by Inflation Is Destroying UsOne of the most damaging shortcomings of modern statistics-based economics is that it all too often removes the individual human person from its analysis. In this setting, “economics” becomes a matter of “macro” aggregates and data factoids like GDP and CPI. This kind of “economics” removes the individual acting person as the central, key variable.Austrian School economics, on the other hand, never loses sight of the importance of the individual in understanding economic analysis. This focus on the individual provides another advantage as well: Austrian School economists are far less likely to forget the fact that society and the economy are not machines to be fine-tuned and tinkered with. Rather, we understand that groups of individuals
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Inflation Is Destroying Us
One of the most damaging shortcomings of modern statistics-based economics is that it all too often removes the individual human person from its analysis. In this setting, “economics” becomes a matter of “macro” aggregates and data factoids like GDP and CPI. This kind of “economics” removes the individual acting person as the central, key variable.
Austrian School economics, on the other hand, never loses sight of the importance of the individual in understanding economic analysis. This focus on the individual provides another advantage as well: Austrian School economists are far less likely to forget the fact that society and the economy are not machines to be fine-tuned and tinkered with. Rather, we understand that groups of individuals are far too diverse and complex to allow for central planning. We delude ourselves if we think we can anticipate, plan, or manage the wants and needs of millions of individuals.
Our focus has never strayed from seeing the flesh and blood of human beings behind every economic statistic, every easy-money scheme, and every new dangerous experiment in public policy.
In our current age of rampant monetary inflation and price inflation, good economics has become more relevant for ordinary people. Inflation, of course, is not some arcane matter of consumer price indices and statistics on the monetary base. Inflation, for many people, is simply ruinous on the personal level. Despite claims to the contrary, incomes are not keeping up with inflation in the real world. The prices of housing, education, and even groceries continue to force down the standard of living for millions of Americans. The CPI has increased by 20 percent since 2020. Cash savings and incomes have fallen significantly in their purchasing power, harming people of ordinary means. A new home is quickly becoming unattainable for first-time buyers.
The effects of this inflationary regime cannot be fully measured by numbers on spreadsheets. There are deeper societal effects as well. In this issue of The Misesian, Academic Vice President Joseph Salerno examines the effects of economics on our very ideas about ourselves as human beings with detailed examples in historical context. He writes: “Money and property are thus essential elements in the socioeconomic process conditioning what an individual human being is and can become. Without economic calculation based on sound money, not only is it impossible for entrepreneurs and businesses to reasonably calculate the outcome of alternative investment decisions, but it also becomes impossible for a person to even know who he is or to reasonably assess the possibilities of what he can become.”
This issue also contains a special Q and A with economist Nicolás Cachanosky, who is a native of Argentina, explaining how galloping inflation has demoralized and destroyed the Argentine middle class, leading to political victories for Javier Milei. Unfortunately, he notes, Argentina’s inflation-fueled problems go much deeper than what can be fixed in a few years. Argentina will need to embrace longterm reform to escape the inflationary trap.
Readers will also find in these pages two excellent book reviews from Senior Fellow David Gordon. In the first review, he covers topics critical to understanding our current economic malaise. In his second review, Dr. Gordon examines how even free-market economists can go wrong when they fail to understand the true nature of money. Good theoretical foundations are always essential to good economics and good policy.
As always, you will find in this issue news on past and upcoming Mises Institute events—including a brief on February’s Tampa conference on inflation and a rundown on this year’s Austrian Economics Research Conference—students, faculty, and more.
There is much more to come in 2024.
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