I think the members of BTM can all agree that it is not the governments business to redress inequality by redistributing income. Most of us believe that the invisible hand of free market capitalism is at the very least the lesser of two evils.
Now here's the contentious part. It is my impression that laissez-faire capitalism results in two things with regard to income: 1/ It raises the standard of living for the poorest members of society. 2/ It causes a rise in inequality. This is because, while everyone is getting richer, the rich are getting much, much richer, because it is possible for those with a great deal of talent/initiative/hard work ethic (lets throw in inherited wealth and a bit of luck to be fair, and for the sake of argument) to amass huge amounts of capital without penalties.
The questions are, A/ Is it true? Does free market capitalism raise the standard of living for the poorest? And does it result in greater inequality? This should be an easy enough question to answer, if you can compare statistics from countries with more or less free economies. B/ In inequality bad? If it is the case that our preferred economic and political system results in a wider gap between rich and poor, is that just a regrettable side effect of an otherwise good system? This is a different kind of question, that has more to do with values and philosophy. I suspect it will form the bulk of the discussion.
I'm going to go out on a limb and argue that if income inequality is is not in and of itself a bad thing. We should embrace it. It is GOOD for certain people to be much, much richer than everyone else. The main reason for this is that much more can be accomplished with a huge fortune than a medium one. Big investment has a proportionally bigger payoff. A new car manufacturing plant will stimulate the economy and create wealth more efficiently than a mom-and-pop business, as will a new media empire. These kinds of things require big concentrations of capital.
Another good thing about very rich people: when they are motivated to do something, they are much more likely to have the power to accomplish it. Since people are people, and rich people have many of the same problems as the rest of us, in a society with a lot of very rich people these problems are more likely to find solutions. Take illness, for example. Anyone can get cancer, or have a child with diabetes. If that happened to you, wouldn't you do everything in your power to find a cure? Power can be a very good thing, and not just for the person who holds it. We are all bothered by the idea that children might grow up without access to a good education. If there were no public schools, it seems very unlikely to me that several philanthropist wouldn't be looking for ways to address inequality of opportunity with regard to education, if only for selfish reasons, to improve the quality of the workforce in an information heavy economy.
Finally, I think that seeing the example of the very rich motivates everyone to try harder, especially if they believe that there is nothing stopping them from getting there too if they work hard and have good ideas.
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Take a look at what we're talking about, if you haven't already:
http://www.lcurve.org/
The top of that curve would be a few people with incomes that doubtless
dwarf Bill Gates'. These would be the owners of our central bank.
The only redistribution I advocate is where provable theft has occurred.
I hereby demand the return of all gold sold the Federal Reserve for fiat money
at cost, and the total issuance of new US currency since since the Fed's inception;
we paid them improperly for it with our national debt instruments at a total cost
much inflated by interest. The deal doesn't satisfy the rational man standard
indicating that the U.S. population at large has been coerced. Oh yeah, don't
forget the unpaid interest on all unexpired U.S. government paper. This money
printing function is limited to Congress. It's fine for them to delegate that, but
certainly not at a cost greater than the amount of currency issued by the interest
charged, nor the right to regulate markets, without a more open process to
choose members of the currency regulatory body, if one is even considered
necessary. All the foregoing monies are to be paid to the U.S.Treasury, and
distributed among the population, by the destruction of all fiat in the forfeiture .
Criminal trials shouldn't be necessary except in the absence of immediate compliance,
although they should be expected at some point. A great amount of lenience
could be expected following voluntary compliance, so it's only sporting to offer it.
The U.S. was robbed of all new money printed since the Fed's inception in 1913,
unless they voluntarily gave any of it back, as they claim. I hope they kept their
receipts.
Care for a smooth transition?
=====================
http://en.wikipedia.org/wiki/Household_income_in_the_United_States
This chart has been designed to maintain public order aka obedience.
I read the L-curve link you posted, and I am not following you-- are you endorsing the claims in the article, or using it as an example of collectivist thinking? Here is a quote from the conclusion of the article:
"The economy is a complex system, but it is essentially a human invention. It can be "managed" (or influenced) in many ways. If it is not managed intentionally, then it is managed (or manipulated) by those who hold political and economic power, typically to their own advantage. It is not enough to create a strong economy. It is just as important to ask how the benefits of the economy are distributed through the population. A truly democratic society needs to find ways to manage the economy to benefit the population as a whole. This is not being done."
