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  • MisesLibrary

    Newly Rediscovered Translations of Ludwig von Mises

    Thanks to economist Andrew Silva, the Boston Austrian Economics Group has two newly unearthed translations of Ludwig von Mises.

    The first, translated by Mrs. Helena  L. Ratzka, is “Comments About The Mathematical Treatment Of Economic Problems“, an article first published in Studium Generale VI, No. 2 in 1953. This article comments on the importance of using the correct methodologies for the different sciences. Mathematics may be appropriate for the physical sciences, such as chemistry and mechanics, but it is not applicable to human action.

    The other article, translated by Andrew Silva, is “Ideas About The Postwar Political Economy“, an article originally published in the July/August 1942 edition of Cuadernos Americanos. This article, written at the height of World War II, highlights the necessary conditions for peace in Europe, and elsewhere.

    Many thanks to Andrew Silva, who has provided us with these texts!

  • netneutrality-tollbooth

    Net Neutrality is Central Planning of the Internet

    Should the government impose “net neutrality” legislation/regulations? The question is better asked as: Should the government fix prices for Internet data? Net neutrality mandates that all Internet service providers (ISPs) treat all data equally, instead of offering various prices for different data. For instance, some ISPs are charging Netflix extra per unit data due to the fact that Netflix eats up the vast majority of data. This would be similar to a sewer company charging more per unit sewage to a sports stadium than to its other customers in the neighborhood. By outlawing this practice through net neutrality legislation, the government is essentially subsidizing Netflix.

    Apart from Netflix, ISPs do tend to charge equally for data. This is consistent with Austrian price theory: As Rothbard writes in Chapter 4 of Man, Economy, and State: “Just as in the case of direct exchange, there will always be a tendency on the market for one money price to be established for each good.” In one ostensible exception, Netflix, a few companies do charge a different rate. But this is because Netflix is in an important sense consuming a different good: 90% of a network’s data may be treated differently by a company than .01% of a network’s data. The sports stadium may be treated differently than the homeowner by the sewage company, even though the sewage coming out is the same. Companies may charge a progressive rate to ensure one company doesn’t eat up all of its product, or if it does, that company pays a bit more for the privilege. Isn’t this what progressives are suppose to be in favor of: The largest economic actors paying more?

    The real danger in this price fixing is that it cements the Internet as a public utility under the law. Even more dangerously, it becomes a federal public utility, which is worse than a municipal one. At least the terrible decisions made in East Bumbleberry don’t affect residents of West Bumbleberry: There is some degree of competition with local government.

    In the recent Boston Globe article “A Rising Tide of Internet Regulation,” the process of turning the Internet into a public utility is explained: “More recently, Netflix elected to pay Comcast to pump its millions of data streams directly into Comcast’s Internet servers, a common Internet practice called ‘peering.’ But Netflix opposes any FCC moves that would let Comcast or another Internet provider charge more for faster access to individual homes….Advocates of Net neutrality want to forestall [Comcast charging more for home access] by invoking an existing law that lets the FCC treat broadband providers as public utilities. The FCC could then order ISPs to provide the same standard of service to all comers. But this means putting the hitherto free-wheeling Internet industry under federal control. Similar oversight of the telephone industry led to decades of technological stagnation and artificially high prices.”

    Price fixing is central planning. If an entrepreneur doesn’t have the freedom to decide prices, then what freedom does that entrepreneur have? Some make the argument that state barriers to entry have contributed to the size of currently existing ISPs, and that prices should be fixed to correct this grievance. Well, if state regulation is responsible for the size of Wal Mart, we don’t solve the problem by fixing the price of food. If state regulation is responsible for the size of banks, we’re certainly not solving any problems by fixing the interest rate. More regulation doesn’t solve the problems caused by existing regulation.

    In fact, the main problem with regulation is that it spawns additional regulation to “solve” the problems it created. As Ludwig von Mises wrote in Interventionism, first a regulation is enacted, then prices go up, then price fixing occurs to “solve” the problem, then shortages occur, then quotas are imposed to mandate companies offer the products in short supply. Finally, bankruptcies occur, it is impossible to do business, the state nationalizes the industry to “solve” the problem, and full socialism in that industry is the result. The most clear-cut example of this process at work in the US is the railroad industry. They too were forced to be “fair” and obey price fixing decrees, and later quota requirements. Then they went bust and were bailed out/nationalized/socialized by AMTRAK.

    Net neutrality legislation is mostly a solution looking for a problem, since Netflix is the only company currently affected by disparate data pricing. But there are certainly problems in the ISP industry, and those problems are caused by state intervention. The focus of Internet reformers shouldn’t be regulation, but deregulation.

    According to the recent Wired article “Don’t Blame Big Cable. It’s Local Governments That Choke Broadband Competition”:

    Local governments and their public utilities charge ISPs far more than these things actually cost. For example, rights of way and pole attachments fees can double the cost of network construction. So the real bottleneck isn’t incumbent providers of broadband, but incumbent providers of rights-of-way. These incumbents — the real monopolists — also have the final say on whether an ISP can build a network. They determine what hoops an ISP must jump through to get approval. This reduces the number of potential competitors who can profitably deploy service — such as AT&T’s U-Verse, Google Fiber, and Verizon FiOS. The lack of competition makes it easier for local governments and utilities to charge more for rights of way and pole attachments.

    Deregulation at the municipal, county, state, federal, and international level is essential for the Internet to remain a vibrant laissez faire industry that is able to operate outside of state control. As the state reaches its tentacles further and further into the Web, it will be able to do more things like UK’s recent ban of child porn that actually ended up banning dissident websites. This must be fought at all costs.

  • moksa

    Meeting Tonight at Moksa Restaurant

    Tonight’s meetup will be in Cambridge at Moksa Restaurant. We will not be in Jamaica Plain tonight.

    Moksa Restaurant is a perfect example of how a free market responds to customer requests; recently, they installed a Bitcoin ATM per their customers’ requests. As more and more people start requesting that Bitcoin be accepted as payment for other goods and services, businesses will respond. This is the standard response of the free market, and we support businesses that respond positively to customer requests.

    A few other reminders:

    Also, we just upgraded our CMS to WordPress 3.9.1, and as a result, our event pages are a little bit funky. All the information is still there, but the display is rather weird (moved columns, changed text color, etc.). Please bear with me through the updates. Thanks!!

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ABOUT US

ABOUT USBoston Austrian EconomicsMEETUP GROUP

The Boston Austrian Economics Group is a weekly meet-up in downtown Boston, where we study Austrian Economics. We know what you're thinking... no, it isn't the economics of the country of Austria. Austrian Economics is the oldest, continuous school of thought in economics; the founding members of which were all from Vienna.


It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a 'dismal science.' But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.

— Murray N. Rothbard

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