Three Disadvantages of Fiat Money

Fiat money or the paper money that the majority of society uses today is convenient, easy to understand, and overall has made the buying and selling of goods and services easier. Like everything fiat money has its issues or disadvantages which are rather overlooked the most. What are three of these disadvantages of fiat money?

The first disadvantage of fiat money is that it can inflate. Because the government is in control of the money supply, and how much money is to be printed, prices of things can go up or fluctuate and reduce the value of the money. This is a common theme unfortunately today, where something ten years ago was cheaper than the same thing would be today. Another disadvantage that comes along with inflation is that fiat money can drop to zero value, and when that happens that money’s value cannot rise again.

The final disadvantage I must note is that because fiat money is controlled by the government, it increases the power of the government over the people. Money is very important and pretty much everyone relies on it one way or another, if the government has control over that money when it comes to printing, that government has a pretty stronghold on the people. The people can only use the money that the government makes themselves. 

Fiat money is the norm in the majority of today’s societies and has been in use for some time. Unfortunately, fiat money has many disadvantages including the truth that it can inflate, has a risk of dropping to zero value, and gives governments the opportunity to have more control over their people. 

The Origin of Money

Money is a very important part of our modern society today and is the medium of exchange that everyone uses to exchange goods and services. Like everything money has its origins, what is the origin of money?

To first note money is a rather nonspecific word that could refer to many things, which is why when I am referring to the word “money,” I mean paper bills that the majority of us use today. With that now in mind the origin of money. People before a form of money used to barter, which is a method where one trades one good or another good from someone else. For example say if I traded some chocolate for some flour with someone, that is barter. Barter though it worked was not exactly convenient, no one exactly knew what good equaled the value of another good, which led to some confusion. 

After a while people began to search for other methods for a medium of exchange that had universal value; they landed on gold. Gold though it had many pros had one main con, which was that it was not exactly practical to carry around. Carrying around pieces of gold is not exactly convenient. This is why eventually, the paper money we have today came into the picture.

In conclusion, money originated from barter, which was not exactly convenient, but eventually evolved into using gold. The usage of gold because it was not practical to carry around bits of gold, eventually changed and evolved yet again into the paper money we have today. This is the origin of money.

What is the Washington Monument Syndrome?

Governments throughout history have done unethical things at one point. Even though the majority of those unethical deeds did seem unethical to the public, that did not justify them. An unethical and questionable thing that the US government did is referred to as the Washington Monument Syndrome. What is the Washington Monument Syndrome?

The Washington Monument Syndrome refers to a period in which the Washington Monument was closed by the United States government, to control budget cuts. In a normal situation if the government was faced with a budget cut, they would shut something down that does not have much use, or fire a few government employees that were not necessary employees. But in this case the government did not want to go ahead with this budget cut so to override it they shut down the very famous and visited Washington Monument. This angered the public to a point that it reversed the budget cut ultimately. Not surprisingly this was exactly the government’s plan, to use the public in their favor, without maybe considering why the budget cut needed to happen in the first place.

The Washington Monument Syndrome refers to how the United States government overrode a budget cut by using the public’s anger in their favor, regardless of if the budget cut was necessary. 

The “Benefit Principle” Has Been Used to Justify Progressive Income Taxation. What is the Benefit Principle? Are There Any Problems With it? 

The benefit principle is the concept that people should be taxed in accordance with the benefits those people receive from the government. Overall this concept sounds relatively sound, but with every concept there is always the question of, does it have any issues? Does the benefit principle have any problems with it?

First of all, because the benefit principle is a concept of people being taxed in accordance with the benefits those people receive from the government, there are some definant issues, including the question: what about people who receive welfare checks, or people who work for the government? In technical terms a person who works for the government receives all of their monetary benefits from the government, which means in the definition of the benefit principle, these people have to be taxed their entire income from the state, this also goes for people who receive welfare checks. This is questionable, who wants to get paid to just give all that money back to the entity that is paying you, a bit contradictory to say the least. Another problem with the concept of the benefit principle is how it does not apply in the market. For example people who benefit greatly from a product pay the same amount as somebody who benefits only a little to none from the same product. 

The “benefit principle,” though the concept in and of itself sounds relatively sound, has a few important contradictory issues. Any concept that contradicts itself, cannot be implemented effectively, and thus if implemented results in confusion.

What Have Been Some of the Problems With the Federal Prohibition on Certain Drugs?

Drugs are a very large issue and have been for decades. Even though most illicit drugs are illegal, that does not prevent people from getting a hold of them. There are many sides to this complicated debate on drugs, which is far too vast to get into much detail. The US government has acted many times to fight this plague of drugs, but overall these attempts are unsuccessful, which brings up the question: what are some of the problems with the federal prohibition on certain drugs?

A commonly known fact is that no matter how much information is brought out there on the terrible side effects of these illicit drugs, that does not stop people from getting intrigued by them or getting their hands on these drugs. No matter how much is done by the people or state it does not stop the use of drugs. The Federal Prohibition on illicit drugs began in 1971 under President Nixon. Some of the issues that the Federal Prohibition on drugs faced included the heavy use of limited resources such as police officers. Because police officers now had to focus on catching drug offenders, there was less of a focus on other crimes such as crimes against private property, which sometimes led to a rise in those crimes. This focus on drug offenders in the police force did not solve the underlying problem.

Prisons began to fill up with drug addicts instead of all actual real criminals such as murderers, thieves, assaulters, or people who sold drugs. This led to an increase in taxpayer money being spent, because not surprisingly drug addicts require medical attention. This, though not as mentioned, is the ugly truth that because drug addicts could go to jail for abusing drugs, people resist getting medical attention or calling 911 when someone in their circle is overdosing. This increases deaths due to drugs. Overall the federal prohibition on certain drugs has not been successful in decreasing the number of deaths from drugs, the overall problem, and most importantly making it more difficult for people to find them. 