This is exactly the kind of thinking that will end up ruining this country.
Regarding a return to the gold standard, I know that was one of Ron Paul's platforms, but I'm not sure if I agree with it. What we need is a fair and efficient way to match the currency to demand that is impervious to tampering, like an automatic formula, that Congress has no control over. If Congress wants money to pay for something they would have to find it the old fashioned way, and let's see how popular their programs would be when they have to raise sufficient taxes to pay for them.
Claire:
"I read the L-curve link you posted, and I am not following you-- are you endorsing the claims in
the article, or using it as an example of collectivist thinking? Here is a quote from the conclusion
of the article:"
bobo:
I only used that page to show the chart.
"The only redistribution I advocate is where provable theft has occurred."
Claire:
"What we need is a fair and efficient way to match the currency to demand that is impervious to
tampering, like an automatic formula, that Congress has no control over. If Congress wants money
to pay for something they would have to find it the old fashioned way, and let's see how popular
their programs would be when they have to raise sufficient taxes to pay for them."
bobo:
Sounds like a metal based money. The fewer non-monetary uses a metal can have the better.
That narrows in down to gold. This removes individual humans from having an improperly large
control of an economy. The people of the world control it through an organically linked self
regulating world economy, between and within nations. The gold standard immediately and
automatically disincentivises excess consumption versus production and does so with perfect
balance as to individual consequences throughout society.
The only coercion the government is justified in exerting is directed at limiting coercion itself.
Theft, fraud, assault, cartels, all qualify. That thing about burning the Fed's fiat occurred to
me totally off the cuff, and I can't remember ever having seen it anywhere else. Still sounds
about right and I'm still thinking about it. The ramifications go deep.
"The only coercion the government is justified in exerting is directed at limiting coercion itself."
Tom Mullen
www.tommullen.net
www.myspace.com/skepticsongs
I've definitely turned against burning fiat. That would be catastrophic for debtors if
significant deflation resulted.
The introduction of a gold backed currency usable for financial purposes, and
straightening up the government would set things a lot closer to right and make
use of market forces in a less destabilizing way. All the other currencies would have
to compete with it, and the stabilizing effect of that one gold currency would be felt
everywhere.
Those big bankers still stole America's gold and fiat, though.
My impression is that socialism produces greater income equality than capitalism. But it does so by making everyone dirt poor with the exception of a small ruling elite. Capitalism produces much greater wealth for most of the people.
Lets look at some of the countries that went totally socialist, the former USSR, China, N Korea, Vietnam, Cuba, and India. OK the first 5 were communist and India was socialist but not communist. Either way the results were the same, crushing poverty for the majority of the people. Now that India and China are adopting capitalism at least to a limited extent their economies are taking off like a rocket.
Countries like Sweden and some of the European countries are sometimes referred to as socialist, but in fact they are still part capitalist. I maintain that the capitalist part keeps them afloat.
THat is the 60 million dollar secret. Well said.
Tom Mullen
www.tommullen.net
www.myspace.com/skepticsongs
Here is Obama just yesterday (COMMENCEMENT ADDRESS KNOX COLLEGE, JUNE4, 2005.) It's what I'm talking about:
"At the end of the Civil War, when farmers and their families began moving into the cities to work in the big factories that were sprouting up all across America, we had to decide: Do we do nothing and allow captains of industry and robber barons to run roughshod over the economy and workers by competing to see who can pay the lowest wages at the worst working conditions? Or do we try to make the system work by setting up basic rules for the market, instituting the first public schools, busting up monopolies, letting workers organize into unions?
We chose to act, and we rose together."
He goes on to praise the New Deal etc... Always the industrialists are the bad guys and the government comes to the rescue. Also, the government is benign, because the government is "us". Big government means power to the people. The belief is so widespread among people I know that it seems self evident to them. Most people have never heard the other side.
Regarding Parisi's "fight the power" approach, I remember having a big long discussion about this with I guy on the far left of the debate who at the end of it told me to my astonishment that he considers himself to be an anarchist. I asked him what is an anarchist doing supporting more power for the government, and he confessed that it's just that he hates rich people so much, and he wants to see them pay.
We do need to point out the relationship between inflation and socialism, and all the other reasons, both moral and practical, for desiring a minimal government. But we also need to address the very visceral distrust of money and business that it is so handy for collectivists to foment and exploit-- after all, isn't the easiest way to "make rich people pay" to raise their taxes? In comparison, dismantling most of the federal government seems like the long way around.
