which, like a liquid in a tank, always rises evenly. But with prices, there is no such thing as a...

Inflation: An Increase in the Quantity of Money (1 of 5)

If the supply of caviar were as plentiful as the supply of potatoes, the price of caviar--that is, the exchange ratio between caviar and money or caviar and other com­modities-would change considerably. In that case, one could obtain caviar at a much smaller...

A Case Study in Nuisance

Nuisance is highly contextual. An action that constitutes a nuisance in one context may not be a nuisance in another context.

Affordable Housing: The Costs of Democracy in California

On the one hand, housing advocates and public officials decry the state’s housing shortage. On the other hand, they continue to advocate for more controls and restrictions to be piled onto the shoulders of housing producers.

Capitalism’s Visible Hand: The Uniformity of Profit Principle

The best way to begin to understand the functioning of the price system, and thus the full nature of the dependence of the division of labor on capitalism, is by understanding the following very simple and fundamental principle. Namely, there is a tendency in a free market toward the establishment of a uniform rate of profit on capital invested in all the different branches of industry.

Interventionism vs Capitalism: The Price Control (2 of 4)

Let us consider one example of interventionism, very popular in many countries and tried again and again by many governments, especially in times of inflation. I refer to price control. Governments usually resort to price control when they have inflated the money...

Stocks and Bonds Hurt Alike Under Stagflation

When bonds and stocks decline a lot and simultaneously it suggests inflation is rising rapidly even as the economy is stagnating or contracting (or will soon do so). For most economists today, that combination is near-impossible.