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In the latest Econoclasts, Wolfgang and I, first, dissect the fallout of Iceland’s historic referendum vote to reject European Union accession talks and, then, we debate amongst each other whether a European capital markets union can revive investment or simply feed a stagnant #Iceland #EUElections #CapitalMarkets #IS #EU

Again:#EU will continue to make its members violate foundational norms of int'l law (prohibitions of genocide, annexation of territory by force, torture) until its leadership will put the interests of banks&markets (including trade with Apartheid Israel) above all. #EU #InternationalLaw #HumanRights #EU #IL

If you’re an intellectual and believe certain things about the use of military force in foreign policy and about unregulated markets in economics, and both of them lead to big disasters, you ought to rethink some of those assumptions By @fukuyamafrancis https://t.co/f6FiqJMALV #ForeignPolicy #MilitaryForce #Economics #Thetweetdoesnotmentionanyspecificcountries #sotherearenocountrycodestoreturn.

“Socialism Was Good in Theory” That sentence assumes the theory was never seriously challenged. It was. Long before the Soviet Union existed, before Lenin seized power, and before socialism had been tested on a national scale, major thinkers were already attacking its foundations—from very different directions. Five of them stand out. Tocqueville: Equality Can Become Servitude In 1848, Alexis de Tocqueville drew a sharp distinction between democracy and socialism. Both spoke about equality. But Tocqueville believed they pursued it in fundamentally different ways. Democracy, in his view, sought equality while preserving individual freedom. Socialism risked achieving equality by expanding the power of the state over the individual. His warning was essentially this: equality is not automatically liberty. A society can pursue equality so aggressively that it begins sacrificing the independence that makes political freedom meaningful. Bastiat: Follow Where Redistribution Leads Two years later, Frédéric Bastiat attacked socialism from a different direction. His question was deceptively simple: What happens when the state acquires the authority to take from some people and give to others in the name of justice? Bastiat called this “legal plunder.” His concern was not merely that redistribution might be expensive. It was that once government becomes the instrument through which competing groups obtain benefits from one another, politics can turn into a permanent struggle over who controls the machinery of redistribution. The problem, therefore, wasn’t simply how much the state redistributed. It was the principle that made redistribution legitimate in the first place. (bastiat.org⁠) Nietzsche: Equality Can Become Resentment Nietzsche approached socialism neither as an economist nor as a constitutional theorist. He attacked its psychology. He saw modern egalitarian movements as part of a much older moral impulse: resentment toward exceptional individuals and suspicion of strength, ambition and hierarchy. For Nietzsche, the danger was not simply that everyone might become economically equal. It was that a culture could begin treating excellence itself as something morally suspect. The goal would cease to be lifting people upward. It would become bringing the exceptional downward. Böhm-Bawerk: Challenge the Economics Then came Eugen von Böhm-Bawerk. In 1896, he turned his attention specifically toward Marx’s economic system. His criticism was not primarily moral or political. It was technical. Böhm-Bawerk argued that Marx’s theory of value did not adequately explain how the labor values developed in Capital could be reconciled with the actual prices Marx subsequently needed to explain. In other words, he attacked socialism where it claimed to possess a scientific economic foundation. The argument became one of the central criticisms of Marxian economics and helped launch a debate that would continue for generations. Mises: The Calculation Problem Then, in 1920, Ludwig von Mises attacked an even more fundamental question: Even if socialism is morally desirable, how would a socialist economy actually know what to produce? A functioning economy has millions of competing uses for scarce resources. Build a bridge or a hospital? Use steel here or there? Produce more machinery or more consumer goods? Under private ownership and markets, prices for capital goods provide information about relative scarcity and opportunity costs. Mises argued that abolishing private ownership of the means of production also removes the genuine market prices necessary for rational economic calculation. The problem wasn’t simply that socialist planners might make bad decisions. It was that the system deprived them of the very economic signals required to systematically compare those decisions. (Mises Institute⁠) And that was the sequence. Tocqueville challenged the political premise. Bastiat challenged the moral and legal mechanism of redistribution. Nietzsche challenged the psychology behind egalitarianism. Böhm-Bawerk challenged Marx’s economic theory. Mises challenged the possibility of rational central economic calculation. Five different thinkers. Five different objections. And all of them came before the Soviet Union had demonstrated what large-scale socialist government would actually look like. So “socialism was good in theory, but bad in practice” is not an argument. It is a historical claim that requires you to explain why these theoretical objections were wrong. The interesting question isn’t whether socialism had critics. It did. The interesting question is whether socialism ever adequately answered them” - ChatGPT

🇪🇺 #ECB GOVERNING COUNCIL MEMBER NAGEL SPEAKS IN LE MONDE INTERVIEW *ECB'S NAGEL: MARKETS SEE >95% PROBABILITY OF SEPT. RATE HIKE *NAGEL: MARKETS UNDERSTAND 'RATHER WELL' OUR WAY OF REACTING *NAGEL: CAUTIOUS ABOUT GIVING ANY INDICATION BEYOND SEPTEMBER *NAGEL: THERE IS LOTS OF #ECB #MonetaryPolicy #InterestRates #EU