It seems to me, ironically, that the more socialist a country gets, the more it's citizens resent the rich (I don't have any proof of this. It's just an impression-- the Canadians I know are more critical of big business than Americans and the "anarchist" guy was German). This actually makes a lot of sense, because the more socialist the system, the less likely are the rich to have come by their money honestly-- or the more likely they are to have found ways to avoid paying the taxes that are gouging everyone else. Either way it seems unjust.
Let's present the positive side of wealth. Let's take the focus off of punishing rich people. Let's celebrate the spirit of enterprise and the drive to move up in the world. If we want libertarianism to gain ground we have to fight this PR battle on all fronts. Critique is very good, but we have to balance it out with a positive message.
"Let's present the positive side of wealth. Let's take the focus off of punishing rich people. Let's celebrate the spirit of enterprise and the drive to move up in the world. If we want libertarianism to gain ground we have to fight this PR battle on all fronts. Critique is very good, but we have to balance it out with a positive message."
Sure, this is one prong. I maintain the most effective approach is to hit a nerve and that is done either through crisis or gross unfairness. Crisis I spoke of above, it is largely a destiny for us, not a strategy (dying dollar, etc.)
Unfairness (read Kahan and the Logic of Reciprocity) is something that will hit American nerves soon and we can aid that and fight others who try to spin it. When I was canvassing for Ron Paul I wrote this text in a small leaflet:
"Our grandchildren will have to make enormous sacrifices to pay the bills we’re leaving them.
According to David Walker in a 60 Minutes report last July, “the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan but our own fiscal irresponsibility. We are mortgaging the future of our children and grandchildren at record rates.”
Mr. Walker is Comptroller General of the United States, ‘The Nation’s Top Accountant’ says the story’s correspond-
ent, Steve Kroft, adding “hardly anyone disagrees with his numbers, projections and analysis.”
And still, the Democrats are pushing for more spending on entitlements…
* Universal health care to cost Billions
* ‘Dems push $30 billion SCHIP expansion’
And Republicans, for more spending to keep us Policeman to the World.
Of all the candidates for President, there is only one brave enough to talk about this serious crisis, and how we must act now to avoid it.
Only Ron Paul has led the fight against both the welfare and the warfare bureaucracies as he’s been elected 10 times to the US Congress. As President, he would bring our troops home, not only from Iraq, but from Japan, Korea and elsewhere, saving hundreds of billions of dollars while making us safer at home.
A champion of individual liberty, rights & privacy, Ron Paul would bring government down to size, closer to what is mandated by the Constitution. That includes getting The Fed out of the business of monetary management, which created the stock market & real estate bubbles that truly hurt so many families.
We need the man with unmatched consistency of principles, who has never taken a junket on the people’s dime and never voted for an unbalanced budget or a tax increase. The leader with the courage and wisdom to stand against nation-building after 9-11, as well as before. A former flight surgeon, a private physician who delivered 4,000 babies, a current husband of 50 years and grandfather of 18.
Our children deserve the most peace, the most prosperity and the most freedom they can have. They don’t deserve our debt and our wars."
***It looks better with the graphics. It was written for big-hearted, business hating boomers, seniors and women who would never consider voting for anyone besides a Democrat (we mass-produce them here:)
Simply: Unfairness hits a nerve. Big govt is more unfair than Mr. Big Bucks or Big Business. I am hoping these are the types of things BTM will try to shout from the mountaintops.
Yes, we should celebrate wealth, honestly earned. There is a huge difference between those that amass great wealth honestly - as Bill Gates and Sam Walton did - and those that amass it by exploiting government looting, as Halliburton did. Socialists levied every accusation in the world at Microsoft, but in the end they dominated the industry because EVERYONE voluntarily chose their product. The anti-trust suit was a gross injustice, and I was saddened to hear that Microsoft began contributing to politics afterwards, when they never had before.
Tom Mullen
www.tommullen.net
www.myspace.com/skepticsongs
"Does free market capitalism raise the standard of living for the poorest?"
Of course and as you said the stats are easy to find to bear that out.
"..does it result in greater inequality?"
