print“Game. Set. Match, Mitt Romney,” last night, did not mean that the arguments made during the second presidential debate were not both tedious and hopeless for liberty lovers.
I did perk my ears, though, when Barack Obama made an argument from inflation. Mitt Romney failed or was prohibited from following-up (although I’m not suggesting that he had the philosophical wherewithal with which to respond).
Obama suggested that an earlier drop in gas prices was due to America’s economic straits (partially correct), and was thus a bad thing (completely incorrect):
CROWLEY: Mr. President, could you address, because we did finally get to gas prices here, could you address what the governor said, which is if your energy policy was working, the price of gasoline would not be $4 a gallon here. Is that true?
OBAMA: Well, think about what the governor — think about what the governor just said. He said when I took office, the price of gasoline was $1.80, $1.86. Why is that? Because the economy was on the verge of collapse, because we were about to go through the worst recession since the Great Depression, as a consequence of some of the same policies that Governor Romney’s now promoting.
In Austrian economics, deflation, “a sustained decrease of the price level,” is a good and natural market response.
Writes Doug French “In Defense of Deflation”:
Lower prices increase demand; they do not reduce or delay it. That’s why more and more people own flat-screen TVs, cellular telephones, and laptop computers: the prices of these goods have fallen, and people with lower incomes can afford them. And there are more low-income people than high-income people.
Lower prices don’t mean lower profits; nor do they mean that employees will be laid off. More demand for a good or service means more employees needed to produce those goods and services. “There is no reason why inflation should ever reduce rather than increase unemployment”
“Deflation is one of the great scarecrows of present day economic policy and monetary policy in particular”…
And here’s Guido Hülsmann on “The Economics of Deflation”: