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Gary Galles

Articles by Gary Galles

Bipartisanship Is Not a Substitute for Voluntary Exchange

5 days ago

Besides using bipartisan comprehensive political reform as a cover for evasion and extortion, the many political abuses of posturing, window dressing, and maneuvering enabled do not exhaust the problems involved. Those problems are, instead, far more comprehensive, especially when it comes to the amount of usable information that is accessible, including accurate information about the true costs of government programs.
As Ludwig von Mises, Friedrich von Hayek, and many others have clearly laid out, centralizing decisions in the hands of politicians and bureaucrats requires that many valuable details of time, place, and circumstance, which can be known only to those directly involved, must be discarded from the decision-making process.
Substituting political

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Don’t Take Liberties with Liberty

9 days ago

Have you ever thought about the relationship between the words liberty and freedom? Frequently, the words are used interchangeably, but I have always preferred liberty.
Perhaps my preference goes back to Thomas Jefferson’s reference to “life, liberty, and the pursuit of happiness” in the Declaration of Independence. Perhaps it traces to Patrick Henry’s “Give me liberty or give me death.” Perhaps it is because “with liberty and justice for all” is “the most important phrase in the Pledge of Allegiance,” according to Harvard political theorist Danielle Allen. In a more analytical sense, it could come from John Stuart Mill’s essay “On Liberty” and its contrast between freedom to act and the absence of coercion, or Isaiah Berlin’s distinction between positive liberty

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Why Biden’s Spending Is Unsustainable

17 days ago

It’s popular for politicians to claim they will never cut Social Security. But doing nothing now about the program means imposing an even larger hit on seniors in the future. 

Original Article: "Why Biden’s Spending Is Unsustainable"
This Audio Mises Wire is generously sponsored by Christopher Condon. 

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Fiscal Illusion and Entitlements

24 days ago

As the State of the Union address and subsequent pronouncements have made clear, American politics is in the firm grip of fiscal illusion.
One example is President Biden’s bragging that “In the last two years, my administration has cut the deficit by more than $1.7 trillion—the largest deficit reduction in American history,” which implied that we should only look at a short run effect which had little, if anything, to do with the policies he adopted, in evaluating his fiscal policy.
However, he did not mention that the CBO estimates that the average yearly federal deficit over the next decade will be $1.6 trillion (under current policies, not including any expansions that have not yet been enacted), which implies his current policies continue to massively rip off

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Why You Should Fear “Bipartisan” Agreements in Congress

March 1, 2023

When we see real bipartisan action in Congress, it usually is for the worst.

Original Article: "Why You Should Fear "Bipartisan" Agreements in Congress"
This Audio Mises Wire is generously sponsored by Christopher Condon. 

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Joe Biden Calls for the FTC to Resurrect the Robinson Patman Act. It’s a Very Bad Idea

February 17, 2023

As former Federal Trade Commission (FTC) chairman Timothy J. Muris has recently noted, “President Biden rejects the economics-driven antitrust policies of the past 40 years.” In contrast, President Joe Biden “promised to return to earlier antitrust traditions.” Unfortunately, “those traditions were abandoned for good reason: they harmed consumers.”
An important illustration Muris uses is the 1936 Robinson-Patman Act (RPA), which used to be a lynchpin of antitrust enforcement. After “withering” and “devastating” academic and legal criticisms that “excoriated” FTC enforcement, the agency began moving away from the act half a century ago. However, despite the fact that, in the words of Richard Posner, “The Robinson-Patman Act . . . is almost uniformly condemned by

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Subsidizing Higher Education Is Not Creating Widespread External Benefits

February 6, 2023

President Biden’s student debt relief proposal created a storm of controversy. That is not surprising, since it was a transparent (and apparently successful) attempt to buy the votes of an important Democratic constituency, even though it created a target-rich environment for critics.
It is sharply pro-rich at the expense of those far poorer, from a party pretending to stand for the opposite. It is very costly to everyone else (the National Taxpayers Union put the average burden at just over $2500 per taxpayer). The income cutoffs, designed to make it appear it is less pro-rich than it is, are misleading because most affected are in the early parts of their careers, when their incomes are lower, even though their average lifetime incomes (wealth, in present value

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Can We Have Scarcity but Reject the “Scarcity Mindset?” in a Word, No

October 25, 2022

Since I am an economist and my school year is not too far along, my classroom discussion of how all of economics traces back to the fact of scarcity (the combination of limited resources, which implies a limited ability to produce, along with wants that always exceed the amount that can be produced) facing everyone was quite recent. That was why Brad Polumbo’s recent article, “What AOC and Nina Turner Get Wrong about the ‘Scarcity Mindset,’” so quickly drew my attention.
It is the fact that each of us on earth faces scarcity that drives economics as a field (and why I tell my students it will only help them on earth, and not in heaven, since we are told there will be no scarcity there). Scarcity implies that we must choose among the goods and services which we

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A Cliché of Socialism: Under Public Ownership, We the People Own it!