I suggest that to determine 'good' or 'bad' or 'regrettable' is a more subjective and less desirable task than to compare today's poor in America with the poor of 1950 (see Robert Rector). Comparing my wealth with Bill Gates' is like comparing my fastball to Josh Beckett's. Do I have reasonable access to baseballs and gloves, and the ability to extract joy (pursue happiness) from playing baseball? Of course. Equal opportunity is the key principle of the Constitution, not more equal results.
"What do we think of efforts by some "progressives" to stir up resentment against the very rich? Is it a good idea to let them set the tone of the discussion about wealth?"
I like your final question because it does something not often done here and elsewhere, it tries to move the ball forward for the liberty movement (sorry for another sports analogy). Here's my style in conversing with my progressive friends:
You want to "fight the power?" Well maybe libertarians are more serious about it than you. What power does McDonald's have over you? What power does the super-rich Walton family (Walmart) have over you. Then why do you rail against these people and companies for the products they sell or the billions they own? When you try to control them with policies and laws, they'll just lobby their way out the back door. Leave them alone (laissez faire). Concentrate on the government, which has infinitely more power over you than private enterprise... etc., etc.
Your last paragraph here is great. I always try to get them to explain how they derive the right to redistribute wealth. I say "where do you get the right?" and they say "do you think it's fair that some people have health care and some do not," and I say "but where do you get the right to take from one person to provide for another?" and they say "would you let them go without it...."
You can see my way is very time consuming and doesn't get very consistent results. LOL!
Has your approach worked for you?
Tom Mullen
www.tommullen.net
www.myspace.com/skepticsongs
It's a Johnny Appleseed thing, at least in Massachusetts and RI, where the left is more socialist than liberal, anti-capitalist on a remarkable scale. I threw a few seeds by calling into a Boston talk radio show a couple of weeks ago as the lone voice in defense of economics (gas prices) and was hammered.
The years have led me to the conclusion that only crisis breeds true philosophical change unless you are an intellectually hungry sort like BTM folks et al. And all of these seeds we plant, me on fight the power, you on monetary policy and Claire on free market prosperity, they will bear fruit. I've been at it long enough to witness minds changing. A lot more road to hoe of course.
http://en.wikipedia.org/wiki/List_of_countries_by_income_equality
Here is a list of inequality statistics for different countries. Interestingly, former Soviet-bloc countries are among the most unequal, along with other dictatorships, which lends support to Tom's argument that greater economic and political freedom lowers economic inequality. In support of my argument, economic inequality in many socialist European countries is much lower, but I admit that this might be due to factors other than government interference in the economy. So the upshot is, maybe I was wrong to assume that a freer economy leads to a wider gap between the rich and everyone else. At the very least it's inconclusive...
Let's leave it at this. It is possible, in a free market economy, for certain people to become extremely rich. This is much more difficult in a managed economy such as they have in Germany or Canada (and admittedly, much easier in a corrupt dictatorship.) What do we think of efforts by some "progressives" to stir up resentment against the very rich? Is it a good idea to let them set the tone of the discussion about wealth? It seems to me that this is an issue we should address head on, because it has been brought up already by those on the Left, in an effort to try to steer us toward the kind of socialist systems they have in Europe, where tax margins are much higher and you are penalized for accumulating wealth. Can we answer them by saying there is nothing wrong with, and many good things about, certain people having a lot of money, as long as they came by it honestly?
Claire, I believe your reasoning is sound, but you are still in the grip of conditioning that makes your reasoning proceed from false assumptions. One is that the German or Canadian economies are "more managed" than ours. 50 years ago, yes. At this point, I would say no. We have piled the regulations up so high that I actually believe that many of these "socialist" countries are freer than we are. I have first hand experience in that I have run a company for the past three years that imports from Germany and China. I deal with them on a daily basis, and I can tell you that my experience is that they are much freer to do business than we are at this point, which is why they are catching up to us quickly, in economic terms.
This is not to say that their system is good - by no means is that so. Our rhetoric is still better, but in practice we have become more socialist than the socialists. Socialized medicine is the last step we have to take and then we will be worse than both Canada and Germany (and bankrupt as well).
In answering your question, the real answer is this: While laissez faire does indeed get the best results for everyone willing to earn what they have, whether it be great wealth or modest prosperity, results are not the ultimate measuring stick. Morality is. Don't forget that morality - despite everything you have ever been taught, every slogan you have ever heard - IS ON THE SIDE OF LAISSEZ FAIRE. The use of government force for ANYTHING - be it redistribution of wealth, or control over the economy, which amounts to using coercion to prevent exchanges by mutual voluntary consent, is not only immoral, but actually qualifies as an act of war according to the definitions of any of the philosophers that our tradition of liberty is based upon.
