In our last post, we explored how the Great Depression didn’t happen because capitalism failed, but because government intervention in monetary markets created distortions that made a necessary correction catastrophic. But the story doesn’t end with the 1929 crash. What followed reveals an even more important lesson about how government solutions can turn a temporary downturn into a decade-long disaster. Most of us learned in school that Franklin Roosevelt’s New Deal programs softened the Depression’s worst effects, and that World War II’s massive government spending finally ended the economic nightmare. It’s a comforting narrative that positions the government as the …

Unfettered capitalism. That’s usually how the story goes. Greedy speculators run wild, markets spin out of control, and eventually the whole system collapses under the weight of its own excess. Then the government steps in heroically to clean up capitalism’s inevitable mess. It’s a tidy narrative that fits our intuitions about boom-and-bust cycles. But what if the real story is far more complicated? What if the Great Depression happened not because markets were too free, but because well-intentioned government policies created a web of distortions that made the eventual crash both inevitable and far worse than it needed to be? …

“We need to break up Big Tech!” “These corporations are too powerful!” If you’ve followed political discourse over the past few years, you’ve heard variations of these complaints countless times. The underlying assumption is always the same: once a business gets big enough, it becomes permanently entrenched, immune to competition, and capable of exploiting consumers indefinitely. But what if this assumption is completely wrong? What if the natural tendency in free markets isn’t toward permanent monopolies but toward constant change, disruption, and renewal? What if the businesses that seem invincible today are actually more vulnerable than they appear? Let’s start …

Robber barons. The term conjures images of cigar-chomping industrialists exploiting workers, crushing competitors, and amassing obscene wealth through ruthless tactics. It’s a narrative we’ve all heard—probably in high school history class. These men, we’re told, built their fortunes by robbing the common people, hence the name. But what if this entire story is backward? What if the real story of the Gilded Age isn’t about exploitation and robbery but about capitalism creating the greatest period of rising living standards in human history? What if these robber barons actually made ordinary people’s lives dramatically better—so much better, in fact, that for …

“We need more cooperation and less competition in our economy.” You’ve probably heard variations of this sentiment from politicians, pundits, and well-meaning friends who worry that market competition creates a harsh, uncaring society. The underlying assumption is clear: competition and cooperation are opposites. If we want people to work together harmoniously, we need less of the brutal dog-eat-dog competition that capitalism supposedly encourages. This framing presents a false choice that fundamentally misunderstands both competition and cooperation. In our last post, we explored how competition in capitalism differs completely from zero-sum contests. Business competition isn’t about defeating opponents. It’s about creating …

“Competition is brutal. It’s a dog-eat-dog world out there. May the best man win.” You’ve probably heard phrases like these countless times, and they reflect how most of us think about competition. One winner, everyone else loses. Whether it’s a foot race, a beauty contest, or a job interview, competition means someone comes out on top while everyone else goes home empty-handed. This zero-sum thinking carries over to how many people view business competition. We talk about the rat race and console ourselves about business failures by saying, “It’s a dog-eat-dog world.” But this fundamentally misunderstands what competition means in …

No politician has ever stood at a podium and declared, “We’re going to fund this program by printing money and causing inflation.” That would be political suicide. Instead, they promise popular spending programs while simultaneously pledging to keep taxes low. It sounds like magic—getting everything you want without paying for it. But as we explored in our last post, there’s no such thing as a free lunch, even when politicians make it seem otherwise. The political incentive structure is straightforward. Spending money on programs that benefit specific groups is extremely popular with those groups. Whether it’s farm subsidies, infrastructure projects, …

“Inflation is always and everywhere a monetary phenomenon.” Milton Friedman’s famous declaration sounds appropriately academic, but what does it actually mean for your grocery bill or your rent payment? And why should you care about monetary theory when you’re just trying to understand why everything seems to cost more than it did last year? Let’s start with the basics. In economics, inflation is simply defined as an increase in prices. But when you hear it discussed on the evening news, what people are really talking about is price increases beyond the normal fluctuations caused by supply and demand. You’re probably …

In our last post, we explored how government spending creates unavoidable trade-offs by redirecting resources from private uses to public ones. Today, let’s examine a specific type of market distortion that makes these trade-offs even more problematic: monopsony. Most people are familiar with monopolies—situations where there’s only one seller of a particular product or service and multiple buyers. But the flip side, monopsony, gets much less attention despite being equally important. A monopsony exists when there’s essentially only one buyer for a particular good or service. In truly free markets, monopsonies are almost impossible to maintain naturally. Imagine if there …

If recent events have taught us anything, it’s that the United States government spends an eye-wateringly large amount of money every year, and it’s not always clear where exactly all that money goes or why. Leaving aside the printing and borrowing of money (for the time being), the main way these gargantuan budgets get funded is through extracting money from other people—that is, taxes. Taxes come in a variety of forms, from income taxes to tariffs and everything in between. Some are baked into consumer pricing (like tariffs), some get automatically drawn from every paycheck (like Social Security withholding), and …