When Rationality Breaks Down, So Does the Economy

Via WRSA

Rational Choice Theory tells us that people want good things, and they want them at the lowest price possible. Therefore, economic man is a rational actor. He measures costs against benefits. Of course, men are also irrational actors and capable of willfully misunderstanding their economic interests. And today, like no other time, irrationality is becoming a power in and of itself, dictating to the economy, subverting the very grounds of rational choice by taking choice away from the individual and giving it to government bureaucrats.

Many years ago the Austrian economist, Ludwig von Mises, pointed out that nations were more or less prosperous depending on the degree to which they “put obstacles in the way of the spirit of free enterprise and private initiative.” We look around today, in both Europe and America, and find that the great economic crisis of our time has not been met with sane solutions drawn from careful study, but by an anti-capitalist prejudice that holds grimly onto ideas and methods that have long since been discredited.

In 1956 Mises wrote, “The people of the United States are more prosperous than the inhabitants of all other countries because their government embarked later than the governments in other parts of the world upon the policy of obstructing business. Nonetheless many people, and especially intellectuals, passionately loathe capitalism.” And now we are living more than half a century later, bearing witness to the triumph of that loathing. America is no longer the prosperous country it once was.

Businesses are being obstructed in ways that would have been unimaginable in the 1950s. (See the Free Market America video on The Big Green’s True Colors, or peruse the EPA’s blog on Cap and Trade, or read regultions.gov from the perspective of a farmer, rancher or fisherman.)
Whatever happened at the end of the Cold War, it was not the defeat of socialism; for a new anti-capitalist formation predicated on environmentalism was already taking shape.

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