Oh, good, another place to bicker about reserves. When Austrians rail against fractional reserves, I am inclined to ask "what would you do about it, exactly?" It is odd that so many Austrians, so able to make rational distinctions most of the time, seem entirely unable to see between the extremes on this question. What of the bank I wish to open (in theory) that would allow for withdrawal on demand, but post a sign explaining that we maintain only 85% reserves, and so, while you're free to try to withdraw your money, there is a slight chance that you won't be able to if lots of other people try at the same time? Is this fraudulent? Is it 100% reserve?

On Tom's remarks, I wonder why everyone is so quick to grant Tom's claims. Yes, government intervention in the form of corporate welfare is bad, and is a problem. But I have yet to see proof that it is THE crux of why government is bad. I'd submit that warfare is worse, if we're going to rank such things. But I'd invite Tom to at least present some evidence, rather than simply asserting THIS to be the bad thing about government. In fact, there are very few aspects of the corporation that could not be reproduced in a free economy, although I am not convinced that they could be reproduced practically - that is, people might shy away from doing business with a firm that insists on contracts exempting its principals from liability. But certainly the corporate form and public ownership could and likely would exist in the free market - Mises once commented that the best dividing line between a capitalist and socialist economy is the presence of a stock market. In any case, it's hard to see why the presence of a limited-liability corporation, or a publicly held corporation, threatens my liberty. Certainly it is odd to say that this is a greater threat than uniformed armed men enforcing my compliance with edicts.

Posted by: Joshua Katz at February 7, 2007 9:22 AM