The Economic Philosopher's Outcast:

Mises
BY STEVE MARIOTTI
SS Gestapo Chief Henrich Himmler's agents sped through the streets of Vienna on an early
morning, March 11, 1938, to capture and eliminate Nazi Germany's enemies. One of his prime
targets lived in a middle-class Jewish neighborhood at 28 Weihoffen St. Apartment 7. Ludwig
Von Mises, a 58-year-old political philosopher, was Jewish and defenseless. Hitler deemed this
man an enemy of the state and one of the top targets to be seized during the Nazi takeover of
Austria. Fleeing from the city the day before, Professor Mises narrowly escaped to Switzerland.
Despite attempts on his life, Mises born in 1881, spent the 92 years of his life fighting
totalitarianism that fed the actions of the Nazis, Marxist Socialists and other fringe groups. He
believed that any kind of authoritarian government infringed on people's rights to worship, free
speech, the right to travel and own businesses, all of which were banned by the National
Socialist and Bolsheviks.
With cities like Detroit ($18.5 billion in debt), Philadelphia ($8 billion in debt), and Sacramento
($1.9 billion in debt) why are Mises disciple's voices silenced at major economic councils in
Washington and throughout the country? Robert Reich, former Clinton Administration
Secretary of Labor, singles out the huge economic and political discrepancies between the Tea
Party and the Occupier movements sparked by the Wall St. government bailouts. In a recent
series of articles in the Huffington Post, Reich cites the high correlation "between inequality and
political divisiveness." He correctly points out that America was never so divided regarding
income, wealth and power since the 1920s. What Reich fails to address are the conditions that
fed the growth of extremist movements, such as the Nazis and Communists, which later
imploded as a result of the economic policies of debt and printing money.
Mises, the modern day creator of the Classical Liberal movement (today also called
libertarianism) destroyed the intellectual arguments of socialism by proving that it was
impossible to allocate scarce resources effectively without private property and free-market
prices. He showed that the more the state limited economic incentives to individuals, the greater
the harm to low-income people and the general population. Centralized planning, something
that was characteristic of all three types of socialism: the Nazis, the Fascists and the
Communists, led to the ruin of an economy, and resulted in more and more tyranny and the rise
of the totalitarian state. What economists failed to understand was that massive government
spending and a authoritative centralized government would bring economic ruin to Germany,
Russia, and many other countries.
Sooner or later government debt has to be repaid out of tax receipts. Our current revenue base is
not strong enough to sustain a viable repayment program to service the debt. Today we create
money -- billions a month -- to meet the debt repayments. As new money floods the market its
value declines. The country experiences inflation destroying the savings, and pensions of its
citizens. Similar conditions led to the downfall of the Weimar Republic. The rampant inflation of
the 1920s in Germany was a contributing factor to the rise of Hitler, Himmler and the
centralized planning of the ultimate socialist organization the National Socialist Workers Party
(Nazis).
The recent bankruptcy of the City of Detroit is a harbinger of serious problems for the $2.9
trillion municipal bond market. Mises witnessed firsthand rampant government spending,
overwhelming debt, and inflation in both Germany and Austria. The results of similar economic
policies are threatening major urban centers around our country.
Author of dozens of seminal books and hundreds of articles, Mises works were studied by the
Nazis in the 1930s as part of their assault on pro-democracy individuals, particularly those who
were Jewish. Mises' unparalleled contributions to economic theory, which upheld a free market
over one controlled by a coercive government, later fostered a world-wide movement. His books
were significant for their discussions of money, credit, Socialism, central planning, and human
action.
Mises' most remarkable argument for the free market came in his 1922 piece, "Socialism: an
Economic and Sociological Analysis." In a Socialist state, there were no prices, essential to
allocating resources. Prices signaled information simultaneously to both entrepreneurs and
consumers. The centralized decision making over both production and consumption is
impossible because of the complexity of an economy composed of hundreds millions of people
and trillions of decisions every second. This insight gave Mises a greater appreciation of the
value of a market economy, one that allows for the change of prices based on changes in supply
and demand. The anticipation of future consumer demand impacts the output of entrepreneurs
intent on meeting that demand in the future and thereby make a profit. This defense of limited
government and the rights of all citizens made Professor Mises a threat to the ultimate central
planners and explains why the Gestapo had sped to his home to arrest him.
Mises, leader of the Austrian School of Economics, mentored the great Nobel Prize winner
Friederich Hayek, who I studied with in 1979 at the Institute for Humane Studies. They
influenced noted economists such as Israel Kirzner, Robert Higgs, Lawrence White, Peter G.
Klein, Roger Garrison, Edward Stringham, Peter Boettke, and the novelist Ayn Rand who later
made popular classical liberal economic policies.
Mises disciples today see the threat of government intervention in our nation's economy as
seriously undermining economic productivity and self-starting growth. According to Peter Klein,
a disciple of Mises:
People are increasingly disenchanted with mainstream Keynesian views of the economy.
Keynesians were blindsided by the housing bubble and the financial crisis. Their response was
to pump the economy with cheap credit and huge government spending which has only
prolonged the agony. The Austrians led by Mises offer a compelling alternative explanation in
which booms and busts are caused by central-bank manipulation of interest rates in vain
attempts to stimulate or stabilize the economy.
Klein further points out that monetary central planning, combined with misguided housing
regulation led the economy to produce the wrong kinds of goods and services. For Klein
recovery means getting the government out of the way and letting entrepreneurs fix the
mistakes.
According to Paul Wisenthal, the country's leading journalist authority on entrepreneurship
education for young people, America was built on new small business development, led by its
forefathers who were primarly entrepreneurs. He believes the U.S. may continue to diminish
small business incentives as government expands on taxpayer dollars that don't exist.
Anyone wishing to learn more about this fascinating political philosopher should visit Hillsdale
College, which houses the personal library and works of Ludwig Von Mises in Hillsdale,
Michigan or the Mises Institute located in Auburn, Alabama. The world's top professional
philosophers, economists, students and political scientists attend annual conferences to debate
and discuss these ideas; true outcasts in a society haunted by the idea of large coercive
regulation and antiquated tax codes on the world's population.

The author in the archives of the Mises Institute.