Ludwig von Mises on Money and Inflation.pdf - The Ludwig von ...

ment spends also billions of tax money in order to make cotton more
expensive. Cotton goods are certainly not luxury goods; they are perhaps
luxury goods when compared with bread, but the government does the
same thing, it follows the same policy, with bread.
e real war on poverty was the “industrial revolution” and the industrialization
of modern factories. At the beginning of the nineteenth
century, shoes and stockings were luxury items for most of the people of
continental Europe; they were not articles of daily wear. And the condition
of these people was not improved by taxing, by taking money or shoes
from the rich to give to the poor. It was the shoe industry, not the riches
of the government, that improved the condition of the poor, that made a
revolutionary change in the peoples’ condition.
A statesman may say, “If I had more money to spend I could do things
which would make me very popular in my country.” e government tries
to make itself popular by doing these things, but the technique it uses is
to spend; and then it tries to ascribe to itself the good results of an expenditure.
An expenditure is not always good. Sometimes an expenditure is
just buying bombs and throwing them into a foreign country. But if the
expenditure is beneficial, let us say if it makes it possible to improve some
things in the country, then the statesman says, “Look, you never had such
a wonderful life as you have under my regime. ere are some bad people,
some inflationists, some people who are profiteers, but I have nothing to
do with them. is is not my fault.” And so on.
Our economic situation depends largely on the relation of the government
and the ruling political party or parties to the labor unions. We have
“inflation,” in the sense of higher prices, built into our economic system
because the unions every year, every two years, or in exceptional cases every
three years, ask for higher wages. e great majority of workers want
continually higher wages and they assume wages can be manipulated ad
libitum, at will, by the government. e unions have the power, by using
violence, with the aid of certain laws and of certain institutions in Washington,
to force people to agree to their wage demands. If wages do not
continue to go up, no one knows what will happen. e only possible
solution to the inflation problem is an open opposition to the unions and
to the idea that higher money wages are the only means for improving
the condition of the masses. Union members should also realize that their
conditions would improve if the money prices of the things they wanted
to buy went down, even if their money wages did not rise. I do not want to
say anything more about this problem except to add that the government
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