The debate on drugs is probably one of the more controversial topics today, with many ins and outs for arguments. Regardless, one must note the truth that the Federal Prohibition on drugs in the US has not improved the situation, and instead in many ways made it worse. Thus these are some of the problems with the Federal Prohibition on certain drugs.

What are Some of the Pitfalls of Industrial Policy?

Industrial policy in the modern definition that one encounters usually is the concept of an industrial policy or strategy of a country(or in other words the state), which is designed to encourage the growth and development of an area of an economy or the economy as a whole. In more factual terms it is a policy in which the government favors certain industries by offering subsidies and cheap loans. Like every government policy or strategy, there are pitfalls. What are the pitfalls of industrial policy?

There are two main pitfalls other than the main one which is that industrial policy is a state-interventionist policy. The first of these pitfalls is that it removes the incentive from a favored firm to be entrepreneurial. The second of which is the truth that it becomes difficult for other firms that are not favored by industrial policy to compete with firms that are. Thus, these are some of the main pitfalls of industrial policy. 

“World War II was a Time of Great Prosperity in the United States”

A statement that is still commonly believed is the statement: “World War II was a time of great prosperity in the United States.” Perhaps people still believe this because before the war America was in an economic low with the Great Depression, and things began looking less bleak from 1939. But how accurate is this statement in actuality?

If one actually thinks about this statement, isn’t it ridiculous to think that a country in a war was more prosperous than ever before. A lot of the working force meaning the healthy men were sent off to war. This percentage of the working force not working anymore was forty percent. During the war in the US the working force was made up of people who either had not been working for a while and people who had never done those sorts of jobs in their life; is that more efficient economically? Also the economy was a wartime economy, which meant that the government was buying more things, because of the war, which of course made it seem there was an economic increase. Overall war is not an economic thing: lives are lost, resources are spent, etc.

In short, the statement: “World War II was a time of great prosperity in the United States,” is ultimately false. 

What are Some of the Factors that Have Contributed to Rising-Health Costs in the United States?

Health care is something that is important in today’s society especially in the United States. Unfortunately in the United States health costs have been rising pretty dramatically, from a number of factors. What are some of the factors that have contributed to rising-health costs in the United States?

During World War II in the United States, wages were frozen, meaning they could not be raised or lowered, which made it more difficult for employers to draw in new employees. With some thinking some of these employers began providing health care benefits which meant that they would pay for the majority of the employees health bills; this worked to attract employees pretty successfully. This overtime became the norm in American society for employers to provide health care benefits. 

Because now employers pay for the majority of these health costs for their employees, these employees now do not really have to think about the costs of their health bills, unlike people who have to pay for it out of their pocket. The first decent sized problem arises when medical professionals notice this fact that people are not exactly thinking about the cost of their health bills, which gives them an incentive to rack up the prices. This is one of the main reasons why health costs in the United States are very costly, and rising.

In short, these are some of the factors that have contributed to rising-health costs in the United States. 

What Has Been the Most Significant Contributing Factor to the Abolition of Child Labor?

Child labor is a very debated and controversial topic. There are many forms of child labor but the universal view of it is that of, children being exploited through work that deprives them of education, and an overall normal childhood. Child labor is not a common thing in the west anymore but it is a common thing in other countries. A question to ask regarding child labor is: what has been the most significant contributing factor to the abolition of child labor.

Child labor exists mainly because of poverty. Children from impoverished families have to work because it is critical for their survival. The conditions of the jobs that the children work are often harsh and terrible, but these children do not have much of an option.Making a law against child labor does not exactly help because this causes more starvation, or these children turn to more horrible work options such as prostitution. Making a law against child labor is not exactly the answer. With this in mind the most significant contributing factor to the abolition of child labor is capital investment which increases labor productivity. This also increases abundance and the purchasing power which allows families to keep their children home. Capital investment helped decrease child labor in the west, which was a common throughout history until around the 20th century.

To conclude, child labor is something that has existed for centuries, and still exists in many poorer countries today. There have been many debates on how to “end,” child labor, and there have been many attempts to do so. Some of these attempts were done through laws which banned child labor, which mostly failed because these children would either starve or turn to other jobs which were much worse than the previous jobs they had. A contributing factor that has helped contribute to abolishing child labor is capital investment, which helps increase labor productivity, abundance, and the purchasing power.

What is the Problem that Ludwig von Mises Identified that a Socialist Economic Planning Board Faces?

In the relatively free market society we live in over here in the west, business owners are capable of calculating their profits and losses efficiently. These business owners compare their work to the work of other businesses or their competitors to have a better understanding to see if their goods or services are selling less or more than their competitors. This system is known as economic calculation and is very helpful in preventing a lot of economic waste. Since we now know of this system of economic calculation, what is the problem that Ludwig von Mises(a famous Austrian economist), identified that a socialist economic planning board faces?

Like I mentioned above, in a free market society business owners are able to calculate their profits and losses to see if they are making an excess of economic waste. But in a socialistic society, it is very difficult to do this calculation because a government board is making all the economic decisions, which in turn means that they have nothing to compare their economic decisions to because there is no economic competition. The government is distributing what is being produced. This ultimately brings forth plenty of economic waste, poor financial decisions, and the waste of resources.

In conclusion, the problem that Ludwig von Mises identified that a socialistic economic planning board faces is that this board is not able to calculate their economic profits and losses, in the way of comparing those numbers to other businesses, to see if they are being efficient. This is one of the main reasons why a socialistic economy makes more poor economic decisions and more economic waste than say a capitalistic economy.