When you say, "earned their wealth honestly," what you mean is that they earned it by trading THEIR work voluntarily with others who VOLUNTARILY paid them for it. THis is the only honest, moral way for people to deal with each other. The only alternative is the use of force. Socialism is nothing more than those in power using force to take away the labor of its citizens without their consent and use it how they may - to feed the poor, educate the children, care for the sick - always with a healthy administrative fee for themselves. Having risen to the richest, most powerful country in history BECAUSE OF its laissez faire system, America fell prey to age old bad ideas - we forgot what made us what we were, which is freedom. There is no such thing as freedom without economic freedom - without laissez faire. The minute we began undermining it we began to decline. The momentum we had carried us through from 1913 until the 1960's, but we had lost the secret that made us great.
Tom Mullen
www.tommullen.net
www.myspace.com/skepticsongs
I forgot about Angela Merkel and her economic reform. Or is this yet another "matrix" assumption? China is freer economically than politically, at least according to the last edition of Capitalism and Freedom, so it doesn't surprise me that it is easy to do business there. I know the Disney studio in Paris had to shut down because of labor laws; they weren't allowed to lay anyone off between movies. A lot of very talented animators had to come here. I know a few of them personally... Of course France now has a right wing president too. This was a few years ago.
True, Canada is not messing too much with the currency, and is paying off (has paid off?) the national debt, but the labor and tax laws there are way more restrictive than they are here (I get this from my cousin who is a small business owner in Montreal. He also does business in China), and they have socialized medicine (which is falling apart, by the way-- so maybe they will end up ditching that). True, I don't know much about economics, but culturally Canada is way to the left of us. The CBC (Canada's government funded broadcasting company) makes NPR sound right wing (and yes, I do associate the traditional right with greater economic freedom-- is that "matrix" too?). In Canada it is considered to be the government's responsibility to promote multiculturalim. A lot of tax dollars are spent on this. Recently they established an official commission to censor speech that might be considered offensive against minorities. Talk about coercive. Maybe this has little impact on the economy, but it's anti-freedom all the same.
Are you saying that even in the 60s 70s and 80s the US was more socialistic than Canada and Germany? What about France? Come on.
You are right. I am not ready to abandon the assumption that America has a relatively free economy, compared to the rest of the world, or at least that it has until VERY recently (not 50 years ago). Convince me, Tom Mullen.
Your first assumption is correct - laissez faire capitalism does raise the standard of living for the poor. The second is false - laissez faire capitalism does not widen the gap between rich and poor.
Your methodology would be sound if there were any economies in existence that were close to "laissez faire." There are not, including the United States. The best comparison would be to compare the United States 1865-1910 to the United States of today. That was probably the most laissez faire economy that ever existed, and it was a period where the standard of living of the poor improved more than in thousands of years of previous history.
While some may say that the poor are better off now than then, it is important to look at where they were 100 years before the industrial revolution. This historical perspective is typically ignored by opponents of laissez faire. Contrary to popular belief, the industrial revolution ELIMINATED child labor, it didn't start it. Child labor had existed for thousands of years. The industrial revolution eliminated the need for it in less than 50.
Regarding the gap between rich and poor, the number one cause of this growing wider is monetary inflation, resulting in a devaluing of the currency that makes the poorest and middle class even poorer, while actually making the rich even richer. Artificial manipulation of the money supply and the value of money is as ANTI-LAISSEZ FAIRE as it gets, and we have had it only since creation of the federal reserve in 1913. Before that, the value of the dollar and resulting prices had remained relatively stable since 1635!
In conclusion, laissez faire capitalism results in an improvement in standard of living for all segments of society, including the poor, and also the largest middle class and smallest gap between rich and poor. For a great treatment of this subject, read Andrew Bernstein's The Capitalist Manifesto.
Tom Mullen
www.tommullen.net
www.myspace.com/skepticsongs
Hi Tom.
I'll check out Bernstein's Manifesto. Let me ask you though, I understand how laissez faire capitalism results in "an improvement in standard of living for all segments of society, including the poor, and also the largest middle class", I mean I understand the process by which this happens. Everyone is free to use their money as they wish and the rewards for starting up businesses are potentially very big, this results in more economic activity and growth. For those of us who are not entrepreneurial, there plenty of opportunities to work for other people, and plenty of money to go around. That all makes sense to me.
