04 Sep 2016

Brad Birzer Talks to Tom Woods About Mythology, Christianity, and Liberty

Libertarianism, Religious 2 Comments

Sure I’ll go ahead and post this on a Sunday. Listen to two Catholics talk about Thor. (Joking aside, this is really good stuff.)

04 Sep 2016

*Risen*

Religious 4 Comments

I worry that this trailer gives away too much, but probably on balance it will goad more of you into watching the movie.

This is a surprisingly good movie. It was not the cheesy, preachy kind of “Christian” film. It had good acting (especially the lead role) and did a good job of making the Resurrection into a dramatic mystery.

So, if you are vaguely interested but need a nudge, I’m giving the nudge.

03 Sep 2016

Three Oldies But Goodies on Utility Theory

David Friedman 10 Comments

Ah, my previous post on Mises vs. David Friedman has sparked controversy over cardinal vs. ordinal utility. Here are three things I wrote on this general topic: one, two, three.

However, I should admit that at some point, I am pretty sure I made a major concession to David Friedman (we were going back and forth on this stuff) that modern economists use a cardinal notion of utility in some applications. To be clear, I was NOT saying, “OK David you win, now I believe in cardinal utility,” but rather I said something like, “OK I will agree with you that there is no way to take what modern economists do in this setting and transform it into an equivalent (but more cumbersome) approach that is clearly based on ordinal preference rankings.”

However, I cannot right now say what that application was. I don’t think it can simply be the use of a “pure discount” on future utils, because in this paper Koopmans shows the assumptions one can make on ordinal preferences over streams of consumption in order to derive such a discount rate:

Koopmans, Tjalling C. (1960) “Stationary Ordinal Utility and Impatience,” Econometrica, Vol. 28, No. 2 (April), pp. 287-309.

But, presumably I remembered that paper when I made the concession to David, so I don’t know what to tell you kids right now except that some of my sweeping statements in the “one” and “two” essays above may be too much. In other words, even though Austrians are still right (in my mind) that utility theory should have an ordinal foundation, if David Friedman wants to argue that you can only do certain modern things with cardinal utility functions, he may be right (whereas in those essays I argued that he wasn’t).

03 Sep 2016

Contra Krugman Episode 50 — What’s Causing Maternal Deaths in Texas?

Contra Krugman 1 Comment

There has been a spike in maternal deaths in Texas. The authors of the study documenting this disturbing fact don’t know the cause, but Paul Krugman is pretty sure it’s misogynist (and racist) Republicans. Tom and I investigate.

02 Sep 2016

Krugman’s ObamaCare Predictions Spiraling to Their Death

*The Primal Prescription*, Krugman, Shameless Self-Promotion 1 Comment

I know this is par for the course, but when I put all of these things together, the result impressed even me. Just look at how cagey Dr. Krugman has been on the issue of “death spirals.”

01 Sep 2016

Potpourri

Infinite Banking Concept, Potpourri 1 Comment

==> This was a good Tom Woods show, where Michael Malice gives a great analysis of how the PC warriors think. What may have seemed incomprehensible to you before, will at least seem more understandable. As an added bonus, your sensitivity training comes from a man you may have thought was very rude.

==> A great analysis of paid family leave from David R. Henderson, where he cites the work of Jonathan Gruber (!).

==> Scott Alexander has THE BEST post on the EpiPen issue. Make sure you read to the end. (I may have already blogged this, but so what, you need to read it.)

==> Libertarian sociology professor (that’s not an oxymoron) Kimberly Johnson sends me her new paper on midwives and the medical establishment. Fight the patriarchy!

==> The eagle-eyed von Pepe also spotted this article on the woes in life insurance. However, notice that the article says the problem is in universal life policies (and long-term care insurance). With that context, consider the following excerpt from a video on the Infinite Banking Concept put out by James Neathery (one of the financial professionals on our IBC Practitioner Finder):

The reason I stress this is that Nelson Nash is adamant in his book and public lectures that people should NOT try to implement IBC using a Universal Life policy. This was actually a sticking point with some people; they thought Nash was being a fuddy duddy and not appreciating the flexibility of the new UL policies versus the old-fashioned Whole Life policies.

