And so began the downward trend in America's free market in medicine. With fewer medical schools — and thus fewer doctors — wages can be kept higher than would exist in a market dominated by free enterprise and the unobstructed entry into practice. Consumers, who ordinarily determine the success of producers, have lost out as they face higher costs on top of being deemed too ignorant to choose an adequate doctor without the aid of the state. Rent seeking becomes ingrained in an industry that must devote increasing amounts of financial resources to appease public officials.
The American Dental Association's opposition to expanded licensing has more to do with preserving the status quo than looking out for consumer safety. If freedom of entry were maintained in the dental industry, there is little doubt that mid-level dental practitioners, or some cost-efficient form of such, would have emerged as a viable occupation by now.I received a couple of angry emails from current dentists over this, so I take that as a great sign of my logic and rational.
It must be stressed, however, that the advent of an increase in licensing for a type of mid-level dentist is by no means a comprehensive solution for the problems that plague the industry. Previous governmental intervention was the cause of a shortage in dentists and an increase in the price of dental care. Further micromanagement of an already overly managed problem will only bring about more unintended consequences. Such is the nature of the state: intervention begets intervention, and we forge ahead on the path to socialism.
The director of LvMIC asked me to do a brief piece on the history of Austrian economics and its founders. Below is an initial draft, all suggestions are welcome, including those from current dental practitioners:
Austrian Economics 101
What is Austrian economics and who were its leading theorizers? The following will attempt to answer that question as succinctly as possible.
The Austrian school received its name from the fact that many of its early thinkers hailed from Vienna in the Austrian Empire. This oft-neglected school of thought emphasizes a few key concepts vital to economic analysis including individual methodology, the heterogeneous nature of production and goods, and the incompatibility of applying precise mathematical constructs to unpredictable human action.
The birth of Austrian economics begins with Carl Menger and the publication of his Principles of Economics in 1871. Menger was one of three founders of the “marginalist revolution” along with William Stanley Jevons and Leon Walras. In correcting the Smithian paradox of the classical school, otherwise known as water vs. diamonds, the marginalist position was one of explaining how items are valued by market participants on the margin of their value scales. As an individual trades for preferred goods, their value scales are fulfilled in steps in accordance with perceived marginal utility of each good. The “marginal revolution,” which Menger helped spearhead, set the foundation for establishing individual subjective value as the basis for all economic observances of value. In addition to his rigorous use of individual methodology and deductive reasoning, Menger outlined how commodities become mediums of exchange; which would become a full fledged theory come Ludwig von Mises’ “regression theory.”
Eugen Bohm von Bawerk, who was a devout follower of Menger, made significant contributions in the development of time in its relation to production. In his devastating critique of Karl Marx, Bohm-Bawerk described the “roundabout” nature of production in that capitalists risk their own saved capital to invest and pay workers in the time it takes to yield a final product. Time is ultimately the key determinant of interest rates which are not exploitive but a price paid for present satisfaction.
The leading economist of the Austrian school was Ludwig von Mises. Mises, whose ambitious treatise Human Action is the leading work on the Austrian worldview, embraced economics as a “value-free” science and applied a number of universally true axioms to deduce that laissez faire capitalism was the best economic system for relieving man’s uneasiness within nature. The fundamental Mises axiom begins as “human action is purposeful behavior” through which an entire body of economic thought developed. In addition to his rigorous application of axiomatic truths to economics, Mises developed a number of groundbreaking theories in the sphere of monetary operations and theory. Most famously, Mises applied marginal utility to the inflationary policies of central banking and concluded that abundant credit expansion not backed by an increase in savings on part of the general public leads to distortions in economic calculation and malinvestment. In short, artificially low interest rates perpetuated by a central bank lead to the business cycle- usually called the Austrian Business Cycle theory. Like Bohm-Bawerk before him, Mises dismantled any notion of socialism possibly working by showing that prices act as signals to producers in order to more efficiently allocate goods. Without the pricing system, socialism is doomed to fail. Mises also brought Menger’s theory on money evolvement full circle with his regression theorem which stated that any commodity being used as a unit of exchange obtains its value from its previous usage as a non-money.
Perhaps the most famous of the Austrian economists was Freidrich Hayek. Hayek, being a student of Mises, made great strides in developing the Austrian Business Cycle Theory and the damage wrought by central banking. Hayek’s lasting influence however comes from his theorizing on the disbursement of knowledge throughout society. In arguably the most important economic essay ever written, The Use of Knowledge in Society, Hayek explains how marketable information can never possibly reside in the minds of few central planners and that markets must remain unobstructed in order to work efficiently.
Economist Murray Rothbard took the Misean approach to another level by synthesizing it with a strict adherence to natural rights. Rothbard’s Man, Economy, and State and Power and Market rank along with Human Action as the premier treatise on Austrian economic theory. In addition to elaborating on the theories of Mises in his famously succinct prose, Rothbard made headway in further developing Austrian thought on such concepts as monopoly price and the limited size of private firms amidst dynamic competition. Rothbard was also a rigorous historian and libertarian theorist who developed a substantial body of work in application of the fundamental “non aggression axiom.” Rothbard famously coined the term “anarcho capitalism” to describe his preferred economic system as lacking in a state apparatus.
Though Austrian economics is not as popular or eminent as the Keynesian or Chicago school, it has seen yet another revival with the presidential campaign of Texas Congressman Ron Paul and worldwide economic slump. As interest continues to grow as to the true cause of financial crisis, the Austrian school stands to gain much more attention from a broader audience. This can be seen as the one true silver lining in the devastation brought about by the Federal Reserve.
It needs some elaboration but it's a start.