Celebration of Mises 130st Birthday in Lviv, Ukraine

Oktober 6, 2011

130 years ago, on the 29th of September 1881, Ludwig Heinrich Edler von Mises was born in Lemberg.  At that time part of the Austrian-Hungarian Empire, Lemberg is now called Lviv, and is located in Ukraine. This event had to be celebrated and so academics, representatives of Think-Tanks, and government officials from eight different countries came together to honor Mises with an academic conference about the “Economics and Bureaucracy in an Open Society”.

One might think that bureaucrats would react reluctantly to Mises‘ ideas. Nevertheless, the event was organized by Dr. Mykola Bunyk and Prof. Dr. Volodymyr Zahorskyy from the Institute of Public Administration and the National Academy of State Management. Mises shows understanding for the bureaucrat in his book “Bureaucracy,” but makes it clear that the alleged good intentions of the bureaucrat have to fail before the reality of the incentive and decision-making framework of governmental institutions. These and more questions were debated critically by academics from Ukraine like Prof. Dr.Viktor Borshchevskyy with a presentation about bureaucracy in transitional societies, Kateryna Kantur with a case study of the negative consequences of regulation in the Ukrainian oil market, and with a discussion of the impossibility of accurate economical predictions by Russian professor Dr. Andrey Zaostrovtsev.

I was quite excited before my first speech at an academic conference. My paper was about the “Limitations of Regulation” and my goal was to give a comprehensive overview about the manifold arguments of the Austrian School of Economics against regulation. We started with a distinction between law, how it evolves and how regulation differs from that. Following, we discussed the justification of government regulation i.e. Public Goods and Monopoly Theory, and rejected this due to the indistinct concepts and in parts ridiculous conclusions (Socks as a Public Good[1]). The last part of my speech was focusing on the difference in the decision making framework of entrepreneurs and regulators. The regulator has no mechanism how to interpret prices and no feedback mechanism about his regulations. He gets his orders what to regulate from his job description and from politicians. He cannot interpret prices and must therefore regulate blindfolded without insufficient information about the subject he will regulate and without any information of the effects and the consequences of his orders. The entrepreneur on the other hand has always a profit motive to internalize market disruptions. If he does a good job he gets rewarded with a profit, if not he will suffer losses. This was an important distinction to make which I broke down graphically. Some questions about regulations within the healthcare field were asked and I could answer them with the staggering numbers of a paper by Kazman[2]. In this paper he shows that due to the holding back of one drug of the FDA circa 100.000 people have died. I made it clear that my paper was not about which system is perfect, but about which system creates the better incentive structure and therefore possibilities to internalize the problem that man can err.

It was a beautiful experience to see that Austrian Economics is alive and active in Eastern Europe as an interdisciplinary school of thought. This was stressed by the fact that philosophers from Ukraine, Austria, and even from the United States of America came to Lviv to present papers. For example, Eugen-Maria Schulak, who owns a private philosophical practice in Austria, spoke about Mises‘ epistemology, and Prof. Dr. William Edward Kline from Illinois spoke about Austrian business ethics.

The event finished with a ceremonial unveiling of a badge of honor at Ludwig von Mises‘ birthplace, which was only discovered two months ago. The badge was funded by voluntary donations from citizens from all over Ukraine. These people only knew each other through a Facebook group and came up with the design and the necessary funding for the badge. The result is, like its process, extraordinary, and resembles the lively interest and passion for Austrian Economics all around the world.

[1] Laer, Wolf von: “The Limitations of Regulation”, 2011, p. 6.

[2] Kazman, Sam: “Drug Approvals and Deadly Delays”, Journal of American Physicians and Surgeons, Vol. 15, Nr. 4, 2010.

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