Money, Monopoly & Market Intervention

Robert P. MurphyMises Academy

November 7, 2011

Lecture 6: 1st Third of Chapter 12 of Man, Economy, and State

1st Third ofChapter 12 of MES

1. State vs. Private Intervention2. Typology of Intervention

3. Utility

4. Price Controls

5. Gresham’s Law

VI. Resurrecting “Monopoly Price”

VII. Taxing and Spending Both Burdens

VIII. Thoughts on Taxes

IX. Income vs. Consumption Taxes

I. State vs. Private Intervention

II. Typology of Intervention

Autistic

Binary

Triangular

III. Utility

Rothbard argues that (in a sense) free market “maximizes” utility of everyone.

By definition, an intervention raises the utility of the intervener but lowers that of the recipient.

IV. Price Controls

For more, see Lessons for the Young Economist.

V. Gresham’s Law

Traditional version:“Bad money drives out good.”

Bimetallism: Government enforces a fixed exchange ratio between gold and silver.

VI. Resurrecting “Monopoly Price”

VII. Taxing and Spending Both Burdens

VIII. Thoughts on Taxation

●No such thing as a “neutral tax.”

●Head Tax vs. Flat Tax

●Tax “Shifting”: What’s right and what’s wrong

IX. Income vs. Consumption Taxes

●Income tax does penalize saving (though be careful about reasoning).

●Consumption tax ends up “taxing” income too!

●Right-wingers tend to denigrate consumption.