Please explain how free market capitalism also narrows the gap between rich and poor. Is it because unfettered competition prevents anyone from becoming too successful? What if you have a great idea, and a patent on that idea? Or doesn't laissez faire capitalism allow for ownership of intellectual property, and if not, what would motivate anyone to place any substantial investment in a new idea? Are you saying that in a in a system where the government has zero power over the economy there would be no one as rich as, say, Bill Gates? I find that hard to believe...
And isn't it true that although inflation exists everywhere, there is less of an income gap in socialist countries than in capitalist ones? I'm not absolutely sure about this-- will look up studies.
Forgive my presumption, but in the absence of any explanation (and again, I realize that you are referring to a text which I should maybe have read-- I have read Friedman's Capitalism and Freedom though), this sounds like wishful thinking to me-- and it brings me back to the question, should we wish for this to be true? Why are people uncomfortable with a big gap between rich and poor, as long the society as a whole is well off (few poor people, a large middle class)?
Claire
One more thing.
The income gap is wider depending upon how socialist the country is. The more socialist, the more wealth is concentrated in the hands of a wealthy few (the social planners) that decide how all the rest of it is going to be distributed. Moreover, the planners consistently fail to achieve the results they intend to, as central planning never works, and so even to the extent that they are trying to improve the lives of "everyone else," they fail and those people get poorer and poorer. The great experiment was conducted, and russia pretty much proved the theory. Unfortunately, the U.S. is going right down the same path, albeit with a "free market cover" on its socialist book. Last night, Barack Obama said, "Education is the God given right of every American" and tens of thousands cheered. How can the fruit of someone's labor be anyone else's right? That means that I should be able to demand that a teacher provide me an education for free. We do it more indirectly, by forcing someone else to pay the teacher, but it's still extortion either way.
Tom Mullen
www.tommullen.net
www.myspace.com/skepticsongs
If you have a library to go to. It is schooling which costs money.
“There is more benefit from speaking out imperfectly than remaining perfectly quiet.”
~ Jahfre Fire Eater http://alphavilledecoder.org/
Free market capitalism narrows the gap between rich and poor for the reasons you stated and more. There will always be Thomas Edisons or Bill Gates that amass great fortunes. However, in a truly free market, it is the exception rather than the rule that one man or company is going to dominate a sector permanently, even with patent protection. Only when government grants coercive monopolies is this possible. Moreover, with no crushing regulation to comply with and no drag of entitlement benefits to pay for, it is relatively easy for smaller competitors to enter the market the minute even a dominant company begins to operate less efficiently (paying too much in bonuses or executive salaries, ceasing to innovate in production efficiencies or R & D, etc.).
The biggest reason, I think, though, is the absence of monetary inflation. When you have a sound currency, you don't get the silent transfer of wealth from the very many to the very few like you do in our system. It all goes to together. Without $1.5 trillion in welfare programs, our government wouldn't run $400 billion deficits, and wouldn't finance it with monetary inflation, etc. Both Bernstein and Ron Paul do a pretty good job at explaining this effect: The central bank expands the money supply, the new money goes to the wealthiest investors first, while it is still worth more, then they spend it into the economy, creating their own equity while diluting the value of that money. By the time it gets to the working class, prices have risen because of the monetary expansion, but the worker's wages are still the same, and only go up months or years later. Combine that with the fact that the governments numbers on inflaton are totally bogus (understated), and you see how every year, the working class gets just a little poorer, even if their wages go up a little.
Monetary inflation goes hand in hand with socialism - you can't have socialism without it, because you would have to tax the productive segment of society way more than they will agree to. Instead, you inflate the currency and silently tax them without them knowing it. Laissez faire allows for no monetary inflation, because the money supply is determined by a free market, which more or less corrects the supply according to the real needs of the market.
The proof of this is in prices in America. From 1635 to 1913, they were virtually unchanged, as was the value of the dollar. Since 1913, prices have risen almost 1000%, and the dollar is worth 4 cents compared to its 1913 counterpart. The only reason people aren't storming the capital building over this is that they aren't aware of it, have been conditioned to accept inflation even though it defies logic (as technology makes production more efficient, prices come down unless the money is debased), and have been conditioned that life has to be hard, at least for them.
This is why I'm here!
Tom Mullen
www.tommullen.net
www.myspace.com/skepticsongs