October 8, 2022

Foundation for Economic Education founder and cornerstone Leonard Read always had an ear out for widely accepted but misleading clichés that served to aggrandize government power and limit liberty. In his 1965 “A Cliché of Socialism: Under Public Ownership, We the People Own It!” He focused his attention on the large gap between public ownership of assets and the idea that “we the people” own them.
Read pointed out that not only is public ownership misunderstood, but that goods privately owned by another party are, in fact much more available to an individual’s control than goods supposedly owned in common by we-the-people:
Public ownership and government control are synonymous terms—two ways of expressing an identical concept.
The popular notion is that a

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The Government Runs the Ultimate Racket

July 29, 2022

“Seniors hurt in Ponzi scam” headlined the story of elderly Southern Californians bilked in a pyramid scheme. While sad, the story reminded me of Social Security, since it is also a Ponzi scheme involving those older, with high payoffs to early recipients coming from pockets of later participants. With Social Security, however, it benefits those older at others’ expense.
Pyramid scams collapse when they run out of enough new “investors” to pay earlier promises. Some use this fact to deny that Social Security is really a massive redistribution scheme, since it has lasted over 70 years. That assertion misses two substantial differences between Social Security and other Ponzi schemes however: Social Security involves far longer generations, with people collecting on

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Why “Macro” Thinking in Economics Is Such a Problem

December 22, 2021

As someone who teaches public finance (better termed the economics of government), I can’t count how many times I have heard politicians promise “comprehensive” reforms to some major problem. But what such efforts actually produce is always different from what is promised, because such achievements are beyond government’s competence. The more comprehensive the “reforms” (say, measured by the number of pages in a bill), the more adverse incentives undermining social cooperation are created and the less freedom survives. Of course, when the political goal is the “unity” of 50 percent + 1 in reallocating the minority’s rights and resources, that reality makes a great deal of sense.
Leonard Read confronted this problem in his “The Macro Malady,” chapter 8 in his 1967

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Leaving behind the Labor Theory of Value

November 20, 2021

The labor theory of value has long undermined people’s understanding of the miracles created by markets and rationalized various incarnations of socialism which mangle those miracles. Leonard Read understood why undoing that misunderstanding by all who hold to it, as well as those who just use it as an excuse for what they want government to impose on unwilling citizens, is of immense value to each of us. And in his December 1956 Freeman article, “Unearned Riches,” he offered a very insightful look at the issues. That look is worth taking again.
Understanding the fallacy of the labor theory of value is a first step toward respect for privately owned and controlled property, without which there can be neither voluntary exchange nor freedom.
Many people sincerely

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Why It’s Important to Prepare Students for “Trick Questions”

November 20, 2021

I have taught economics long enough that I have made use of a variety of “trick” questions in introductory courses. I have found them, used well, to be pedagogically helpful. But not everyone agrees.
Whether a question is considered a trick depends on one’s viewpoint. From a professor’s point of view, such questions are often a way of revealing whether students have grasped how to put a principle into action or correctly make a critical distinction in a real-world-type setting. Given that economics training is not useful if it cannot be used in that context, that is an important issue, worthy of testing. From many students’ points of view, however, any time the answer to that question is no, it was, almost by their definition, a tricky question, in part because

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How to Cheat with Cost-Benefit Analysis: Double Count the Benefits

September 10, 2021

[unable to retrieve full-text content]Because my economics courses focus on public policy, I often deal with benefit-cost analyses (BCA) in them. While little discussed, the central idea is simply to identify and include all the relevant benefits and costs of a decision, do our best to estimate their values, then choose the option that provides the greatest net benefits. Hardly a radical idea. It can be useful in disciplining our thinking to be more consistent. Benjamin Franklin employed a version of it.

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Governments Are Failing at Their Most Basic Duties—While Promising Free Stuff

June 20, 2021

[unable to retrieve full-text content]Three city blocks were systematically burned to the ground as hundreds of the local police stood by and viewed the violence. They were obeying orders not to harm the arsonists. The National Guard was called, adding more armed watchers. A passive gendarmerie consorting with open rebellion has rarely been seen in American history, until recently.