The Deadly Seduction of Democratic Socialism Young people are being urged to support “democratic” socialism—ideas blamed for tens of millions of deaths in the last century—promising that consent will make it work this time. But consent cannot make an economic system wise. A ballot cannot set the right prices for wages, goods, or services, nor prevent shortages, repression, or famine. This isn’t fringe. New York elected Zohran Mamdani, who says there should be no billionaires and backs rent freezes, state-run grocery stores, free CUNY, and higher taxes. Polling shows strong support for socialism and communism among Americans under 30. The core error is believing resources can be taken from creators and transferred without losing the knowledge that made them productive. Mao’s China illustrates the outcome: land reform dispossessed and killed landowners, production collapsed as local expertise was treated as an enemy, and grain seizures during the Great Leap Forward worsened a catastrophic famine. The lesson: destroying incentives, property rights, and local knowledge destroys production itself. Envy is often disguised as justice. Communist regimes cultivated resentment and turned grievance into political energy, making societies less focused on creating wealth and more focused on making others lose it. Even when central planners tried to subordinate families to the state, people preserved knowledge through markets, private plots, and community practice. Civilization isn’t a machine bureaucrats can redesign. Take away property and you don’t automatically transfer knowledge—abundance can vanish with it. Redistribution may promise equality, but if it destroys the people, incentives, and knowledge that produce abundance, the result is a hungry one.

The Austrian Critique of Marx followed a line from value theory to economic coordination. 1) **Menger:** Value is **subjective**. People value goods because they think they satisfy wants; water in a desert can be far more valuable than water at home, with production labor unchanged. 2) **Böhm-Bawerk:** Marx’s surplus value is flawed. **Time and capital** matter: wages and costs are advanced before revenue arrives, so interest/profit reflect time preference, risk, and production structure—not unpaid labor. 3) **Transformation problem:** Marx’s labor-values should imply different surplus values by industry, but competition pushes toward equal profit rates. Marx tried to convert values into **prices of production**, yet the inconsistency with his earlier theory remains debated. 4) **Mises:** The key issue is whether socialism can **calculate**. Rational planning needs prices for **capital goods**, which only markets under **private ownership** can generate. 5) **Hayek:** Knowledge is **dispersed** and local. **Prices** transmit that information so coordination can occur without everyone knowing the full cause. 6) **Rothbard:** Profit isn’t necessarily exploitation. Capitalists bear uncertainty, organize production, and pay wages upfront; workers get an agreed wage, while profit is what remains if the venture succeeds. So the deepest split is not only about profit source, but about coordination: Marx asks who appropriates value; Austrians increasingly ask how millions coordinate exchange, knowledge, and expectations at all.

Milton Friedman Exposed the Fatal Flaw of Socialism Milton Friedman exposed the fatal flaw in socialism: the assumption that inequality proves capitalism is morally broken. Inequality isn’t automatically injustice—people differ in intelligence, ability, effort, and circumstances—and “greed” isn’t uniquely capitalist. The deeper issue is human nature. Thomas Sowell contrasts visions where humans are inherently self-interested and society must channel those traits through institutions, versus visions where people are malleable enough for experts to remake society. Civilizational breakthroughs rarely come from central planning; central control doesn’t erase flaws, it relocates them. The businessman’s greed can become the bureaucrat’s, and the desire to manage markets can become the desire to dominate whole industries. Hayek warned that central planning tends toward coercion: redistributing wealth requires taking it, and enforcing plans requires people willing to use force. The result can be “mercy” that demands submission—comfort and certainty traded for freedom. The question is simple: where are the angels who will run society for us?

🇫🇷 🇮🇹🚨 France is starting to be perceived as a greater bond risk than Italy - FT *The French 10-year yield moved above the Italian 10-year and a genuine shift in market perception seems to lie. 📊 Markets look above all at the debt's trajectory and the political ability to https://t.co/lYvLGyLY6E #France #Italy #BondRisk #FR #IT

That is how Global Gateway works: public investment that makes transformational projects possible where the markets will not step in alone. This investment will strengthen forest management, support resilient agro-forestry and build skills in the sector. Protecting forests is https://t.co/oGGHpXdHOb #GlobalGateway #SustainableInvesting #ForestryManagement #Therearenospecificcountrymentionsinthetweetprovided.Therefore #theresponseis:

Key takeaways from Bessent presser: 1/ Markets rejecting his intervention is “noise”. 2/ He does not understand why oil prices are rising. They’re losing control. They may regain a little in the short-term but they’re now fighting gravity. 🇺🇸💵 https://t.co/9BsVCwQXi0 #MarketTrends #OilPrices #EconomicControl #US

You have a bond market crisis on your hands, an inflation crisis, a jobs market coughing blood, an investment markets bubble, and a looming Social Security meltdown. And you are playing games, literally. #BondMarketCrisis #Inflation #EconomicConcerns #Nospecificcountrycodesarementionedinthetweet.

Apple will make changes to the App Store starting in October due to pressure from the EU, in order to provide users in the EU with more choices when downloading and paying for apps, which is intended to improve competitive conditions in digital markets in accordance with the Digital Markets Act. (translated)

The EU has created new regulatory tools with the Digital Markets Act and the Digital Services Act to limit the influence of large tech companies like Google and TikTok, and to control the content on online platforms, which recently led to a nearly billion-dollar fine against Google. (translated)