Such was our concern on this front–i.e. to avoid just the type of nightmares that are described in the NYT article–we have our financial professionals sign a contract agreeing that they can only use dividend-paying Whole Life policies (i.e. not UL policies) for people who want an IBC policy. See 3.3 in our FAQ for our Practitioner Program.

For one last pat on my back, go to Episode 18 of the Lara-Murphy Show, and listen from 11:00 – 13:30. You will hear me stress that you should make sure you are getting a dividend-paying Whole Life policy, and I warn that if someone tries to get you to use a policy with “more versatility” (I don’t call it UL by name but that’s what I had in mind), that it could “go south on you.”

In summary, I feel badly for the people who are getting shocked by the poor performance of their Universal Life insurance policies, but this is a testament to the wisdom of Nelson Nash. He has always been adamant that people who bought those policies were playing with fire, and that’s why he insists that IBC be implemented only with a dividend-paying Whole Life policy.

01 Sep 2016

Did Hayek Favor Targeting NGDP?

Austrian School, Banking, Market Monetarism 18 Comments

I think I may have blogged about this before, but hey, if I can’t quite remember, maybe you guys can’t either. (Plus, there could be new readers.)

Sometimes I see people claiming that Hayek supported NGDP targeting, or perhaps that Hayek’s preferred monetary regime would mimic NGDP targeting. I am by no means a Hayek scholar, but when I dug up his Nobel acceptance speech (for other reasons) I was struck by this passage:

The theory which has been guiding monetary and financial policy during the last thirty years, and which I contend is largely the product of such a mistaken conception of the proper scientific procedure, consists in the assertion that there exists a simple positive correlation between total employment and the size of the aggregate demand for goods and services; it leads to the belief that we can permanently assure full employment by maintaining total money expenditure at an appropriate level. [Hayek, 1974]

That doesn’t sound like a full-throated defense of stable NGDP growth.

Now, I think the issue is that perhaps earlier in his career, Hayek had supported the maintenance of MV during a depression. I asked von Pepe, who keeps track of such things better than me, and he dug up this comment from Jerry O’Driscoll:

I wasn’t at the debate and don’t know what Larry White or anyone else said. I do know what Hayek said, however, and I know my economic history.

It is entirely anachronistic to say that Hayek or anyone else wanted to maintain nominal GDP in the Great Depression. National income accounting hadn’t been invented yet. Here is a link to the history of NIA.http://www.bea.gov/national/pdf/nipaguid.pdf

[What] Hayek wrote in P&P [Prices and Production] is that neutral money meant keeping MV constant. He later clarified that he never intended this to be a guide to policy for any number of reasons. Velocity was not observed in real time and he thought the demand for money changed cyclically and unpredictably. And then there is the knowledge problem I referenced.

(His statement of the knowledge problem predates P&P. So we have additionally textual evidence that the concept of money neutrality wasn’t intended be a guide to activist policy.)

To say something would be desirable in [principle], but is impossible to execute in practice is not a fault. It is intellectual honesty. I don’t think he ever used these words, but Hayek thought that fractional reserve banking with central banks was inherently unstable.

On this, he was in the Henry Simons/Milton Friedman camp. He expressed support for both 100% reserve banking and free banking, but did not think either…was politically possible.

 

01 Sep 2016

Why Market Exchanges Are Not Acts of Measuring Value

Economics 20 Comments

Hoisted from the comments of my last post:

This is in response to Tel, but I’m doing it stand-alone so it doesn’t get lost in the indentation:

Shoot, Tel, I meant to hit this point but I forgot. When Jim trades 10 pizzas to Sally in exchange for a painting, we can say that the painting has the same market value as 10 pizzas. However, there is no measurement going on here.It’s not that they each had a certain amount of “market value” inherently, and then we put the pizzas up to the painting to figure out how many “pizza market values” were contained in the painting.

E.g. when you put a meter stick against a barn and measure it as 13.4 meters, it works because you assume they both possess units of length and you’re seeing how many of the meter stick’s lengths *equals* the length in the barn.

But when Jim trades 10 pizzas for the painting, he does it because he thinks the painting has MORE value than the 10 pizzas, and vice versa for Sally. They are not measuring market value, they are consulting their subjective value rankings. They are not using equality, they are using inequality.

So there is nothing at all analogous in two people making an exchange and thereby producing a market exchange rate, and a person using a meter stick to measure the length of an object.