To attempt to coordinate society through
coercion is an intellectual error.

Part I, the price system:

Part II, profit and loss:

See also, Kirzner, How Markets Work: Disequilibrium, Entrepreneurship and Discovery (PDF), which is a wonderful rebellion against the over-simplification of neo-classical economics. For example:

Austrian theory, as presented here, places great weight on ‘entrepreneurial discovery’ which enables decentralised decision-makers to recognise when present decisions can be improved upon, and to anticipate future changes in the decisions being made by others. Movements in prices, production methods, choices of outputs, and resource owner incomes generated by entrepreneurial discovery tend to reveal where current allocation patterns are faulty, and to stimulate changes in the corrective direction.

In other words, don’t tinker with the complex, dynamic, creative process that is life in society: it’s not helpful. And if contemporary mainstream theorists had understood the application of this idea to interest rates, we might not be in this mess.

The Economist reports China: Off the rails?

Public support for high-speed trains is muted. The trains may reach 350km per hour but fares are proportionately eye-watering. That is all right for well-heeled travellers, happy to have an alternative to flying. But tens of millions of poor migrants who work far afield and flock home for the Chinese new year are being priced out the rail market and have to go by bus (the number of bus journeys is soaring).

So, the wealthy few long-distance rail travellers benefit at the expense of the many? As we learned in Transport Committee, the same applies to the UK’s high-speed rail plans.

There’s much to say, but it’s Sunday, so I’ll simply recommend:

• Thursday’s Westminster Hall debate on high speed rail, in which we find the argument apparently polarised between those who expect tangible benefits at everyone else’s expense and those who would bear tangible costs but whose arguments in the national interest are dismissed as self-interested. It seems a bizarre reversal to me but, unfortunately, for those bearing only the dispersed costs of high speed rail, the project isn’t worth lobbying against. (Although thank goodness for The TaxPayers’ Alliance.)
• They Meant Well, Government Project Disasters, D. R. Myddelton, 2007, in which we find the country has seen it all before.
• What Is Seen and What Is Not Seen, Bastiat, 1848, in which we find the world has seen it all before, and for a long time too.
• How Markets Work: Disequilibrium, Entrepreneurship and Discovery, Kirzner, 1997, which teaches us, in a slim volume, that the dynamic process which is social cooperation can never conform to models which present some static ideal, thereby undermining the techniques of public policy making.

The sooner we learn to put our confidence in unhampered, voluntary social cooperation, the better. In transport, as in all else, we should let markets work.

Over at The Cobden Centre, my colleague James Tyler explores the FTSE All Share index priced in oz of gold, which, it turns out, tends to maintain its purchasing power over centuries:

FTSE All share in terms of oz gold (click for story)

James is Chief Executive of Tyler Capital and a keen supporter of honest money in the interests of the ordinary person.

Read more here.