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“That’s quite a markup,” remarked my father as he paid for my six-year-old son’s treat after a soccer game. “Three dollars for a cup of ice.” It’s true; the price tag did seem steep at first. But as we analyzed the situation more carefully — my father is also a fan of free markets — we realized that there was no reason to be outraged at the

The big financial news this week was the Federal Reserve’s first press conference. The financial press and bloggers have already parsed Bernanke’s every last syllable, but I’ll make some observations that I haven’t seen elsewhere. Why Do We Care What “The Bernank” Has to Say? At one level, it’s absurd that the entire world is hanging on the words

[Editor’s note: MMT is back in the news, championed by Congresswoman Alexandria Ocasio-Cortez and former Bernie Sanders advisor Stephanie Kelton. Economists like Brad DeLong and Paul Krugman are giving MMT at least faint praise, and even  National Review  has favorable things to say.   Ironically, MMT is neither modern nor truly “monetary;”

Although it has been temporarily drowned out by the discussion of Osama bin Laden, the debate over the federal-government debt ceiling continues. On Monday, Treasury Secretary Geithner sent a letter to Congress explaining that the statutory debt limit would be reached around May 16, and therefore Geithner would implement “extraordinary measures”

One of the more interesting recent stories of government absurdity is New York City mayor Michael Bloomberg’s decree that starting in 2013, the Nissan NV200 minivan will become the official taxi of the city. Over the next five years, all other models will be phased out. In addition to illustrating the corrupting effects of political power, the

A major piece of financial news last week was billionaire Raj Rajaratnam’s conviction on 14 counts of securities fraud and conspiracy. Rajaratnam, founder of the hedge fund Galleon Group, was worth an estimated $1.8 billion in 2009. His conviction has pleased those who want the feds to crack down on “insider trading” and show the fat cats on Wall

One of the most important developments in the history of economic thought was the so-called Marginal Revolution of the early 1870s, in which the older cost (and more specifically, labor) theory of value was overturned by subjective value theory. This was an unambiguous advance in the science of economics, analogous to the superiority of

Politicians often try to empathize with struggling Americans by promising to cut government spending, “just like regular households in tough times.” This simile evokes different reactions depending on one’s economic views. Keynesians think it’s reckless, proponents of Modern Monetary Theory (MMT) think it’s absurd, and Rothbardians think it’s

A shocking news report recently documented how Tennessee police were stopping drivers on the interstate and confiscating large amounts of cash, even if the drivers were accused of no crime. The report was particularly shocking because the special unit was operating far outside of its jurisdiction in exchange for giving a cut of the seized cash to

In a previous article I explained some of the major problems with a cost theory of value. In the current essay I will lay out the basics of the modern subjectivist approach to price theory and show how it is a clear improvement over the cost theory. The Austrian Approach Starts with Individual Preferences Although the “marginalist revolution” of