A basic understanding of economics by all individuals will almost certainly eliminate much of the world’s problems overnight. It will ensure people do not vote for political parties with non-economic and pseudo-economic policies, and will not campaign for completely-unattainable policies, such as ‘free’ education.
Much of Martin’s writing, much of which is under the banner of the Free Market Foundation, is dedicated to informing the public about the basic principles of economics.
Private property is the foundation of economics. Without private property and property rights, individuals are unable to truly enjoy the fruits of their labor, which is necessary for survival. Despite the superficial Marxist distinction between ‘personal’ and ‘private’ property, these things are in essence the same, and, especially in the 21st century, what could formerly be seen as ‘personal’ property now also acts as a means of production.
One of the most important considerations with private property, especially in the South African post-Apartheid context, is how the right to property vests in an individual. The land reform debate in South Africa has become a red herring, consisting of ‘patterns’ and averages, when it is supposed to be exclusively about determining which property is owned legitimately, and which is owned illegitimately. Illegitimately-owned property, which was expropriated under Apartheid land law, must be restituted to their legitimate owners.
‘Austrian’ economics – or just ‘economics’ – as distinguished from other quasi-economic schools of thought like Marxism, is a discipline of principles, rather than numbers and figures. The numbers and figures often lead many to conclude that economics is a science too complex for laymen to understand or even attempt to understand.
However, economics is simply the study of human action and individual choice in relation to the scarce resources of the world. Any reasonable person can understand the basic principles of economics, and, when they do, their view of society and government will fundamentally change from the prevailing norm.
Some basic principles of economics include:
- Value is subjective: Only the consumer in the circumstances at hand can decide the value of a good or service. Gold is not ‘objectively’ more valuable than dirt, for example. Health is not objectively ‘invaluable’ as many make it out to be. If the consumer, subjectively, values the good or service more than he does the money being charged for it, he will buy it. If he is unsure, or values the money being charged more than the good or service, he won’t buy it. The same principle applies in labor affairs, meaning the Marxist notion of ‘exploitation’ is quite baseless.
- Prices are determined by the market: Because value is subjective, a price for a good or service can only be determined by the market. If it is not, then incorrect economic signals will be sent, and shortages or oversupplies will ensue. Prices summarize the amount of one thing (goods, services) which the market is prepared to sacrifice for money. When something is more expensive, it means that down the production line something happened: a drought, a fire, a new, more expensive regulatory burden, etc.
- Government intervention always causes detrimental, unintended consequences: Whenever a new law, regulation, tax, fee, or directive is passed down from government onto consumers or producers, those consumers and producers (often subconsciously) adapt their behavior. Higher income taxes, for instance, means less disposable income and thus less income for small businesses. These small businesses, in turn, must employ fewer people and charge higher prices for their products. A minimum wage, which on the surface looks like a compassionate measure by government, means the unemployed, and especially the unskilled, will have an even smaller pool of job opportunities. As companies are forced to pay their workers more than they value their labor at, they will inevitably shift the burden onto their consumers with higher prices, or employ fewer people, or, as is happening in the fast-food industry in the United States, computerize.
Much of the work Martin does at the Free Market Foundation as its Head: Legal Policy and -Research is to show government and the public that new laws and regulations will have these detrimental, unintended consequences.
In The Real Digital Divide, for instance, of which Martin was the principal co-author, the Department of Telecommunications and Postal Services’ new ICT Policy White Paper was deconstructed. Martin and Neil Emerick pointed out that the new centrally-planned telecommunications regime will stifle innovation and expansion as firms need to spend substantially more time, money and effort complying with government directives.
The Regulation of Agricultural Land Holdings Bill, 2017 outlaws foreign ownership of agricultural land in South Africa. The Bill was introduced amidst government’s ostensible commitment to encouraging foreign investment and accelerated economic growth. This is a clear instance of government being completely naive, or blissfully ignorant, about the unintended consequences of its interventions, as it follows logically that outlawing foreign ownership of agricultural land will lead to decreased foreign investment in SA’s agricultural economy.
Martin authored the FMF’s submission to government on the Bill.