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There’s Nothing Wrong with Short Selling

February 4, 2021

The recent GameStop short-squeeze drama has riveted financial markets. Given the historic unpopularity of short sellers (e.g., Holman Jenkins has written that “short-selling is…widely unpopular with everyone who has a stake in seeing stock prices go up”), the resulting heightened invective against them is not a surprise.
Unfortunately, an intensification of this rhetoric could lead to unwarranted broader restrictions on short selling, indicated by the politicians already calling for hearings that could be used to do just that. It would hardly be the first such abuse. For instance, when Joe Biden became vice president, he was replaced in the Senate by Edward Kaufman, whose first legislative initiative, after “a lobbying campaign by financial institutions and other

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California Now Wants to Tax People Who Live in Other States, Too

January 7, 2021

California’s government has become infamous for abusing its citizens, from steep taxation to burdensome regulations to arbitrary covid impositions. But less noticed is how it is also trying to abuse other Americans as well.
As reported in a December 28 Los Angeles Times editorial, the California Department of Tax and Fee Administration (CDTFA), which oversees sales and use tax collections, is trying to retroactively impose sales taxes on out-of-state retailers as far back as 2012.
Prior to 2018’s South Dakota v. Wayfair Supreme Court ruling, states had the power to mandate that companies with a physical presence in their borders collect and remit taxes on sales in the state, even if the products involved came from outside the state. But they could not force

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Why the Marketplace Is Not a Zero-Sum Game

December 26, 2020

Twenty-twenty marks the twenty-fifth anniversary of a book that has had an expanding influence on the public conversation about market competition. Robert Frank and Philip Cook’s 1995 The Winner-Take-All Society argued that there are an increasing number of markets in which small differences in performance give rise to enormous differences in rewards. As John Kenneth Galbraith described it in a review of that book, the consequence is that “the one who wins gets it all.”
Since then, I have seen multiple articles that reflected the winner-take-all, “a few win at the expense of others” rhetoric as an accurate description of competitive markets, sometimes even accepting that its core claim was so well-established that it could be used as a scapegoat for an

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Being Pro-union Means Being Antiworker

November 24, 2020

After becoming the apparent president-elect, Joe Biden clearly promised to unify Americans. However, that promise was in sharp contrast to what his campaign promises would actually achieve.
Granting unions their fondest wishes is clearly part of Biden’s labor policy, as illustrated by his statement that “I am a union man. Period” in his 2019 campaign-opening speech and his website’s opposition to the “war on organizing, collective bargaining, unions, and workers” under the current administration. And International Brotherhood of Electrical Workers (IBEW) president Lonnie Stephenson asserted a Biden administration would advance unity because it would be “a win for all working people.”
The problem is that Biden’s support for unions, particularly the Protecting the

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Talk of “Unity” Is Both Hypocritical and Delusional

November 18, 2020

Grand invocations that “I will unify us” are actually shorthand for “We mean to get our way, regardless of others’ well-being and desire.”
Original Article: “Talk of “Unity” Is Both Hypocritical and Delusional“.

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.

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What Germany Must Do for a Speedy Recovery
On June 29, the German parliament reacted as parliaments normally do when there is a problem, namely, by allowing the government to spend more. In order to respond to the economic difficulties due to the corona epidemic and the government restrictions, it passed a typical Keynesian stimulus package in order to boost aggregate demand.

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The Idea that Democracy Is the Same as Liberty Is a Weapon in the Hands of Despots

November 7, 2020

As Americans approach a date with their polling places and “get out the vote” campaigns crescendo, there is plenty of rhetoric that all but deifies democracy.
Unfortunately, while democratically determining who will be entrusted with the reins of government may generally represent the best hope to enable governments to change without bloodshed (exemplified by John Adams just going home when he lost the presidency to Thomas Jefferson), democracy is not the defining characteristic of American greatness. Liberty is. Democracy is important only insofar as it serves and defends liberty. For example, if whatever the current majority decided “democratically” were to be law, our Constitution and Bill of Rights, which put some things beyond majority determination, could

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Our Politicians Would Probably Be Better If We Picked Them by Lot

October 11, 2020

Rather than choose among a group of narcissists desperate to become popular by redistributing the income of others, why not choose officeholders by lot for a single term?

