Over the past year, countless mainstream economists have shown a tendency to become upset when anyone suggests the economy isn’t great for everyone. The drive to convince everyone that things are swell began in 2022 and has continued through the whole summer. For example, last month Tyler Cowen penned an article in Bloomberg titled “The Economy Is Great. Stop Worrying about It.” Similarly, in July a columnist for the Harvard Gazette insisted “the economy keeps getting better.” In mid- September, Paul Krugman told Christiane Amanpour on CNN that the economy is “surreally good” and that those who disagree suffer from a “profound and peculiar disconnect.”
Even by mainstream standards, these proclamations are plainly bad economics. These economists often fixate on a single nationwide data point: total employment. Meanwhile, they ignore the fact real wages went down for two years during 2021 and 2022. These economists act as if rents and home prices were no big deal for first-time home buyers and people on fixed incomes. The economists pretend a rapidly rising cost of living—coupled with rising consumer debt—is not a reality for millions of Americans. Instead, the economists look at a few averages and tell us things couldn’t be better.
An even bigger mistake they make is ignoring the lost wealth and opportunities that we have endured thanks to relentless government intervention. This is one area where the Austrian school is especially insightful. The official government stats—which don’t even show us a very impressive economy—only show us the “seen.” But as Austrians, we want to look deeper into the unseen realities of the economy.
Clearly, the question, “Are we getting poorer?” is an important one. But bad economics will give us only bad answers. In this issue of The Austrian, to better answer this question, we take a closer look at the real costs of monetary inflation and government regulations. We are reminded that the unseen costs are numerous, unpredictable, and unfortunate.
First, Mises Institute Fellow Karl-Friedrich Israel looks at how monetary intervention by central banks makes it harder for ordinary people to get ahead. Central banks increase economic inequality by favoring large asset owners over ordinary workers. Inequality, of course, is a natural feature of any economy. But when inequality is driven by central bank policy it’s the result of forced redistribution from one group to another. Monetary policy is never neutral. It benefits some while impoverishing others. In 2023, it is ordinary people who are impoverished most. They face relentlessly rising costs and increasingly struggle to save and invest. These issues have only intensified with increasing central bank activity since the financial crisis of 2008. Yet this is all largely unseen.
Israel’s article is followed by an interview with Senior Fellow Per Bylund, author of The Seen, the Unseen, and the Unrealized. Bylund reminds us that the true costs of government regulation are often measured in the many jobs that aren’t created, the many entrepreneurs who aren’t allowed to compete, and the products that aren’t brought to market. From minimum wages to antitrust laws, regulations tend to harm the most vulnerable groups. Like monetary inflation, these interventions increase artificial inequality and rob workers of income and wealth.
In these pages you’ll also find two new book reviews from David Gordon. One examines the latest antimarket and antifreedom book from conservative activist Sohrab Ahmari. The other review features an important new book on economic development from Senior Fellow Shawn Ritenour.
You’ll also find lots of news about the Mises Institute, our students, our resident research fellows, our events, and more. For more than forty years, the Mises Institute has been a much-needed workshop and oasis for students, teachers, and scholars seeking to do new work promoting sound economics, accurate history, peace, and freedom. We continue to push forward with new books, articles, lectures, and programs every year. Keep reading to find out more.