This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: “Our Politicians Would Probably Be Better If We Picked Them by Lot​“.

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Why Fed Bugs Really, Really Hate Gold
Judy Shelton, a Trump nominee to the Fed Board of Governors, may not have coined the excellent term "Fed Bug," but she used it to delicious effect in this 2019 Financial Times interview:
“People call me a goldbug, and I think, well, what does that make them? A Fed bug,” she says.

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The Folly of “Ask What You Can Do for Your Country”

May 26, 2020

Recently, I was reminded of John F. Kennedy’s most famous line, “Ask not what your country can do for you; ask what you can do for your country,” when I heard it among several famous sound bites leading into a radio show segment. It also reminded me that we will hear it more soon, as we are approaching JFK’s May 29 birthday. However, it is worth reconsidering what it means.
Of particular importance is Milton Friedman’s response that “Ask not” was “at odds with the free man’s belief in his own responsibility for his own destiny….[It] implies the government is the master…the citizen, the servant.”
You can see the reason by noting that “Ask not” is completely consistent with what a tyrannical government—the kind that has beset people throughout most of recorded

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How Words Like “Essential” and “Need” Are Abused by Politicians

May 18, 2020

Over the years, one of the most common trump cards used to justify government treating people differently, rather than equally, has been the word need. And when used to override individuals’ ownership of themselves and what they produce, its usage has created confusion rather than clarity. In public discussion, “need” has increasingly morphed into one of its synonyms—essential, as in “essential jobs.” But it still suffers from many of the same analytical problems.
“Need” has the logical disadvantage of lacking a clear meaning. But that is also its biggest political advantage, because careful thinking is the enemy of inappropriate policy. The same is true for government determination of essential jobs.
“Need” implies agreement on what and how extensive the need is.

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Be Thankful for Those Who “Only Do It for the Money”

May 7, 2020

At least since I first read George Orwell’s Politics and the English Language, I have been a student of the use of weasel words. I have joined what he called the “struggle against the abuse of language,” because “Political language…is designed to make lies sound truthful…and to give an appearance of solidity to pure wind.”
I even found the phrase’s origins interesting. As explained by, “It has long been a widespread belief that weasels suck the yolks from bird’s [sic] eggs, leaving only the empty shell. This belief is the basis of the term ‘weasel words’.” And although that idea can be traced to Shakespeare’s mentions of weasels, the phrase’s first known use was in 1900, near the beginning of the Progressive Era, during which even the word

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Why Democracy Doesn’t Give Us What We Want

February 2, 2020

That Americans are in the throes of a crisis in democracy has become a commonplace refrain of late. I have noticed that almost all such commentary treats political democracy, implicitly or explicitly, as the ideal. Yet in truth it is a seriously flawed ideal. In fact, as F. A. Hayek noted years ago,
all the inherited limitations on government power are breaking down before…unlimited democracy…the problem today.
Perhaps the most blatant evidence against the idea that moving toward more democracy is always an improvement is the frequency with which policies and candidates claiming majority support advance coercive measures that take from some to give to others. That is robbery, which violates universal moral and ethical principles, making it less than an ideal.

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Peaceful Market Exchange—Not Politics—Harnesses the Value of Diversity

January 26, 2020

That there are inherent benefits in diversity is a common article of faith in our democratic/populist times. We hear it in and about universities, businesses, politics, entertainment, etc. Typically, though, we hear about it in terms of forcing more diversity on those whose diversity in a particular dimension doesn’t measure up to someone else’s arbitrary standard.
However, high-volume discussions on the topic often proceed as if diversity was the relevant end desired, while all but ignoring whether that diversity expands our joint possibilities or contracts them by increasing social balkanization. And policies that reinforce divisions between groups by imposing disparate treatment do the latter. The zero- or negative-sum views they represent, and the top-down

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“Low” Tax Rates Often Mask Much Larger Tax Burdens

January 12, 2020

Discussions about the incentive effects of taxes can be misleading. The focus is usually on the tax rates imposed. But one’s incentives are not best measured by tax rates, but by how much value created for others (reflected in consumers’ willingness to pay) is retained by the creator, which I refer to as take-home income.
These two variables — tax rates and take-home income — are reciprocal in the sense that the higher the marginal tax rate, the smaller the take-home income relative to the value created. But the latter is a more precise tool, because it reveals how much incentives change as a result of a tax change.
This is a key to supply-side economics, because the higher the existing marginal tax rates, the greater the improvement in incentives with a decrease

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